Ex-4.2 Option Agreement



 




Exhibit
4.2



SINOFRESH HEALTHCARE, INC.

NON-QUALIFIED STOCK OPTION AGREEMENT

FOR

CYNTHIA DUNN




Agreement




     1. Grant of Option. SinoFresh Healthcare, Inc., a Florida corporation (the “Company”)
hereby issues this option agreement to evidence an option (the “Option”) committed to Cynthia Dunn
(“Optionee”) by the Company as of August 30, 2005 (which date shall be deemed the “Date of Grant”)
and which Option is assumed by the Company. This is an Option to purchase up to 10,000 shares of
the Company’s Common Stock, no par value (the “Stock”), at an exercise price per share equal to
Sixty Cents ($0.60) (the “Option Price”). This Option shall be subject to the terms and conditions
set forth herein. This Option is a nonqualified stock option, and not an incentive stock option
within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).



     2. Exercise Schedule. This Option vests on the one year anniversary of the date of
grant.



     3. Method of Exercise. This Option shall be exercisable in whole or in part by
written notice which shall state the election to exercise this Option, the number of shares of
Stock in respect of which this Option is being exercised, and such other representations and
agreements as to the holder’s investment intent with respect to such shares of Stock as may be
required by the Company. Such written notice shall be signed by the Optionee and shall be
delivered in person or by certified mail to the President of the Company. The written notice shall
be accompanied by payment of the exercise price. This Option shall be deemed to be exercised after
(a) receipt by the Company of such written notice accompanied by the exercise price, and (b)
arrangements that are satisfactory to the Board of Directors in its sole discretion have been made
for Optionee’s payment to the Company of the amount that is necessary to be withheld in accordance
with applicable Federal or state withholding requirements. No shares of Stock will be issued
pursuant to this Option unless and until such issuance and such exercise shall comply with all
relevant provisions of applicable law, including the requirements of any stock exchange upon which
the Stock then may be traded.



     4. Method of Payment. Payment of the exercise price shall be by any of the following,
or a combination thereof, at the election of the Optionee: (a) cash; (b) check; (c) with shares
that have been held by the Optionee for at least 6 months (or such other shares as the Company
determines will not cause the Company to recognize for financial accounting purposes a charge for
compensation expense); (d) subject to there being an effective Form S-8 registration statement (or
other applicable registration) in place for this Option, pursuant to a “cashless exercise”
procedure, by delivery of a properly executed exercise notice together with such other
documentation, and subject to such guidelines, as the Company shall require to effect an exercise
of this Option and delivery to the Company by a licensed broker acceptable to the Company of



 









 







proceeds from the sale of Stock or a margin loan sufficient to pay the Option Price and any
applicable income or employment taxes; or (d) such other consideration or in such other manner as
may be determined by the Board of Directors in its absolute discretion.



     This Option may also be exercised by a cashless exercise procedure pursuant to a formula
(“Formula Cashless Exercise”), or a combination of cash and Formula Cashless Exercise. In the
event of a Formula Cashless Exercise, the Optionee shall surrender this Option to the Company with
a written notice of the Optionee’s intention to effect a cashless exercise, including a calculation
of the number of shares of common stock to be issued upon such exercise in accordance with the
terms hereof; and, in lieu of paying the Option Price in cash, the Optionee shall surrender this
Option for that number of shares of common stock determined by multiplying the number of shares of
common stock to which it would otherwise be entitled by a fraction, the numerator of which shall be
the difference between (i) the average Market Price per share of the common stock for the five (5)
Trading Days immediately prior to the date of delivery of the cashless exercise notice to the
Company (the “Cashless Exercise Market Price”) and (ii) the Option Price, and the denominator of
which shall be the Cashless Exercise Market Price. As used herein, “Market Price” means, as of any
Trading Day, (i) the closing sale price for the shares of common stock on the NASD OTC Bulletin
Board (“OTCBB”) as reported by Bloomberg, or (ii) if the OTCBB is not the principal trading market
for the shares of Common Stock, the closing sale price on the principal trading market for the
common stock as reported by Bloomberg, or (iii) if market value cannot be calculated as of such
date on any of the foregoing basis, the Market Price shall be the fair market value as reasonably
determined in good faith by the Company’s Board of Directors. As used herein, a “Trading Day” shall
mean any day on which the common Stock is traded for any period on the OTCBB, or on the principal
securities exchange or other securities market on which the common stock is then being traded.”



     5. Termination of Option.



          (a) This Option shall terminate and become null and void on the fifth (5th)
anniversary of the Date of Grant.



          (b) To the extent not previously exercised, (i) this Option shall terminate immediately in the
event of (1) the liquidation or dissolution of the Company, or (2) any reorganization, merger,
consolidation or other form of corporate transaction in which the Company does not survive, or the
Company’s outstanding shares are converted into or exchanged for securities issued by another
entity, or an affiliate of such successor or acquiring entity, unless the successor or acquiring
entity, or a parent or subsidiary of such successor or acquiring entity, assumes this Option or
substitutes an equivalent option or right pursuant to Section 6 below, and (ii) the Board of
Directors in its sole discretion may by written notice (“cancellation notice”) cancel, effective
upon the consummation of a corporate transaction described in Section 5(b)(A) below in which the
Company does survive, this Option (or portion thereof) that remains unexercised on such date. The
Board of Directors shall give written notice of any proposed transaction referred to in this
Section 5(b) a reasonable period of time prior to the closing date for such transaction (which
notice may be given either before or after approval of such transaction), in order that the
Optionee may have a reasonable period of time prior to the closing date of such transaction within
which to exercise this Option if and to the extent that it then is exercisable. The Optionee may
condition his exercise of this Option upon the



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consummation of a transaction referred to in this Section 5(b).




               (A) As used in Section 5(b) above, a corporate transaction in which the Company does survive
shall mean the 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, 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 (any such event being referred to as a “Corporate Transaction”) is
subsequently abandoned).



          (c) Notwithstanding anything to the contrary contained in this Agreement, the merger of the
Company with and into SinoFresh Acquisition Corp., a Florida corporation, shall not constitute a
corporate transaction subject to this Section 5.



     6. Stock Dividend or Reorganization.



          (a) If (i) the Company shall at any time be involved in a transaction described in Section
424(a) of the Code (or any successor provision) or any “corporate transaction” described in the
regulations thereunder; (ii) the Company shall declare a dividend payable in, or shall subdivide or
combine, its Common Stock or (iii) any other event with substantially the same effect shall occur,
the Board of Directors shall, subject to applicable law, with respect to this Option,
proportionately adjust the number of shares of Common Stock subject to this Option and/or the
exercise price per share so as to preserve the rights of the Optionee substantially proportionate
to the rights of the Optionee prior to such event.



          (b) In the event that the presently authorized capital stock of the Company is changed into
the same number of shares with a different par value, or without par value, the stock resulting
from any such change shall be deemed to be Common Stock within the meaning of this Option, and this
Option shall apply to the same number of shares of such new stock as it applied to old shares
immediately prior to such change.



          (c) If the Company shall at any time declare an extraordinary dividend with respect to the
Common Stock, whether payable in cash or other property, the Board of Directors may, subject to
applicable law, in the exercise of its sole discretion and with respect to this Option,
proportionately adjust the number of shares of Common Stock subject to this Option and/or adjust
the exercise price per share so as to preserve the rights of the Optionee substantially
proportionate to the rights of the Optionee prior to such event.



          (d) The foregoing adjustments in the shares subject to this Option shall be made by the Board
of Directors, or by the applicable terms of any assumption or substitution document.



          (e) The grant of this Option shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital or



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business structure, to merge, consolidate or dissolve, to liquidate or to sell or transfer all
or any part of its business or assets.



     7. Transferability. Unless otherwise determined by the Board of Directors, this
Option is not transferable otherwise than by will or under the applicable laws of descent and
distribution, and during the lifetime of the Optionee this Option shall be exercisable only by the
Optionee or the Optionee’s guardian or legal representative. In addition, this Option shall not be
assigned, negotiated, pledged or hypothecated in any way (whether by operation of law or
otherwise), and this Option shall not be subject to execution, attachment or similar process. Upon
any attempt to transfer, assign, negotiate, pledge or hypothecate this Option, or in the event of
any levy upon this Option by reason of any execution, attachment or similar process contrary to the
provisions hereof, this Option shall immediately become null and void. The terms of this Option
shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.



     8. No Rights of Stockholders. Neither the Optionee 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 of Stock purchasable or issuable upon the exercise of this
Option, in whole or in part, prior to the date of exercise of this Option.



     9. No Right to Employment. Neither this Option nor this Agreement shall confer upon
the Optionee any right to employment or service with the Company.



     10. Law Governing. This Agreement shall be governed in accordance with and governed
by the internal laws of the State of Florida.



     11. 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 President
at 516 Paul Morris Drive, Englewood, Florida 34223, or if the Company should move its principal
office, to such principal office, and, in the case of the Optionee, to the Optionee’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.



     12. Tax Consequences. Set forth below is a brief summary as of the date of this
Option of some of the federal tax consequences of exercise of this Option and disposition of the
Stock. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES OF STOCK.



          (a) Exercise of Option. There may be a regular federal income tax liability upon the
exercise of this Option. The Optionee will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of the fair market value of the
Stock on the date of exercise over the Option Price. If Optionee is an employee, the Company will
be required to withhold from Optionee’s compensation or collect from Optionee



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and pay to the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.



          (b) Disposition of Stock. If the Stock is held for at least one year, any gain
realized on disposition of the Stock will be treated as long-term capital gain for federal income
tax purposes.



     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written
above.



	 	 	 	 	 	 	 
	 	 	COMPANY:	 	 
	 
	 	 	 	 	 	 
	 	 	SinoFresh Healthcare, Inc., a Florida corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Charles Fust	 	 
	 

	 	Title:
	 	Chairman and CEO	 	 






     Optionee has reviewed this Option in its entirety, has had an opportunity to obtain the advice
of counsel prior to executing this Option, and fully understands all provisions of this Option.



	 	 	 	 	 	 	 
	 	 	OPTIONEE:	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:
	 	[Cynthia Dunn]	 	 







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