CHINA WIND SYSTEMS, INC. STOCK OPTION AGREEMENT
NEITHER
THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SHARES ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE ASECURITIES
ACT@)
OR THE SECURITIES LAWS OF ANY STATE. NEITHER THE SECURITIES REPRESENTED HEREBY
MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED NOR MAY THE SHARES
BE
ISSUED UPON EXERCISE UNLESS SUCH SECURITIES AND SHARES ARE REGISTERED UNDER
THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR THE COMPANY RECEIVES
AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH SALE, TRANSFER, PLEDGE
OR
ISSUANCE IS EXEMPT FROM REGISTRATION.
THIS
STOCK OPTION AGREEMENT (“Option”), is made as of this 8th day of February, 2008
by and between China Wind Systems, Inc., a Delaware corporation (the “Company”),
and Xxxx Xx (“Optionee”).
RECITALS
WHEREAS,
on February 8, 2008, in connection with the execution of an employment agreement
between the Company and Optionee dated even date herewith (“Employment
Agreement”), the Company’s Board of Directors authorized the grant to Optionee
of an option to purchase the number of shares of common stock (the “Common
Shares”) of the Company specified in Paragraph 1 hereof, at the price specified
therein, such option to be for the term and upon the terms and conditions
hereinafter stated;
WHEREAS,
the Board of Directors, or such other committee or individual that the Board
of
Directors appoints, shall be the “Administrator” for purposes of this Agreement;
WHEREAS,
this Option is not issued under any plan.
AGREEMENT
NOW,
THEREFORE, in consideration of the promises and of the undertakings of the
parties hereto contained herein, it is hereby agreed:
1. Number
of
Shares; Option Price. Pursuant to said action of the Board of Directors, the
Company hereby grants to Optionee this Option to purchase, upon and subject
to
the terms and conditions hereof, up to 120,000 Common Shares of the Company
at
an exercise price of $2.00 per share (“Exercise Price”).
2. Term.
This Option shall expire on the day before the fourth anniversary of the date
hereof (the “Expiration Date”) unless such Option shall have been terminated
prior to that date in accordance with the provisions of this Agreement. The
term
“Affiliate” as used herein shall have the meaning as set forth in the Federal
Securities laws of the United States.
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3. Shares
Subject to Exercise. The Option shall vest and the Common Shares shall be
subject to vesting, which shall cease in the event of a cessation of “Continuous
Service” of the Employee, as the term is defined in the Employment Agreement.
All Common Shares shall thereafter remain subject to exercise for the term
specified in Paragraph 2 hereof. This Option shall vest and be exercisable
for
up to:
60,000
Common Shares on the date that is one year from the date hereof, and
60,000
Common Shares on the date that is two years from the date hereof.
4. Method
and Time of Exercise. The Option may be exercised by written notice delivered
to
the Company at its principal executive office stating the number of Common
Shares with respect to which the Option is being exercised, together with a
check or money order made payable to the Company in the amount of the exercise
price.
5. Termination
of Option. In the event that Optionee terminates its employment, pursuant to
Section 8(b) of the Employment Agreement, all Options not then vested shall
immediately terminate.
6. Non-transferability.
Except with the express written approval of the Administrator, this Option
may
not be assigned or transferred except by will, qualified domestic relations
order or by the laws of descent and distribution, and may be exercised only
by
Optionee during her lifetime and after her death, by her personal representative
or by the person entitled thereto under her will or the laws of intestate
succession.
7. Optionee
Not a Shareholder. Optionee shall have no rights as a shareholder with respect
to the Common Shares of the Company covered by this Option until the date of
issuance of a stock certificate or stock certificates to her upon exercise
of
this Option. No adjustment will be made for dividends or other rights for which
the record date is prior to the date such stock certificate or certificates
are
issued.
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8. No
Right
to Employment. Nothing in the Option granted hereby shall interfere with or
limit in any way the right of the Company or of any of its Affiliates to
terminate Optionee's employment or consulting at any time, nor confer upon
Optionee any right to continue in the employ of, or consult with, the Company
or
any of its Affiliates.
9. Anti-dilution
Adjustment.
9.1
Stock
Dividends, Stock Splits, Etc. If the Company declares or pays a dividend on
its
Common Stock payable in Common Stock or other securities, or subdivides the
outstanding Common Stock into a greater amount of Common Stock, then upon
exercise of this Option, for each Common Share acquired, Optionee shall receive,
without cost to Optionee, the total number and kind of securities to which
Optionee would have been entitled had Optionee owned the Common Shares of record
as of the date the dividend or subdivision occurred.
9.2 Reclassifications,
Exchange or Substitution. Upon any reclassification, exchange, substitution,
or
other event that results in a change of the number and/or class of the
securities issuable upon exercise of this Option, Optionee shall be entitled
to
receive, upon exercise of this Option, the number and kind of securities and
property that Optionee would have received for the Common Shares if this Option
had been exercised immediately before such reclassification, exchange,
substitution, or other event. The Company or its successor shall promptly issue
to Optionee a new Option for such new securities or other property. The new
Option shall provide for adjustments which shall be as nearly equivalent as
may
be practicable to the adjustments provided for in this Section 10.2, including,
without limitation, adjustments to the Exercise Price and to the number of
securities or property issuable upon exercise of the new Option. The provisions
of this Section 10.2 shall similarly apply to successive reclassifications,
exchanges, substitutions, or other events.
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9.3
Adjustments for Combinations, Etc. If the outstanding shares of Common Stock
are
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares, the Exercise Price shall be proportionately increased.
9.4
Merger or Consolidation. In case of any consolidation of the Company with,
or
merger of the Company into any other corporation, or in the case of any sale
or
conveyance of all or substantially all of the assets of the Company other than
in connection with a plan of complete liquidation of the Company, then as a
condition of such consolidation, merger or sale or conveyance, adequate
provision will be made whereby the registered holder of the Option will have
the
right to acquire and receive upon exercise of this Option in lieu of the shares
of Common Stock immediately theretofore subject to acquisition upon the exercise
of this Option, such shares of stock, securities or assets as may be issued
or
payable with respect to or in exchange for the number of shares of Common Stock
immediately theretofore subject to acquisition and receivable upon exercise
of
this Option had such consolidation, merger or sale or conveyance not taken
place. In any such case, the Company will make appropriate provision to insure
that the provisions of this Section 10 hereof will thereafter be applicable
as
nearly as may be in relation to any shares of stock or securities thereafter
deliverable upon the exercise of this Option.
10. Restrictions
on Sale of Common Shares. Optionee represents and agrees that upon her exercise
of this Option, in whole or in part, unless there is in effect at that time
under the Securities Act a registration statement relating to the Common Shares
issued to her, she will acquire the Common Shares issuable upon exercise of
this
Option for the purpose of investment and not with a view to their resale or
further distribution, and that upon such exercise thereof she will furnish
to
the Company a written statement to such effect, satisfactory to the Company
in
form and substance. Optionee agrees that any certificates issued upon exercise
of this Option may bear a legend indicating that their transferability is
restricted in accordance with applicable state and federal securities law.
Any
person or persons entitled to exercise this Option under the provisions of
Paragraphs 5 and 6 hereof shall, upon each exercise of this Option under
circumstances in which Optionee would be required to furnish such a written
statement, also furnish to the Company a written statement to the same effect,
satisfactory to the Company in form and substance.
11. Notices.
All notices to the Company shall be addressed to the Chief Executive Officer
at
the principal executive office of the Company, and all notices to Optionee
shall
be addressed to Optionee at the address of Optionee on file with the Company
or
its subsidiary, or to such other address as either may designate to the other
in
writing. A notice shall be deemed to be duly given if and when enclosed in
a
properly addressed sealed envelope deposited, postage prepaid, with the United
States Postal Service. In lieu of giving notice by mail as aforesaid, written
notices under this Agreement may be given by personal delivery to Optionee
or to
the Chief Executive Officer (as the case may be).
12. Sale
or
Other Disposition. If Optionee at any time contemplates the disposition (whether
by sale, gift, exchange, or other form or transfer) of any Shares acquired
by
exercise of this Option, she or she shall first notify the Company in writing
of
such proposed disposition and cooperate with the Company in complying with
all
applicable requirements of law, which, in the judgment of the Company, must
be
satisfied prior to such disposition.
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
and year first above written.
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| By: |
/s/
Xxxxxxx Xx
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Name:
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Xxxxxxx
Xx
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Title:
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Chairman
and CEO
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OPTIONEE
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/s/
Xxxx Xx
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Xxxx
Xx
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Address:
____________________
____________________
5
EXHIBIT
A
PURCHASE
FORM
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Dated:
____________
|
The
undersigned, pursuant to the provisions set forth in the attached option, hereby
elects to purchase (check
applicable box):
_________
shares of the Common Stock of China Wind Systems, Inc. covered by such
Option.
The
undersigned herewith makes payment of the full Exercise Price for such shares
at
the price per share provided for in such Option. Such payment takes the form
of:
$______
in lawful money of the United States; and/or
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Print
or Type Name
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(Signature
must conform in all respects to name
of
holder as specified on the face of the
Option)
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|||
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(Street
Address)
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(City) (State) (Zip Code) |
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