CHINA SHANDONG INDUSTRIES, INC. STOCK OPTION AGREEMENT
EXHIBIT
10.5
THIS STOCK OPTION AGREEMENT
(this “Agreement”) is
made and entered into as of July 1, 2010, by and between China Shandong
Industries, Inc., a Delaware corporation (the “Company”), and Xxxxxxxx Xx
(the “Employee”).
The
parties hereto agree as follows:
1. Option.
(a) Option Grant. The
Company hereby grants to Employee, an option (the “Option”) to purchase up to
2,000,000 shares (the “Option
Shares”) of common stock, par value $0.0001 per share (the “Common Stock”), at an exercise
price per share equal to (i) the per share price of a share of Common Stock sold
in the proposed public offering (the “Offering”), or (ii) if the
Offering does not occur by December 31, 2010, the price determined by the
Company’s Board of Directors, which price per share shall not be less than the
market price of a share of Common Stock on the date that the Board of Directors
determined the exercise price (the “Option Price”). The Option
Price and the number of Option Shares issuable upon exercise of the Option will
be proportionately adjusted for any share split, share dividend,
reclassification or recapitalization of the Common Stock which occurs subsequent
to the date of this Agreement. The Option will expire on the close of business
on the eleventh anniversary of the date of this Agreement.
(b) Exercisability. The
Option shall not be exercisable prior to July 2, 2011. On July 1,
2011, the Option shall become fully vested and exercisable with respect to all
of the Option Shares.
(c) Procedure for
Exercise. At any time after all or any portion of the Options granted
hereunder have become exercisable with respect to any Option Shares and prior to
the close of business on the eleventh anniversary of the date of this Agreement,
Employee may exercise all or any portion of the Option granted hereunder with
respect to Option Shares vested pursuant to Section 1(b) above by delivering
written notice of exercise to the Company (the “Exercise Notice”), which
Exercise Notice is attached hereto as Exhibit
A, together with payment in full by delivery of a cashier’s, personal or
certified check or wire transfer of immediately available funds to the Company
in the amount equal to the number of Option Shares to be acquired multiplied by
the Option Price. In the event that, at the time of the exercise of
the Option, the Option Shares have not been registered under the Securities Act
of 1933, as amended (the “Securities Act”), the Employee
will deliver to the Company his or her Investment Representation Statement in
the form attached hereto as Exhibit
B.
(e) Securities Laws
Restrictions. Employee represents that when Employee exercises any
portion of the Option he or she will be purchasing the Option Shares represented
thereby for Employee's own account and not on behalf of others. Employee
understands and acknowledges that U.S. federal, state and foreign securities
laws govern and restrict Employee’s right to offer, sell or otherwise dispose of
any Option Shares unless Employee's offer, sale or other disposition thereof is
registered under the Securities Act and federal, state and foreign securities
laws or, in the opinion of the Company's counsel, such offer, sale or other
disposition is exempt from registration thereunder. Employee agrees that he or
she will not offer, sell or otherwise dispose of any Option Shares in any manner
which would: (i) require the Company to file any registration statement (or
similar filing under applicable securities law) with the Securities and Exchange
Commission or to amend or supplement any such filing or (ii) violate or cause
the Company to violate the Securities Act, the rules and regulations promulgated
thereunder or any other applicable U.S. or local securities law. Employee
further understands that the certificates for any Option Shares which Employee
purchases will bear the legend set forth in the Exercise Notice or such other
legends as the Company deems necessary or desirable in connection with the
Securities Act or other rules, regulations or laws.
(f) Limited Transferability of
the Option. The Option granted hereunder is personal to Employee and is
not transferable by Employee except pursuant to the laws of descent or
distribution. Only Employee or his or her legal guardian or representative may
exercise the Option granted hereunder.
2. Notices. Any notice or
communication given hereunder shall be in writing and shall be deemed to have
been duly given when delivered in person, or by regular mail, first class and
prepaid, to the appropriate party at the address set forth below (or such other
address as the party shall from time to time specify):
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If
to the Company, to:
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No.
0000 Xxxxxx Xxxx
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Development
Zone Cao County
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Xxxxxxxx
Xxxxxxxx, 000000 Xxxxx
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Attention:
Chief Financial Officer
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If to the
Employee, to the address on file with the Company.
3. Third Party Beneficiaries; Successors
and Assigns. The parties hereto acknowledge and agree that, except as
otherwise provided herein, this Agreement shall bind and inure to the benefit of
and be enforceable by Employee, the Company and their respective heirs,
successors and assigns (including subsequent holders of Option
Shares).
4. Complete Agreement. This
Agreement and the other documents referred to herein embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any
way.
5. Counterparts. This Agreement
may be executed in separate counterparts, each of which may be delivered via
facsimile and is deemed to be an original, and all of which taken together
constitute one and the same agreement.
6. Severability. If all or any
part of this Agreement is declared by any court or governmental authority to be
unlawful or invalid, such unlawfulness or invalidity shall not invalidate any
portion of this Agreement not declared to be unlawful or invalid. Any section of
this Agreement (or part of such a section) so declared to be unlawful or invalid
shall, if possible, be construed in a manner that will give effect to the terms
of such section or part of a section to the fullest extent possible while
remaining lawful and valid.
7. Amendment and Waiver. The
provisions of this Agreement may be amended or waived only with the prior
written consent of the Board and Employee, and no course of conduct or failure
or delay in enforcing the provisions of this Agreement shall affect the
validity, binding effect or enforceability of this Agreement.
8. Tax Treatment. Neither party
makes any representations or warranties to the other party with respect to the
tax treatment of the transactions contemplated hereby.
9. Language. If Employee has
received this Agreement or any other document related hereto translated into a
language other than English and if the translated version is different than the
English version, the English version will control.
IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first written
above.
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CHINA SHANDONG INDUSTRIES,
INC.
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By:
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/s/ Xxxxxxxx Xx | |||
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Name:
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Xxxxxxxx
Xx
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Title:
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Chairman
and Chief Executive Officer
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EMPLOYEE:
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Xxxxxxxx
Xx
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Exhibit
A
EXERCISE
NOTICE
No. 0000
Xxxxxx Xxxx
Development
Zone Cao County
Xxxxxxxx
Xxxxxxxx, 000000 Xxxxx
Attention:
Chief Financial Officer
Effective
as of today, ______________, ___ the undersigned (the “Employee”) hereby elects to
exercise the Employee's stock option to purchase ___________ shares of common
stock (the “Shares”) of
China Shandong Industries, Inc. (the “Company”) under and pursuant
to the Stock Option Agreement For Non-U.S. Employees (the “Option Agreement”) dated July
1, 2010.
Representations of the
Employee. The Employee acknowledges that the Employee has
received, read and understood the Option Agreement; the Employee agrees to abide
by and be bound by their terms and conditions.
Rights as
Stockholder. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Shares, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such stock
certificate promptly after the Option is exercised. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the stock certificate is issued, except as provided in the Option
Agreement.
Delivery of
Payment. The Employee herewith delivers to the Company the
full Exercise Price for the Shares in the form(s) provided for in the Option
Agreement.
Tax
Consultation. The Employee understands that the Employee may
suffer adverse tax consequences as a result of the Employee's purchase or
disposition of the Shares. The Employee represents that the Employee
has consulted with any tax consultants the Employee deems advisable in
connection with the purchase or disposition of the Shares and that the Employee
is not relying on the Company for any tax advice.
Taxes. The Employee
agrees to satisfy all applicable foreign, federal, state and local income and
employment tax withholding obligations and herewith delivers to the Company the
full amount of such obligations or has made arrangements acceptable to the
Company to satisfy such obligations.
Restrictive
Legends. The Employee understands and agrees that the Company
may cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the Shares
together with any other legends that may be required by the Company or by state
or federal securities laws:
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE “ACT”) AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
Successors and
Assigns. The Company may assign any of its rights under this
Exercise Notice to single or multiple assignees, and this agreement shall inure
to the benefit of the successors and assigns of the Company. Subject
to the restrictions on transfer herein set forth, this Exercise Notice shall be
binding upon the Employee and his or her heirs, executors, administrators,
successors and assigns.
Headings. The
captions used in this Exercise Notice are inserted for convenience only and
shall not be deemed a part of this agreement for construction or
interpretation.
Notices. Any notice
required or permitted hereunder shall be given in writing and shall be deemed
effectively given upon personal delivery or upon deposit in the mail by
certified mail, with postage and fees prepaid, addressed to the other party at
its address as shown below beneath its signature, or to such other address as
such party may designate in writing from time to time to the other
party.
Further
Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this agreement.
Entire
Agreement. The Option Agreement is incorporated herein by
reference and together with this Exercise Notice constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes in their entirety all prior undertakings and agreements of the
Company and the Employee with respect to the subject matter hereof, and may not
be modified adversely to the Employee’s interest except by means of a writing
signed by the Company and the Employee.
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Submitted
by:
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Accepted
by:
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EMPLOYEE:
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By:
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By:
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Name:
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Xxxxxxxx
Xx
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Name:
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Title:
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Exhibit
B
INVESTMENT
REPRESENTATION STATEMENT
EMPLOYEE:
COMPANY: China
Shandong Industries, Inc.
SECURITY: Common
Stock
AMOUNT: _____________
DATE: ______________
In
connection with the purchase of the above-listed securities, the undersigned
Employee represents to the Company the following:
Employee
is aware of the Company's business affairs and financial condition and has
acquired sufficient information about the Company to reach an informed and
knowledgeable decision to acquire the Securities. Employee is
acquiring these Securities for investment for Employee's own account only and
not with a view to, or for resale in connection with, any “distribution” thereof
within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).
Employee
acknowledges and understands that the Securities constitute “restricted
securities” under the Securities Act, have not been registered under the
Securities Act and are being issued to the Employee in reliance upon a specific
exemption therefrom, which exemption depends, upon among other things, the bona
fide nature of Employee's investment intent as expressed
herein. Employee further understands that the Securities must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available. Employee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Employee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company.
Employee
represents that he is a resident of _________________.
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EMPLOYEE:
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By:
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Name:
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Xxxxxxxx
Xx
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Date:
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