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2007 NONSTATUTORY STOCK OPTION PLAN
1.
Purpose
This Nonstatutory Stock Option Plan (the
“Plan”) is intended to further the growth and
financial success of China Recycling Energy Corporation, a
Nevada corporation (the “Corporation”) by providing
incentives in the form of options to acquire the common stock of
the Corporation (“Options”) to selected employees,
directors, and consultants to the Corporation and its Affiliates
so that such employees and consultants may acquire or increase
their proprietary interest in the Corporation. As used
herein, an “Affiliate” of the Corporation shall mean
(a) any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation if, at the
time of the determination, each of the corporations other than
the Corporation owns 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, or (b) any
corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation if, at the time of
the determination, each of the corporations other than the last
corporation in the unbroken chain owns 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.
2.
Administration
The Plan shall be administered by the Board of
Directors of the Corporation (the “Board”); provided
however, that the Board may delegate such administration to a
committee of not fewer than three (3) members of the Board (the
“Committee”). Option grants, and transactions
in or involving Options, intended to be exempt under Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), must be duly and timely authorized
by the Board or a committee consisting solely of two or more
non-employee directors (as this requirement is applied under
Rule 16b-3 promulgated under the Exchange Act). The Board
may delegate ministerial, non-discretionary functions to
individuals who are officers or employees of the Corporation or
any of its Subsidiaries or to third parties.
Subject to the provisions of the Plan, the Board
and/or the Committee shall have authority to (a) grant, in its
discretion, Options to eligible persons; (b) determine in good
faith the fair market value of the stock covered by an Option;
(c) determine which eligible persons shall be granted Options
and the number of shares to be covered thereby and the term
thereof; (d) construe and interpret the Plan; (e) promulgate,
amend and rescind rules and regulations relating to its
administration, and correct defects, omissions, and
inconsistencies in the Plan or any Option; (f) consistent with
the Plan and with the consent of the Optionee, as appropriate,
amend any outstanding Option or amend the exercise date or dates
thereof; (g) determine the duration and purpose of leaves of
absence which may be granted to optionholders without
constituting termination of their employment for the purpose of
the Plan; and (h) make all other determinations necessary or
advisable for the Plan's administration. The interpretation and
construction by the Board of any provisions of the Plan or of
any Option it shall be conclusive and final. No member of the
Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any
Option.
Any action taken by, or inaction of, the
Corporation, any Affiliate, or the Board or the Committee
relating or pursuant to this Plan and within its authority
hereunder or under applicable law shall be within the absolute
discretion of that entity or body and shall be conclusive and
binding upon all persons. Neither the Board nor any Board
committee, nor any member thereof or person acting at the
direction thereof, shall be liable for any act, omission,
interpretation, construction or determination made in good faith
in connection with this Plan (or any award made under this
Plan), and all such persons shall be entitled to indemnification
and reimbursement by the Corporation in respect of any claim,
loss, damage or expense (including, without limitation,
attorneys’ fees) arising or resulting therefrom to the
fullest extent permitted by law and/or under any directors and
officers liability insurance coverage that may be in effect from
time to time.
The persons who shall be eligible to receive
Options shall be employees, directors, or consultants of the
Corporation or any of its Affiliates (each, an “Eligible
Person”). A consultant shall only be an Eligible
Person if such consultant is an individual consultant or advisor
who renders or has rendered bona fide services (other than
services in connection with the offering or sale of securities
of the Corporation or one of its Affiliates in a capital-raising
transaction or as a market maker or promoter of securities of
the Corporation or one of its Affiliates) to the Corporation or
one of its Affiliates and who is selected to participate in this
Plan by the Board or Committee; provided, however, that a
consultant may participate in this Plan only if such
participation would not adversely affect either the
Corporation’s eligibility to use Form S-8 to register
under the Securities Act of 1933, as amended (the
“Securities Act”), the offering and sale of shares
issuable under this Plan by the Corporation or the
Corporation’s compliance with any other applicable laws.
An Eligible Person who has been granted an Option is
referred to as an “Optionee.”
Subject to Section 5(h), the capital stock that
may be delivered under this Plan shall be shares of the
Corporation’s authorized but unissued common stock
(“Stock”). For purposes of this Plan,
“Stock” shall mean the common stock of the
Corporation and such other securities or property as may become
the subject of Options under this Plan, or may become subject to
such Options, pursuant to an adjustment made under Section
5(h).
(a) Number of Shares . Subject to
adjustment as provided in Paragraph 5(h) of this Plan, the total
number of shares of Stock which may be delivered through
exercise of Options granted under this Plan shall not exceed
3,000,000 shares. If any Option shall for any reason terminate
or expire, any shares allocated thereto but remaining
unpurchased upon such expiration or termination shall again be
available for the grant of Options with respect thereto under
this Plan as though no Option had been granted with respect to
such shares.
(b) Reservation of Shares . The
Corporation shall reserve and keep available at all times during
the term of the Plan such number of shares as shall be
sufficient to satisfy the requirements of the Plan. If, after
reasonable efforts, which efforts shall not include the
registration of the Plan or Options under the Act, the
Corporation is unable to obtain authority from any applicable
regulatory body, which authorization is deemed necessary by
legal counsel for the Corporation for the lawful issuance of
shares hereunder, the Corporation shall be relieved of any
liability with respect to its failure to issue and sell the
shares for which such requisite authority was so deemed
necessary unless and until such authority is obtained.
5.
Terms and Conditions of Options
Each Option granted hereunder shall be evidenced
by an option agreement (“Option Agreement”) between
the Corporation and the respective Optionee which shall set
forth the material terms and conditions of the Option, in such
form and substance as the Board or Committee shall from time to
time approve. Each Option Agreement need not be identical,
and in each case may include such provisions as the Board or
Committee may determine, but all such agreements shall be
subject to and limited by the following terms and
conditions:
(a) Number of Shares : Each Option
Agreement shall state the number of shares of Stock to which the
Option pertains.
(b) Option Price : The Board
or Committee shall determine the purchase price per share of the
Common Stock covered by each Option (the “Option
Price”) at the time of the grant of the Option, which
exercise price will be set forth in the applicable Option
Agreement; provided that in no case will the Option Price of an
Option be less than the par value of the Stock. The Option
Price of each Option that is granted on the date that the Plan
becomes effective shall be $1.23 per share.
(c) Medium and Time of Payment :
The Corporation shall not be obligated to deliver certificates
for the shares of Stock to be purchased on exercise of an Option
unless and until it receives full payment of the exercise price
therefor, all related tax withholding obligations have been
satisfied, and all other conditions to the exercise of the
Option set forth herein or in the Option Agreement have been
satisfied. The Option Price of any shares of Stock
purchased on exercise of an Option must be paid in full at the
time of each purchase in any one or combination of the following
methods: (i) in cash or by check, (ii) by delivery of other
common stock of the Corporation, provided such tendered stock
was not acquired directly or indirectly from the Corporation,
or, if acquired from the Corporation, has been held by the
Optionee for more than six months, (iii) to the extent
permissible by applicable law, by the Optionee's promissory note
in a form satisfactory to the Corporation and bearing interest
at a rate determined by the Board, in its sole discretion, but
in no event less than 6% per annum, or (iv) such other form of
legal consideration permitted by applicable state law as may be
acceptable to the Board. Shares of Stock used to satisfy
the exercise price of an Option (whether previously-owned shares
or shares otherwise deliverable pursuant to the terms of the
Option) shall be valued at their fair market value on the date
of exercise. Unless otherwise expressly provided in the
applicable Option Agreement, the Administrator may eliminate or
limit an Optionee’s ability to pay the Option Price of any
Option by any method other than cash payment to the Corporation.
(d) Term and Exercise of Options:
(i) Except as provided in Section 5(l), an
Option may be exercised only to the extent that it is vested and
exercisable. The Board or Committee will determine the
vesting and/or exercisability provisions of each Option, which
provisions will be set forth in the applicable Option Agreement,
provided that each Option shall become vested and exercisable
over a period of no longer than five years from the date of
grant. Unless the Board or Committee otherwise expressly
provides, once exercisable an Option will remain exercisable
until the expiration or earlier termination of the Option.
(ii) In no event shall any Option be exercisable
after the expiration of five years from the date it is granted.
Unless a later date is otherwise specified by the Board or the
Committee in the resolution authorizing such Option, the date of
grant of an Option shall be deemed to be the date upon which the
Board or the Committee authorizes the granting of such
Option.
(iii) No fractional shares shall be
delivered under this Plan. The Board or Committee may pay
cash in lieu of any fractional shares in settlements of Options
under this Plan. During the lifetime of an Optionee, the
Option shall be exercisable only by the Optionee and shall not
be assignable or transferable by the Optionee, and no other
person shall acquire any rights therein. To the extent not
exercised, installments (if more than one) shall accumulate, but
shall be exercisable, in whole or in part, only during the
period for exercise as stated in the Option Agreement, whether
or not other installments are then exercisable.
(e) Termination of Status as Employee,
Director, or Consultant : If Optionee's status as an
employee, director, or consultant shall terminate for any
reason, then the Optionee (or if the Optionee shall die after
such termination, but prior to exercise, Optionee's personal
representative or the person entitled to succeed to the Option)
shall have the right to exercise any [ vested ]
Options, in whole or in part, at any time after such termination
during the remaining term of the Option; provided, however, that
the Board may specify a shorter period for exercise following
termination as the Board deems reasonable and appropriate, but
not shorter than six months in the event Optionee’s
termination was caused by permanent disability. For
purposes of this Plan an Optionee shall be deemed to be
permanently disabled if he is unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected
to resulting death or which has lasted or can be expected to
last for a continuous period of not less than 12 months.
The Option may be exercised only with respect to
installments that the Optionee could have exerci
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