FUQI INTERNATIONAL, INC. STOCK OPTION AGREEMENT
Exhibit
99.3
RECITALS
A. The
Board
has adopted the Plan for the purpose of retaining the services of selected
Employees, non-employee members of the Board or the board of directors of any
Parent or Subsidiary and consultants and other independent advisors in the
service of the Corporation (or any Parent or Subsidiary).
B. Optionee
is to render valuable services to the Corporation (or a Parent or Subsidiary),
and this Agreement is executed pursuant to, and is intended to carry out the
purposes of, the Plan in connection with the Corporation’s grant of an option to
Optionee.
C. All
capitalized terms in this Agreement shall have the meaning assigned to them
in
the attached Appendix.
NOW,
THEREFORE,
it is
hereby agreed as follows:
1. Grant
of Option.
The
Corporation hereby grants to Optionee, as of the Grant Date, an option to
purchase up to the number of Option Shares specified in the Grant Notice. The
Option Shares shall be purchasable from time to time during the option term
specified in Paragraph 2 at the Exercise Price.
2. Option
Term.
This
option shall have a term of [__] years measured from the Grant Date and shall
accordingly expire at the close of business on the Expiration Date, unless
sooner terminated in accordance with Paragraph 5 or 6.
3. Limited
Transferability.
(a) This
option shall be neither transferable nor assignable by Optionee other than
by
will or the laws of inheritance following Optionee’s death and may be exercised,
during Optionee’s lifetime, only by Optionee. However, Optionee may designate
one or more persons as the beneficiary or beneficiaries of this option, and
this
option shall, in accordance with such designation, automatically be transferred
to such beneficiary or beneficiaries upon the Optionee’s death while holding
this option. Such beneficiary or beneficiaries shall take the transferred option
subject to all the terms and conditions of this Agreement, including (without
limitation) the limited time period during which this option may, pursuant
to
Paragraph 5, be exercised following Optionee’s death.
(b) If
this
option is designated a Non-Statutory Option in the Grant Notice, then this
option may be assigned in whole or in part during Optionee’s lifetime to the
Optionee’s family members as a gift, whether directly or indirectly, or by means
of a trust or partnership or otherwise, or pursuant to a qualified domestic
relations order as defined in the Code or Title 1 of the Employee Retirement
Income Security Act of 1974, as amended, provided,
that,
if the
Corporation is subject to the reporting requirements of Section 13 or 15(d)
of
the Exchange Act, then as otherwise permitted pursuant to General Instructions
A.1(a)(5) to Form S-8 under the Securities Act of 1933, as amended, or any
successor thereto. For purposes of this Agreement, unless otherwise determined
by the Plan Administrator, "family
member"
shall
have the meaning given to such term in Rule 701 promulgated under the Securities
Act, provided,
that,
if the
Corporation is subject to the reporting requirements of Section 13 or 15(d)
of
the Exchange Act, then it shall have the meaning given to such term in General
Instructions A.1(a)(5) to Form S-8 under the Securities Act of 1933, as amended,
or any successor thereto. The assigned portion shall be exercisable only by
the
person or persons who acquire a proprietary interest in the option pursuant
to
such assignment. The terms applicable to the assigned portion shall be the
same
as those in effect for this option immediately prior to such assignment.
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4. Dates
of Exercise.
This
option shall become exercisable for the Option Shares in one or more
installments as specified in the Grant Notice. As the option becomes exercisable
for such installments, those installments shall accumulate, and the option
shall
remain exercisable for the accumulated installments until the Expiration Date
or
sooner termination of the option term under Paragraph 5 or 6.
5. Cessation
of Service.
The
option term specified in Paragraph 2 shall terminate (and this option shall
cease to be outstanding) prior to the Expiration Date should any of the
following provisions become applicable:
(a) Should
Optionee cease to remain in Service for any reason (other than death, Disability
or Misconduct) while this option is outstanding, then Optionee (or any person
or
persons to whom this option is transferred pursuant to a permitted transfer
under Paragraph 3) shall have a period of thirty (30) days (commencing with
the date of such cessation of Service) during which to exercise this option,
but
in no event shall this option be exercisable at any time after the Expiration
Date.
(b) Should
Optionee die while this option is outstanding, then the personal representative
of Optionee’s estate or the person or persons to whom the option is transferred
pursuant to Optionee’s will or the laws of inheritance following Optionee’s
death or to whom the option is transferred during Optionee’s lifetime pursuant
to a permitted transfer under Paragraph 3 shall have the right to exercise
this option. However, if Optionee dies while holding this option and has an
effective beneficiary designation in effect for this option at the time of
his
or her death, then the designated beneficiary or beneficiaries shall have the
exclusive right to exercise this option following Optionee’s death. Any such
right to exercise this option shall lapse, and this option shall cease to be
outstanding, upon the earlier
of (i)
the expiration of the six (6)-month period measured from the date of Optionee’s
death or (ii) the Expiration Date.
(c) Should
Optionee cease Service by reason of Disability while this option is outstanding,
then Optionee (or any person or persons to whom this option is transferred
pursuant to a permitted transfer under Paragraph 3) shall have a period of
six (6) months (commencing with the date of such cessation of Service) during
which to exercise this option. In no event shall this option be exercisable
at
any time after the Expiration Date.
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Note:
Exercise of this option on a date later than three (3) months following
cessation of Service due to Disability will result in loss of favorable
Incentive Option treatment, unless
such
Disability constitutes Permanent Disability. In the event that Incentive Option
treatment is not available, this option will be taxed as a Non-Statutory Option
upon exercise.
(d) During
the limited period of post-Service exercisability, this option may not be
exercised in the aggregate for more than the number of Option Shares in which
Optionee is, at the time of Optionee’s cessation of Service, vested pursuant to
the Vesting Schedule specified in the Grant Notice or the special vesting
acceleration provisions of Paragraph 6. Upon the expiration of such limited
exercise period or (if earlier) upon the Expiration Date, this option shall
terminate and cease to be outstanding for any vested Option Shares for which
the
option has not been exercised. To the extent Optionee is not vested in one
or
more Option Shares at the time of Optionee’s cessation of Service, this option
shall immediately terminate and cease to be outstanding with respect to those
shares.
(e) Should
Optionee’s Service be terminated for Misconduct or should Optionee otherwise
engage in Misconduct while this option is outstanding, then this option shall
terminate immediately and cease to remain outstanding.
6. Change
of Control Assumption.
(a) If
this
option is assumed in connection with a Change in Control or otherwise continued
in effect, then this option shall be appropriately adjusted, immediately after
such Change in Control, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Change in Control
had the option been exercised immediately prior to such Change in Control,
and
appropriate adjustments shall also be made to the Exercise Price, provided
the
aggregate Exercise Price shall remain the same. To the extent that the actual
holders of the Corporation’s outstanding Common Stock receive cash consideration
for their Common Stock in consummation of the Change in Control, the successor
corporation may, in connection with the assumption of this option, substitute
one or more shares of its own common stock with a fair market value equivalent
to the cash consideration paid per share of Common Stock in such Change in
Control.
(b) This
Agreement shall not in any way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure
or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
7. Adjustment
in Option Shares.
Should
any change be made to the Common Stock by reason of any stock split, stock
dividend, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the
Corporation’s receipt of consideration, appropriate adjustments shall be made to
(i) the total number and/or class of securities subject to this option and
(ii)
the Exercise Price in order to reflect such change and thereby preclude a
dilution or enlargement of benefits hereunder.
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8. Stockholder
Rights.
The
holder of this option shall not have any stockholder rights with respect to
the
Option Shares until such person shall have exercised the option, paid the
Exercise Price and become the record holder of the purchased
shares.
9. Manner
of Exercising Option.
(a) In
order
to exercise this option with respect to all or any part of the Option Shares
for
which this option is at the time exercisable, Optionee (or any other person
or
persons exercising the option) must take the following actions:
(i) Execute
and deliver to the Corporation a [Purchase Agreement/Exercise Notice] for the
Option Shares for which the option is exercised.
(ii) Pay
the
aggregate Exercise Price for the purchased shares in one or more of the
following forms:
(A) cash
or
check made payable to the Corporation; or
(B) a
promissory note payable to the Corporation, but only to the extent authorized
by
the Plan Administrator in accordance with Paragraph 14.
Should
the Common Stock be registered under Section 12 of the 1934 Act at the time
the
option is exercised, then the Exercise Price may also be paid as
follows:
(C) in
shares
of Common Stock held by Optionee (or any other person or persons exercising
the
option) for the requisite period necessary to avoid a charge to the
Corporation’s earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date; or
(D) to
the
extent the option is exercised for vested Option Shares and unless prohibited
by
Section 402 of the Sarbanes Oxley Act of 2002, through payment in accordance
with a brokerage transaction as permitted under the provisions of Regulation
T
applicable to cashless exercises promulgated by the Federal Reserve Board out
of
the sale proceeds available on the settlement date of sufficient funds to cover
the aggregate exercise price payable for the purchased shares plus all
applicable income and employment taxes required to be withheld by the
Corporation by reason of such exercise and the Optionee (or any other person
or
persons exercising the option) shall concurrently provide irrevocable
instructions to the Corporation to deliver the certificates for the purchased
shares directly to a brokerage firm in order to complete the sale.
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(iii) Furnish
to the Corporation appropriate documentation that the person or persons
exercising the option (if other than Optionee) have the right to exercise this
option.
(iv) Execute
and deliver to the Corporation such written representations as may be requested
by the Corporation in order for it to comply with the applicable requirements
of
applicable securities laws.
(v) Make
appropriate arrangements with the Corporation (or Parent or Subsidiary employing
or retaining Optionee) for the satisfaction of all applicable income and
employment tax withholding requirements applicable to the option
exercise.
(b) As
soon
as practical after the Exercise Date, the Corporation shall issue to or on
behalf of Optionee (or any other person or persons exercising this option)
a
certificate for the purchased Option Shares, with the appropriate legends
affixed thereto.
10. Compliance
with Laws and Regulations.
(a) The
exercise of this option and the issuance of the Option Shares upon such exercise
shall be subject to compliance by the Corporation and Optionee with all
applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange (or the Nasdaq National Market, if applicable)
on which the Common Stock may be listed for trading at the time of such exercise
and issuance.
(b) The
inability of the Corporation to obtain approval from any regulatory body having
authority deemed by the Corporation to be necessary to the lawful issuance
and
sale of any Common Stock pursuant to this option shall relieve the Corporation
of any liability with respect to the non-issuance or sale of the Common Stock
as
to which such approval shall not have been obtained. The Corporation, however,
shall use its best efforts to obtain all such approvals.
11. Successors
and Assigns.
Except
to the extent otherwise provided in Paragraphs 3 and 6, the provisions of this
Agreement shall inure to the benefit of, and be binding upon, the Corporation
and its successors and assigns and Optionee, Optionee’s assigns and the legal
representatives, heirs and legatees of Optionee’s estate.
12. Notices.
Any
notice required to be given or delivered to the Corporation under the terms
of
this Agreement shall be in writing and addressed to the Corporation at its
principal corporate offices. Any notice required to be given or delivered to
Optionee shall be in writing and addressed to Optionee at the address indicated
below Optionee’s signature line on the Grant Notice. All notices shall be deemed
effective upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.
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13. Financing.
The
Plan Administrator may, in its absolute discretion and without any obligation
to
do so, permit Optionee to pay the Exercise Price for the purchased Option Shares
by delivering a full-recourse promissory note bearing interest at a market
rate
and secured by those Option Shares. The payment schedule in effect for any
such
promissory note shall be established by the Plan Administrator in its sole
discretion.
Note:
If the
Optionee is a consultant, then the promissory note delivered in payment of
the
Exercise Price must be secured by collateral other than the purchased Option
Shares.
14. Construction.
This
Agreement and the option evidenced hereby are made and granted pursuant to
the
Plan and are in all respects limited by and subject to the terms of the Plan.
All decisions of the Plan Administrator with respect to any question or issue
arising under the Plan or this Agreement shall be conclusive and binding on
all
persons having an interest in this option.
15. Governing
Law.
The
interpretation, performance and enforcement of this Agreement shall be governed
by the laws of the State of Delaware without resort to that State’s
conflict-of-laws rules.
16. Stockholder
Approval.
If the
Option Shares covered by this Agreement exceed, as of the Grant Date, the number
of shares of Common Stock which may be issued under the Plan as last approved
by
the stockholders, then this option shall be void with respect to such excess
shares, unless stockholder approval of an amendment sufficiently increasing
the
number of shares of Common Stock issuable under the Plan is obtained in
accordance with the provisions of the Plan.
17. Additional
Terms Applicable to an Incentive Option.
In the
event this option is designated an Incentive Option in the Grant Notice, the
following terms and conditions shall also apply to the grant:
(a) This
option shall cease to qualify for favorable tax treatment as an Incentive Option
if (and to the extent) this option is exercised for one or more Option Shares:
(i) more than thirty (30) days after the date Optionee ceases to be an Employee
for any reason other than death or Permanent Disability or (ii) more than six
(6) months after the date Optionee ceases to be an Employee by reason of
Permanent Disability.
(b) This
option shall not become exercisable in the calendar year in which granted if
(and to the extent) the aggregate Fair Market Value (determined at the Grant
Date) of the Common Stock for which this option would otherwise first become
exercisable in such calendar year would, when added to the aggregate value
(determined as of the respective date or dates of grant) of the Common Stock
and
any other securities for which one or more other Incentive Options granted
to
Optionee prior to the Grant Date (whether under the Plan or any other option
plan of the Corporation or any Parent or Subsidiary) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars ($100,000)
in
the aggregate. To the extent the exercisability of this option is deferred
by
reason of the foregoing limitation, the deferred portion shall become
exercisable in the first calendar year or years thereafter in which the One
Hundred Thousand Dollar ($100,000) limitation of this Paragraph 17(b) would
not be contravened, but such deferral shall in all events end immediately prior
to the effective date of a Change in Control in which this option is not to
be
assumed or otherwise continued in effect, whereupon the option shall become
immediately exercisable as a Non-Statutory Option for the deferred portion
of
the Option Shares.
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(c) Should
Optionee hold, in addition to this option, one or more other options to purchase
Common Stock which become exercisable for the first time in the same calendar
year as this option, then the foregoing limitations on the exercisability of
such options as Incentive Options shall be applied on the basis of the order
in
which such options are granted.
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APPENDIX
The
following definitions shall be in effect under the Agreement:
A. Agreement
shall
mean this Stock Option Agreement.
B. Board
shall
mean the Corporation’s Board of Directors.
C. Change
in Control
shall
mean a change in ownership or control of the Corporation effected through any
of
the following transactions:
(i) a
merger,
consolidation or other reorganization approved by the Corporation’s
stockholders, unless
securities representing more than fifty percent (50%) of the total combined
voting power of the voting securities of the successor corporation are
immediately thereafter beneficially owned, directly or indirectly and in
substantially the same proportion, by the persons who beneficially owned the
Corporation’s outstanding voting securities immediately prior to such
transaction, or
(ii) a
stockholder-approved sale, transfer or other disposition of all or substantially
all of the Corporation’s assets in complete liquidation or dissolution of the
Corporation, or
(iii) the
acquisition, directly or indirectly by any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls,
is
controlled by, or is under common control with, the Corporation), of beneficial
ownership (within the meaning of Rule 13d-3 of the 0000 Xxx) of securities
possessing more than fifty percent (50%) of the total combined voting power
of
the Corporation’s outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation’s stockholders.
In
no
event shall any public offering of the Corporation’s securities be deemed to
constitute a Change in Control.
D. Code
shall
mean the Internal Revenue Code of 1986, as amended.
E. Common
Stock
shall
mean the Corporation’s common stock.
F. Corporation
shall
mean Fuqi International, Inc., a Delaware corporation, and any successor
corporation to all or substantially all of the assets or voting stock of Fuqi
International, Inc. which shall by appropriate action assume this
option.
G. Disability
shall
mean the inability of Optionee to engage in any substantial gainful activity
by
reason of any medically determinable physical or mental impairment and shall
be
determined by the Plan Administrator on the basis of such medical evidence
as the Plan Administrator deems warranted under the circumstances. Disability
shall be deemed to constitute Permanent
Disability in
the
event that such Disability is expected to result in death or has lasted or
can
be expected to last for a continuous period of twelve (12) months or
more.
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H. Employee
shall
mean an individual who is in the employ of the Corporation (or any Parent or
Subsidiary), subject to the control and direction of the employer entity as
to
both the work to be performed and the manner and method of
performance.
I. Exercise
Date
shall
mean the date on which the option shall have been exercised in accordance with
Paragraph 9 of the Agreement.
J. Exercise
Price
shall
mean the exercise price payable per Option Share as specified in the Grant
Notice.
K. Expiration
Date
shall
mean the date on which the option expires as specified in the Grant
Notice.
L. Fair
Market Value
per
share of Common Stock on any relevant date shall be determined in accordance
with the following provisions:
(i) If
the
Common Stock is at the time traded on the Nasdaq National Market, then the
Fair
Market Value shall be the closing selling price per share of Common Stock on
the
date in question, as the price is reported by the National Association of
Securities Dealers on the Nasdaq National Market and published in The
Wall Street Journal.
If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(ii) If
the
Common Stock is at the time listed on any Stock Exchange, then the Fair Market
Value shall be the closing selling price per share of Common Stock on the date
in question on the Stock Exchange determined by the Plan Administrator to be
the
primary market for the Common Stock, as such price is officially quoted in
the
composite tape of transactions on such exchange and published in The
Wall Street Journal.
If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(iii) If
the
Common Stock is at the time neither listed on any Stock Exchange nor traded
on
the Nasdaq National Market, then the Fair Market Value shall be determined
by
the Plan Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate.
X. Xxxxx
Date
shall
mean the date of grant of the option as specified in the Grant
Notice.
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X. Xxxxx
Notice
shall
mean the Notice of Grant of Stock Option accompanying the Agreement, pursuant
to
which Optionee has been informed of the basic terms of the option evidenced
hereby.
O. Incentive
Option
shall
mean an option which satisfies the requirements of Code Section 422.
P. Misconduct shall
mean the commission of any act of fraud, embezzlement or dishonesty by Optionee,
any unauthorized use or disclosure by Optionee of confidential information
or
trade secrets of the Corporation (or any Parent or Subsidiary), or any other
intentional misconduct by Optionee adversely affecting the business or affairs
of the Corporation (or any Parent or Subsidiary) in a material manner. The
foregoing definition shall not in any way preclude or restrict the right of
the
Corporation (or any Parent or Subsidiary) to discharge or dismiss Optionee
or
any other person in the Service of the Corporation (or any Parent or Subsidiary)
for any other acts or omissions, but such other acts or omissions shall not
be
deemed, for purposes of the Plan or this Agreement, to constitute grounds for
termination for Misconduct.
Q. 1934
Act
shall
mean the Securities Exchange Act of 1934, as amended.
R. Non-Statutory
Option
shall
mean an option not intended to satisfy the requirements of Code Section
422.
S. Option
Shares
shall
mean the number of shares of Common Stock subject to the option.
T. Optionee shall
mean the person to whom the option is granted as specified in the Grant
Notice.
U. Parent
shall
mean any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, provided each corporation in the
unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
V. Plan
shall
mean the Corporation’s 2007 Equity Incentive Plan.
W. Plan
Administrator
shall
mean either the Board or a committee of the Board acting in its capacity as
administrator of the Plan.
X. Purchase
Agreement
shall
mean the stock purchase agreement in substantially the form of Exhibit C to
the
Grant Notice.
Y. Service
shall
mean the Optionee’s performance of services for the Corporation (or any Parent
or Subsidiary) in the capacity of an Employee, a non-employee member of the
board of directors or an independent consultant.
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Z. Stock
Exchange
shall
mean the American Stock Exchange or the New York Stock Exchange.
AA. Subsidiary
shall
mean any entity in which, directly or indirectly through one or more
intermediaries, the Corporation has at least a 50% ownership interest or, where
permissible under Code Section 409A, at least a 20% ownership interest.
BB. Vesting
Schedule
shall
mean the vesting schedule specified in the Grant Notice pursuant to which the
Optionee is to vest in the Option Shares in a series of installments over his
or
her period of Service.
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ADDENDUM
TO
The
following provisions are hereby incorporated into, and are hereby made a part
of, that certain Stock Option Agreement (the “Option
Agreement”)
by and
between Fuqi International, Inc. (the “Corporation”)
and
________________________ (“Optionee”)
evidencing the stock option (the “Option”)
granted on this date to Optionee under the terms of the Corporation’s 2007
Equity Incentive Plan, and such provisions shall be effective immediately.
All
capitalized terms in this Addendum, to the extent not otherwise defined herein,
shall have the meanings assigned to them in the Option Agreement.
INVOLUNTARY
TERMINATION FOLLOWING
A
CHANGE IN CONTROL
A. If
the
Option is to be assumed by the successor corporation (or the parent thereof)
in
connection with a Change in Control or is otherwise to be continued in full
force and effect pursuant to the terms of the Change in Control transaction,
then none of the Option Shares shall vest on an accelerated basis upon the
occurrence of that Change in Control, and Optionee shall accordingly continue,
over his or her period of Service following the Change in Control, to vest
in
the Option Shares in one or more installments in accordance with the provisions
of the Option Agreement. However, upon an Involuntary Termination of Optionee’s
Service within _________ (__) months following such Change in Control, all
the
Option Shares at the time subject to the Option shall automatically vest in
full
on an accelerated basis so that the Option shall immediately become exercisable
for all the Option Shares as fully-vested shares and may be exercised for any
or
all of those Option Shares as vested shares. The Option shall remain so
exercisable until the earlier
of (i)
the Expiration Date or (ii) the expiration of the one (1)-year period measured
from the date of the Involuntary Termination.
B. For
purposes of this Addendum, an Involuntary
Termination
shall
mean the termination of Optionee’s Service by reason of:
(a) Optionee’s
involuntary dismissal or discharge by the Corporation for reasons other than
for
Misconduct, or
(b) Optionee’s
voluntary resignation following (A) a change in Optionee’s position with the
Corporation (or Parent or Subsidiary employing Optionee) which materially
reduces Optionee’s duties and responsibilities or the level of management to
which he or she reports, (B) a reduction in Optionee’s level of compensation
(including base salary, fringe benefits and target bonus under any
corporate-performance based incentive programs) by more than fifteen percent
(15%) or (C) a relocation of Optionee’s place of employment by more than
fifty (50) miles, provided and only if such change, reduction or relocation
is effected by the Corporation without Optionee’s consent.
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C. The
provisions of Paragraph 1 of this Addendum shall govern the period for which
the
Option is to remain exercisable following the Involuntary Termination of
Optionee’s Service within _____ (__) months after the Change in Control and
shall supersede any provisions to the contrary in Paragraph 5 of the Option
Agreement.
IN
WITNESS WHEREOF,
Fuqi
International, Inc. has caused this Addendum to be executed by its duly
authorized officer as of the Effective Date specified below.
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Title:
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EFFECTIVE
DATE:
________________, _______
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