Exhibit 4.1
CHINA DIRECT TRADING CORPORATION
2005 Consultants & Legal Services Plan
Section 1. Introduction. China Direct Trading Corporation, a Florida
corporation, (the "Company" or "CHDT") hereby establishes the 2005 Consultants
Stock Plan (hereinafter referred to as the "Plan") as of January 24, 2005.
The purposes of the Plan are to obtain services for CHDT from
independent contractors and professional advisors for services at reduced
compensation or at rates and/or on terms that are otherwise negotiated favorably
to CHDT by paying their fees or retainers in the form of shares of the Company's
Common Stock, $0.0001 par value per share ("Common Stock").
Section 2. Definitions. The following terms shall have the meanings set
forth below:
"Board" means the Board of Directors of the Company.
"Change of Control" has the meaning set forth in Section 10(a) below.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder. References to any provision of the Code or
rule or regulation thereunder shall be deemed to include any amended or
successor provision, rule or regulation.
"Common Stock" has the meaning set forth in Section 1 above.
"Company" has the meaning set forth in Section 1 above.
"Delivery Date" has the meaning set forth in Section 6 herein.
"Dividend Equivalent" for a given dividend or other distribution means
a number of shares of Common Stock having a Fair Market Value, as of the record
date for such dividend or distribution, equal to the amount of cash, plus the
fair market value on the date of distribution of any property, that is
distributed with respect to one share of Common Stock pursuant to such dividend
or distribution; such fair market value to be determined by the Board in good
faith.
"Effective Date" has the meaning set forth in Section 3 herein.
"Exchange Act" has the meaning set forth in Section 10(c) herein.
"Fair Market Value" means the mean between the highest and lowest
reported sales prices of the Common Stock on the OTC Bulletin Board, or, if not
listed on such exchange, on any other national securities exchange on which the
Common Stock is listed or on NASDAQ on the last trading day prior to the date
with respect to which the Fair Market Value is to be determined.
"Independent Contractors" shall mean certain third parties, including
both individuals and companies, that are neither directors nor key employees of
CHDT, and who provide certain services to CHDT.
"Participant" shall mean professional advisors, consultants,
independent contractors and suppliers of the Company and any of its
subsidiaries, as the Board in its sole discretion determines to be significantly
responsible for the success and future growth and profitability of the Company
and whom the Board may designate from time to time to receive stock under the
Plan.
"Plan" shall mean this 2005 Consultants Stock Plan .
Section 3. Effective Date of the Plan. The Plan was adopted by the
Board on January 24, 2005 and is effective as of the same ("Effective Date").
Section 4. Eligibility. Participants shall be those persons, who in the
judgment of the Board, are performing, or will perform, vital services in the
management, operation, and development of CHDT and contribute significantly, or
are expected to contribute significantly, to the achievement of long-term
corporate economic objectives, and/or, in the case of consultants, independent
contractors or suppliers furnish services to CHDT at reduced rates or on other
terms which are significantly favorable to CHDT.
Each issuance of shares of Common Stock pursuant to the Plan shall be
evidenced by a written agreement duly executed and delivered by or on behalf of
the Company and a Participant, if such an agreement is required by the Company
to assure compliance with all applicable laws and regulations.
Section 5. Grants of Shares. Commencing on the Effective Date,
Participants shall be eligible to receive shares of Common Stock pursuant to
this Plan at the issuance price $0.05 per Share (valued as such for purposes of
determining value of Common Stock issued for services).
Section 6. Delivery of Shares. (a) The shares of Common Stock shall be
delivered in accordance with this Section 6 as soon as practicable (the
"Delivery Date"). If, the number of shares so delivered includes a fractional
share, then such number shall be rounded to the nearest whole number of shares.
If any such shares are to be delivered after the Participant has died or become
legally incompetent, they shall be delivered to the Participant's estate or
legal guardian, as the case may be. References to a Participant in this Plan
shall be deemed to refer to the Participant's estate or legal guardian, where
appropriate.
(b) The Company may, but shall not be required to, create a grantor
trust or utilize an existing grantor trust (in either case, "Trust") to assist
it in accumulating the shares of Common Stock needed to fulfill its obligations
under this Section 6. However, Participants shall have no beneficial or other
interest in the Trust and the assets thereof, and their rights under the Plan
shall be as general creditors of the Company, unaffected by the existence or
nonexistence of the Trust, except that deliveries of Common Stock under the Plan
to Participants from the Trust shall, to the extent thereof, be treated as
satisfying the Company's obligations under this Section 6.
Section 7. Share Certificates; Voting and Other Rights. The
certificates for shares delivered to a Participant pursuant to Section 6 above
shall be issued in the name of the Participant, and from and after the date of
such issuance the Participant shall be entitled to all rights of a shareholder
with respect to Common Stock for all such shares issued in his or her name,
including the right to vote the shares, and the Participant shall receive all
dividends and other distributions, if any, paid or made with respect thereto.
Section 8. General Restrictions. (a) Notwithstanding any other
provision of the Plan or agreements made pursuant thereto, the Company shall not
be required to issue or deliver any certificate or certificates for shares of
Common Stock under the Plan prior to fulfillment of all of the following
conditions:
(i) Any registration or other qualification of such shares
under any state or federal law or regulation, or the maintaining in effect of
any such registration or other qualification which the Board shall, upon the
advice of counsel, deem necessary or advisable; and
(ii) Obtaining any other consent, approval, or permit from any
state or federal governmental agency which the Board shall, after receiving the
advice of counsel, determine to be necessary or advisable.
(b) Nothing contained in the Plan shall prevent the Company from
adopting other or additional compensation arrangements for the Participants.
Section 9. Shares Available. Subject to Section 10 below, the maximum
number of shares of Common Stock, which may in the aggregate issued pursuant to
the Plan is 10 million (10,000,000) Shares of Common Stock. The Plan shares may
be taken from treasury shares of the Company or purchased on the open market.
Section 10. Adjustments; Change of Control. (a) In the event that there
is, at any time after the Board adopts the Plan, any exchange in corporate
capitalization, such as a stock split, combination of shares, exchange of
shares, warrants or rights offering to purchase Common Stock at a price below
its fair market value, reclassification, or recapitalization, or a corporate
transaction, such as any merger, consolidation, separation, including a
spin-off, or other extraordinary distribution of stock or property of the
Company, any reorganization (whether or not such reorganization comes within the
definition of such term in Section 368 of the Code) or any partial or complete
liquidation of the Company (each of the foregoing a "Transaction"), in each case
other than any such Transaction which constitutes a Change of Control (as
defined below), (i) the number and kind of shares or other property subject to
the Plan shall be appropriately adjusted to reflect the effectiveness of any
such Transaction and (ii) the Board shall appropriately adjust any other
relevant provisions of the Plan and any such modification by the Board shall be
binding and conclusive on all persons.
(b) In lieu of the adjustment contemplated by this Section 10, in the
event of a Change of Control, the following shall occur on the date of the
Change of Control: (i) the Plan shall be terminated.
(c) For purposes of this Plan, Change of Control shall mean any of the
following events:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent
(20%) or more of either (a) the then outstanding shares of common stock of the
Company ("Outstanding Company Common Stock") or (b) the combined voting power of
the then outstanding voting securities of the Company entitled to vote generally
in the election of directors ("Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not constitute a Change
of Control: (a) any acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion privilege unless the
security being so converted was itself acquired directly from the Company), (b)
any acquisition by the Company, (c) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (d) any acquisition by any corporation pursuant to
a reorganization, merger or consolidation, if, following such reorganization,
merger or consolidation, the conditions described herein of this Section 10 are
satisfied; or (ii) Individuals who, as of the date hereof, constitute the Board
of the Company (as of the date hereof, "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board; or (iii) Approval by the
shareholders of the Company of a reorganization, merger, binding share exchange
or consolidation, unless, following such reorganization, merger, binding share
exchange or consolidation (a) more than sixty percent (60%) of, respectively,
the then outstanding shares of common stock of the corporation resulting from
such reorganization, merger, binding share exchange or consolidation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger, binding share exchange or
consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger, binding share exchange or
consolidation, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (b) no Person (excluding the Company, any
employee benefit plan (or related trust) of the Company or such corporation
resulting from such reorganization, merger, binding share exchange or
consolidation and any Person beneficially owning, immediately prior to such
reorganization, merger, binding share exchange or consolidation, directly or
indirectly, twenty percent (20%) or more of the Outstanding Company Common Stock
or Outstanding Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, twenty percent (20%) or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger, binding share exchange or consolidation or the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (c) at least a
majority of the members of the board of directors of the corporation resulting
from such reorganization, merger, binding share exchange or consolidation were
members of the Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger, binding share exchange or
consolidation; or
(iv) Approval by the shareholders of the Company of (a) a
complete liquidation or dissolution of the Company or (b) the sale or other
disposition of all or substantially all of the assets of the Company, other than
to a corporation, with respect to which following such sale or other
disposition, (x) more than sixty percent (60%) of, respectively, the then
outstanding shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such sale
or other disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be, (y)
no Person (excluding the Company and any employee benefit plan (or related
trust) of the Company or such corporation and any Person beneficially owning,
immediately prior to such sale or other disposition, directly or indirectly,
twenty percent (20%) or more of the Outstanding Company Common Stock or
Outstanding Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, twenty percent (20%) or more of, respectively, the then
outstanding shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors and (z) at least a majority of the
members of the board of directors of such corporation were members of the
Incumbent Board at the time of the execution of the initial agreement or action
of the Board providing for such sale or other disposition of assets of the
Company.
Section 11. Administration; Amendment and Termination. (a) The Plan
shall be administered by the Board of the Directors or a committee of the Board
("Board"), which shall have full authority to construe and interpret the Plan,
to establish, amend and rescind rules and regulations relating to the Plan, and
to take all such actions and make all such determinations in connection with the
Plan as it may deem necessary or desirable. (b) The Board may from time to time
make such amendments to the Plan, including to preserve or come within any
exemption from liability under Section 16(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as it may deem proper and in the best
interest of the Company without further approval of the Company's stockholders,
provided that, to the extent required under Florida law or to qualify
transactions under the Plan for exemption under Rule 16b-3 promulgated under the
Exchange Act, no amendment to the Plan shall be adopted without further approval
of the Company's stockholders and, provided, further, that if and to the extent
required for the Plan to comply with Rule 16b-3 promulgated under the Exchange
Act, no amendment to the Plan shall be made more than once in any six (6) month
period that would change the amount, price or timing of the grants of Common
Stock hereunder other than to comport with changes in the Internal Revenue Code
of 1986, as amended, the Employee Retirement Income Security Act of 1974, as
amended, or the regulations thereunder. (c) The Board may terminate the Plan at
any time by a vote of a majority of the members thereof.
Section 12. Miscellaneous. The Company shall have the right to require,
prior to the issuance or delivery of any shares of Common Stock pursuant to the
Plan, that a Participant make arrangements satisfactory to the Board for the
withholding of any taxes required by law to be withheld with respect to the
issuance or delivery of such shares, including without limitation by the
withholding of shares that would otherwise be so issued or delivered, by
withholding from any other payment due to the Participant, or by a cash payment
to the Company by the Participant.
Section 13. Governing Law. The Plan and all actions taken hereunder
shall be governed by and construed in accordance with the laws of the State of
Florida.