Security Ownership of Certain Beneficial Owners
The following table sets
forth certain information regarding the beneficial ownership of our capital stock as of March 12, 2021, for each person known by us to
own beneficially 5% or more of the voting capital stock.
|
Title of Class
|
|
Name and
Address of
Beneficial Owner
|
|
Amount
and
Nature of
Beneficial
Ownership
|
|
|
Percent
of
Class
(1)
|
|
|
Common Stock
|
|
Thomas
J. Shaw(2)
511
Lobo Lane
Little
Elm, TX 75068
|
|
|
15,656,660
|
|
|
|
46.1
|
%
|
(1) The
Percent of Class is calculated by dividing the Amount of Beneficial Ownership, as shown in the table above, by the sum of the total outstanding
Common Stock (33,982,604 shares).
(2) 1,080,000
of the shares owned by the August 2010 Family Trust are controlled by Mr. Shaw pursuant to a Voting Agreement. These shares are voted
by Mr. Shaw until such time as they are sold. Additionally, Mr. Shaw has investment power over 500,000 shares of Common Stock as
Trustee pursuant to a trust agreement for the benefit of a family member.
Security Ownership of Management and Directors
The following table sets
forth certain information regarding the beneficial ownership of our capital stock as of March 12, 2021, for each Named Executive Officer
specified by Item 402 of Regulation S-K (i.e., our CEO, CFO, and three other highest paid officers) and Director of the Company. Except
pursuant to applicable community property laws or as otherwise discussed below, each shareholder identified in the table possesses sole
voting and investment power with respect to his or her shares.
|
Title of Class
|
|
Name
of
Beneficial
Owner
|
|
Amount
and Nature of
Beneficial Ownership
|
|
|
Percent
of
Class(1)
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
As a Group
|
|
Named Executive Officers and Directors
|
|
|
16,805,560
|
|
|
|
49.5
|
%
|
|
As Individuals
|
|
Thomas J. Shaw(2)
|
|
|
15,656,660
|
|
|
|
46.1
|
%
|
|
|
|
Michele M. Larios(3)
|
|
|
861,000
|
|
|
|
2.5
|
%
|
|
|
|
John W. Fort III(4)
|
|
|
9,900
|
|
|
|
<1
|
%
|
|
|
|
Marco Laterza(5)
|
|
|
95,000
|
|
|
|
<1
|
%
|
|
|
|
Walter O. Bigby, Jr.
|
|
|
95,000
|
|
|
|
<1
|
%
|
|
|
|
Amy Mack(6)
|
|
|
50,000
|
|
|
|
<1
|
%
|
|
|
|
Darren E. Findley
|
|
|
4,200
|
|
|
|
<1
|
%
|
|
|
|
Kathryn Duesman(7)
|
|
|
20,700
|
|
|
|
<1
|
%
|
|
|
|
Russell B. Kuhlman(8)
|
|
|
13,100
|
|
|
|
<1
|
%
|
(1) The
Percent of Class is calculated for the individuals holding Common Stock by dividing each beneficial owner's Amount of Beneficial Ownership,
as shown in the table above, by the sum of the total outstanding Common Stock (33,982,604 shares) plus that beneficial owner's stock
equivalents (options), if any. The Percent of Class is calculated for the "As a Group" row by totaling all of the Percent of
Class percentages appearing in the chart.
(2) 1,080,000
of the shares owned by the August 2010 Family Trust are controlled by Mr. Shaw pursuant to a Voting Agreement. These shares are voted
by Mr. Shaw until such time as they are sold. Additionally, Mr. Shaw has investment power over 500,000 shares of Common Stock as
Trustee pursuant to a trust agreement for the benefit of a family member.
(3) 1,000
of these shares are owned by Ms. Larios’ children. 800,000 of these shares are owned by trusts for the benefit of non-family members
for which Ms. Larios serves as trustee.
(4) These
shares are acquirable by the exercise of stock options.
(5) 25,000
of these shares are acquirable by the exercise of stock options.
(6) These
shares are acquirable by the exercise of stock options.
(7) Ms.
Duesman is not an executive officer, but qualifies as a “named executive officer” by virtue of Item 402(m)(2)(iii) of Regulation
S-K.
(8) Mr.
Kuhlman was a Named Executive Officer on March 12, 2021.
There are no arrangements,
the operation of which would result in a change of control of the Company, other than:
1. The 1,080,000 shares owned
by the August 2010 Family Trust shall cease to be controlled by Mr. Shaw under the Voting Agreement upon their sale to a third party
for value; and
2. Mr. Shaw has voting control
over 15,156,660 shares of the currently outstanding shares of the Common Stock (44.6%) and investment power over 14,576,660 shares (42.9%)
and total beneficial ownership of 46.1% of the currently outstanding shares of the Common Stock. Assuming the exercise of all vested
options and conversion of all outstanding preferred shares, Mr. Shaw would have beneficial ownership of 45.5% of the Common Stock.
COMPENSATION
Compensation Discussion and Analysis
The Objectives of Our Compensation Plan
Our executive officer compensation
program (the “Compensation Program”) is based on the belief that competitive compensation is essential to attract, retain,
motivate, and reward highly qualified and industrious executive officers. Our Compensation Program is intended to accomplish the following:
|
·
|
attract
and retain highly talented and productive executive officers;
|
|
·
|
provide incentives
and rewards for superior performance by the executive officers; and
|
|
·
|
align
the interests of executive officers with the interests of our shareholders.
|
Our Compensation Program
is designed to reward both superior long-term performance by our executive officers and their loyalty.
Elements of Compensation
To achieve these objectives,
the Compensation and Benefits Committee has approved an executive officer compensation program that consists of three basic components:
|
·
|
base
salary;
|
|
·
|
short-term
incentive compensation in the form of cash bonuses; and
|
|
·
|
medical, life,
and benefit programs (which are generally available to all employees).
|
Historically, the Company
also offered periodic long-term incentive compensation in the form of stock options. Our 2008 Stock Option Plan expired on July 25, 2018.
Pursuant to this proxy statement, we are soliciting shareholder approval to implement a new long-term compensation plan, the 2021 Stock
Option Plan.
Executive compensation is
not based on the individual’s contribution to specific, quantitative corporate objectives due to the fact that we compete in a
market environment where significant achievement or performance is not always correlated with corporate results.
Base Salary
We choose to pay a significant
component of our compensation in base salary due to the fact that our ability to grow has been constrained by larger market players.
Until such time as we believe that we have consistent access to the market, we believe that it is appropriate to weigh our Compensation
Program heavily in favor of base salaries rather than incentive compensation.
Management establishes the
initial recommendations regarding compensation for all employees. Executive compensation remains the same until there is a review of
such compensation by the Compensation and Benefits Committee. Additionally, the Compensation and Benefits Committee sets the compensation
for new officers. Compensation, other than that of the Chief Executive Officer, has generally not been reviewed annually. Under the terms
of Mr. Shaw’s employment agreement, his compensation is reviewed annually.
The base salary for each
of our executive officers is subjectively determined primarily on the basis of the following factors: experience, individual performance,
contribution to our performance, level of responsibility, duties and functions, salary levels in effect for comparable positions within
and without our industry, and internal base salary comparability considerations. However, salaries can also be affected by our long-term
needs.
Cash Bonuses
From time to time and when
our cash reserves allow, we grant cash bonuses in order to reward significant efforts or the accomplishment of short term goals. The
bonuses, when paid, are paid on a discretionary basis as determined by the Compensation and Benefits Committee.
Long-Term Incentives:
Stock Options
Our 2008 Stock Option Plan
expired on July 25, 2018. As discussed in greater detail in Proposal 2, we are proposing the approval of the 2021 Stock Option Plan.
Stock options align the interests
of executive officers with those of shareholders and to provide each executive officer with a significant incentive to manage from the
perspective of an owner with an equity stake in the Company.
Generally, option awards
to executive officers are granted by the Compensation and Benefits Committee and for others are granted at the discretion of the Board.
The Committee (or Board, as applicable) considers, among other factors, our financial condition and the expected expense of the grants.
Each stock option grant to
employees allows the employee to acquire shares of Common Stock at a fixed price per share (never less than the closing stock price of
the Common Stock on the date of grant or the prior trading day, as applicable) for a fixed period (usually ten years). Options generally
vest based on a time-based formula. Accordingly, stock option grants provide a return to the employee only if the employee remained employed
by us during the vesting period, and then only if the market price of the underlying Common Stock appreciates.
Awards are granted on the
basis of historical performance. There is no discretion to change the awards once granted. The Company adopted a Clawback Policy on March
16, 2021 to address recoupment of any incentive compensation granted based on the attainment of certain financial measures in the event
of certain restatements of the Company’s financial statements.
Shareholder Advisory Votes
A
majority of the advisory votes cast in 2019 on the executive compensation proposals were voted in favor of the executive compensation
and three-year frequency of shareholder advisory votes on compensation.
The
Compensation and Benefits Committee will continue to take into account the outcome of these advisory votes when making compensation decisions
for the named executive officers.
Factors We Consider in Determining to Change
Compensation Materially
We consider our cash position,
current liquidity trends, and the short-term and long-term needs for cash reserves when evaluating whether we can change compensation
materially at a given time. On an individual-by-individual basis, we also consider the value of past option compensation, the competitiveness
of that individual’s base salary, and that individual’s contribution to our goals. On occasion, we engage compensation consultants
as well. Longnecker Associates was engaged in January 2021 to review increases in compensation and new option grants to our principal
executive officer, principal financial officer, and general counsel. Its report presented a market analysis for our three executive officers’
base salary, annual incentives, and long-term incentives.
The Impact of the Accounting and Tax Treatments
Stock options granted to
executives and other employees have been expensed for accounting purposes under the Stock Compensation Topic of the Financial Accounting
Standards Board Accounting Standards Codification. We have expensed all of our past option costs. Stock option expense is not recognized
for tax purposes, except in the case of non-qualified stock options. For non-qualified stock options, the intrinsic value of the option
is recognized when the option is exercised.
Section 162(m) of the
Internal Revenue Code has not historically been a material concern since our executives have not been compensated over $1 million in
past years.
Compensation Pursuant to Employment Agreement
We have an Employment Agreement
with Mr. Thomas J. Shaw (the “Employment Agreement”). No other executives or Directors are compensated pursuant to employment
agreements.
The Employment Agreement
provides for an initial period of three years which ended December 31, 2010 and automatically and continuously renews for consecutive
two-year periods. The Employment Agreement is terminable either by us or Mr. Shaw upon 30 days’ written notice or upon Mr. Shaw’s
death. The Employment Agreement details a variety of causes for termination and payments owed to Mr. Shaw in each case.
The Employment Agreement
dated January 1, 2008 provides for an annual salary of at least $416,400 with an annual salary increase equal to no less than the percentage
increase in the CPI over the prior year. The Employment Agreement requires that Mr. Shaw’s salary be reviewed by the Compensation
and Benefits Committee annually, which shall make such increases as it considers appropriate. In 2021, the Compensation and Benefits
Committee relied upon a report from a compensation consultant to increase Mr. Shaw’s 2021 salary to $1,000,000.
Under the Employment Agreement,
we are obligated to provide certain benefits, including, but not limited to, participation in qualified pension plan and profit-sharing
plans, participation in the Company's Cafeteria Plan and other such insurance benefits provided to other executives, paid vacation, and
sick leave. We are also obligated to furnish him with a cellular telephone and suitable office space as well as reimburse him for any
reasonable and necessary out of pocket travel and entertainment expenses incurred by him in carrying out his duties and responsibilities,
membership dues to professional organizations, and any business-related seminars and conferences.
Mr. Shaw has the right under
this agreement to resign in the event that there is a change of control. A “Change of Control” shall be deemed to have occurred
on either of the following dates: (i) the date any one person (other than Mr. Shaw), or more than one person acting as a group, acquires
(or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of
stock of the Company possessing 30% or more of the total possible voting power of the stock of the Company (assuming the immediate conversion
of all then outstanding convertible preferred stock) or (ii) the date a majority of members of the Board of Directors is replaced during
any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board
of Directors before the date of the appointment or election. Mr. Shaw further has the right to resign if there is a change in ownership.
A change in ownership is defined to have occurred on the date that any one person (other than Mr. Shaw) or more than one person acting
as a group acquires ownership of the Company’s stock that, together with the stock previously held by such person or group, constitutes
more than 50% of the total fair market value or total voting power (assuming the immediate conversion of all then outstanding convertible
preferred stock) of the Company. In such event Mr. Shaw is entitled to salary through the date of termination, salary for 24 months,
reimbursement of expenses, and applicable benefits.
PROPOSAL NO. 2
APPROVAL OF THE 2021 STOCK OPTION PLAN
On March 16, 2021, the Board
of Directors adopted the 2021 Stock Option Plan (the "Plan"). The shareholders must approve the Plan within 12 months and the
underlying Common Stock must be listed on a stock exchange prior to the exercise of the options. The Plan, if approved, will provide
for the granting of Incentive Stock Options (“ISOs”) and Non-Qualified Stock Options ("NQSOs"), as defined in the
Plan and collectively referred to in this section as "Stock Options" or “Awards”. The purpose of the Plan will
be to encourage stock ownership, provide incentives and rewards, and promote the success of the Company’s business. The following
description is intended to be a summary of the Plan's principal terms and is qualified in its entirety to the complete text provided
as Appendix A attached hereto.
Description
of the Proposed Plan and Options to be Issued Thereunder
General
The Plan authorizes the Company
to grant ISOs to employees of the Company and NQSOs to employees, consultants providing bona fide services to the Company, and non-employee
Directors. There are currently 182 employees, 4 non-employee Directors, and 3 consultants that are eligible for awards under the Plan.
The Plan will be administered by the Compensation and Benefits Committee (the “Committee”), or, if the Board decides otherwise
on an occasion, by the Board (such body referred to herein as “Administrator”). The interpretation and construction of a
provision of the Plan by the Committee shall be final unless otherwise determined by the Board of Directors. The Company has reserved
a maximum of 2,000,000 shares of Common Stock to be available for issuance pursuant to Stock Options granted under the Plan, subject
to adjustment to reflect a subdivision or consolidation of shares or any other capital adjustment, payment of a stock dividend, or other
increase or decrease in such shares effected without consideration.
The maximum number of shares
of Common Stock subject to Awards granted during a single calendar year to any non-employee Director shall not exceed 25,000.
Awards
Under the Plan, the Administrator
has wide discretion and flexibility, enabling it to administer the Plan in the manner it determines to be in the best interest of the
Company. The Administrator's determinations with respect to which employees will receive Awards, and the form, amount and frequency,
and the terms and conditions thereof, need not be uniform as to similarly situated persons. The designation of an employee to receive
one form of an Award under the Plan does not require the Administrator to designate or entitle such employee to receive any other form
of Award.
The option price for any
Stock Option granted under the Plan will be at least 100 percent of the fair market value of the Company's Common Stock as of the date
of grant. However, in the event the participant is a ten percent shareholder, the price of any ISO will be at least 110 percent of the
fair market value of the Common Stock as of the date of grant. All ISOs granted are subject to the condition that the aggregate fair
market value (determined at the time of the grant) of the Common Stock with respect to which ISOs are exercisable for the first time
by any employee during any calendar year shall not exceed One Hundred Thousand Dollars ($100,000), or other such amount as may be hereafter
set by amendments to the Internal Revenue Code of 1986, as amended (the “Code”).
All Stock Options must expire
no later than ten years from the date of grant. All ISOs held by a ten percent shareholder must expire no later than five years from
the date of grant.
Generally, the ISOs will
terminate three months after termination of employment without cause and all Stock Options will terminate automatically upon termination
for cause. Recipients of NQSOs who are terminated without cause may continue to hold their vested Awards until expiration. In the case
of death or permanent disability, the Stock Options expire after one year following the termination of employment. Any Stock Options
not then exercisable shall be forfeited upon death or permanent disability.
Expired or cancelled Awards
may be available for reissuance under the Plan.
New Plan Benefits
The following table shows
the Awards to our current executive officers, directors, and employees which have been granted by the Board of Directors, with exercise
rights subject to the shareholders’ approval of the 2021 Stock Option Plan. Additional Awards are not determinable at this time.
|
New Plan Benefits
|
|
|
|
2021
Stock Option Plan
Name
and Position
|
|
|
Number
of
Units of
Common
Stock(1)
|
Thomas
J. Shaw
President and CEO
(principal executive officer)
|
|
|
1,000,000
|
|
|
|
|
|
Michelle M.
Larios
Vice President,
General Counsel
|
|
|
250,000
|
|
|
|
|
|
John W. Fort
III
Vice President, CFO
(principal financial officer, principal accounting officer)
|
|
|
100,000
|
|
|
|
|
|
|
Executive Group
|
|
|
1,350,000
|
|
|
|
|
|
|
Non-Executive Director Group
|
|
|
0
|
|
|
|
|
|
|
Non-Executive Officer Employee Group
|
|
|
0
|
(1)
All of the foregoing options were granted on March 16, 2021 and vest in three years (March 16, 2024) and expire March 16, 2031.
All of the foregoing options were issued with an exercise price equal to the fair market value of the Common Stock as of the date of
grant as measured by the stock’s closing price on the New York Stock Exchange ($13.00). The options may only be exercised if the
shareholders approve the Plan by March 16, 2022.
Effect of Extraordinary Corporate Transactions
on Options
In the event of a Change
in Control (as defined by the Plan to include liquidations and certain mergers or transfers), all Stock Options shall become immediately
exercisable upon the announcement of such a Change in Control event and terminate three months from the closing date of the Change in
Control event. The Plan also provides for proportionate adjustments in the event of any capital adjustment or other increase or decrease
in the number of Common Stock shares outstanding without consideration provided therefor to the Company.
Transferability of Options
The Stock Options are not
transferable except by will or the laws of descent and distribution.
Federal
Income Tax Consequences
The following is a brief
summary of the Company's understanding of the principal anticipated federal income tax consequences of Awards made under the Plan based
upon the applicable provisions of the Code in effect on the date hereof. The Company can make no guarantee that any Award structured
to comply with the requirements under the Code for ISOs will actually qualify as an ISO nor can it guarantee that the Code will continue
to provide preferential tax treatment for ISOs. This summary is not intended to be exhaustive and does not describe foreign, state, or
local tax consequences nor does it address all of the tax considerations that may apply in light of the circumstances of a particular
participant in the Plan.
ISOs Generally
Generally, an option holder
will not realize taxable income at the time an ISO is granted or exercised. However, exercise of an ISO may cause the option holder to
incur alternative minimum tax liability. Company Common Stock is issued to an option holder pursuant to the exercise of an ISO, and if
no disqualifying disposition of the shares is made by the option holder within two years of the date of grant or within one year after
exercise of the option, then: (a) any gain upon the subsequent sale of the shares will be taxed to the option holder as a capital gain,
and any loss sustained will be a capital loss, and (b) no deduction will be allowed to the Company for federal income tax purposes. There
may be a positive alternative minimum tax income adjustment in the amount of the spread between the ISO exercise price and the fair market
value of the shares at the time of exercise.
If an option holder disposes
of shares acquired upon the exercise of an ISO before the expiration of the holding periods described above, then generally: (a) the
option holder will be taxed as if he had received compensation income in the year of disposition in an amount equal to the excess, if
any, of the fair market value of the shares on the exercise date (or, if less, the amount realized on value of the shares on the disposition
of the shares) over the option price paid for such shares, and (b) the Company will generally be entitled to a corresponding deduction
in that year. Any further gain or loss realized by the option holder will be taxed as short-term or long-term capital gain or loss, as
the case may be, and will not result in any deduction by the Company.
Subject to the disqualifying
distribution rules described above, stock acquired through exercise of an ISO must be held for more than 12 months to obtain long-term
capital gains treatment.
All stock acquired pursuant
to the exercise of an ISO is subject to the holding period rules and disqualifying disposition rules described above.
To the extent that the aggregate
fair market value of the Company's Common Stock (determined as of the date of grant) with respect to which ISOs are exercisable for the
first time by an option holder during any calendar year (under all Company plans) exceeds $100,000, those options will not be considered
ISOs.
NQSOs Generally
An option holder will generally
not recognize taxable income at the time an NQSO is granted, but taxable income will be realized, and the Company will generally be entitled
to a deduction, at the time of exercise of the NQSO. The amount of income and the Company's deduction will be equal to the difference
between the fair market value of the shares on the date of exercise and the NQSO exercise price. The income realized will be taxed to
the option holder at the ordinary income tax rates for federal income tax purposes. Withholding is required upon exercise of an NQSO,
except for non-employee Directors. On subsequent disposition of the shares acquired upon exercise of an NQSO, capital gain or loss as
determined under the normal capital asset holding period rules will be realized in the amount of the difference between the proceeds
of sale and the sum of the exercise price and the ordinary income recognized on exercise.
Amendments WITHOUT Shareholder
Vote
The Plan may be amended,
suspended, or terminated by the Board of Directors, provided that there may be no amendment without the approval of the shareholders
to the extent shareholder approval is required. Additionally, if the Board or Administrator determines that the application of an accounting
standard concerning the treatment of stock options would have a significant adverse effect on the financial statements, then the Board
may, in its absolute discretion, cancel and revoke all such Stock Options and the holders of such Stock Options will have no further
rights relating to them. The Administrator shall also have the power to accelerate the time at which an Award may first be exercised
or the time during which an Award will vest.
Consideration
Received by Company
We will not receive cash
consideration for the granting of Stock Options. The Stock Option exercise price and any other amounts payable shall be paid in full
by the option holder to the Company at the time the Stock Option is exercised.
RECENT
Market Value OF UNDERLYING SHARES
The market value of the Common
Stock underlying the options as of March 16, 2021, was $13.00 per share.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE “FOR” THE APPROVAL OF THE 2021 STOCK OPTION PLAN.
ACCOUNTING MATTERS
Moss Adams LLP has been selected
again as our independent accountants for the year ending December 31, 2021. A representative of Moss Adams LLP will attend the virtual
Annual Meeting and will have the opportunity to make a statement if he or she so desires. A Moss Adams LLP representative will be available
to respond to appropriate shareholder questions at that time.
Audit Fees
The aggregate fees billed
by Moss Adams LLP for professional services rendered for the audit of our annual financial statements for 2020 and 2019 and the reviews
of the financial statements included in our Forms 10-Q for 2020 and 2019 and services normally provided by the accountants in connection
with statutory and regulatory filings for these periods were $280,772 and $208,260, respectively.
Audit Related Fees
The aggregate fees billed
by Moss Adams LLP for professional services rendered for the audit of our 401(k) plan for 2020 and 2019 were $18,350 and $17,172, respectively.
Tax Fees
The aggregate fees billed
by Moss Adams LLP for preparation of federal and state income tax returns and tax consulting costs related to notices from taxing authorities
for 2020 and 2019 were $61,925 and $45,300, respectively.
Pre-Approval Policies and Procedures
The engagement of the independent
accountants was entered into pursuant to the approval policies and procedures of the Audit Committee. Before any independent accountant
was engaged to render services, the engagement was approved by the Audit Committee. The engagements for audit and tax services were detailed
separately. The Audit Committee implemented its approval procedures, i.e., they were not delegated to any other party. All of the services
provided were pre-approved by the Audit Committee.
DELIVERY
OF SINGLE OR MULTIPLE SETS OF DOCUMENTS TO ONE HOUSEHOLD
We have adopted a procedure
approved by the SEC called "householding." Under this procedure, certain shareholders of record who have the same address and
last name and do not participate in electronic delivery of proxy materials will receive only one copy of our annual report and proxy
statement, unless one or more of these shareholders notifies us that they would like to receive individual copies. This reduces our printing
costs and postage fees. Shareholders who participate in householding will continue to receive separate proxy cards.
If you and other shareholders
of record with whom you share an address currently receive multiple copies of our annual report and/or proxy statement, and you would
like to receive only a single copy of the annual report or proxy statement for your household, please contact Michele M. Larios, Secretary
and General Counsel of the Corporation, at 511 Lobo Lane, Little Elm, Texas 75068, (888) 806-2626.
If you participate in householding
and would like to receive a separate copy of our annual report or this proxy statement, please contact us in the manner described in
the immediately preceding paragraph. We will deliver the requested documents to you promptly upon receipt of your request.
2022 ANNUAL MEETING
Proposals
by shareholders that are submitted for inclusion in our proxy statement for our 2022 Annual Meeting must follow the procedures set forth
in Rule 14a-8 under the Securities Exchange Act of 1934 and our bylaws. To be timely under Rule 14a-8, they must be received by our Corporate
Secretary, Michele Larios, at 511 Lobo Lane, Little Elm, Texas 75068-5295, at
least 120 days prior to the anniversary of the mailing date of the most recent annual meeting, meaning by December 1, 2021.
If
a shareholder does not submit a proposal for inclusion in our proxy statement, but does wish to propose an item of business to be considered
at the annual meeting of shareholders (other than director nominations), that shareholder must give advance written notice of such proposal
to our Corporate Secretary at least 45 days prior to the anniversary of the mailing date of the most recent annual meeting. For our 2021
Annual Meeting, notice must be given by February 14, 2022, and must comply with certain other requirements contained in our bylaws, as
well as all applicable statutes and regulations. Proposals received after this date will be considered untimely and may not, in
the Board of Directors’ discretion, be addressed at the next annual meeting.
We reserve the right to reject,
rule out of order, or take other appropriate action with respect to any proposal that does not comply with these requirements.
A shareholder may nominate
a person, on their own initiative, for consideration for recommendation by the Board to the shareholders in our Proxy Statement for the
2022 annual meeting. Such notice must be received by December 1, 2021 and must set forth:
1. The
name and address of the shareholder making the nomination and of the person to be nominated;
2. A
representation that the shareholder is a holder of record of Common Stock of the Company entitled to vote at such meeting (specifying
the number of shares beneficially held) and intends to appear in person or by proxy at the meeting;
3. A
description of all arrangements or understandings between the shareholder and the nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination is being made by the shareholder and any material interest of the shareholder in
making the nomination;
4. Such
other information regarding the nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant
to the then current proxy rules of the SEC; and
5. The
consent of the nominee to serve as a Director if so recommended by the Board and duly elected at the annual meeting by the shareholders.
We evaluate Director nominees
recommended by shareholders in the same manner in which we evaluate other Director nominees.
Appendix A
RETRACTABLE TECHNOLOGIES, INC.
2021 STOCK OPTION PLAN
(1)
PURPOSES AND SCOPE. The name of this plan is the Retractable Technologies, Inc. 2021 Stock Option Plan (the “Plan”).
The purposes of this Plan are to encourage ownership of Retractable Technologies, Inc. and its Subsidiaries, if any (the “Company”),
by those persons responsible for the management and/or growth of the Company and to provide incentives and rewards to such persons to
encourage them to continue in service of the Company and promote the success of the Company’s business.
(2) DEFINITIONS.
For purposes of this Plan, the following terms shall have the following meanings:
“Administrator” shall have
the meaning set forth in Section (4) hereof.
“Board” shall mean the
Board of Directors of the Company
“Cause” shall mean, unless
the applicable award agreement states otherwise:
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(i)
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if the Participant is a party to an employment
or service agreement with the Company and such agreement provides for a definition of Cause,
the definition contained therein; or
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(ii)
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if no such agreement exists, or if such
agreement does not define Cause:
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(1)
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the commission of, or plea of guilty or
no contest to, a felony or a crime involving moral turpitude or the commission of any other
act involving willful malfeasance or material fiduciary breach with respect to the Company;
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(2)
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conduct that brings or is reasonably likely
to bring the Company negative publicity or into public disgrace, embarrassment, or disrepute;
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(3)
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gross negligence or willful misconduct
with respect to the Company;
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(4)
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material violation of state or federal
securities laws;
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(5)
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material violation of the Company’s
written policies or codes of conduct, including written policies related to discrimination,
harassment, performance of illegal or unethical activities, and ethical misconduct;
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(6)
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willful conversion of corporate funds;
or
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(7)
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for a Participant Director, repeated failure
to participate in Board meetings on a regular basis despite having received proper notice
of the meetings in advance.
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The Administrator, in its absolute
discretion, shall determine the effect of all matters and questions relating to whether a Participant has been discharged for Cause.
“Change in Control” shall
mean either (A) dissolution or liquidation of the Company; (B) a merger or consolidation in which the Company is not the surviving corporation
(other than a merger or consolidation with a wholly-owned subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the stockholders of the Company or their relative stock holdings and the
stock options granted under this Plan are assumed, converted or replaced by the successor corporation, which assumption, conversion or
replacement will be binding on all optionees); (C) merger or consolidation in which the Company is the surviving corporation but after
which the stockholders of the Company (other than any stockholder which merges [or which owns or controls another corporation which merges]
with the Company in such merger) cease to own their shares or other equity interests in the Company; (D) the sale of substantially all
of the assets of the Company; or (E) the acquisition, sale or transfer of more than 50% of the outstanding shares of Common Stock of
the Company by tender offer or similar transaction (otherwise than by will or by the laws of descent and distribution).
“Clawback Policy” shall
have the meaning set forth in Section 14 hereof.
“Committee” shall mean
the Compensation and Benefits Committee, which shall be appointed by the Board.
“Code” shall mean the Internal
Revenue Code of 1986, as amended.
“Continuous Service” shall
mean that the Participant’s service with the Company, whether as an employee, consultant or Director, is not interrupted or terminated.
The Participant’s Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company as an employee, consultant or Director, provided that there is no interruption or termination
of the Participant’s service; provided further that if any award is subject to Section 409A of the Code, this sentence shall only
be given effect to the extent consistent with Section 409A of the Code. The Administrator, in its sole discretion, may determine whether
Continuous Service shall be considered interrupted in the case of any leave of absence, including sick leave, military leave or any other
personal or family leave of absence. The Administrator, in its sole discretion, may determine whether a Company transaction, such as
a sale or spin-off of a division or subsidiary that employs a Participant, shall be deemed to result in a termination of service for
purposes of affected awards, and such decision shall be final, conclusive and binding.
“Director” shall mean a
member of the Board.
“Effective Date” shall
have the meaning set forth in Section (16) hereof.
“ISO” shall mean an incentive
stock option within the meaning of Section 422 of the Code to purchase Common Stock, granted pursuant to this Plan.
“NQSO” shall mean a non-qualified
stock option to purchase Common Stock, granted pursuant to this Plan.
“Option” shall mean an
award under this Plan including ISOs and NQSOs.
“Option Price” shall mean
the exercise price for Common Stock pursuant to a stock option as determined in Section (6) of this Plan.
“Participant” shall mean
a person eligible to receive an award under this Plan and to whom an award is granted.
“Subsidiary” or “Subsidiaries”
when capitalized shall mean any corporation in which the Company directly or indirectly has majority ownership.
(3) SHARES
SUBJECT TO THE PLAN. Subject to the provisions of Section (11) of this Plan, no more than 2,000,000 shares of Common Stock
shall be available for the grant of options under this Plan, all of which may be designated as ISOs. During the term of the option awards
under this Plan, the Company shall keep available at all times the number of shares of Common Stock required to satisfy such awards.
Shares of Common Stock available under this Plan may consist, in whole or in part, of authorized and unissued shares, treasury shares,
or shares reacquired by the Company in any manner.
The maximum number of shares
of Common Stock subject to awards granted during a single calendar year to any non-employee Director shall not exceed 25,000.
Any shares of Common Stock
subject to an award that expires or is cancelled, forfeited, or terminated without issuance of the full number of shares of Common Stock
to which the award related will again be available for issuance under this Plan.
(4) ADMINISTRATION.
This Plan shall be administered by the Committee or, if the Board decides otherwise on occasion, by the Board (the applicable administering
body being herein referred to as the “Administrator”). The Administrator shall make determinations with respect to participation
in this Plan by Participants, and with respect to the terms, limitations, restrictions, conditions and extent of that participation.
Management of the Company may make recommendations regarding awards under this Plan. In making its determinations, the Administrator
may consider factors it deems relevant, including the Participant’s functions, responsibilities, the value of the services provided
to the Company, and contributions to the Company’s profitability and growth. The Administrator’s determinations under this
Plan need not be uniform and may be made selectively among persons who are eligible to receive awards. Without limiting the generality
of the foregoing, the Administrator shall be entitled to make non-uniform and selective determinations, amendments, and adjustments,
and to enter into non-uniform and selective award agreements; provided, however, that ISOs may only be granted to employees of the Company.
Any interpretation and construction of any provision of this Plan by the Committee shall be final, unless otherwise determined by the
Board. The Administrator, including any of its individual members, shall not be liable for any omission, action, or determination made
by any of them in good faith relating to this Plan or any award thereunder.
To the extent allowed by
applicable law, the Administrator shall be indemnified by the Company against the reasonable expenses and liabilities, including attorneys’
fees, actually incurred in connection with any action, suit, or proceeding to which the Administrator may be a party by reason of any
action taken or failure to act under or in connection with this Plan or any award granted hereunder.
(5) ELIGIBILITY.
ISOs may be granted only to employees of the Company. NQSOs may be granted to employees, non-employee Directors, and consultants of the
Company providing bona fide services to the Company. The Administrator shall designate the stock options as ISOs or NQSOs to the extent
permitted hereby.
(6) OPTION
TERMS AND CONDITIONS. Each option granted under this Plan shall be evidenced by an award agreement stating the total number of shares
of Common Stock to which it pertains. Each option so granted shall be subject to the conditions set forth in this Section 6, and to such
other conditions not inconsistent with this Plan as may be reflected in the applicable award agreement. All options shall be separately
designated as ISOs or NQSOs at the time of grant. Notwithstanding the foregoing, the Company shall have no liability to any Participant
or any other person if an option granted as an ISO fails to qualify as such at any time or if an option is determined to constitute nonqualified
deferred compensation within the meaning of Section 409A of the Code and the terms of such option do not satisfy the requirements of
Section 409A of the Code.
(A) PRICE.
For any Participant who is not deemed to be a Ten Percent (10%) shareholder of the Company under the rules applicable to ISOs
under Section 422 of the Code (a “10% Shareholder”), the Option Price for each share to be acquired pursuant to an ISO
shall be at least One Hundred Percent (100%) of the fair market value of a share of Common Stock on the date the ISO is granted. For
any Participant who is deemed to be a Ten Percent (10%) Shareholder under the rules applicable to ISOs under Section 422
of the Code, the Option Price for each share to be acquired pursuant to an ISO shall be at least One Hundred Ten Percent (110%) of
the fair market value of a share of Common Stock on the date the ISO is granted. The Option Price for any NQSO shall be at least One
Hundred Percent (100%) of the fair market value of a share of Common Stock on the date the NQSO is granted.
(B)
TERM. An award must be exercised within the period specified in the award agreement. Notwithstanding any other provision
of this Plan or the applicable award agreement, an award granted to a Participant may not be exercised after the expiration of ten (10)
years from the date it is granted; provided, however, that no ISO to a 10% Shareholder may be exercised after the expiration of five
(5) years from the date it is granted.
(C)
FORM OF CONSIDERATION. The option exercise price of Common Stock acquired pursuant to an option shall be paid, to the extent
permitted by applicable statutes and regulations, either (i) in immediately available U.S. funds at the time the option is exercised;
or (ii) if the person exercising the option is not subject to Section 16 of the Securities Exchange Act of 1934, a cashless exercise
program established with a broker.
(D)
TERMINATION OF SERVICE AND DEATH. The Option shall terminate in accordance with the first of the following events to occur:
(i) DEATH.
Unless otherwise provided in an award agreement, in the event a Participant’s Continuous Service terminates as a result of the
Participant’s death, then the option may be exercised (to the extent vested at the date of death) by the Participant’s estate,
by a person who acquired the right to exercise the option by bequest or inheritance or by a person designated to exercise the option
upon the Participant’s death, but only within the period ending on the earlier of: (a) the date twelve (12) months following the
date of death or (b) the expiration of the term of the option as set forth in the award agreement. If, after the Participant’s
death, the option is not exercised within the time specified herein or in the award agreement, the option shall terminate. The provisions
of this Section 6(D)(i) shall apply notwithstanding the fact that the Participant’s relationship with the Company may have terminated
prior to death unless the option has otherwise previously terminated under another provision hereof.
(ii) DISABILITY.
Unless otherwise provided in an award agreement, in the event a Participant’s Continuous Service terminates as a result of the
Participant’s disability, then the option may be exercised (to the extent vested at the date of termination) by the Participant,
but only within the period ending on the earlier of: (a) the date twelve (12) months following the date of termination or (b) the expiration
of the term of the option as set forth in the award agreement. If, after termination, the Participant does not exercise the option within
the time specified herein or in the award agreement, the option shall terminate. In the event of a dispute, the Board shall determine
in its sole discretion whether a Participant was terminated by reason of disability.
(iii) TERMINATION
FOR OTHER REASONS.
(1) In
the event a Participant’s Continuous Service terminates as a result of termination for Cause, all outstanding options shall
immediately terminate and cease to be exercisable.
(2)
Unless otherwise provided in an award agreement or in an employment agreement with the Company, in the event a Participant’s
Continuous Service terminates otherwise than a termination for Cause, death, or disability, the Participant may exercise any vested portion
of his option as follows:
(I) if
the option is designated as an ISO, during the period of time ending on the earlier of the date three months following the date of termination
or the expiration of the term of the option as set forth in the award agreement; or
(II) if
the option is not designated as an ISO, prior to the expiration of the term of the option as set forth in the award agreement.
If, after termination, the Participant
does not exercise his option within the time specified herein or in the award agreement, the option shall terminate.
(E)
TRANSFERABILITY. Options shall not be transferable other than by will or by the laws of descent and distribution, and during
a Participant’s lifetime, shall be exercisable only by such Participant (or his legal guardian or representative).
(7) VESTING.
(A)
VESTING OF OPTIONS. The vesting provisions of individual awards may vary. Each option may become exercisable in one or
more installments over time or may be subject to such other terms and conditions on the time or times when it may be exercised as the
Administrator may deem appropriate. Each option that vests solely based on the continued service of the Participant shall vest and therefore
become exercisable no earlier than one (1) year after the date of grant.
(B)
$100,000 LIMITATION. Any option designated as an ISO shall be subject to the condition that the aggregate fair market value
(determined at the time the option is granted) of Common Stock with respect to which the ISO is exercisable for the first time by any
employee during any calendar year (under this Plan and all other similar plans of the Company regardless of when adopted) shall not exceed
One Hundred Thousand Dollars ($100,000.00) or such other amounts as may hereafter be set by amendments to the Code. Any option grant
or portion thereof which exceeds such limit shall be treated as an NQSO.
(C)
MISCELLANEOUS EXERCISE PROVISIONS. No award may be exercised for a fractional share of Common Stock. An award may be exercised
in part and shall remain exercisable as to the remaining part in accordance with its terms.
(8) SECURITIES
MATTERS. The Company shall be under no obligation to cause the registration pursuant to the Securities Act of any shares of Common
Stock to be issued hereunder or to effect similar compliance under any state or local laws. Notwithstanding anything herein to the contrary,
the Company shall not be obligated to cause to be issued shares of Common Stock pursuant to this Plan unless and until the Company is
advised by its counsel that the issuance is in compliance with all applicable laws, regulations, and the requirements of any securities
exchange on which shares of Common Stock are traded. The Company may require, as a condition to the issuance of Common Stock pursuant
to the terms hereof, that the recipient of such shares make such covenants, agreements, and representations, and that any resulting evidence
of share ownership bear such legends as the Company deems necessary or desirable.
(9) RIGHTS
OF PARTICIPANTS.
(A)
SHAREHOLDER RIGHTS. No person shall have any rights as a shareholder of the Company with respect to any shares of Common
Stock covered by or relating to any option award until the date of the issuance of such Common Stock on the books and records of the
Company. No adjustment will be made for dividends or other rights for which the record date is prior to the date the Common Stock is
issued on the books and records of the Company.
(B)
NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in this Plan or any award granted pursuant to this Plan shall confer on
any Participant any right to continue to serve the Company. Nothing in this Plan or any award granted pursuant to this Plan shall affect
the right of the Company to terminate the employment of an employee or consultant or terminate the service of a Director in accordance
with any applicable provisions of the Company’s governing documents and state law.
(10) WITHHOLDING.
The Participant shall satisfy any federal, state, or local withholding obligation relating to the exercise of an option award in accordance
with the terms of the award agreement.
(11) ADJUSTMENTS
TO STOCK; CHANGE IN CONTROL. The aggregate number of shares of Common Stock available for stock options under this Plan, the award
limit specified in Section 3, the Common Stock shares subject to any stock option, and the price per share shall each be proportionately
adjusted for any increase or decrease in the number of issued shares of Common Stock subsequent to the effective date of this Plan resulting
from: (A) a subdivision or consolidation of shares or any other capital adjustment, (B) the payment of a Common Stock dividend,
or (C) other increase or decrease in such shares effected without receipt of consideration by the Company.
If the Company shall be the
surviving corporation in any merger or consolidation, any stock option shall pertain to, apply to, and relate to the securities to which
a holder of the number of shares of Common Stock subject to the stock option would have been entitled after the merger or consolidation.
In the event of a Change
in Control, all outstanding options shall become immediately exercisable upon the announcement date of such event with respect to all
of the shares of Common Stock subject to such options. Further, all outstanding stock options shall terminate after a period of three
months from the closing date of the event causing a Change in Control.
(12) NO
OBLIGATION TO EXERCISE. The grant to a Participant of a stock option award shall impose no obligation upon such Participant to exercise
that stock option.
(13) USE
OF PROCEEDS. Proceeds from the exercise of stock options under this Plan shall constitute general funds of the Company.
(14) FORFEITURE.
In addition to forfeiture events set forth in this Plan, each option shall be subject to such forfeiture events as may be set forth in
the applicable award agreement. Such events may include, without limitation, covenants applicable to the Participant or other conduct
by the Participant that is detrimental to the business or reputation of the Company or its affiliates. Notwithstanding any other provisions
in this Plan, the Company may cancel any option award, require reimbursement of any award by a Participant, and effect any other right
of recoupment of equity and other compensation provided under this Plan including transfer of stock acquired by exercise of an option
in accordance with any Company policies that may be adopted and/or modified from time to time. (“Clawback Policy”). It is
intended that this Clawback Policy be interpreted in a manner that is consistent with the requirements of Section 10D of the Exchange
Act and any applicable rules or standards adopted by the Securities and Exchange Commission or any national securities exchange on which
the Company’s securities are listed. A Participant may be required to repay to the Company previously paid compensation including
transfer of stock acquired by option exercise in accordance with the Clawback Policy. By accepting an award, the Participant is agreeing
to be bound by the Clawback Policy, as in effect or as may be adopted and/or modified from time to time by the Company in its discretion.
A Participant whose award is forfeited shall be solely responsible for any and all income tax consequences of such forfeiture, and the
Participant shall have no right of reimbursement or claim whatsoever against the Company as a result of such forfeiture.
(15) AMENDMENT.
The Board may, at any time and from time to time, amend, suspend, or terminate this Plan. However, except as provided in Section 11,
no amendment shall be effective unless approved by the shareholders of the Company to the extent shareholder approval is required. It
is expressly contemplated that the Board may amend this Plan in any respect the Board deems necessary or advisable to provide eligible
Participants with the maximum benefits provided or to be provided under the provisions of the Code and the Treasury Regulations promulgated
thereunder relating to NQSOs, ISOs and/or to the nonqualified deferred compensation provisions of Section 409A of the Code and/or to
bring this Plan and/or awards granted under this Plan into compliance therewith. Rights under any award granted before amendment of this
Plan shall not be impaired by any amendment of this Plan unless the Participant consents in writing; provided, however, that such consent
shall not be necessary if the Board or Administrator determines that the application of an accounting standard concerning the treatment
of the stock options would have a significant adverse effect on the Company’s financial statements, in which case, the Board or
Administrator may cancel and revoke all outstanding stock options to which such adverse effect is attributed and the holders of those
stock options shall have no further rights in respect thereof. The Administrator shall additionally have the power to accelerate the
time at which an award may first be exercised or the time during which an award or any part thereof will vest in accordance with this
Plan, notwithstanding the provisions in the award stating the time it may first be exercised or the time during which it will vest.
(16) TERM
AND TERMINATION. This Plan is effective as of March 16, 2021 (the “Effective Date”). No award shall be exercised unless
and until this Plan has been approved by the shareholders of the Company, which approval shall be within twelve (12) months after the
Effective Date. This Plan shall terminate automatically on March 15, 2031. No award shall be granted pursuant to this Plan after the
foregoing termination date, but awards previously granted may extend beyond that date. The Board may suspend or terminate this Plan at
any earlier date pursuant to Section 15 hereof.
(17) DELIVERY
OF COMMON STOCK. Upon exercise of an option granted under this Plan, the Company shall issue Common Stock within a reasonable period
of time thereafter. Subject to any statutory or regulatory obligations the Company may otherwise have, for purposes of this Plan, thirty
(30) days shall be considered a reasonable period of time.
(18) DISQUALIFYING
DISPOSITIONS. Any Participant who shall make a “disposition” (as defined in Section 424 of the Code) of all or any portion
of shares of Common Stock acquired upon exercise of an ISO within two (2) years from the grant date of such ISO or within one (1) year
after the issuance of the shares of Common Stock acquired upon exercise of such ISO (a “Disqualifying Disposition”) shall
be required to immediately advise the Company in writing as to the occurrence of the disposition and the price realized upon the disposition
of such shares of Common Stock. A Participant making such a Disqualifying Disposition shall be solely responsible for any and all income
tax consequences of such disposition to such Participant, and the Participant shall have no right of reimbursement or claim whatsoever
against the Company as a result of such a Disqualifying Disposition.
(19) TAX
REPORTING FOR ISO EXERCISE. The Company or its Subsidiary, as appropriate, shall furnish a statement to any Participant exercising
an ISO on or before January 31 of the calendar year following the calendar year in which an ISO exercise occurs in compliance with
Section 6039 of the Code. The statement shall contain the information required by the Code as of the date such information
is to be provided.
(20) LEGAL
CONSTRUCTION. In the event that any one or more of the terms, provisions or agreements that are contained in this Plan or any award
shall be held by a Court of competent jurisdiction to be invalid, illegal or unenforceable in any respect for any reason, the invalid,
illegal or unenforceable term, provision or agreement shall not affect any other term, provision or agreement that is contained in this
Plan or the award and this Plan or the award shall be construed in all respects as if the invalid, illegal or unenforceable term, provision
or agreement had never been contained herein.
(21) TEXAS
LAW TO APPLY. THIS PLAN SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (EXCLUDING
ANY CONFLICTS-OF-LAW RULE OR PRINCIPLE OF TEXAS LAW THAT MIGHT REFER THE GOVERNANCE, CONSTRUCTION OR INTERPRETATION OF THIS AGREEMENT
TO THE LAWS OF ANOTHER STATE).
NON-QUALIFIED STOCK OPTION AGREEMENT
ISSUED UNDER THE
RETRACTABLE TECHNOLOGIES, INC.
2021 STOCK OPTION PLAN
This Non-qualified Stock
Option Agreement (the “Agreement”) is made and entered into by and between RETRACTABLE TECHNOLOGIES, INC. (the “Company”)
and ____________________ (the “Participant”). The Company and the Participant are sometimes hereinafter collectively
referred to as the “Parties”.
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Grant date:
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Exercise Price per Share:
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Number of Option Shares:
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Expiration Date:
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(1) All
capitalized terms used herein are to have the meaning set forth in the Company’s 2021 Stock Option Plan (the “Plan”)
unless defined differently herein. The grant of the option hereunder is made in consideration of the services to be rendered by the Participant
to the Company and is subject to the terms and conditions of the Plan.
(2) OPTION.
The Company hereby grants to the Participant an option (the “Option”) to purchase the total number of shares of Common Stock
of the Company equal to the number of Option Shares set forth above at the Exercise Price set forth above. The Option is being granted
pursuant to the terms of the Plan. This Option may not be exercised unless and until the Plan is approved by the shareholders of the
Company. The Option is not intended to be an incentive stock option within the meaning of Section 422 of the Code.
This Option shall become
exercisable according to the following table until the Option is fully vested:
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Date
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Shares Newly Acquirable
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(3)
TERMINATION OF OPTION.
(A) OPTION
TERM. The Option will expire on the Expiration Date set forth above or earlier as provided in this Agreement or the Plan.
(B) TERMINATION
OF CONTINUOUS SERVICE
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(i)
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Termination for Reasons Other Than Cause,
Death, or Disability. If the Participant's Continuous Service is terminated for any reason
other than Cause, death or disability, the Participant may exercise the vested portion of
the Option until the Expiration Date.
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(ii)
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Termination for Cause. If the Participant's
Continuous Service is terminated for Cause, the Option (whether vested or unvested) shall
immediately terminate and cease to be exercisable.
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(iii)
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Termination due to Disability.
If the Participant's Continuous Service terminates as a result of the Participant's disability,
the Participant may exercise the vested portion of the Option, but only within such period
of time ending on the earlier of: (a) the date twelve (12) months following the Participant's
termination of Continuous Service or (b) the Expiration Date.
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(iv)
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Termination due to Death. If the
Participant's Continuous Service terminates as a result of the Participant's death, the vested
portion of the Option may be exercised by the Participant's estate, by a person who acquired
the right to exercise the Option by bequest or inheritance or by the person designated to
exercise the Option upon the Participant's death, but only within the time period ending
on the earlier of: (a) the date twelve (12) months following the Participant's termination
of Continuous Service or (b) the Expiration Date.
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(4) EXERCISE
OF OPTION. This Option shall be exercised by the Participant (or by his executors or administrators, as provided in Section 3
of this Agreement) as to all or part of the shares covered hereby which are then exercisable under the terms of this Agreement, by the
giving of written notice of such exercise, which may be provided in substantially the form attached hereto as Exhibit A to the Company
specifying the number of shares to be purchased. The giving of such written notice to the Company shall constitute an irrevocable election
to purchase the number of shares specified in the notice and to exercise the right on the date specified in the notice (the “Exercise
Date”). Provided that the exercise notice and payment are satisfactory in form and substance to the Company, the Company shall
issue the shares of Common Stock registered in the name of the Participant which shall be evidenced by appropriate means as determined
by the Company.
(5) OPTION
PRICE. The Exercise Price for the exercised portion of the Option shall be payable in full at the time of exercise, to the extent
permitted by applicable statutes and regulations and the Plan either: (A) in cash at the time the Option is exercised; or (B) through
a cashless exercise program established with a broker.
(8) WITHHOLDING.
Except in the case of a non-employee Director, prior to the issuance of Common Stock shares under this option, the Participant must make
arrangements satisfactory to the Company to pay or provide for any applicable federal, state and local withholding obligations of the
Company. The Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise of the Option by
any of the following means: (a) tendering a cash payment; or (b) increasing withholding on the employee’s cash compensation. Notwithstanding
any action the Company takes with respect to any or all income tax or other tax withholding, the ultimate liability for all tax withholding
is and remains the Participant’s responsibility. The Company makes no representation or undertakings regarding the treatment of
any taxes in connection with the grant, vesting, or exercise of the Option or the subsequent sale of any shares acquired on exercise.
(9) NO
RIGHTS PRIOR TO ISSUANCE OF COMMON STOCK. Neither the Participant nor his representatives shall have any of the rights of a
shareholder of the Company with respect to the shares subject to this Option until the Common Stock shall have been issued to the Participant
on the books and records of the Company. No adjustment will be made for dividends or other rights for which the record date is prior
to the date the Common Stock is issued on the books and records of the Company.
(8) NONASSIGNABILITY.
This Option shall not be assignable or transferable other than by will or by the laws of descent and distribution, and during the Participant’s
lifetime shall be exercisable only by him (or his legal guardian or representative).
(9) ADJUSTMENT
FOR CORPORATE EVENTS. In the event of any capital adjustment Common Stock dividend or other increase or decrease in the Common Stock
shares without receipt of consideration by the Company while any portion of this Option is outstanding but unexercised, or if the Company
participates in any transaction resulting in a corporate merger, consolidation, acquisition of property or stock, separation, reorganization
(where the Company is the surviving entity) or liquidation, the Board of Directors of the Company or any surviving corporation shall
take such action as is permitted by Section (11) of the Plan to prevent dilution.
Notwithstanding anything
to the contrary herein, in the event of a Change in Control, the stock option shall terminate after a period of three (3) months from
the completion of such trigger event; provided, however, that the Participant shall have the right, immediately upon announcement of
such event to exercise his stock option in whole or in part.
(10) REPRESENTATIONS
AND WARRANTIES OF THE PARTICIPANT. The Participant, by acceptance of the Option, represents and warrants to the Company that the
Participant will execute any further covenants, agreements, and representations that the Company may require as a condition to the issuance
of Common Stock hereunder for purposes of complying with federal securities laws, state securities laws, rules and regulations under
any of the foregoing and applicable requirements of any securities exchange upon which the Company’s securities shall be listed.
The Participant agrees that the obligation of the Company to issue shares upon the exercise of a stock option shall also be subject as
conditions precedent to compliance with applicable provisions of the federal securities laws, state securities laws, rules and regulations
under any of the foregoing and applicable requirements of any securities exchange upon which the Company’s securities shall be
listed. The Company may require certain restrictive legends be affixed to the Common Stock issued pursuant to this Option.
(11) ADDITIONAL
PARTICIPANT ACKNOWLEDGMENTS. The Participant acknowledges the Plan is accessible to the Participant over the internet via EDGAR,
the SEC’s electronic website database. In addition, the Participant acknowledges that a written copy of the Plan will be
provided upon request at no charge. The Participant acknowledges that he is familiar with the terms and provisions thereof, and
hereby accepts this Option subject to all the terms and provisions thereof. The Participant hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Agreement.
(12) LEGAL
CONSTRUCTION. In the event that any one or more of the terms, provisions or agreements that are contained in this Agreement
shall be held by a Court of competent jurisdiction to be invalid, illegal or unenforceable in any respect for any reason, the invalid,
illegal or unenforceable term, provision or agreement shall not affect any other term, provision or agreement that is contained in this
Agreement and this Agreement shall be construed in all respects as if the invalid, illegal or unenforceable term, provision or agreement
had never been contained herein.
(13) ENTIRE
AGREEMENT. This Agreement, Exhibit A, which is attached hereto and incorporated herein for all purposes, and the Plan
together supersede any and all other prior understandings and agreements, either oral or in writing, between the Parties with respect
to the subject matter hereof and constitute the sole and only agreements between the Parties with respect to the said subject matter.
All prior negotiations and agreements between the Parties with respect to the subject matter hereof are merged into this Agreement and
the Plan. Each Party to this Agreement acknowledges that no representations, inducements, promises or agreements, orally or otherwise,
have been made by any Party or by anyone acting on behalf of any Party, which are not embodied in this Agreement, the Exhibit A
or the Plan and that any agreement, statement or promise that is not contained in this Agreement, the Exhibit A or the Plan shall
not be valid or binding or of any force or effect.
(14) CONFLICT
OF AGREEMENT WITH PLAN. In the event of any conflict between this Agreement and the Plan, the terms of the Plan shall control.
(15) PARTIES
BOUND. The terms, provisions, representations, warranties, covenants and agreements that are contained in this Agreement and
the Plan shall apply to, be binding upon and inure to the benefit of the Parties and their respective heirs, executors, administrators,
legal representatives and permitted successors and assigns.
(16) TEXAS
LAW TO APPLY. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
(EXCLUDING ANY CONFLICTS-OF-LAW RULE OR PRINCIPLE OF TEXAS LAW THAT MIGHT REFER THE GOVERNANCE, CONSTRUCTION OR INTERPRETATION OF THIS
AGREEMENT TO THE LAWS OF ANOTHER STATE).
(17) MODIFICATION.
No change or modification of this Agreement shall be valid or binding upon the Parties unless the change or modification is in writing
and signed by the Parties. Notwithstanding the preceding sentence, the Board or Administrator may amend the Plan or revoke this
Option to the extent permitted in the Plan.
(18) NOTICE.
Any notice required or permitted to be delivered hereunder shall be deemed to be delivered upon the earlier of the expiration of three
(3) days after deposit in the U.S. mail or actual receipt at the addresses set forth below, or at such other addresses as they have theretofore
specified by written notice delivered in accordance herewith:
(A) Notice
to the Company shall be addressed and delivered as follows:
RETRACTABLE TECHNOLOGIES, INC.
511 LOBO LANE
LITTLE ELM, TEXAS 75068
ATTENTION: PRESIDENT
AND CHIEF EXECUTIVE OFFICER
(B) Notice
to the Participant shall be addressed and delivered as follows:
___________________________________________________
___________________________________________________
___________________________________________________
(19) DISCRETIONARY
NATURE OF PLAN. This award may be amended, cancelled, or terminated by the Board or Administrator at any time in its discretion and
in accordance with the Plan. The grant of the Option in this Agreement does not create any contractual right or other right to receive
any other awards in the future. Any amendment, modification, or termination of the Plan or this award shall not constitute a change or
impairment of the terms and conditions of the Participant’s employment with or service to the Company, as applicable.
(20) FORFEITURE.
The Company may cancel any option award, require reimbursement of any award by a Participant, and effect any other right of recoupment
of equity and other compensation provided under this Agreement and the Plan including transfer of stock acquired by exercise of an option
in accordance with any Company policies that may be adopted and/or modified from time to time. (“Clawback Policy”). It is
intended that the Clawback Policy be interpreted in a manner that is consistent with the requirements of Section 10D of the Exchange
Act and any applicable rules or standards adopted by the Securities and Exchange Commission or any national securities exchange on which
the Company’s securities are listed. A Participant may be required to repay to the Company previously paid compensation including
transfer of stock acquired by option exercise in accordance with the Clawback Policy. By accepting an award, the Participant is agreeing
to be bound by the Clawback Policy, as in effect or as may be adopted and/or modified from time to time by the Company in its discretion.
A Participant whose award is forfeited shall be solely responsible for any and all income tax consequences of such forfeiture, and the
Participant shall have no right of reimbursement or claim whatsoever against the Company as a result of such forfeiture.
(21) COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one
and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable
document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document,
will have the same effect as physical delivery of the paper document bearing an original signature.
IN WITNESS WHEREOF, the Company
has caused these presents to be signed by its duly authorized President and Chief Executive Officer as of the ____ day of ______________,
______.
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RETRACTABLE TECHNOLOGIES, INC.
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By:
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PRESIDENT AND CHIEF EXECUTIVE OFFICER
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ACCEPTED AND AGREED TO:
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By:
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PARTICIPANT
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PARTICIPANT’S PRINTED NAME
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EXHIBIT A
NOTICE OF EXERCISE
OF NON-QUALIFIED STOCK OPTION
To: Retractable
Technologies, Inc.
I hereby exercise (all/a
portion of) my Non-qualified Stock Option granted by RETRACTABLE TECHNOLOGIES, INC., under the Retractable Technologies, Inc.
2021 Stock Option Plan (the “Plan”), which is subject to all the terms and provisions thereof and of the Plan referenced
therein and notify you of my desire to purchase ______________ shares of Common Stock of the Company which were offered to me pursuant
to said Option.
The Option Exercise Price
due for this purchase is $______________________.
I am paying this amount by
(please check one or more):
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Cash (bank check or certified check)
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Broker-assisted cashless exercise; I hereby certify I am not a Director or Officer of the Company
Please choose one:
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I
have no withholding obligation.
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I
am satisfying my withholding obligation by making a direct payment by check to the Company.
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I
am satisfying my withholding obligation by hereby authorizing increased withholding on my
cash compensation payable on the Exercise Date.
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EXERCISE DATE
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SIGNATURE
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ADDRESS:
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PRINT NAME
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SOCIAL SECURITY NUMBER
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I understand that there may be adverse tax consequences
as a result of my purchase or disposition of the shares. I have been advised to consult with a tax advisor in connection with this exercise
and I am not relying on the Company for tax advice. In connection with this exercise, I will deliver to the Company any other documents
it may require.
AGREEMENT BY COMPANY
The Company hereby accepts
the foregoing Notice of Exercise and acknowledges that all necessary conditions have been met.
INCENTIVE STOCK OPTION AGREEMENT
ISSUED UNDER THE
RETRACTABLE TECHNOLOGIES, INC.
2021 STOCK OPTION PLAN
This Incentive Stock Option
Agreement (the “Agreement”) is made and entered into by and between RETRACTABLE TECHNOLOGIES, INC. (the “Company”)
and ____________________, an employee of the Company or its Subsidiaries, if any (the “Participant”). The Company and
the Participant are sometimes hereinafter collectively referred to as the “Parties”.
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Grant
date:
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Exercise
Price per Share:
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Number
of Option Shares:
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Expiration
Date:
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(1) All
capitalized terms used herein are to have the meaning set forth in the Company’s 2021 Stock Option Plan (the “Plan”)
unless defined differently herein. The grant of the option hereunder is made in consideration of the services to be rendered by the Participant
to the Company and is subject to the terms and conditions of the Plan.
(2) OPTION.
The Company hereby grants to the Participant an option (the “Option”) to purchase the total number of shares of Common Stock
of the Company equal to the number of Option Shares set forth above at the Exercise Price set forth above. The Option is being granted
pursuant to the terms of the Plan. This option may not be exercised unless and until the Plan is approved by the shareholders of the
Company. The Option is intended to be an incentive stock option within the meaning of Section 422 of the Code, although the Company makes
no representation or guarantee that the Option will qualify as an ISO.
PARTICIPANT ACKNOWLEDGES
THAT EXERCISE OF AN ISO MAY SUBJECT THE EMPLOYEE TO ADVERSE TAX CONSEQUENCES UNDER THE ALTERNATIVE MINIMUM TAX.
This Option shall become
exercisable according to the following table until the Option is fully vested:
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Date
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Shares Newly Acquirable
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In no event shall the aggregate
fair market value of Common Stock (determined as of the date of grant of the Option) with respect to which any part of the Option together
with other ISOs granted to Participant under the Company’s plans becomes first exercisable by the Participant in any calendar year
exceed One Hundred Thousand Dollars ($100,000.00).
(3) TERMINATION
OF OPTION.
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(A)
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OPTION TERM.
The Option will expire on the Expiration Date set forth above or earlier as provided in this
Agreement or the Plan.
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(B)
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TERMINATION OF CONTINUOUS
SERVICE
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(i)
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Termination for Reasons Other Than Cause,
Death, Disability. If the Participant's Continuous Service is terminated for any reason
other than Cause, death or Disability, the Participant may exercise the vested portion of
the Option, but only within such period of time ending on the earlier of: (a) the date three
(3) months following the termination of the Participant's Continuous Service or (b) the Expiration
Date.
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(ii)
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Termination for Cause. If the Participant's
Continuous Service is terminated for Cause, the Option (whether vested or unvested) shall
immediately terminate and cease to be exercisable.
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(iii)
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Termination due to Disability.
If the Participant's Continuous Service terminates as a result of the Participant's Disability,
the Participant may exercise the vested portion of the Option, but only within such period
of time ending on the earlier of: (a) the date twelve (12) months following the Participant's
termination of Continuous Service or (b) the Expiration Date.
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(iv)
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Termination due to Death. If the
Participant's Continuous Service terminates as a result of the Participant's death, the vested
portion of the Option may be exercised by the Participant's estate, by a person who acquired
the right to exercise the Option by bequest or inheritance or by the person designated to
exercise the Option upon the Participant's death, but only within the time period ending
on the earlier of: (a) the date twelve (12) months following the Participant's termination
of Continuous Service or (b) the Expiration Date.
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(4) EXERCISE
OF OPTION. This Option shall be exercised by the Participant (or by his executors or administrators, as provided in Section 3
of this Agreement) as to all or part of the shares covered hereby which are then exercisable under the terms of this Agreement, by the
giving of written notice of such exercise, which may be provided in substantially the form attached hereto as Exhibit A to the Company
specifying the number of shares to be purchased. The giving of such written notice to the Company shall constitute an irrevocable election
to purchase the number of shares specified in the notice and to exercise the right on the date specified in the notice (the “Exercise
Date”). Provided that the exercise notice and payment are satisfactory in form and substance to the Company, the Company shall
issue the shares of Common Stock registered in the name of the Participant which shall be evidenced by appropriate means as determined
by the Company.
(5) OPTION
PRICE. The Exercise Price for the exercised portion of the Option shall be payable in full at the time of exercise, to the
extent permitted by applicable statutes and regulations and the Plan either: (A) in cash at the time the Option is exercised; or (B)
through a cashless exercise program established with a broker.
(6) WITHHOLDING.
If the Company, in its discretion, determines that it is obligated to withhold any tax in connection with the exercise of the Option,
the Participant must make arrangements satisfactory to the Company to pay or provide for any applicable federal, state and local withholding
obligations of the Company. The Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise
of the Option by any of the following means: (A) tendering a cash payment; or (B) increasing withholding on the employee’s cash
compensation. Notwithstanding any action the Company takes with respect to any or all income tax or other tax withholding, the ultimate
liability for all tax withholding is and remains the Participant’s responsibility. The Company (y) makes no representation or undertakings
regarding the treatment of any taxes in connection with the grant, vesting, or exercise of the Option or the subsequent sale of any shares
acquired on exercise; and (z) does not commit to structure the Option to reduce or eliminate the Participant’s tax liability.
(7) NO
RIGHTS PRIOR TO ISSUANCE OF COMMON STOCK. Neither the Participant nor his representatives shall have any of the rights of a
shareholder of the Company with respect to the shares subject to this Option until the Common Stock shall have been issued to the Participant
on the books and records of the Company. No adjustment will be made for dividends or other rights for which the record date is prior
to the date the Common Stock is issued on the books and records of the Company.
(8) NONASSIGNABILITY.
This Option shall not be assignable or transferable other than by will or by the laws of descent and distribution, and during the Participant’s
lifetime shall be exercisable only by him (or his legal guardian or representative).
(9) ADJUSTMENT
FOR CORPORATE EVENTS. In the event of any capital adjustment Common Stock dividend or other increase or decrease in the Common Stock
shares without receipt of consideration by the Company while any portion of this Option is outstanding but unexercised, or if the Company
participates in any transaction resulting in a corporate merger, consolidation, acquisition of property or stock, separation, reorganization
(where the Company is the surviving entity) or liquidation, the Board of Directors of the Company or any surviving corporation shall
take such action as is permitted by Section (11) of the Plan to prevent dilution.
Notwithstanding anything
to the contrary herein, in the event of a Change in Control, the Option shall terminate after a period of three (3) months from the completion
of such trigger event; provided, however, that the Participant shall have the right, immediately upon announcement of such event to exercise
his Option in whole or in part.
(10) REPRESENTATIONS
AND WARRANTIES OF THE PARTICIPANT. The Participant, by acceptance of the Option, represents and warrants to the Company that the
Participant will execute any further covenants, agreements, and representations that the Company may require as a condition to the issuance
of Common Stock hereunder for purposes of complying with federal securities laws, state securities laws, rules and regulations under
any of the foregoing and applicable requirements of any securities exchange upon which the Company’s securities shall be listed.
The Participant agrees that the obligation of the Company to issue shares upon the exercise of a stock option shall also be subject as
conditions precedent to compliance with applicable provisions of the federal securities laws, state securities laws, rules and regulations
under any of the foregoing and applicable requirements of any securities exchange upon which the Company’s securities shall be
listed. The Company may require certain restrictive legends be affixed to the Common Stock issued pursuant to this Option.
(11) ADDITIONAL
PARTICIPANT ACKNOWLEDGMENTS. The Participant acknowledges the Plan is accessible to the Participant over the internet via EDGAR,
the SEC’s electronic website database. In addition, the Participant acknowledges that a written copy of the Plan will be
provided upon request at no charge. The Participant acknowledges that he is familiar with the terms and provisions thereof, and
hereby accepts this Option subject to all the terms and provisions thereof. The Participant hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Agreement. The Participant
further acknowledges that, in order to obtain the favorable income tax treatment provided by the Code for stock acquired pursuant to
ISOs, the Participant may not dispose of stock acquired by exercise of the Option within two (2) years of the date of grant of the
stock option or within one (1) year of the date of the actual transfer of Common Stock to him. The Participant further acknowledges
that he must hold the Common Stock for more than twelve (12) months to obtain long-term capital gains tax rates on a sale of the Common
Stock. The Participant acknowledges that material adverse alternative minimum tax consequences may result from exercise of a stock option.
The Participant understands and agrees that the Company shall not be liable or responsible for any additional tax liability the Participant
incurs in the event that the Internal Revenue Service for any reason determines that this Option does not qualify as an ISO within the
meaning of the Code.
(12) DISQUALIFYING
DISPOSITION. If the Participant disposes of the shares of Common Stock prior to the expiration of either two (2) years from the grant
date of the Option or one (1) year from the date the shares are transferred to the Participant pursuant to the exercise of the Option
(a "Disqualifying Disposition"), the Participant shall notify the Company in writing within thirty (30) days after such disposition
of the date and terms of such disposition. The Participant also agrees to provide the Company with any information concerning any such
dispositions as the Company requires for tax purposes. A Participant making such a Disqualifying Disposition shall be solely responsible
for any and all income tax consequences of such disposition to such Participant, and the Participant shall have no right of reimbursement
or claim whatsoever against the Company as a result of such a Disqualifying Disposition.
(13) LEGAL
CONSTRUCTION. In the event that any one or more of the terms, provisions or agreements that are contained in this Agreement
shall be held by a Court of competent jurisdiction to be invalid, illegal or unenforceable in any respect for any reason, the invalid,
illegal or unenforceable term, provision or agreement shall not affect any other term, provision or agreement that is contained in this
Agreement and this Agreement shall be construed in all respects as if the invalid, illegal or unenforceable term, provision or agreement
had never been contained herein.
(14) ENTIRE
AGREEMENT. This Agreement, Exhibit A, which is attached hereto and incorporated herein for all purposes, and the Plan
together supersede any and all other prior understandings and agreements, either oral or in writing, between the Parties with respect
to the subject matter hereof and constitute the sole and only agreements between the Parties with respect to the said subject matter.
All prior negotiations and agreements between the Parties with respect to the subject matter hereof are merged into this Agreement and
the Plan. Each Party to this Agreement acknowledges that no representations, inducements, promises or agreements, orally or otherwise,
have been made by any Party or by anyone acting on behalf of any Party, which are not embodied in this Agreement, the Exhibit A
or the Plan and that any agreement, statement or promise that is not contained in this Agreement, the Exhibit A or the Plan shall
not be valid or binding or of any force or effect.
(15) CONFLICT
OF AGREEMENT WITH PLAN. In the event of any conflict between this Agreement and the Plan, the terms of the Plan shall control.
(16) PARTIES
BOUND. The terms, provisions, representations, warranties, covenants and agreements that are contained in this Agreement and
the Plan shall apply to, be binding upon and inure to the benefit of the Parties and their respective heirs, executors, administrators,
legal representatives and permitted successors and assigns.
(17) TEXAS
LAW TO APPLY. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
(EXCLUDING ANY CONFLICTS-OF-LAW RULE OR PRINCIPLE OF TEXAS LAW THAT MIGHT REFER THE GOVERNANCE, CONSTRUCTION OR INTERPRETATION OF THIS
AGREEMENT TO THE LAWS OF ANOTHER STATE).
(18) MODIFICATION.
No change or modification of this Agreement shall be valid or binding upon the Parties unless the change or modification is in writing
and signed by the Parties. Notwithstanding the preceding sentence, the Board or Administrator may amend the Plan or revoke this
Option to the extent permitted in the Plan.
(19) NOTICE.
Any notice required or permitted to be delivered hereunder shall be deemed to be delivered upon the earlier of the expiration of three
(3) days after deposit in the U.S. mail or actual receipt at the addresses set forth below, or at such other addresses as they have theretofore
specified by written notice delivered in accordance herewith:
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(A)
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Notice to the Company shall be addressed and
delivered as follows:
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RETRACTABLE TECHNOLOGIES, INC.
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511 LOBO LANE
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LITTLE ELM, TEXAS 75068
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ATTENTION: PRESIDENT AND CHIEF EXECUTIVE OFFICER
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(B)
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Notice to the Participant shall be addressed
and delivered as follows:
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___________________________________________________
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___________________________________________________
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___________________________________________________
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(20) DISCRETIONARY
NATURE OF PLAN. This award may be amended, cancelled, or terminated by the Board or Administrator at any time in its discretion and
in accordance with the Plan. The grant of the Option in this Agreement does not create any contractual right or other right to receive
any other awards in the future. Any amendment, modification, or termination of the Plan or this award shall not constitute a change or
impairment of the terms and conditions of the Participant’s employment with the Company.
(21) FORFEITURE.
The Company may cancel any option award, require reimbursement of any award by a Participant, and effect any other right of recoupment
of equity and other compensation provided under this Agreement and the Plan including transfer of stock acquired by exercise of an option
in accordance with any Company policies that may be adopted and/or modified from time to time. (“Clawback Policy”). It is
intended that the Clawback Policy be interpreted in a manner that is consistent with the requirements of Section 10D of the Exchange
Act and any applicable rules or standards adopted by the Securities and Exchange Commission or any national securities exchange on which
the Company’s securities are listed. A Participant may be required to repay to the Company previously paid compensation including
transfer of stock acquired by option exercise in accordance with the Clawback Policy. By accepting an award, the Participant is agreeing
to be bound by the Clawback Policy, as in effect or as may be adopted and/or modified from time to time by the Company in its discretion.
A Participant whose award is forfeited shall be solely responsible for any and all income tax consequences of such forfeiture, and the
Participant shall have no right of reimbursement or claim whatsoever against the Company as a result of such forfeiture.
(22) COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one
and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable
document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document,
will have the same effect as physical delivery of the paper document bearing an original signature.
IN WITNESS WHEREOF, the Company has caused these presents to be signed
by its duly authorized President and Chief Executive Officer as of the ____ day of ______________, ______.
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RETRACTABLE TECHNOLOGIES, INC.
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By:
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PRESIDENT AND CHIEF EXECUTIVE OFFICER
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ACCEPTED AND AGREED TO:
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By:
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PARTICIPANT
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PARTICIPANT’S PRINTED NAME
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EXHIBIT A
NOTICE OF EXERCISE
OF INCENTIVE STOCK OPTION
To: Retractable
Technologies, Inc.
I hereby exercise (all/a
portion of) my Incentive Stock Option granted by RETRACTABLE TECHNOLOGIES, INC., under the Retractable Technologies, Inc. 2021
Stock Option Plan (the “Plan”), which is subject to all the terms and provisions thereof and of the Plan referenced therein
and notify you of my desire to purchase ______________ shares of Common Stock of the Company which were offered to me pursuant to said
Option.
The Option Exercise Price
due for this purchase is $______________________.
I am paying this amount by
(please check one or more):
¨
Cash (bank check or certified check)
¨
Broker-assisted cashless exercise; I hereby certify I am not a Director or Officer of the Company
I hereby authorize payroll withholding and will
make arrangements satisfactory to the Company to pay or provide for any applicable federal, state and local withholding obligations of
the Company. I understand that I may satisfy any federal, state or local tax withholding obligation relating to the exercise of the Option
by any of the methods set forth in my award agreement.
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EXERCISE DATE
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SIGNATURE
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ADDRESS:
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PRINT NAME
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SOCIAL SECURITY NUMBER
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I understand that there may be adverse tax consequences
as a result of my purchase and/or disposition of the shares. I have been advised to consult with a tax advisor in connection with this
exercise and I am not relying on the Company for tax advice. In connection with this exercise, I will deliver to the Company any other
documents it may require.
I hereby agree to promptly notify the Company
if I transfer or sell any of the Common Stock shares purchased pursuant to this Notice of Exercise within one (1) year from the date
of exercise or within two (2) years from the grant date of the Option.
AGREEMENT BY COMPANY
The Company hereby accepts
the foregoing Notice of Exercise and acknowledges that all necessary conditions have been met.
Appendix B