EXHIBIT 10.5
NON-QUALIFIED STOCK OPTION AGREEMENT
This NON-QUALIFIED STOCK OPTION AGREEMENT (this "Agreement") is made, and dated
and effective as of the day of April 2007 ("Grant Date"), by China Direct
Trading Corporation, a Florida corporation (the "Company"), and ____________, a
senior officer of the Company ("Participant") pursuant to the terms of the China
Direct Trading Corporation Stock Option Plan of 2007 (the "Plan"). All
capitalized terms used but not defined herein shall have the meanings set forth
therefore in the Plan. Company and Participant may hereinafter also be referred
to individually as a "party" and collectively as the "parties."
1 GRANT OF OPTION. To carry out the purposes of the Plan, by affording
Participant the opportunity to purchase shares of Common Stock, $0.0001
par value per share of the Company ("Common Stock"), and in consideration
of the mutual agreements and other matters set forth herein and in the
Plan, the Company hereby grants to Participant the right and option
("Option") to purchase all or any part of an aggregate of
_________________________ shares of Common Stock, effective as of the
Grant Date on the terms and conditions set forth herein and in the Plan,
which Plan is incorporated herein by reference as a part of this
Agreement. The Compensation Committee shall administer the Plan and this
Option. This Option shall not be treated as an incentive stock option
within the meaning of section 422(b) of the Internal Revenue Code of
1986, as amended (the "Code").
2 PURCHASE PRICE AND TERM. The purchase price of Common Stock purchased
pursuant to the exercise of this Option shall be $______per share. Unless
sooner terminated as provided herein, this Option shall expire if not
exercised within ten (10) years from the Grant Date.
3 EXERCISE OF OPTION. This Option shall be exercisable in the manner
described below:
a.
25% of total grant vests 1 year after grant date; and
b.
remaining grant vests in 12 equal consecutive calendar quarterly
installments;
provided, however, that this Option may be exercised only prior to its
expiration date and, except as otherwise provided below, only while
Participant remains an Employee, Service Provider or Non-Employee
Director of the Company. This Option will terminate and cease to be
exercisable upon Participant's termination of employment or separation
from service with the Company, except that:
(a) if Participant's employment with the Company terminates by
reason other than death, Disability or Cause, all Options
exercisable immediately prior to such termination may be
exercised for a period after termination that shall end on the
earlier of (i) the expiration date set forth in this Agreement
or (ii) the date that occurs three (3) months after such
termination date.
(b) if Participant's employment with the Company terminates by
reason of death or Disability, all Options, whether or not
exercisable immediately prior to Participant's Disability or
death, may be exercised for a period of 12 months following such
termination;
(c) except as provided in (b) above, any Options that are not
exercisable immediately prior to Participant's termination of
employment or service shall terminate immediately upon
Participant's termination of employment or service; and
(d) all Options, whether or not exercisable immediately prior to
Participant's termination of employment or service shall
terminate as of 12:01 a.m. EST on Participant's last date of
employment or service if Participant's employment or service
with the Company is terminated for Cause.
Notwithstanding the foregoing, the Compensation Committee shall have
the discretion to provide that the Options may be exercised prior to
the dates set forth above and for the continuation of any Options for
any period following termination of employment, but not to exceed the
term of the Option, upon such terms and conditions as may be determined
by the Compensation Committee in its sole discretion. Further
notwithstanding the foregoing, the Options may be accelerated or
terminated in accordance with the terms of the Plan.
4 MANNER OF EXERCISE. In order to exercise this Option, the Participant
shall deliver to the President or other designated officer of the Company
payment in full for (i) the shares being purchased and (ii) unless other
arrangements have been made with the Plan Committee, any required
withholding taxes. The payment of the exercise price for each Option
shall be either in cash or by check payable and acceptable to the
Company; PROVIDED, HOWEVER, payment of the exercise price and/or
withholding may be made in accordance with the terms of the Plan by (x)
tendering to the Company shares of Common Stock having an aggregate Fair
Market Value as of the date of exercise that is not greater than the full
exercise price for the shares with respect to which the Option is being
exercised and the amount required to be withheld, or (y) the Company may
deliver certificates for the shares of Common Stock for which the Option
is being exercised to a broker for sale on behalf of Participant,
provided that Participant has irrevocably instructed such broker to remit
directly to the Company on Participant's behalf from the proceeds of such
sale the full amount of the exercise price, plus all required withholding
taxes. In the event that Participant, with the consent of the Plan
Committee, elects to make payment as allowed under clause (x) above, the
Compensation Committee may, upon confirming that Participant owns the
number of shares being tendered, authorize the issuance of a new
certificate for the number of shares being acquired pursuant to the
exercise of the Option, less the number of shares being tendered upon the
exercise, and return to Participant (or not require surrender of) the
certificate for the shares being tendered upon the exercise.
5 SERVICE RELATIONSHIP. For purposes of this Agreement, Participant shall
be considered to be in the service of the Company as long as Participant
remains an Employee, Consultant or Non-Employee Director of either the
Company, a parent or subsidiary corporation (as defined in section 424 of
the Code) of the Company, or a corporation or a parent or subsidiary of
such corporation assuming or substituting a new option for this Option.
Any question as to whether and when there has been a separation from
service, and the cause of such separation, shall be determined by the
Compensation Committee in its sole discretion, and its determination
shall be final.
6 WITHHOLDING OF TAX. To the extent that the exercise of this Option or the
disposition of shares of Common Stock acquired by exercise of this Option
results in compensation income to Participant for federal or state income
or employment tax or withholding purposes, Participant shall deliver to
the Company at the time of such exercise or disposition such amount of
money as the Company may require to meet its obligation under applicable
tax laws or regulations, and if Participant fails to do so, the Company is
authorized to withhold from any cash or Common Stock remuneration then or
thereafter payable to Participant any tax required to be withheld by
reason of such resulting compensation income. Upon an exercise of this
Option, the Company is further authorized in its discretion to satisfy any
withholding requirement out of any cash or shares of Common Stock
distributable to Participant upon such exercise.
7 REORGANIZATION OF THE COMPANY. The existence of this Agreement shall not
affect in any way the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business; any merger or consolidation of the Company; any issuance of
bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof; the dissolution or
liquidation of the Company; any sale or transfer of all or any part of its
assets or business; or any other corporate act or proceeding, whether of a
similar character or otherwise.
8 RECAPITALIZATION EVENTS. In the event of stock dividends, spin-offs of
assets or other extraordinary dividends, stock splits, combinations of
shares, recapitalizations, mergers, consolidations, reorganizations,
liquidations, issuances of rights or warrants and similar transactions or
events involving the Company ("Recapitalization Events"), then for all
purposes references herein to Common Stock shall mean and include all
securities or other property (other than cash) that holders of Common
Stock of the Company are entitled to receive in respect of Common Stock by
reason of each successive Recapitalization Event, and the exercise price
of the Option shall be adjusted as deemed necessary or appropriate in the
sole discretion of the Compensation Committee to prevent enlargement or
dilution of Participant's rights under this Agreement.
9 TRANSFER OF OPTION. Except as provided herein or in the Plan, all rights
granted hereunder shall not be transferable other than by will or the laws
of descent and distribution and shall be exercisable during the
Participant's lifetime only by the Participant or, in the case of the
Participant's death or incapacity, by the Participant's guardian or legal
representative. No transfer of this Option shall be effective unless the
Compensation Committee receives prior written notice of the terms and
conditions of any intended transfer, determines that the transfer complies
with the requirements imposed hereunder with respect to Option transfers
and approves the transfer. Any purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance of this Option that does not
satisfy the requirements set forth hereunder shall be void and
unenforceable against the Company.
10 DEFINITIONS. For purposes of this Agreement, the following definitions apply:
(a) "Non-competition Period" means the period beginning on the date of
this Agreement and ending one year after the date Participant's
employment with the Company ends or is terminated for any reason. (b)
"Restricted Activities" means the provision of executive management and
strategic planning similar to the services Participant provides to the
Company during last year of Participant's employment with the Company.
(c) "Restricted Business" means the business of providing low-tech
consumer products, whether under the Company brand name or a private
branding arrangement, to retailers and distributors selling in the
Territory or a part thereof and which business Participant hereby
acknowledges and agrees is the business in which the Company is
primarily engaged. If the Company's primary business changes and the
Participant is still employed by the Company, then the parties agree
that the new primary business of the Company shall constitute the
"Restricted Business" hereunder without any action or notice by any
party.
(d) "Territory" means the State of Florida, State of Georgia, State of
North Carolina, State of South Carolina, State of Alabama, Commonwealth
of Virginia, District of Columbia, Commonwealth of Pennsylvania, State
of Delaware, State of New Jersey, which Participant acknowledges is
included within the geographic scope of the Company's business (as
conducted by its operating subsidiaries) and is the territory for or in
which Participant performs services for the Company.
11 NON-COMPETITION. As consideration for the Option granted to Participant
herein, Participant hereby covenants that he will not, within the
Territory and during the Non-competition Period, without the prior
written consent of the Company, engage in any Restricted Activities for
or on behalf of any corporation, partnership, venture or other business
entity which is engaged in the Restricted Business.
12 REASONABLE AND NECESSARY RESTRICTIONS. Participant acknowledges that
during the course of his employment with the Company he has received and
will receive and has had and will have access to Confidential
Information and Trade Secrets of the Company (as defined in the
Proprietary Information and Inventions Agreement between Participant and
the Company), including but not limited to confidential and secret
business and marketing plans, strategies, and studies, detailed
client/customer lists and information relating to the operations and
business requirements of those clients/customers and, accordingly, he is
willing to enter into the covenants contained in this Agreement in order
to provide the Company with what he considers to be reasonable
protection for its interests. Participant acknowledges that the
restrictions, prohibitions and other provisions in this Agreement are
reasonable, fair and equitable in scope, terms and duration, are
necessary to protect the legitimate business interests of the Company,
and are a material inducement to the Company to provide Participant with
the Option. Participant acknowledges and agrees that any breach of this
Agreement by Participant will cause the Company irreparable injury for
which money damages would be insufficient. As a result, Participant
covenants and agrees that, in addition to all other remedies available
to it, the Company shall be entitled to injunctive relief, without the
necessity of posting a bond, to enjoin any breach or threatened breach
of this Agreement.
13 CURRENT EMPLOYMENT. Participant shall not, during his employment with
the Company, engage in any work or other activity as a principal, agent,
consultant, employee, or otherwise, in any field or fields related to
the Company's business, without first obtaining the written consent of
the Company.
14 NATURE OF EMPLOYMENT. Participant understands and agrees that nothing in
this Agreement is intended to or shall be interpreted as creating
employment for a specified period of time. No act, statement or conduct,
of any nature whatsoever, of any representative of the Company shall
alter the nature of Participant's employment, unless it is in writing
and signed by an authorized representative of the Company.
15 AMENDMENT; WAIVER. No amendment, modification or discharge of this
Agreement shall be valid or binding unless set forth in writing and duly
executed by each of the parties hereto. Any waiver by any party or
consent by any party to any breach of or any variation from any
provision of this Agreement shall be valid only if in writing and only
in the specific instance in which it is given, and such waiver or
consent shall not be construed as a waiver of any subsequent breach of
any other provision or as a consent with respect to any similar instance
or circumstance.
16 SEVERABILITY. If fulfillment of any provision of this Agreement, at the
time such fulfillment shall be due, shall transcend the limit of
validity prescribed by law, then the obligation to be fulfilled shall be
reduced to the limit of such validity; and if any clause or provision
contained in this Agreement operates or would operate to invalidate this
Agreement, in whole or in part, then such clause or provision only shall
be held ineffective, as though not herein contained, and the remainder
of this Agreement shall remain operative and in full force and effect.
17 CERTAIN RESTRICTIONS. By executing this Agreement, Participant
acknowledges that Participant will enter into such written
representations, warranties and agreements and execute such documents as
the Company may reasonably request in order to comply with this
Agreement, the securities laws or any other applicable laws, rules or
regulations, or the terms of the Plan. Upon exercise, the Common Stock
received by the Participant shall be subject to any then applicable
shareholders' agreement of the Company.
18 AMENDMENT AND TERMINATION. Except as otherwise provided in the Plan or
this Agreement, no amendment or termination of this Agreement shall be
made by the Company without the written consent of the Participant.
19 NO GUARANTEE OF TAX CONSEQUENCES. The Company makes no commitment or
guarantee to Participant that any federal or state tax treatment will
apply or be available to any person eligible for benefits under this
Agreement.
20 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of any successors to the Company and all persons lawfully
claiming under Participant.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by
its officer thereunto duly authorized, and Participant has executed this
Agreement, all as of the day and year first above written.
CHINA DIRECT TRADINGC CORP., A FLORIDA CORPORATION
BY:____________________________________________
NAME/TITLE:______________________________________
PARTICIPANT: ______________________________
SIGNATURE:_____________________________________________
SSN# (FOR TAX REPORTING PURPOSES):___________________
