CHINA YONGXIN PHARMACEUTICALS INC. FORM OF INCENTIVE STOCK OPTION AGREEMENT
Exhibit
10.2
2010
EQUITY INCENTIVE PLAN
FORM
OF
This
INCENTIVE STOCK OPTION AGREEMENT (the “Option Agreement”), dated as of the
day of ____________, 20__ (the “Grant Date”), is between China Yongxin
Pharmaceuticals Inc., a Delaware corporation (the “Company”), and
(the “Optionee”), a key employee of the Company or of a Subsidiary of the
Company (a “Related Corporation”), pursuant to the China Yongxin Pharmaceuticals
Inc. 2010 Equity Incentive Plan (the “Plan”).
WHEREAS,
the Company desires to give the Optionee the opportunity to purchase shares of
common stock of the Company, par value $0.001 (“Common Shares”) in accordance
with the provisions of the Plan, a copy of which is attached
hereto;
NOW
THEREFORE, in consideration of the mutual covenants hereinafter set forth and
for other good and valuable consideration, the parties hereto, intending to be
legally bound hereby, agree as follows:
1.
Grant
of Option. The Company
hereby grants to the Optionee the right and option (the “Option”) to purchase
all or any part of an aggregate of Common Shares. The Option is in all
respects limited and conditioned as hereinafter provided, and is subject in all
respects to the terms and conditions of the Plan now in effect and as it may be
amended from time to time (but only to the extent that such amendments apply to
outstanding options). Such terms and conditions are incorporated herein by
reference, made a part hereof, and shall control in the event of any conflict
with any other terms of this Option Agreement. The Option granted hereunder is
intended to be an incentive stock option (“ISO”) meeting the requirements of the
Plan and section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”), and not a nonqualified stock option
(“NQSO”).
2.
Exercise
Price. The exercise price
of the Common Shares covered by this Option shall be $ per share. It is the determination of
the committee administering the Plan (the “Committee”) that on the Grant Date
the exercise price was not less than the greater of (i) 100% (110% for an
Optionee who owns more than 10% of the total combined voting power of all shares
of stock of the Company or of a Related Corporation - a “More-Than-10% Owner”)
of the “Fair Market Value” (as defined in the Plan) of a Common Share, or (ii)
the par value of a Common Share.
3.
Term. Unless earlier terminated pursuant to
any provision of the Plan or of this Option Agreement, this Option shall expire
on _____________ __, 20__ (the “Expiration Date”). This Option shall not be
exercisable on or after the Expiration Date.
4.
Exercise of
Option. Subject to any
acceleration vesting provisions contained in the Plan, the Optionee shall have
the right to purchase from the Company, on and after the following dates, the
following number of Common Shares, provided the Optionee has not terminated his
or her service as of the applicable vesting date:
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Date
Installment Becomes Exercisable
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Number
of Common Shares
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_____
Shares
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an
additional _____ Shares
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an
additional _____ Shares
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an
additional _____ Shares
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5.
Method of
Exercising Option. Subject
to the terms and conditions of this Option Agreement and the Plan, the Option
may be exercised by written notice to the Company at its principal office. The
form of such notice is attached hereto and shall state the election to exercise
the Option and the number of whole shares with respect to which it is being
exercised; shall be signed by the person or persons so exercising the Option;
and shall be accompanied by payment of the full exercise price of such shares.
Only full shares will be issued.
[The Committee should select which of
the following methods of payment will be permitted:]
The
exercise price shall be paid to the Company -
(a)
in cash, or by
certified check, bank draft, or postal or express money
order;
(b)
through the delivery of Common
Shares previously acquired by the Optionee;
(c)
by delivering a properly executed
notice of exercise of the Option to the Company and a broker, with irrevocable
instructions to the broker promptly to deliver to the Company the amount
necessary to pay the exercise price of the Option;
(d)
in Common Shares
newly acquired by the Optionee upon exercise of the Option (which shall
constitute a disqualifying disposition with respect to this
ISO);
(e)
in any combination of (a), (b),
(c), or (d) above.
[In the
event the exercise price is paid, in whole or in part, with Common Shares, the
portion of the exercise price so paid shall be equal to the Fair Market Value of
the Common Shares surrendered on the date of exercise.]
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Upon
receipt of notice of exercise and payment, the Company shall deliver a
certificate or certificates representing the Common Shares with respect to which
the Option is so exercised. The Optionee shall obtain the rights of a
shareholder upon receipt of a certificate(s) representing such Common
Shares.
Such
certificate(s) shall be registered in the name of the person so exercising the
Option (or, if the Option is exercised by the Optionee and if the Optionee so
requests in the notice exercising the Option, shall be registered in the name of
the Optionee and the Optionee’s spouse, jointly, with right of survivorship),
and shall be delivered as provided above to, or upon the written order of, the
person exercising the Option. In the event the Option is exercised by any person
after the death or disability (as determined in accordance with Section 22(e)(3)
of the Code) of the Optionee, the notice shall be accompanied by appropriate
proof of the right of such person to exercise the Option. All Common Shares that
are purchased upon exercise of the Option as provided herein shall be fully paid
and non-assessable.
Upon
exercise of the Option, Optionee shall be responsible for all employment and
income taxes then or thereafter due (whether Federal, State or local), and if
the Optionee does not remit to the Company sufficient cash (or, with the consent
of the Committee, Common Shares) to satisfy all applicable withholding
requirements, the Company shall be entitled to satisfy any withholding
requirements for any such tax by disposing of Common Shares at exercise,
withholding cash from Optionee’s salary or other compensation or such other
means as the Committee considers appropriate to the fullest extent permitted by
applicable law. Nothing in the preceding sentence shall impair or limit the
Company’s rights with respect to satisfying withholding obligations under
Section 10 of the Plan.
6.
Non-Transferability
of Option. This Option is
not assignable or transferable, in whole or in part, by the Optionee other than
by will or by the laws of descent and distribution. During the lifetime of the
Optionee, the Option shall be exercisable only by the Optionee or, in the event
of his or her disability, by his or her guardian or legal
representative.
7.
Termination
of Employment by Optionee.
If the Optionee’s employment with the Company and all Related Corporations is
terminated by the Optionee for any reason (other than death or disability or
with Good Reason) prior to the Expiration Date, this Option may be exercised, to
the extent of the number of Common Shares with respect to which the Optionee
could have exercised it on the date of such termination of employment by the
Optionee at any time prior to the earlier of (i) the Expiration Date, or (ii)
ninety (90) days after such termination of employment. Any part of the Option
that was not exercisable immediately before the Optionee’s termination of
employment shall terminate at that time.
8.
Disability. If the Optionee becomes disabled (as
determined in accordance with section 22(e)(3) of the Code) during his or her
employment and, prior to the Expiration Date, the Optionee’s employment is
terminated as a consequence of such disability, this Option may be exercised, to
the extent of the number of Common Shares with respect to which the Optionee
could have exercised it on the date of such termination of employment by the
Optionee or by the Optionee’s legal representative at any time prior to the
earlier of (i) the Expiration Date or (ii) ninety (90) days after such
termination of employment. Any part of the Option that was not exercisable
immediately before the Optionee’s termination of employment shall terminate at
that time.
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9.
Termination
of Employment by Company without Cause or by Optionee with Good
Reason. If the Optionee’s
employment with the Company and all Related Corporations is terminated by the
Company for any reason other than Cause (or is terminated by the Optionee for
Good Reason) prior to the Expiration Date, this Option may be exercised, to the
extent of the number of Common Shares with respect to which the Optionee could
have exercised it on the date of such termination of employment by the Optionee
at any time prior to the earlier of (i) the Expiration Date, or (ii) one year
after such termination of employment. Any part of the Option that was not
exercisable immediately before the Optionee’s termination of employment shall
terminate at that time.
10.
Death. If the Optionee dies during his or
her employment and prior to the Expiration Date, or if the Optionee’s employment
is terminated for any reason (as described in Paragraphs 7, 8 and 9) and
the Optionee dies following his or her termination of employment but prior to
the earliest of (i) the Expiration Date, or (ii) the expiration of the period
determined under Paragraph 7, 8 or 9 (as applicable to the Optionee) this
Option may be exercised, to the extent of the number of Common Shares with
respect to which the Optionee could have exercised it on the date of his or her
death by the Optionee’s estate, personal representative or beneficiary who
acquired the right to exercise this Option by bequest or inheritance or by
reason of the Optionee’s death, at any time prior to the earlier of (i) the
Expiration Date or (ii) one year after the date of the Optionee’s death. Any
part of the Option that was not exercisable immediately before the Optionee’s
death shall terminate at that time.
11.
Termination
for Cause. If the
Optionee’s employment with the Company and all Related Corporations is
terminated by the Company for Cause prior to the Expiration Date, any
unexercised portion of this Option shall immediately terminate at that
time.
12.
Disqualifying
Disposition of Option Shares. The Optionee agrees to give written
notice to the Company, at its principal office, if a “disposition” of the Common
Shares acquired through exercise of the Option granted hereunder occurs at any
time within two years after the Grant Date or within one year after the transfer
to the Optionee of such shares. Optionee acknowledges that if such disposition
occurs, the Optionee generally will recognize ordinary income as of the date the
Option was exercised in an amount equal to the lesser of (i) the Fair Market
Value of the Common Shares on the date of exercise minus the exercise price, or
(ii) the amount realized on disposition of such shares minus the exercise price.
If requested by the Company at the time of and in the case of any such
disposition, Optionee shall pay to the Company an amount sufficient to satisfy
the Company’s federal, state and local withholding tax obligations with respect
to such disposition. The provisions of this Section 12 shall apply, whether or
not the Optionee is in the employ of the Company at the time of the relevant
disposition. For purposes of this Paragraph, the term “disposition” shall have
the meaning assigned to such term by section 424(c) of the
Code.
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13.
Securities
Matters. (a) If, at any
time, counsel to the Company shall determine that the listing, registration or
qualification of the Common Shares subject to the Option upon any securities
exchange or under any state or federal law, or the consent or approval of any
governmental or regulatory body, or that the disclosure of non-public
information or the satisfaction of any other condition is necessary as a
condition of, or in connection with, the issuance or purchase of Common Shares
hereunder, such Option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, or satisfaction of
such condition shall have been effected or obtained on conditions acceptable to
the Board of Directors. The Company shall be under no obligation to apply for or
to obtain such listing, registration or qualification, or to satisfy such
condition. The Committee shall inform the Optionee in writing of any decision to
defer or prohibit the exercise of an Option. During the period that the
effectiveness of the exercise of an Option has been deferred or prohibited, the
Optionee may, by written notice, withdraw the Optionee’s decision to exercise
and obtain a refund of any amount paid with respect thereto.
(b)
The Company may require: (i) the
Optionee (or any other person exercising the Option in the case of the
Optionee’s death or Disability) as a condition of exercising the Option, to give
written assurances, in substance and form satisfactory to the Company, to the
effect that such person is acquiring the Common Shares subject to the Option for
his or her own account for investment and not with any present intention of
selling or otherwise distributing the same, and to make such other
representations or covenants; and (ii) that any certificates for Common Shares
delivered in connection with the exercise of the Option bear such legends, in
each case as the Company deems necessary or appropriate, in order to comply with
federal and applicable state securities laws, to comply with covenants or
representations made by the Company in connection with any public offering of
its Common Shares or otherwise. The Optionee specifically understands and agrees
that the Common Shares, if and when issued upon exercise of the Option, may be
“restricted securities,” as that term is defined in Rule 144 under the
Securities Act of 1933 and, accordingly, the Optionee may be required to hold
the shares indefinitely unless they are registered under such Securities Act of
1933, as amended, or an exemption from such registration is
available.
(c)
The Optionee shall have no rights
as a shareholder with respect to any Common Shares covered by the Option
(including, without limitation, any rights to receive dividends or non-cash
distributions with respect to such shares) until the date of issue of a stock
certificate to the Optionee for such Common Shares. No adjustment shall be made
for dividends or other rights for which the record date is prior to the date
such stock certificate is issued.
14.
Governing
Law. This Option Agreement
shall be governed by the applicable Code provisions to the maximum extent
possible. Otherwise, the laws of the State of Delaware (without reference to the
principles of conflict of laws) shall govern the operation of, and the rights of
the Optionee under, the Plan and Options granted thereunder.
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IN
WITNESS WHEREOF, the Company has caused this Incentive Stock Option Agreement to
be duly executed by its duly authorized officer, and the Optionee has hereunto
set his or her hand and seal, all as of the ______ day of ______,
20__.
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By:
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Name:
Title:
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Optionee
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2010
Equity Incentive Plan
Notice of
Exercise of Incentive Stock Option
I hereby
exercise the incentive stock option granted to me pursuant to the Incentive
Stock Option Agreement dated as of _______, 2010, by China Yongxin
Pharmaceuticals Inc. (the “Company”), with respect to the following number of
shares of the Company’s common stock (“Shares”), par value $0.001 per Share,
covered by said option:
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Number
of Shares to be purchased:
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_______
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Purchase
price per Share:
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$_______
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Total
purchase price:
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$_______
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o
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A.
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Enclosed
is cash or my certified check, bank draft, or postal or express money
order in the amount of $________ in full/partial [circle one] payment for
such Shares;
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and/or
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o
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B.
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Enclosed
is/are _____ Share(s) with
a total fair market value of $ ___
on the date hereof in full/partial [circle one] payment for
such Shares;
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and/or
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o
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C.
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I
have provided notice to _____ [insert name of broker],
a broker, who will render full/partial [circle one] payment for
such Shares. [Optionee
should attach to the notice of exercise provided to such broker a copy of
this Notice of Exercise and irrevocable instructions to pay to the Company
the full/partial (as elected above) exercise
price.]
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and/or
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o
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D.
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I
elect to satisfy the payment for Shares purchased hereunder by having the
Company withhold newly acquired Shares pursuant to the exercise of the
Option. I understand that this will result in a “disqualifying
disposition,” as described in Section 12 of my Incentive Stock Option
Agreement.
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Please have the certificate or
certificates representing the purchased Shares registered in the following name
or names* : ; and sent to
.
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DATED: _______ ___, 20__
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Optionee’s
Signature
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*
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Certificates
may be registered in the name of the Optionee alone or in the joint names
(with right of survivorship) of the Optionee and his or her
spouse.
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