EXHIBIT 10.12
Date of Grant: May 31 2001
STOCK OPTION AGREEMENT
THIS AGREEMENT is made by and between Dragon Pharmaceutical, Inc., a
Florida corporation (the "Company") and Kin Xxxx Xxx (Xxx) ("Optionee"), is
effective as of May 31 2001.
In consideration of the mutual covenants contained herein and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to Optionee, in the manner and
subject to the conditions hereinafter provided, the right, privilege and option
to purchase (the "Option") an aggregate of one hundred and twenty five thousand
(125,000) shares of the Company's Common Stock, no par value, (the "Shares").
This Option is specifically conditioned on compliance with the terms and
conditions set forth herein.
2. Term of Option. Subject to the terms, conditions, and restrictions set forth
herein, the term of this Option shall be five (5) years from the date of grant
(the "Expiration Date"). Any portion of this Option not exercised prior to the
Expiration Date shall thereupon become null and void.
3. Exercise
3.1. Exercise of Option. This Option shall become fully exercisable upon the
execution of this agreement.
3.2. Manner of Exercise. The Vested Portion of this Option may be exercised from
time to time, in whole or in part, by presentation of a Request to Exercise
Form, substantially in the form attached hereto, to the Company at its principal
office, which Form must be duly executed by Optionee and accompanied by payment
(by check or certified check) to the Company, in the aggregate amount of the
Exercise Price (as defined below), multiplied by the number of Shares the
Optionee is purchasing at such time, subject to reduction for withholding for
tax obligations as provided in Section 13, if any.
Upon receipt and acceptance by the Company of such Form accompanied by the
payment specified, the Optionee shall be deemed to be the record owner of the
Shares purchased, notwithstanding that the stock transfer books of the Company
may then be closed or that certificates representing the Shares purchased under
this Option may not then be actually delivered to the Optionee.
3.3. Exercise Price. The exercise price (the "Exercise Price") payable upon
exercise of this Option shall be US $1.80 per Share.
4. Exercise After Certain Events.
4.1. Termination of Employment, Directorship or Consultant Relationship. If for
any reason other than permanent and total disability (as defined below) or death
an Optionee ceases to be employed by, be a director of, or be a consultant to
the Company, Options held at the date of such termination (to the extent then
exercisable) may be exercised, in whole or in part, at any time within 30 days
after the date of such termination or such lesser period specified in the Option
Agreement (but in no event after the expiration date of the Option).
4.2. Permanent Disability and Death. If an Optionee becomes permanently and
totally disabled or dies while employed by the Company, or while acting as an
officer, director or consultant of the Company, Options then held (to the extent
then exercisable) may be exercised by the Optionee, the Optionee's personal
representative, or by the person to whom the Option is transferred by will or
the laws of descent and distribution, in whole or in part, at any time within 6
months after the disability or death (but in no event after the expiration date
of the Option).
5. Restrictions on Transfer of Option. This Option is not transferable by
Optionee other than by will or the laws of descent and distribution and is
exercisable only by the Optionee during his lifetime except as provided in
Section 4.2. above. The Option and the Shares underlying the Option shall not be
available for the debts or obligations of the Optionee, nor shall it be subject
to disposition by transfer, alienation, pledge, or other means of disposition,
whether voluntary or involuntary or by operation of law through judgment, levy,
attachment, garnishment, or other legal proceeding (including bankruptcy).
6. Adjustment for Changes in Capitalization. The existence of this Option shall
not affect the Company's right to effect adjustments, recapitalizations,
reorganizations, or other changes in its or any other corporation's capital
structure or business, any merger or consolidation, any issuance of bonds,
debentures, preferred or prior preference stock ahead of or affecting the
Shares, the dissolution or liquidation of the Company's or any other
corporation's assets or business or any other corporate act whether similar to
the events described above or otherwise. If the outstanding shares of the
Company's Common Stock are increased or decreased in number or changed into or
exchanged for a different number or kind of securities of the Company or any
other corporation by reason of a recapitalization, reclassification, stock
split, reverse stock split, combination of shares, stock dividend or other
similar event, an appropriate adjustment of the number and kind of securities
with respect to which this Option may be exercised and the exercise price at
which this Option may be exercised will be made.
7. Dissolution, Liquidation, Merger.
7.1. Company Not The Survivor. In the event of a dissolution or liquidation of
the Company, a merger, consolidation, combination, or reorganization in which
the Company is not the surviving corporation, or a sale of substantially all of
the assets of the Company (as determined in the sole discretion of the Board of
Directors), and if the Optionee does not exercise the entire Option within 30
days of such event, the Board of Directors and Optionee may agree to (i) cancel
each outstanding Option upon payment in cash to the Optionee of the amount by
which any cash and the fair market value of any other property which the
Optionee would have received as consideration for the shares of Stock covered by
the Option if the Option had been exercised before such liquidation,
dissolution, merger, consolidation, or sale exceeds the exercise price of the
Option or (ii) assign the Option and all rights and obligations under it to the
successor entity, with all such rights and obligations being assumed by the
successor entity.
7.2. Company is the Survivor. In the event of a merger, consolidation,
combination, or reorganization in which the Company is the surviving
corporation, the Board of Directors shall determine the appropriate adjustment
of the number and kind of securities with respect to which outstanding Options
may be exercised, and the exercise price at which outstanding Options may be
exercised. The Board of Directors shall determine, in its sole and absolute
discretion, when the Company shall be deemed to survive for purposes of this
Agreement.
8. Reservation of Shares. The Company agrees that prior to the earlier of the
expiration of this Option or the exercise and purchase of the total number of
Shares represented by this Option, there shall be reserved for issuance and
delivery upon exercise of this Option such number of the Company's authorized
and unissued Shares as shall be necessary to satisfy the terms and conditions of
this Agreement.
9. No Rights as Shareholder. The Optionee shall have no rights as a shareholder
with respect to any Shares covered by this Option unless the Optionee shall have
exercised this Option, and then only with respect to the Shares underlying the
portion of the Option exercised. The Optionee shall have no right to vote any
Shares, or to receive distributions of dividends or any assets or proceeds from
the sale of Company assets upon liquidation until Optionee has effectively
exercised this Option and fully paid for such Shares. Subject to Section 6, no
adjustment shall be made for dividends or other rights for which the record date
is prior to the date title to the Shares has been acquired by the Optionee.
10. No Rights to Employment or Continued Employment. The grant of this Option
shall in no way be construed so as to confer on Optionee the rights to
employment or continued employment by the Company. Nothing hereunder shall
confer upon any Optionee any right to employment or to continue in the employ of
the Company, or to interfere with or restrict in any way the rights of the
Company, which are hereby expressly reserved, to terminate or discharge any
Optionee at any time for any reason whatsoever, with or without cause.
11. Suspension and Termination. In the event the Board of Directors reasonably
believes that the Optionee has committed an act of misconduct specified below,
the Board of Directors may suspend the Optionee's right to exercise any Option
pending final determination by the Board of Directors, which final determination
shall be made within five (5) business days of such suspension. If the Board of
Directors determines that an Optionee has committed an act of embezzlement,
fraud, breach of fiduciary duty, or deliberate disregard of the Company rules
resulting in loss, damage, or injury to the Company, or if an Optionee makes an
unauthorized disclosure of any Company trade secret or confidential information,
engages in any conduct constituting unfair competition, induces any Company
customer to breach a contract with the Company, or induces any principal for
whom the Company acts as agent to terminate such agency relationship, neither
the Optionee nor his estate shall be entitled to exercise any Option hereunder.
In approving the termination of any Option pursuant to this Section 11, at least
80% of the non-interested Board of Directors must approve such termination. In
making such determination, the Board of Directors shall give the Optionee an
opportunity to appear and present evidence on the Optionee's behalf.
12. Participation in Other Option Plans. The grant of this Option shall not
prevent Optionee from participating or being granted other options in other
plans provided that the Optionee meets the eligibility requirements.
13. Payment of Taxes. Unless the Board of Directors permits otherwise, the
Optionee shall pay the Company in cash all local, state and federal withholding
taxes applicable, in the Board of Directors' absolute discretion, to the grant
or exercise of this Option, or the transfer or other disposition of Shares
acquired upon exercise of this Option. Any such payment must be made promptly
when the amount of such obligation becomes determinable. The Board of Directors
may, in lieu of such cash payment, withhold that number of Shares sufficient to
satisfy such withholding.
14. Issue and Transfer Tax. The Company will pay all issuance taxes, if any,
attributable to the initial issuance of Shares upon the exercise of the Option;
provided, however, that the Company shall not be required to pay any tax or
taxes which may be payable in respect of any transfer involved in the issue or
delivery of any certificates for Shares in a name other than that of the
Optionee.
15. Compliance with Securities Laws. The Company shall not be obligated to issue
any Shares upon exercise of this Option unless such Shares are at that time
effectively registered or exempt from registration under the federal securities
laws and the offer and sale of the Shares are otherwise in compliance with all
applicable securities laws. Upon exercising all or any portion of this Option,
an Optionee may be required to furnish representations or undertakings deemed
appropriate by the Company to enable the offer and sale of the Shares or
subsequent transfers of any interest in such Shares to comply with applicable
securities laws. Evidences of ownership of Shares acquired upon exercise of this
Option shall bear any legend required by, or useful for purposes of compliance
with, applicable securities laws or this Agreement.
16. Notices. All notices to be given by either party to the other shall be in
writing and may be transmitted by personal delivery, facsimile transmission,
overnight courier or mail, registered or certified, postage prepaid with return
receipt requested; provided, however, that notices of change of address or telex
or facsimile number shall be effective only upon actual receipt by the other
party. Notices shall be delivered at the following addresses, unless changed as
provided for herein.
To the Optionee:
Kin Xxxx Xxx (Xxx)
Xxxxx 000, 0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
To the Company:
Dragon Pharmaceutical
1200 - 000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0, Xxxxxx
17. Applicable Law. This Option and the relationship of the parties in
connection with its subject matter shall be governed by, and construed under,
the laws of British Columbia.
18. Attorney's Fees. In the event of any litigation, arbitration, or other
proceeding arising out of this Option, the prevailing party shall be entitled to
an award of costs, including an award of reasonable attorney's fees. Any
judgment, order, or award entered in any such proceeding shall designate a
specific sum as such an award of attorney's fees and costs incurred. This
attorney's fee provision is intended to be severable from the other provisions
of this Agreement, shall survive any judgment or order entered in any
proceeding, and shall not be deemed merged into any such judgment or order, so
that such further fees and costs as may be incurred in the enforcement of an
award or judgment or in defending it on appeal shall likewise be recoverable by
further order of a court or panel or in a separate action as may be appropriate.
19. Binding Effect. This Agreement shall inure to the benefit of, and be binding
upon, the parties hereto and their respective heirs, executors, and successors.
20. Tax Effect. The federal tax consequences of stock options are complex and
subject to change. Each person should consult with his or her tax advisor before
exercising any Option or disposing of any Shares acquired upon the exercise of
an Option.
21. Counterparts. This Option may be executed in one or more counterparts, each
of which when taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Option Agreement has been executed as of the 31st day
of May 2001 at Vancouver, British Columbia.
THE COMPANY: DRAGON PHARMACEUTICAL, INC.
By:
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OPTIONEE:
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Kin Xxxx Xxx (Xxx)
