CHINA YONGXIN PHARMACEUTICALS, INC. FORM OF NONQUALIFIED STOCK OPTION AGREEMENT
Exhibit
10.3
CHINA
YONGXIN PHARMACEUTICALS, INC.
2010
EQUITY INCENTIVE PLAN
This
NONQUALIFIED 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 [choose one] [key employee, director, advisor and/or consultant]
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 a nonqualified stock option (“NQSO”) and not
an incentive stock option (“ISO”) as such term is defined in section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”).
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% 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:
Date
Installment Becomes Exercisable Number of Option
Shares
________
Shares
an
additional ________ Shares
an
additional ________ Shares
an
additional ________ Shares
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;
(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 the exercise of the Option;
or
(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.]
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
or persons 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 or persons 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.
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 Service by Optionee. If the Optionee’s service with the Company
and all Related Corporations is terminated by the Optionee for any reason other
than death or disability 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 service
by the Optionee at any time prior to the earlier of (i) the Expiration Date or
(ii) ninety (90) days after the date of such termination of service. [The Plan
provides for this period as a default. The Committee may provide for different
exercise periods in any particular NQSO.] Any part of the Option that was not
exercisable immediately before the Optionee’s termination of service 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 service and, prior to the
Expiration Date, the Optionee’s service 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 service 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 service. Any part of the Option
that was not exercisable immediately before the Optionee’s termination of
service shall terminate at that time.
9.
Termination of Service by Company without Cause or by Optionee with Good Reason.
If the Optionee’s service 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 service. 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 service and prior to the
Expiration Date, or if the Optionee’s service is terminated for any reason (as
described in Paragraphs 7, 8 and 9) and the Optionee dies following his or her
termination of service but prior to the earlier of the Expiration Date or 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 service 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.
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.
13.
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.
IN
WITNESS WHEREOF, the Company has caused this Nonqualified 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_.
CHINA
YONGXIN PHARMACEUTICALS, INC.
By: _____________________________
Name:
____________________________
Title:
_____________________________
Optionee:
_________________________
CHINA
YONGXIN PHARMACEUTICALS, INC.
2010
EQUITY INCENTIVE PLAN
Notice of
Exercise of Nonqualified Stock Option
I hereby
exercise the nonqualified stock option granted to me pursuant to the
Nonqualified Stock Option Agreement dated as of _________ __, 20_, 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:
Number of
Shares to be purchased: _______
Purchase
price per Share: $_______
Total
purchase price: $_______
A.
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;
and/or
B.
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;
and/or
C. 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 exercise price.]
and/or
D. 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.
Please
have the certificate or certificates representing the purchased Shares
registered in the following name or names*
: ;
and sent
to .
DATED: ___,
20__
Optionee’s
Signature:_____________________________
*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.