Document:

Unassociated Document

    Exhibit
10.1

     

     

    Lizhan
Environmental Corporation

    2010
Stock Option Plan

     

    ARTICLE
I

    General

     

    1.1           Purpose

     

    The
Lizhan Environmental Corporation 2010 Stock Option Plan (the “Plan”) is designed
to provide certain key persons, on whose initiative and efforts the successful
conduct of the business of Lizhan Environmental Corporation (the “Company”)
depends, and who are responsible for the management, growth and protection of
the business of the Company, with incentives to: (a) enter into and remain in
the service of the Company, a Company subsidiary or a Company joint venture, (b)
acquire a proprietary interest in the success of the Company, (c) maximize their
performance and (d) enhance the long-term performance of the Company (whether
directly or indirectly through enhancing the long-term performance of a Company
subsidiary or a Company joint venture).

     

    1.2           Administration

     

    (a)           Administration by Committee;
Constitution of Committee.  The Plan shall be administered by
the Compensation Committee of the Board of Directors of the Company (the
“Board”) or such other committee or subcommittee as the Board may designate (the
“Committee”).  The members of the Committee shall be appointed by, and
serve at the pleasure of, the Board.  If the Committee does not exist,
or for any other reason determined by the Board, the Board may take any action
under the Plan that would otherwise be the responsibility of the
Committee.

     

    (b)           Committee’s
Authority.  The Committee shall have the authority to (i)
exercise all of the powers granted to it under the Plan, (ii) construe,
interpret and implement the Plan and any option certificates issued under the
Plan, (iii) prescribe, amend and rescind rules and regulations relating to the
Plan, including rules governing its own operations, (iv) make all determinations
necessary or advisable in administering the Plan, (v) correct any defect,
supply any omission and reconcile any inconsistency in the Plan, and (vi) amend
the Plan to reflect changes in applicable law.

     

    (c)           Committee Action;
Delegation.  Actions of the Committee shall be taken by the
vote of a majority of its members.  Except as otherwise required by
applicable law, any action may be taken by a written instrument signed by a
majority of the Committee members, and action so taken shall be fully as
effective as if it had been taken by a vote at a
meeting.  Notwithstanding the foregoing or any other provision of the
Plan, the Committee (or the Board acting instead of the Committee), may delegate
to one or more officers of the Company the authority to designate the
individuals (other than such officer(s)), among those eligible to receive
options pursuant to the terms of the Plan, who will receive options under the
Plan and the size of each such grant, to the fullest extent permitted by
applicable law.

     

    (d)           Determinations
Final.  The determination of the Committee on all matters
relating to the Plan or any option under the Plan shall be final, binding and
conclusive.

     

    (e)           Limit on Committee Members’
Liability.  No member of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
option thereunder.

     

    1.3           Persons Eligible for
Options

     

    The
persons eligible to receive options under the Plan are those officers, directors
(whether or not they are employed by the Company), and executive, managerial,
professional or administrative employees of, and consultants to, the Company,
its parent, subsidiaries and joint ventures (collectively, “key persons”) as the
Committee in its sole discretion shall select.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.4           Options Under
Plan

     

    Stock
options granted under the Plan (“options”) shall not be incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”)

     

    1.5           Shares Available
for Options; Adjustments to Options

     

    (a)           Aggregate Number Available;
Certificate Legends.  Subject to adjustment as provided under
subparagraph (c)(i) below, the total number of shares of common stock of the
Company (“Common Stock”) with respect to which options may be granted pursuant
to the Plan shall not exceed the sum of 3,000,000 shares.  Shares
issued pursuant to the Plan may be authorized but unissued Common Stock or
Common Stock acquired by the Company for the purposes of the
Plan.  The Committee may direct that any stock certificate evidencing
shares issued pursuant to the Plan shall bear a legend setting forth such
restrictions on transferability as may apply to such shares.

     

    (b)           Certain Shares to Become
Available Again.  Any shares that are subject to an option
under the Plan and that remain unissued upon the cancellation or termination of
such option for any reason whatsoever shall again become available for options
under the Plan.

     

    (c)           Adjustments to Available
Shares and Existing Options Upon Changes in Common Stock or Certain Other
Events.  Upon certain changes in Common Stock or other
corporate events, the number of shares of Common Stock available for issuance
with respect to options that may be granted under the Plan, and that are the
subject of existing options, shall be adjusted or shall be adjustable, as
follows:

     

    (i)           Shares Available for
Grants.  In the event of any change in the number of shares of
Common Stock outstanding by reason of any stock dividend or split, reverse stock
split, recapitalization, merger, consolidation, combination or exchange of
shares or similar corporate change, the maximum number of shares of Common Stock
with respect to which the Committee may grant options under paragraph (a) above
shall be appropriately adjusted by the Committee.  In the event of any
change in the number of shares of Common Stock outstanding by reason of any
other event or transaction, the Committee may, but need not, adjust the maximum
number and class of shares of Common Stock with respect to which the Committee
may grant options under paragraph (a) above, as the Committee may deem
appropriate.

     

    (ii)           Outstanding Options --
Increase or Decrease in Issued Shares Without
Consideration.  Subject to any required action by the
stockholders of the Company, in the event of any increase or decrease in the
number of issued shares of Common Stock resulting from a subdivision or
consolidation of shares of Common Stock or the payment of a stock dividend (but
only on the shares of Common Stock), or any other increase or decrease in the
number of such shares effected without receipt of consideration by the Company,
the Committee shall proportionally adjust the number of shares of Common Stock
subject to each outstanding option and the exercise price-per-share of Common
Stock of each such option to the extent necessary to prevent the enlargement or
dilution of rights with respect to such options.

     

    (iii)           Outstanding Options –
Certain Mergers.  Subject to any required action by the
stockholders of the Company, in the event that the Company shall be the
surviving corporation in any merger or consolidation (except a merger or
consolidation as a result of which the holders of shares of Common Stock receive
securities of another corporation), each option outstanding on the date of such
merger or consolidation shall pertain to and apply to the securities which a
holder of the number of shares of Common Stock subject to such option would have
received in such merger or consolidation.

     

    (iv)           Outstanding Options --
Certain Other Transactions.  In the event of (1) a dissolution
or liquidation of the Company, (2) a merger or consolidation involving the
Company in which the Company is not the surviving corporation or (3) a merger or
consolidation involving the Company in which the Company is the surviving
corporation but the holders of shares of Common Stock receive securities of
another corporation and/or other property, including cash, the Committee shall,
in its absolute discretion, either:

     

    
      
        
        

      

      
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    (A)           cancel,
effective immediately prior to the occurrence of such event, each option
outstanding immediately prior to such event (whether or not then exercisable),
and, in full consideration of such cancellation, pay to the applicable grantee
an amount in cash, for each share of Common Stock subject to such option, equal
to the excess of (x) the value, as determined by the Committee in its absolute
discretion, of the property (including cash) received by the holder of a share
of Common Stock as a result of such event over (y) the exercise price of such
option; or

     

    (B)           provide
for the exchange of each option outstanding immediately prior to such event
(whether or not then exercisable) for an option on some or all of the property
which a holder of the number of shares of Common Stock subject to such option
would have received and, incident thereto, make an equitable adjustment as
determined by the Committee in its absolute discretion in the exercise price of
the option, or the number of shares or amount of property subject to the option
or, if appropriate, provide for a cash payment to the applicable grantee in
partial consideration for the exchange of the option.

     

    (v)           Outstanding Options -- Other
Changes.  In the event of any change in the capitalization of
the Company or a corporate change other than those specifically referred to in
subparagraphs (iii), (iv) or (v) above, the Committee may, in its absolute
discretion, make such adjustments in the number and class of shares subject to
options outstanding on the date on which such change occurs and in the per-share
exercise price of each such option as the Committee may consider appropriate to
prevent dilution or enlargement of rights.  In addition, if and to the
extent the Committee determines it is appropriate, the Committee may elect to
cancel each option outstanding immediately prior to such event (whether or not
then exercisable), and, in full consideration of such cancellation, pay to the
applicable grantee an amount in cash, for each share of Common Stock subject to
such option equal to the excess of (x) the Fair Market Value of Common Stock on
the date of such cancellation over (y) the exercise price of such
option.

     

    (vi)           No Other
Rights.  Except as expressly provided in the Plan, no grantee
shall have any rights by reason of any subdivision or consolidation of shares of
stock of any class, the payment of any dividend, any increase or decrease in the
number of shares of stock of any class or any dissolution, liquidation, merger
or consolidation of the Company or any other corporation.  Except as
expressly provided in the Plan, no issuance by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Common Stock subject to an option or the exercise price of
any option.

     

    1.6           Definitions of Certain
Terms

     

    (a)           The
“Fair Market Value” of a share of Common Stock on any day shall be determined by
the Committee.  In no event shall the Fair Market Value of any share
of Common Stock be less than its par value.

     

    (b)           A
grantee shall be deemed to have “terminated employment” on (i) the date the
grantee ceases to be employed by, or to provide consulting services for, the
Company, any Company parent, subsidiary or joint venture, or any corporation (or
any of its subsidiaries) which assumes the grantee’s option in a transaction to
which section 424(a) of the Code applies; or (ii) the date the grantee ceases to
be a Board member, provided, however, that in the case of a grantee (x) who is,
at the time of reference, both an employee or consultant and a Board member, or
(y) who ceases to be engaged as an employee, consultant or Board member and
immediately is engaged in another of such relationships with the Company, any
Company parent, subsidiary or joint venture, the grantee shall be deemed to have
a “termination of employment” upon the later of the dates determined pursuant to
clauses (i) and (ii) above.  For purposes of clause (i) above, a
grantee who continues his or her employment or consulting relationship with: (A)
a Company subsidiary subsequent to its sale by the Company, or (B) a Company
joint venture subsequent to the Company’s sale of its interests in such joint
venture, shall have a termination of employment upon the date of such
sale.  The Committee may in its discretion determine whether any leave
of absence constitutes a termination of employment for purposes of the Plan and
the impact, if any, of any such leave of absence on options theretofore made
under the Plan.

     

    
      
        
        

      

      
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    (c)           The
term “employment” shall be deemed to mean an employee’s employment with, or a
consultant’s provision of services to, the Company, any Company parent,
subsidiary or joint venture and each Board member’s service as a Board
member.

     

    (d)           In
connection with a termination of employment by reason of a dismissal for
“cause”:

     

    (i)           The
term “cause” shall mean:

     

    (A)           to
the extent that there is an employment, severance or other agreement governing
the relationship between the grantee and the Company, a Company parent,
subsidiary or joint venture, which agreement contains a definition of “cause,”
cause shall consist of those acts or omissions that would constitute “cause”
under such agreement; and

     

    (B)           to
the extent that there is no such agreement as provided for in subsection
(d)(i)(A) above, the grantee’s termination of employment by the Company or an
affiliate on account of any one or more of the following:

     

    (1)           grantee’s
willful and intentional repeated failure or refusal, continuing after notice
that specifically identifies the breach(es) complained of, to perform
substantially his or her material duties, responsibilities and obligations
(other than a failure resulting from grantee’s incapacity due to physical or
mental illness or other reasons beyond the control of grantee), and which
failure or refusal results in demonstrable direct and material injury to the
Company;

     

    (2)           any
willful and intentional act or failure to act involving fraud,
misrepresentation, theft, embezzlement, dishonesty or moral turpitude
(collectively, “Fraud”) which results in demonstrable direct and material injury
to the Company; and

     

    (3)           any
unauthorized use or disclosure by the grantee of confidential information or
trade secrets of the Company (or any affiliated entity);

     

    (4)           any
intentional wrongdoing by such person whether by omission or commission, which
materially adversely affects the business or affairs of the Company (or any
affiliated entity); and

     

    (5)           conviction
of (or a plea of nolo contendere to) an offense which is a felony in the
jurisdiction involved or which is a misdemeanor in the jurisdiction involved but
which involves Fraud.

     

    (ii)           For
purposes of determining whether cause exists:

     

    (A)           to
the extent that there is an employment, severance or other agreement governing
the relationship between the grantee and the Company, a Company parent,
subsidiary or joint venture, which agreement contains a definition of “cause”
and provides a procedure for the determination of whether cause exists, the
determination of whether a grantee’s employment is (or is deemed to have been)
terminated for cause for purposes of the Plan or any option hereunder shall be
made in accordance with such agreement; and

     

    
      
        
        

      

      
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    (B)           to
the extent that there is no such agreement as provided for in subsection
(f)(ii)(A) above:

     

    (1)           the
determination of whether a grantee’s employment is (or is deemed to have been)
terminated for cause for purposes of the Plan or any option hereunder shall be
made by the Committee in its discretion;

     

    (2)           any
rights the Company may have hereunder in respect of the events giving rise to
cause shall be in addition to the rights the Company may have under any other
agreement with a grantee or at law or in equity;

     

    (3)           if,
subsequent to a grantee’s voluntary termination of employment or involuntary
termination of employment without cause, it is discovered that the grantee’s
employment could have been terminated for cause, the Committee may deem such
grantee’s employment to have been terminated for cause; and

     

    (4)           a
grantee’s termination of employment for cause shall be effective as of the date
of the occurrence of the event giving rise to cause, regardless of when the
determination of cause is made.

     

    ARTICLE
II

    Options
Under the Plan

     

    2.1           Certificates Evidencing
Options

     

    Each option granted under the Plan
shall be evidenced by a written certificate (“option certificate”) which shall
contain such provisions as the Committee may in its sole discretion deem
necessary or desirable.  By accepting an option pursuant to the Plan,
a grantee thereby agrees that the option shall be subject to all of the terms
and provisions of the Plan and the applicable option certificate.

     

    2.2           Terms of Stock
Options

     

    (a)           Stock Option
Grants.  The Committee may grant options to purchase shares of
Common Stock from the Company, to such key persons, and in such amounts and
subject to such vesting and forfeiture provisions and other terms and
conditions, as the Committee shall determine in its sole discretion, subject to
the provisions of the Plan.

     

    (b)           Option Exercise
Price.  Each option certificate shall set forth the amount (the
“exercise price”) payable by the grantee to the Company upon exercise of the
option evidenced thereby.  The exercise price per share shall be
determined by the Committee in its sole discretion; provided, however, that in
no event shall the exercise price be less than the par value of a share of
Common Stock.

     

    (c)           Exercise
Period.  Each option certificate shall set forth the periods
during which the option evidenced thereby shall be exercisable, whether in whole
or in part.  Such periods shall be determined by the Committee in its
sole discretion, subject to the following:

     

    (i)           Ten-Year
Limit.  No stock option shall be exercisable more than 10 years
after the date of grant.

     

    
      
        
        

      

      
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    (ii)           Beginning of Exercise
Period.  Unless the applicable option certificate otherwise
provides, an option shall become exercisable with respect to a number of whole
shares as close as possible to one-quarter (1⁄4) of the shares subject to such
option on each of the first four anniversaries of the date of
grant.

     

    (iii)           End of Exercise
Period.  Unless the applicable option certificate otherwise
provides, once an installment becomes exercisable, it shall remain exercisable
until the earlier of (A) the tenth anniversary of the date of grant of the
option or (B) the expiration, cancellation or termination of the
option.

     

    (iv)           Timing and Extent of
Exercise.  Unless the applicable option certificate otherwise
provides, an option may be exercised from time to time as to all or part of the
shares as to which such option is then exercisable.

     

    (v)           Termination of Employment --
Generally.  Except as otherwise provided below or in the
applicable option certificate, a grantee who terminates employment may exercise
any outstanding option on the following terms and conditions: (A) exercise may
be made only to the extent that the grantee was entitled to exercise the option
on the termination of employment date; and (B) exercise must occur within three
months after termination of employment but in no event after the original
expiration date of the option.

     

    (vi)           Dismissal for
Cause.  If a grantee’s employment is terminated for cause, all
options not theretofore exercised shall terminate upon the commencement of
business on the date of the grantee’s termination of employment.

     

    (vii)           Disability.  If
a grantee’s employment terminates by reason of a disability (as defined below),
then any outstanding option shall be exercisable on the following terms and
conditions: (A) exercise may be made only to the extent that the grantee was
entitled to exercise the option on the termination of employment date; and
(B) exercise must occur by the earlier of (I) the first anniversary of the
grantee’s termination of employment, or (II) the original expiration date of the
option.  For this purpose “disability” shall mean any physical or
mental condition that would qualify a grantee for a disability benefit under the
long-term disability plan maintained by the Company or, if there is no such
plan, the inability of a grantee to perform all or a substantial part of his or
her material duties, as a result of mental or physical defect or illness for a
period of 90 consecutive days or 120 non-consecutive days during any 12 month
period.  The existence of a disability shall be determined by the
Committee in its absolute discretion.

     

    (viii)           Death.

     

    (A)           Termination of Employment as
a Result of Grantee’s Death.  If a grantee terminates
employment as the result of death, then any outstanding option shall be
exercisable on the following terms and conditions: (I) exercise may be made only
to the extent that the grantee was entitled to exercise the option on the date
of death; and (II) exercise must occur by the earlier of (1) the first
anniversary of the grantee’s termination of employment, or (2) the original
expiration date of the option.

     

    (B)           Death Subsequent to a
Termination of Employment.  If a grantee dies subsequent to
terminating employment but prior to the expiration of the exercise period with
respect to a stock option, then the option shall remain exercisable until the
earlier to occur of (I) the first anniversary of the grantee’s date of death or
(II) the original expiration date of the option.

     

    (C)           Restrictions on Exercise
Following Death.  Any such exercise of an option following a
grantee’s death shall be made only by the grantee’s executor or administrator or
other duly appointed representative reasonably acceptable to the Committee,
unless the grantee’s will specifically disposes of such option, in which case
such exercise shall be made only by the recipient of such specific
disposition.  If a grantee’s personal representative or the recipient
of a specific disposition under the grantee’s will shall be entitled to exercise
any option pursuant to the preceding sentence, such representative or recipient
shall be bound by all the terms and conditions of the Plan and the applicable
option certificate which would have applied to the grantee.

     

    
      
        
        

      

      
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    2.3           Exercise of
Options

     

    Subject to the other provisions of this
Article II, each option granted under the Plan shall be exercisable as
follows:

     

    (a)           Notice of
Exercise.  An option shall be exercised by the filing of a
written notice with the Company or the Company’s designated exchange agent (the
“exchange agent”), on such form and in such manner as the Committee in its sole
discretion shall prescribe.

     

    (b)           Payment of Exercise
Price.  Any written notice of exercise of an option shall be
accompanied by payment for the shares being purchased.  Such payment
shall be made: (i) by certified or official bank check (or the equivalent
thereof acceptable to the Company or its exchange agent) for the full exercise
price; or (ii) with the consent of the Committee, by delivery of shares of
Common Stock owned by the grantee (whether acquired by option exercise or
otherwise, provided that if such shares were acquired pursuant to the exercise
of an option, they were acquired at least six months prior to the option
exercise date or such other period as the Committee may from time to time
determine) having a Fair Market Value (determined as of the exercise date) equal
to all or part of the exercise price and a certified or official bank check (or
the equivalent thereof acceptable to the Company or its exchange agent) for any
remaining portion of the full exercise price; (iii) by means of a brokered
cashless exercise; or (iv) at the discretion of the Committee and to the extent
permitted by law, by such other provision, consistent with the terms of the
Plan, as the Committee may from time to time prescribe.

     

    (c)           Delivery of Certificates
Upon Exercise.  Promptly after receiving payment of the full
exercise price, the Company or its exchange agent shall deliver to the grantee
or to such other person as may then have the right to exercise the option, a
certificate or certificates for the shares of Common Stock for which the option
has been exercised or shall establish an account evidencing ownership of such
shares in uncertificated form.  If the method of payment employed upon
option exercise so requires, and if applicable law permits, a grantee may direct
the Company, or its exchange agent, as the case may be, to deliver the stock
certificate(s) to the grantee’s stockbroker.

     

    (d)           No Stockholder
Rights.  No grantee (or other person having the right to
exercise an option) shall have any of the rights of a stockholder of the Company
with respect to shares subject to such option until the issuance of a stock
certificate to such person for such shares or the establishment of an account
evidencing share ownership in uncertificated form.  Except as
otherwise provided in Section 1.5(c), no adjustment shall be made for dividends,
distributions or other rights (whether ordinary or extraordinary, and whether in
cash, securities or other property) for which the record date is prior to the
date such stock certificate is issued or such account is
established.

     

    2.4           Transferability of
Options

     

    (a)           General.  Except
as otherwise provided in an applicable option certificate as described below,
during the lifetime of a grantee, each option shall be exercisable only by the
grantee or the grantee’s legal representative and no option shall be assignable
or transferable otherwise than by will or by the laws of descent and
distribution.  Any attempt to transfer any option other than as
permitted herein shall be void and immediately cancelled, and no such option
shall in any manner be liable for or subject to the debts, contracts,
liabilities or torts of any person who shall be entitled to such option, nor
shall any option be subject to attachment or legal process for or against such
person.  The Committee may, in any applicable option certificate,
permit a grantee to transfer all or some of the options to (A) the grantee’s
spouse, children or grandchildren (“immediate family members”), (B) a trust or
trusts for the exclusive benefit of such immediate family members, or (C) other
parties approved by the Committee in its absolute
discretion.  Following any such transfer, any transferred options
shall continue to be subject to the same terms and conditions as were applicable
immediately prior to the transfer, and the transferee shall be subject to all
obligations hereunder as if such person were the grantee.

     

    
      
        
        

      

      
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    (b)           Payment to Minors,
Etc.  Any benefit payable to or for the benefit of a minor, an
incompetent person or other person incapable of receipt thereof shall be deemed
paid when paid to such person's guardian or to the party providing or reasonably
appearing to provide for the care of such person, and such payment shall fully
discharge the Committee, the Board, the Company, its affiliates and their
employees, agents and representatives with respect thereto.

     

    2.5           Right of
Recapture

     

    If at any
time after the date on which an option was granted or became exercisable
pursuant to the achievement of performance goals, the Committee determines that
the earlier determination as to the achievement of the performance goals was
based on incorrect data and that in fact the performance goals had not been
achieved or had been achieved to a lesser extent than originally determined,
then (i) any option or portion of an option granted based on such incorrect
determination shall be forfeited, and (ii) any option or portion of an option
that became exercisable based on such incorrect determination shall be deemed to
be not exercisable.

     

    ARTICLE
III

    Miscellaneous

     

    3.1           Amendment of the Plan; Modification
of Options

     

    (a)           Amendment of the
Plan.  The Board may from time to time suspend, discontinue,
revise or amend the Plan in any respect whatsoever, except that no such
amendment shall materially impair any rights or materially increase any
obligations under any option theretofore granted under the Plan without the
consent of the grantee (or, upon the grantee’s death, the person having the
right to exercise the option).  For purposes of this Section 3.1, any
action of the Board or the Committee that in any way alters or affects the tax
treatment of any option shall not be considered to materially impair any rights
of any grantee. The Board shall determine, in its sole discretion, whether to
submit any amendment of the Plan to stockholders for approval.

     

    (b)           Modification of
Options.  The Committee may cancel any option under the
Plan.  The Committee also may amend any outstanding option, including,
without limitation, by amendment which would: (i) accelerate the time or times
at which the option may be exercised; (ii) waive or amend any goals,
restrictions or conditions set forth in the option certificate; or (iii) waive
or amend any applicable provision of the Plan or option certificate with respect
to the expiration of the option upon termination of
employment.  However, any such cancellation or amendment (other than
an amendment pursuant to Section 1.5(c)) that materially impairs the rights or
materially increases the obligations of a grantee under an outstanding option
shall be made only with the consent of the grantee (or, upon the grantee’s
death, the person having the right to exercise the option).

     

    3.2           Consent
Requirement

     

    (a)           No Plan Action without
Required Consent.  If the Committee shall at any time determine
that any Consent (as hereinafter defined) is necessary or desirable as a
condition of, or in connection with, the granting of any option under the Plan,
the exercise of such option or the taking of any other action thereunder (each
such action being hereinafter referred to as a “Plan action”), then such Plan
action shall not be taken or permitted, in whole or in part, unless and until
such Consent shall have been effected or obtained to the full satisfaction of
the Committee.

     

    (b)           Consent
Defined.  The term “Consent” as used herein with respect to any
Plan action means (i) any and all listings, registrations or qualifications in
respect thereof upon any securities exchange or under any federal, state or
local law, rule or regulation, (ii) any and all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made and (iii) any and all consents,
clearances and approvals in respect of a Plan action by any governmental or
other regulatory bodies.

     

    
      
        
        

      

      
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    (c)           Representations,
Legend.  The Committee may require as a condition to the
receipt of shares of Common Stock pursuant to an option that the grantee or any
other person receiving shares pursuant to the option represent that such person
is not acquiring the shares with a view to distribution thereof and to make such
other securities law related representations as the Committee shall
request.  In addition to any legend required by this Plan, any
certificate representing Common Stock acquired in respect of an option may bear
such legends as the Company deems advisable to assure compliance with all
applicable laws and regulations.

     

    3.3           Withholding
Taxes

     

    The
Company shall be entitled to require as a condition of exercise of an option
that the grantee remit to the Company an amount sufficient in the opinion of the
Company to satisfy all governmental tax withholding requirements related to such
exercise.  With the approval of the Company, which the Company shall
have sole discretion whether or not to give, the grantee may satisfy the
foregoing condition by electing to have the Company withhold from delivery
shares of Common Stock having a value equal to the amount of tax to be
withheld.  Such shares shall be valued at their Fair Market Value as
of the date on which the amount of tax to be withheld is
determined.

     

    3.4           Employment
Provisions

     

    (a)           Right of Discharge
Reserved. Nothing
in the Plan or in any option certificate shall confer upon any grantee the right
to continue employment with the Company or any affiliated entity or affect any
right which the Company or any affiliated entity may have to terminate such
employment.

     

    (b)           Confidentiality.  The
acceptance of an option by a grantee shall be deemed to be a covenant by the
grantee that he or she will not disclose to anyone outside the Company or its
affiliates, or use in any manner other than in the furtherance of the Company's
or its affiliate's business, without written authorization from the Company, any
confidential information or proprietary information relating to the business of
the Company or its affiliates that is acquired by a grantee prior to the
grantee's termination of employment.

     

    3.5           Nature of
Payments

     

    (a)           Consideration for Services
Performed.  Any and all grants of options and issuances of
shares of Common Stock upon exercise of such option shall be in consideration of
services performed for the Company by the grantee.

     

    (b)           Not Taken into Account for
Benefits.  All such grants and issuances shall constitute a
special incentive payment to the grantee and shall not be taken into account in
computing the amount of salary or compensation of the grantee for the purpose of
determining any benefits under any pension, retirement, profit-sharing, bonus,
life insurance or other benefit plan of the Company or under any agreement
between the Company and the grantee, unless such plan or agreement specifically
otherwise provides.

     

    3.6           Non-Uniform
Determinations

     

    The Committee’s determinations under
the Plan need not be uniform and may be made by it selectively among persons who
receive, or who are eligible to receive, options under the Plan (whether or not
such persons are similarly situated).  Without limiting the generality
of the foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations, and to enter into non-uniform and
selective option certificates, as to (a) the persons to receive options, (b) the
terms and provisions of options, and (c) the treatment of leaves of absence
pursuant to Section 1.6(b).

     

    
      
        
        

      

      
        - 9
-

        
          

        

      

      
        
        

      

    

     

    3.7           Severability of
Provisions

     

    If any
provision of this Plan shall be held invalid or unenforceable, such invalidity
or unenforceability shall not affect any other provisions hereof, and this Plan
shall be construed and enforced as if such provisions had not been
included.

     

    3.8           Other Payments or
Options

     

    Nothing contained in the Plan shall be
deemed in any way to limit or restrict the Company from making any option or
payment to any person under any other plan, arrangement or understanding,
whether now existing or hereafter in effect.

     

    3.9           Headings

     

    Any section, subsection, paragraph or
other subdivision headings contained herein are for the purpose of convenience
only and are not intended to expand, limit or otherwise define the contents of
such subdivisions.

     

    3.10           Effective Date and Term of
Plan

     

    (a)           Adoption; Stockholder
Approval.  The Plan was adopted by the Board on March 1,
2010.

     

    (b)           Termination of
Plan.  Unless sooner terminated by the Board or pursuant to
paragraph (a) above, the provisions of the Plan respecting the grant of any
option shall terminate on March 1, 2015, and no such options shall thereafter be
made under the Plan.  All options made under the Plan prior to the
termination of the Plan shall remain in effect until such options have been
satisfied or terminated in accordance with the terms and provisions of the Plan
and the applicable option certificates.

     

    3.11           Restriction on Issuance of Stock
Pursuant to Options

     

    The
Company shall not permit any shares of Common Stock to be issued pursuant to
options granted under the Plan unless such shares of Common Stock are fully paid
and non-assessable, within the meaning of applicable law.

     

    3.12           Governing Law

     

    Except to
the extent preempted by any applicable federal law, the Plan will be construed
and administered in accordance with the laws of the Cayman Islands, without
giving effect to principles of conflict of laws.

     

    
      
        
        

      

      
        - 10
-Exhibit
10.2

     

    Shares
Transfer Agreement of Zhejiang Hongzhan New Materials Co., Ltd.

     

    Party A:
Lizhan Resourses Recycling Technology Development Company Limited

    Address:
Room 501, 5/F,
No. 113 Anjier Street, Mong Kok, Kowloon, Hongkong

    Legal
representative: Liu Jianfeng Position: chairman of the board Nationality:
Chinese

    

    Party B:
Eminent Benefit Holdings Limited

    Address:
213 Queen's Road East, Wan Chai, Hongkong (Room 2208 22/F Wu Chung
House)

    

    Legal
representative: Zhang Liwen  Position: chairman of the
board  Nationality: Chinese

    

    Party C:
Zhang Liwen  ID card No.: 130402196405260013

     

    Based on
the principle of equality, mutual benefit and equal price, through friendly
consultation, with regard to the matter of transferring 13% of the shares of
Zhejiang Hongzhan New Materials Co., Ltd. (hereinafter referred to as the
“company”) held by Party A to Party B, the Parties hereby agree as
follows:

     

    I.
Number of Shares Transferred and Transfer Price

     

    Party A
is willing to transfer 13% of the shares of the company to Party B at USD
650,000. Party B agrees to accept the above shares according to the terms
herein.

     

    II.
The Completion Date and Means of Share Transfer

     

    The share
transfer shall be completed on the date of this share transfer agreement taking
effect. Party B shall make a lump sum payment to Party A in cash within one
month of being approved by the original approving authority and registering
changes with the industrial and commercial administration.

     

    III.
Rights and Responsibilities of Transferor and Transferee

     

    Party A
warrants that the property right of the shares transferred to Party B is clear
and there is no mortgage, pledge, lien or other security interests or
restrictive measure of seizure, freezing etc on the shares. Party A has the
complete disposal right to the shares transferred. Otherwise all the liabilities
caused shall be borne by Party A.

     

    Party B
is willing to purchase the above shares transferred by Party A and agrees to
bear and enjoy relevant liabilities, rights and benefits according to the
Company Law of the People’s Republic of China and the Articles of Associations
of the company.

     

    Party B
shall provide the necessary documents of its identification certificate etc
within two days of signing of this agreement to the company for handing the
registration change.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IV.
Liability for Breach of Contract

     

    In case
the agreement can not be performed or fully performed due to one party’s fault,
the party with the fault shall bear the liability for breach; if it is due to
the fault of the two parties, Party A and Party B shall bear their share of
liability according to the actual circumstances.

     

    V.
Governing Law and Dispute Resolution

     

    This
Agreement shall be governed by the laws of the People’s Republic of China. In
case of any disputes arising from this agreement, they shall first be resolved
through consultation by all parties. If they cannot be resolved through
consultation, the parties can submit for arbitration or legal
proceedings.

     

    VI.
Alteration and Cancelation of the Agreement

     

    The
alteration of this agreement shall only become effective through written
alteration agreement signed by both Party A and Party B as well as the approval
of the original approving authority. If any party gravely breaches this
agreement, the agreement abiding party is entitled to apply to the original
approving authority for terminating the agreement.

     

    VII.
Effectiveness of the Agreement

     

    The
agreement shall become effective after being signed by Party A and Party B and
the altered certificate for foreign invested enterprises being approved and
issued by the original approving authority.

     

    VIII.
Date and Venue of the Agreement

     

    The
agreement is made on the 8th of
February, 2010 at the office of the company in Tongxiang, Zhejiang,
China.

     

    IX.
Collateral Condition

     

    Party B
and Party C warrant the transfer of the three patents of base fabric of
collagenous fiber restored leather and its processing method (application No.:
200410097268.8, application has been accepted), a kind of liquid opening and
scutching machine (patent for invention No.: ZL200610035347.5, patent has been
approved) and a kind of punlace fabric and its processing method(application
No.: 200710003092.9, application has been accepted) and related materials held
by Zhang Liwen to Zhejiang Hongzhan New Materials Co., Ltd. without any
condition and guarantee the effective use in its production. Otherwise Party A
is entitled to regain the above shares at the price provided in Article I at any
time.

     

    X.
Miscellaneous

     

    This
agreement shall have five originals. Each party shall hold one copy. The company
shall keep one copy and submit one cope each to the approving authority and
registration authority.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Signature
for and on behalf of Party A:

     

    Lizhan
Resourses Recycling Technology Development Company Limited (seal)

     

    February
8, 2010

     

    Signature
for and on behalf of Party B:

     

    Eminent
Benefit Holdings Limited

     

    February
8, 2010

     

    Signature
of Party C: Zhang Liwen

     

    February
8, 2010

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