Exhibit 10.1
 
STOCK OPTION AGREEMENT

Granted pursuant to the terms of the
Dongsheng Pharmaceutical International Co., Ltd.
Equity Incentive Plan

Unless otherwise defined herein, the terms defined in this Stock Option
Agreement (“Option Agreement”) shall have the same defined meanings as in the
Dongsheng Pharmaceutical International Co., Ltd. Equity Incentive Plan (“Plan”).

I.  
     PARTICIPANT.

 
                  NAME: Jianping Chen

                  ADDRESS: 105 Wallace CT, Green Brook, NJ 08812
 
            The undersigned Participant is hereby granted an Option to purchase
Common Stock (“Shares”) of Dongsheng Pharmaceutical International Co., Ltd.
(“Company”), subject to the terms and conditions of the Plan and this Option
Agreement, as follows:

  DATE OF GRANT: September 3, 2010

  VESTING COMMENCEMENT DATE: September 3, 2010

  EXERCISE PRICE PER SHARE: $1.00

  TOTAL NUMBER OF COMMON SHARES
  SUBJECT TO OPTION: 150,000

  TYPE OF OPTION (CHECK
ONE):                                                                                                                    
  o NON-QUALIFIED 
                                                       o QUALIFIED

 
  TERM/EXPIRATION DATE:
___ years from the Date of Grant unless earlier terminated as provided herein.

Subject to the terms and conditions contained herein, this Option shall vest as
follows:

(i) The first 50,000 shares will be fully vested as of May 15, 2011; (ii) the
second 50,000 shares will be fully vested as of May 15, 2012; (iii) the third
50,000 shares will be fully vested as of May 15, 2013. Please refer to 2(b) and
6(b) for vesting acceleration terms. All shares are pro-rated on a monthly
basis. Subject to the terms and conditions contained herein, this Option shall
vest as follows:
 
 
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II.           AGREEMENT.

1.           Grant of Option. The Committee, on behalf of the Company’s Board,
hereby grants to the Participant an option (“Option”) to purchase the number of
Shares set forth on first page of this Option Agreement, at the exercise price
per Share set forth on the first page of this Option Agreement (“Exercise
Price”), and subject to the terms and conditions of the Plan, which is attached
hereto as Exhibit A and incorporated herein by reference. This Option Agreement
is subject to all the terms, conditions and provisions of the Plan, and to such
rules, regulations and interpretations relating to the Plan adopted by the
Committee or the Board as may be in effect from time to time. If and to the
extent that this Agreement conflicts or is inconsistent with the terms,
conditions and provisions of the Plan, the Plan shall control, and this
Agreement shall be deemed to be modified accordingly. The Participant accepts
the Option subject to all the terms and provisions of the Plan and this
Agreement. The undersigned Participant hereby accepts as binding, conclusive and
final all decisions or interpretations of the Committee or the Board upon any
questions arising under the Plan and this Agreement.

2.           Exercise of Option.
 
               (a)           Right to Exercise. This Option shall be exercisable
during its term in accordance with the Vesting Schedule set out on the first
page of this Option Agreement and with the applicable provisions of the Plan and
this Option Agreement.
 
               (b)           Vesting Acceleration.
 
This Option shall become immediately fully vested and exercisable in the event
of a “Change in Control.” For purposes of this Option, a “Change in Control”
shall be deemed to occur when, or upon:

(i)           Approval by the shareholders of the Company of a reorganization,
merger, consolidation or other form of corporate transaction or series of
transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own more than
50% of the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then outstanding
voting securities, in substantially the same proportions as their ownership
immediately prior to such reorganization, merger, consolidation or other
transaction, or a liquidation or dissolution of the Company, or the sale of all
or substantially all of the assets of the Company (unless such reorganization,
merger, consolidation or other corporate transaction, liquidation, dissolution
or sale is subsequently abandoned); or

(ii)           Individuals who, as of the date on which the Option is granted
hereof, constitute the Board (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board, provided that any person becoming a
director subsequent to the date on which the Option was granted whose election,
or nomination for election by the Company's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose initial assumption
of office is in connection with an actual or threatened election contest
relating to the election of the Directors of the Company) shall be, for purposes
of this Agreement, considered as though such person were a member of the
Incumbent Board; or
 
 
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                           (iii)           The acquisition (other than from the
Company) by any person, entity or “group,” within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act, of beneficial ownership
(within the meaning of Rule 13-d promulgated under the Securities Exchange Act,
of 40% or more of either the then outstanding shares of the Company's Common
Stock or the combined voting power of the Company's then outstanding voting
securities entitled to vote generally in the election of directors (hereinafter
referred to as the ownership of a “Controlling Interest”) excluding, for this
purpose, any acquisitions by (1) a group whose primary persons are members of
the Rothschild family; (2) the Company or its Subsidiaries, (3) any person,
entity or “group” that as of the date on which the Option is granted owns
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act) of a Controlling Interest or (4) any employee benefit
plan of the Company or its Subsidiaries.

            (c)           Method of Exercise. This Option shall be exercisable
by delivery of an exercise notice as attached to the Plan (the “Exercise
Notice”), or on such other form authorized by the Committee, that shall state
the election to exercise the Option, the number of Shares with respect to which
the Option is being exercised, and such other representations and agreements as
may be required by the Company. The Exercise Notice shall be accompanied by
payment of the aggregate Exercise Price as to all Exercised Shares. This Option
shall be deemed to be exercised upon receipt by the Company of such fully
executed Exercise Notice accompanied by the aggregate Exercise Price.
 
                            No Shares shall be issued pursuant to the exercise
of an Option unless such issuance and such exercise complies with applicable
laws. Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to the Participant on the date on which the Option is
exercised with respect to such Shares.

3.           Method of Payment. Payment of the aggregate Exercise Price shall be
by cash, or in any manner otherwise permitted by the Plan or the Committee.

4.           Restrictions on Exercise. This Option may not be exercised until
such time as the Plan has been approved by the shareholders of the Company, or
if the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
law. This Option may not be exercised by anyone other than the Participant.

5.           Non-Transferability of Option. The Option granted hereby is not
transferable otherwise than by will or under the applicable laws of descent and
distribution, and during the lifetime of the Participant the Option shall be
exercisable only by the Participant, or the Participant’s guardian or legal
representative. In addition, the Option shall not be assigned, negotiated,
pledged or hypothecated in any way (whether by operation of law or otherwise),
and the Option shall not be subject to execution, attachment or similar process.
Upon any attempt to transfer, assign, negotiate, pledge or hypothecate the
Option, or in the event of any levy upon the Option by reason of any execution,
attachment or similar process contrary to the provisions hereof, the Option
shall immediately become null and void. The terms of the Plan and this Option
Agreement shall be binding upon the executors, administrators, heirs, successors
and assigns of the Participant.
 
 
 
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6.           Term of Option.
 
              (a)           Generally. This Option may be exercised only within
the term set forth on the first page of this Option Agreement, and may be
exercised during such term only in accordance with the Plan and the terms of
this Option.
 
              (b)           Termination of Participant. Without limiting the
generality of Section 6(a), if Participant is Terminated for non- “cause” (as
defined below), then for a period of ninety (90) days after the Termination
Date, Participant may exercise this Option to the extent that such Option is
vested and would have otherwise been exercisable upon the Termination Date.
Notwithstanding the foregoing and in accordance with the Participant’s
employment agreement, dated May 16, 2010, if the Participant is terminated for
non- “cause,” the Participant shall be entitled to an additional nine (9) months
worth of pro-rated fully vested stock options. If Participant is Terminated
because of Death or Disability, then this Option may be exercised for a period
of twelve (12) months after the Termination Date but only to the extent that
such Option would have been exercisable by Participant (or Participant’s legal
representative or authorized assignee) on the Termination Date. If Participant
is Terminated for cause, participant may exercise this Option but only to the
extent that such Option is vested and would have otherwise been exercisable upon
the Termination Date. For purposes of this Option Agreement, “cause” shall mean
willful misconduct or gross negligence.

7.           Notices. Any notice under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and addressed,
in the case of the Company, to the Company’s principal office, and, in the case
of the Participant, to the Participant’s last permanent address as shown on the
Company’s records, subject to the right of either party to designate some other
address at any time hereafter in a notice satisfying the requirements of this
Section.

8.           No Rights of Stockholders. Neither the Participant nor any personal
representative (or beneficiary) shall be, or shall have any of the rights and
privileges of, a stockholder of the Company with respect to any Shares
purchasable or issuable upon the exercise of the Option, in whole or in part,
prior to the date of exercise of the Option.

9.           Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Participant
with respect to the subject matter hereof, and may not be modified adversely to
the Participant’s interest except by means of a writing signed by the Company
and Participant. This Agreement is governed by the internal substantive laws of
the State of Delaware.
 
 
 
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10.          No Guarantee of Continued Service. PARTICIPANT ACKNOWLEDGES AND
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING AS A PARTICIPANT AT THE WILL OF THE COMPANY (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE COMPANY’S RIGHT TO
TERMINATE PARTICIPANT'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.

Participant acknowledges receipt of a copy of the Plan and represents that he or
she is familiar with the terms and provisions thereof, and hereby accepts this
Option subject to all of the terms and provisions thereof. Participant has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Participant further agrees to notify
the Company upon any change in his or her residence address.
 

 PARTICIPANT      DONGSHENG PHARMACEUTICAL        INTERNATIONAL CO., LTD.      
   /s/  Jianping Chen     By:  /s/  Xiadong Zhu  (SIGNATURE)          Xiadong
Zhu,  Chief Executive Officer

        
 
 
 
 
 
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