1
EXHIBIT 10.34
China Resources Development, Inc., Amended and Restated
1995 Stock Option Plan, as amended on December 30, 1996
2
CHINA RESOURCES DEVELOPMENT, INC.
AMENDED AND RESTATED
1995 STOCK OPTION PLAN
1. Purpose.
The plan shall be known as The China Resources Development, Inc.,
Stock Option Plan (the "Plan"). The purpose of the Plan shall be to
promote the long-term growth and profitability of China Resources
Development, Inc. (the "Company"), and its subsidiaries by (i)
providing certain officers, key employees, directors, consultants, and
affiliates of the Company and its subsidiaries with incentives to
improve stockholder values and contribute to the success of the
Company and (ii) enabling the Company to attract, retain and reward
the best available persons for positions of substantial
responsibility. Grants of incentive or nonqualified stock options, or
any combination of the foregoing, may be made under the Plan.
2. Definitions.
(a) "Incentive Stock Option" means an option conforming to the
requirements of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
(b) "Nonqualified Stock Option" means any stock option
other than an Incentive Stock Option.
(c) "Subsidiary" and "subsidiaries" mean a corporation or
corporations of which outstanding shares representing 50% or
more of the combined voting power of such corporation or
corporations are owned directly or indirectly by the Company.
(d) "Disability" means a permanent and total disability as
defined in Section 72(m)(7) of the Code.
(e) "Retirement" means termination of one's employment with
the approval of the Committee.
(f) "Cause" means the occurrence of one of the following:
(i) Conviction for a felony or for any crime or
offense lesser than a felony involving the
property of the Company or a subsidiary.
(ii) Conduct that has caused demonstrable and serious
injury to the Company or a subsidiary, monetary or
otherwise, as evidenced by a final determination of
a court or governmental agency of competent
jurisdiction in effect after exhaustion or lapse of
all rights of appeal.
3
(iii) Gross dereliction of duty or other grave
misconduct, as determined by the Company.
(g) "Competition" is deemed to occur if a participant who
has terminated employment subsequently obtains a
position as a full-time or part-time employee, as a
member of the board of directors, or as a consultant or
advisor with or to, or acquires an ownership interest
in excess of five percent (5%) of, a corporation,
partnership, firm or other entity that engages in any
of the businesses of the Company or any subsidiary with
which the participant was involved in a management role
at any time during the last five years of his employ-
ment with the Company or any subsidiary.
(h) "Change in Control" shall mean an event that would be
required to be reported in response to Item 1 of Form 8-K or
any successor form thereto promulgated under the Securities
Exchange Act of 1934 ("Exchange Act") if the Company were
subject to such Act (or that is so required if and when the
Company is subject to such Act).
(i) "Fair Market Value" of a share of Common Stock of the
Company shall mean, with respect to the date in
question, the average of the closing bid and asked
prices as quoted by the National Association of
Securities Dealers through its OTC Bulletin Board or
its automated quotation system ("NASDAQ"); or, if the
Company's Common Stock is listed or admitted to
unlisted trading privileges on a national stock
exchange, either (x) the average of the highest and
lowest officially-quoted selling prices on such
exchange or (y) the closing sale price of such stock,
as selected by the Committee; or if the Company's
Common Stock is not quoted by the NASD or NASDAQ,
traded on such an exchange, or otherwise traded
publicly, the value determined, in good faith, by the
Committee.
3. Administration.
A. The Plan shall be administered by a the Board of Directors
or by a committee appointed by the Board of Directors consisting of
at least three of its members. No member of the Committee, while a
member, shall be eligible to participate in the Plan. Subject to the
provisions of the Plan, and subject to ratification of the grant by
the Board of Directors (if so required by applicable state law), the
Committee shall be authorized to (i) select persons to participate in
the Plan, (ii) determine the form and substance of grants made under
the Plan to each participant, and the conditions and restrictions, if
any, subject to which such grants will be made, (iii) interpret the
Plan and (iv) adopt, amend, or rescind such rules and regulations
for carrying out the Plan as it may deem appropriate. Decisions of
the
-2-
4
Committee on all matters relating to the Plan shall be in the
Committee's sole discretion and shall be conclusive and binding on all
parties, including the Company, its stockholders, and the participants
in the Plan, unless otherwise determined by the Board of Directors.
The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance
with applicable federal and state laws and rules and regulations
promulgated pursuant thereto. The Committee and shall keep full
records and accounts of its proceedings and transactions, and all such
transactions shall be reported to the Board of Directors. No member of
the Board of Directors or the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any
stock option granted under it.
B. The Committee may select one of its members as its
chairman, and shall hold meetings at such time and places as it may
determine. Acts by a majority of the Committee, or acts reduced to and
approved in writing by a majority of the members of the Committee,
shall be the valid acts of the Committee. All references in this Plan
to the Committee shall mean the Board of Directors if no Committee has
been appointed. From time to time the Board of Directors may increase
the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies however caused, or remove all
members of the Committee and thereafter administer the Plan.
C. Notwithstanding the provisions of paragraph 3.A., stock
options may be granted to members of the Board of Directors; however,
no stock option shall be granted to any person who is, at the time of
the proposed grant, a member of the Board of Directors unless such
grant has been approved by a majority vote of the other members of the
Board of Directors. All grants of stock options to members of the
Board shall in all other respects be made in accordance with the
provisions of this Plan applicable to other eligible persons. Member
of the Board of Directors who either (i) are eligible for stock
options pursuant to the Plan or (ii) have been granted stock options
may vote on any matters affecting the administration of the Plan or
the grant of any stock options pursuant to the Plan, except that no
such member shall act upon the granting to himself of stock options,
but any such member may be counted in determining the existence of a
quorum at any meeting of the Board of Directors during which such
action is taken with respect to the granting to him of stock options.
D. Notwithstanding any other provision of this paragraph 3,
in the event the Company registers any equity security pursuant to
Section 12 of the Securities Exchange Act
-3-
5
of 1934, as amended (the "Exchange Act"), any grants of stock options
to directors made at any time from the effective date of such
registration until six months after the termination of such
registration shall be made only by the Board of Directors; provided
however, that if a majority of the Board of Directors is eligible to
participate in the Plan or in any other stock option or other stock
plan of the Company or any of its affiliates, or has been so eligible
at any time within the preceding year, any grant of stock options to
directors must be made by, or in accordance with the recommendation
of, a committee consisting of three or more persons who may, but need
not be, directors or employees of the Company appointed by the Board
of Directors but having full authority to act in the matter, none of
whom is eligible to participate in this Plan or any other stock
option or other stock plan of the Company or any of its affiliates,
or has been eligible at any time within the preceding year. The
requirements imposed by the preceding sentence shall also apply with
respect to grants to officers who are not also directors. Once
appointed, the committee shall continue to serve until otherwise
directed by the Board of Directors.
4. Shares Available for the Plan.
Subject to adjustments as provided in Section 12, the number of shares
of Common Stock of the Company (hereinafter the "shares") which may be
issued pursuant to the Plan is that number of shares which would, in
the aggregate and if deemed outstanding, constitute 20% of the
Company's then-outstanding shares of Common Stock, as determined at
the time of granting stock options. Such shares may represent
authorized but unissued shares. If any grant under the Plan expires or
terminates unexercised, becomes unexercisable or is forfeited as to
any shares, such unpurchased or forfeited shares shall thereafter be
available for further grants under the Plan.
5. Participation.
Participation in the Plan shall be limited to those officers,
directors, key employees, consultants and affiliates of the Company
and its subsidiaries selected by the Committee. Nothing in the Plan or
in any grant there-under shall confer any right on an employee to
continue in the employ of the Company or shall interfere in any way
with the right of the Company to terminate an employee at any time.
Incentive or nonqualified stock options, or any combination
thereof, may be granted to such persons and for such number of shares
as the Committee shall determine (such individuals to whom grants are
made being herein called "optionees"). A grant of any type made
hereunder in any one year to an eligible employee shall neither
guarantee nor
-4-
6
preclude a further grant of that or any other type to such employee
in that year or subsequent years.
The maximum number of shares with respect to which incentive
or nonqualified options, or any combination thereof, may be granted to
any single individual in any one calendar year shall not exceed
500,000 shares.
6. Incentive and Nonqualified Options.
The Committee may from time to time grant to eligible participants
Incentive Stock Options, Nonqualified Stock Options, or any
combination thereof. The options granted shall take such form as the
Committee shall determine, subject to the following terms and
conditions.
(a) Price. The price per share deliverable upon the
exercise of each Incentive Stock Option shall not be
less than 100% of the Fair Market Value of the shares
on the date the option is granted, as the Committee
determines. In the case of the grant of any Incentive
Stock Option to an employee who, at the time of the
grant, owns more than 10% of the total combined voting
power of all classes of stock of the Company or any of
its subsidiaries, such price per share, if required by
the Code at the time of grant, shall not be less than
110% of the Fair Market Value of the shares on the date
the option is granted.
The price per share deliverable upon the exercise of each
Nonqualified Stock Option shall not be less than the higher
of (i) the net tangible assets per share of the Company as of
the end of the fiscal year immediately preceding the date of
such grant, or (ii) 80% of the Fair Market Value of the
shares on the date the option is granted, as the Committee
determines.
(b) Cash Exercise. Options may be exercised in whole or in
part upon payment of the exercise price of the shares
to be acquired. Payment shall be made in cash or, in
the discretion of the Committee, in shares previously
acquired by the participant or a combination of cash
and shares of Common Stock. The Fair Market Value of
shares of Common Stock tendered on exercise of options
shall be determined on the date of exercise.
(c) Cashless Exercise. Options may be exercised in whole
or in part upon delivery to the Secretary of the
Company of an irrevocable written notice of exercise.
The date on which such notice is received by the
Secretary shall be the date of exercise of the option,
provided that within five business days of the delivery
of such notice the funds to pay for exercise of the
option are delivered to the Company by a broker acting
on behalf of the optionee
-5-
7
either in connection with the sale of the shares underlying
the option or in connection with the making of a margin
loan to the optionee to enable payment of the exercise
price of the option. In connection with the foregoing, the
Company will provide a copy of the notice of exercise of
the option to the aforesaid broker upon receipt by the
Secretary of such notice and will deliver to such broker,
within five business days of the delivery of such notice to
the Company, a certificate or certificates (as requested by
the broker) representing the number of shares underlying
the option that have been sold by such broker for the
optionee.
(d) Terms of Options. The term during which each option
may be exercised shall be determined by the Committee,
but in no event shall an Incentive Stock Option be
exercisable in whole or in part in less than one year
or, in the case of a Nonqualified Stock Option, more
than ten years and one day from the date it is granted,
or, in the case of an Incentive Stock Option, ten years
from the date it is granted; and, in the case of the
grant of an Incentive Stock Option to an employee who
at the time of the grant owns more than 10% of the
total combined voting power of all classes of stock of
the Company or any of its subsidiaries, in no event
shall such option be exercisable, if required by the
Code at the time of grant, more than five years from
the date of the grant. All rights to purchase shares
pursuant to an option shall, unless sooner terminated,
expire at the date designated by the Committee. The
Committee shall determine the date on which each option
shall become exercisable and may provide that an option
shall become exercisable in installments. The shares
constituting each installment may be purchased in whole
or in part at any time after such installment becomes
exercisable, subject to such minimum exercise
requirement as is designated by the Committee. The
Committee may accelerate the time at which any option
may be exercised in whole or in part. Unless otherwise
provided herein, an optionee may exercise an option
only if he or she is, and has continuously been since
the date the option was granted, an employee of the
Company or a subsidiary. Prior to the exercise of the
option and delivery of the stock represented thereby,
the optionee shall have no rights to any dividends or be
entitled to any voting rights on any stock represented by
outstanding options.
(e) Limitations on Grants. If required by the Code at the time of
grant of an Incentive Stock Option, the aggregate Fair Market
Value (determined as of the grant date) of shares for which
such option is exercisable for the first time during any
calendar year may not exceed US$100,000.
-6-
8
(f) Termination of Employment; Change in Control. If a
participant ceases to be an officer, employee, or
director of the Company or any subsidiary due to death
or Disability, each of the participant's options that
was granted at least one year prior to death or
Disability shall become fully vested and exercisable
and shall remain so for a period of one year from the
date of termination of employment, but in no event
after its expiration date; and all options granted to
such participant less than one year prior to death or
Disability shall be forfeited.
If a participant ceases to be an officer, employee
or director of the Company or any subsidiary upon the
occurrence of his or her Retirement, each of his or her
options granted at least one year prior to Retirement shall
become fully vested and exercisable and shall remain so for a
period of five years from the date of Retirement, but in no
event after its expiration date, provided that the
participant does not engage in Competition during that
five-year period unless he receives written consent to do so
from the Board. Notwithstanding the foregoing, Incentive
Stock Options not exercised by such participant within 90
days after Retirement will cease to qualify as Incentive
Stock Options and will be treated as Nonqualified Stock
Options under the Plan if required to be so treated under the
Code. All options granted to such participant less than one
year prior to Retirement shall be forfeited.
If a participant ceases to be an officer or employee
of the Company or any subsidiary due to Cause, all of his or
her options shall be forfeited.
If a participant ceases to be an officer or employee
of the Company or any subsidiary for any reason other than
death, Disability, Retirement or Cause, each of his or her
options that was exercisable on the date of termination shall
remain exercisable for, and shall otherwise terminate at the
end of, a period of 90 days after the date of termination of
employment, but in no event after its expiration date;
provided that the participant does not engage in Competition
during such 90-day period unless he or she receives written
consent to do so from the Board. All of the participant's
options that were not exercisable on the date of such
termination shall be forfeited.
Notwithstanding anything to the contrary herein, if
a participant ceases to be an officer, employee or director
of the Company or any subsidiary, for any reason other than
Cause, the Committee at its sole discretion may accelerate
the vesting of any option so that it will
-7-
9
become fully vested and exercisable as of the date of such
participant's termination of employment. If there is a
Change in Control of the Company, there will be an
automatic acceleration of the vesting of any outstanding
option so that it will become fully vested and exercisable
as of the date of the Change in Control.
7. Withholding of Taxes.
The Company may require, as a condition to any grant under the Plan or
to the delivery of certificates for shares issued hereunder, that the
grantee pay to the Company, in cash, any federal, state or local taxes
of any kind required by law to be withheld with respect to any grant
or any delivery of shares. The Committee, in its sole discretion, may
permit participants to pay such taxes through the withholding of
shares otherwise deliverable to such participant in connection with
such grant or the delivery to the Company of shares otherwise acquired
by the participant. The Fair Market Value of shares of Common Stock
withheld by the Company or tendered to the Company for the
satisfaction of tax withholding obligations under this section shall
be determined on the date such shares are withheld or tendered. The
Company, to the extent permitted or required by law, shall have the
right to deduct from any payment of any kind (including salary or
bonus) otherwise due to a grantee any federal, state or local taxes of
any kind required by law to be withheld with respect to any grant or
to the delivery of shares under the Plan, or to retain or sell without
notice a sufficient number of the shares to be issued to such grantee
to cover any such taxes, provided that the Company shall not sell any
such shares if such sale would be considered a sale by such grantee
for purposes of Section 16 of the Exchange Act.
8. Written Agreement.
Each employee to whom a grant is made under the Plan shall enter into
a written agreement with the Company that shall
contain such provisions, consistent with the provisions of
the Plan, as may be established by the Committee.
9. Transferability.
No option granted under the Plan shall be transferable by an employee
otherwise than by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the
Code or Title I of the Employee Retirement Income Security Act, or the
rules thereunder. An option may be exercised only by the optionee or
his guardian or legal representative; provided that Incentive Stock
Options may be exercised by such guardian or legal representative only
if permitted by the Code and any regulations promulgated thereunder.
-8-
10
10. Listing and Registration.
If the Committee determines that the listing, registration, or
qualification upon any securities exchange or under any law of shares
subject to any option is necessary or desirable as a condition of, or
in connection with, the granting of same or the issue or purchase of
shares thereunder, no such option may be exercised in whole or in part
or no shares issued unless such listing, registration or qualification
is effected free of any conditions not acceptable to the Committee.
11. Transfer of Employee.
Transfer of an employee from the Company to a subsidiary, from a
subsidiary to the Company, and from one subsidiary to another shall
not be considered a termination of employment. Nor shall it be
considered a termination of employment if an employee is placed on
military or sick leave or such other leave of absence which is
considered as continuing intact the employment relationship; in such a
case, the employment relationship shall be continued until the date
when an employee's right to reemployment shall no longer be guaranteed
either by law or by contract.
12. Adjustments.
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, distribution
of assets, or any other change in the corporate structure or shares of
the Company, the Committee shall make such adjustments as it deems
appropriate in the number and kind of shares reserved for issuance
under the Plan, in the number and kind of shares covered by grants
made under the Plan, and in the exercise price of outstanding
options. In the event of any merger, consolidation or other
reorganization in which the Company is not the surviving or
continuing corporation, all options that were granted hereunder and
that are outstanding on the date of such event shall be assumed by
the surviving or continuing corporation.
13. Termination and Modification of the Plan.
The Board of Directors, without further approval of the shareholders,
may modify or terminate the Plan and from time to time may suspend,
and if suspended, may reinstate any or all of the provisions of the
Plan, except that (i) no modification, suspension or termination of
the Plan may, without the consent of the grantee affected, alter or
impair any grant previously made under the Plan, and (ii) no
modification shall become effective without prior approval of the
stockholders of the Company that would (a) increase (except as
provided in Section 12) the maximum number of shares reserved for
issuance under the Plan; (b) change the
-9-
11
classes of employees eligible to be participants; or (iii) materially
increase the benefits accruing to participants in the Plan.
With the consent of the grantee affected thereby, the
Committee may amend or modify the grant of any outstanding option in
any manner to the extent that the Committee would have had the
authority to make such grant as so modified or amended, including
without limitation to change the date or dates as of which an option
becomes exercisable. The Committee shall be authorized to make minor
or administrative modifications to the Plan as well as modifications
to the Plan that may be dictated by requirements of federal or state
laws applicable to the Company or that may be authorized or made
desirable by such laws.
14. Commencement Date; Termination Date.
The date of commencement of the Plan shall be March 31, 1995. Unless
previously terminated, the Plan shall terminate at the close of
business on March 31, 2005.
15. Cash Awards.
The Committee may authorize cash awards to any participant receiving
shares under the Plan in order to assist such participant in meeting
his or her tax obligations with respect to such shares.
16. Provisions Applicable Solely to Insiders.
The following provisions shall apply only to persons who are subject
to Section 16 of the Securities Exchange Act of 1934 with respect to
securities of the Company ("Insiders"):
(a) No Insider shall be permitted to transfer any
securities of the Company acquired by him, except to
the extent permitted by 17 C.F.R.ss.240.16a-2(d)(1),
upon the exercise of any Incentive Stock Option or
Nonqualified Stock Option, until at least six months
and one day after the later of (i) the day on which
such security is granted to the participant or (ii) the
day on which the exercise or conversion price of such
security is fixed.
(b) An Insider may elect to have shares withheld from a
grant made under the Plan or tender shares to the
Company in order to satisfy the tax withholding
consequences of a grant made under the Plan, only
during the period beginning on the third business day
following the date on which the Company releases the
financial information specified in 17 C.F.R.ss.240.16b-
3(e)(1)(ii) and ending on the twelfth business day
following such date.
-10-
12
(c) Notwithstanding Section 19 (b)(ii) hereof, an Insider may
elect to have shares withheld from a grant made under the
Plan in order to satisfy tax withholding consequences thereof
by providing the Company with a written election to so
withhold at least six months in advance of the withholding of
shares otherwise issuable upon exercise of an option.
The China Resources Development, Inc., 1995 Stock Option Plan was
amended and restated pursuant to (i) a resolution of the Board of Directors of
the corporation unanimously adopted at a special meeting of the Board held on
November 29, 1996, and (ii) a vote by the shareholders of the corporation
holding at least a majority of each class of stock outstanding and entitled to
vote, at the annual meeting of shareholders held on December 30, 1996.
-11-