Document:

Exhibit 10.17

 

PHASERX, INC.

 

2016 LONG-TERM INCENTIVE PLAN

 

The PhaseRx, Inc. 2016
Long-Term Incentive Plan (the “Plan”) was adopted by the Board of Directors of PhaseRx, Inc., a Delaware
corporation (the “Company”), effective as of _______________________, 2016, subject to approval by the
Company’s stockholders.

 

Article
1

PURPOSE

 

The purpose of the
Plan is to attract and retain the services of key Employees, key Contractors, and Outside Directors of the Company and its Subsidiaries
and to provide such persons with a proprietary interest in the Company through the granting of Incentive Stock Options, Nonqualified
Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Awards, Dividend Equivalent Rights,
and Other Awards, whether granted singly, or in combination, or in tandem, that will:

 

(a)          increase
the interest of such persons in the Company’s welfare;

 

(b)          furnish
an incentive to such persons to continue their services for the Company or its Subsidiaries; and

 

(c)          provide
a means through which the Company may attract able persons as Employees, Contractors, and Outside Directors.

 

With respect to Reporting
Participants, the Plan and all transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3
promulgated under the Exchange Act. To the extent any provision of the Plan or action by the Committee fails to so comply, such
provision or action shall be deemed null and void ab initio, to the extent permitted by law and deemed advisable by the
Committee.

 

Article
2

DEFINITIONS

 

For the purpose of
the Plan, unless the context requires otherwise, the following terms shall have the meanings indicated:

 

2.1           “Applicable
Law” means all legal requirements relating to the administration of equity incentive plans and the issuance and distribution
of shares of Common Stock, if any, under applicable corporate laws, applicable securities laws, the rules of any exchange or inter-dealer
quotation system upon which the Company’s securities are listed or quoted, and any other applicable law, rule or restriction.

 

2.2           “Authorized
Officer” is defined in Section 3.2(b) hereof.

 

2.3           “Award”
means the grant of any Incentive Stock Option, Nonqualified Stock Option, Restricted Stock, SAR, Restricted Stock Unit, Performance
Award, Dividend Equivalent Right or Other Award, whether granted singly or in combination or in tandem (each individually referred
to herein as an “Incentive”).

 

     

     

    

  

2.4          “Award
Agreement” means a written agreement between a Participant and the Company which sets out the terms of the grant
of an Award.

 

2.5          “Award
Period” means the period set forth in the Award Agreement during which one or more Incentives granted under an Award
may be exercised.

 

2.6          “Board”
means the board of directors of the Company.

 

2.7          “Change
in Control” means the occurrence of the event set forth in any one of the following paragraphs, except as otherwise
provided herein:

 

(a)          any
Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from the Company or its Affiliates) representing fifty percent
(50%) or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes
such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (c) below;

 

(b)          the
following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on
the effective date of this Plan, constitute the Board and any new director (other than a director whose initial assumption of office
is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to
the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s
stockholders was approved or recommended by a vote of at least two-thirds (2/3rds) of the directors then still in office
who either were directors on the effective date of this Plan or whose appointment, election or nomination for election was previously
so approved or recommended;

 

(c)          there
is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation,
other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior
to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof) at least fifty percent (50%) of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger
or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes
the Beneficial Owner, directly or indirectly, of securities of the Company (not including the securities Beneficially Owned by
such Person any securities acquired directly from the Company or its Affiliates other than in connection with the acquisition by
the Company or its Affiliates of a business) representing fifty percent (50%) or more of the combined voting power of the Company’s
then outstanding securities; or

 

(d)          the
stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement
for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition
by the Company of all or substantially all of the Company’s assets to an entity, at least fifty percent (50%) of the combined
voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as
their ownership of the Company immediately prior to such sale.

 

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For purposes
hereof:

 

“Affiliate”
shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

 

“Beneficial
Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

 

“Person”
shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (i) the Company or any of its Subsidiaries, (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant
to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company.

 

Notwithstanding the
foregoing provisions of this Section 2.7, if an Award issued under the Plan is subject to Section 409A of the Code, then
an event shall not constitute a Change in Control for purposes of such Award under the Plan unless such event also constitutes
a change in the Company’s ownership, its effective control or the ownership of a substantial portion of its assets within
the meaning of Section 409A of the Code.

 

2.8           “Claims”
means any claim, liability or obligation of any nature, arising out of or relating to this Plan or an alleged breach of this Plan,
or an Award Agreement.

 

2.9           
“Code” means the United States Internal Revenue Code of 1986, as amended.

 

2.10         “Committee”
means the committee appointed or designated by the Board to administer the Plan in accordance with Article 3 of this Plan.

 

2.11         “Common
Stock” means the common stock, par value $.0001 per share, which the Company is currently authorized to issue or
may in the future be authorized to issue, or any securities into which or for which the common stock of the Company may be converted
or exchanged, as the case may be, pursuant to the terms of this Plan.

 

2.12         “Company”
means PhaseRx, Inc., a Delaware corporation, and any successor entity.

 

2.13         “Contractor”
means any natural person, who is not an Employee, rendering bona fide services to the Company or a Subsidiary, with compensation,
pursuant to a written independent contractor agreement between such person and the Company or a Subsidiary, provided that such
services are not rendered in connection with the offer or sale of securities in a capital raising transaction and do not directly
or indirectly promote or maintain a market for the Company’s securities.

 

2.14         “Corporation”
means any entity that (i) is defined as a corporation under Section 7701 of the Code and (ii) is the Company or is in an unbroken
chain of corporations (other than the Company) beginning with the Company, if each of the corporations other than the last corporation
in the unbroken chain owns stock possessing a majority of the total combined voting power of all classes of stock in one of the
other corporations in the chain. For purposes of clause (ii) hereof, an entity shall be treated as a “corporation”
if it satisfies the definition of a corporation under Section 7701 of the Code.

 

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2.15         “Date
of Grant” means the effective date on which an Award is made to a Participant as set forth in the applicable Award
Agreement; provided, however, that solely for purposes of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder, the Date of Grant of an Award shall be the date of stockholder approval of the Plan if such date is later than the
effective date of such Award as set forth in the Award Agreement.

 

2.16         “Dividend
Equivalent Right” means the right of the holder thereof to receive credits based on the cash dividends that would
have been paid on the shares of Common Stock specified in the Award if such shares were held by the Participant to whom the Award
is made.

 

2.17         “Employee”
means a common law employee (as defined in accordance with the Regulations and Revenue Rulings then applicable under Section 3401(c)
of the Code) of the Company or any Subsidiary of the Company.

 

2.18         “Exchange
Act” means the United States Securities Exchange Act of 1934, as amended.

 

2.19         “Exercise
Date” is defined in Section 8.3(b) hereof.

 

2.20         “Exercise
Notice” is defined in Section 8.3(b) hereof.

 

2.21         “Executive
Officer” means an officer of the Company or a Subsidiary subject to Section 16 of the Exchange Act or a “covered
employee” as defined in Section 162(m)(3) of the Code.

 

2.22         “Fair
Market Value” means, as of a particular date, (a) if the shares of Common Stock are listed on any established national
securities exchange, the volume weighted average selling price per share of Common Stock, on the consolidated transaction reporting
system for the principal securities exchange for the Common Stock during the ten (10) trading day period immediately prior to that
date; (b) if the shares of Common Stock are not so listed, but are quoted on an automated quotation system, the volume weighted
average selling price per share of Common Stock reported on the automated quotation system for the ten (10) trading day period
immediately prior to that date,; (c) if the Common Stock is not so listed or quoted for a particular date during the ten (10) day
trading period prior to that date, the mean between the closing bid and asked price on such date, or, if there are no quotations
available for such date, on the last preceding date on which such quotations shall be available, as reported by the OTC Bulletin
Board operated by the Financial Industry Regulation Authority, Inc. or the OTC Markets Group Inc., formerly known as Pink OTC Markets
Inc.; or (d) if none of the above is applicable, such amount as may be determined by the Committee (acting on the advice of an
Independent Third Party, should Committee elect in its sole discretion to utilize an Independent Third Party for this purpose),
in good faith, to be the fair market value per share of Common Stock. The determination of Fair Market Value shall, where applicable,
be in compliance with Section 409A of the Code.

 

2.23         “Immediate
Family Members” is defined in Section 15.8 hereof.

 

2.24         “Incentive”
is defined in Section 2.3 hereof.

 

2.25         “Incentive
Stock Option” means an incentive stock option within the meaning of Section 422 of the Code, granted pursuant to
this Plan.

 

2.26         “Independent
Third Party” means an individual or entity independent of the Company having experience in providing investment banking
or similar appraisal or valuation services and with expertise generally in the valuation of securities or other property for purposes
of this Plan. The Committee may utilize one or more Independent Third Parties.

 

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2.27         “Nonqualified
Stock Option” means a nonqualified stock option, granted pursuant to this Plan, which is not an Incentive Stock Option.

 

2.28         “Option
Price” means the price which must be paid by a Participant upon exercise of a Stock Option to purchase a share of
Common Stock.

 

2.29         “Other
Award” means an Award issued pursuant to Section 6.9 hereof.

 

2.30         “Outside
Director” means a director of the Company who is not an Employee or a Contractor.

 

2.31         “Participant”
means an Employee or Contractor of the Company or a Subsidiary or an Outside Director to whom an Award is granted under this Plan.

 

2.32         “Performance
Award” means an Award hereunder of cash, shares of Common Stock, units or rights based upon, payable in, or otherwise
related to, Common Stock pursuant to Section 6.7 hereof.

 

2.33         “Performance
Criteria” is defined in Section 6.10 hereof.

 

2.34         “Performance
Goal” means any of the goals set forth in Section 6.10 hereof.

 

2.35         “Person”
is defined in Section 2.7 hereof.

 

2.36         “Plan”
means this PhaseRx, Inc. 2016 Long-Term Incentive Plan, as amended from time to time.

 

2.37         “Reporting
Participant” means a Participant who is subject to the reporting requirements of Section 16 of the Exchange Act.

 

2.38         “Restricted
Stock” means shares of Common Stock issued or transferred to a Participant pursuant to Section 6.4 of this
Plan which are subject to restrictions or limitations set forth in this Plan and in the related Award Agreement.

 

2.39         “Restricted
Stock Units” means units awarded to Participants pursuant to Section 6.6 hereof, which are convertible into
Common Stock at such time as such units are no longer subject to restrictions as established by the Committee.

 

2.40         “Restriction
Period” is defined in Section 6.4(b)(i) hereof.

 

2.41         “Retirement”
means any Termination of Service solely due to retirement upon or after attainment of age sixty-five (65), or permitted early retirement
as determined by the Committee.

 

2.42         “SAR”
or “Stock Appreciation Right” means the right to receive an amount, in cash and/or Common Stock, equal
to the excess of the Fair Market Value of a specified number of shares of Common Stock as of the date the SAR is exercised (or,
as provided in the Award Agreement, converted) over the SAR Price for such shares.

 

2.43         “SAR
Price” means the exercise price or conversion price of each share of Common Stock covered by a SAR, determined on
the Date of Grant of the SAR.

 

2.44         “Spread”
is defined in Section 12.4(b) hereof.

 

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2.45         “Stock
Option” means a Nonqualified Stock Option or an Incentive Stock Option.

 

2.46         “Subsidiary”
means (i) any corporation in an unbroken chain of corporations beginning with the Company, if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing a majority of the total combined voting power of all classes of
stock in one of the other corporations in the chain, (ii) any limited partnership, if the Company or any corporation described
in item (i) above owns a majority of the general partnership interest and a majority of the limited partnership interests entitled
to vote on the removal and replacement of the general partner, and (iii) any partnership or limited liability company, if the partners
or members thereof are composed only of the Company, any corporation listed in item (i) above or any limited partnership listed
in item (ii) above. “Subsidiaries” means more than one of any such corporations, limited partnerships,
partnerships or limited liability companies.

 

2.47         “Termination
of Service” occurs when a Participant who is (i) an Employee of the Company or any Subsidiary ceases to serve as
an Employee of the Company and its Subsidiaries, for any reason; (ii) an Outside Director of the Company or a Subsidiary ceases
to serve as a director of the Company and its Subsidiaries for any reason; or (iii) a Contractor of the Company or a Subsidiary
ceases to serve as a Contractor of the Company and its Subsidiaries for any reason. Except as may be necessary or desirable to
comply with applicable federal or state law, a “Termination of Service” shall not be deemed to have occurred when a
Participant who is an Employee becomes an Outside Director or Contractor or vice versa. If, however, a Participant who is an Employee
and who has an Incentive Stock Option ceases to be an Employee but does not suffer a Termination of Service, and if that Participant
does not exercise the Incentive Stock Option within the time required under Section 422 of the Code upon ceasing to be an Employee,
the Incentive Stock Option shall thereafter become a Nonqualified Stock Option. Notwithstanding the foregoing provisions of this
Section 2.47, in the event an Award issued under the Plan is subject to Section 409A of the Code, then, in lieu of the foregoing
definition and to the extent necessary to comply with the requirements of Section 409A of the Code, the definition of “Termination
of Service” for purposes of such Award shall be the definition of “separation from service” provided for under
Section 409A of the Code and the regulations or other guidance issued thereunder.

 

2.48         “Total
and Permanent Disability” means a Participant is qualified for long-term disability benefits under the Company’s
or Subsidiary’s disability plan or insurance policy; or, if no such plan or policy is then in existence or if the Participant
is not eligible to participate in such plan or policy, that the Participant, because of a physical or mental condition resulting
from bodily injury, disease, or mental disorder, is unable to perform his or her duties of employment for a period of six (6) continuous
months, as determined in good faith by the Committee, based upon medical reports or other evidence satisfactory to the Committee;
provided that, with respect to any Incentive Stock Option, Total and Permanent Disability shall have the meaning
given it under the rules governing Incentive Stock Options under the Code. Notwithstanding the foregoing provisions of this Section
2.48, in the event an Award issued under the Plan is subject to Section 409A of the Code, then, in lieu of the foregoing definition
and to the extent necessary to comply with the requirements of Section 409A of the Code, the definition of “Total and Permanent
Disability” for purposes of such Award shall be the definition of “disability” provided for under Section 409A
of the Code and the regulations or other guidance issued thereunder.

 

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Article
3

ADMINISTRATION

 

3.1           General
Administration; Establishment of Committee. Subject to the terms of this Article 3, the Plan shall be administered
by the Board or such committee of the Board as is designated by the Board to administer the Plan (the “Committee”).
The Committee shall consist of not fewer than two persons. Any member of the Committee may be removed at any time, with or without
cause, by resolution of the Board. Any vacancy occurring in the membership of the Committee may be filled by appointment by the
Board. At any time there is no Committee to administer the Plan, any references in this Plan to the Committee shall be deemed to
refer to the Board.

 

Membership on the Committee
shall be limited to those members of the Board who are “outside directors” under Section 162(m) of the Code and “non-employee
directors” as defined in Rule 16b-3 promulgated under the Exchange Act. The Committee shall select one of its members to
act as its Chairman. A majority of the Committee shall constitute a quorum, and the act of a majority of the members of the Committee
present at a meeting at which a quorum is present shall be the act of the Committee.

 

3.2          Designation
of Participants and Awards.

 

(a)          The
Committee or the Board shall determine and designate from time to time the eligible persons to whom Awards will be granted and
shall set forth in each related Award Agreement, where applicable, the Award Period, the Date of Grant, and such other terms, provisions,
limitations, and performance requirements, as are approved by the Committee, but not inconsistent with the Plan. The Committee
shall determine whether an Award shall include one type of Incentive or two or more Incentives granted in combination or two or
more Incentives granted in tandem (that is, a joint grant where exercise of one Incentive results in cancellation of all or a portion
of the other Incentive). Although the members of the Committee shall be eligible to receive Awards, all decisions with respect
to any Award, and the terms and conditions thereof, to be granted under the Plan to any member of the Committee shall be made solely
and exclusively by the other members of the Committee, or if such member is the only member of the Committee, by the Board.

 

(b)          Notwithstanding
Section 3.2(a), to the extent permitted by Applicable Law, the Board may, in its discretion and by a resolution adopted
by the Board, authorize one or more officers of the Company (an “Authorized Officer”) to (i) designate
one or more Employees as eligible persons to whom Nonqualified Stock Options, Incentive Stock Options or SARs will be granted under
the Plan, and (ii) determine the number of shares of Common Stock that will be subject to such Nonqualified Stock Options, Incentive
Stock Options or SARs; provided, however, that the resolution of the Board granting such authority shall (x) specify
the total number of shares of Common Stock that may be made subject to the Nonqualified Stock Options, Incentive Stock Options
or SARs, (y) set forth the price or prices (or a formula by which such price or prices may be determined) to be paid for the purchase
of the Common Stock subject to such Nonqualified Stock Options, Incentive Stock Options or SARs, and (z) not authorize an officer
to designate himself as a recipient of any Award.

 

3.3           Authority
of the Committee. The Committee, in its discretion, shall (i) interpret the Plan and Award Agreements, (ii) prescribe, amend,
and rescind any rules and regulations, as necessary or appropriate for the administration of the Plan, (iii) establish performance
goals for an Award and certify the extent of their achievement, and (iv) make such other determinations or certifications and take
such other action as it deems necessary or advisable in the administration of the Plan. Any interpretation, determination, or other
action made or taken by the Committee shall be final, binding, and conclusive on all interested parties. The Committee’s
discretion set forth herein shall not be limited by any provision of the Plan, including any provision which by its terms is applicable
notwithstanding any other provision of the Plan to the contrary.

 

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The Committee may delegate
to officers of the Company, pursuant to a written delegation, the authority to perform specified functions under the Plan. Any
actions taken by any officers of the Company pursuant to such written delegation of authority shall be deemed to have been taken
by the Committee.

 

With respect to restrictions
in the Plan that are based on the requirements of Rule 16b-3 promulgated under the Exchange Act, Section 422 of the Code, Section
162(m) of the Code, the rules of any exchange or inter-dealer quotation system upon which the Company’s securities are listed
or quoted, or any other Applicable Law, to the extent that any such restrictions are no longer required by Applicable Law, the
Committee shall have the sole discretion and authority to grant Awards that are not subject to such mandated restrictions and/or
to waive any such mandated restrictions with respect to outstanding Awards.

 

Article
4

ELIGIBILITY

 

Any Employee (including
an Employee who is also a director or an officer), Contractor or Outside Director of the Company whose judgment, initiative, and
efforts contributed or may be expected to contribute to the successful performance of the Company is eligible to participate in
the Plan; provided that only Employees of a Corporation shall be eligible to receive Incentive Stock Options. The Committee, upon
its own action, may grant, but shall not be required to grant, an Award to any Employee, Contractor or Outside Director. Awards
may be granted by the Committee at any time and from time to time to new Participants, or to then Participants, or to a greater
or lesser number of Participants, and may include or exclude previous Participants, as the Committee shall determine. Except as
required by this Plan, Awards need not contain similar provisions. The Committee’s determinations under the Plan (including
without limitation determinations of which Employees, Contractors or Outside Directors, if any, are to receive Awards, the form,
amount and timing of such Awards, the terms and provisions of such Awards and the agreements evidencing same) need not be uniform
and may be made by it selectively among Participants who receive, or are eligible to receive, Awards under the Plan.

 

Article
5

SHARES SUBJECT TO PLAN

 

5.1           Number
Available for Awards. Subject to adjustment as provided in Articles 11 and 12, the maximum number of shares of
Common Stock that may be delivered pursuant to Awards granted under the Plan is one million four hundred thousand (1,400,000) shares,
provided that, such aggregate number of shares reserved for Awards will automatically increase on January 1 of each year, commencing
on January 1 of the year following the year in which the Effective Date occurs and ending on (and including) January 1, 2026, in
an amount equal to five percent (5%) of the total number of shares of Common Stock outstanding on December 31 of the preceding
calendar year. Notwithstanding the foregoing, the Board may act prior to January 1 of a given year to provide that there will be
no January 1 increase for such year or that the increase for such year will be a lesser number of shares than provided herein.
Subject to adjustment as provided in Articles 11 and 12, the maximum number of shares of Common Stock that may be delivered
pursuant to Incentive Stock Options under the Plan is one million four hundred thousand (1,400,000) shares and the maximum number
of shares of Common Stock with respect to which Stock Options or SARs may be granted to an Executive Officer during any calendar
year is six hundred thousand (600,000) shares of Common Stock. Shares to be issued may be made available from authorized but unissued
Common Stock, Common Stock held by the Company in its treasury, or Common Stock purchased by the Company on the open market or
otherwise. During the term of this Plan, the Company will at all times reserve and keep available the number of shares of Common
Stock that shall be sufficient to satisfy the requirements of this Plan.

 

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5.2           Reuse
of Shares. To the extent that any Award under this Plan shall be forfeited, shall expire or be canceled, in whole or in part,
then the number of shares of Common Stock covered by the Award or stock option so forfeited, expired or canceled may again be awarded
pursuant to the provisions of this Plan. In the event that previously acquired shares of Common Stock are delivered to the Company
in full or partial payment of the exercise price for the exercise of a Stock Option granted under this Plan, the number of shares
of Common Stock available for future Awards under this Plan shall be reduced only by the net number of shares of Common Stock issued
upon the exercise of the Stock Option. Awards that may be satisfied either by the issuance of shares of Common Stock or by cash
or other consideration shall be counted against the maximum number of shares of Common Stock that may be issued under this Plan
only during the period that the Award is outstanding or to the extent the Award is ultimately satisfied by the issuance of shares
of Common Stock. Awards will not reduce the number of shares of Common Stock that may be issued pursuant to this Plan if the settlement
of the Award will not require the issuance of shares of Common Stock, as, for example, a SAR that can be satisfied only by the
payment of cash. Notwithstanding any provisions of the Plan to the contrary, only shares forfeited back to the Company or shares
canceled on account of termination, expiration or lapse of an Award shall again be available for grant of Incentive Stock Options
under the Plan, but shall not increase the maximum number of shares described in Section 5.1 above as the maximum number
of shares of Common Stock that may be delivered pursuant to Incentive Stock Options.

 

Article
6

GRANT OF AWARDS

 

6.1          In
General.

 

(a)          The
grant of an Award shall be authorized by the Committee and shall be evidenced by an Award Agreement setting forth the Incentive
or Incentives being granted, the total number of shares of Common Stock subject to the Incentive(s), the Option Price (if applicable),
the Award Period, the Date of Grant, and such other terms, provisions, limitations, and performance objectives, as are approved
by the Committee, but (i) not inconsistent with the Plan, (ii) to the extent an Award issued under the Plan is subject to Section
409A of the Code, in compliance with the applicable requirements of Section 409A of the Code and the regulations or other guidance
issued thereunder, and (iii) to the extent the Committee determines that an Award shall comply with the requirements of Section
162(m) of the Code, in compliance with the applicable requirements of Section 162(m) of the Code and the regulations and other
guidance issued thereunder. The Company shall execute an Award Agreement with a Participant after the Committee approves the issuance
of an Award. Any Award granted pursuant to this Plan must be granted within ten (10) years of the date of adoption of this Plan
by the Board. The Plan shall be submitted to the Company’s stockholders for approval; however, the Committee may grant Awards
under the Plan prior to the time of stockholder approval. Any such Award granted prior to such stockholder approval shall be made
subject to such stockholder approval. The grant of an Award to a Participant shall not be deemed either to entitle the Participant
to, or to disqualify the Participant from, receipt of any other Award under the Plan.

 

(b)          If
the Committee establishes a purchase price for an Award, the Participant must accept such Award within a period of thirty (30)
days (or such shorter period as the Committee may specify) after the Date of Grant by executing the applicable Award Agreement
and paying such purchase price.

 

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(c)          Any
Award under this Plan that is settled in whole or in part in cash on a deferred basis may provide for interest equivalents to be
credited with respect to such cash payment. Interest equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the grant.

 

6.2           Option
Price. The Option Price for any share of Common Stock which may be purchased under a Nonqualified Stock Option for any share
of Common Stock must be equal to or greater than the Fair Market Value of the share on the Date of Grant. The Option Price for
any share of Common Stock which may be purchased under an Incentive Stock Option must be at least equal to the Fair Market Value
of the share on the Date of Grant; if an Incentive Stock Option is granted to an Employee who owns or is deemed to own (by reason
of the attribution rules of Section 424(d) of the Code) more than ten percent (10%) of the combined voting power of all classes
of stock of the Company (or any parent or Subsidiary), the Option Price shall be at least one hundred ten percent (110%) of the
Fair Market Value of the Common Stock on the Date of Grant.

 

6.3           Maximum
ISO Grants. The Committee may not grant Incentive Stock Options under the Plan to any Employee which would permit the aggregate
Fair Market Value (determined on the Date of Grant) of the Common Stock with respect to which Incentive Stock Options (under this
and any other plan of the Company and its Subsidiaries) are exercisable for the first time by such Employee during any calendar
year to exceed $100,000. To the extent any Stock Option granted under this Plan which is designated as an Incentive Stock Option
exceeds this limit or otherwise fails to qualify as an Incentive Stock Option, such Stock Option (or any such portion thereof)
shall be a Nonqualified Stock Option. In such case, the Committee shall designate which stock will be treated as Incentive Stock
Option stock by causing the issuance of a separate stock certificate and identifying such stock as Incentive Stock Option stock
on the Company’s stock transfer records.

 

6.4           Restricted
Stock. If Restricted Stock is granted to or received by a Participant under an Award (including a Stock Option), the Committee
shall set forth in the related Award Agreement: (i) the number of shares of Common Stock awarded, (ii) the price, if any, to be
paid by the Participant for such Restricted Stock and the method of payment of the price, (iii) the time or times within which
such Award may be subject to forfeiture, (iv) specified Performance Goals of the Company, a Subsidiary, any division thereof or
any group of Employees of the Company, or other criteria, which the Committee determines must be met in order to remove any restrictions
(including vesting) on such Award, and (v) all other terms, limitations, restrictions, and conditions of the Restricted Stock,
which shall be consistent with this Plan, to the extent applicable and in the event the Committee determines that an Award shall
comply with the requirements of Section 162(m) of the Code, in compliance with the requirements of Section 162(m) of the Code and
the regulations and other guidance issued thereunder and, to the extent Restricted Stock granted under the Plan is subject to Section
409A of the Code, in compliance with the applicable requirements of Section 409A of the Code and the regulations or other guidance
issued thereunder. The provisions of Restricted Stock need not be the same with respect to each Participant.

 

(a)          Legend
on Shares. The Company shall electronically register the Restricted Stock awarded to a Participant in the name of such Participant,
which shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock,
substantially as provided in Section 15.10 of the Plan. No stock certificate or certificates shall be issued with respect
to such shares of Common Stock, unless, following the expiration of the Restriction Period (as defined in Section 6.4(b)(i))
without forfeiture in respect of such shares of Common Stock, the Participant requests delivery of the certificate or certificates
by submitting a written request to the Committee (or such party designated by the Company) requesting delivery of the certificates.
The Company shall deliver the certificates requested by the Participant to the Participant as soon as administratively practicable
following the Company’s receipt of such request.

 

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(b)          Restrictions
and Conditions. Shares of Restricted Stock shall be subject to the following restrictions and conditions:

 

(i)          Subject
to the other provisions of this Plan and the terms of the particular Award Agreements, during such period as may be determined
by the Committee commencing on the Date of Grant or the date of exercise of an Award (the “Restriction Period”),
the Participant shall not be permitted to sell, transfer, pledge or assign shares of Restricted Stock. Except for these limitations,
the Committee may in its sole discretion, remove any or all of the restrictions on such Restricted Stock whenever it may determine
that, by reason of changes in Applicable Laws or other changes in circumstances arising after the date of the Award, such action
is appropriate.

 

(ii)         Except
as provided in sub-paragraph (i) above or in the applicable Award Agreement, the Participant shall have, with respect to his or
her Restricted Stock, all of the rights of a stockholder of the Company, including the right to vote the shares, and the right
to receive any dividends thereon, provided that any dividends shall at all times be subject to the same restrictions as the underlying
Restricted Stock and shall not be paid to the Participant unless and until such Restricted Stock becomes vested. Certificates for
shares of Common Stock free of restriction under this Plan shall be delivered to the Participant promptly after, and only after,
the Restriction Period shall expire without forfeiture in respect of such shares of Common Stock or after any other restrictions
imposed on such shares of Common Stock by the applicable Award Agreement or other agreement have expired. Certificates for the
shares of Common Stock forfeited under the provisions of the Plan and the applicable Award Agreement shall be promptly returned
to the Company by the forfeiting Participant. Each Award Agreement shall require that each Participant, in connection with the
issuance of a certificate for Restricted Stock, shall endorse such certificate in blank or execute a stock power in form satisfactory
to the Company in blank and deliver such certificate and executed stock power to the Company.

 

(iii)        The
Restriction Period of Restricted Stock shall commence on the Date of Grant or the date of exercise of an Award, as specified in
the Award Agreement, and, subject to Article 12 of the Plan, unless otherwise established by the Committee in the Award
Agreement setting forth the terms of the Restricted Stock, shall expire upon satisfaction of the conditions set forth in the Award
Agreement; such conditions may provide for vesting based on such Performance Goals, as may be determined by the Committee in its
sole discretion.

 

(iv)        Except
as otherwise provided in the particular Award Agreement, upon Termination of Service for any reason during the Restriction Period,
the nonvested shares of Restricted Stock shall be forfeited by the Participant. In the event a Participant has paid any consideration
to the Company for such forfeited Restricted Stock, the Committee shall specify in the Award Agreement that either (i) the Company
shall be obligated to, or (ii) the Company may, in its sole discretion, elect to, pay to the Participant, as soon as practicable
after the event causing forfeiture, in cash, an amount equal to the lesser of the total consideration paid by the Participant for
such forfeited shares or the Fair Market Value of such forfeited shares as of the date of Termination of Service, as the Committee,
in its sole discretion shall select. Upon any forfeiture, all rights of a Participant with respect to the forfeited shares of the
Restricted Stock shall cease and terminate, without any further obligation on the part of the Company.

 

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6.5           SARs.
The Committee may grant SARs to any Participant, either as a separate Award or in connection with a Stock Option. SARs shall be
subject to such terms and conditions as the Committee shall impose, provided that such terms and conditions are (i) not inconsistent
with the Plan, (ii) to the extent a SAR issued under the Plan is subject to Section 409A of the Code, in compliance with the applicable
requirements of Section 409A of the Code and the regulations or other guidance issued thereunder, and (iii) to the extent the Committee
determines that a SAR shall comply with the requirements of Section 162(m) of the Code, in compliance with the applicable requirements
of Section 162(m) and the regulations and other guidance issued thereunder. The grant of the SAR may provide that the holder may
be paid for the value of the SAR either in cash or in shares of Common Stock, or a combination thereof. In the event of the exercise
of a SAR payable in shares of Common Stock, the holder of the SAR shall receive that number of whole shares of Common Stock having
an aggregate Fair Market Value on the date of exercise equal to the value obtained by multiplying (i) the difference between the
Fair Market Value of a share of Common Stock on the date of exercise over the SAR Price as set forth in such SAR (or other value
specified in the agreement granting the SAR), by (ii) the number of shares of Common Stock as to which the SAR is exercised, with
a cash settlement to be made for any fractional shares of Common Stock. The SAR Price for any share of Common Stock subject to
a SAR may be equal to or greater than the Fair Market Value of the share on the Date of Grant. The Committee, in its sole discretion,
may place a ceiling on the amount payable upon exercise of a SAR, but any such limitation shall be specified at the time that the
SAR is granted.

 

6.6           Restricted
Stock Units. Restricted Stock Units may be awarded or sold to any Participant under such terms and conditions as shall be established
by the Committee, provided, however, that such terms and conditions are (i) not inconsistent with the Plan, (ii) to the extent
a Restricted Stock Unit issued under the Plan is subject to Section 409A of the Code, in compliance with the applicable requirements
of Section 409A of the Code and the regulations or other guidance issued thereunder, and (iii) to the extent the Committee determines
that a Restricted Stock Unit award shall comply with the requirements of Section 162(m) of the Code, in compliance with the applicable
requirements of Section 162(m) and the regulations and other guidance issued thereunder. The grant of a Restricted Stock Unit may
provide that the holder may be paid for the value of the Restricted Stock Unit either in cash or in shares of Common Stock, or
a combination thereof. Restricted Stock Units shall be subject to such restrictions as the Committee determines, including, without
limitation, (a) a prohibition against sale, assignment, transfer, pledge, hypothecation or other encumbrance for a specified period;
or (b) a requirement that the holder forfeit (or in the case of shares of Common Stock or units sold to the Participant, resell
to the Company at cost) such shares or units in the event of Termination of Service during the period of restriction.

 

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6.7           Performance
Awards.         

 

(a)          The
Committee may grant Performance Awards to one or more Participants. The terms and conditions of Performance Awards shall be specified
at the time of the grant and may include provisions establishing the performance period, the Performance Goals to be achieved during
a performance period, and the maximum or minimum settlement values, provided that such terms and conditions are (i) not inconsistent
with the Plan and (ii) to the extent a Performance Award issued under the Plan is subject to Section 409A of the Code, in compliance
with the applicable requirements of Section 409A of the Code and the regulations or other guidance issued thereunder. If the Performance
Award is to be in shares of Common Stock, the Performance Awards may provide for the issuance of the shares of Common Stock at
the time of the grant of the Performance Award or at the time of the certification by the Committee that the Performance Goals
for the performance period have been met; provided, however, if shares of Common Stock are issued at the time of
the grant of the Performance Award and if, at the end of the performance period, the Performance Goals are not certified by the
Committee to have been fully satisfied, then, notwithstanding any other provisions of this Plan to the contrary, the Common Stock
shall be forfeited in accordance with the terms of the grant to the extent the Committee determines that the Performance Goals
were not met. The forfeiture of shares of Common Stock issued at the time of the grant of the Performance Award due to failure
to achieve the established Performance Goals shall be separate from and in addition to any other restrictions provided for in this
Plan that may be applicable to such shares of Common Stock. Each Performance Award granted to one or more Participants shall have
its own terms and conditions.

 

To the extent
the Committee determines that a Performance Award shall comply with the requirements of Section 162(m) of the Code and the regulations
and other guidance issued thereunder, and if it is determined to be necessary in order to satisfy Section 162(m) of the Code, at
the time of the grant of a Performance Award (other than a Stock Option) and to the extent permitted under Section 162(m) of the
Code and the regulations issued thereunder, the Committee shall provide for the manner in which the Performance Goals shall be
reduced to take into account the negative effect on the achievement of specified levels of the Performance Goals which may result
from enumerated corporate transactions, events that are of an unusual nature or indicate infrequency of occurrence, extraordinary
events, accounting changes and other similar occurrences which were unanticipated at the time the Performance Goal was initially
established. In no event, however, may the Committee increase the amount earned under such a Performance Award, unless the reduction
in the Performance Goals would reduce or eliminate the amount to be earned under the Performance Award and the Committee determines
not to make such reduction or elimination.

 

With respect
to a Performance Award that is not intended to satisfy the requirements of Code Section 162(m), if the Committee determines, in
its sole discretion, that the established performance measures or objectives are no longer suitable because of a change in the
Company’s business, operations, corporate structure, or for other reasons that the Committee deemed satisfactory, the Committee
may modify the performance measures or objectives and/or the performance period.

 

(b)          Performance
Awards may be valued by reference to the Fair Market Value of a share of Common Stock or according to any formula or method deemed
appropriate by the Committee, in its sole discretion, including, but not limited to, achievement of Performance Goals or other
specific financial, production, sales or cost performance objectives that the Committee believes to be relevant to the Company’s
business and/or remaining in the employ of the Company or a Subsidiary for a specified period of time. Performance Awards may be
paid in cash, shares of Common Stock, or other consideration, or any combination thereof. If payable in shares of Common Stock,
the consideration for the issuance of such shares may be the achievement of the performance objective established at the time of
the grant of the Performance Award. Performance Awards may be payable in a single payment or in installments and may be payable
at a specified date or dates or upon attaining the performance objective. The extent to which any applicable performance objective
has been achieved shall be conclusively determined by the Committee.

 

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(c)          Notwithstanding
the foregoing, in order to comply with the requirements of Section 162(m) of the Code, if applicable, no Participant may receive
in any calendar year Performance Awards intended to comply with the requirements of Section 162(m) of the Code which have an aggregate
value of more than $3,600,000, and if such Performance Awards involve the issuance of shares of Common Stock, said
aggregate value shall be based on the Fair Market Value of such shares on the time of the grant of the Performance Award. In no
event, however, shall any Performance Awards not intended to comply with the requirements of Section 162(m) of the Code be issued
contingent upon the failure to attain the Performance Goals applicable to any Performance Awards granted hereunder that the Committee
intends to comply with the requirements of Section 162(m) of the Code.

 

6.8           Dividend
Equivalent Rights. The Committee may grant a Dividend Equivalent Right to any Participant, either as a component of another
Award or as a separate Award. The terms and conditions of the Dividend Equivalent Right shall be specified by the grant. Dividend
equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional
shares of Common Stock (which may thereafter accrue additional dividend equivalents). Any such reinvestment shall be at the Fair
Market Value at the time thereof. Dividend Equivalent Rights may be settled in cash or shares of Common Stock, or a combination
thereof, in a single payment or in installments. A Dividend Equivalent Right granted as a component of another Award may provide
that such Dividend Equivalent Right shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such
other Award, and that such Dividend Equivalent Right granted as a component of another Award may also contain terms and conditions
different from such other Award.

 

6.9           Other
Awards. The Committee may grant to any Participant other forms of Awards, based upon, payable in, or otherwise related to,
in whole or in part, shares of Common Stock, if the Committee determines that such other form of Award is consistent with the purpose
and restrictions of this Plan. The terms and conditions of such other form of Award shall be specified by the grant. Such Other
Awards may be granted for no cash consideration, for such minimum consideration as may be required by Applicable Law, or for such
other consideration as may be specified by the grant.

 

6.10         Performance
Goals. Awards of Restricted Stock, Restricted Stock Units, Performance Award and Other Awards (whether relating to cash or
shares of Common Stock) under the Plan may be made subject to the attainment of Performance Goals relating to one or more business
criteria which, where applicable, shall be within the meaning of Section 162(m) of the Code and consist of one or more or any combination
of the following criteria: operational objectives, consisting of one or more objectives based on achieving progress in research
and development programs or achieving regulatory milestones related to development and or approval of products (including, FDA
approvals of filings or commencement of clinical trials); clinical or developmental milestones (including, completion of enrollment
for clinical trials and obtaining final data); production or production growth; resource replacement or resource growth; cash cost
per ounce of production; cost containment or reduction; signing term sheets or definitive agreements for partnerships, joint ventures,
R&D collaboration agreements, option agreements, license agreements and other similar agreements; strengthening the balance
sheet; obtaining equity or debt investments; hiring key executive team members; cash flow; cost; revenues; sales; ratio of debt
to debt plus equity; net borrowing, credit quality or debt ratings; profit before tax; economic profit; earnings before interest
and taxes; earnings before interest, taxes, depreciation and amortization; gross margin; earnings per share (whether on a pre-tax,
after-tax, operational or other basis); operating earnings; capital expenditures; expenses or expense levels; economic value added;
ratio of operating earnings to capital spending or any other operating ratios; free cash flow; net profit; net sales; net asset
value per share; the accomplishment of mergers, acquisitions, dispositions, public offerings or similar extraordinary business
transactions; sales growth; price of the Company’s Common Stock; return on assets, equity or stockholders’ equity;
market share; inventory levels, inventory turn or shrinkage; or total return to stockholders (“Performance Criteria”).
Any Performance Criteria may be used to measure the performance of the Company as a whole or any business unit of the Company and
may be measured relative to a peer group or index. Any Performance Criteria may include or exclude (i) events that are of an unusual
nature of indicate infrequency of occurrence, (ii) gains or losses on the disposition of a business, (iii) changes in tax or accounting
regulations or laws, (iv) the effect of a merger or acquisition, as identified in the Company’s quarterly and annual earnings
releases, or (v) other similar occurrences. In all other respects, Performance Criteria shall be calculated in accordance with
the Company’s financial statements, under generally accepted accounting principles, or under a methodology established by
the Committee prior to the issuance of an Award which is consistently applied and identified in the audited financial statements,
including footnotes, or the Compensation Discussion and Analysis section of the Company’s annual report. However, to the
extent Section 162(m) of the Code is applicable, the Committee may not in any event increase the amount of compensation payable
to an individual upon the attainment of a Performance Goal.

 

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6.11         Tandem
Awards. The Committee may grant two or more Incentives in one Award in the form of a “tandem Award,” so that the
right of the Participant to exercise one Incentive shall be canceled if, and to the extent, the other Incentive is exercised. For
example, if a Stock Option and a SAR are issued in a tandem Award, and the Participant exercises the SAR with respect to one hundred
(100) shares of Common Stock, the right of the Participant to exercise the related Stock Option shall be canceled to the extent
of one hundred (100) shares of Common Stock.

 

6.12         Recoupment
for Restatements. Notwithstanding any other language in this Plan to the contrary, the Company may recoup all or any portion
of any shares or cash paid to a Participant in connection with an Award, in the event of a restatement of the Company’s financial
statements as set forth in the Company’s clawback policy, if any, approved by the Company’s Board from time to time.

 

Article
7

AWARD PERIOD; VESTING

 

7.1           Award
Period. Subject to the other provisions of this Plan, the Committee may, in its discretion, provide that an Incentive may not
be exercised in whole or in part for any period or periods of time or beyond any date specified in the Award Agreement. Except
as provided in the Award Agreement, an Incentive may be exercised in whole or in part at any time during its term. The Award Period
for an Incentive shall be reduced or terminated upon Termination of Service. No Incentive granted under the Plan may be exercised
at any time after the end of its Award Period. No portion of any Incentive may be exercised after the expiration of ten (10) years
from its Date of Grant. However, if an Employee owns or is deemed to own (by reason of the attribution rules of Section 424(d)
of the Code) more than ten percent (10%) of the combined voting power of all classes of stock of the Company (or any parent or
Subsidiary) and an Incentive Stock Option is granted to such Employee, the term of such Incentive Stock Option (to the extent required
by the Code at the time of grant) shall be no more than five (5) years from the Date of Grant.

 

7.2           Vesting.
The Committee, in its sole discretion, may determine that an Incentive will be immediately vested in whole or in part, or that
all or any portion may not be vested until a date, or dates, subsequent to its Date of Grant, or until the occurrence of one or
more specified events, subject in any case to the terms of the Plan. If the Committee imposes conditions upon vesting, then, subsequent
to the Date of Grant, the Committee may, in its sole discretion, accelerate the date on which all or any portion of the Incentive
may be vested.

 

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Article
8

EXERCISE OR CONVERSION OF INCENTIVE

 

8.1           In
General. A vested Incentive may be exercised or converted, during its Award Period, subject to limitations and restrictions
set forth in the Award Agreement.

 

8.2           Securities
Law and Exchange Restrictions. In no event may an Incentive be exercised or shares of Common Stock issued pursuant to an Award
if a necessary listing or quotation of the shares of Common Stock on a stock exchange or inter-dealer quotation system or any registration
under state or federal securities laws required under the circumstances has not been accomplished.

 

8.3           Exercise
of Stock Option.

 

(a)          In
General. If a Stock Option is exercisable prior to the time it is vested, the Common Stock obtained on the exercise of the
Stock Option shall be Restricted Stock which is subject to the applicable provisions of the Plan and the Award Agreement. If the
Committee imposes conditions upon exercise, then subsequent to the Date of Grant, the Committee may, in its sole discretion, accelerate
the date on which all or any portion of the Stock Option may be exercised. No Stock Option may be exercised for a fractional share
of Common Stock. The granting of a Stock Option shall impose no obligation upon the Participant to exercise that Stock Option.

 

(b)          Notice
and Payment. Subject to such administrative regulations as the Committee may from time to time adopt, a Stock Option may be
exercised by the delivery of written notice to the Committee setting forth the number of shares of Common Stock with respect to
which the Stock Option is to be exercised (the “Exercise Notice”) and the date of exercise thereof (the
“Exercise Date”) with respect to which any Stock Option shall be the date that the Participant has delivered
both the Exercise Notice and consideration with a value equal to the total Option Price of the shares to be purchased (plus any
employment tax withholding or other tax payment due with respect to such Award), payable as provided in the Award Agreement, which
may provide for payment in any one or more of the following ways: (a) cash or check, bank draft, or money order payable to the
order of the Company, (b) Common Stock (including Restricted Stock) owned by the Participant on the Exercise Date, valued at its
Fair Market Value on the Exercise Date, (c) by delivery (including by FAX or electronic transmission) to the Company or its designated
agent of an executed irrevocable option exercise form (or, to the extent permitted by the Company, exercise instructions, which
may be communication in writing, telephonically or electronically) together with irrevocable instructions from the Participant
to a broker or dealer, reasonably acceptable to the Company, to sell certain of the shares of Common Stock purchased upon exercise
of the Stock Option or to pledge such shares as collateral for a loan and promptly deliver to the Company the amount of sale or
loan proceeds necessary to pay such purchase price, and/or (d) in any other form of valid consideration that is acceptable to the
Committee in its sole discretion. In the event that shares of Restricted Stock are tendered as consideration for the exercise of
a Stock Option, a number of shares of Common Stock issued upon the exercise of the Stock Option equal to the number of shares of
Restricted Stock used as consideration therefor shall be subject to the same restrictions and provisions as the Restricted Stock
so tendered. If the Participant fails to deliver the consideration described in this Section 8.3(b) within three (3) business
days of the date of the Exercise Notice, then the Exercise Notice shall be null and void and the Company will have no obligation
to deliver any shares of Common Stock to the Participant in connection with such Exercise Notice.

 

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(c)          Issuance
of Certificate. Except as otherwise provided in Section 6.4 hereof (with respect to shares of Restricted Stock) or in
the applicable Award Agreement, upon payment of all amounts due from the Participant, the Company shall cause the Common Stock
then being purchased to be registered in the Participant’s name (or the person exercising the Participant’s Stock Option
in the event of his or her death), but shall not issue certificates for the Common Stock unless the Participant or such other person
requests delivery of the certificates for the Common Stock, in writing in accordance with the procedures established by the Committee.
The Company shall deliver certificates to the Participant (or the person exercising the Participant’s Stock Option in the
event of his or her death) as soon as administratively practicable following the Company’s receipt of a written request from
the Participant or such other person for delivery of the certificates. Notwithstanding the forgoing, if the Participant has exercised
an Incentive Stock Option, the Company may at its option retain physical possession of the certificate evidencing the shares acquired
upon exercise until the expiration of the holding periods described in Section 422(a)(1) of the Code. Any obligation of the Company
to deliver shares of Common Stock shall, however, be subject to the condition that, if at any time the Committee shall determine
in its discretion that the listing, registration, or qualification of the Stock Option or the Common Stock upon any securities
exchange or inter-dealer quotation system or under any state or federal law, or the consent or approval of any governmental regulatory
body, is necessary as a condition of, or in connection with, the Stock Option or the issuance or purchase of shares of Common Stock
thereunder, the Stock Option may not be exercised in whole or in part unless such listing, registration, qualification, consent,
or approval shall have been effected or obtained free of any conditions not reasonably acceptable to the Committee.

 

(d)          Failure
to Pay. Except as may otherwise be provided in an Award Agreement, if the Participant fails to pay for any of the Common Stock
specified in such notice or fails to accept delivery thereof, that portion of the Participant’s Stock Option and right to
purchase such Common Stock may be forfeited by the Participant.

 

8.4           SARs.
Subject to the conditions of this Section 8.4 and such administrative regulations as the Committee may from time to time
adopt, a SAR may be exercised by the delivery (including by FAX) of written notice to the Committee setting forth the number of
shares of Common Stock with respect to which the SAR is to be exercised and the Exercise Date, which with respect to any SAR shall
be the date that the Participant has delivered both the written notice and consideration to the Company with a value equal to any
employment tax withholding or other tax payments due with respect to such Award. Subject to the terms of the Award Agreement and
only if permissible under Section 409A of the Code and the regulations or other guidance issued thereunder (or, if not so permissible,
at such time as permitted by Section 409A of the Code and the regulations or other guidance issued thereunder), the Participant
shall receive from the Company in exchange therefor in the discretion of the Committee, and subject to the terms of the Award Agreement:

 

(a)          cash
in an amount equal to the excess (if any) of the Fair Market Value (as of the Exercise Date, or if provided in the Award Agreement,
conversion, of the SAR) per share of Common Stock over the SAR Price per share specified in such SAR, multiplied by the total number
of shares of Common Stock of the SAR being surrendered;

 

(b)          that
number of shares of Common Stock having an aggregate Fair Market Value (as of the Exercise Date, or if provided in the Award Agreement,
conversion, of the SAR) equal to the amount of cash otherwise payable to the Participant, with a cash settlement to be made for
any fractional share interests; or

 

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(c)          the
Company may settle such obligation in part with shares of Common Stock and in part with cash.

 

The distribution of
any cash or Common Stock pursuant to the foregoing sentence shall be made at such time as set forth in the Award Agreement.

 

8.5           Disqualifying
Disposition of Incentive Stock Option. If shares of Common Stock acquired upon exercise of an Incentive Stock Option are disposed
of by a Participant prior to the expiration of either two (2) years from the Date of Grant of such Stock Option or one (1) year
from the transfer of shares of Common Stock to the Participant pursuant to the exercise of such Stock Option, or in any other disqualifying
disposition within the meaning of Section 422 of the Code, such Participant shall notify the Company in writing of the date and
terms of such disposition. A disqualifying disposition by a Participant shall not affect the status of any other Stock Option granted
under the Plan as an Incentive Stock Option within the meaning of Section 422 of the Code.

 

Article
9

AMENDMENT OR DISCONTINUANCE

 

Subject to the limitations
set forth in this Article 9, the Board may at any time and from time to time, without the consent of the Participants, alter,
amend, revise, suspend, or discontinue the Plan in whole or in part; provided, however, that no amendment for which stockholder
approval is required either (i) by any securities exchange or inter-dealer quotation system on which the Common Stock is listed
or traded or (ii) in order for the Plan and Incentives awarded under the Plan to continue to comply with Sections 162(m), 421,
and 422 of the Code, including any successors to such Sections, or other Applicable Law, shall be effective unless such amendment
shall be approved by the requisite vote of the stockholders of the Company entitled to vote thereon. Any such amendment shall,
to the extent deemed necessary or advisable by the Committee, be applicable to any outstanding Incentives theretofore granted under
the Plan, notwithstanding any contrary provisions contained in any Award Agreement. In the event of any such amendment to the Plan,
the holder of any Incentive outstanding under the Plan shall, upon request of the Committee and as a condition to the exercisability
thereof, execute a conforming amendment in the form prescribed by the Committee to any Award Agreement relating thereto. Notwithstanding
anything contained in this Plan to the contrary, unless required by law, no action contemplated or permitted by this Article
9 shall adversely affect any rights of Participants or obligations of the Company to Participants with respect to any Incentive
theretofore granted under the Plan without the consent of the affected Participant.

 

Article
10

TERM

 

The Plan shall be effective
from the date that this Plan is adopted by the Board. Unless sooner terminated by action of the Board, the Plan will terminate
on the tenth anniversary of the Effective Date but Incentives granted before that date will continue to be effective in accordance
with their terms and conditions.

 

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Article
11

CAPITAL ADJUSTMENTS

 

In the event that any
dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization,
stock split, reverse stock split, rights offering, reorganization, merger, consolidation, split-up, spin-off, split-off, combination,
subdivision, repurchase, or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to
purchase Common Stock or other securities of the Company, or other similar corporate transaction or event affects the fair value
of an Award, then the Committee shall adjust any or all of the following so that the fair value of the Award immediately after
the transaction or event is equal to the fair value of the Award immediately prior to the transaction or event (i) the number of
shares and type of Common Stock (or the securities or property) which thereafter may be made the subject of Awards, (ii) the number
of shares and type of Common Stock (or other securities or property) subject to outstanding Awards, (iii) the number of shares
and type of Common Stock (or other securities or property) specified as the annual per-participant limitation under Section
5.1 of the Plan, (iv) the Option Price of each outstanding Award, (v) the amount, if any, the Company pays for forfeited shares
of Common Stock in accordance with Section 6.4, and (vi) the number of or SAR Price of shares of Common Stock then subject
to outstanding SARs previously granted and unexercised under the Plan, to the end that the same proportion of the Company’s
issued and outstanding shares of Common Stock in each instance shall remain subject to exercise at the same aggregate SAR Price;
provided however, that the number of shares of Common Stock (or other securities or property) subject to any Award shall always
be a whole number. Notwithstanding the foregoing, no such adjustment shall be made or authorized to the extent that such adjustment
would cause the Plan or any Stock Option to violate Section 422 of the Code or Section 409A of the Code. Such adjustments shall
be made in accordance with the rules of any securities exchange, stock market, or stock quotation system to which the Company is
subject.

 

Upon the occurrence
of any such adjustment, the Company shall provide notice to each affected Participant of its computation of such adjustment which
shall be conclusive and shall be binding upon each such Participant.

 

Article
12

RECAPITALIZATION, MERGER AND CONSOLIDATION

 

12.1         No
Effect on Company’s Authority. The existence of this Plan and Incentives granted hereunder shall not affect in any way
the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations,
or other changes in the Company’s capital structure and its business, or any Change in Control, or any merger or consolidation
of the Company, or any issuance of bonds, debentures, preferred or preference stocks ranking prior to or otherwise affecting the
Common Stock or the rights thereof (or any rights, options, or warrants to purchase same), or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether
of a similar character or otherwise.

 

12.2         Conversion
of Incentives Where Company Survives. Subject to any required action by the stockholders and except as otherwise provided by
Section 12.4 hereof or as may be required to comply with Section 409A of the Code and the regulations or other guidance
issued thereunder, if the Company shall be the surviving or resulting corporation in any merger, consolidation or share exchange,
any Incentive granted hereunder shall pertain to and apply to the securities or rights (including cash, property, or assets) to
which a holder of the number of shares of Common Stock subject to the Incentive would have been entitled.

 

    19

     

    

  

12.3         Exchange
or Cancellation of Incentives Where Company Does Not Survive. Except as otherwise provided by Section 12.4 hereof or
as may be required to comply with Section 409A of the Code and the regulations or other guidance issued thereunder, in the event
the acquirer or the surviving or resulting corporation does not agree to assume the Incentives or in the event of any merger, consolidation
or share exchange pursuant to which the Company is not the surviving or resulting corporation, there shall be substituted for each
share of Common Stock subject to the unexercised portions of outstanding Incentives, that number of shares of each class of stock
or other securities or that amount of cash, property, or assets of the surviving, resulting or consolidated company which were
distributed or distributable to the stockholders of the Company in respect to each share of Common Stock held by them, such outstanding
Incentives to be thereafter exercisable for such stock, securities, cash, or property in accordance with their terms.

 

12.4         Cancellation
of Incentives. Notwithstanding the provisions of Sections 12.2 and 12.3 hereof, and except as may be required to comply
with Section 409A of the Code and the regulations or other guidance issued thereunder, in the event the acquiror or the surviving
or resulting corporation does not agree to assume the Incentives, all Incentives granted hereunder may be canceled by the Company,
in its sole discretion, as of the effective date of any Change in Control, merger, consolidation or share exchange, or any issuance
of bonds, debentures, preferred or preference stocks ranking prior to or otherwise affecting the Common Stock or the rights thereof
(or any rights, options, or warrants to purchase same), or of any proposed sale of all or substantially all of the assets of the
Company, or of any dissolution or liquidation of the Company, by either:

 

(a)          giving
notice to each holder thereof or his personal representative of its intention to cancel those Incentives for which the issuance
of shares of Common Stock involved payment by the Participant for such shares, and permitting the purchase during the thirty (30)
day period next preceding such effective date of any or all of the shares of Common Stock subject to such outstanding Incentives,
including in the Board’s discretion some or all of the shares as to which such Incentives would not otherwise be vested and
exercisable; or

 

(b)          in
the case of Incentives that are either (i) settled only in shares of Common Stock, or (ii) at the election of the Participant,
settled in shares of Common Stock, paying the holder thereof an amount equal to a reasonable estimate of the difference between
the net amount per share payable in such transaction or as a result of such transaction, and the price per share of such Incentive
to be paid by the Participant (hereinafter the “Spread”), multiplied by the number of shares subject
to the Incentive. In cases where the shares constitute, or would after exercise, constitute Restricted Stock, the Company, in its
discretion, may include some or all of those shares in the calculation of the amount payable hereunder. In estimating the Spread,
appropriate adjustments to give effect to the existence of the Incentives shall be made, such as deeming the Incentives to have
been exercised, with the Company receiving the exercise price payable thereunder, and treating the shares receivable upon exercise
of the Incentives as being outstanding in determining the net amount per share. In cases where the proposed transaction consists
of the acquisition of assets of the Company, the net amount per share shall be calculated on the basis of the net amount receivable
with respect to shares of Common Stock upon a distribution and liquidation by the Company after giving effect to expenses and charges,
including but not limited to taxes, payable by the Company before such liquidation could be completed.

 

(c)          An
Award that by its terms would be fully vested or exercisable upon a Change in Control will be considered vested or exercisable
for purposes of Section 12.4(a) hereof.

 

    20

     

    

  

Article
13

LIQUIDATION OR DISSOLUTION

 

Subject to Section
12.4 hereof, in case the Company shall, at any time while any Incentive under this Plan shall be in force and remain unexpired,
(i) sell all or substantially all of its property, or (ii) dissolve, liquidate, or wind up its affairs, then each Participant shall
be entitled to receive, in lieu of each share of Common Stock of the Company which such Participant would have been entitled to
receive under the Incentive, the same kind and amount of any securities or assets as may be issuable, distributable, or payable
upon any such sale, dissolution, liquidation, or winding up with respect to each share of Common Stock of the Company. If the Company
shall, at any time prior to the expiration of any Incentive, make any partial distribution of its assets, in the nature of a partial
liquidation, whether payable in cash or in kind (but excluding the distribution of a cash dividend payable out of earned surplus
and designated as such) and an adjustment is determined by the Committee to be appropriate to prevent the dilution of the benefits
or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable,
make such adjustment in accordance with the provisions of Article 11 hereof.

 

Article
14

INCENTIVES IN SUBSTITUTION FOR

INCENTIVES GRANTED BY OTHER ENTITIES

 

Incentives may be granted
under the Plan from time to time in substitution for similar instruments held by employees, independent contractors or directors
of a corporation, partnership, or limited liability company who become or are about to become Employees, Contractors or Outside
Directors of the Company or any Subsidiary as a result of a merger or consolidation of the employing corporation with the Company,
the acquisition by the Company of equity of the employing entity, or any other similar transaction pursuant to which the Company
becomes the successor employer. The terms and conditions of the substitute Incentives so granted may vary from the terms and conditions
set forth in this Plan to such extent as the Committee at the time of grant may deem appropriate to conform, in whole or in part,
to the provisions of the incentives in substitution for which they are granted.

 

Article
15

MISCELLANEOUS PROVISIONS

 

15.1         Investment
Intent. The Company may require that there be presented to and filed with it by any Participant under the Plan, such evidence
as it may deem necessary to establish that the Incentives granted or the shares of Common Stock to be purchased or transferred
are being acquired for investment and not with a view to their distribution.

 

15.2         No
Right to Continued Employment. Neither the Plan nor any Incentive granted under the Plan shall confer upon any Participant
any right with respect to continuance of employment by the Company or any Subsidiary.

 

    21

     

    

 

15.3         Indemnification
of Board and Committee. No member of the Board or the Committee, nor any officer or Employee of the Company acting on behalf
of the Board or the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good
faith with respect to the Plan, and all members of the Board and the Committee, each officer of the Company, and each Employee
of the Company acting on behalf of the Board or the Committee shall, to the extent permitted by law, be fully indemnified and protected
by the Company in respect of any such action, determination, or interpretation to the fullest extent provided by law. Except to
the extent required by any unwaiveable requirement under applicable law, no member of the Board or the Committee (and no Subsidiary
of the Company) shall have any duties or liabilities, including without limitation any fiduciary duties, to any Participant (or
any Person claiming by and through any Participant) as a result of this Plan, any Award Agreement or any Claim arising hereunder
and, to the fullest extent permitted under applicable law, each Participant (as consideration for receiving and accepting an Award
Agreement) irrevocably waives and releases any right or opportunity such Participant might have to assert (or participate or cooperate
in) any Claim against any member of the Board or the Committee and any Subsidiary of the Company arising out of this Plan.

 

15.4         Effect
of the Plan. Neither the adoption of this Plan nor any action of the Board or the Committee shall be deemed to give any person
any right to be granted an Award or any other rights except as may be evidenced by an Award Agreement, or any amendment thereto,
duly authorized by the Committee and executed on behalf of the Company, and then only to the extent and upon the terms and conditions
expressly set forth therein.

 

15.5         Compliance
with Other Laws and Regulations. Notwithstanding anything contained herein to the contrary, the Company shall not be required
to sell or issue shares of Common Stock under any Incentive if the issuance thereof would constitute a violation by the Participant
or the Company of any provisions of any law or regulation of any governmental authority or any national securities exchange or
inter-dealer quotation system or other forum in which shares of Common Stock are quoted or traded (including without limitation
Section 16 of the Exchange Act and Section 162(m) of the Code); and, as a condition of any sale or issuance of shares of Common
Stock under an Incentive, the Committee may require such agreements or undertakings, if any, as the Committee may deem necessary
or advisable to assure compliance with any such law or regulation. The Plan, the grant and exercise of Incentives hereunder, and
the obligation of the Company to sell and deliver shares of Common Stock, shall be subject to all applicable federal and state
laws, rules and regulations and to such approvals by any government or regulatory agency as may be required.

 

15.6         Foreign
Participation. To assure the viability of Awards granted to Participants employed in foreign countries, the Committee may provide
for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy or custom.
Moreover, the Committee may approve such supplements to, or amendments, restatements or alternative versions of, this Plan as it
determines is necessary or appropriate for such purposes. Any such amendment, restatement or alternative versions that the Committee
approves for purposes of using this Plan in a foreign country will not affect the terms of this Plan for any other country.

 

15.7         Tax
Requirements. The Company or, if applicable, any Subsidiary (for purposes of this Section 15.7, the term “Company”
shall be deemed to include any applicable Subsidiary), shall have the right to deduct from all amounts paid in cash or other form
in connection with the Plan, any Federal, state, local, or other taxes required by law to be withheld in connection with an Award
granted under this Plan. The Company may, in its sole discretion, also require the Participant receiving shares of Common Stock
issued under the Plan to pay the Company the amount of any taxes that the Company is required to withhold in connection with the
Participant’s income arising with respect to the Award. Such payments shall be required to be made when requested by the
Company and may be required to be made prior to the delivery of any certificate representing shares of Common Stock. Such payment
may be made (i) by the delivery of cash to the Company in an amount that equals or exceeds (to avoid the issuance of fractional
shares under (iii) below) the required tax withholding obligations of the Company; (ii) if the Company, in its sole discretion,
so consents in writing, the actual delivery by the exercising Participant to the Company of shares of Common Stock, which shares
so delivered have an aggregate Fair Market Value that equals or exceeds (to avoid the issuance of fractional shares under (iii)
below) the required tax withholding payment; (iii) if the Company, in its sole discretion, so consents in writing, the Company’s
withholding of a number of shares to be delivered upon the exercise of the Stock Option, which shares so withheld have an aggregate
Fair Market Value that equals (but does not exceed) the required tax withholding payment; or (iv) any combination of (i), (ii),
or (iii). The Company may, in its sole discretion, withhold any such taxes from any other cash remuneration otherwise paid by the
Company to the Participant. The Committee may in the Award Agreement impose any additional tax requirements or provisions that
the Committee deems necessary or desirable.

 

    22

     

    

  

15.8         Assignability.
Incentive Stock Options may not be transferred, assigned, pledged, hypothecated or otherwise conveyed or encumbered other than
by will or the laws of descent and distribution and may be exercised during the lifetime of the Participant only by the Participant
or the Participant’s legally authorized representative, and each Award Agreement in respect of an Incentive Stock Option
shall so provide. The designation by a Participant of a beneficiary will not constitute a transfer of the Stock Option. The Committee
may waive or modify any limitation contained in the preceding sentences of this Section 15.8 that is not required for compliance
with Section 422 of the Code.

 

Except as otherwise
provided herein, Awards may not be transferred, assigned, pledged, hypothecated or otherwise conveyed or encumbered other than
by will or the laws of descent and distribution. Notwithstanding the foregoing, the Committee may, in its discretion, authorize
all or a portion of a Nonqualified Stock Option or SAR to be granted to a Participant on terms which permit transfer by such Participant
to (i) the spouse (or former spouse), children or grandchildren of the Participant (“Immediate Family Members”),
(ii) a trust or trusts for the exclusive benefit of such Immediate Family Members, (iii) a partnership in which the only partners
are (1) such Immediate Family Members and/or (2) entities which are controlled by the Participant and/or Immediate Family Members,
(iv) an entity exempt from federal income tax pursuant to Section 501(c)(3) of the Code or any successor provision, or (v) a split
interest trust or pooled income fund described in Section 2522(c)(2) of the Code or any successor provision, provided that
(x) there shall be no consideration for any such transfer, (y) the Award Agreement pursuant to which such Nonqualified Stock Option
or SAR is granted must be approved by the Committee and must expressly provide for transferability in a manner consistent with
this Section, and (z) subsequent transfers of transferred Nonqualified Stock Options or SARs shall be prohibited except those by
will or the laws of descent and distribution.

 

Following any transfer,
any such Nonqualified Stock Option and SAR shall continue to be subject to the same terms and conditions as were applicable immediately
prior to transfer, provided that for purposes of Articles 8, 9, 11, 13 and 15 hereof the term “Participant”
shall be deemed to include the transferee. The events of Termination of Service shall continue to be applied with respect to the
original Participant, following which the Nonqualified Stock Options and SARs shall be exercisable or convertible by the transferee
only to the extent and for the periods specified in the Award Agreement. The Committee and the Company shall have no obligation
to inform any transferee of a Nonqualified Stock Option or SAR of any expiration, termination, lapse or acceleration of such Stock
Option or SAR. The Company shall have no obligation to register with any federal or state securities commission or agency any Common
Stock issuable or issued under a Nonqualified Stock Option or SAR that has been transferred by a Participant under this Section
15.8.

 

15.9         Use
of Proceeds.  Proceeds from the sale of shares of Common Stock pursuant to Incentives granted under this Plan shall constitute
general funds of the Company.

 

15.10         Legend.
Each certificate representing shares of Restricted Stock issued to a Participant shall bear the following legend, or a similar
legend deemed by the Company to constitute an appropriate notice of the provisions hereof (any such certificate not having such
legend shall be surrendered upon demand by the Company and so endorsed):

 

    23

     

    

  

On the face of the certificate:

 

“Transfer of this stock
is restricted in accordance with conditions printed on the reverse of this certificate.”

 

On the reverse:

 

“The shares of stock evidenced
by this certificate are subject to and transferable only in accordance with that certain PhaseRx, Inc. 2016 Long-Term Incentive
Plan, a copy of which is on file at the principal office of the Company in Seattle, Washington. No transfer or pledge of the shares
evidenced hereby may be made except in accordance with and subject to the provisions of said Plan. By acceptance of this certificate,
any holder, transferee or pledgee hereof agrees to be bound by all of the provisions of said Plan.”

 

The following legend
shall be inserted on a certificate evidencing Common Stock issued under the Plan if the shares were not issued in a transaction
registered under the applicable federal and state securities laws:

 

“Shares of stock represented
by this certificate have been acquired by the holder for investment and not for resale, transfer or distribution, have been issued
pursuant to exemptions from the registration requirements of applicable state and federal securities laws, and may not be offered
for sale, sold or transferred other than pursuant to effective registration under such laws, or in transactions otherwise in compliance
with such laws, and upon evidence satisfactory to the Company of compliance with such laws, as to which the Company may rely upon
an opinion of counsel satisfactory to the Company.”

 

15.11         Governing
Law. The Plan shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware (excluding
any conflict of laws, rule or principle of Delaware law that might refer the governance, construction, or interpretation of this
Agreement to the laws of another state). A Participant’s sole remedy for any Claim shall
be against the Company, and no Participant shall have any claim or right of any nature against any Subsidiary of the Company or
any shareholder or existing or former director, officer or Employee of the Company or any Subsidiary of the Company. Each Award
Agreement shall require the Participant to release and covenant not to sue any Person other than the Company over any Claims. The
individuals and entities described above in this Section 15.11 (other than the Company) shall be third-party beneficiaries
of this Plan for purposes of enforcing the terms of this Section 15.11.

 

A copy of this Plan
shall be kept on file in the principal office of the Company in Seattle, Washington.

 

***************

 

    24

     

    

 

IN WITNESS WHEREOF,
the Company has caused this instrument to be executed as of _________________________, 2016, by its Chief Executive Officer and
Secretary pursuant to prior action taken by the Board.

 

	 	PHASERX, INC.
	 	 	 
	 	By:	/s/ Robert Overell
	 	Name:	 
	 	Title:	Chief Executive Officer

 

	Attest:	 
	 	 	 
	By:	 	 
	Name:	 	 
	Title:	Secretary	 

 

    25Exhibit 10.18

 

NONQUALIFIED STOCK
OPTION AGREEMENT

 

PHASERX, INC.

2016 LONG-TERM
INCENTIVE PLAN

 

1.          Grant
of Option. Pursuant to the PhaseRx, Inc. 2016 Long-Term Incentive Plan (the “Plan”) for key Employees,
key Contractors, and Outside Directors of PhaseRx, Inc., a Delaware corporation (the “Company”), the
Company grants to

 

_________________________

(the “Participant”),

 

an option (the “Option”
or “Stock Option”) to purchase a total of ___________________ (__________) full shares of Common Stock
of the Company (the “Optioned Shares”) at an “Option Price” equal to $________
per share (being the Fair Market Value per share of the Common Stock on the Date of Grant).

 

The “Date
of Grant” of this Stock Option is _________________, 20__. The “Option Period” shall commence
on the Date of Grant and shall expire on the date immediately preceding the tenth (10th) anniversary of the Date of
Grant, unless terminated earlier in accordance with Section 4 below. The Stock Option is a Nonqualified Stock Option. This
Stock Option is intended to comply with the provisions governing nonqualified stock options under the final Treasury Regulations
issued on April 17, 2007, in order to exempt this Stock Option from application of Section 409A of the Code.

 

2.          Subject
to Plan. The Stock Option and its exercise are subject to the terms and conditions of the Plan, and the terms of the Plan shall
control to the extent not otherwise inconsistent with the provisions of this Nonqualified Stock Option Agreement (the “Agreement”).
The capitalized terms used herein that are defined in the Plan shall have the same meanings assigned to them in the Plan. The Stock
Option is subject to any rules promulgated pursuant to the Plan by the Board or the Committee and communicated to the Participant
in writing. In addition, if the Plan previously has not been approved by the Company’s stockholders, the Stock Option is
granted subject to such stockholder approval.

 

3.          Vesting;
Time of Exercise. Except as specifically provided in this Agreement and subject to certain restrictions and conditions
set forth in the Plan, the Optioned Shares shall be vested and the Stock Option shall be exercisable as follows:

 

		a.	One forty-eighth (1/48) of the total Optioned Shares shall vest on the one-month anniversary of
the Date of Grant, provided the Participant is employed by (or, if the Participant is a Contractor or an Outside Director, is providing
services to) the Company or a Subsidiary on that date.

 

		b.	An additional one forty-eighth (1/48) of the total Optioned Shares shall vest on each monthly anniversary
of the Date of Grant thereafter, provided the Participant is employed by (or, if the Participant is a Contractor or an Outside
Director, is providing services to) the Company or a Subsidiary on that date.

 

In the event that (i)
a Change in Control occurs, and (ii) this Agreement is not assumed by the surviving corporation or its parent, or the surviving
corporation or its parent does not substitute its own option for this Stock Option, then immediately prior to the effective date
of such Change in Control, the total Optioned Shares not previously vested shall thereupon immediately become vested and this Stock
Option shall become fully exercisable, if not previously so exercisable.

 

    	 	 	 

     

    

 

4.          Term;
Forfeiture.

 

a.           Except
as otherwise provided in this Agreement, to the extent the unexercised portion of the Stock Option relates to Optioned Shares which
are not vested on the date of the Participant’s Termination of Service, the Stock Option will be terminated on that date.
The unexercised portion of the Stock Option that relates to Optioned Shares which are vested will terminate at the first of the
following to occur:

 

i.            5
p.m. on the date the Option Period terminates;

 

ii.         5
p.m. on the date which is twelve (12) months following the date of the Participant’s Termination of Service due to death,
Retirement or Total and Permanent Disability;

 

iii.         immediately
upon the Participant’s Termination of Service by the Company for Cause (as defined herein);

 

iv.         5
p.m. on the date which is three (3) months following the date of the Participant’s Termination of Service for any reason
not otherwise specified in this Section 4.a.; and

 

v.           5
p.m. on the date the Company causes any portion of the Stock Option to be forfeited pursuant to Section 7 hereof.

 

b.           For
purposes of this Agreement, “Cause” means the Participant’s Termination of Service by the Company
because of: (i) the Participant’s conviction of, or plea of nolo contendere to, a felony or crime involving moral turpitude;
(ii) the Participant’s personal dishonesty, incompetence, willful misconduct, willful violation of any law, rule or regulation
(other than minor traffic violations or similar offenses) or breach of fiduciary duty which involves personal profit; (iii) the
Participant’s commission of material mismanagement in the conduct of the Participant’s duties as assigned to him or
her by the Board or the Participant’s supervising officer or officers of the Company or any Subsidiary; (iv) the Participant’s
willful failure to execute or comply with the policy of the Company or any of its Subsidiaries or the Participant’s stated
duties as established by the Board or the Participant’s supervising officer or officers of the Company or any Subsidiary
or the Participant’s intentional failure to perform the Participant’s stated duties; or (v) substance abuse or addiction
on the part of the Participant. Notwithstanding the foregoing, in the case of any Participant who has entered into an employment
agreement with the Company or any Subsidiary that contains the definition of “cause” (or any similar definition), then
during the term of such employment agreement the definition contained in such employment agreement shall be the applicable definition
of “cause” under the Agreement as to such Participant if such employment agreement expressly so provides.

 

5.          Who
May Exercise. Subject to the terms and conditions set forth in Sections 3 and 4 above, during the lifetime of the Participant,
the Stock Option may be exercised only by the Participant, or by the Participant’s guardian or personal or legal representative.
If the Participant’s Termination of Service is due to his death prior to the dates specified in Section 4.a. hereof,
and the Participant has not exercised the Stock Option as to the maximum number of vested Optioned Shares as set forth in Section 3
hereof as of the date of death, the following persons may exercise the exercisable portion of the Stock Option on behalf of the
Participant at any time prior to the earliest of the dates specified in Section 4.a. hereof: the personal representative
of his estate, or the person who acquired the right to exercise the Stock Option by bequest or inheritance or by reason of the
death of the Participant; provided that the Stock Option shall remain subject to the other terms of this Agreement, the Plan, and
Applicable Laws, rules, and regulations.

 

    	 	2	 

     

    

 

6.          No
Fractional Shares. The Stock Option may be exercised only with respect to full shares, and no fractional share of stock shall
be issued.

 

7.          Manner
of Exercise. Subject to such administrative regulations as the Committee may from time to time adopt, the Stock Option may
be exercised by the delivery of written notice to the Committee (the “Exercise Notice”) setting forth
the number of shares of Common Stock with respect to which the Stock Option is to be exercised, the date of exercise thereof (the
“Exercise Date”). On the Exercise Date, the Participant shall deliver to the Company consideration with
a value equal to the total Option Price of the shares to be purchased, payable as follows: (a) cash, check, bank draft, or money
order payable to the order of the Company, (b) if the Company, in its sole discretion, so consents in writing, Common Stock (including
Restricted Stock) owned by the Participant on the Exercise Date, valued at its Fair Market Value on the Exercise Date, (c) if the
Company, in its sole discretion, so consents in writing, by delivery (including by FAX) to the Company or its designated agent
of an executed irrevocable option exercise form together with irrevocable instructions from the Participant to a broker or dealer,
reasonably acceptable to the Company, to sell certain of the shares of Common Stock purchased upon exercise of the Stock Option
or to pledge such shares as collateral for a loan and promptly deliver to the Company the amount of sale or loan proceeds necessary
to pay such purchase price, and/or (d) in any other form of valid consideration that is acceptable to the Committee in its sole
discretion. In the event that shares of Restricted Stock are tendered as consideration for the exercise of a Stock Option, a number
of shares of Common Stock issued upon the exercise of the Stock Option equal to the number of shares of Restricted Stock used as
consideration therefor shall be subject to the same restrictions and provisions as the Restricted Stock so tendered.

 

Upon payment of all
amounts due from the Participant, the Company shall cause the Common Stock then being purchased to be registered in the Participant’s
name (or the person exercising the Participant’s Stock Option in the event of his death), but shall not issue certificates
for such Common Stock unless the Participant or such other person requests delivery of certificates for such Common Stock in accordance
with Section 8.3(c) of the Plan. The obligation of the Company to register shares of Common Stock shall, however, be subject to
the condition that, if at any time the Company shall determine in its discretion that the listing, registration, or qualification
of the Stock Option or the Common Stock upon any securities exchange or inter-dealer quotation system or under any state or federal
law, or the consent or approval of any governmental regulatory body, is necessary as a condition of, or in connection with, the
Stock Option or the issuance or purchase of shares of Common Stock thereunder, then the Stock Option may not be exercised in whole
or in part unless such listing, registration, qualification, consent, or approval shall have been effected or obtained free of
any conditions not reasonably acceptable to the Committee.

 

If the Participant
fails to pay for any of the Optioned Shares specified in such notice within three (3) business days of the date in the Exercise
Notice or fails to accept delivery thereof, then the Exercise Notice shall be null and void and the Company will have no obligation
to deliver any shares of Common Stock to the Participant in connection with such Exercise Notice.

 

8.          Nonassignability.
The Stock Option is not assignable or transferable by the Participant except by will or by the laws of descent and distribution.

 

    	 	3	 

     

    

 

9.          Rights
as Stockholder. The Participant will have no rights as a stockholder with respect to any of the Optioned Shares until the registration
of such shares in the Participant’s name. The Optioned Shares shall be subject to the terms and conditions of this Agreement.
Except as otherwise provided in Section 10 hereof, no adjustment shall be made for dividends or other rights for which
the record date is prior to the issuance of such certificate or certificates. The Participant, by his or her execution of this
Agreement, agrees to execute any documents requested by the Company in connection with the issuance of the shares of Common Stock.

 

10.         Adjustment
of Number of Optioned Shares and Related Matters. The number of shares of Common Stock covered by the Stock Option, and the
Option Prices thereof, shall be subject to adjustment in accordance with Articles 11 - 13 of the Plan.

 

11.         Nonqualified
Stock Option. The Stock Option shall not be treated as an Incentive Stock Option.

 

12.         Voting.
The Participant, as record holder of some or all of the Optioned Shares following exercise of this Stock Option, has the exclusive
right to vote, or consent with respect to, such Optioned Shares until such time as the Optioned Shares are transferred in accordance
with this Agreement; provided, however, that this Section shall not create any voting right where the holders of
such Optioned Shares otherwise have no such right.

 

13.         Specific
Performance. The parties acknowledge that remedies at law will be inadequate remedies for breach of this Agreement and consequently
agree that this Agreement shall be enforceable by specific performance. The remedy of specific performance shall be cumulative
of all of the rights and remedies at law or in equity of the parties under this Agreement.

 

14.         Participant’s
Representations. Notwithstanding any of the provisions hereof, the Participant hereby agrees that he will not exercise the
Stock Option granted hereby, and that the Company will not be obligated to issue any shares to the Participant hereunder, if the
exercise thereof or the issuance of such shares shall constitute a violation by the Participant or the Company of any provision
of any law or regulation of any governmental authority. Any determination in this connection by the Company shall be final, binding,
and conclusive. The obligations of the Company and the rights of the Participant are subject to all Applicable Laws, rules, and
regulations. The Participant agrees and covenants not to sue any Person other than the Company over any Claims.

 

15.         Investment
Representation. Unless the shares of Common Stock are issued to the Participant in a transaction registered under applicable
federal and state securities laws, by his execution hereof, the Participant represents and warrants to the Company that all Common
Stock which may be purchased hereunder will be acquired by the Participant for investment purposes for his own account and not
with any intent for resale or distribution in violation of federal or state securities laws. Unless the Common Stock is issued
to him in a transaction registered under the applicable federal and state securities laws, all certificates issued with respect
to the Common Stock shall bear an appropriate restrictive investment legend and shall be held indefinitely, unless they are subsequently
registered under the applicable federal and state securities laws or the Participant obtains an opinion of counsel, in form and
substance satisfactory to the Company and its counsel, that such registration is not required.

 

16.         Participant’s
Acknowledgments. The Participant acknowledges that a copy of the Plan has been made available for his or her review by the
Company, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Stock Option
subject to all the terms and provisions thereof. The Participant hereby agrees to accept as binding, conclusive, and final all
decisions or interpretations of the Committee or the Board, as appropriate, upon any questions arising under the Plan or this Agreement.

 

    	 	4	 

     

    

 

17.         Law
Governing. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware
(excluding any conflict of laws rule or principle of Delaware law that might refer the governance, construction, or interpretation
of this Agreement to the laws of another state).

 

18.         No
Right to Continue Service or Employment. Nothing herein shall be construed to confer upon the Participant the right to continue
in the employ or to provide services to the Company or any Subsidiary, whether as an Employee or as a Contractor or as an Outside
Director, or interfere with or restrict in any way the right of the Company or any Subsidiary to discharge the Participant as an
Employee, Contractor or Outside Director at any time.

 

19.         Legal
Construction. In the event that any one or more of the terms, provisions, or agreements that are contained in this Agreement
shall be held by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the
invalid, illegal, or unenforceable term, provision, or agreement shall not affect any other term, provision, or agreement that
is contained in this Agreement and this Agreement shall be construed in all respects as if the invalid, illegal, or unenforceable
term, provision, or agreement had never been contained herein.

 

20.         Covenants
and Agreements as Independent Agreements. Each of the covenants and agreements that is set forth in this Agreement shall be
construed as a covenant and agreement independent of any other provision of this Agreement. The existence of any claim or cause
of action of the Participant against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense
to the enforcement by the Company of the covenants and agreements that are set forth in this Agreement.

 

21.         Entire
Agreement. This Agreement together with the Plan supersede any and all other prior understandings and agreements, either oral
or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between
the parties with respect to the said subject matter. All prior negotiations and agreements between the parties with respect to
the subject matter hereof are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are
not embodied in this Agreement or the Plan and that any agreement, statement or promise that is not contained in this Agreement
or the Plan shall not be valid or binding or of any force or effect.

 

22.         Parties
Bound. The terms, provisions, and agreements that are contained in this Agreement shall apply to, be binding upon, and inure
to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, and permitted successors
and assigns, subject to the limitation on assignment expressly set forth herein.

 

23.         Modification.
No change or modification of this Agreement shall be valid or binding upon the parties unless the change or modification is in
writing and signed by the parties; provided, however, that the Company may change or modify this Agreement without the Participant’s
consent or signature if the Company determines, in its sole discretion, that such change or modification is necessary for purposes
of compliance with or exemption from the requirements of Section 409A of the Code or any regulations or other guidance issued thereunder.
Notwithstanding the preceding sentence, the Company may amend the Plan to the extent permitted by the Plan.

 

24.         Headings.
The headings that are used in this Agreement are used for reference and convenience purposes only and do not constitute substantive
matters to be considered in construing the terms and provisions of this Agreement.

 

    	 	5	 

     

    

 

25.         Gender
and Number. Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in
the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise.

 

26.         Notice.
Any notice required or permitted to be delivered hereunder shall be deemed to be delivered only when actually received by the Company
or by the Participant, as the case may be, at the addresses set forth below, or at such other addresses as they have theretofore
specified by written notice delivered in accordance herewith:

 

a.           Notice
to the Company shall be addressed and delivered as follows:

 

PhaseRx, Inc.

410 W. Harrison Street,
Suite 300

Seattle, WA 98119

Attn:__________________________

Facsimile:______________________

 

b.           Notice
to the Participant shall be addressed and delivered as set forth on the signature page.

 

27.         Tax
Requirements. The Participant is hereby advised to consult immediately with his or her own tax advisor regarding the tax consequences
of this Agreement. The Company or, if applicable, any Subsidiary (for purposes of this Section 27, the term “Company”
shall be deemed to include any applicable Subsidiary), shall have the right to deduct from all amounts paid in cash or other form
in connection with the Plan, any federal, state, local, or other taxes required by law to be withheld in connection with this Award.
The Company may, in its sole discretion, also require the Participant receiving shares of Common Stock issued under the Plan to
pay the Company the amount of any taxes that the Company is required to withhold in connection with the Participant’s income
arising with respect to this Award. Such payments shall be required to be made when requested by the Company and may be required
to be made prior to the delivery of any certificate representing shares of Common Stock. Such payment may be made by (i) the delivery
of cash to the Company in an amount that equals or exceeds (to avoid the issuance of fractional shares under (iii) below) the required
tax withholding obligations of the Company; (ii) if the Company, in its sole discretion, so consents in writing, the actual delivery
by the exercising Participant to the Company of shares of Common Stock, which shares so delivered have an aggregate Fair Market
Value that equals or exceeds (to avoid the issuance of fractional shares under (iii) below) the required tax withholding payment;
(iii) if the Company, in its sole discretion, so consents in writing, the Company’s withholding of a number of shares to
be delivered upon the exercise of the Stock Option, which shares so withheld have an aggregate Fair Market Value that equals (but
does not exceed) the required tax withholding payment; or (iv) any combination of (i), (ii), or (iii). The Company may, in its
sole discretion, withhold any such taxes from any other cash remuneration otherwise paid by the Company to the Participant.

 

28.         Clawback.
The Participant acknowledges and agrees that any compensation paid to the Participant by the Company, pursuant to this Agreement
or otherwise, shall be subject to recovery by the Company in accordance with the Company’s clawback policy applicable to
employees of the Company, if any, as amended from time to time.

 

* * * * * * * *

 

[Remainder of Page Intentionally Left
Blank

Signature Page Follows.]

 

    	 	6	 

     

    

 

IN WITNESS WHEREOF,
the Company has caused this Agreement to be executed by its duly authorized officer, and the Participant, to evidence his consent
and approval of all the terms hereof, has duly executed this Agreement, as of the date specified in Section 1 hereof.

 

	 	PHASERX:
	 	 
	 	 
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	PARTICIPANT:
	 	 
	 	 
	 	Signature
	 	 
	 	Name:	 
	 	Address:	 
	 	 	 

 

    	 	7

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