FUQI INTERNATIONAL, INC. STOCK PURCHASE AGREEMENT
Exhibit
99.5
AGREEMENT
made
this
_____ day of ___________________, _____ by and between Fuqi International,
Inc.,
a Delaware corporation, and _____________________, Optionee under the
Corporation’s 2007 Equity Incentive Plan.
All
capitalized terms in this Agreement shall have the meaning assigned to them
in
this Agreement or in the attached Appendix.
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A.
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EXERCISE OF
OPTION
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1. Exercise.
Optionee hereby purchases _______ shares of Common Stock (the “Purchased
Shares”)
pursuant to that certain option (the “Option”)
granted Optionee on ____________________, _____ (the “Grant
Date”)
to
purchase up to _______________ shares of Common Stock (the “Option
Shares”)
under
the Plan at the exercise price of $___________ per share (the “Exercise
Price”).
2. Payment.
Concurrently with the delivery of this Agreement to the Corporation, Optionee
shall pay the Exercise Price for the Purchased Shares in accordance with the
provisions of the Option Agreement and shall deliver whatever additional
documents may be required by the Option Agreement as a condition for exercise,
together with a duly-executed blank Assignment Separate from Certificate (in
the
form attached hereto as Exhibit I) with respect to the Purchased
Shares.
3. Stockholder
Rights.
Until
such time as the Corporation exercises the Repurchase Right, Optionee (or any
successor in interest) shall have all the rights of a stockholder (including
voting, dividend and liquidation rights equal to those of other holders of
the
Company’s Common Stock) with respect to the Purchased Shares, subject, however,
to the transfer restrictions of Articles B and C.
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B.
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SECURITIES
LAW COMPLIANCE
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1. Restricted
Securities.
To the
extent the Purchased Shares are not issued pursuant to an effective registration
statement, the Purchased Shares have not been registered under the 1933 Act
and
are being issued to Optionee in reliance upon the exemption from such
registration provided by SEC Rule 701 for stock issuances under compensatory
benefit plans such as the Plan. Optionee hereby confirms that Optionee has
been
informed that the Purchased Shares are restricted securities under the 1933
Act
and may not be resold or transferred unless the Purchased Shares are first
registered under the Federal securities laws or unless an exemption from such
registration is available. Accordingly, Optionee hereby acknowledges that
Optionee is acquiring the Purchased Shares for investment purposes only and
not
with a view to resale and is prepared to hold the Purchased Shares for an
indefinite period and that Optionee is aware that SEC Rule 144 issued under
the
1933 Act which exempts certain resales of unrestricted securities is not
presently available to exempt the resale of the Purchased Shares from the
registration requirements of the 1933 Act.
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2. Restrictions
on Disposition of Purchased Shares.
Optionee shall make no disposition of the Purchased Shares (other than a
Permitted Transfer) unless and until there is compliance with all of the
following requirements:
(i) Optionee
shall have provided the Corporation with a written summary of the terms and
conditions of the proposed disposition.
(ii) Optionee
shall have complied with all requirements of this Agreement applicable to the
disposition of the Purchased Shares.
(iii) Optionee
shall have provided the Corporation with written assurances, in form and
substance satisfactory to the Corporation, that (a) the proposed disposition
does not require registration of the Purchased Shares under the 1933 Act or
(b)
all appropriate action necessary for compliance with the registration
requirements of the 1933 Act or any exemption from registration available under
the 1933 Act (including Rule 144) has been taken.
The
Corporation shall not
be
required (i) to transfer on its books any Purchased Shares which have been
sold
or transferred in violation of the provisions of this Agreement or
(ii) to
treat as the owner of the Purchased Shares, or otherwise to accord voting,
dividend or liquidation rights to, any transferee to whom the Purchased Shares
have been transferred in contravention of this Agreement.
3. Restrictive
Legends.
The
stock certificates for the Purchased Shares shall be endorsed with one or more
of the following restrictive legend(s):
“The
shares represented by this certificate have not been registered under the
Securities Act of 1933. The shares may not be sold or offered for sale in the
absence of (a) an effective registration statement for the shares under such
Act, (b) a ‘no action’ letter of the Securities and Exchange Commission with
respect to such sale or offer or (c) satisfactory assurances to the Corporation
that registration under such Act is not required with respect to such sale
or
offer.”
“The
shares represented by this certificate are subject to certain repurchase rights
granted to the Corporation and accordingly may not be sold, assigned,
transferred, encumbered, or in any manner disposed of except in conformity
with
the terms of a written agreement between the Corporation and the registered
holder of the shares (or the predecessor in interest to the shares). A copy
of
such agreement is maintained at the Corporation’s principal corporate offices.”
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C.
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TRANSFER
RESTRICTIONS
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1. Restriction
on Transfer.
Except
for any Permitted Transfer, Optionee shall not transfer, assign, encumber or
otherwise dispose of any of the Purchased Shares which are subject to the
Repurchase Right.
2. Transferee
Obligations.
Each
person (other than the Corporation) to whom the Purchased Shares are transferred
by means of a Permitted Transfer must, as a condition precedent to the validity
of such transfer, acknowledge in writing to the Corporation that such person
is
bound by the provisions of this Agreement and that the transferred shares are
subject to the Repurchase Right to the same extent such shares would be so
subject if retained by Optionee.
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D.
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REPURCHASE
RIGHT
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1. Grant.
The
Corporation is hereby granted the right (the “Repurchase
Right”),
exercisable at any time during the ninety (90)-day period following the date
Optionee ceases for any reason to remain in Service or (if later) during the
ninety (90)-day period following the execution date of this Agreement, to
repurchase at the Repurchase Price any or all of the Purchased Shares in which
Optionee is not, at the time of his or her cessation of Service, vested in
accordance with the Vesting Schedule applicable to those shares or any special
vesting acceleration provisions of Paragraph D.6 of this Agreement (such shares
to be hereinafter referred to as the “Unvested
Shares”).
2. Exercise
of the Repurchase Right.
The
Repurchase Right shall be exercisable by written notice delivered to each Owner
of the Unvested Shares prior to the expiration of the ninety (90)-day exercise
period. The notice shall indicate the number of Unvested Shares to be
repurchased, the Repurchase Price to be paid per share and the date on which
the
repurchase is to be effected, such date to be not more than thirty (30) days
after the date of such notice. The certificates representing the Unvested Shares
to be repurchased shall be delivered to the Corporation on the closing date
specified for the repurchase. Concurrently with the receipt of such stock
certificates, the Corporation shall pay to Owner, in cash or cash equivalents
(including the cancellation of any purchase-money indebtedness), an amount
equal
to the Repurchase Price for the Unvested Shares which are to be repurchased
from
Owner.
3. Termination
of the Repurchase Right.
The
Repurchase Right shall terminate with respect to any Unvested Shares for which
it is not timely exercised under Paragraph D.2. In addition, the Repurchase
Right shall terminate and cease to be exercisable with respect to any and all
Purchased Shares in which Optionee vests in accordance with the Vesting
Schedule.
4. Aggregate
Vesting Limitation.
If the
Option is exercised in more than one increment so that Optionee is a party
to
one or more other Stock Purchase Agreements (the “Prior
Purchase Agreements”)
which
are executed prior to the date of this Agreement, then the total number of
Purchased Shares as to which Optionee shall be deemed to have a fully-vested
interest under this Agreement and all Prior Purchase Agreements shall not exceed
in the aggregate the number of Purchased Shares in which Optionee would
otherwise at the time be vested, in accordance with the Vesting Schedule, had
all the Purchased Shares (including those acquired under the Prior Purchase
Agreements) been acquired exclusively under this Agreement.
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5. Recapitalization.
Any
new, substituted or additional securities or other property (including cash
paid
other than as a regular cash dividend) which is by reason of any
Recapitalization distributed with respect to the Purchased Shares shall be
immediately subject to the Repurchase Right and any escrow requirements
hereunder, but only to the extent the Purchased Shares are at the time covered
by such right or escrow requirements. Appropriate adjustments to reflect such
distribution shall be made to the number and/or class of Purchased Shares
subject to this Agreement and to the Repurchase Price per share to be paid
upon
the exercise of the Repurchase Right in order to reflect the effect of any
such
Recapitalization upon the Corporation’s capital structure; provided,
however, that the aggregate Repurchase Price shall remain the same.
6. Change
in Control.
To the
extent the Repurchase Right remains in effect following a Change in Control,
such right shall apply to any new securities or other property (including any
cash payments) received in exchange for the Purchased Shares in consummation
of
the Change in Control, but only to the extent the Purchased Shares are at the
time covered by such right. Appropriate adjustments shall be made to the
Repurchase Price per share payable upon exercise of the Repurchase Right to
reflect the effect (if any) of the Change in Control upon the Corporation’s
capital structure; provided,
however, that the aggregate Repurchase Price shall remain the same. The new
securities or other property (including any cash payments) issued or distributed
with respect to the Purchased Shares in consummation of the Change in Control
shall be immediately deposited in escrow with the Corporation (or the successor
entity) and shall not be released from escrow until Optionee vests in such
securities or other property in accordance with the same Vesting Schedule in
effect for the Purchased Shares.
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E.
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SPECIAL
TAX ELECTION
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The
acquisition of the Purchased Shares may result in adverse tax consequences
which
may be avoided or mitigated by filing an election under Code Section 83(b).
Such
election must be filed within thirty (30) days after the date of this Agreement.
A description of the tax consequences applicable to the acquisition of the
Purchased Shares and the form for making the Code Section 83(b) election are
set
forth in Exhibit II. OPTIONEE
SHOULD CONSULT WITH HIS OR HER TAX ADVISOR TO DETERMINE THE TAX CONSEQUENCES
OF
ACQUIRING THE PURCHASED SHARES AND THE ADVANTAGES AND DISADVANTAGES OF FILING
THE CODE SECTION 83(b) ELECTION. OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE’S
SOLE RESPONSIBILITY, AND NOT THE CORPORATION’S, TO FILE A TIMELY ELECTION UNDER
CODE SECTION 83(b), EVEN IF OPTIONEE REQUESTS THE CORPORATION OR ITS
REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF.
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F.
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GENERAL
PROVISIONS
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1. Assignment.
The
Corporation may assign the Repurchase Right to any person or entity selected
by
the Board, including (without limitation) one or more stockholders of the
Corporation.
2. At
Will Employment.
Nothing
in this Agreement or in the Plan shall confer upon Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent
or
Subsidiary employing or retaining Optionee) or of Optionee, which rights are
hereby expressly reserved by each, to terminate Optionee’s Service at any time
for any reason, with or without cause.
3. Notices.
Any
notice required to be given under this Agreement shall be in writing and shall
be deemed effective upon personal delivery or upon deposit in the U.S. mail,
registered or certified, postage prepaid and properly addressed to the party
entitled to such notice at the address indicated in the Grant Notice or at
such
other address as such party may designate by ten (10) days advance written
notice under this paragraph to all other parties to this Agreement.
4. No
Waiver.
The
failure of the Corporation in any instance to exercise the Repurchase Right
or
the First Refusal Right shall not constitute a waiver of any other repurchase
rights and/or rights of first refusal that may subsequently arise under the
provisions of this Agreement or any other agreement between the Corporation
and
Optionee. No waiver of any breach or condition of this Agreement shall be deemed
to be a waiver of any other or subsequent breach or condition, whether of like
or different nature.
5. Cancellation
of Shares.
If the
Corporation shall make available, at the time and place and in the amount and
form provided in this Agreement, the consideration for the Purchased Shares
to
be repurchased in accordance with the provisions of this Agreement, then from
and after such time, the person from whom such shares are to be repurchased
shall no longer have any rights as a holder of such shares (other than the
right
to receive payment of such consideration in accordance with this Agreement).
Such shares shall be deemed purchased in accordance with the applicable
provisions hereof, and the Corporation shall be deemed the owner and holder
of
such shares, whether or not the certificates therefor have been delivered as
required by this Agreement.
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G.
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MISCELLANEOUS
PROVISIONS
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1. Optionee
Undertaking.
Optionee hereby agrees to take whatever additional action and execute whatever
additional documents the Corporation may deem necessary or advisable in order
to
carry out or effect one or more of the obligations or restrictions imposed
on
either Optionee or the Purchased Shares pursuant to the provisions of this
Agreement.
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2. Agreement
is Entire Contract.
This
Agreement constitutes the entire contract between the parties hereto with regard
to the subject matter hereof. This Agreement is made pursuant to the provisions
of the Plan and shall in all respects be construed in conformity with the terms
of the Plan.
3. Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of Delaware without resort to that State’s conflict-of-laws
rules.
4. Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed to
be
an original, but all of which together shall constitute one and the same
instrument.
5. Successors
and Assigns.
The
provisions of this Agreement shall inure to the benefit of, and be binding
upon,
the Corporation and its successors and assigns and upon Optionee, Optionee’s
permitted assigns and the legal representatives, heirs and legatees of
Optionee’s estate, whether or not any such person shall have become a party to
this Agreement and have agreed in writing to join herein and be bound by the
terms hereof.
IN
WITNESS WHEREOF,
the
parties have executed this Agreement on the day and year first indicated
above.
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Title:
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____________, OPTIONEE |
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SPOUSAL
ACKNOWLEDGMENT
The
undersigned spouse of Optionee has read and hereby approves the foregoing Stock
Purchase Agreement. In consideration of the Corporation’s granting Optionee the
right to acquire the Purchased Shares in accordance with the terms of such
Agreement, the undersigned hereby agrees to be irrevocably bound by all the
terms of such Agreement, including (without limitation) the right of the
Corporation (or its assigns) to purchase any Purchased Shares in which Optionee
is not vested at time of his or her cessation of Service.
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OPTIONEE’S
SPOUSE
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Address:
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EXHIBIT
I
ASSIGNMENT
SEPARATE FROM CERTIFICATE
FOR
VALUE RECEIVED
___________________ hereby sell(s), assign(s) and transfer(s) unto Fuqi
International, Inc. (the “Corporation”), _______________ (_________) shares of
the Common Stock of the Corporation standing in his or her name on the books
of
the Corporation represented by Certificate No. ________________ herewith and
do(es) hereby irrevocably constitute and appoint _____________________ Attorney
to transfer the said stock on the books of the Corporation with full power
of
substitution in the premises.
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Dated:
____________________
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Signature
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Instruction:
Please
do not fill in any blanks other than the signature line. Please sign exactly
as
you would like your name to appear on the issued stock certificate. The purpose
of this assignment is to enable the Corporation to exercise the Repurchase
Right
without requiring additional signatures on the part of Optionee.
EXHIBIT
II
FEDERAL
INCOME TAX CONSEQUENCES AND
SECTION
83(b)
TAX ELECTION
I. Federal
Income Tax Consequences and Section 83(b) Election For Exercise of Non-Statutory
Option.
If the
Purchased Shares are acquired pursuant to the exercise of a Non-Statutory
Option, as specified in the Grant Notice, then under Code Section 83, the excess
of the Fair Market Value of the Purchased Shares on the date any forfeiture
restrictions applicable to such shares lapse over the Exercise Price paid for
those shares will be reportable as ordinary income on the lapse date. For this
purpose, the term “forfeiture restrictions” includes the right of the
Corporation to repurchase the Purchased Shares pursuant to the Repurchase Right.
However, Optionee may elect under Code Section 83(b) to be taxed at the time
the
Purchased Shares are acquired, rather than when and as such Purchased Shares
cease to be subject to such forfeiture restrictions. Such election must be
filed
with the Internal Revenue Service within thirty (30) days after the date of
the
Agreement. Even if the Fair Market Value of the Purchased Shares on the date
of
the Agreement equals the Exercise Price paid (and thus no tax is payable),
the
election must be made to avoid adverse tax consequences in the future. The
form
for making this election is attached as part of this exhibit. FAILURE
TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30)-DAY PERIOD WILL RESULT
IN
THE RECOGNITION OF ORDINARY INCOME BY OPTIONEE AS THE FORFEITURE RESTRICTIONS
LAPSE.
II. Federal
Income Tax Consequences and Conditional Section 83(b) Election For Exercise
of
Incentive Option.
If the
Purchased Shares are acquired pursuant to the exercise of an Incentive Option,
as specified in the Grant Notice, then the following tax principles shall be
applicable to the Purchased Shares:
(i) For
regular tax purposes, no taxable income will be recognized at the time the
Option is exercised.
(ii) The
excess of (a) the Fair Market Value of the Purchased Shares on the date the
Option is exercised or (if later) on the date any forfeiture restrictions
applicable to the Purchased Shares lapse over (b) the Exercise Price paid for
the Purchased Shares will be includible in Optionee’s taxable income for
alternative minimum tax purposes.
(iii) If
Optionee makes a disqualifying disposition of the Purchased Shares, then
Optionee will recognize ordinary income in the year of such disposition equal
in
amount to the excess of (a) the Fair Market Value of the Purchased Shares on
the
date the Option is exercised or (if later) on the date any forfeiture
restrictions applicable to the Purchased Shares lapse over (b) the Exercise
Price paid for the Purchased Shares. Any additional gain recognized upon the
disqualifying disposition will be either short-term or long-term capital gain
depending upon the period for which the Purchased Shares are held prior to
the
disposition.
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(iv) For
purposes of the foregoing, the term “forfeiture restrictions” will include the
right of the Corporation to repurchase the Purchased Shares pursuant to the
Repurchase Right. The term “disqualifying disposition” means any sale or other
disposition1
of the
Purchased Shares within two (2) years after the Grant Date or within one (1)
year after the exercise date of the Option.
(v) In
the
absence of final Treasury Regulations relating to Incentive Options, it is
not
certain whether Optionee may, in connection with the exercise of the Option
for
any Purchased Shares at the time subject to forfeiture restrictions, file a
protective election under Code Section 83(b) which would limit Optionee’s
ordinary income upon a disqualifying disposition to the excess of the Fair
Market Value of the Purchased Shares on the date the Option is exercised over
the Exercise Price paid for the Purchased Shares. Accordingly, such election
if
properly filed will only be allowed to the extent the final Treasury Regulations
permit such a protective election.
(vi) The
Code
Section 83(b) election will be effective in limiting the Optionee’s alternative
minimum taxable income to the excess of the Fair Market Value of the Purchased
Shares at the time the Option is exercised over the Exercise Price paid for
those shares.
Page
2 of
the attached form for making the election should be filed with any election
made
in connection with the exercise of an Incentive Option.
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Generally, a disposition of shares purchased under an Incentive Option
includes
any transfer of legal title, including a transfer by sale, exchange or
gift, but
does not include a transfer to the Optionee’s spouse, a transfer into joint
ownership with right of survivorship if Optionee remains one of the joint
owners, a pledge, a transfer by bequest or inheritance or certain tax-free
exchanges permitted under the Code.
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SECTION
83(b) ELECTION
This
statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.
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(1)
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The
taxpayer who performed the services is:
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Name:
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Address:
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Taxpayer
Ident. No.:
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(2)
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The
property with respect to which the election is being made is _____________
shares of the common stock of Fuqi International, Inc.
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(3)
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The
property was issued on ______________,
_____.
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(4)
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The
taxable year in which the election is being made is the calendar
year
_____.
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(5)
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The
property is subject to a repurchase right pursuant to which the issuer
has
the right to acquire the property at the fair market value per share,
if
for any reason taxpayer’s service with the issuer terminates. [The
issuer’s repurchase right will lapse in a series of annual and monthly
installments over a four (4)-year period ending on ___________,
20__.]
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(6)
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The
fair market value at the time of transfer (determined without regard
to
any restriction other than a restriction which by its terms will
never
lapse) is $__________per share.
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(7)
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The
amount paid for such property is $___________ per
share.
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(8)
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A
copy of this statement was furnished to Fuqi International, Inc.
for whom
taxpayer rendered the services underlying the transfer of
property.
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(9)
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This
statement is executed on _________________,
______.
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This
election must be filed with the Internal Revenue Service Center with which
taxpayer files his or her Federal income tax returns and must be made within
thirty (30) days after the execution date of the Stock Purchase Agreement.
This
filing should be made by registered or certified mail, return receipt requested.
Optionee must retain two (2) copies of the completed form for filing with his
or
her Federal and state tax returns for the current tax year and an additional
copy for his or her records.
The
property described in the above Section 83(b) election is comprised of shares
of
common stock acquired pursuant to the exercise of an incentive stock option
under Section 422 of the Internal Revenue Code (the “Code”). Accordingly, it is
the intent of the Taxpayer to utilize this election to achieve the following
tax
results:
1. One
purpose of this election is to have the alternative minimum taxable income
attributable to the purchased shares measured by the amount by which the fair
market value of such shares at the time of their transfer to the Taxpayer
exceeds the purchase price paid for the shares. In the absence of this election,
such alternative minimum taxable income would be measured by the spread between
the fair market value of the purchased shares and the purchase price which
exists on the various lapse dates in effect for the forfeiture restrictions
applicable to such shares.
2. Section
421(a)(1) of the Code expressly excludes from income any excess of the fair
market value of the purchased shares over the amount paid for such shares.
Accordingly, this election is also intended to be effective in the event there
is a “disqualifying disposition” of the shares, within the meaning of Section
421(b) of the Code, which would otherwise render the provisions of Section
83(a)
of the Code applicable at that time. Consequently, the Taxpayer hereby elects
to
have the amount of disqualifying disposition income measured by the excess
of
the fair market value of the purchased shares on the date of transfer to the
Taxpayer over the amount paid for such shares. Since Section 421(a) presently
applies to the shares which are the subject of this Section 83(b) election,
no
taxable income is actually recognized for regular tax purposes at this time,
and
no income taxes are payable, by the Taxpayer as a result of this election.
The
foregoing election is to be effective to the full extent permitted under the
Code.
THIS
PAGE 2 IS TO BE ATTACHED TO ANY SECTION 83(b) ELECTION FILED IN CONNECTION
WITH
THE EXERCISE OF AN INCENTIVE STOCK OPTION UNDER THE FEDERAL TAX
LAWS.
APPENDIX
The
following definitions shall be in effect under the Agreement:
A. Agreement
shall
mean this Stock Purchase 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 ▇▇▇▇ ▇▇▇) 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 adopt the Plan.
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G. 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 such 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.
▇. ▇▇▇▇▇
Date
shall
have the meaning assigned to such term in Paragraph A.1.
▇. ▇▇▇▇▇
Notice
shall
mean the Notice of Grant of Stock Option pursuant to which Optionee has been
informed of the basic terms of the Option.
J. Incentive
Option
shall
mean an option which satisfies the requirements of Code Section 422.
K. 1933
Act
shall
mean the Securities Act of 1933, as amended.
L. 1934
Act
shall
mean the Securities Exchange Act of 1934, as amended.
M. Non-Statutory
Option
shall
mean an option not intended to satisfy the requirements of Code Section
422.
N. Option
shall
have the meaning assigned to such term in Paragraph A.1.
O. Option
Agreement
shall
mean all agreements and other documents evidencing the Option.
2
P. Optionee
shall
mean the person to whom the Option is granted under the Plan.
Q. Owner
shall
mean Optionee and all subsequent holders of the Purchased Shares who derive
their chain of ownership through a Permitted Transfer from
Optionee.
R. 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.
S. Permitted
Transfer
shall
mean (i) a transfer of title to the Purchased Shares effected pursuant to
Participant’s will or the laws of inheritance following Participant’s death (ii)
a transfer to the Corporation in pledge as security for any purchase-money
indebtedness incurred by Participant in connection with the acquisition of
the
Purchased Shares or (iii) a transfer by a Participant to the Participant’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 1934 Act, then as otherwise
permitted pursuant to General Instructions A.1(a)(5) to Form S-8 under the
1933
Act. For purposes of this definition, "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 1934 Act, then it shall have the meaning given to such term
in
General Instructions A.1(a)(5) to Form S-8 under the 1933 Act.
T. Plan
shall
mean the Corporation’s 2007 Equity Incentive Plan.
U. Plan
Administrator
shall
mean either the Board or a committee of the Board acting in its capacity as
administrator of the Plan.
V. Prior
Purchase Agreement
shall
have the meaning assigned to such term in Paragraph D.4.
W. Purchased
Shares
shall
have the meaning assigned to such term in Paragraph A.1.
X. Recapitalization
shall
mean any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the Corporation’s outstanding
Common Stock as a class without the Corporation’s receipt of
consideration.
3
Y. Reorganization
shall
mean any of the following transactions:
(i) a
merger
or consolidation in which the Corporation is not the surviving entity,
(ii) a
sale,
transfer or other disposition of all or substantially all of the Corporation’s
assets,
(iii) a
reverse
merger in which the Corporation is the surviving entity but in which the
Corporation’s outstanding voting securities are transferred in whole or in part
to a person or persons different from the persons holding those securities
immediately prior to the merger, or
(iv) any
transaction effected primarily to change the state in which the Corporation
is
incorporated or to create a holding company structure.
Z. Repurchase
Price
shall
mean the lower
of
(i) the
Exercise Price or (ii) the Fair Market Value per share of Common Stock on the
date of Optionee’s cessation of Service.
AA. Repurchase
Right
shall
mean the right granted to the Corporation in accordance with Article
D.
BB. SEC
shall
mean the Securities and Exchange Commission.
CC. Service
shall
mean the Optionee’s performance of services for the Corporation (or any Parent
or Subsidiary) in the capacity of an employee, 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, a non-employee member of the board of
directors or an independent consultant.
DD. Target
Shares
shall
have the meaning assigned to such term in Paragraph E.2.
EE. 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.
FF. 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.
GG. Unvested
Shares
shall
have the meaning assigned to such term in Paragraph D.1.
4
ADDENDUM
TO
The
following provisions are hereby incorporated into, and are hereby made a part
of, that certain Stock Purchase Agreement (the “Purchase
Agreement”)
by and
between Fuqi International, Inc. (the “Corporation”)
and
_____________________________ (“Optionee”)
evidencing the shares of Common Stock purchased on this date by Optionee under
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 such terms in
the
Purchase Agreement.
INVOLUNTARY
TERMINATION FOLLOWING
A
CHANGE IN CONTROL
To
the extent the Repurchase Right is assigned to the successor corporation (or
parent thereof) in connection with a Change in Control or otherwise continued
in
full force and effect pursuant to the terms of the Change in Control
transaction, no accelerated vesting of the Purchased Shares shall occur upon
that Change in Control, and the Repurchase Right shall continue to remain in
full force and effect in accordance with the provisions of the Purchase
Agreement. Optionee shall, over his or her period of Service following such
Change in Control, continue to vest in the Purchased Shares in one or more
installments in accordance with the provisions of the Purchase Agreement.
However, upon an Involuntary Termination of Optionee’s Service within __________
(___) months following such Change in Control, the Repurchase Right shall
terminate automatically, and all the Purchased Shares shall immediately vest
in
full at that time. Any unvested escrow account maintained on Optionee’s behalf
pursuant to Paragraph D.6 of the Purchase Agreement shall also vest at the
time
of such Involuntary Termination and shall be paid to Optionee promptly
thereafter.
For
purposes of this Addendum, the following definitions shall be in
effect:
An
Involuntary
Termination
shall
mean the termination of Optionee’s Service by reason of:
Optionee’s
involuntary dismissal or discharge by the Corporation for reasons other than
for
Misconduct, or
Optionee’s
voluntary resignation following (A) a change in his or her position with the
Corporation (or Parent or Subsidiary employing Optionee) which materially
reduces his or her 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.
1
Misconduct
shall
mean the termination of Optionee’s Service by reason of Optionee’s commission of
any act of fraud, embezzlement or dishonesty, 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
and
this Addendum, to constitute grounds for termination for
Misconduct.
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.
|
FUQI
INTERNATIONAL, INC.
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|
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| By: | ||
|
Title:
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EFFECTIVE
DATE:
_____________, ______
2