Ex. 10.7
 
PUDA COAL, INC.
 
2008 EQUITY INCENTIVE PLAN
 
STOCK OPTION AGREEMENT

 
Name and Address of Awardee:
(the “Awardee”)
   
Board Approval Date:
 
   
Grant Date:
(the “Grant Date”)
   
Exercise Price Per Share:
the (“Exercise Price”)
   
No. of Underlying Shares:
shares of Common Stock (the “Shares”)
   
Type of Option:
Shares Incentive Stock Option
     
Shares Nonstatutory Stock Option
   
Expiration Date:
(the “Expiration Date”)
   
Vesting Commencement Date:
(the “Vesting Commencement Date”)
   
Transferability:
This Option may not be transferred.

 
1.           Grant of Option.  Puda Coal, Inc., a Florida corporation (the
“Company”), hereby grants to Awardee an option (this “Option”) to purchase the
Shares at the above Exercise Price per Share subject to the terms, definitions
and provisions of the Puda Coal, Inc. 2008 Equity Incentive Plan (the “Plan”),
which is incorporated into this Stock Option Agreement (this “Agreement”) by
reference.  Unless otherwise defined in this Agreement, the terms used in this
Agreement shall have the meanings defined in the Plan.
 
2.           Designation of Option.  This Option is intended to be an Incentive
Stock Option as defined in Section 422 of the Code only to the extent so
designated above, and to the extent it is not so designated or to the extent
this Option does not qualify as an Incentive Stock Option, it is intended to be
a Nonstatutory Stock Option.
 
Notwithstanding the above, if designated as an “Incentive Stock Option,” this
Option shall be treated in accordance with Section 9(b) of the Plan.
 
3.          Vesting/Exercise Schedule. So long as Awardee’s employment or
consulting relationship with the Company continues, this Option shall vest and
become exercisable with respect to the Shares in accordance with the following
schedule:

 

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___________ of the Shares subject to this Option shall vest and become
exercisable on the ________ month anniversary of the Vesting Commencement Date
and _______ of the total number of Underlying Shares subject to this Option
shall vest and become exercisable each month thereafter.

4.           Exercise of Option.  This Option shall be exercisable prior to the
Expiration Date in accordance with the Vesting/Exercise Schedule set forth in
Section 3 above and Section 10 of the Plan by delivering an Option exercise
notice in the form attached hereto as Exhibit A indicating his or her election
to purchase some or all of the Shares with respect to which this Option is
exercisable at the time of such notice and further agrees that:
 
(a)           As a condition to the exercise of this Option, Awardee agrees to
make arrangements as the Administrator may require for tax withholding as set
forth in Section 13 of the Plan; and
 
(b)           The Company is not obligated, and will have no liability for
failure, to issue or deliver any Shares upon exercise of this Option unless such
issuance or delivery would comply with the Applicable Laws, with such compliance
determined by the Company in consultation with its legal counsel. This Option
may not be exercised until such time as the Plan has been approved by the
stockholders of the Company, or if the issuance of such Shares upon such
exercise or the method of payment of consideration for such shares would
constitute a violation of any applicable federal or state securities or other
law or regulation, including any rule under Part 221 of Title 12 of the Code of
Federal Regulations as promulgated by the Federal Reserve Board.  As a condition
to the exercise of this Option, the Company may require Awardee to make any
representation and warranty to the Company as may be required by the Applicable
Laws.  Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to Awardee on the date on which this Option is exercised
with respect to such Shares.
 
5.           Method of Payment.  Payment of the Exercise Price shall be by any
of the following, or a combination of the following, at the election of Awardee:
 
(a)           cash, check or wire transfer (denominated in U.S. Dollars); or
 
(b)           other as set forth in Section 8 of the Plan.
 
6.           Termination of Relationship.  Following the date of termination of
Awardee’s employment or service for any reason (the “Termination Date”), Awardee
may exercise this Option only as set forth in Section 10 of the Plan.
 
7.           Non-Transferability of Option.  This Option may not be transferred
in any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of Awardee only by such Awardee.  The
terms of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of Awardee.
 
8.           Tax Consequences.  Below is a brief summary as of the date of this
Option of certain of the U.S. federal tax consequences of exercise of this
Option and disposition of the Shares under the laws in effect as of the Grant
Date, which may or may not apply to you depending on your tax status.  THIS
SUMMARY IS INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE.  AWARDEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.

 
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(a)           Incentive Stock Option.
 
(i)           Tax Treatment upon Exercise and Sale of Shares.  If this Option
qualifies as an Incentive Stock Option, there will be no regular federal income
tax liability upon the exercise of this Option, although the excess, if any, of
the fair market value of the Shares on the date of exercise over the Exercise
Price will be treated as an adjustment to the alternative minimum tax for
federal tax purposes and may subject Awardee to the alternative minimum tax in
the year of exercise.  If Shares issued upon exercise of an Incentive Stock
Option are held for at least one year after exercise and are disposed of at
least two years after this Option grant date, any gain realized on disposition
of the Shares will also be treated as long-term capital gain for federal income
tax purposes.  If Shares issued upon exercise of an Incentive Stock Option are
disposed of within such one-year period or within two years after this Option
grant date, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
difference between the Exercise Price and the lesser of (i) the fair market
value of the Shares on the date of exercise, or (ii) the sale price of the
Shares.
 
(ii)           Notice of Disqualifying Dispositions.  With respect to any Shares
issued upon exercise of an Incentive Stock Option, if Awardee sells or otherwise
disposes of such Shares on or before the later of (i) the date two years after
the Option grant date, or (ii) the date one year after the date of exercise,
Awardee shall immediately notify the Company in writing of such
disposition.  Awardee acknowledges and agrees that he or she may be subject to
income tax withholding by the Company on the compensation income recognized by
Awardee from the early disposition by payment in cash or out of the current
earnings paid to Awardee.
 
(b)           Nonstatutory Stock Option.  If this Option does not qualify as an
Incentive Stock Option, there may be a regular federal (and state) income tax
liability upon the exercise of this Option. Awardee will be treated as having
received compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the fair market value of the Shares on the date of exercise
over the Exercise Price.  If Awardee is an Employee, the Company will be
required to withhold from Awardee’s compensation or collect from Awardee and pay
to the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.  If Shares issued upon exercise of
a Nonstatutory Stock Option are held for at least one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes.
 
9.           Effect of Agreement.  Awardee acknowledges receipt of a copy of the
Plan and represents that he or she is familiar with the terms and provisions
thereof (and has had an opportunity to consult counsel regarding the Option
terms), and hereby accepts this Option and agrees to be bound by its contractual
terms as set forth herein and in the Plan.  Awardee hereby agrees to accept as
binding, conclusive and final all decisions and interpretations of the
Administrator regarding any questions relating to this Option.  In the event of
a conflict between the terms and provisions of the Plan and the terms and
provisions of this Agreement, the Plan terms and provisions shall prevail.  This
Agreement, including the Plan, constitutes the entire agreement between Awardee
and the Company on the subject matter hereof and supersedes all proposals,
written or oral, and all other communications between the parties relating to
such subject matter.
 
By your signature and the signature of the Company’s representative below, you
and the Company agree that this Option is granted under and governed by the
terms and conditions of the Puda Coal, Inc. 2008 Equity Incentive Plan, which is
attached and made a part of this Agreement.

 
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In addition, you agree and acknowledge that your rights to any Shares underlying
this Option will be earned only as you provide services to the Company over
time, that the grant of this Option is not as consideration for services you
rendered to the Company prior to your Vesting Commencement Date, and that
nothing in this Agreement or Plan confers upon you any right to continue your
employment or consulting relationship with the Company for any period of time,
nor does it interfere in any way with your right or the Company’s right to
terminate that relationship at any time, for any reason, with or without cause.
 
Capitalized terms used but not defined in this Agreement have the meanings
designated to them in the Plan.
 
AWARDEE:
 
PUDA COAL, INC.
         
By:
 
 
 
Name:
     
Title:
       
Print Name
   

 
 
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EXHIBIT A

NOTICE OF EXERCISE

To:
Puda Coal, Inc.

Attn:
Plan Administrator

Subject:
Notice of Intention to Exercise Stock Option

This is official notice that the undersigned (“Awardee”) intends to exercise
Awardee’s Option to purchase __________ shares of Common Stock of Puda Coal,
Inc. under and pursuant to the Puda Coal, Inc. 2008 Equity Incentive Plan and
the Stock Option Agreement dated ___________, as follows:
 

 
Grant Number:
             
Date of Purchase:
             
Number of Shares:
             
Purchase Price:
             
Method of Payment
     
of Purchase Price:
   

 

 
Social Security No.:
 

 
The shares should be issued as follows:
 

 
Name:
             
Address:
                                             
Signed:
             
Date:
   

 
 

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