1010-00004 · Arbor Health Technologies Inc · Transaction Documents/Equity Awards

stock-option-award-agreement-draft.docx DOCUMENT Funds

32 / 35 ← → ✕

Contract analysis Extract to table

ATTORNEY WORK PRODUCT — PRIVILEGED AND CONFIDENTIAL

STOCK OPTION AWARD AGREEMENT

Under the Arbor Health Technologies Inc. 2020 Equity Incentive Plan (as amended May 2021)

DRAFT — August 12, 2022

Prepared by: Calderwood & Harkness LLP, One International Place, Suite 3400, Boston, MA 02110

Reviewed by: Sandra Okafor, Counsel, Corporate/M&A; Devon Archer, Lead Associate, Labor & Employment

Matter No.: 1010-00004 / Client No.: 81-30294

STOCK OPTION AWARD AGREEMENT

This STOCK OPTION AWARD AGREEMENT (this "Agreement") is made and entered into as of [●], 2022 (the "Grant Date"), by and between:

ARBOR HEALTH TECHNOLOGIES INC., a Delaware corporation, with its principal offices located at 400 Brattle Commerce Park, Suite 1200, Cambridge, Massachusetts 02138 (the "Company");

and

DR. MARCUS J. ELLISTON, an individual residing at 87 Laurel Hill Road, Wellesley, Massachusetts 02481 (the "Participant" or the "Optionee").

The Company and the Participant are sometimes referred to herein individually as a "Party" and collectively as the "Parties."

RECITALS

WHEREAS, the Company has adopted the Arbor Health Technologies Inc. 2020 Equity Incentive Plan (as amended May 2021) (the "Plan"), which provides for the grant of stock options, restricted stock, restricted stock units, and other equity-based awards to eligible employees, directors, and consultants of the Company and its affiliates;

WHEREAS, the Compensation Committee of the Board of Directors of the Company (the "Committee") has authorized the grant of a stock option to the Participant in connection with his employment as Chief Operating Officer of the Company, and has determined that such grant is in the best interests of the Company and its stockholders;

WHEREAS, this Agreement sets forth the terms and conditions of such stock option grant, and is in all respects subject to the terms and conditions of the Plan, a copy of which has been provided to the Participant and is on file at the principal offices of the Company; and

WHEREAS, capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Plan.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows. The Plan is incorporated herein by reference and made a part hereof as if fully set forth herein. In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall govern and control in all respects.

SECTION 1: GRANT OF OPTION

1.1 Grant. Subject to the terms and conditions set forth in this Agreement and in the Plan, the Company hereby grants to the Participant an option (the "Option") to purchase a number of shares of Common Stock, par value $0.001 per share, of the Company (the "Shares") representing one and twenty-five hundredths percent (1.25%) of the fully diluted equity of the Company as of the Grant Date, calculated in accordance with the fully diluted share methodology set forth in Section 2.3 of the Plan. The exact number of Shares subject to the Option shall be determined by the Committee as of the Grant Date and set forth on Appendix A attached hereto, which is incorporated herein by reference.

1.2 Grant Date. The "Grant Date" of the Option shall be [●], 2022, as determined by the Committee. The Grant Date is anticipated to coincide with, or occur shortly after, the Participant's start date of November 1, 2022, and shall be set forth on Appendix A upon determination by the Committee.

1.3 Type of Option. The Option is intended to be a nonqualified stock option ("NQSO") within the meaning of the Plan and applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code"). The Option shall not be treated as an incentive stock option ("ISO") within the meaning of Section 422 of the Code. The Participant acknowledges and agrees that the Option will not qualify for the favorable tax treatment available to incentive stock options under Section 422 of the Code and the regulations promulgated thereunder.

SECTION 2: EXERCISE PRICE

2.1 Exercise Price Per Share. The exercise price per Share subject to the Option (the "Exercise Price") shall be equal to the Fair Market Value (as defined in the Plan) of one Share of Common Stock on the Grant Date, as determined by the Committee in accordance with the Plan and applicable law. The Exercise Price shall be set forth on Appendix A upon determination by the Committee.

2.2 Fair Market Value Determination. The Parties acknowledge that, as of the date of this Agreement, the Shares are not listed or traded on any established national securities exchange or nationally recognized trading system. Accordingly, the Fair Market Value of the Shares shall be determined by the Committee in good faith, based on an independent valuation of the Common Stock that is consistent with the requirements of Section 409A of the Code and Treasury Regulation § 1.409A-1(b)(5)(iv)(B) (the "409A Valuation"). Such independent valuation shall be performed by a qualified, independent appraiser meeting the requirements of Treasury Regulation § 1.409A-1(b)(5)(iv)(B)(2) and shall be conducted as of a date no more than twelve (12) months prior to the Grant Date. The Company anticipates coordinating the 409A Valuation with Hargrove & Sinclair CPAs, the Company's independent accounting firm, to ensure consistency with the Company's overall tax and financial reporting methodologies. The Committee shall have sole and final authority with respect to all matters relating to the determination of Fair Market Value for purposes of this Agreement.

SECTION 3: VESTING SCHEDULE

3.1 Vesting. Subject to the Participant's Continuous Employment (as defined in Section 3.2 below) with the Company (or any subsidiary or affiliate of the Company) through each applicable vesting date, the Option shall vest and become exercisable with respect to the Shares subject thereto in accordance with the following schedule:

(a) Cliff Vesting. Twenty-five percent (25%) of the total number of Shares subject to the Option shall vest and become exercisable on the first (1st) anniversary of the Grant Date (the "Cliff Vesting Date"). No portion of the Option shall vest or become exercisable prior to the Cliff Vesting Date, except as expressly provided in Section 6 or Section 7 of this Agreement.

(b) Monthly Vesting. Following the Cliff Vesting Date, the remaining seventy-five percent (75%) of the total number of Shares subject to the Option shall vest and become exercisable in thirty-six (36) equal monthly installments over the thirty-six (36)-month period immediately following the Cliff Vesting Date, with each such monthly installment vesting on the same day of the month as the Grant Date (or, if there is no such day in a particular month, on the last day of such month). For the avoidance of doubt, this schedule results in the vesting of one forty-eighth (1/48th) of the total number of Shares subject to the Option per month on a cumulative basis, with the initial twelve forty-eighths (12/48ths) vesting on the Cliff Vesting Date.

(c) Full Vesting. Subject to the Participant's Continuous Employment and the other terms and conditions of this Agreement, one hundred percent (100%) of the total number of Shares subject to the Option shall be fully vested and exercisable on the fourth (4th) anniversary of the Grant Date.

3.2 Continuous Employment Requirement. For purposes of this Agreement, "Continuous Employment" means the Participant's uninterrupted employment with the Company or any subsidiary or affiliate of the Company from the Grant Date through the applicable vesting date. The Participant's employment shall not be deemed to have been interrupted or terminated for purposes of this Agreement by reason of any approved leave of absence, including but not limited to medical leave, family leave, military leave, or any other leave of absence approved in writing by the Company. Notwithstanding the foregoing, the Committee shall retain sole and exclusive discretion to determine the effect of any such leave of absence on the vesting of the Option, including whether vesting shall be tolled, suspended, or otherwise modified during any such leave, consistent with the terms of the Plan and applicable law.

3.3 No Partial Vesting of Fractional Shares. In the event that the application of the vesting schedule set forth in Section 3.1 would result in the vesting of a fractional Share on any vesting date, the number of Shares vesting on such date shall be rounded down to the nearest whole Share. Any fractional Share amounts that are not vested as a result of such rounding shall accumulate and vest on the final vesting date (i.e., the fourth anniversary of the Grant Date), so that the aggregate number of Shares vesting over the full vesting period equals the total number of Shares subject to the Option.

SECTION 4: TERM AND EXPIRATION

4.1 Option Term. Unless earlier terminated in accordance with Section 6 or Section 7 of this Agreement or the terms of the Plan, the Option shall expire at 11:59 p.m. Eastern Time on the tenth (10th) anniversary of the Grant Date (the "Expiration Date"). After the Expiration Date, the Option shall have no further force or effect and shall not be exercisable for any purpose.

4.2 No Exercise After Expiration. Under no circumstances may the Option be exercised, in whole or in part, after the Expiration Date. The Participant acknowledges and agrees that it is the Participant's sole responsibility to monitor the Expiration Date and any post-termination exercise periods applicable to the Option, and that the Company shall have no obligation to notify the Participant prior to the expiration or termination of the Option.

SECTION 5: EXERCISE OF OPTION

5.1 Exercise in Whole or in Part. Subject to the terms and conditions of this Agreement and the Plan, the vested portion of the Option may be exercised at any time, and from time to time, in whole or in part, on or after the applicable vesting date and prior to the Expiration Date (or such earlier termination date as may be applicable under Section 6 or Section 7), by delivering to the Company a written notice of exercise specifying the number of Shares with respect to which the Option is being exercised. Each exercise of the Option shall be with respect to a whole number of Shares only, and no partial exercise of the Option may be for less than one hundred (100) Shares (or such lesser number of Shares as to which the Option is then exercisable).

5.2 Method of Exercise. The Option shall be exercised by delivery of a written notice of exercise in the form prescribed by the Committee from time to time (the "Exercise Notice"), which shall be substantially in the form provided to the Participant by the Company. The Exercise Notice shall set forth the number of Shares with respect to which the Option is being exercised, the method of payment of the aggregate Exercise Price, and such other information as the Committee may reasonably require. The Exercise Notice shall be delivered to the Company at the address set forth in Section 15.3, or to such other person or at such other address as the Committee may designate from time to time. The exercise of the Option shall be deemed effective on the date the Company receives a properly completed Exercise Notice together with full payment of the aggregate Exercise Price and satisfaction of all applicable tax withholding obligations (the "Exercise Date").

5.3 Payment Methods. The aggregate Exercise Price for the Shares with respect to which the Option is being exercised shall be paid in full at the time of exercise by one or more of the following methods, as determined by the Participant and subject to the approval of the Committee:

(a) Cash or Check. Payment by cash, certified check, bank draft, or money order payable to the order of the Company in United States dollars;

(b) Wire Transfer. Payment by wire transfer of immediately available funds in United States dollars to a bank account designated by the Company;

(c) Share Surrender. To the extent permitted by the Committee in its sole discretion, by the surrender or attestation of Shares of Common Stock of the Company already owned by the Participant (free and clear of any liens, claims, encumbrances, or security interests) and held for at least six (6) months prior to such surrender (or such other period as the Committee may require to avoid adverse accounting consequences to the Company), with such Shares to be valued at Fair Market Value as of the Exercise Date;

(d) Other Methods. Such other methods of payment as the Committee may approve from time to time in its sole discretion, including, without limitation, a broker-assisted cashless exercise arrangement to the extent the Shares become publicly traded on an established national securities exchange or nationally recognized trading system. The Committee shall have no obligation to approve any particular alternative payment method and may impose such conditions and restrictions on the use of any such method as it deems appropriate.

5.4 Tax Withholding. The Participant acknowledges that the exercise of the Option will give rise to taxable income to the Participant, and that the Company is required to withhold taxes with respect to such income. The Company shall have the right to deduct from any compensation or other amounts payable to the Participant, or to require the Participant to remit to the Company, an amount sufficient to satisfy all applicable federal, state, local, and foreign tax withholding obligations (including, without limitation, income tax, social security, Medicare, and any other employment or payroll taxes) arising from the exercise of the Option. In its discretion, the Committee may permit or require the Company to satisfy such withholding obligations, in whole or in part, by withholding Shares otherwise deliverable to the Participant upon exercise of the Option, with such Shares valued at their Fair Market Value as of the Exercise Date; provided, however, that the number of Shares so withheld shall not exceed the number necessary to satisfy the Company's tax withholding obligations at the minimum statutory withholding rate applicable to the Participant (or such other rate as may be permitted by the Committee without adverse accounting consequences to the Company). The Participant shall be solely responsible for the payment of any taxes imposed on the Participant in connection with the Option that are not satisfied through withholding.

5.5 Issuance of Shares. Subject to Section 11 of this Agreement and any other applicable provisions of the Plan, upon the proper exercise of the Option in accordance with this Section 5 and the payment of the aggregate Exercise Price and satisfaction of all applicable tax withholding obligations, the Company shall deliver (or cause to be delivered) to the Participant the number of Shares with respect to which the Option has been exercised, as promptly as practicable but in no event later than thirty (30) days following the Exercise Date. The Shares may, in the sole discretion of the Committee, be evidenced by (i) stock certificates registered in the name of the Participant (or, if applicable, the Participant's estate or beneficiary), bearing such legends as the Company deems necessary or advisable, or (ii) book-entry registration on the books of the Company or its transfer agent. Until such time as the Shares are delivered or registered, the Participant shall have no rights as a stockholder of the Company with respect to such Shares, including without limitation no right to vote, receive dividends, or exercise any other rights of a stockholder.

SECTION 6: TERMINATION OF EMPLOYMENT

6.1 Termination for Cause. If the Participant's employment with the Company is terminated by the Company for "Cause" (as defined in the Executive Employment Agreement between the Company and the Participant, dated [●], 2022 (the "Employment Agreement")), the Option, whether vested or unvested, shall immediately terminate and be forfeited in its entirety as of the date of such termination of employment. The Participant shall have no right to exercise any portion of the Option on or after the date of such termination. For the avoidance of doubt, no partial or prorated vesting shall apply in the event of a termination for Cause.

6.2 Termination by Reason of Death or Disability.

(a) If the Participant's employment with the Company terminates by reason of the Participant's death or "Disability" (as defined in the Plan), then (i) the unvested portion of the Option shall immediately vest as to the number of additional Shares that would have vested during the twelve (12)-month period immediately following the date of such termination of employment had the Participant remained in Continuous Employment throughout such period (the "Accelerated Death/Disability Shares"), and (ii) the vested portion of the Option (including any Accelerated Death/Disability Shares) shall remain exercisable for a period of twelve (12) months following the date of the Participant's death or termination of employment by reason of Disability, as applicable, but in no event later than the Expiration Date. In the event of the Participant's death, the Option shall be exercisable by the Participant's estate, executor, administrator, or the person or persons to whom the Option is transferred by will or by the laws of descent and distribution, or by the Participant's designated beneficiary pursuant to Section 9.2.

(b) Any unvested portion of the Option that is not accelerated pursuant to Section 6.2(a) above shall be immediately forfeited and terminated as of the date of the Participant's termination of employment by reason of death or Disability. Any vested portion of the Option that is not exercised within the twelve (12)-month post-termination exercise period described in Section 6.2(a) shall be forfeited and terminated upon the expiration of such period.

6.3 Termination Without Cause or Resignation for Good Reason (No Change in Control).

(a) If the Participant's employment with the Company is terminated by the Company without Cause, or if the Participant resigns for "Good Reason" (as defined in the Employment Agreement), and such termination of employment does not occur within the twenty-four (24)-month period immediately following a Change in Control (as defined in Section 7.1), then vesting of twenty-five percent (25%) of the then-unvested portion of the Option shall accelerate and become exercisable as of the date of such termination of employment (the "Partial Acceleration Shares").

(b) The vested portion of the Option, including the Partial Acceleration Shares, shall remain exercisable for a period of ninety (90) days following the date of the Participant's termination of employment, but in no event later than the Expiration Date. Any vested portion of the Option that is not exercised within such ninety (90)-day period shall be forfeited and terminated upon the expiration of such period.

(c) Any unvested portion of the Option that is not accelerated pursuant to Section 6.3(a) above shall be immediately forfeited and terminated as of the date of the Participant's termination of employment.

(d) Notwithstanding the foregoing, the acceleration of vesting provided in this Section 6.3 shall be conditioned upon and subject to the Participant's timely execution and non-revocation of a general release of claims against the Company, its affiliates, and their respective officers, directors, employees, and agents, in substantially the form attached as Schedule B to the Employment Agreement (the "Release"), within the time period specified in such Release (which shall in no event exceed sixty (60) days following the date of the Participant's termination of employment). If the Participant fails to timely execute the Release or revokes the Release within the applicable revocation period, no acceleration of vesting shall occur under this Section 6.3, and the unvested portion of the Option shall be forfeited and terminated as of the date of the Participant's termination of employment.

6.4 Voluntary Resignation Without Good Reason.

(a) If the Participant voluntarily resigns from employment with the Company without Good Reason, the unvested portion of the Option shall immediately terminate and be forfeited in its entirety as of the date of such resignation. No acceleration of vesting shall apply in the event of a voluntary resignation without Good Reason.

(b) The vested portion of the Option shall remain exercisable for a period of thirty (30) days following the date of the Participant's resignation, but in no event later than the Expiration Date. Any vested portion of the Option that is not exercised within such thirty (30)-day period shall be forfeited and terminated upon the expiration of such period.

6.5 Non-Renewal. If the Participant's employment with the Company terminates as a result of either Party's non-renewal of the Employment Agreement term upon ninety (90) days' prior written notice in accordance with the terms of the Employment Agreement, the treatment of the Option upon such termination shall be governed by: (i) Section 6.3 of this Agreement if the non-renewal is initiated by the Company, or (ii) Section 6.4 of this Agreement if the non-renewal is initiated by the Participant, unless the Company and the Participant otherwise agree in writing to a different treatment at or prior to the time of such non-renewal.

SECTION 7: CHANGE IN CONTROL

7.1 Definition of "Change in Control." For purposes of this Agreement, a "Change in Control" shall mean the occurrence of any one or more of the following events:

(a) Acquisition of Voting Securities. The acquisition by any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than Ridgeline Capital Partners, LP or any of its affiliates (including, without limitation, Ridgeline Capital Partners Fund IV, LP, and any successor funds or parallel investment vehicles managed by Ridgeline Capital Partners, LP or its affiliates) (collectively, the "Excluded Investors"), of "beneficial ownership" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of securities representing more than fifty percent (50%) of the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors;

(b) Merger, Consolidation, or Asset Sale. The consummation of a merger, consolidation, reorganization, or similar business combination transaction involving the Company, or a sale, lease, license, exchange, or other disposition of all or substantially all of the assets of the Company, in each case in which the stockholders of the Company immediately prior to such transaction retain, directly or indirectly, less than fifty percent (50%) of the combined voting power of the outstanding voting securities of the surviving, resulting, or acquiring entity (or its ultimate parent entity) immediately following such transaction;

(c) Liquidation or Dissolution. The approval by the stockholders of the Company, or the consummation, of a plan of complete liquidation or dissolution of the Company; or

(d) Board Composition Change. A change in the composition of the Board of Directors of the Company (the "Board") such that the individuals who, as of the Grant Date, constitute the Board (the "Incumbent Directors"), together with any new director whose election to the Board or whose nomination for election to the Board by the Company's stockholders was approved by a vote of at least a majority of the Incumbent Directors then still in office (such new directors being deemed "Incumbent Directors" for this purpose), cease for any reason to constitute at least a majority of the members of the Board then in office.

Notwithstanding the foregoing, a transaction shall not constitute a Change in Control if it is effected primarily for the purpose of changing the Company's state of incorporation or creating a holding company structure that does not result in a material change in the beneficial ownership of the Company's voting securities.

7.2 Double-Trigger Acceleration. If, within the twenty-four (24)-month period immediately following a Change in Control, the Participant's employment with the Company (or its successor or acquirer) is terminated by the Company (or its successor or acquirer) without Cause, or the Participant resigns for Good Reason (a "Qualifying CIC Termination"), then one hundred percent (100%) of the unvested portion of the Option shall immediately vest and become fully exercisable as of the date of such Qualifying CIC Termination. For the avoidance of doubt, the acceleration provided in this Section 7.2 shall be in lieu of, and not in addition to, the partial acceleration provided in Section 6.3(a) with respect to any such termination or resignation.

7.3 Post-CIC Exercise Period. Following a Qualifying CIC Termination, the Option (to the extent vested, including any portion accelerated pursuant to Section 7.2) shall remain exercisable for a period of twelve (12) months following the date of such Qualifying CIC Termination, but in no event later than the Expiration Date. Any portion of the Option that is not exercised within such twelve (12)-month period shall be forfeited and terminated upon the expiration of such period.

7.4 Release Requirement. The acceleration of vesting provided in Section 7.2 shall be conditioned upon and subject to the Participant's timely execution and non-revocation of a general release of claims as described in Section 6.3(d) of this Agreement, within the time period specified therein. If the Participant fails to timely execute the Release or revokes the Release within the applicable revocation period, no acceleration of vesting shall occur under Section 7.2, and the Option shall instead be treated in accordance with Section 6.3 (to the extent the conditions of Section 6.3 are satisfied) or Section 6.4 of this Agreement, as applicable.

7.5 Section 280G Best-Net Cutback. Notwithstanding anything in this Agreement or the Plan to the contrary, in the event that any payment, benefit, or distribution of any type received or to be received by the Participant from the Company, its affiliates, or any of their respective successors (whether pursuant to this Agreement, the Employment Agreement, the Plan, or any other plan, agreement, policy, or arrangement with the Company or any of its affiliates) (collectively, the "Total Payments") would constitute a "parachute payment" within the meaning of Section 280G of the Code and would be subject to the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then the aggregate amount of the Total Payments shall be reduced (but not below zero) to the largest amount that would result in no portion of the Total Payments being subject to the Excise Tax (a "Cutback"), but only if and to the extent that the after-tax benefit to the Participant of such reduced Total Payments (after taking into account all applicable federal, state, local, and foreign income taxes and employment taxes, but excluding the Excise Tax) exceeds the after-tax benefit to the Participant of the Total Payments without such reduction (after taking into account all applicable federal, state, local, and foreign income taxes and employment taxes, including the Excise Tax). If the after-tax benefit to the Participant of the Total Payments without such Cutback is equal to or greater than the after-tax benefit to the Participant of the reduced Total Payments, then no Cutback shall apply and the Participant shall be entitled to receive the Total Payments in full, subject to the Excise Tax. For the avoidance of doubt, the Company shall not provide a "gross-up" payment to the Participant with respect to any Excise Tax.

The determination of whether a Cutback is required and the amount of any such Cutback shall be made by Hargrove & Sinclair CPAs (or such other nationally recognized independent registered public accounting firm or tax advisory firm as may be designated by the Company) (the "Determining Firm") at the Company's expense, and such determination shall be final and binding on the Company and the Participant. In the event that a Cutback is required, the order in which payments and benefits shall be reduced shall be determined in accordance with the ordering provisions set forth in the Employment Agreement (including, without limitation, the ordering provisions set forth in Section [●] thereof). If no such ordering provisions are set forth in the Employment Agreement, then the Cutback shall be applied by reducing the Total Payments in the following order: (i) first, any cash severance payments; (ii) second, any accelerated vesting of equity awards (including the Option); and (iii) third, any other payments and benefits, in each case in reverse chronological order (i.e., the payment or benefit with the latest payment date shall be reduced first).

7.6 Treatment Absent Double Trigger. If a Change in Control occurs but the Participant's employment with the Company (or its successor or acquirer) is not terminated in a Qualifying CIC Termination within the twenty-four (24)-month period immediately following such Change in Control, then no acceleration of vesting shall occur under this Section 7, and the Option shall continue to vest in accordance with the schedule set forth in Section 3.1 of this Agreement (subject to the Participant's Continuous Employment and the other terms and conditions of this Agreement). For the avoidance of doubt, this Agreement provides for "double-trigger" acceleration only, and no single-trigger acceleration shall apply upon a Change in Control.

SECTION 8: RESTRICTIVE COVENANTS

8.1 Cross-Reference to Employment Agreement and Non-Competition Agreement. The Participant acknowledges and agrees that the grant of the Option hereunder is made in consideration of, among other things, the Participant's agreement to be bound by and comply with the restrictive covenants set forth in (i) the Employment Agreement, and (ii) the Employee Non-Competition Agreement between the Company and the Participant (the "Non-Competition Agreement"), including without limitation: (a) the twelve (12)-month post-termination non-competition covenant; (b) the eighteen (18)-month post-termination employee non-solicitation covenant; (c) the twelve (12)-month post-termination customer non-solicitation covenant; and (d) the perpetual confidentiality and non-disclosure obligations. The Participant further acknowledges that the grant of the Option constitutes adequate and independent consideration for such restrictive covenants. The Participant agrees that the restrictive covenants referenced in this Section 8.1 are reasonable and necessary to protect the Company's legitimate business interests, including its confidential information, trade secrets, customer relationships, and employee workforce stability.

8.2 Forfeiture for Breach. In the event that the Participant breaches, or the Company reasonably determines that the Participant has breached, any restrictive covenant referenced in Section 8.1, then, in addition to any and all other remedies available to the Company at law or in equity (including, without limitation, injunctive relief and damages):

(a) the unvested portion and the vested but unexercised portion of the Option shall be immediately and automatically forfeited and terminated as of the date of such breach (or, if earlier, the date on which the Company determines that such breach has occurred); and

(b) the Participant shall be required to repay to the Company, within thirty (30) days of the Company's written demand, the net proceeds (i.e., the aggregate Fair Market Value of the Shares on the date of exercise, less the aggregate Exercise Price paid and any taxes withheld by the Company) realized by the Participant from any exercise of the Option occurring within the twelve (12)-month period immediately preceding such breach (or, if later, the twelve (12)-month period immediately preceding the date on which the Company discovers such breach).

The remedies set forth in this Section 8.2 shall be cumulative and shall be in addition to, and not in lieu of, any other remedies available to the Company under the Employment Agreement, the Non-Competition Agreement, the Plan, or applicable law.

SECTION 9: NON-TRANSFERABILITY

9.1 General Restriction. The Option may not be sold, transferred, pledged, assigned, hypothecated, encumbered, or otherwise alienated or disposed of by the Participant, whether voluntarily, involuntarily, or by operation of law, other than by will or by the laws of descent and distribution. During the Participant's lifetime, the Option shall be exercisable only by the Participant (or, in the event of the Participant's legal incapacity, by the Participant's duly authorized guardian or legal representative). Any attempted transfer, assignment, pledge, hypothecation, or other disposition of the Option in violation of this Section 9.1 shall be null and void, and the Company shall not recognize or give effect to any such attempted transfer on its books and records.

9.2 Beneficiary Designation. The Participant may, from time to time, designate one or more beneficiaries to exercise the Option following the Participant's death, in accordance with procedures established by the Committee. Any beneficiary designation shall be filed with the Company in writing on a form prescribed by the Committee and shall become effective only upon receipt by the Company. The Participant may revoke or change any such beneficiary designation at any time by filing a new designation with the Company. If no beneficiary designation is in effect at the time of the Participant's death, or if no designated beneficiary survives the Participant, the Option shall be exercisable by the executor, administrator, or personal representative of the Participant's estate, or by the person or persons to whom the Option is transferred by will or by the laws of descent and distribution.

SECTION 10: ADJUSTMENTS

10.1 Capitalization Adjustments. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification, spin-off, reorganization, merger, consolidation, split-up, repurchase, exchange of shares, issuance of warrants, or other similar change in the capital structure of the Company affecting the Common Stock, the Committee shall make such equitable and proportionate adjustments as it determines, in its sole discretion and in accordance with the terms of the Plan, to (a) the number and kind of Shares (or other securities or property) subject to the Option, and (b) the Exercise Price, in each case to prevent dilution or enlargement of the rights of the Participant under this Agreement. Any such adjustments made by the Committee shall be final, conclusive, and binding on the Participant.

10.2 No Adjustment for Ordinary Dividends. No adjustment to the Option or the Exercise Price shall be made for ordinary cash dividends or distributions declared or paid by the Company on the Common Stock, regardless of whether such dividends or distributions are regular or special in nature.

SECTION 11: SECURITIES LAW COMPLIANCE AND STOCKHOLDERS' AGREEMENT

11.1 Securities Law Restrictions. The Shares issuable upon exercise of the Option have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any applicable state securities or "blue sky" laws. The Shares shall not be issued, delivered, or transferred to the Participant unless and until the issuance and delivery of such Shares comply with all applicable requirements of law, including without limitation the Securities Act, any applicable state securities laws, and the rules and regulations of any securities exchange or quotation system on which the Shares may then be listed or quoted. The Company may require, as a condition to the issuance of any Shares upon exercise of the Option, that the Participant furnish such representations, warranties, and agreements as the Company may consider appropriate in connection with the issuance of the Shares, including without limitation (a) an investment representation letter confirming that the Participant is acquiring the Shares for investment and not with a view to distribution, and (b) an acknowledgment that the Shares are "restricted securities" within the meaning of Rule 144 under the Securities Act. The Company may place one or more restrictive legends on any stock certificates (or apply comparable restrictions to book-entry Shares) evidencing the Shares issued upon exercise of the Option, including without limitation legends restricting transfer in the absence of an effective registration statement or applicable exemption from registration under the Securities Act and applicable state securities laws, and legends reflecting the transfer restrictions set forth in any applicable stockholders' agreement.

11.2 Stockholders' Agreement. The Participant acknowledges and agrees that the Shares acquired upon exercise of the Option will be subject in all respects to the terms and conditions of the Stockholders' Agreement among the Company, Ridgeline Capital Partners Fund IV, LP, Helix Ventures Fund III, LP, and certain other stockholders of the Company (as such agreement may be amended, restated, supplemented, or otherwise modified from time to time, the "Stockholders' Agreement"), including without limitation provisions relating to (a) drag-along rights, (b) tag-along rights, (c) transfer restrictions and prohibited transfers, (d) rights of first refusal, (e) co-sale rights, (f) information rights, and (g) voting agreements. As a condition to the issuance of any Shares upon exercise of the Option, the Participant agrees to execute and deliver a joinder agreement to the Stockholders' Agreement in such form as the Company may require, and to be bound by all terms and conditions of the Stockholders' Agreement applicable to holders of Common Stock. The Participant further acknowledges that the Participant has been provided with a copy of the current Stockholders' Agreement and has had the opportunity to review the same and to consult with the Participant's own legal counsel regarding its terms.

11.3 Helix Ventures Consent. The Participant acknowledges that the grant of this Option and the issuance of Shares upon exercise may be subject to consent rights of Helix Ventures Fund III, LP (or its affiliates or successors) under the Stockholders' Agreement with respect to certain equity issuances by the Company. The Company shall be solely responsible for obtaining any such consents as may be required in connection with the grant of this Option and the issuance of Shares hereunder, and the Participant shall cooperate with the Company in connection therewith as reasonably requested. Notwithstanding the foregoing, the Company shall not be obligated to issue any Shares upon exercise of the Option to the extent that any required consent has not been obtained, and the Participant shall have no claim against the Company in connection with any delay in the issuance of Shares resulting from the Company's efforts to obtain such consent.

SECTION 12: SECTION 409A COMPLIANCE

12.1 Exempt from Section 409A. The Option is intended to be exempt from the requirements of Section 409A of the Code ("Section 409A") pursuant to the stock rights exemption set forth in Treasury Regulation § 1.409A-1(b)(5)(i)(A). Specifically, the Parties intend that the Option satisfies the following conditions: (a) the Exercise Price is not less than the Fair Market Value of the underlying Shares on the Grant Date; (b) the Option relates to "service recipient stock" within the meaning of Treasury Regulation § 1.409A-1(b)(5)(iii); (c) the Option does not include any feature for the deferral of compensation other than the deferral of recognition of income until the later of exercise or disposition of the Option in accordance with Treasury Regulation § 1.409A-1(b)(5)(i)(A)(3); and (d) the Option otherwise satisfies each of the conditions for exemption from Section 409A as a stock right.

12.2 Construction. This Agreement shall be construed, interpreted, and administered in a manner consistent with the exemption of the Option from Section 409A. Notwithstanding any other provision of this Agreement, in no event shall the Company, any affiliate of the Company, the Board, the Committee, or any of their respective members, officers, employees, or agents be liable to the Participant for any additional tax, interest, or penalties that may be imposed on the Participant by reason of Section 409A, or for any damages for failing to comply with Section 409A. The Company and its affiliates make no representations or warranties regarding the tax consequences of the grant, vesting, or exercise of the Option or the disposition of the Shares acquired upon exercise of the Option.

12.3 No Guarantee of Tax Treatment. The Company makes no representation or warranty, express or implied, regarding the federal, state, local, or foreign tax treatment of the Option, the Shares, or any payment or benefit under this Agreement. The Participant acknowledges that the Participant has been advised to consult with the Participant's own independent tax advisors regarding the tax consequences of the Option, including without limitation the application of Section 409A, Section 280G, Section 4999, and Section 83 of the Code, and any applicable state and local tax laws. The Participant shall be solely responsible for the satisfaction of all tax obligations arising from or relating to the Option, and the Company shall have no obligation to indemnify, hold harmless, or otherwise compensate the Participant with respect to any such tax obligations.

SECTION 13: GOVERNING LAW AND DISPUTE RESOLUTION

13.1 Governing Law. This Agreement shall be governed by, construed, and interpreted in accordance with the laws of the Commonwealth of Massachusetts, without giving effect to any choice of law or conflict of laws rules or provisions (whether of the Commonwealth of Massachusetts or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the Commonwealth of Massachusetts.

13.2 Jurisdiction and Venue. Any dispute, claim, or controversy arising out of, relating to, or in connection with this Agreement, the Option, or the breach, termination, enforcement, interpretation, or validity of this Agreement (including the determination of the scope or applicability of this Section 13.2), shall be subject to the exclusive jurisdiction and venue of the state courts of the Commonwealth of Massachusetts located in Suffolk County, Massachusetts, and the United States District Court for the District of Massachusetts sitting in Boston, Massachusetts. Each of the Parties hereby irrevocably submits to the personal jurisdiction of such courts for the purposes of any such action, suit, or proceeding and irrevocably waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any such action, suit, or proceeding in such courts and any claim that any such action, suit, or proceeding brought in any such court has been brought in an inconvenient forum.

13.3 Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OPTION, OR ANY TRANSACTION OR RELATIONSHIP CONTEMPLATED HEREBY. Each Party certifies and acknowledges that (a) no representative of the other Party has represented, expressly or otherwise, that such other Party would not, in the event of litigation, seek to enforce the foregoing waiver; (b) each Party understands and has considered the implications of this waiver; (c) each Party makes this waiver voluntarily; and (d) each Party has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 13.3.

SECTION 14: PLAN GOVERNS

14.1 Incorporation of Plan. This Agreement is made pursuant to and is subject in all respects to the terms and conditions of the Plan, a copy of which has been provided to the Participant. The Participant acknowledges that the Participant has received a copy of the Plan, has read and understands the terms and conditions thereof, and agrees to be bound thereby. In the event of any conflict, ambiguity, or inconsistency between the terms and conditions of this Agreement and the terms and conditions of the Plan, the terms and conditions of the Plan shall govern and control to the extent of such conflict, ambiguity, or inconsistency, unless the Plan expressly provides otherwise.

14.2 Committee Authority. The Committee has full and exclusive authority, power, and discretion to administer, construe, and interpret the Plan and this Agreement, to establish, amend, and rescind rules and regulations relating to the Plan and this Agreement, and to make all other determinations necessary or advisable for the administration of the Plan and this Agreement. All decisions, determinations, and interpretations of the Committee made in good faith shall be final, conclusive, and binding on the Participant and all other persons having or claiming any interest in the Option or the Shares.

SECTION 15: MISCELLANEOUS PROVISIONS

15.1 Entire Agreement. This Agreement, together with the Plan, the Employment Agreement, and the Non-Competition Agreement, constitutes the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous oral and written agreements, discussions, negotiations, commitments, understandings, and representations relating to the grant of the Option and the subject matter hereof. No oral or written statements, representations, promises, or inducements not contained in this Agreement, the Plan, the Employment Agreement, or the Non-Competition Agreement shall be binding on either Party.

15.2 Amendments. This Agreement may not be amended, modified, supplemented, or waived except by a written instrument duly executed by both the Company and the Participant; provided, however, that the Committee may amend the Plan or this Agreement without the Participant's consent to the extent permitted by the Plan, including without limitation to ensure compliance with applicable law or to reflect changes in applicable tax, securities, or other laws or regulations, provided that no such amendment shall materially and adversely affect the Participant's rights under this Agreement without the Participant's prior written consent. Any such amendment, modification, or waiver shall be effective only in the specific instance and for the specific purpose for which it is given.

15.3 Notices. All notices, requests, demands, consents, waivers, and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given when (a) delivered by hand, (b) sent by nationally recognized overnight courier service (with confirmation of delivery), (c) sent by registered or certified mail, return receipt requested, postage prepaid, or (d) transmitted by facsimile or electronic mail (with confirmation of receipt), to the respective Parties at the following addresses (or at such other address as either Party may hereafter designate in writing to the other Party in accordance with this Section 15.3):

If to the Company:

Arbor Health Technologies Inc. 400 Brattle Commerce Park, Suite 1200 Cambridge, Massachusetts 02138

Attention: General Counsel (Aaron Whitfield)

If to the Participant:

Dr. Marcus J. Elliston 87 Laurel Hill Road Wellesley, Massachusetts 02481

or to such other address as either Party may designate by written notice given to the other Party in accordance with this Section 15.3.

15.4 No Right to Continued Employment. Nothing in this Agreement, the Plan, or any related document shall confer upon the Participant any right to continue as an employee of the Company or any affiliate of the Company, or shall interfere with or restrict in any way the right of the Company or any affiliate to discharge or terminate the services of the Participant at any time for any reason whatsoever, with or without Cause, subject to the terms and conditions of the Employment Agreement. The grant of the Option does not constitute a commitment by the Company to grant additional equity awards to the Participant in the future, whether on similar or different terms.

15.5 Severability. If any provision or portion of any provision of this Agreement is held to be invalid, illegal, void, or unenforceable by a court of competent jurisdiction, such provision shall be modified or reformed to the minimum extent necessary to make it valid, legal, and enforceable, and if such modification or reformation is not possible, such provision shall be deemed severed from this Agreement, and the remaining provisions of this Agreement shall continue in full force and effect and shall be construed so as to give effect, to the fullest extent possible, to the original intent of the Parties.

15.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns (including, without limitation, any corporation or other entity that acquires all or substantially all of the assets of the Company, or into which the Company is merged, consolidated, or reorganized), and the Participant and the Participant's heirs, executors, administrators, legal representatives, and permitted assigns. The Participant may not assign or delegate any of the Participant's rights or obligations under this Agreement without the prior written consent of the Company.

15.7 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which, taken together, shall constitute one and the same instrument. Execution and delivery of this Agreement by facsimile, portable document format (PDF), or other electronic transmission shall be deemed to constitute delivery of an originally executed counterpart and shall be binding upon the Party so delivering.

15.8 Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to the Option, the Plan, this Agreement, or future equity awards granted under the Plan, or any other documents related to the Participant's participation in the Plan, by electronic means, including without limitation by electronic mail, posting on the Company's intranet or a third-party website, or other electronic delivery methods. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.

15.9 Clawback Policy. The Option and any Shares acquired upon exercise of the Option, as well as any proceeds, gains, or other economic benefit realized by the Participant from the exercise of the Option or the sale or other disposition of the Shares, shall be subject to any clawback, forfeiture, recoupment, or similar policy or provision adopted by the Company or the Board from time to time, whether adopted before or after the date of this Agreement, including without limitation any such policy adopted in compliance with applicable law or the rules and regulations of any securities exchange or quotation system on which the Company's securities may then be listed or quoted. By accepting the Option, the Participant agrees to be bound by any such policy and to promptly comply with any demand for repayment or return of compensation made pursuant to any such policy.

IN WITNESS WHEREOF, the Parties hereto have executed this Stock Option Award Agreement as of the date first written above.

ARBOR HEALTH TECHNOLOGIES INC.

By: ________

Name: Priya Chandrasekaran

Title: Chief Executive Officer

Date: ________

PARTICIPANT

________________________________________

Dr. Marcus J. Elliston

Date: ________

APPENDIX A

SUMMARY OF KEY TERMS

(Incorporated by Reference into the Stock Option Award Agreement)

The following is a summary of the key terms of the Option granted pursuant to this Agreement. This Appendix A is incorporated into and made a part of this Agreement. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Agreement or the Plan, as applicable. In the event of any conflict between this Appendix A and the body of the Agreement, the body of the Agreement shall control.

End of Stock Option Award Agreement — Draft dated August 12, 2022

ATTORNEY WORK PRODUCT — PRIVILEGED AND CONFIDENTIAL

Calderwood & Harkness LLP	Matter No. 1010-00004 / Client No. 81-30294
Term	Description
Participant	Dr. Marcus J. Elliston
Title	Chief Operating Officer
Grant Date	[●], 2022
Number of Option Shares	Such number of shares of Common Stock representing 1.25% of the fully diluted equity of the Company as of the Grant Date, calculated in accordance with the Plan's fully diluted share methodology
Type of Option	Nonqualified Stock Option (NQSO)
Exercise Price Per Share	Fair Market Value on the Grant Date (to be determined by independent 409A valuation)
Vesting Schedule	25% cliff vesting on the 1st anniversary of the Grant Date; remaining 75% vesting in equal monthly installments over the following 36 months (1/48th per month cumulative; 4-year total vesting period)
Option Term	10 years from the Grant Date
Post-Termination Exercise Periods	Termination for Cause: Immediate termination (no exercise period); Death or Disability: 12 months; Without Cause / Good Reason (no CIC): 90 days; Voluntary resignation without Good Reason: 30 days; Qualifying CIC Termination: 12 months
CIC Acceleration	100% of unvested Option vests upon a Qualifying CIC Termination (double-trigger; within 24 months following a Change in Control)
Non-CIC Acceleration (Without Cause / Good Reason)	25% of the then-unvested portion of the Option
Section 280G Treatment	Best-net cutback (no excise tax gross-up)
Release Requirement	Acceleration under Sections 6.3 and 7.2 conditioned upon timely execution and non-revocation of a general release of claims
Plan	Arbor Health Technologies Inc. 2020 Equity Incentive Plan (as amended May 2021)
Governing Law	Commonwealth of Massachusetts

ATTORNEY WORK PRODUCT — PRIVILEGED AND CONFIDENTIAL
STOCK OPTION AWARD AGREEMENT
Under the Arbor Health Technologies Inc. 2020 Equity Incentive Plan (as amended May 2021)
DRAFT — August 12, 2022
Prepared by: Calderwood & Harkness LLP, One International Place, Suite 3400, Boston, MA 02110
Reviewed by: Sandra Okafor, Counsel, Corporate/M&A; Devon Archer, Lead Associate, Labor & Employment
Matter No.: 1010-00004 / Client No.: 81-30294
STOCK OPTION AWARD AGREEMENT
This STOCK OPTION AWARD AGREEMENT (this "Agreement") is made and entered into as of [●], 2022 (the "Grant Date"), by and between:
ARBOR HEALTH TECHNOLOGIES INC., a Delaware corporation, with its principal offices located at 400 Brattle Commerce Park, Suite 1200, Cambridge, Massachusetts 02138 (the "Company");
and
DR. MARCUS J. ELLISTON, an individual residing at 87 Laurel Hill Road, Wellesley, Massachusetts 02481 (the "Participant" or the "Optionee").
The Company and the Participant are sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, the Company has adopted the Arbor Health Technologies Inc. 2020 Equity Incentive Plan (as amended May 2021) (the "Plan"), which provides for the grant of stock options, restricted stock, restricted stock units, and other equity-based awards to eligible employees, directors, and consultants of the Company and its affiliates;
WHEREAS, the Compensation Committee of the Board of Directors of the Company (the "Committee") has authorized the grant of a stock option to the Participant in connection with his employment as Chief Operating Officer of the Company, and has determined that such grant is in the best interests of the Company and its stockholders;
WHEREAS, this Agreement sets forth the terms and conditions of such stock option grant, and is in all respects subject to the terms and conditions of the Plan, a copy of which has been provided to the Participant and is on file at the principal offices of the Company; and
WHEREAS, capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Plan.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows. The Plan is incorporated herein by reference and made a part hereof as if fully set forth herein. In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall govern and control in all respects.
SECTION 1: GRANT OF OPTION
1.1 Grant. Subject to the terms and conditions set forth in this Agreement and in the Plan, the Company hereby grants to the Participant an option (the "Option") to purchase a number of shares of Common Stock, par value $0.001 per share, of the Company (the "Shares") representing one and twenty-five hundredths percent (1.25%) of the fully diluted equity of the Company as of the Grant Date, calculated in accordance with the fully diluted share methodology set forth in Section 2.3 of the Plan. The exact number of Shares subject to the Option shall be determined by the Committee as of the Grant Date and set forth on Appendix A attached hereto, which is incorporated herein by reference.
1.2 Grant Date. The "Grant Date" of the Option shall be [●], 2022, as determined by the Committee. The Grant Date is anticipated to coincide with, or occur shortly after, the Participant's start date of November 1, 2022, and shall be set forth on Appendix A upon determination by the Committee.
1.3 Type of Option. The Option is intended to be a nonqualified stock option ("NQSO") within the meaning of the Plan and applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code"). The Option shall not be treated as an incentive stock option ("ISO") within the meaning of Section 422 of the Code. The Participant acknowledges and agrees that the Option will not qualify for the favorable tax treatment available to incentive stock options under Section 422 of the Code and the regulations promulgated thereunder.
SECTION 2: EXERCISE PRICE
2.1 Exercise Price Per Share. The exercise price per Share subject to the Option (the "Exercise Price") shall be equal to the Fair Market Value (as defined in the Plan) of one Share of Common Stock on the Grant Date, as determined by the Committee in accordance with the Plan and applicable law. The Exercise Price shall be set forth on Appendix A upon determination by the Committee.
2.2 Fair Market Value Determination. The Parties acknowledge that, as of the date of this Agreement, the Shares are not listed or traded on any established national securities exchange or nationally recognized trading system. Accordingly, the Fair Market Value of the Shares shall be determined by the Committee in good faith, based on an independent valuation of the Common Stock that is consistent with the requirements of Section 409A of the Code and Treasury Regulation § 1.409A-1(b)(5)(iv)(B) (the "409A Valuation"). Such independent valuation shall be performed by a qualified, independent appraiser meeting the requirements of Treasury Regulation § 1.409A-1(b)(5)(iv)(B)(2) and shall be conducted as of a date no more than twelve (12) months prior to the Grant Date. The Company anticipates coordinating the 409A Valuation with Hargrove & Sinclair CPAs, the Company's independent accounting firm, to ensure consistency with the Company's overall tax and financial reporting methodologies. The Committee shall have sole and final authority with respect to all matters relating to the determination of Fair Market Value for purposes of this Agreement.
SECTION 3: VESTING SCHEDULE
3.1 Vesting. Subject to the Participant's Continuous Employment (as defined in Section 3.2 below) with the Company (or any subsidiary or affiliate of the Company) through each applicable vesting date, the Option shall vest and become exercisable with respect to the Shares subject thereto in accordance with the following schedule:
(a) Cliff Vesting. Twenty-five percent (25%) of the total number of Shares subject to the Option shall vest and become exercisable on the first (1st) anniversary of the Grant Date (the "Cliff Vesting Date"). No portion of the Option shall vest or become exercisable prior to the Cliff Vesting Date, except as expressly provided in Section 6 or Section 7 of this Agreement.
(b) Monthly Vesting. Following the Cliff Vesting Date, the remaining seventy-five percent (75%) of the total number of Shares subject to the Option shall vest and become exercisable in thirty-six (36) equal monthly installments over the thirty-six (36)-month period immediately following the Cliff Vesting Date, with each such monthly installment vesting on the same day of the month as the Grant Date (or, if there is no such day in a particular month, on the last day of such month). For the avoidance of doubt, this schedule results in the vesting of one forty-eighth (1/48th) of the total number of Shares subject to the Option per month on a cumulative basis, with the initial twelve forty-eighths (12/48ths) vesting on the Cliff Vesting Date.
(c) Full Vesting. Subject to the Participant's Continuous Employment and the other terms and conditions of this Agreement, one hundred percent (100%) of the total number of Shares subject to the Option shall be fully vested and exercisable on the fourth (4th) anniversary of the Grant Date.
3.2 Continuous Employment Requirement. For purposes of this Agreement, "Continuous Employment" means the Participant's uninterrupted employment with the Company or any subsidiary or affiliate of the Company from the Grant Date through the applicable vesting date. The Participant's employment shall not be deemed to have been interrupted or terminated for purposes of this Agreement by reason of any approved leave of absence, including but not limited to medical leave, family leave, military leave, or any other leave of absence approved in writing by the Company. Notwithstanding the foregoing, the Committee shall retain sole and exclusive discretion to determine the effect of any such leave of absence on the vesting of the Option, including whether vesting shall be tolled, suspended, or otherwise modified during any such leave, consistent with the terms of the Plan and applicable law.
3.3 No Partial Vesting of Fractional Shares. In the event that the application of the vesting schedule set forth in Section 3.1 would result in the vesting of a fractional Share on any vesting date, the number of Shares vesting on such date shall be rounded down to the nearest whole Share. Any fractional Share amounts that are not vested as a result of such rounding shall accumulate and vest on the final vesting date (i.e., the fourth anniversary of the Grant Date), so that the aggregate number of Shares vesting over the full vesting period equals the total number of Shares subject to the Option.
SECTION 4: TERM AND EXPIRATION
4.1 Option Term. Unless earlier terminated in accordance with Section 6 or Section 7 of this Agreement or the terms of the Plan, the Option shall expire at 11:59 p.m. Eastern Time on the tenth (10th) anniversary of the Grant Date (the "Expiration Date"). After the Expiration Date, the Option shall have no further force or effect and shall not be exercisable for any purpose.
4.2 No Exercise After Expiration. Under no circumstances may the Option be exercised, in whole or in part, after the Expiration Date. The Participant acknowledges and agrees that it is the Participant's sole responsibility to monitor the Expiration Date and any post-termination exercise periods applicable to the Option, and that the Company shall have no obligation to notify the Participant prior to the expiration or termination of the Option.
SECTION 5: EXERCISE OF OPTION
5.1 Exercise in Whole or in Part. Subject to the terms and conditions of this Agreement and the Plan, the vested portion of the Option may be exercised at any time, and from time to time, in whole or in part, on or after the applicable vesting date and prior to the Expiration Date (or such earlier termination date as may be applicable under Section 6 or Section 7), by delivering to the Company a written notice of exercise specifying the number of Shares with respect to which the Option is being exercised. Each exercise of the Option shall be with respect to a whole number of Shares only, and no partial exercise of the Option may be for less than one hundred (100) Shares (or such lesser number of Shares as to which the Option is then exercisable).
5.2 Method of Exercise. The Option shall be exercised by delivery of a written notice of exercise in the form prescribed by the Committee from time to time (the "Exercise Notice"), which shall be substantially in the form provided to the Participant by the Company. The Exercise Notice shall set forth the number of Shares with respect to which the Option is being exercised, the method of payment of the aggregate Exercise Price, and such other information as the Committee may reasonably require. The Exercise Notice shall be delivered to the Company at the address set forth in Section 15.3, or to such other person or at such other address as the Committee may designate from time to time. The exercise of the Option shall be deemed effective on the date the Company receives a properly completed Exercise Notice together with full payment of the aggregate Exercise Price and satisfaction of all applicable tax withholding obligations (the "Exercise Date").
5.3 Payment Methods. The aggregate Exercise Price for the Shares with respect to which the Option is being exercised shall be paid in full at the time of exercise by one or more of the following methods, as determined by the Participant and subject to the approval of the Committee:
(a) Cash or Check. Payment by cash, certified check, bank draft, or money order payable to the order of the Company in United States dollars;
(b) Wire Transfer. Payment by wire transfer of immediately available funds in United States dollars to a bank account designated by the Company;
(c) Share Surrender. To the extent permitted by the Committee in its sole discretion, by the surrender or attestation of Shares of Common Stock of the Company already owned by the Participant (free and clear of any liens, claims, encumbrances, or security interests) and held for at least six (6) months prior to such surrender (or such other period as the Committee may require to avoid adverse accounting consequences to the Company), with such Shares to be valued at Fair Market Value as of the Exercise Date;
(d) Other Methods. Such other methods of payment as the Committee may approve from time to time in its sole discretion, including, without limitation, a broker-assisted cashless exercise arrangement to the extent the Shares become publicly traded on an established national securities exchange or nationally recognized trading system. The Committee shall have no obligation to approve any particular alternative payment method and may impose such conditions and restrictions on the use of any such method as it deems appropriate.
5.4 Tax Withholding. The Participant acknowledges that the exercise of the Option will give rise to taxable income to the Participant, and that the Company is required to withhold taxes with respect to such income. The Company shall have the right to deduct from any compensation or other amounts payable to the Participant, or to require the Participant to remit to the Company, an amount sufficient to satisfy all applicable federal, state, local, and foreign tax withholding obligations (including, without limitation, income tax, social security, Medicare, and any other employment or payroll taxes) arising from the exercise of the Option. In its discretion, the Committee may permit or require the Company to satisfy such withholding obligations, in whole or in part, by withholding Shares otherwise deliverable to the Participant upon exercise of the Option, with such Shares valued at their Fair Market Value as of the Exercise Date; provided, however, that the number of Shares so withheld shall not exceed the number necessary to satisfy the Company's tax withholding obligations at the minimum statutory withholding rate applicable to the Participant (or such other rate as may be permitted by the Committee without adverse accounting consequences to the Company). The Participant shall be solely responsible for the payment of any taxes imposed on the Participant in connection with the Option that are not satisfied through withholding.
5.5 Issuance of Shares. Subject to Section 11 of this Agreement and any other applicable provisions of the Plan, upon the proper exercise of the Option in accordance with this Section 5 and the payment of the aggregate Exercise Price and satisfaction of all applicable tax withholding obligations, the Company shall deliver (or cause to be delivered) to the Participant the number of Shares with respect to which the Option has been exercised, as promptly as practicable but in no event later than thirty (30) days following the Exercise Date. The Shares may, in the sole discretion of the Committee, be evidenced by (i) stock certificates registered in the name of the Participant (or, if applicable, the Participant's estate or beneficiary), bearing such legends as the Company deems necessary or advisable, or (ii) book-entry registration on the books of the Company or its transfer agent. Until such time as the Shares are delivered or registered, the Participant shall have no rights as a stockholder of the Company with respect to such Shares, including without limitation no right to vote, receive dividends, or exercise any other rights of a stockholder.
SECTION 6: TERMINATION OF EMPLOYMENT
6.1 Termination for Cause. If the Participant's employment with the Company is terminated by the Company for "Cause" (as defined in the Executive Employment Agreement between the Company and the Participant, dated [●], 2022 (the "Employment Agreement")), the Option, whether vested or unvested, shall immediately terminate and be forfeited in its entirety as of the date of such termination of employment. The Participant shall have no right to exercise any portion of the Option on or after the date of such termination. For the avoidance of doubt, no partial or prorated vesting shall apply in the event of a termination for Cause.
6.2 Termination by Reason of Death or Disability.
(a) If the Participant's employment with the Company terminates by reason of the Participant's death or "Disability" (as defined in the Plan), then (i) the unvested portion of the Option shall immediately vest as to the number of additional Shares that would have vested during the twelve (12)-month period immediately following the date of such termination of employment had the Participant remained in Continuous Employment throughout such period (the "Accelerated Death/Disability Shares"), and (ii) the vested portion of the Option (including any Accelerated Death/Disability Shares) shall remain exercisable for a period of twelve (12) months following the date of the Participant's death or termination of employment by reason of Disability, as applicable, but in no event later than the Expiration Date. In the event of the Participant's death, the Option shall be exercisable by the Participant's estate, executor, administrator, or the person or persons to whom the Option is transferred by will or by the laws of descent and distribution, or by the Participant's designated beneficiary pursuant to Section 9.2.
(b) Any unvested portion of the Option that is not accelerated pursuant to Section 6.2(a) above shall be immediately forfeited and terminated as of the date of the Participant's termination of employment by reason of death or Disability. Any vested portion of the Option that is not exercised within the twelve (12)-month post-termination exercise period described in Section 6.2(a) shall be forfeited and terminated upon the expiration of such period.
6.3 Termination Without Cause or Resignation for Good Reason (No Change in Control).
(a) If the Participant's employment with the Company is terminated by the Company without Cause, or if the Participant resigns for "Good Reason" (as defined in the Employment Agreement), and such termination of employment does not occur within the twenty-four (24)-month period immediately following a Change in Control (as defined in Section 7.1), then vesting of twenty-five percent (25%) of the then-unvested portion of the Option shall accelerate and become exercisable as of the date of such termination of employment (the "Partial Acceleration Shares").
(b) The vested portion of the Option, including the Partial Acceleration Shares, shall remain exercisable for a period of ninety (90) days following the date of the Participant's termination of employment, but in no event later than the Expiration Date. Any vested portion of the Option that is not exercised within such ninety (90)-day period shall be forfeited and terminated upon the expiration of such period.
(c) Any unvested portion of the Option that is not accelerated pursuant to Section 6.3(a) above shall be immediately forfeited and terminated as of the date of the Participant's termination of employment.
(d) Notwithstanding the foregoing, the acceleration of vesting provided in this Section 6.3 shall be conditioned upon and subject to the Participant's timely execution and non-revocation of a general release of claims against the Company, its affiliates, and their respective officers, directors, employees, and agents, in substantially the form attached as Schedule B to the Employment Agreement (the "Release"), within the time period specified in such Release (which shall in no event exceed sixty (60) days following the date of the Participant's termination of employment). If the Participant fails to timely execute the Release or revokes the Release within the applicable revocation period, no acceleration of vesting shall occur under this Section 6.3, and the unvested portion of the Option shall be forfeited and terminated as of the date of the Participant's termination of employment.
6.4 Voluntary Resignation Without Good Reason.
(a) If the Participant voluntarily resigns from employment with the Company without Good Reason, the unvested portion of the Option shall immediately terminate and be forfeited in its entirety as of the date of such resignation. No acceleration of vesting shall apply in the event of a voluntary resignation without Good Reason.
(b) The vested portion of the Option shall remain exercisable for a period of thirty (30) days following the date of the Participant's resignation, but in no event later than the Expiration Date. Any vested portion of the Option that is not exercised within such thirty (30)-day period shall be forfeited and terminated upon the expiration of such period.
6.5 Non-Renewal. If the Participant's employment with the Company terminates as a result of either Party's non-renewal of the Employment Agreement term upon ninety (90) days' prior written notice in accordance with the terms of the Employment Agreement, the treatment of the Option upon such termination shall be governed by: (i) Section 6.3 of this Agreement if the non-renewal is initiated by the Company, or (ii) Section 6.4 of this Agreement if the non-renewal is initiated by the Participant, unless the Company and the Participant otherwise agree in writing to a different treatment at or prior to the time of such non-renewal.
SECTION 7: CHANGE IN CONTROL
7.1 Definition of "Change in Control." For purposes of this Agreement, a "Change in Control" shall mean the occurrence of any one or more of the following events:
(a) Acquisition of Voting Securities. The acquisition by any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than Ridgeline Capital Partners, LP or any of its affiliates (including, without limitation, Ridgeline Capital Partners Fund IV, LP, and any successor funds or parallel investment vehicles managed by Ridgeline Capital Partners, LP or its affiliates) (collectively, the "Excluded Investors"), of "beneficial ownership" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of securities representing more than fifty percent (50%) of the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors;
(b) Merger, Consolidation, or Asset Sale. The consummation of a merger, consolidation, reorganization, or similar business combination transaction involving the Company, or a sale, lease, license, exchange, or other disposition of all or substantially all of the assets of the Company, in each case in which the stockholders of the Company immediately prior to such transaction retain, directly or indirectly, less than fifty percent (50%) of the combined voting power of the outstanding voting securities of the surviving, resulting, or acquiring entity (or its ultimate parent entity) immediately following such transaction;
(c) Liquidation or Dissolution. The approval by the stockholders of the Company, or the consummation, of a plan of complete liquidation or dissolution of the Company; or
(d) Board Composition Change. A change in the composition of the Board of Directors of the Company (the "Board") such that the individuals who, as of the Grant Date, constitute the Board (the "Incumbent Directors"), together with any new director whose election to the Board or whose nomination for election to the Board by the Company's stockholders was approved by a vote of at least a majority of the Incumbent Directors then still in office (such new directors being deemed "Incumbent Directors" for this purpose), cease for any reason to constitute at least a majority of the members of the Board then in office.
Notwithstanding the foregoing, a transaction shall not constitute a Change in Control if it is effected primarily for the purpose of changing the Company's state of incorporation or creating a holding company structure that does not result in a material change in the beneficial ownership of the Company's voting securities.
7.2 Double-Trigger Acceleration. If, within the twenty-four (24)-month period immediately following a Change in Control, the Participant's employment with the Company (or its successor or acquirer) is terminated by the Company (or its successor or acquirer) without Cause, or the Participant resigns for Good Reason (a "Qualifying CIC Termination"), then one hundred percent (100%) of the unvested portion of the Option shall immediately vest and become fully exercisable as of the date of such Qualifying CIC Termination. For the avoidance of doubt, the acceleration provided in this Section 7.2 shall be in lieu of, and not in addition to, the partial acceleration provided in Section 6.3(a) with respect to any such termination or resignation.
7.3 Post-CIC Exercise Period. Following a Qualifying CIC Termination, the Option (to the extent vested, including any portion accelerated pursuant to Section 7.2) shall remain exercisable for a period of twelve (12) months following the date of such Qualifying CIC Termination, but in no event later than the Expiration Date. Any portion of the Option that is not exercised within such twelve (12)-month period shall be forfeited and terminated upon the expiration of such period.
7.4 Release Requirement. The acceleration of vesting provided in Section 7.2 shall be conditioned upon and subject to the Participant's timely execution and non-revocation of a general release of claims as described in Section 6.3(d) of this Agreement, within the time period specified therein. If the Participant fails to timely execute the Release or revokes the Release within the applicable revocation period, no acceleration of vesting shall occur under Section 7.2, and the Option shall instead be treated in accordance with Section 6.3 (to the extent the conditions of Section 6.3 are satisfied) or Section 6.4 of this Agreement, as applicable.
7.5 Section 280G Best-Net Cutback. Notwithstanding anything in this Agreement or the Plan to the contrary, in the event that any payment, benefit, or distribution of any type received or to be received by the Participant from the Company, its affiliates, or any of their respective successors (whether pursuant to this Agreement, the Employment Agreement, the Plan, or any other plan, agreement, policy, or arrangement with the Company or any of its affiliates) (collectively, the "Total Payments") would constitute a "parachute payment" within the meaning of Section 280G of the Code and would be subject to the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then the aggregate amount of the Total Payments shall be reduced (but not below zero) to the largest amount that would result in no portion of the Total Payments being subject to the Excise Tax (a "Cutback"), but only if and to the extent that the after-tax benefit to the Participant of such reduced Total Payments (after taking into account all applicable federal, state, local, and foreign income taxes and employment taxes, but excluding the Excise Tax) exceeds the after-tax benefit to the Participant of the Total Payments without such reduction (after taking into account all applicable federal, state, local, and foreign income taxes and employment taxes, including the Excise Tax). If the after-tax benefit to the Participant of the Total Payments without such Cutback is equal to or greater than the after-tax benefit to the Participant of the reduced Total Payments, then no Cutback shall apply and the Participant shall be entitled to receive the Total Payments in full, subject to the Excise Tax. For the avoidance of doubt, the Company shall not provide a "gross-up" payment to the Participant with respect to any Excise Tax.
The determination of whether a Cutback is required and the amount of any such Cutback shall be made by Hargrove & Sinclair CPAs (or such other nationally recognized independent registered public accounting firm or tax advisory firm as may be designated by the Company) (the "Determining Firm") at the Company's expense, and such determination shall be final and binding on the Company and the Participant. In the event that a Cutback is required, the order in which payments and benefits shall be reduced shall be determined in accordance with the ordering provisions set forth in the Employment Agreement (including, without limitation, the ordering provisions set forth in Section [●] thereof). If no such ordering provisions are set forth in the Employment Agreement, then the Cutback shall be applied by reducing the Total Payments in the following order: (i) first, any cash severance payments; (ii) second, any accelerated vesting of equity awards (including the Option); and (iii) third, any other payments and benefits, in each case in reverse chronological order (i.e., the payment or benefit with the latest payment date shall be reduced first).
7.6 Treatment Absent Double Trigger. If a Change in Control occurs but the Participant's employment with the Company (or its successor or acquirer) is not terminated in a Qualifying CIC Termination within the twenty-four (24)-month period immediately following such Change in Control, then no acceleration of vesting shall occur under this Section 7, and the Option shall continue to vest in accordance with the schedule set forth in Section 3.1 of this Agreement (subject to the Participant's Continuous Employment and the other terms and conditions of this Agreement). For the avoidance of doubt, this Agreement provides for "double-trigger" acceleration only, and no single-trigger acceleration shall apply upon a Change in Control.
SECTION 8: RESTRICTIVE COVENANTS
8.1 Cross-Reference to Employment Agreement and Non-Competition Agreement. The Participant acknowledges and agrees that the grant of the Option hereunder is made in consideration of, among other things, the Participant's agreement to be bound by and comply with the restrictive covenants set forth in (i) the Employment Agreement, and (ii) the Employee Non-Competition Agreement between the Company and the Participant (the "Non-Competition Agreement"), including without limitation: (a) the twelve (12)-month post-termination non-competition covenant; (b) the eighteen (18)-month post-termination employee non-solicitation covenant; (c) the twelve (12)-month post-termination customer non-solicitation covenant; and (d) the perpetual confidentiality and non-disclosure obligations. The Participant further acknowledges that the grant of the Option constitutes adequate and independent consideration for such restrictive covenants. The Participant agrees that the restrictive covenants referenced in this Section 8.1 are reasonable and necessary to protect the Company's legitimate business interests, including its confidential information, trade secrets, customer relationships, and employee workforce stability.
8.2 Forfeiture for Breach. In the event that the Participant breaches, or the Company reasonably determines that the Participant has breached, any restrictive covenant referenced in Section 8.1, then, in addition to any and all other remedies available to the Company at law or in equity (including, without limitation, injunctive relief and damages):
(a) the unvested portion and the vested but unexercised portion of the Option shall be immediately and automatically forfeited and terminated as of the date of such breach (or, if earlier, the date on which the Company determines that such breach has occurred); and
(b) the Participant shall be required to repay to the Company, within thirty (30) days of the Company's written demand, the net proceeds (i.e., the aggregate Fair Market Value of the Shares on the date of exercise, less the aggregate Exercise Price paid and any taxes withheld by the Company) realized by the Participant from any exercise of the Option occurring within the twelve (12)-month period immediately preceding such breach (or, if later, the twelve (12)-month period immediately preceding the date on which the Company discovers such breach).
The remedies set forth in this Section 8.2 shall be cumulative and shall be in addition to, and not in lieu of, any other remedies available to the Company under the Employment Agreement, the Non-Competition Agreement, the Plan, or applicable law.
SECTION 9: NON-TRANSFERABILITY
9.1 General Restriction. The Option may not be sold, transferred, pledged, assigned, hypothecated, encumbered, or otherwise alienated or disposed of by the Participant, whether voluntarily, involuntarily, or by operation of law, other than by will or by the laws of descent and distribution. During the Participant's lifetime, the Option shall be exercisable only by the Participant (or, in the event of the Participant's legal incapacity, by the Participant's duly authorized guardian or legal representative). Any attempted transfer, assignment, pledge, hypothecation, or other disposition of the Option in violation of this Section 9.1 shall be null and void, and the Company shall not recognize or give effect to any such attempted transfer on its books and records.
9.2 Beneficiary Designation. The Participant may, from time to time, designate one or more beneficiaries to exercise the Option following the Participant's death, in accordance with procedures established by the Committee. Any beneficiary designation shall be filed with the Company in writing on a form prescribed by the Committee and shall become effective only upon receipt by the Company. The Participant may revoke or change any such beneficiary designation at any time by filing a new designation with the Company. If no beneficiary designation is in effect at the time of the Participant's death, or if no designated beneficiary survives the Participant, the Option shall be exercisable by the executor, administrator, or personal representative of the Participant's estate, or by the person or persons to whom the Option is transferred by will or by the laws of descent and distribution.
SECTION 10: ADJUSTMENTS
10.1 Capitalization Adjustments. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification, spin-off, reorganization, merger, consolidation, split-up, repurchase, exchange of shares, issuance of warrants, or other similar change in the capital structure of the Company affecting the Common Stock, the Committee shall make such equitable and proportionate adjustments as it determines, in its sole discretion and in accordance with the terms of the Plan, to (a) the number and kind of Shares (or other securities or property) subject to the Option, and (b) the Exercise Price, in each case to prevent dilution or enlargement of the rights of the Participant under this Agreement. Any such adjustments made by the Committee shall be final, conclusive, and binding on the Participant.
10.2 No Adjustment for Ordinary Dividends. No adjustment to the Option or the Exercise Price shall be made for ordinary cash dividends or distributions declared or paid by the Company on the Common Stock, regardless of whether such dividends or distributions are regular or special in nature.
SECTION 11: SECURITIES LAW COMPLIANCE AND STOCKHOLDERS' AGREEMENT
11.1 Securities Law Restrictions. The Shares issuable upon exercise of the Option have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any applicable state securities or "blue sky" laws. The Shares shall not be issued, delivered, or transferred to the Participant unless and until the issuance and delivery of such Shares comply with all applicable requirements of law, including without limitation the Securities Act, any applicable state securities laws, and the rules and regulations of any securities exchange or quotation system on which the Shares may then be listed or quoted. The Company may require, as a condition to the issuance of any Shares upon exercise of the Option, that the Participant furnish such representations, warranties, and agreements as the Company may consider appropriate in connection with the issuance of the Shares, including without limitation (a) an investment representation letter confirming that the Participant is acquiring the Shares for investment and not with a view to distribution, and (b) an acknowledgment that the Shares are "restricted securities" within the meaning of Rule 144 under the Securities Act. The Company may place one or more restrictive legends on any stock certificates (or apply comparable restrictions to book-entry Shares) evidencing the Shares issued upon exercise of the Option, including without limitation legends restricting transfer in the absence of an effective registration statement or applicable exemption from registration under the Securities Act and applicable state securities laws, and legends reflecting the transfer restrictions set forth in any applicable stockholders' agreement.
11.2 Stockholders' Agreement. The Participant acknowledges and agrees that the Shares acquired upon exercise of the Option will be subject in all respects to the terms and conditions of the Stockholders' Agreement among the Company, Ridgeline Capital Partners Fund IV, LP, Helix Ventures Fund III, LP, and certain other stockholders of the Company (as such agreement may be amended, restated, supplemented, or otherwise modified from time to time, the "Stockholders' Agreement"), including without limitation provisions relating to (a) drag-along rights, (b) tag-along rights, (c) transfer restrictions and prohibited transfers, (d) rights of first refusal, (e) co-sale rights, (f) information rights, and (g) voting agreements. As a condition to the issuance of any Shares upon exercise of the Option, the Participant agrees to execute and deliver a joinder agreement to the Stockholders' Agreement in such form as the Company may require, and to be bound by all terms and conditions of the Stockholders' Agreement applicable to holders of Common Stock. The Participant further acknowledges that the Participant has been provided with a copy of the current Stockholders' Agreement and has had the opportunity to review the same and to consult with the Participant's own legal counsel regarding its terms.
11.3 Helix Ventures Consent. The Participant acknowledges that the grant of this Option and the issuance of Shares upon exercise may be subject to consent rights of Helix Ventures Fund III, LP (or its affiliates or successors) under the Stockholders' Agreement with respect to certain equity issuances by the Company. The Company shall be solely responsible for obtaining any such consents as may be required in connection with the grant of this Option and the issuance of Shares hereunder, and the Participant shall cooperate with the Company in connection therewith as reasonably requested. Notwithstanding the foregoing, the Company shall not be obligated to issue any Shares upon exercise of the Option to the extent that any required consent has not been obtained, and the Participant shall have no claim against the Company in connection with any delay in the issuance of Shares resulting from the Company's efforts to obtain such consent.
SECTION 12: SECTION 409A COMPLIANCE
12.1 Exempt from Section 409A. The Option is intended to be exempt from the requirements of Section 409A of the Code ("Section 409A") pursuant to the stock rights exemption set forth in Treasury Regulation § 1.409A-1(b)(5)(i)(A). Specifically, the Parties intend that the Option satisfies the following conditions: (a) the Exercise Price is not less than the Fair Market Value of the underlying Shares on the Grant Date; (b) the Option relates to "service recipient stock" within the meaning of Treasury Regulation § 1.409A-1(b)(5)(iii); (c) the Option does not include any feature for the deferral of compensation other than the deferral of recognition of income until the later of exercise or disposition of the Option in accordance with Treasury Regulation § 1.409A-1(b)(5)(i)(A)(3); and (d) the Option otherwise satisfies each of the conditions for exemption from Section 409A as a stock right.
12.2 Construction. This Agreement shall be construed, interpreted, and administered in a manner consistent with the exemption of the Option from Section 409A. Notwithstanding any other provision of this Agreement, in no event shall the Company, any affiliate of the Company, the Board, the Committee, or any of their respective members, officers, employees, or agents be liable to the Participant for any additional tax, interest, or penalties that may be imposed on the Participant by reason of Section 409A, or for any damages for failing to comply with Section 409A. The Company and its affiliates make no representations or warranties regarding the tax consequences of the grant, vesting, or exercise of the Option or the disposition of the Shares acquired upon exercise of the Option.
12.3 No Guarantee of Tax Treatment. The Company makes no representation or warranty, express or implied, regarding the federal, state, local, or foreign tax treatment of the Option, the Shares, or any payment or benefit under this Agreement. The Participant acknowledges that the Participant has been advised to consult with the Participant's own independent tax advisors regarding the tax consequences of the Option, including without limitation the application of Section 409A, Section 280G, Section 4999, and Section 83 of the Code, and any applicable state and local tax laws. The Participant shall be solely responsible for the satisfaction of all tax obligations arising from or relating to the Option, and the Company shall have no obligation to indemnify, hold harmless, or otherwise compensate the Participant with respect to any such tax obligations.
SECTION 13: GOVERNING LAW AND DISPUTE RESOLUTION
13.1 Governing Law. This Agreement shall be governed by, construed, and interpreted in accordance with the laws of the Commonwealth of Massachusetts, without giving effect to any choice of law or conflict of laws rules or provisions (whether of the Commonwealth of Massachusetts or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the Commonwealth of Massachusetts.
13.2 Jurisdiction and Venue. Any dispute, claim, or controversy arising out of, relating to, or in connection with this Agreement, the Option, or the breach, termination, enforcement, interpretation, or validity of this Agreement (including the determination of the scope or applicability of this Section 13.2), shall be subject to the exclusive jurisdiction and venue of the state courts of the Commonwealth of Massachusetts located in Suffolk County, Massachusetts, and the United States District Court for the District of Massachusetts sitting in Boston, Massachusetts. Each of the Parties hereby irrevocably submits to the personal jurisdiction of such courts for the purposes of any such action, suit, or proceeding and irrevocably waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any such action, suit, or proceeding in such courts and any claim that any such action, suit, or proceeding brought in any such court has been brought in an inconvenient forum.
13.3 Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OPTION, OR ANY TRANSACTION OR RELATIONSHIP CONTEMPLATED HEREBY. Each Party certifies and acknowledges that (a) no representative of the other Party has represented, expressly or otherwise, that such other Party would not, in the event of litigation, seek to enforce the foregoing waiver; (b) each Party understands and has considered the implications of this waiver; (c) each Party makes this waiver voluntarily; and (d) each Party has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 13.3.
SECTION 14: PLAN GOVERNS
14.1 Incorporation of Plan. This Agreement is made pursuant to and is subject in all respects to the terms and conditions of the Plan, a copy of which has been provided to the Participant. The Participant acknowledges that the Participant has received a copy of the Plan, has read and understands the terms and conditions thereof, and agrees to be bound thereby. In the event of any conflict, ambiguity, or inconsistency between the terms and conditions of this Agreement and the terms and conditions of the Plan, the terms and conditions of the Plan shall govern and control to the extent of such conflict, ambiguity, or inconsistency, unless the Plan expressly provides otherwise.
14.2 Committee Authority. The Committee has full and exclusive authority, power, and discretion to administer, construe, and interpret the Plan and this Agreement, to establish, amend, and rescind rules and regulations relating to the Plan and this Agreement, and to make all other determinations necessary or advisable for the administration of the Plan and this Agreement. All decisions, determinations, and interpretations of the Committee made in good faith shall be final, conclusive, and binding on the Participant and all other persons having or claiming any interest in the Option or the Shares.
SECTION 15: MISCELLANEOUS PROVISIONS
15.1 Entire Agreement. This Agreement, together with the Plan, the Employment Agreement, and the Non-Competition Agreement, constitutes the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous oral and written agreements, discussions, negotiations, commitments, understandings, and representations relating to the grant of the Option and the subject matter hereof. No oral or written statements, representations, promises, or inducements not contained in this Agreement, the Plan, the Employment Agreement, or the Non-Competition Agreement shall be binding on either Party.
15.2 Amendments. This Agreement may not be amended, modified, supplemented, or waived except by a written instrument duly executed by both the Company and the Participant; provided, however, that the Committee may amend the Plan or this Agreement without the Participant's consent to the extent permitted by the Plan, including without limitation to ensure compliance with applicable law or to reflect changes in applicable tax, securities, or other laws or regulations, provided that no such amendment shall materially and adversely affect the Participant's rights under this Agreement without the Participant's prior written consent. Any such amendment, modification, or waiver shall be effective only in the specific instance and for the specific purpose for which it is given.
15.3 Notices. All notices, requests, demands, consents, waivers, and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given when (a) delivered by hand, (b) sent by nationally recognized overnight courier service (with confirmation of delivery), (c) sent by registered or certified mail, return receipt requested, postage prepaid, or (d) transmitted by facsimile or electronic mail (with confirmation of receipt), to the respective Parties at the following addresses (or at such other address as either Party may hereafter designate in writing to the other Party in accordance with this Section 15.3):
If to the Company:
Arbor Health Technologies Inc. 400 Brattle Commerce Park, Suite 1200 Cambridge, Massachusetts 02138
Attention: General Counsel (Aaron Whitfield)
If to the Participant:
Dr. Marcus J. Elliston 87 Laurel Hill Road Wellesley, Massachusetts 02481
or to such other address as either Party may designate by written notice given to the other Party in accordance with this Section 15.3.
15.4 No Right to Continued Employment. Nothing in this Agreement, the Plan, or any related document shall confer upon the Participant any right to continue as an employee of the Company or any affiliate of the Company, or shall interfere with or restrict in any way the right of the Company or any affiliate to discharge or terminate the services of the Participant at any time for any reason whatsoever, with or without Cause, subject to the terms and conditions of the Employment Agreement. The grant of the Option does not constitute a commitment by the Company to grant additional equity awards to the Participant in the future, whether on similar or different terms.
15.5 Severability. If any provision or portion of any provision of this Agreement is held to be invalid, illegal, void, or unenforceable by a court of competent jurisdiction, such provision shall be modified or reformed to the minimum extent necessary to make it valid, legal, and enforceable, and if such modification or reformation is not possible, such provision shall be deemed severed from this Agreement, and the remaining provisions of this Agreement shall continue in full force and effect and shall be construed so as to give effect, to the fullest extent possible, to the original intent of the Parties.
15.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns (including, without limitation, any corporation or other entity that acquires all or substantially all of the assets of the Company, or into which the Company is merged, consolidated, or reorganized), and the Participant and the Participant's heirs, executors, administrators, legal representatives, and permitted assigns. The Participant may not assign or delegate any of the Participant's rights or obligations under this Agreement without the prior written consent of the Company.
15.7 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which, taken together, shall constitute one and the same instrument. Execution and delivery of this Agreement by facsimile, portable document format (PDF), or other electronic transmission shall be deemed to constitute delivery of an originally executed counterpart and shall be binding upon the Party so delivering.
15.8 Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to the Option, the Plan, this Agreement, or future equity awards granted under the Plan, or any other documents related to the Participant's participation in the Plan, by electronic means, including without limitation by electronic mail, posting on the Company's intranet or a third-party website, or other electronic delivery methods. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.
15.9 Clawback Policy. The Option and any Shares acquired upon exercise of the Option, as well as any proceeds, gains, or other economic benefit realized by the Participant from the exercise of the Option or the sale or other disposition of the Shares, shall be subject to any clawback, forfeiture, recoupment, or similar policy or provision adopted by the Company or the Board from time to time, whether adopted before or after the date of this Agreement, including without limitation any such policy adopted in compliance with applicable law or the rules and regulations of any securities exchange or quotation system on which the Company's securities may then be listed or quoted. By accepting the Option, the Participant agrees to be bound by any such policy and to promptly comply with any demand for repayment or return of compensation made pursuant to any such policy.
IN WITNESS WHEREOF, the Parties hereto have executed this Stock Option Award Agreement as of the date first written above.
ARBOR HEALTH TECHNOLOGIES INC.
By: ________
Name: Priya Chandrasekaran
Title: Chief Executive Officer
Date: ________
PARTICIPANT
________________________________________
Dr. Marcus J. Elliston
Date: ________
APPENDIX A
SUMMARY OF KEY TERMS
(Incorporated by Reference into the Stock Option Award Agreement)
The following is a summary of the key terms of the Option granted pursuant to this Agreement. This Appendix A is incorporated into and made a part of this Agreement. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Agreement or the Plan, as applicable. In the event of any conflict between this Appendix A and the body of the Agreement, the body of the Agreement shall control.
End of Stock Option Award Agreement — Draft dated August 12, 2022
ATTORNEY WORK PRODUCT — PRIVILEGED AND CONFIDENTIAL
Calderwood & Harkness LLP | Matter No. 1010-00004 / Client No. 81-30294
Term | Description
Participant | Dr. Marcus J. Elliston
Title | Chief Operating Officer
Grant Date | [●], 2022
Number of Option Shares | Such number of shares of Common Stock representing 1.25% of the fully diluted equity of the Company as of the Grant Date, calculated in accordance with the Plan's fully diluted share methodology
Type of Option | Nonqualified Stock Option (NQSO)
Exercise Price Per Share | Fair Market Value on the Grant Date (to be determined by independent 409A valuation)
Vesting Schedule | 25% cliff vesting on the 1st anniversary of the Grant Date; remaining 75% vesting in equal monthly installments over the following 36 months (1/48th per month cumulative; 4-year total vesting period)
Option Term | 10 years from the Grant Date
Post-Termination Exercise Periods | Termination for Cause: Immediate termination (no exercise period); Death or Disability: 12 months; Without Cause / Good Reason (no CIC): 90 days; Voluntary resignation without Good Reason: 30 days; Qualifying CIC Termination: 12 months
CIC Acceleration | 100% of unvested Option vests upon a Qualifying CIC Termination (double-trigger; within 24 months following a Change in Control)
Non-CIC Acceleration (Without Cause / Good Reason) | 25% of the then-unvested portion of the Option
Section 280G Treatment | Best-net cutback (no excise tax gross-up)
Release Requirement | Acceleration under Sections 6.3 and 7.2 conditioned upon timely execution and non-revocation of a general release of claims
Plan | Arbor Health Technologies Inc. 2020 Equity Incentive Plan (as amended May 2021)
Governing Law | Commonwealth of Massachusetts

ATTORNEY WORK PRODUCT — PRIVILEGED AND CONFIDENTIAL

STOCK OPTION AWARD AGREEMENT

STOCK OPTION AWARD AGREEMENT

RECITALS

SECTION 1: GRANT OF OPTION

SECTION 2: EXERCISE PRICE

SECTION 3: VESTING SCHEDULE

SECTION 4: TERM AND EXPIRATION

SECTION 5: EXERCISE OF OPTION

SECTION 6: TERMINATION OF EMPLOYMENT

SECTION 7: CHANGE IN CONTROL

SECTION 8: RESTRICTIVE COVENANTS

SECTION 9: NON-TRANSFERABILITY

SECTION 10: ADJUSTMENTS

SECTION 11: SECURITIES LAW COMPLIANCE AND STOCKHOLDERS' AGREEMENT

SECTION 12: SECTION 409A COMPLIANCE

SECTION 13: GOVERNING LAW AND DISPUTE RESOLUTION

SECTION 14: PLAN GOVERNS

SECTION 15: MISCELLANEOUS PROVISIONS

ARBOR HEALTH TECHNOLOGIES INC.

PARTICIPANT

APPENDIX A

SUMMARY OF KEY TERMS

Record

Parties

Dates

Amounts