PHARMACY MARKET NETWORK

POC ESOP SCHEME

January, 2021
 Stock options – POC Pharma’s Employee stock options plan

STOCK-OPTION *3 BOOSTER

Scheme coverage How is the booster applied?

Employees with over 6 months of employment as at The *3 booster is applied on the net amount
31/01/2021 can decide to transform up to 100% of any type of bonus
their net bonus into stock-options

This is applicable starting the performance bonus of

2020 and shall be applicable as well on the
fundraising bonus coming with the Series A

CONFIDENTIAL – POC PHARMA LIMITED – ESOP January 2021

 Stock options – Definition and terms

Employee stock options & shares

What are stock options?

Stock options are options to buy shares of a company, i.e.: if I have options to buy shares of POC Pharma, it means that I
can transform those options into POC Pharma’s shares.

What are shares?

They are units/parts/title of the company’s ownership (i.e.: if I have a share of POC Pharma, I own part of the company)

Terms to understand

Stock options are granted at a given date and vested over a period before reaching a cliff, date at which the employee can
exercise its right to purchase the share for the pre-set price
- There is a grant date: the date your stock options start to vest
- The vesting period: the period you have to wait before exercising your option to buy shares
- The cliff: the date at which you can exercise your option to buy shares
- The pre-set price: price at which the share can be purchased
- Exercising the option: the action to transform your options to shares at the pre-set price

CONFIDENTIAL – POC PHARMA LIMITED – ESOP January 2021

EXAMPLES & REAL LIFE CASES

CONFIDENTIAL – POC PHARMA LIMITED – ESOP January 2021

 Stock options – examples of an ESOP: Ms. Vu
Example of vesting table
Terms of Ms. Vu ESOP Option Shares Cumulative Option
Date
Vested Shares Vested
Ms. Vu works for a company which has an employee stock 01/04/2021 0 0
option plan 01/05/2021 0 0
01/06/2021 0 0
- Contract signature (grant date) = 01/04/2021
- Number of options = 2 01/07/2021 0 0
- Vesting period = 24 months 01/08/2021 0 0
- Cliff = 01/04/2022 (1 year)
01/09/2021 0 0
- Price per share of the company: USD 1,000
- Purchasing price for Ms. Vu: USD 1 01/10/2021 0 0
- Ms. Vu has 4 years to exercise her vested options ….. 0 0
01/04/2022 1 1
01/05/2022 0 1
01/06/2022 0 1
….. 0 1
01/04/2023 1 2
CONFIDENTIAL – POC PHARMA LIMITED – ESOP January 2021
 Stock options – examples: transformations into shares
Example 1: exercising the options asap
Ms. Vu has continued working with the company for a
year and decides to exercise her first option:
- Ms. Vu will pay her company the purchasing price of
USD 1 and will transform her option into a share of the
company.
Ms. Vu waits another year for her second option to vest
and decides to exercise it as well:
- Ms. Vu will pay USD 1 for this option too which will
become a share of the company
CONFIDENTIAL – POC PHARMA LIMITED – ESOP January 2021
Example 2: waiting to exercise the options
Ms. Vu has waited 3 years and decided to exercise her
options
- Ms. Vu will pay her company USD 2 to exercise her
options and receive the shares of the company.
Example 3: waiting too long to exercise the options
Ms. Vu has waited 8 years and decided to exercise her
options
- Ms. Vu has exceeded the 4 years during which she can
exercise her options into shares of the company. Thus
Ms. Vu’s stock options are now worth 0 and can never
be exchanged
 Stock options – examples: leaving the company

Example 1: Resigning during the vesting Example 3: Let go – Good Leaver

Ms. Vu resigned 1 year and 1 month after she signed up for Ms. Vu is let go by her manager because of her
the stock options plan performance

- Ms. Vu already vested 1 stock options that she can still - Ms. Vu is not in breach with her employment contract
exercise within 6 months and that share can be kept. (i.e. fraud, theft, sending information to the
- She can’t claim her 2nd stock options which is not fully competition etc.), examples 1 or 2 can be applied
vested yet. It is lost without any compensation.

Example 2: Resigning before the vesting Example 4: Let go - Bad leaver

Ms. Vu resigned 6 months after signing the ESOP Ms. Vu was let go by her manager because she stole a
computer
- Since she has not reached the 1 year cliff, she has not
vested any option thus, she looses her right to continue - Ms. Vu did not respect her contract, thus she is let go
vesting and will leave the company with no option and no immediately.
share. - Every stock option and/or share will be cancelled even
if already issued
CONFIDENTIAL – POC PHARMA LIMITED – ESOP January 2021
 Stock options – examples: value
Example 1: Selling my stock option
Ms. Vu has heard that her option is now worth USD 2,000
and would like to sell it
- Stock options are not liquid = they are not easily
transferable for several reasons:
- She would need to find a buyer ready to buy the
option. It is unlikely to be someone from the outside
because they would not have enough information
about the company
- The USD 2,000 price could be heavily negotiated and
decreased as it is very difficulty to set a price
- She would need to get the approval from the Board
of Directors to be able to transfer it
The same is applicable to the shares
It is very important to note that options and shares will
be very difficult to sell individually
CONFIDENTIAL – POC PHARMA LIMITED – ESOP January 2021
Example 2: Cancelling of the ESOP
Ms. Vu needs her money back and would like to cancel
her ESOP.
- Ms. Vu will not be able to switch back to having her
bonus instead of stock options.
- The company has no obligation to buy back her
options at any price
Example 3: the price per share decreased
Ms. Vu has had 2 shares for the past 5 years. From a
price of USD 1,000 it went down to USD 100 per share
- The value of a share is never guaranteed. It is possible
that the price of a share decreases and reach USD 0 if
the company goes bankrupt.
- It has a high risk factor and could be worth nothing.
 Stock options – examples: exit
Example 1: Purchase of the company
A competitor just offered to purchase the company
- The price may be lower or higher than the previously
communicated price per share
- Ms. Vu has no choice but to sell at the offered price if
approved by the company. It is called the “Drag-Along”
clause, no matter if she considers this price fair or not.
CONFIDENTIAL – POC PHARMA LIMITED – ESOP January 2021
Example 2: Merger
The company is merging with its competitor, thus
creating a new company
- The company will choose to exchange Ms. Vu options
or shares for a payment to the company’s discretion or
options/shares of the newly created company or
similar actions
Example 3: Initial Public Offering
The company is doing an IPO – meaning that it is no
longer a private company but rather a publicly traded
company
- The shares are liquid and can easily be traded with
buyers – no need for board approval anymore.
 Stock options – points of attention
Taxes
Stock-options may have tax implications:
- When exercised (ex: Ms. Vu pays USD 1 for a normal price
per share at USD 1,000) it could be considered as benefits,
thus being liable to the PIT in Vietnam.
- When a stock-option or share is sold, if a profit is made, it
is considered as capital gains which is also taxed.
All taxes whether PIT, taxes on capital gains or taking any
other shape are all under the employee’s responsibility.
POC Pharma will not be responsible for tax liabilities of any
kind.
CONFIDENTIAL – POC PHARMA LIMITED – ESOP January 2021
Misunderstanding
Understanding all the terms is very important
- It is not POC Pharma’s responsibility to offer legal
counselling and it shall not be considered as
responsible for misunderstandings.
- If you feel that you haven’t understood some terms,
notions or the risks associated with stock options or
shares, we highly recommend you not to consider
employee stock options.
POC PHARMA’S ESOP

CONFIDENTIAL – POC PHARMA LIMITED – ESOP January 2021

 Stock options – How does POC’s stock options plan work?

STOCK-OPTION *3 BOOSTER

Scheme coverage How is the booster applied?

Employees with over 6 months of employment as at The *3 booster is applied on the net amount (of
31/01/2021 can decide to transform up to 100% of the bonus)
their net bonus into stock-options i.e.: a net bonus of USD: 1,000 can be
transformed into USD 3,000 stock-options

How will you determine how many options I get?

Currently, the company in the Pre-Series A funding round has an estimated price per share of USD 1,650.
In order to render it more accessible, we intend to create a holding (as seen in next slide) to issue more shares with a lower
price (i.e. USD 1 or USD 10 per share instead of the current USD 1,650) from which the stock options and shares will be
issued.
It has no impact on the ownership percentage, it is just more liquid in order to not block employees who do not have the
possibility to sign up at a price of USD 1,650 per share.
CONFIDENTIAL – POC PHARMA LIMITED – ESOP January 2021
 Stock options – How will it take place
EXAMPLE OF LEGAL STRUCTURE FOR POC – NOT REAL FIGURES

Staff 1 with Staff 2 with Staff 3 with

Legal structure Converted share Converted share Converted share

ESOP beneficiaries (as well as business angels) will be 30% 10% 60%
holders of options and/or shares from an SPV (Special
Purpose Vehicle) that serves as a holding company (cf.
example on the right) thus reuniting all smaller SPV – POC Other
shareholders into one legal structure. Pharma shareholders

10% 90%
The shares will not give the holders any voting right.

Thomas Miklavec will be the only Board Member and

shareholder with voting rights in the SPV, securing the POC Pharma
alignment of objectives between private owners and the (HK)
company.
100%

POC Pharma
(VN)

CONFIDENTIAL – POC PHARMA LIMITED – ESOP January 2021

 Stock options – POC example
STOCK-OPTION *3 BOOSTER
Example: employee X

Situation:
Employed since 01/03/2020 so he is eligible for the Employee Stock Option Plan.
He is entitled to a bonus of USD 1,200 for this performance in 2020 which becomes a net USD 1,000 after PIT.
He has two options in front of him: (1) receive the USD 1,000 bonus or (2) receive the equivalent *3 his net bonus in form of stock options
(USD 3,000).

Choice:
He chooses to move forward with the stock options plan and signs the contract on 01/02/2021. He will not be able to receive his bonus or
go back on his decision.
He is now waiting for his options to be convertible to shares which will be the case after one year. If he leaves before, he won’t be able to
convert his options into shares.

At each event (i.e. Series A, Series B, merger etc.) during which a new value will be given to the company, he will be informed by the
management of the company.

Reminder:
The advantages is that Employee X was able to buy stock options at 1/3 of the price of a share thanks to the booster on his net bonus but
the drawbacks are that he may lose his investment.
 Stock options – Administrative steps from option to shares

STEP 1 Think about bonus or transfer to stock-options

STEP 2 Notify the finance team of POC Pharma of choice made

STEP 3 Read and sign the Stock Options contract

STEP 4 Wait for the stock options to be ready to be exercised

STEP 5 Notify the finance team of POC Pharma of the wish to exercise the options

STEP 6 Follow finance team instructions and pay the fee for the shares

STEP 7 Receive your shares

CONFIDENTIAL – POC PHARMA LIMITED – ESOP January 2021

 Stock options – Disclaimers & risks

Quick reminder

Stock options are risky, not guaranteed and cannot be exercised if you leave the company too soon.

Stock options and shares are very hard to sell and it is difficult to know when and if the employee will make any profit.

There are tax implications and taxation rules may involve in time.

CONFIDENTIAL – POC PHARMA LIMITED – ESOP January 2021

THANK YOU
VERY MUCH