THE
SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE
TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED
HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "1933 ACT").
NONE OF THE SECURITIES
REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY
U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE
OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS
DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION,
HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED
UNLESS IN COMPLIANCE WITH THE 1933 ACT. "UNITED STATES" AND "U.S.
PERSON" ARE AS DEFINED BY REGULATION S UNDER THE 1933
ACT.
UNLESS OTHERWISE PERMITTED
UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY IN OR FROM BRITISH COLUMBIA UNLESS THE
CONDITIONS IN SECTION 12(2) OF BC INSTRUMENT 51-509 ISSUERS QUOTED
IN THE U.S. OVER-THE-COUNTER MARKET ARE MET.
STOCK OPTION AND SUBSCRIPTION
AGREEMENT
THIS STOCK OPTION AND
SUBSCRIPTION AGREEMENT is entered into as of the 5 th
day of May, 2009 (the "Date of Grant").
BETWEEN:
FUTURE CANADA CHINA ENVIRONMENT INC.
, with an office at 114 West
Magnolia Street, Suite 437, Bellingham, Washington (the
"Company")
AND:
RUI
YANG (the
"Optionee")
RECITALS
WHEREAS:
A. The Optionee is the Vice
President of the Company and as an incentive for the Optionee to
perform his services, the board of directors of the Company (the
"Board") has authorized the Company to grant stock options to
purchase a total of TWO HUNDRED THOUSAND (200,000) shares of common
stock to the Optionee.
NOW THEREFORE THIS AGREEMENT
WITNESSES that in consideration of the covenants and agreements set
forth herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1.1 In this Agreement, the
following terms shall have the following meanings:
|
|
(a)
|
" Common Stock " means the
shares of common stock of the Company;
|
|
|
|
|
|
|
(b)
|
" Exercise Payment " means
the amount of money equal to the Exercise Price multiplied by the
number of
|
Optioned Shares specified in the Notice of
Exercise;
|
|
(c)
|
" Exercise Price " means
$5.00 per share;
|
|
|
|
|
|
|
(d)
|
" Expiry Date " means May
5, 2012;
|
|
|
|
|
|
|
(e)
|
" Notice of Exercise "
means a notice in writing addressed to the Company at its address
first recited (or such other address of the Company as may from
time to time be notified to the Optionee in writing), substantially
in the form attached as Appendix "A" hereto, which notice shall
specify therein the number of Optioned Shares in respect of which
the Options are being exercised;
|
|
|
|
|
|
|
(f)
|
" Options " means the
irrevocable right and option to purchase, from time to time, all,
or any part of the Optioned Shares granted to the Optionee by the
Company pursuant to Section 1.2 of this Agreement;
|
|
|
|
|
|
|
(g)
|
" Optioned Shares " means
the shares of Common Stock, subject to the Options;
|
|
|
|
|
|
|
(h)
|
" Securities " means,
collectively, the Options and the Optioned Shares;
|
|
|
|
|
|
|
(i)
|
" Shareholders " means
holders of record of the shares of Common Stock;
|
|
|
|
|
|
|
(j)
|
" U.S. Person " shall have
the meaning ascribed thereto in Regulation S under the 1933 Act,
and for the purpose of the Agreement includes any person in the
United States; and
|
|
|
|
|
|
|
(k)
|
" Vested Options " means
the Options that have vested in accordance with Section 1.3 of this
Agreement.
|
1.2 The Company agrees to offer
to the Optionee the option to purchase, upon the terms and
conditions set forth herein, Options to purchase a total of TWO
HUNDRED THOUSAND (200,000) Optioned Shares at the Exercise
Price.
1.3 The Options shall vest and be
exercisable on the Date of Grant.
1.4 The Options shall, at 5:00
p.m. (Vancouver time) on the Expiry Date, forthwith expire and be
of no further force or effect whatsoever.
1.5 Vested Options shall
terminate, to the extent not previously exercised, upon the
occurrence of the first of the following events:
|
|
(a)
|
three (3) years from the Date of
Grant;
|
|
|
|
|
|
|
(b)
|
the expiration of thirty (30)
days from (1) the date of the Optionee's termination of employment
or contractual relationship with the Company for cause (as
determined in the sole discretion of the Board, acting reasonably)
or (2) the date of resignation by the Optionee from the Optionee's
employment or contractual relationship with the Company;
|
|
|
|
|
|
|
(c)
|
the expiration of one (1) year
from the date of the death of the Optionee, or the expiration of
one (1) year from termination of the Optionee's employment or
contractual relationship by reason of disability; or
|
|
|
|
|
|
|
(d)
|
the expiration of thirty (30)
days from the date of the Optionee's termination of employment or
contractual relationship with the Company for any reason whatsoever
other than cause, death or disability.
|
1.6 Subject to compliance with
any applicable securities laws, the Options shall be exercisable,
in full or in part, at any time after vesting, until termination;
provided, however, that if the Optionee is subject to the
reporting and liability provisions of Section 16 of the
Securities Exchange Act of 1934 with respect to the Common
Stock, the
Optionee
shall be precluded from selling, transferring or otherwise
disposing of any Common Stock underlying any Options during the six
(6) months immediately following the grant of that Option. If less
than all of the shares included in the vested portion of any
Options are purchased, the remainder may be purchased at any
subsequent time prior to the Expiry Date. Only whole shares may be
issued pursuant to the exercise of any Options, and to the extent
that any Options covers less than one (1) share, it is
unexercisable.
Each exercise of the Options
shall be by means of delivery of a Notice of Exercise (which may be
in the form attached hereto as Exhibit A) to the Secretary
of the Company at its principal executive office, specifying the
number of shares of Common Stock to be purchased and accompanied by
payment in cash by certified check or cashier's check in the amount
of the full exercise price for the Common Stock to be purchased. In
addition to payment in cash by certified check or cashier's check,
an Optionee or transferee of the Options may pay for all or any
portion of the aggregate exercise price by complying with one or
more of the following alternatives:
|
|
(a)
|
by delivering a properly executed
Notice of Exercise together with irrevocable instructions to a
broker promptly to sell or margin a sufficient portion of the
Common Stock and deliver directly to the Company the amount of sale
or margin loan proceeds to pay the exercise price; or
|
|
|
|
|
|
|
(b)
|
by complying with any other
payment mechanism approved by the Board at the time of
exercise.
|
It is a condition precedent to
the issuance of Optioned Shares that the Optionee execute and/or
deliver to the Company all documents and withholding taxes required
in accordance with applicable laws.
1.7 Nothing in this Agreement
shall obligate the Optionee to purchase any Optioned Shares except
those Optioned Shares in respect of which the Optionee shall have
exercised the Options in the manner provided in this
Agreement.
2. Documents Required from
Optionee
2.1 The Optionee must complete,
sign and return an executed copy of this Agreement to the
Company.
2.2 The Optionee shall complete,
sign and return to the Company as soon as possible, on request by
the Company, any documents, questionnaires, notices and
undertakings as may be required by regulatory authorities, and
applicable law.
2.3 The Questionnaire in the form
attached as Exhibit B.
3. Acknowledgements of the
Optionee
3.1 The Optionee acknowledges and
agrees that:
|
|
a)
|
the Optionee is a director and/or
officer of the Company;
|
|
|
|
|
|
|
b)
|
none of the Securities have been
registered under the 1933 Act or under any state securities or
"blue sky" laws of any state of the United States, and, unless so
registered, may not be offered or sold in the United States or,
directly or indirectly, to U.S. Persons, except in accordance with
the provisions of Regulation S, pursuant to an effective
registration statement under the 1933 Act, or pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the 1933 Act and in each case only in
accordance with applicable state securities laws;
|
|
|
|
|
|
|
c)
|
the Company has not undertaken,
and will have no obligation, to register any of the Securities
under the 1933 Act;
|
|
|
|
|
|
|
d)
|
the Optionee has received and
carefully read this Agreement and the public information which has
been filed with the SEC in compliance or intended compliance with
applicable securities legislation (collectively, the "Company
Information");
|
|
|
e)
|
the decision to execute this
Agreement and acquire the Securities hereunder has not been based
upon any oral or written representation as to fact or otherwise
made by or on behalf of the Company, and such decision is based
entirely upon a review of the Company Information (the receipt of
which is hereby acknowledged);
|
|
|
|
|
|
|
f)
|
no securities commission or
similar regulatory authority has reviewed or passed on the merits
of the Securities;
|
|
|
|
|
|
|
g)
|
there is no government or other
insurance covering the Securities;
|
|
|
|
|
|
|
h)
|
there are risks associated with
an investment in the Securities;
|
|
|
|
|
|
|
i)
|
the Optionee has not acquired the
Securities as a result of, and will not itself engage in, any
"directed selling efforts" (as defined in Regulation S under the
1933 Act) in the United States in respect of the Securities which
would include any activities undertaken for the purpose of, or that
could reasonably be expected to have the effect of, conditioning
the market in the United States for the resale of the Securities;
provided, however, that the Optionee may sell or otherwise dispose
of the Securities pursuant to registration thereof under the 1933
Act and any applicable state and provincial securities laws or
under an exemption from such registration requirements;
|
|
|
|
|
|
|
j)
|
the Optionee and the Optionee's
advisor(s) (if applicable) have had a reasonable opportunity to ask
questions of and receive answers from the Company in connection
with the distribution of the Securities hereunder, and to obtain
additional information, to the extent possessed or obtainable
without unreasonable effort or expense, necessary to verify the
accuracy of the information about the Company;
|
|
|
|
|
|
|
k)
|
the books and records of the
Company were available upon reasonable notice for inspection,
subject to certain confidentiality restrictions, by the Optionee
during reasonable business hours at its principal place of
business, and all documents, records and books in connection with
the distribution of the Securities hereunder have been made
available for inspection by the Optionee, the Optionee's attorney
and/or advisor(s) (if applicable);
|
|
|
|
|
|
|
l)
|
the Company is entitled to rely
on the representations and warranties and the statements and
answers of the Optionee contained in this Agreement;
|
|
|
|
|
|
|
m)
|
the Optionee will indemnify and
hold harmless the Company and, where applicable, its directors,
officers, employees, agents, advisors and shareholders, from and
against any and all loss, liability, claim, damage and expense
whatsoever (including, but not limited to, any and all fees, costs
and expenses whatsoever reasonably incurred in investigating,
preparing or defending against any claim, lawsuit, administrative
proceeding or investigation whether commenced or threatened)
arising out of or based upon any representation or warranty of the
Optionee contained herein or in any document furnished by the
Optionee to the Company in connection herewith being untrue in any
material respect or any breach or failure by the Optionee to comply
with any covenant or agreement made by the Optionee to the Company
in connection therewith;
|
|
|
|
|
|
|
n)
|
none of the Securities are listed
on any stock exchange or automated dealer quotation system and no
representation has been made to the Optionee that any of the
Securities will become listed on any stock exchange or automated
dealer quotation system; except that currently certain market
makers make market in the common shares of the Company on the OTC
Bulletin Board service of the National Association of Securities
Dealers, Inc.;
|
|
|
|
|
|
|
o)
|
the Company will refuse to
register any transfer of the Securities not made in accordance with
the provisions of Regulation S, pursuant to an effective
registration statement under the 1933 Act or pursuant to an
available exemption from the registration requirements of the 1933
Act and in accordance with applicable state and provincial
securities laws;
|
|
|
p)
|
the statutory and regulatory
basis for the exemption claimed for the offer of the Securities,
although in technical compliance with Regulation S, would not be
available if the offering is part of a plan or scheme to evade the
registration provisions of the 1933 Act or any applicable state and
provincial securities laws;
|
|
|
|
|
|
|
q)
|
the Optionee has been advised to
consult the Optionee's own legal, tax and other advisors with
respect to the merits and risks of an investment in the Securities
and with respect to applicable resale restrictions, and it is
solely responsible (and the Company is not in any way responsible)
for compliance with:
|
|
|
i)
|
any applicable laws of the
jurisdiction in which the Optionee is resident in connection with
the distribution of the Securities hereunder, and
|
|
|
|
|
|
|
ii)
|
applicable resale restrictions;
and
|
|
|
r)
|
this Agreement is not enforceable
by the Optionee unless it has been accepted by the
Company.
|
4. Representations,
Warranties and Covenants of the Optionee
4.1 The Optionee hereby
represents and warrants to and covenants with the Company (which
representations, warranties and covenants shall survive the
closing) that:
|
|
a)
|
the Optionee is a director and/or
officer of the Company;
|
|
|
|
|
|
|
b)
|
the Optionee has the legal
capacity and competence to enter into and execute this Agreement
and to take all actions required pursuant hereto;
|
|
|
|
|
|
|
c)
|
the Optionee has received and
carefully read this Agreement;
|
|
|
|
|
|
|
d)
|
the Optionee has duly executed
and delivered this Agreement and it constitutes a valid and binding
agreement of the Optionee enforceable against the Optionee in
accordance with its terms;
|
|
|
|
|
|
|
e)
|
the Optionee is not acquiring the
Securities for the account or benefit of, directly or indirectly,
any U.S. Person;
|
|
|
|
|
|
|
f)
|
the Optionee is not a U.S.
Person;
|
|
|
|
|
|
|
g)
|
the Optionee is resident in the
jurisdiction set out on page 1 of this Agreement;
|
|
|
|
|
|
|
h)
|
the acquisition of the Securities
by the Optionee as contemplated in this Agreement complies with or
is exempt from the applicable securities legislation of the
jurisdiction of residence of the Optionee;
|
|
|
|
|
|
|
i)
|
the Optionee is acquiring the
Securities for investment only and not with a view to resale or
distribution and, in particular, it has no intention to distribute
either directly or indirectly any of the Securities in the United
States or to U.S. Persons;
|
|
|
|
|
|
|
j)
|
the Optionee is outside the
United States when receiving and executing this Agreement and is
acquiring the Securities as principal for the Optionee's own
account, for investment purposes only, and not with a view to, or
for, resale, distribution or fractionalisation thereof, in whole or
in part, and no other person has a direct or indirect beneficial
interest in such Securities;
|
|
|
|
|
|
|
k)
|
the Optionee is not an
underwriter of, or dealer in, the common shares of the Company, nor
is the Optionee participating, pursuant to a contractual agreement
or otherwise, in the distribution of the Securities;
|
|
|
|
|
|
|
l)
|
the Optionee (i) has adequate net
worth and means of providing for his/her/its current financial
needs and possible personal contingencies, (ii) has no need for
liquidity in this investment, and (iii) is able to bear
the
|
|
|
|
economic risks of an investment
in the Securities for an indefinite period of time, and can afford
the complete loss of such investment;
|
|
|
|
|
|
|
m)
|
the Optionee is aware that an
investment in the Company is speculative and involves certain
risks, including the possible loss of the investment, and the
Optionee has carefully read and considered the matters set forth
under the caption "Risk Factors" appearing in the Company's various
disclosure documents, filed with the SEC;
|
|
|
|
|
|
|
n)
|
the Optionee has the
requisite
|
