Document:

ex_116581.htm

Exhibit 10.1

 

Employment Agreement

 

This Employment Agreement (“Agreement”) is made in the State of Washington by and between Lori A. Woods (“Executive”) and IsoRay, Inc. a Minnesota corporation (the “Company”).

 

WHEREAS, the Company is engaged in the business of providing innovative solutions for the treatment of malignancies using medical isotopes (the “Business”); and

 

WHEREAS, the parties desire that the Company retain Executive under the terms and conditions set forth in this Agreement; and

 

WHEREAS, the parties desire to express their mutual agreements, covenants, promises, and understandings in a written agreement;

 

NOW THEREFORE, in consideration of the premises and the agreements, promises, covenants, and provisions contained in this Agreement, the parties agree and declare as follows:

 

1.           Employment. The Company hereby employs Executive and Executive accepts employment under the terms and conditions of this Agreement.

 

2.           Position and Duties.

 

(a)     Executive will faithfully and diligently serve the Company to the best of her ability in her positions as Interim Chief Executive Officer and as a member of the Board of Directors (the “Board”) and in the performance of such other duties and responsibilities as the Company may assign to her.

 

(b)     Executive will devote her full professional time, attention, and energies to the performance of her duties for the Company, and will not, during her employment under this Agreement, engage in any other business activity, whether or not for profit, except for passive investments in firms or businesses that do not compete with the Company, without the advance written and signed consent of the Company. Notwithstanding this Section 2(b), Executive will be permitted to serve as a director of not for profit and for profit businesses that do not compete with the Company.

 

(c)     Executive warrants that during the term of her employment under this Agreement, she will not do any act or engage in any conduct, or permit, condone, or acquiesce in any act or conduct of other persons, that she knew for should have known could cause the Company to be in violation of any law or statute, and Executive agrees to indemnify and hold the Company harmless against any and all liabilities, claims, damages, fees, losses, and expenses of any kind or nature whatsoever attributable directly or indirectly to a violation of this warranty.

 

(d)     Executive agrees to comply with the policies and procedures of the Company as may be adopted and changed from time to time, including without limitation, those described in the Company’s employee handbook, Code of Ethics for Chief Executive Officer & Senior Financial Officers, and Code of Conduct and Ethics. If this Agreement conflicts with such policies or procedures, this Agreement will control.

 

 

 

 

(e)     As an officer of the Company, Executive owes a duty of care and loyalty to the Company as well as a duty to perform such duties in a manner that is in the best interests of the Company.

 

3.           Compensation and Benefits. For and in consideration of all services rendered under this Agreement, the Company will compensate Executive as follows:

 

(a)     Salary. During the term of Executive’s employment under this Agreement, Executive will be compensated on the basis of an annual salary of $315,612.15 effective June 4, 2018, payable in accord with the Company’s standard payroll practices.

 

(b)     Bonus. In addition to Executive’s base salary (Section 3(a)), throughout her employment, Executive will be eligible for a quarterly and an annual discretionary bonus as periodically established by the Board (the “Bonus”), based upon metrics that will be established by the Board in its sole discretion paid at the time periods determined by the Board.

 

(c)     Stock Options. Executive shall be eligible to participate in and receive stock options as defined by the relevant plan. Executive shall be issued 250,000 stock options as of the Effective Date (as defined below). The options granted will have an exercise price equal to the fair market value on the date of grant as defined under the 2017 Equity Incentive Plan. The options will vest as follows: 25% six months after the Effective Date, 25% one year after the Effective Date, 25% two years after the Effective Date, and 25% three years after the Effective Date.

 

(d)     Expenses. The Company will reimburse Executive for all reasonable and necessary expenses that Executive incurs in carrying out her duties under this Agreement in accordance with the Company reimbursement policies as in effect from time to time, provided that Executive presents to the Company from time to time an itemized account of such expenses in such form as the Company may require.

 

(e)     Participation in Benefit Plans. As of the Effective Date, Executive shall be included in any and all plans of the Company providing general benefits for the Company’s employees, including, without limitation, medical, dental, vision, disability, life insurance, 401(k) plan, vacation, and holidays.

 

4.           Term/Termination Of Employment.

 

(a)     Initial Term. Executive’s employment under this Agreement commenced on June 4, 2018, but this Agreement will be effective as of June 13, 2018 (“Effective Date”), and will continue for a period of one (1) year (the “Initial Term”). Thereafter, this Agreement shall renew only upon thirty (30) days written notice as provided in Section 4(b).

 

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(b)     Renewal. Upon at least thirty (30) days written notice prior to the end of the Initial Term, and subject to the provisions for termination set forth below, the term of Executive’s employment under this Agreement will extend thereafter for a period of one year (the “Renewal Term”). Upon the expiration of such subsequent term and any term renewed hereunder, and subject to the provisions for termination set forth below, the term of Executive’s employment under this Agreement will require thirty (30) days written notice of renewal for each successive Renewal Term of one-year.

 

(c)     Employment At Will. Notwithstanding Sections 4((a) and 4(b), Executive understands and agrees that this Agreement does not create an obligation on the part of the Company or any other person or entity to continue Executive’s employment. Executive acknowledges and agrees that she is an at-will employee of the Company, which means that either party to this Agreement may terminate Executive’s employment with or without cause, for any or no reason and at any time. Executive’s employment shall also be deemed terminated upon Executive’s death or becoming disabled. Executive shall not be entitled to any salary, bonus, benefits or other compensation with respect to any period subsequent to the termination of her employment.

 

(d)     Set-Off. If Executive has any outstanding obligations to the Company upon the termination of Executive’s employment for any reason, Executive hereby authorizes the Company to deduct any amounts owed to the Company from Executive’s final paycheck and/or any amounts that would otherwise be due to Executive. No other set-off shall be permitted under this Agreement.

 

5.           Confidential Commercial Information.

 

(a)     Executive acknowledges that she will be entrusted with price lists, customer lists, customer contact information, information about customer transactions, development and research work, marketing programs, plans, and proposals, and data contained within internally employed software, data bases, and computer operations developed by or for the Company (“Confidential Commercial Information”); provided, however, that for the purposes of this Agreement Confidential Commercial Information does not include information (i) that was publicly available prior to Executive’s disclosure or use thereof; or (ii) that Executive lawfully received from some person who was not under any obligation of confidentiality with respect thereto; (iii) that becomes publicly available other than as the result of any breach of this Agreement by Executive; or (iv) that is generally known to or readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use. Executive acknowledges that Confidential Commercial Information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and that the Company has made efforts that are reasonable under the circumstances to maintain the secrecy of Confidential Commercial Information.

 

(b)     Executive acknowledges that she has been instructed by the Company to, and agrees that she will, maintain the Company’s Confidential Commercial Information in a confidential manner. During her employment, Executive will not, directly or indirectly, disclose any Confidential Commercial Information to any person or entity not authorized by the Company to receive or use such Confidential Commercial Information. After the termination of Executive’s employment, for whatever reason and by whatever party, Executive will not, directly or indirectly, use or disclose to any person or entity any Confidential Commercial Information without the prior written authorization of the Company.

 

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(c)     All documents and other tangible property relating in any way to the business of the Company that Executive develops or that come into her possession during her employment are the property of the Company, and Executive will return all such documents and tangible property to the Company upon the termination of her employment, or at such earlier time as the Company may request.

 

(d)     Executive acknowledges that all of the commercially available software that the Company uses on its computer system that was not developed specially by or for the Company is either owned or licensed for use by the Company, and that the use of such software is governed strictly by the explicit terms and conditions of licensing agreements between the Company and the publisher of the software, and Executive agrees to adhere to those terms and conditions. Executive will not copy, duplicate, download, transfer, or otherwise make personal use of any software on the Company’s computer system without the Company’s express, written consent.

 

(e)     Executive represents that to the best of her knowledge, the performance of all the terms of this Agreement and of her duties as an employee of the Company will not breach any agreement to keep in confidence any proprietary information that she acquired in confidence prior to her employment under this Agreement, and that Executive has not entered into, and agrees that she will not enter into, any agreement either written or oral in conflict with this Agreement. Executive represents that to the best of her knowledge, Executive has not brought and will not bring with her to the Company or use in the performance of her responsibilities at the Company any materials or documents of a former employer that are not generally available to the public, unless Executive has obtained express written authorization from the former employer for their possession and use. Executive represents that she has delivered to the Company a true and correct copy of any employment, proprietary information, confidentiality, or non-competition agreement to which she is or was a party with any former employers, and that is or may be in effect as of the date hereof. Executive has been instructed not to breach any obligation of confidentiality that she may have to any former employer, and agrees that she will not commit any such breach during employment with the Company.

 

6.           Inventions and Copyrights.

 

(a)     Executive acknowledges that, as a part of her duties, during her employment, she may develop discoveries, concepts, and ideas concerning or relating to the Business, whether or not patentable, including without limitation processes, methods, formulas, and techniques, as well as improvements thereof or know-how related thereto, and concerning any present or prospective activities of the Company that are published before such discoveries, concepts, and ideas (“Inventions”).

 

(b)     Executive will fully disclose and will continue to disclose to the Company all Inventions that she makes or conceives, in whole or in part, at this time or during her employment with the Company.

 

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(c)     Any and all Inventions will be the absolute property of the Company or its designees and, at the request of the Company and at its expense, but without additional compensation, Executive will make application in due form for United States patents and foreign patents on such Inventions, and will assign to the Company all her right, title, and interest in such Inventions, and will execute any and all instruments and do any and all acts necessary or desirable in connection with any such application for patents or in order to establish and perfect in the Company the entire right, title, and interest in such Inventions, patent applications, or patents, and also execute any instrument necessary or desirable in connection with any continuations, renewals, or reissues thereof or in the conduct of any related proceedings or litigation.

 

(d)     The Company will own the copyright in all materials created by Executive relating to the Business and eligible for copyright (which will be deemed work made-for-hire). The Company will have the right to apply for copyright registration, including any renewals or extension, whether under the laws of the U.S. or any country having jurisdiction over the copyright. Executive agrees to execute any documents necessary or appropriate for such registration. The Company will also own any trademark, service mark or trade name created by Executive (alone or in conjunction with others) for the Company and used to identify any present or future product, service, activity, operation, or function of the Company. The Company may obtain trademark or service mark protection of the Company’s rights including, at the Company’s discretion, state, federal and international registration. The Company will own all right, title, and interest in and to all results and the work product of Executive’s services for the Company (all of which will be deemed proprietary), free of any reserved rights by Executive, whether or not specifically enumerated in this Agreement.

 

7.           Post-Employment Restrictions.

 

(a)     Following the termination of Executive’s employment, for whatever reason and by whatever party, and during any Restrictive Period, Executive will not, directly or indirectly, on her own behalf or on behalf of any other person or entity:

 

(i)       enter into or engage in any business that provides Competitive Products or Competitive Services within the Restricted Areas;

 

(ii)      solicit or accept orders for Competitive Products from any person or entity upon whom she called or with whom she had direct or indirect contact on behalf of the Company and who at the time of such conduct is a customer or client of the Company;

 

(iii)     solicit or accept orders for Competitive Products from any person or entity who was a customer or client of the Company during her engagement and who at the time of such conduct is a customer or client of the Company;

 

(iv)     solicit or accept orders for Competitive Products from any person or entity who at the time of such conduct is a customer or client of the Company;

 

(v)      encourage, entice, induce, or influence, directly or indirectly, any person or entity not to do business with the Company;

 

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(vi)     encourage, entice, induce, or influence, directly or indirectly, any person to terminate her or her employment with the Company; or

 

(vii)    hire, retain, or offer to hire or retain for the performance of any service in connection with the marketing, distribution, or sale of any Competitive Product any person who at the time of such conduct is an employee of the Company or who was an employee of the Company within the 180-day prior to such conduct.

 

(viii)   solicit or accept orders for Competitive Services from any person or entity upon whom she called or with whom she had direct or indirect contact on behalf of the Company and who at the time of such conduct is a customer or client of the Company;

 

(ix)    solicit or accept orders for Competitive Services from any person or entity who was a customer or client of the Company during her engagement and who at the time of such conduct is a customer or client of the Company;

 

(x)       solicit or accept orders for Competitive Services from any person or entity who at the time of such conduct is a customer or client of the Company.

 

(b)     The Restrictive Periods are: (a) the 90-day period commencing on the termination of Executive’s employment with the Company (the “First Restrictive Period”); and (b) the 90-day period commencing on the expiration of the First Restrictive Period (the “Second Restrictive Period”); and (c) the 90-day period commencing on the expiration of the Second Restrictive Period (the “Third Restrictive Period”); and (d) the 90-day period commencing on the expiration of the Third Restrictive Period (the “Fourth Restrictive Period”).

 

(c)     The term of any Restrictive Period set forth in this Agreement will be tolled for any time during which Executive is in violation of any provision of this Agreement and for any time during which there is pending any action or arbitration (including any appeal from any final judgment) brought by any person, whether or not a party to this Agreement, in which action the Company seeks to enforce this Agreement or in which any person contests the validity of such agreements and covenants or their enforceability, or seeks to avoid their performance or enforcement.

 

(d)     “Competitive Products” means any supplies, equipment, products, goods, or services that are similar to or competitive with supplies, equipment, products, goods, or services that the Company marketed, distributed, or sold during Executive’s employment with the Company.

 

(e)     “Competitive Services” means any services that are similar to any services that Executive performed for the Company during Executive’s employment with the Company.

 

(f)     The Restrictive Areas are: (1) the area within a 10 air-mile radius of any location of the Company at which Executive performed services during her employment under this Agreement; and (2) Benton County, Washington; and (3) the state of Washington; and (5) the Mountain Time Zone and the Pacific Time Zone of the United States; and (6) that portion of the United States west of the Mississippi River; (7) the United States; and (8) any country in which the Company is conducting business at the time of Executive’s separation from employment.

 

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8.           Non-Disparagement. Executive agrees that during the term of Executive’s services to the Company, and at any time thereafter, not to make or communicate any comments or other remarks which are negative or derogatory to the Company or which would tend to disparage, slander, ridicule, degrade, harm or injure the Company (or any business relationship of the Company) or any officer, partnership member, or other employee of the Company or its affiliates.

 

9.           Remedies.

 

(a)     The parties expressly agree that, in the event of any failure by the Company to pay any wages to which Executive may become entitled in connection with her employment in violation of RCW 49.48 et seq., the amount of Executive’s recovery will be limited to the amount of actual wages that the court or arbitrator determines to have been unpaid, and, notwithstanding the provisions of RCW 49.48.125, no greater amount. Executive hereby expressly waives any remedy that she may have or that may later become available to her under RCW 49.48 et seq. for any additional amounts.

 

(b)     Any breach of the duties and obligations imposed upon Executive by this Agreement would cause irreparable harm to the Company, and the Company could not be fully compensated for any such breach with money damages. Therefore, injunctive relief is an appropriate remedy for any such breach. Such injunctive relief will be in addition to and not in limitation of or substitution for any other remedies or rights to which the Company may be entitled at law or in equity, including without limitation liquidated damages under this Agreement.

 

10.          Change of Control. Notwithstanding anything to the contrary in the Company’s existing or future incentive plans or any award agreement granted to Executive thereunder, upon a Change of Control, all of Executive’s outstanding unvested equity-based awards granted pursuant to the incentive plans, at Executive’s option, shall vest and become immediately exercisable and unrestricted, without any action by the Board or any committee thereof. “Change of Control” shall mean the first of the following events to occur after the Effective Date:

 

(a)     a Person or one or more Persons acting as a group acquires ownership of stock of the Company that, together with the Company stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company;

 

(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, 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 majority of the directors then still in office who either were directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended; and

 

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(c)     a Person or one or more Persons acting as a group acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Company determined immediately prior to such acquisition.

 

For purposes of this Section 10,

 

(i)       “Person” shall mean a “person” as defined in Section 7701(a)(1) of the Code, except that such term shall not include (A) the Company (or any Subsidiary thereof), (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) 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.

 

(ii)      Stock ownership shall be determined in accordance with the attribution rules of Section 318(a) of the Code.

 

(iii)     The gross fair market value of an asset shall be determined without regard to any liabilities associated with that asset.

 

(iv)     A “Change of Control” shall not be occur (A) by virtue of the consummation of any transaction or series of integrated transactions immediately following which the holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions, and (B) as a result of any primary or secondary offering of Company common stock to the general public through a registration statement filed with the Securities and Exchange Commission.

 

11.       Prevailing Party’s Litigation Expenses. In the event of litigation between the Company and Executive related to this Agreement, the non-prevailing party shall reimburse the prevailing party for any costs and expenses (including, without limitation, attorneys’ fees) reasonably incurred by the prevailing party in connection therewith.

 

12.          Withholding. All amounts payable to Executive hereunder shall be subject to required payroll deductions and tax withholdings.

 

13.          Adjudication of Agreement.

 

(a)     If any court or arbitrator of competent jurisdiction holds that any restriction imposed upon Executive by this Agreement exceeds the limit of restrictions that are enforceable under applicable law, the parties desire and agree that the restriction will apply to the maximum extent that is enforceable under applicable law, agree that the court or arbitrator so holding may reform and enforce the restriction to the maximum extent that is enforceable under applicable law, and desire and request that the court or arbitrator do so.

 

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(b)     If any court or arbitrator of competent jurisdiction holds that any provision of this Agreement is invalid or unenforceable, the parties desire and agree that the remaining parts of this Agreement will nevertheless continue to be valid and enforceable.

 

14.          Modification Or Waiver Of Agreement. No modification or waiver of this Agreement will be valid unless the modification or waiver is in writing and signed by both of the parties. The failure of either party at any time to insist upon the strict performance of any provision of this Agreement will not be construed as a waiver of the right to insist upon the strict performance of the same provision at any future time.

 

15.          Notices. Any notices required or permitted under this Agreement will be sufficient if in writing and sent by certified mail to, in the case of Executive, the last address she has filed in writing with the Company or, in the case of the Company, its principal office.

 

16.          Opportunity To Consider Agreement; Legal Representation. Executive acknowledges that she has had a full opportunity to consider this Agreement, to offer suggested modifications to its terms and conditions, and to consult with an attorney of her own choosing before deciding whether to sign it.

 

17.          No Rule Of Strict Construction. The language of this Agreement has been approved by both parties, and no rule of strict construction will be applied against either party.

 

18.          Entire Agreement. This Agreement contains all of the agreements between the parties relating to Executive’s employment with the Company. The parties have no other agreements relating to Executive’s employment, written or oral. This Agreement supersedes all other agreements, arrangements, and understandings relating to Executive’s employment, and no such agreements, arrangements, or understandings are of any force or effect. The parties will execute and deliver to each other any and all such further documents and instruments, and will perform any and all such other acts, as reasonably may be necessary or proper to carry out or effect the purposes of this Agreement.

 

19.          Assignment Of Agreement. Executive has no right to transfer or assign any or all of her rights or interests under this Agreement. The Company may assign its rights and interests under this Agreement to any successor entity as part of any sale, transfer, or other disposition of all or substantially all of the assets of the Company.

 

20.          Headings. The descriptive headings of the paragraphs and subparagraphs of this Agreement are intended for convenience only, and do not constitute parts of this Agreement.

 

21.          Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

 

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22.          Choice Of Forum. The parties agree that the proper and exclusive forum for any action or arbitration arising out of or relating to this Agreement or arising out of or relating to Executive’s employment by the Company will be Benton County, Washington, and that any such action or arbitration will be brought only in Benton County, Washington. Executive consents to the exercise of personal jurisdiction in any such action or arbitration by the courts or arbitrators of Benton County, Washington.

 

23.          Governing Law. This Agreement will be construed in accord with and any dispute or controversy arising from any breach or asserted breach of this Agreement will be governed by the laws of the State of Washington, without reference to the choice of law principles thereof.

 

[Signature Page follows]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement on the dates indicated at their respective signatures below.

 

DATED this 13th day of

 

 

	
			 

				
			/s/ Lori A. Woods

			
	
			 

				
			Lori A. Woods 

			

                                                     

 

DATED this 13th day of

 

	 	IsoRay, Inc., a Minnesota corporation
	 	 	 
	
			 

				
			 

				
			 

			
	
			 

				
			By:

				
			 /s/  Michael McCormick

			
	 	 	Michael McCormick
	 	Its:	Chairman of the Board

 

-11-ex_116584.htm

Exhibit 10.2

 

ISORAY, INC.

NOTICE OF GRANT OF STOCK OPTION

 

Lori A. Woods (the “Participant”) has been granted an option (the “Option”) to purchase certain shares of Common Stock of IsoRay, Inc. pursuant to the IsoRay, Inc. 2017 Equity Incentive Plan (the “Plan”), as follows:

 

	Date of Option Grant:	June 13, 2018
	 	 
	Number of Option Shares:	250,000
	 	 
	Exercise Price:	$0.46
	 	 
	Initial Exercise Date:	The date six (6) months after the Date of Option Grant.
	 	 
	Initial Vesting Date:	The date six (6) months after the Date of Option Grant.
	 	 
	Option Expiration Date:	The date ten (10) years after the Date of Option Grant.
	 	 
	Tax Status of Option:	Nonstatutory.   (Enter “Incentive” or “Nonstatutory.” If blank, this Option will be a Nonstatutory Stock Option.)

 

Vested Shares: Except as provided in the Stock Option Agreement, the number of Vested Shares (disregarding any resulting fractional share) as of any date is determined by multiplying the Number of Option Shares by the “Vested Ratio” determined as of such date as follows:

 

	
			 

				
			Vested Ratio

			
	
			Prior to Initial Vesting Date

				
			0

			
	
			On Initial Vesting Date, provided the Participant’s Service has not terminated prior to such date

				
			1/4

			
	
			Plus:

				 
	
			For each full twelve months of the Participant’s continuous Service from the Date of Option Grant until the Vested Ratio equals 1/1, an additional

				
			1/4

			

 

By their signatures below, the Company and the Participant agree that the Option is governed by this Notice and by the provisions of the Plan and the Stock Option Agreement, both of which are attached to and made a part of this document. The Participant acknowledges receipt of copies of the Plan and the Stock Option Agreement, represents that the Participant has read and is familiar with their provisions, and hereby accepts the Option subject to all of their terms and conditions.

 

 

 

	ISORAY, INC.	 	PARTICIPANT
	 	 	 	 
	By:	/s/ Mark Austin	 	/s/ Lori A. Woods
	 	 	 	Signature
	Its:	Controller	 	6/19/2018
	 	 	 	Date

       

	Address:	350 Hills Street, Suite 106	 	 
	 	Richland, WA 99354	 	 
	 	 	 	 

          

ATTACHMENTS: 2017 Equity Incentive Plan, as amended to the Date of Option Grant; Stock Option Agreement, and Exercise Notice

 

 

 

 

ISORAY, INC.

STOCK OPTION AGREEMENT

 

IsoRay, Inc. has granted to the individual (the “Participant”) named in the Notice of Grant of Stock Option (the “Notice”) to which this Stock Option Agreement (the “Option Agreement”) is attached an option (the “Option”) to purchase certain shares of Common Stock upon the terms and conditions set forth in the Notice and this Option Agreement. The Option has been granted pursuant to and shall in all respects be subject to the terms and conditions of the IsoRay, Inc. 2017 Equity Incentive Plan (the “Plan”), as amended to the Date of Option Grant, the provisions of which are incorporated herein by reference. By signing the Notice, the Participant: (a) represents that the Participant has received copies of, and has read and is familiar with the terms and conditions of, the Notice, the Plan, and this Option Agreement, (b) accepts the Option subject to all of the terms and conditions of the Notice, the Plan, and this Option Agreement, and (c) agrees to accept as binding, conclusive, and final all decisions or interpretations of the Board (or the Committee, if a Committee has been appointed) upon any questions arising under the Notice, the Plan, or this Option Agreement.

 

	 	1.	Definitions and Construction.

 

1.1 Definitions. Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Notice or the Plan.

 

1.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of this Option Agreement. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

 

	 	2.	Tax Consequences.

 

2.1 Tax Status of Option. This Option is intended to have the tax status designated in the Notice.

 

(a) Incentive Stock Option. If the Notice so designates, this Option is intended to be an Incentive Stock Option within the meaning of Section 422(b) of the Code, but the Company does not represent or warrant that this Option qualifies as such. The Participant should consult with the Participant’s own tax advisor regarding the tax effects of this Option and the requirements necessary to obtain favorable income tax treatment under Section 422 of the Code, including, but not limited to, holding period requirements. (NOTE TO PARTICIPANT: If the Option is exercised more than three (3) months after the date on which you cease to be an Employee (other than by reason of your death or permanent and total disability as defined in Section 22(e)(3) of the Code), the Option will be treated as a Nonstatutory Stock Option and not as an Incentive Stock Option to the extent required by Section 422 of the Code.)

 

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(b) Nonstatutory Stock Option. If the Notice so designates, this Option is intended to be a Nonstatutory Stock Option and shall not be treated as an Incentive Stock Option within the meaning of Section 422(b) of the Code.

 

2.2 ISO Fair Market Value Limitation. If the Notice designates this Option as an Incentive Stock Option, then to the extent that the Option (together with all Incentive Stock Options granted to the Participant under all stock option plans of the Participating Company Group, including the Plan) becomes exercisable for the first time during any calendar year for shares having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portion of such options which exceeds such amount will be treated as Nonstatutory Stock Options. For purposes of this Section 2.2, options designated as Incentive Stock Options are taken into account in the order in which they were granted, and the Fair Market Value of stock is determined as of the time the option with respect to such stock is granted. If the Code is amended to provide for a different limitation from that set forth in this Section 2.2, such different limitation shall be deemed incorporated herein effective as of the date required or permitted by such amendment to the Code. If the Option is treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Section 2.2, the Participant may designate which portion of such Option the Participant is exercising. In the absence of such designation, the Participant shall be deemed to have exercised the Incentive Stock Option portion of the Option first. Separate certificates representing each such portion shall be issued upon the exercise of the Option. (NOTE TO PARTICIPANT: If the aggregate Exercise Price of the Option (that is, the Exercise Price multiplied by the Number of Option Shares) plus the aggregate exercise price of any other Incentive Stock Options you hold (whether granted pursuant to the Plan or any other stock option plan of the Participating Company Group) is greater than $100,000, you should contact the Chief Financial Officer of the Company to ascertain whether the entire Option qualifies as an Incentive Stock Option.)

 

	 	3.	Administration of Agreement.

 

All questions of interpretation concerning this Option Agreement shall be determined by the Board. All determinations by the Board shall be final and binding upon all persons having an interest in the Option. Any Officer shall the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, or election.

 

	 	4.	Exercise of the Option.

 

4.1 Right to Exercise.

 

(a) In General. Except as otherwise provided herein, the Option shall be exercisable on and after the Initial Exercise Date set forth and prior to the termination of the Option (as provided in Section 6) in an amount not to exceed the Number of Option Shares less the number of shares previously acquired upon exercise of the Option. In no event shall the Option be exercisable for more shares than the Number of Option Shares, as adjusted pursuant to Section 9.

 

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(b) ISO Exercise Limitation. If this Option is designated as an Incentive Stock Option in the Notice, then notwithstanding the provisions of Section 4.1(a) and except as provided in Section 4.1(c), the aggregate Fair Market Value of the shares of Stock with respect to which the Participant may exercise the Option for the first time during any calendar year, when added to the aggregate Fair Market Value of shares subject to other options designated as Incentive Stock Options and granted to the Participant under other stock option plans of the Participating Company Group prior to the Date of Option Grant which options are exercisable for the first time during the same calendar year, shall not exceed One Hundred Thousand Dollars ($100,000). For purposes of the preceding sentence, options designated as Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of shares of stock shall be determined as of the time the option with respect to such shares is granted. Such limitation on exercise shall be referred to in this Option Agreement as the “ISO Exercise Limitation.” If Section 422 of the Code is amended to provide for a different limitation from that set forth in this Section 4.1(b), the ISO Exercise Limitation shall be deemed amended effective as of the date required or permitted by such amendment to the Code. The ISO Exercise Limitation shall terminate upon the earlier of (i) the Participant’s termination of Service, (ii) the day immediately prior to the effective date of a Corporate Transaction in which the Option is not Assumed or Replaced as provided in Section 8, or (iii) the day ten (10) days prior to the Option Expiration Date. Upon such termination of the ISO Exercise Limitation, the Option shall be deemed a Nonstatutory Stock Option to the extent of the number of shares subject to the Option that would otherwise exceed the ISO Exercise Limitation.

 

(c) Exception to ISO Exercise Limitation. Notwithstanding any other provision of this Option Agreement, if compliance with the ISO Exercise Limitation as set forth in Section 4.1(b) will result in the exercisability of any Vested Shares being delayed more than thirty (30) days beyond the date such shares become Vested Shares (the “Vesting Date”), the Option shall be deemed to be two (2) options. The first option shall be for the maximum portion of the Number of Option Shares that can comply with the ISO Exercise Limitation without causing the Option to be unexercisable in the aggregate as to Vested Shares on the Vesting Date for such shares. The second option, which shall not be treated as an Incentive Stock Option as described in section 422(b) of the Code, shall be for the balance of the Number of Option Shares; that is, those such shares which, on the respective Vesting Date for such shares, would be unexercisable if included in the first option and thereby made subject to the ISO Exercise Limitation. Shares treated as subject to the second option shall be exercisable on the same terms and at the same time as set forth in this Option Agreement; provided, however, that (i) Section 4.1(b) shall not apply to the second option and (ii) each such share shall become a Vested Share on the Vesting Date such share must first be allocated to the second option pursuant to the preceding sentence. Unless the Participant specifically elects to the contrary in the Participant’s written notice of exercise, the first option shall be deemed to be exercised first to the maximum possible extent and then the second option shall be deemed to be exercised.

 

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4.2 Method of Exercise. Exercise of the Option shall be by written notice to the Company, which must state the election to exercise the Option, the number of whole shares of Stock for which the Option is being exercised and such other representations and agreements as to the Participant’s investment intent with respect to such shares as may be required pursuant to the provisions of this Option Agreement. The written notice must be signed by the Participant and must be delivered in person, by certified or registered mail, return receipt requested, by confirmed facsimile transmission, or by such other means as the Board may permit, to the Chief Financial Officer of the Company, or other authorized representative of the Participating Company Group, prior to the termination of the Option as set forth in Section 6, accompanied by full payment of the aggregate Exercise Price for the number of shares of Stock being purchased. The Option shall be deemed to be exercised upon receipt by the Company of such written notice, the aggregate Exercise Price, and, if required by the Company, such executed agreement.

 

4.3 Payment of Exercise Price.

 

(a) Forms of Consideration Authorized. Except as otherwise provided below, payment of the aggregate Exercise Price for the number of shares of Stock for which the Option is being exercised shall be made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company, or attestation to the ownership, of whole shares of Stock owned by the Participant having a Fair Market Value not less than the aggregate Exercise Price, (iii) by means of a Cashless Exercise, as defined in Section 4.3(b), or (iv) by any combination of the foregoing.

 

(b) Limitations on Forms of Consideration.

 

(i)     Tender of Stock. Notwithstanding the foregoing, the Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock to the extent such tender or attestation would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock. The Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Participant for more than six (6) months (and not used for another option exercise by attestation during such period) or were not acquired, directly or indirectly, from the Company.

 

(ii)     Cashless Exercise. A “Cashless Exercise” means the delivery of a properly executed notice together with irrevocable instructions to a broker in a form acceptable to the Company providing for the assignment to the Company of the proceeds of a sale or loan with respect to some or all of the shares of Stock acquired upon the exercise of the Option pursuant to a program or procedure approved by the Company (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System). The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to decline to approve or terminate any such program or procedure.

 

4.4 Tax Withholding. At the time the Option is exercised, in whole or in part, or at any time thereafter as requested by the Company, the Participant hereby authorizes withholding from payroll and any other amounts payable to the Participant, and otherwise agrees to make adequate provision for (including by means of a Cashless Exercise to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Participating Company Group, if any, which arise in connection with the Option, including, without limitation, obligations arising upon (i) the exercise, in whole or in part, of the Option, (ii) the transfer, in whole or in part, of any shares acquired upon exercise of the Option, (iii) the operation of any law or regulation providing for the imputation of interest, or (iv) the lapsing of any restriction with respect to any shares acquired upon exercise of the Option. The Option is not exercisable unless the tax withholding obligations of the Participating Company Group are satisfied. Accordingly, the Company shall have no obligation to deliver shares of Stock until the tax withholding obligations of the Participating Company Group have been satisfied by the Participant.

 

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4.5 Certificate Registration. Except in the event the Exercise Price is paid by means of a Cashless Exercise, the certificate for the shares as to which the Option is exercised shall be registered in the name of the Participant, or, if applicable, in the names of the heirs of the Participant.

 

4.6 Restrictions on Grant of the Option and Issuance of Shares. The grant of the Option and the issuance of shares of Stock upon exercise of the Option shall be subject to compliance with all applicable requirements of federal, state or foreign securities laws. The Option may not be exercised if the issuance of shares of Stock upon exercise would constitute a violation of any applicable federal, state, or foreign securities laws, or any other laws or regulations, or the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, the Option may not be exercised unless (i) a registration statement under the Securities Act shall at the time of exercise be in effect with respect to the shares issuable upon exercise or (ii) in the opinion of legal counsel to the Company, the shares issuable upon exercise may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. THE PARTICIPANT IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE PARTICIPANT MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to lawfully issue and sell any shares subject to the Option shall relieve the Company of any liability in respect of the failure to issue or sell such shares. As a condition to the exercise of the Option, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.

 

4.7 No Fractional Shares. The Participant acknowledges and agrees that the Company will not issue fractional shares upon the exercise of the Option, and the number of Shares in the event of such an exercise shall be rounded down to the nearest whole number.

 

	 	5.	Nontransferability of the Option.

 

The Option may be exercised during the lifetime of the Participant only by the Participant or the Participant’s guardian or legal representative and may not be assigned or transferred in any manner except by will or by the laws of descent and distribution. Following the death of the Participant, the Option, to the extent provided in Section 7, may be exercised by the Participant’s legal representative or by any person empowered to do so under the deceased Participant’s will or under the then applicable laws of descent and distribution.

 

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	 	6.	Termination of the Option.

 

The Option shall terminate and may no longer be exercised after the first to occur of (a) the Option Expiration Date, (b) the last date for exercising the Option following termination of the Participant’s Service as described in Section 7, or (c) a Corporate Transaction to the extent provided in Section 8.

 

	 	7.	Effect of Termination of Service.

 

If the Participant’s Service terminates for any reason, including but not limited to Disability, death or Cause, the Option, to the extent unexercised and exercisable by the Participant on the date on which the Participant’s Service terminated, may be exercised by the Participant (or the Participant’s guardian, legal representative or other person who acquired the right to exercise the Option by reason of the Participant’s death) at any time prior to the Option Expiration Date. Unless otherwise defined in a contract of employment or service between the Participant and a Participating Company, for purposes of this Option Agreement, “Cause” shall have the meaning given such term in the Plan.

 

	 	8.	Corporate transaction.

 

8.1 Termination of Option to Extent Not Assumed in Corporate Transaction. Effective upon the consummation of a Corporate Transaction, the Option shall terminate. However, the Option shall not terminate to the extent it is Assumed in connection with the Corporate Transaction.

 

8.2 Acceleration of Award Upon Corporate Transaction. In the event of a Corporate Transaction and:

 

(a) for the portion of the Option that is Assumed or Replaced, then the Option (if Assumed), the replacement Option (if Replaced), or the cash incentive program (if Replaced) automatically shall become fully vested, exercisable and payable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at Fair Market Value) for all of the shares of Stock at the time represented by such Assumed or Replaced portion of the Option immediately upon termination of the Participant’s Service, if such Service is terminated by the successor company or the Company without Cause or voluntarily by the Participant with Good Reason within twelve (12) months after the Corporate Transaction; and

 

(b) for the portion of the Option that is neither Assumed nor Replaced, such portion of the Option shall automatically become fully vested and exercisable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at Fair Market Value) for all of the shares of Stock at the time represented by such portion of the Option, immediately prior to the specified effective date of such Corporate Transaction, provided however that such accelerated portion of the Option shall terminate under Section 8.1 to the extent not exercised prior to the consummation of such Corporate Transaction.

 

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8.3 Definition of Corporate Transaction.

 

(a)  A “Corporate Transaction” means the first of the following events to occur:

 

(i)     a Person or one or more Persons acting as a group acquires ownership of stock of the Company that, together with the Company stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company;

 

(ii)     the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the Date of Option Grant, 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 majority of the directors then still in office who either were directors on the Date of Option Grant or whose appointment, election or nomination for election was previously so approved or recommended; and

 

(iii)     a Person or one or more Persons acting as a group acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Company determined immediately prior to such acquisition.

 

(b)  For purposes of this Section 8,

 

(i)     “Person” shall mean a “person” as defined in Section 7701(a)(1) of the Code, except that such term shall not include (A) the Company (or any subsidiary thereof), (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) 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.

 

(ii)     Stock ownership shall be determined in accordance with the attribution rules of Section 318(a) of the Code.

 

(iii)     The gross fair market value of an asset shall be determined without regard to any liabilities associated with that asset.  

 

(iv)     A “Change of Control” shall not be occur (A) by virtue of the consummation of any transaction or series of integrated transactions immediately following which the holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions, and (B) as a result of any primary or secondary offering of Company common stock to the general public through a registration statement filed with the Securities and Exchange Commission.

 

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	 	9.	Adjustments for Changes in Capital Structure.

 

Subject to any required action by the stockholders of the Company, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (excepting normal cash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number, Exercise Price and class of shares subject to the Option, in order to prevent dilution or enlargement of the Participant’s rights under the Option. For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.” Any fractional share resulting from an adjustment pursuant to this Section 9 shall be rounded down to the nearest whole number, and in no event may the Exercise Price of the Option be decreased to an amount less than the par value, if any, of the stock subject to the Option. Such adjustments shall be determined by the Board, and its determination shall be final, binding and conclusive.

 

	 	10.	Rights as a Stockholder, Employee, or Consultant.

 

The Participant shall have no rights as a stockholder with respect to any shares covered by the Option until the date of the issuance of a certificate for the shares for which the Option has been exercised (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions, or other rights for which the record date is prior to the date such certificate is issued, except as provided in Section 9. If the Participant is an Employee, the Participant understands and acknowledges that, except as otherwise provided in a separate, written employment agreement between a Participating Company and the Participant, the Participant’s employment is “at will” and is for no specified term. Nothing in this Option Agreement shall confer upon the Participant any right to continue in the Service of a Participating Company or interfere in any way with any right of the Participating Company Group to terminate the Participant’s Service as an Employee or Consultant, as the case may be, at any time. Nothing in this Option shall confer on any person any legal or equitable right against the Company, directly or indirectly, or give rise to any cause of action at law or in equity against any Participating Company. The Option granted hereunder shall not form any part of the wages or salary of Participant for purposes of severance pay or termination indemnities, irrespective of the reason for termination of employment. Under no circumstances shall any person ceasing to be an employee of any Participating Company be entitled to any compensation for any loss of any right or benefit under this Option or the Plan which such employee might otherwise have enjoyed but for termination of employment, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise.

 

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	 	11.	Notice of Sales Upon Disqualifying Disposition.

 

The Participant shall dispose of the shares acquired pursuant to the Option only in accordance with the provisions of this Option Agreement. In addition, if the Notice designates this Option as an Incentive Stock Option, the Participant shall (a) promptly notify the Chief Financial Officer of the Company if the Participant disposes of any of the shares acquired pursuant to the Option within one (1) year after the date the Participant exercises all or part of the Option or within two (2) years after the Date of Option Grant and (b) provide the Company with a description of the circumstances of such disposition. Until such time as the Participant disposes of such shares in a manner consistent with the provisions of this Option Agreement, unless otherwise expressly authorized by the Company, the Participant shall hold all shares acquired pursuant to the Option in the Participant’s name (and not in the name of any nominee) for the one-year period immediately after the exercise of the Option and the two-year period immediately after Date of Option Grant. At any time during the one-year or two-year periods set forth above, the Company may place a legend on any certificate representing shares acquired pursuant to the Option requesting the transfer agent for the Company’s stock to notify the Company of any such transfers. The obligation of the Participant to notify the Company of any such transfer shall continue notwithstanding that a legend has been placed on the certificate pursuant to the preceding sentence.

 

	 	12.	Legends.

 

The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates representing shares of Stock subject to the provisions of this Option Agreement. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to the Option in the possession of the Participant in order to carry out the provisions of this Section. Unless otherwise specified by the Company, legends placed on such certificates shall include, but shall not be limited to, the following:

 

12.1   “THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.”

 

12.2   “THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO THE REGISTERED HOLDER UPON EXERCISE OF AN INCENTIVE STOCK OPTION AS DEFINED IN SECTION 422 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (“ISO”). IN ORDER TO OBTAIN THE PREFERENTIAL TAX TREATMENT AFFORDED TO ISOs, THE SHARES SHOULD NOT BE TRANSFERRED PRIOR TO [INSERT DISQUALIFYING DISPOSITION DATE HERE]. SHOULD THE REGISTERED HOLDER ELECT TO TRANSFER ANY OF THE SHARES PRIOR TO THIS DATE AND FOREGO ISO TAX TREATMENT, THE TRANSFER AGENT FOR THE SHARES SHALL NOTIFY THE CORPORATION IMMEDIATELY. THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE INCENTIVE STOCK OPTION IN THE REGISTERED HOLDER’S NAME (AND NOT IN THE NAME OF ANY NOMINEE) PRIOR TO THIS DATE OR UNTIL TRANSFERRED AS DESCRIBED ABOVE.”

 

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	 	13.	Restrictions on Transfer of Shares.

 

No shares of Stock acquired upon exercise of the Option may be sold, exchanged, transferred (including, without limitation, any transfer to a nominee or agent of the Participant), assigned, pledged, hypothecated or otherwise disposed of, including by operation of law, in any manner which violates any of the provisions of this Option Agreement and any such attempted disposition shall be void. The Company shall not be required (a) to transfer on its books any shares that have been transferred in violation of any of the provisions set forth in this Option Agreement or (b) to treat as owner of such shares, accord the right to vote as such owner or pay dividends to any transferee to whom such shares have been so transferred.

 

	 	14.	Miscellaneous Provisions.

 

14.1    Binding Effect. Subject to the restrictions on transfer set forth herein, this Option Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns.

 

14.2    Termination or Amendment. The Board may terminate or amend the Plan or the Option at any time; provided, however, that except as provided in Section 8.1 in connection with a Corporate Transaction, no such termination or amendment may adversely affect the Option or any unexercised portion hereof without the consent of the Participant, unless such termination or amendment is necessary to comply with any applicable law or government regulation or is required to enable the Option, if designated an Incentive Stock Option in the Notice, to qualify as an Incentive Stock Option. No amendment or addition to this Option Agreement shall be effective unless in writing.

 

14.3    Notices. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given (except to the extent that this Option Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail, with postage and fees prepaid, addressed to the other party at the address shown below that party’s signature or at such other address as such party may designate in writing from time to time to the other party.

 

14.4    Employment Agreement. The terms and provisions of the employment agreement, if any, between Participant and any Participating Company (the “Employment Agreement”) that relate to or affect this Option are incorporated herein by reference. Notwithstanding the provisions of this Option, in the event of any conflict or inconsistency between the terms and conditions of this Option and the terms and conditions of the Employment Agreement, the terms and conditions of the Employment Agreement shall be controlling.

 

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14.5    Integrated Agreement. The Notice, this Option Agreement, and the Plan, together with any employment, service, or other agreement with the Participant and a Participating Company referring to the Option, will constitute the entire understanding and agreement of the Participant and the Participating Company Group with respect to the subject matter contained herein or therein and supersedes any prior agreements, understandings, restrictions, representations, or warranties among the Participant and the Participating Company Group with respect to such subject matter other than those as set forth or provided for herein or therein. To the extent contemplated herein or therein, the provisions of the Notice and the Option Agreement shall survive any exercise of the Option and shall remain in full force and effect.

 

14.6    Applicable Law. This Option Agreement shall be governed by the laws of the State of Minnesota as such laws are applied to agreements between Minnesota residents entered into and to be performed entirely within the State of Minnesota.

 

14.7    Counterparts. The Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

14.8    Consultation with Professional Tax and Investment Advisors. The holder of this Option acknowledges that the grant, exercise, vesting or any payment with respect to this Option, and the sale or other taxable disposition of the shares of Stock acquired pursuant to the exercise thereof, may have tax consequences pursuant to the Code or under local, state or international tax laws. The holder further acknowledges that such holder is relying solely and exclusively on the holder's own professional tax and investment advisors with respect to any and all such matters (and is not relying, in any manner, on any Participating Company or any of its employees or representatives). Finally, the holder understands and agrees that any and all tax consequences resulting from the Option and its grant, exercise, vesting or any payment with respect thereto, and the sale or other taxable disposition of the shares of Stock acquired pursuant to the Plan, is solely and exclusively the responsibility of the holder without any expectation or understanding that any Participating Company or any of its employees or representatives will pay or reimburse such holder for such taxes or other items.

 

14.9    Employment Agreement. If Participant has an employment agreement with the Company that contains terms that are in conflict with this Option Agreement (including, or clarity, Section 8 hereof), then the terms of the employment will control.

 

	☐	Incentive Stock Option	Participant:	/s/ Lori A. Woods

 

	☒	Nonstatutory Stock Option	Date:	6/19/2018

 

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STOCK OPTION EXERCISE NOTICE

 

IsoRay, Inc.

Attention: Chief Financial Officer

350 Hills Street, Suite 106

Richland, WA 99354      

 

Ladies and Gentlemen:

 

1.           Option. I was granted an option (the “Option”) to purchase shares of the common stock (the “Shares”) of IsoRay, Inc. (the “Company”) pursuant to the Company’s 2017 Equity Incentive Plan (the “Plan”), my Notice of Grant of Stock Option (the “Notice”), and my Stock Option Agreement (the “Option Agreement”) as follows:

 

	Date of Option Grant:	 	 
	 	 	 
	Number of Option Shares:	 	 
	 	 	 
	Exercise Price per Share:	$	 

   

2.           Exercise of Option. I hereby elect to exercise the Option to purchase the following number of Shares, all of which are Vested Shares, in accordance with the Notice and the Option Agreement:

 

	Shares Purchased:	 	 
	 	 	 
	Exercise Price (Shares X Price per Share) 	$	 

   

3.           Payments. I enclose payment in full of the total exercise price for the Shares in the following form(s), as authorized by my Option Agreement:

 

	☐ Cash: 	$	 
	 	 	 
	☐ Check:	$	 
	 	 
	☐ Tender of Company Stock:	Contact Company
	 	 
	☐ Cashless Exercise:	Contact Company

       

4.           Tax Withholding. I authorize payroll withholding and otherwise will make adequate provision for the federal, state, local and foreign tax withholding obligations of the Company, if any, in connection with the Option. If I am exercising a Nonstatutory Stock Option, I enclose payment in full of my withholding taxes, if any, as follows:

(Contact Company for amount of tax due.)

 

	☐ Cash:	$	 
	 	 	 
	☐ Check: 	 	 

 

I understand that ownership of the Shares will not be transferred to me until the total Exercise Price and all applicable withholding taxes have been paid.

 

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5.           Participant Information.

 

	My address is:	 
	 	 
	 	 

 

	My Social Security Number is:	 

 

6.            Notice of Disqualifying Disposition. If the Option is an Incentive Stock Option, I agree that I will promptly notify the Chief Financial Officer of the Company if I transfer any of the Shares within one (1) year from the date I exercise all or part of the Option or within two (2) years of the Date of Option Grant.

 

7.          Tax Consequences. I understand that there may be adverse federal or state tax consequences as a result of my purchase or disposition of the Shares. I also acknowledge that I have been advised to consult with a tax advisor in connection with the purchase of disposition of the Shares. I am not relying on the Company for tax advice.

 

8.            Binding Effect. I agree that the Shares are being acquired in accordance with and subject to the terms, provisions and conditions of the Option Agreement, to all of which I hereby expressly assent. This Agreement shall inure to the benefit of and be binding upon my heirs, executors, administrators, successors and assigns.

 

I understand that I am purchasing the Shares pursuant to the terms of the Plan, the Notice and my Option Agreement, copies of which I have received and carefully read and understand.

 

	
			 

				
			Very truly yours,

			
	
			 

				
			 

			
	
			 

				
			 

			
	
			 

				
			 

			
	
			 

				
			(Signature)

			

 

Receipt of the above is hereby acknowledged.

 

ISORAY, INC.

 

 

	By:	 	 

 

	Title:	 	 

 

	Dated:	 	 

 

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