EXHIBIT 10.19

FORM OF GRANT OF EMPLOYEE STOCK OPTION

Date:

 

 

Re:

Non-qualified Stock Options

          The Committee, which administers The 1999 Equity Participation Plan of
Caraco Pharmaceutical Laboratories, Ltd. (the “Plan”), hereby grants you (the
“Grantee”) a non-qualified stock option (each an “Option”), pursuant to the
Plan, in consideration for your rendering faithful and efficient service to the
Company. Certain capitalized terms used in this agreement (the “Agreement”) are
defined in paragraph 12 hereof. Certain capitalized terms used in this
Agreement, which are not defined herein, have the meanings indicated for such
terms in Article I of the Plan. As used herein reference to the “Company” refer
to Caraco Pharmaceutical Laboratories, Inc.

 

 

1.

Stock Option. The Option entitles the Grantee (and such Grantee’s permitted
transferee as described in paragraph 3(a) below)(each such person, a
“Purchaser”) to purchase up to the number of shares of the Company’s Common
Stock, no par value (the “Option Shares”), specified below opposite such
Grantee’s name, at an option price of $    per share, the Fair Market Value of
the Company’s Common Stock at the close on the date prior to the grant (the
“Option Price”), subject to the terms and condition of this Agreement:

 

 

 

 

Grantee

Number of Option Shares

 

 

 

 

2.

Additional Terms. The Options are also subject to the following provision:

 

 

 

 

(a)

Exercisability. Each Option may be exercised and Option Shares may be purchased
at any time and from time to time after the execution of this Agreement, subject
to the vesting limitations imposed by paragraph 2(b) of this Agreement. The
Option Price for Option Shares shall be paid in full in cash or by check by the
Purchaser of such Option Shares prior to the time of the delivery of Option
Shares, or, at the written request of such Purchaser, the Committee may (but
need not) permit payment to be made by (i) delivery to the Company of
outstanding Shares, (ii) retention by the Company of one or more of such Option
Shares or (iii) any combination of cash, check, such Purchaser’s delivery of
outstanding Shares and retention by the Company of one or more of such Option
shares. Option Shares acquired by Purchaser under this Agreement are hereinafter
referred to as the “Exercise Shares.”

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(b)

Vesting/Exercisability. (i) Grantee may only exercise the Option to purchase
Option Shares to the extent that such Option has vested and become exercisable
with respect to such Option Shares. Except as otherwise provided in Paragraph
2(b)(ii) below, the Option Shares will vest and become exercisable in accordance
with the following schedule, if as of each such date the Grantee is still
employed with the Company:

 

 

 

 

 

 

 

 

 

 

 

 

Date

 

Cumulative Percentage of
Option Shares Vested
and Exercisable

 

 

 

 

 

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33 1/3%

 

 

 

 

 

 

 

33 1/3%

 

 

 

 

 

 

 

33 1/3%

 

 

 

 

 

 

 

 

 

 

 

Option Shares, which have become vested and exercisable, are referred to herein
as “Vested Shares” and all other Option Shares are referred to herein as
“Unvested Shares.”

 

 

 

 

 

 

 

(ii) Upon the occurrence of a Change in Control of the Company, each Option
shall vest and all Unvested Shares shall become Vested Shares if, but only if,
the Grantee is employed by the Company or any of its subsidiaries on the date of
such occurrence.

 

 

 

 

 

 

(c)

Procedure For Exercise. Subject to the vesting limitation of Paragraph 2(b)
above, a Purchaser may exercise all or any portion of the Option, so long as it
is valid and outstanding, at any time and from time to time prior to its
termination by delivering written notice to the Company as provided in Section
5.2 of the Plan and Written acknowledgement substantially in the form of Exhibit
“A” hereto that such Purchaser has read, and has been afforded an opportunity to
ask questions of the Company’s management regarding all financial and outer
information provided to Purchaser concerning the Company, together with payment
of the Option Price time the number of Option shares purchased. Subject to
Section 5.2 and 5.3 of the Plan, at the time of exercise, Purchaser will be
entitled to review all financial and other information regarding the Company it
believes necessary to enable such Purchaser to make an informed investment
decision.

 

 

 

 

3.

Transferability Of The Options.

 

 

 

 

 

 

(a)

The Grantee shall not sell, transfer, assign, pledge or otherwise dispose of (a
“Transfer”) any interest in any Option with respect to any Unvested Shares. Any
Option with respect to any Vested Shares of the

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Grantee shall not be Transferred other than as a result of the death of such
Grantee, testate or intestate, and the restrictions herein shall apply to any
Transfer by any such permitted transferee.

 

 

 

 

 

 

(b)

The Company may assign its rights and delegate its duties under this Agreement.

 

 

 

 

4.

Transferability Of Exercise Shares.

 

 

 

 

 

          (a) No Purchaser shall Transfer any Exercise Shares or any interest
therein except in accordance with the provisions of this Agreement. Grantee
shall promptly notify the Company of any disposition of shares of common stock
acquired upon the exercise of the Option within (i) two years from the date of
grant (including the date the Option is modified, extended or renewed for
purposes of Section 424(h) of the Code), or (ii) one year after the transfer of
such shares to the Grantee.

 

 

 

          (b) No holder of any Exercise Shares may Transfer any such shares
(except pursuant to an effective registration statement and/or re-offer
prospectus, as applicable, under the Securities Act) without first delivering to
the Company an opinion of counsel (reasonably acceptable in form and substance
to the Company) that neither registration nor qualification under the Securities
Act and applicable state securities law is required in connection with such
transfer.

 

 

 

 

5.

Conformity With Plan. The options are intended to conform in all respects with,
and are subject to all applicable provisions of, the Plan, which is incorporated
herein by reference. Except with respect to Paragraph 17 hereof, inconsistencies
between this Agreement and the Plan shall be resolved in accordance with the
term of the Plan, except as modified by Paragraph 2(b)(ii) of this Agreement. By
executing this Agreement, the Grantee acknowledges receipt of the Plan and
agrees to be bound by all of the other terms of the Plan.

 

 

 

 

6.

Employment. Notwithstanding any contrary oral representation or promises made to
the Grantee prior to or after the date hereof, the Grantee and the Company
acknowledge that such Grantee’s employment with the Company is and will continue
to be subject to the willingness of each to continue such employment and nothing
set forth herein or otherwise confers any right or obligation on such Grantee to
continue in the employ of the Company or shall affect in any way such Grantee’s
right or the right of the Company to terminate such Grantee’s employment at any
time, for any reason, with or without cause.

 

 

 

 

7.

Adjustment. The Committee shall make appropriate and proportionate adjustments
to the terms of the Options to reflect any stock dividend, stock split,
combination or exchange of shares, merger, consolidation or other change in the
capitalization of the Company which the Committee determines to be similar, in

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its substantive effect upon the Plan or the Options, to any of the changes
expressly indicated in this sentence, as provided in Section 8.3 of the Plan.
The Committee may (but shall not be required to) make any appropriate adjustment
to the term of the Options to reflect any spin-off, spin-out or other
distribution of assets to shareholders or any acquisition of the Company’s stock
or assets or other change which the Committee determines to be similar, in its
substantive effect upon the Plan or the Options, to any of the changes expressly
indicated in this sentence, as provided in Section 8.3 of the Plan. In the event
of any adjustments described in the preceding two sentences, any and all new,
substituted, or additional securities or other property to which any Purchaser
is entitled by reason of the Option shall be immediately subject to such Option
and be included in the word “Option Shares” for all purposes of such Option with
the same force and effect as the Option Shares presently subject to such Option.
After each such event, the number of Option Shares and/or the Option Price shall
be appropriately adjusted.

 

 

8.

Share Legend. Unless the Exercise Shares are the subject of an effective
registration statement and/or re-offer prospectus, as applicable, all
certificates representing any Exercise Shares subject to the provision of this
Agreement shall have endorsed thereon the following legend:

 

 

 

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSED AS OF
_______________, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
THERE-UNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET FORTH IN AN
EMPLOYEE STOCK OPTION AGREEMENT BETWEEN THE COMPANY AND CERTAIN EMPLOYEES OF THE
COMPANY DATED ___________. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE
HOLDER HEREOF AT THE COMPANY’S PRINCIPLE PLACE OF BUSINES WITHOUT CHARGE.”

 

 

 

9.

Investment Representations. Upon the purchase of Option Shares hereunder, the
Purchaser thereof shall execute and deliver to the Company a letter,
substantially in the form attached hereto as Exhibit “A”, confirming such
Purchaser’s investment representation.

 

 

10.

Expiration. Subject to Section 5.3 of the Plan, the Grantee’s Option shall
expire (a) with respect to Vested/Unvested Shares, at the earlier of (i) a
determination by the Company that the Grantee has been grossly negligent in the
performance of his duties to the Company; (ii) Termination for Cause of such
Grantee’s

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employment with the Company; (iii) Grantee’s resignation from the Company; or
(iv) at 5:00 p.m., Detroit time, on the sixth Anniversary of the date hereof.

 

 

 

Further, notwithstanding the above, with respect to Vested Shares, if the
termination of Grantee’s employment is due to death, disability or termination
Without Cause, then the Option shall expire on the earlier of (i) the 90th day
following the termination of Grantee’s employment; or (ii) until 5:00 p.m.,
Detroit time, on the sixth anniversary of the date hereof.

 

 

 

Further, notwithstanding the above, with respect to Vested Shares, if, following
cessation of Grantee’s service to the Company for whatever reason, the Company
discovers that Grantee engaged in conduct that would have justified Removal for
Cause, Grantee’s Option shall expire immediately on the date of such discovery
and any proceeds, gains or other economic benefit actually or constructively
received by Grantee upon any exercise of the Option or upon the receipt or
resale of any Common Stock underlying the Option, must and shall be paid to the
Company.

 

 

11.

Definitions.

 

 

 

“Disability” means permanent and total disability as such term is defined in
Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.

 

 

 

“Fully Diluted Basis” means, without duplication, (i) all shares of Common Stock
outstanding at the time of determination plus (ii) all shares of Common Stock
issuable upon conversion of any convertible securities or the exercise of any
option, warrant or similar right, whether or not such conversion, right or
option, warrant or similar right is then exercisable.

 

 

 

“Termination for Cause” means termination by the Company of Grantee’s employment
because of Grantee’s personal dishonesty, willful misconduct, breach of
fiduciary duty involving personal profit, intentional or continued failure to
perform stated duties, the unlawful violation of any law, rule or regulation
(other than minor traffic violations or similar offenses).

 

 

 

“Termination Without Cause” means any termination by the Company of Grantee’s
employment which is not a termination for Cause, including but not limited to a
voluntary quit by Grantee.

 

 

12.

Further Actions. The Parties agree to execute such further instruments and to
take such further actions as may reasonably be required to carry out the intent
of this Agreement.

 

 

13.

Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under

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applicable law, such provision will be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of this Agreement.

 

 

14.

Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, any one of which need not contain the signatures of more than one
party, and all such counterparts taken together will constitute one and the same
Agreement.

 

 

15.

Notices. Any notices, consent, approval or other communications given pursuant
to the provision of this Agreement shall be in writing and shall be (a) mailed
by certified mail or registered mail, return receipt requested, postage prepaid,
or (b) delivered by a nationally recognized overnight courier, U.S. Post Office
Express Mail, or similar overnight courier, and addressed as follow:

 

 

 

 

 

Grantor’s Address

 

 

 

 

 

 

 

Caraco Pharmaceutical Laboratories, Ltd.

 

 

 

1150 Elijah McCoy Drive

 

 

 

Detroit, Michigan 48202

 

 

 

Attention: CEO or Secretary.

 

 

 

 

 

 

 

Grantee’s Address

 

 

The time of giving of any notice shall be the time of delivery by the applicable
overnight courier or with respect to registered or certified mail, the time of
receipt thereof by the addressee or any agent of the addressee, except that in
the event the addressee or such agent of the addressee shall refuse to receive
any notice given y registered mail or certified mail as above provided or there
shall be no person available at the time do the delivery thereof to receive such
notice, the time of the giving of such notice shall e the time of such refusal
or the time of such delivery, as the case may be. Any party hereto may, giving
five (5) days written notice to the other party hereto, designate any other
address in substitution of the foregoing address to which notice shall be given.

 

 

16.

Successors And Assigns. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company and, subject to the
restrictions on transfer herein set forth, be binding upon Grantee’s heirs,
executors, administrators, successors and permitted assigns.

 

 

17.

Governing Law. This Agreement and all documents contemplated hereby, and all
remedies in connection therewith and all questions or transactions relating
thereto, shall be construed in accordance with and governed by the laws of the
state of Michigan, and jurisdiction and venue shall properly lie in the courts
of the state of Michigan.

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18.

Entire Agreement. This Agreement and the Plan constitute the enter understanding
between the Grantee and the Company with respect to the Option granted
hereunder.

Please sign as Grantee in the space provided below and return the Agreement to
Daniel H. Movens, CEO, to confirm your understanding and acceptance of the
agreements contained in this letter.

 

 

 

 

 

 

 

Very truly yours,

 

 

 

 

 

CARACO PHARMACEUTICAL

 

 

LABORATORIES, LTD.

 

 

 

 

 

By:

 

 

 

 

 

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Daniel H. Movens

 

 

 

 

Chief Executive Officer

 

 

 

 

Dated:

 

 

 

 

 

THE UNDERSIGNED hereby acknowledges having read this Agreement, and the other
enclosures to this Agreement, and hereby agrees to be bound by all provisions
set forth herein and in the plan.

 

 

 

 

GRANTEE:

 

 

 

 

 

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