SUPPLEMENTARY AGREEMENT
This
SUPPLEMENTARY AGREEMENT (this “Agreement”) is made and entered into effective as
of January 20, 2006 (the “Effective Date”) with reference to original agreement
dated on November 2, 2004 (the “Original”), as amended by the supplementary
agreement dated June 22, 2005 (the “Amendment”) by and between New Dragon Asia
Corp., a Florida corporation (the “Company”) and Xxxxx Xxx, an individual
(“Executive” and, together with the Company, the “Parties”).
NOW,
THEREFORE, in consideration of the various covenants and agreements hereinafter
set forth, the Parties hereto agree to the supplementary clauses as
follows:
1. Term.
The
Company hereby employs Executive, and Executive hereby accepts employment with
the Company, for a term extending until December 31, 2008 (the “Term”) amending
such term as reference to the clause No. 1 of the Original and subsequently
amended by clause 1 of the Amendment.
2. Stock
Options.
As of
the Effective Date of this Agreement, the Company hereby grants to Executive
the
right to purchase additional 2,000,000 shares of the Common Stock at an exercise
price of US$1.60 (the “Options”). The term of the Options is for a period of six
years. The Options granted hereunder shall be fully vested and immediately
exercisable according to the terms hereof at such times and under such
conditions set forth in Exhibit A hereto.
3. Governing
Law.
This
Agreement shall be construed in accordance with and governed by the laws of
the
People’s Republic of China.
4. Notices.
Any
notice required or permitted to be given hereunder shall be given in writing
and
may be given by telex, telegram, facsimile transmission or similar method if
confirmed by mail as herein provided and addressed as follows:
|
If
to the Company:
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Suite
2808, International Chamber of Xxxxxxxx Xxxxx
Xxxxx
Xxxxx Xxxx,
Xxxxxxxx,
XXX, 000000
Telephone:
00-000-0000-0000
|
|
With
a copy to:
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Loeb
& Loeb LLP
000
Xxxx Xxxxxx
Xxx
Xxxx, XX 00000-0000
Attention:
Xxxxxxxx X. Xxxxxxxx
Telephone:
(000) 000-0000
Fax:
(000) 000-0000
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|
If
to Executive:
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Xxxxx
Xxx
Xxxx
X, 00/X, Xxxxx 1
East
Ocean Garden
Shenzhen,
PRC
Telephone:
00-0000 0000 000
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5. Counterparts.
This
Agreement may be executed in two counterparts, and by different parties hereto
in separate counterparts, each of which when executed shall be deemed to be
an
original but all of which taken together shall constitute one and the same
agreement.
6. Version.
The
English version of this Agreement is the translation of Chinese version. Should
there be any discrepancy between both versions, the Chinese version shall
prevail.
IN
WITNESS WHEREOF, each of the Parties hereto has duly executed this Agreement
as
of the date and year first above written.
NEW
DRAGON ASIA CORPORATION
By:
/s/ Heng Xxxx
XX
Name:
Heng Xxxx XX
Title:
Chairman
/s/ Xxxxx
Xxx
Xxxxx
Xxx, an individual
EXHIBIT
A
NON-QUALIFIED
STOCK OPTION TERMS
Pursuant
to the Supplementary Agreement, New Dragon Asia Corporation (the “Company”) has
granted the Executive a stock option (“Option”) to purchase 2,000,000 shares of
the Company’s “Common Stock.” The Option shall be subject by the following terms
and conditions:
1. Grant
Date.
The
“Grant Date” shall be January 20, 2006.
2. Exercise
Price.
The
“Exercise Price” shall be $1.60 in United States currency subject to adjustment
under Sections 9 and 10 of this Exhibit A.
3. Vesting.
Subject
to the limitations contained herein, the Option shall be fully vested as of
the
date the Option is approved by the shareholders pursuant to Section 11 of this
Exhibit A.
4. Method
of Payment.
The
consideration to be paid for the shares to be issued upon exercise of the
Option, may consist of (1) cash, (2) check, (3) with the consent of
the Board or Directors of the Company (“Board”) and to the extent consistent
with Applicable Laws, a full recourse promissory note bearing interest (at
no
less than such rate as shall then preclude the imputation of interest under
the
Internal Revenue Code) and payable upon such terms as may be prescribed by
the
Board, (4) other Company shares which (x) in the case of shares
acquired from the Company, have been owned by the Executive for more than six
(6) months on the date of surrender, and (y) have a fair market value on
the date of surrender equal to the aggregate exercise price of the shares as
to
which such Option shall be exercised, (5) surrendered Shares then issuable
upon exercise of the Option having a fair market value on the date of exercise
equal to the aggregate exercise price of the Option or exercised portion
thereof, (6) property of any kind which constitutes good and valuable
consideration, (7) to the extent consistent with applicable laws, delivery
of a notice that the Executive has placed a market sell order with a broker
with
respect to Shares then issuable upon exercise of the Options and that the broker
has been directed to pay a sufficient portion of the net proceeds of the sale
to
the Company in satisfaction of the Option exercise price, provided,
that
payment of such proceeds is then made to the Company upon settlement of such
sale, or (8) any combination of the foregoing methods of
payment.
5.
Securities Law Compliance.
Notwithstanding anything to the contrary contained herein, the Option may not
be
exercised unless the shares of Common Stock issuable upon such exercise are
then
registered under applicable securities laws or, if such shares of Common Stock
are not then so registered, the Company has determined that such exercise and
issuance would be exempt from the registration requirements of applicable
securities laws. The exercise of the Option must also comply with other
applicable laws and regulations governing the Option, and may not be exercised
if the Company determines that such exercise would not be in material compliance
with such laws and regulations.
6. Term.
Subject
to the provisions of this Exhibit A, the Option may be exercised for whole
shares of Common Stock at any time after vesting and prior to the earliest
to
occur of:
6.1 three
(3)
months after the termination of the Executive’s employment for any reason other
than death or Disability;
6.2 twelve
(12) months after the Executive’s termination of employment due to Disability or
death;
6.3 six
(6)
years from the Grant Date.
Notwithstanding
the foregoing, if the exercise of the Option is prevented within the applicable
time periods set forth in Sections 6(a) or (b) is prevented for any reason,
your
Option shall not expire before the date that is thirty (30) days after the
date
that you are notified by the Company that the Option is again exercisable,
but
in any event no later than the “Expiration Date” indicated in Section
6(c).
7. Exercise
Procedures.
The
Option may be exercised after vesting and during its term by delivering of
a
“Notice of Exercise” (in a form designated by the Company) together with the
Exercise Price to the Secretary of the Company, or to such other person as
the
Company may designate, during regular business hours, together with such
additional documents as the Company may then reasonably require. By exercising
the Option, the Executive agrees that, as a condition of exercise, the Company
may require the Executive to enter into an arrangement providing for the payment
to the Company of any tax withholding obligation of the Company arising by
reason of exercise of your Option or other applicable events.
8. Limitations
on Transfer of Options.
The
Option is not transferable, except by will or by the laws of descent and
distribution, and is exercisable during the Executive’s life only by the
Executive. By delivering written notice to the Company, in a form satisfactory
to the Company, the Executive may designate a third party who, in the event
of
the Executive’s death, shall thereafter be entitled to exercise the
Option.
9. Subdivision
or Consolidation.
Subject
to any required action by shareholders of the Company, the number of shares
of
Common Stock covered by the Option SAR, and the Exercise Price thereof, shall
be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock of the Company resulting from a subdivision or
consolidation of shares, including, but not limited to, a stock split, reverse
stock split, recapitalization, continuation or reclassification, or the payment
of a stock dividend or any other increase or decrease in the number of such
shares effected without receipt of consideration by the Company. Any fraction
of
a share subject to the Option that would otherwise result from an adjustment
pursuant to this Section shall be rounded upward to the next full number of
shares without other compensation or consideration to the Executive
10. Capital
Transactions.
Upon a
sale or exchange of all or substantially all of the assets of the Company,
a
merger or consolidation in which the Company is not the surviving corporation,
a
merger, reorganization or consolidation in which the Company is the surviving
corporation and shareholders of the Company exchange their stock for securities
or property, a liquidation of the Company or similar transaction, the Board,
in
its sole discretion, is hereby authorized to take any one or more of the
following actions it determines is appropriate in order to prevent dilution
or
enlargement of the benefits or potential benefits intended by the Company with
respect to the Option or to facilitate such transaction or event:
(a) To
provide for either the purchase of any the Option for an amount of cash equal
to
the amount that could have been obtained upon the exercise of such Option or
the
replacement of such Option with other rights or property selected by the Board
in its sole discretion and in compliance with applicable laws;
(b) To
provide that such Option shall be exercisable as to all shares covered thereby,
notwithstanding anything to the contrary herein;
(c) To
provide that such Option be assumed by the successor or survivor corporation,
or
a parent or subsidiary thereof, or shall be substituted for by similar options,
rights or awards covering the stock of the successor or survivor corporation,
or
a parent or subsidiary thereof, with appropriate adjustments as to the number
and kind of shares and prices;
(d) To
make
adjustments in the number and type of shares of Common Stock (or other
securities or property) subject to the Option and/or in the terms and conditions
of (including the Exercise Price) of the Option; or
(e) To
provide that immediately upon the consummation of such event, such Option shall
not be exercisable and shall terminate; provided,
that
for a specified period of time prior to such event, such Option shall be
exercisable as to all shares covered thereby, notwithstanding anything to the
contrary herein.
11. Shareholder
Approval.
The
Supplementary Agreement including the Option and this Exhibit shall be submitted
for the approval of the Company’s shareholders within twelve (12) months after
the Grant Date to comply with Section 711 of the Amex Company Guide. The Option
shall not vest or be exercisable prior to the time when the Plan is approved
by
the shareholders, and if such approval has not been obtained at the end of
said
twelve-month period, the Option shall thereupon be canceled and become null
and
void.
