STOCK OPTION AGREEMENT
AGREEMENT, dated as of July 11, 2001 by and between PANAGRA
INTERNATIONAL CORPORATION, a New York corporation (the "Company"), and Li
Chuquan ("the Optionee").
W I T N E S S E T H
WHEREAS, pursuant to the terms of an Employment Agreement, dated as of
July 11, 2001, (the "Employment Agreement), between the Optionee and the
Company, the Company is obligated to grant a stock option (the "Option") to the
Optionee for the purchase of Two Million (2,000,000) shares of the Company's
Common Stock; and
WHEREAS, the Board of Directors of the Company has authorized the grant
of the Option to the Optionee.
NOW, THEREFORE, in consideration of the premises, mutual covenants
herein set forth and other good and valuable consideration, subject to the terms
and conditions herein, the Company and the Optionee hereby agree as follows:
1. Grant of Option.
Subject to the terms and conditions herein, the Company hereby grants
to the Optionee an option (the "Option") to purchase Two Million (2,000,000)
shares of its Common Stock, $.01 par value (the "Option Shares"), at an exercise
price (the "Exercise Price") of $1.75 per share, as may be adjusted from time to
time as provided in this Agreement.
2. Exercise of the Option.
2.01 Subject to adjustments as provided in Section 5 herein, the Option
shall be fully exercisable on the date that the Company achieves annual revenues
of $50,000,000.
2.02 The Option shall expire on July 10, 2006 subject to earlier
termination as provided herein.
3. Rights of Holder.
The Optionee shall not have any rights to dividends or any other rights
of a stockholder with respect to any Option Shares until such Shares shall have
been issued to him (as evidenced by the appropriate entry on the transfer books
of the Company) upon purchase of such Shares upon exercise of the Option.
Furthermore, nothing contained in this Stock Option Agreement shall confer upon
the Optionee any right to be continued in the employ of the Company or its
subsidiaries beyond what is called for in the Employment Agreement or shall
prevent the Company from terminating his employment in accordance with the
Employment Agreement.
4. Non-Transferability of Option.
This Option shall not be transferable other than by will or by the laws
of descent and distribution, and may be exercised during the Optionee's lifetime
only by him.
5. Adjustments.
5.01 Adjustments by the Company. In the event of a stock dividend,
stock split-up, share combination, exchange of shares, recapitalization, merger,
consolidation, acquisition or disposition of property or shares, reorganization,
liquidation or other similar changes or transactions, by the Company during the
term of the Option, the Board of Directors of the Company shall make such
adjustment of the number and class of shares then covered by the Option, or of
the Exercise Price, or both, whose determination shall be conclusive. To the
extent practicable, the Company shall give the Optionee prior notice of any such
event, provided that the failure by the Company to give such notice shall not
subject the Company to any liability herein.
5.02 Adjustments Due to Merger, Consolidation, Reorganization, Asset
Sale, Liquidation, etc.
(a) If the Company shall be the surviving corporation in any
reorganization, merger, consolidation, etc. of the Company with one or more
other corporations, any then outstanding Option shall pertain to and apply to
the securities to which a holder of the number of shares of Common Stock subject
to such Option would have been entitled immediately following such
reorganization, merger, consolidation, etc. with a corresponding proportionate
adjustment of the Exercise Price as to which such Option may be exercised so
that the aggregate Exercise Price as to which such Option may be exercised shall
be the same as the aggregate Exercise Price as to which such Option may be
exercised for the shares remaining subject to the Option immediately prior to
such reorganization, merger, consolidation, etc.
(b) In the event of a merger or consolidation in which the Company is
not the surviving corporation, or sale of all or substantially all of the assets
of the Company in which outstanding shares of Common Stock are exchanged for
securities, cash or other property of any other corporation or business entity
or in the event of a liquidation of the Company (collectively, ___ a "Corporate
Transaction"), the Board of Directors of the Company, or the board of directors
of any corporation assuming the obligations of the Company, may, in its
discretion, take any one or more of the following actions, as to outstanding
Options: (i) provide that such Options shall be assumed, or equivalent Options
shall be substituted, by the acquiring or succeeding corporation (or an
affiliate thereof); (ii) upon written notice to the Optionee, provide that all
unexercised Options will terminate immediately prior to the consummation of such
transaction unless exercised by the Optionee within a specified period following
the date of such notice; or (iii) in the event of a Corporate Transaction under
the terms of which holders of the Common Stock of the Company will receive upon
consummation thereof a cash payment for each share surrendered in the Corporate
Transaction (the "Transaction Price"), make or provide for a cash payment to the
Optionee equal to the difference between (A) the Transaction Price times the
number of shares of Common Stock subject to such outstanding Options (to the
extent then exercisable at prices not in excess of the Transaction Price) and
(B) the aggregate Exercise Price of all such outstanding Options in exchange for
the termination of such Options.
6. Reservation of Shares.
The Company shall at all times during the term of the Option reserve
and keep available such number of shares of Common Stock or such other class of
stock then subject to the Option as shall be sufficient to satisfy the
requirements of this Agreement. The Company shall list such shares of Common
Stock on the national securities exchange or automated quotation system on which
the Company's Common Stock is then listed.
7. Exercise Procedure.
7.01 Procedure.
(a) The Optionee may exercise the Option, at any time or from time to
time as provided herein, by delivering to the Company a written notice duly
signed by the Optionee stating the number of Option Shares that the Optionee has
elected to purchase and accompanied by payment in an amount equal to the full
purchase price for the Option Shares to be purchased (the "Purchased Shares").
The notice may be in form of the "Exercise of Option to Purchase Shares"
attached hereto. The payment may either be in cash or by check or shares of the
Company's Common Stock with a fair market value equal to the exercise price on
the date the Option is exercised, or through a combination of cash or shares. If
the exercise price of the Option is less than the fair market value of the
Company's Common Stock, then the Board of Directors of the Company, by written
notice to the Optionee, may also permit the Optionee to exercise the Option on a
cashless basis. For purposes of the foregoing, "fair market value" of the Common
Stock shall be determined as of the last business day for which the prices or
quotes are available prior to the date the particular Options are exercised and
shall mean (i) the last reported sale price (on that date) of the Common Stock
on the Nasdaq National or Small Cap Market System, if the Common Stock is then
traded on either such System; (ii) the last reported sale (on that date) of the
Common Stock on the principal national securities exchange on which the Common
Stock is traded, if the Common Stock is not then traded on the Nasdaq National
or Small Cap Market System; or (iii) the average of the closing bid and asked
prices last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the Nasdaq
National or Small Cap Market System or a national securities exchange. However,
if the Common Stock is not then publicly traded, the "fair market value" shall
be deemed to be the fair value of the Common Stock as determined by the
Corporation's Board of Directors after taking into consideration all factors
which it deems appropriate.
(b) Following receipt by the Company of such notice of exercise and
full payment, the Company shall issue, as soon as practicable, a stock
certificate for the Purchased Shares in the name as designated by the Optionee
and deliver the certificate to the Optionee.
7.02 Compliance.
The Company, however, shall not be required to issue or deliver the
stock certificate pursuant to Section 7.01(b) hereof until it has complied with
all requirements of the Securities Act of 1933, as amended (the "Securities
Act"), the Securities Exchange Act of 1934, as amended, any securities exchange
or automated quotation system on which the Company's Common Stock may then be
listed, and all applicable state laws in connection with the issuance of the
Option Shares or their listing on said securities exchange or system.
7.03 Legend. If the Purchased Shares are not then covered by a
registration statement in accordance with Section 8 hereof, each certificate for
the Purchased Shares shall bear a legend that is substantially similar to the
following:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED
OR HYPOTHECATED UNLESS THE REGISTRATION PROVISIONS OF SAID ACT HAVE
BEEN COMPLIED WITH OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF ITS
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED."
8. Notices.
Each notice relating to this Agreement shall be in writing and
delivered in person or by facsimile or certified mail to the following
addresses:
If to PANAGRA:
PanAgra International Corporation
Xxx Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: President
(000) 000-0000
If the Optionee:
Li Chuquan
c/o Suite 1105, 11th Floor
Xxxxxxx Xxxxx
Xx. 00 Xxxxxx Xx.
Xxxxxxx, Xxxx Xxxx
or to such other address as either party hereto may hereinafter duly give to the
other.
9. Binding.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and their successors, assigns, heirs and administrators.
10. Entire Agreement.
This Agreement constitutes the entire agreement between the parties
hereto with respect to the matters herein, and cannot be amended, modified or
terminated except by an agreement in writing executed by the parties hereto.
11. Governing Law.
This Agreement shall be construed in accordance with and governed by
the laws of the State of New York.
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
PANAGRA INTERNATIONAL CORPORATION
By: /s/ Xxxxxx X.X. Xxx
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Name: Xxxxxx X.X. Xxx
Title: President
Exercise of Option To Purchase Shares
To: PanAgra International Corporation
The undersigned hereby exercises the Option for the purchase of ______
shares (the "Shares") of PanAgra International Corporation Common Stock granted
under a Stock Option Agreement, dated as of July 11, 2001, and herewith makes
payment of the purchase price by the delivery of _______. In the event the
Shares are not registered under the Securities Act of 1933, as amended, the
undersigned shall provide such representations as may be required by the Company
to fulfill any exemptions that may be sought under said Act. Kindly issue the
certificate for the Shares and the Warrants in accordance with the instructions
given below:
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Signature
Instructions for issuance
of stock:
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Name
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Address
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Social Security Number
ZBV01!.DOC\14971\1\45787.01
