Document:

Unassociated Document

    
      STOCK
OPTION AGREEMENT

       

       

      THIS
STOCK OPTION AGREEMENT (“Agreement”) is made
and entered into by and between ZST Digital Networks, Inc. (“Company”), a Delaware
corporation, and John Chen, M.D. (“Optionee”), effective
on October [__], 2009.  (Company and Optionee are sometimes referred
to herein as “party” or
collectively as the “parties.”)

       

      RECITALS

       

      WHEREAS, the Company has entered into
an employment agreement dated as of October 8, 2009 for the purpose of retaining
the services of the Optionee in the service of the Company (or any Parent or
Subsidiary) (the “Employment
Agreement”);

       

      WHEREAS, Optionee is to render valuable
services to the Company (or a Parent or Subsidiary), and this Agreement is
executed pursuant to, and is intended to carry out the purposes of, the
Employment Agreement in connection with the Company’s grant of an option to
Optionee.  All capitalized terms in this Agreement shall have the
meaning assigned to them in the attached Appendix.

       

      NOW, THEREFORE, it is hereby agreed as
follows:

       

      1.           Grant of
Option.  The Company hereby grants to Optionee, on October
[__], 2009 (the “Grant
Date”), an option to purchase up to Twenty-Five Thousand (25,000) shares
of Common Stock (the “Option
Shares”).  The Option Shares shall be purchasable from time to
time during the option term specified in Paragraph 2 at $[______] per share (the
“Exercise
Price”).

       

      2.           Option
Term.  This option shall have a term of five (5) years measured
from the Grant Date (the “Expiration Date”) and
shall accordingly expire at the close of business on the Expiration Date, unless
sooner terminated in accordance with Paragraph 5.

       

      3.           Limited
Transferability.

       

      (a)           This
option shall be neither transferable nor assignable by Optionee other than by
will or the laws of inheritance following Optionee’s death and may be exercised,
during Optionee’s lifetime, only by Optionee.  However, Optionee may
designate one or more persons as the beneficiary or beneficiaries of this
option, and this option shall, in accordance with such designation,
automatically be transferred to such beneficiary or beneficiaries upon the
Optionee’s death while holding this option.  Such beneficiary or
beneficiaries shall take the transferred option subject to all the terms and
conditions of this Agreement, including (without limitation) the limited time
period during which this option may, pursuant to Paragraph 5, be exercised
following Optionee’s death.

       

      
        
          
          

        

        
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      (b)           As
a Non-Statutory Option, this option may be assigned in whole or in part during
Optionee’s lifetime to one or more members of Optionee’s family or to a trust
established for the exclusive benefit of one or more such family members or to
Optionee’s former spouse, to the extent such assignment is in connection with
the Optionee’s estate plan or pursuant to a domestic relations
order.  The assigned portion shall be exercisable only by the person
or persons who acquire a proprietary interest in the option pursuant to such
assignment.  The terms applicable to the assigned portion shall be the
same as those in effect for this option immediately prior to such
assignment.

       

      4.           Dates of
Exercise.  This option shall become immediately exercisable on
the Grant Date, but to the extent exercised, will be subject to a repurchase
right of the Company specified in Paragraph 10, which will lapse as follows: 50%
of this option and Option Shares will vest six (6) months after the Grant Date
and the remaining 50% will vest twelve (12) months after the Grant Date (the
“Vesting
Schedule”).

       

      5.           Cessation
of Service.  The option term specified in Paragraph 2 shall
terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become
applicable:

       

      (a)           Should
Optionee cease to remain in Service for any reason (other than Optionee’s
termination of his employment without Good Reason or the Company’s termination
of Optionee’s employment for Cause) while this option is outstanding, then
Optionee (or any person or persons to whom this option is transferred pursuant
to a permitted transfer under Paragraph 3) shall have a period of thirty
(30) days (commencing with the date of such cessation of Service) during which
to exercise this option, but in no event shall this option be exercisable at any
time after the Expiration Date.

       

      (b)           During
the limited period of post-Service exercisability, this option may not be
exercised in the aggregate for more than the number of Option Shares in which
Optionee is, at the time of Optionee’s cessation of Service, vested pursuant to
the Vesting Schedule or the special vesting acceleration provisions of Paragraph
6.  Upon the expiration of such limited exercise period or (if
earlier) upon the Expiration Date, this option shall terminate and cease to be
outstanding for any vested Option Shares for which the option has not been
exercised.  To the extent Optionee is not vested in one or more Option
Shares at the time of Optionee’s cessation of Service, this option shall
immediately terminate and cease to be outstanding with respect to those
shares.

       

      (c)           Should
Optionee’s Service be terminated by Optionee without Good Reason or by the
Company for Cause, then this option shall terminate immediately and cease to
remain outstanding.

       

      
        
          
          

        

        
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      6.           Accelerated
Vesting.  In the event that Optionee’s Service is terminated by
the Company for Cause or by Optionee for Good Reason, then the Option Shares at
the time subject to this option but not otherwise vested shall automatically
vest in full so that this option shall become exercisable for all of the Option
Shares as fully vested shares and may be exercised for any or all of those
Option Shares as vested shares pursuant to the terms of Section 5.

       

      7.           Adjustment
in Option Shares.  Should any change be made to the Common
Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Company’s receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.

       

      8.           Stockholder
Rights.  The holder of this option shall not have any
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become the record holder
of the purchased shares.

       

      9.           Manner of
Exercising Option.

       

      (a)           In
order to exercise this option with respect to all or any part of the Option
Shares for which this option is at the time exercisable, Optionee (or any other
person or persons exercising the option) must take the following
actions:

       

      (i)           Execute
and deliver to the Company a Purchase Agreement for the Option Shares for which
the option is exercised.

       

      (ii)           Pay
the aggregate Exercise Price for the purchased shares in cash or check made
payable to the Company.

       

      Should
the Common Stock be registered under Section 12 of the 1934 Act at the time the
option is exercised, then the Exercise Price may also be paid as
follows:

       

      (A)           in
shares of Common Stock held by Optionee (or any other person or persons
exercising the option) for the requisite period necessary to avoid a charge to
the Company’s earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date; or

       

      (B)           to
the extent the option is exercised for vested Option Shares, through a special
sale and remittance procedure pursuant to which Optionee (or any other person or
persons exercising the option) shall concurrently provide irrevocable
instructions (a) to a Company-designated brokerage firm to effect the immediate
sale of the purchased shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
Exercise Price payable for the purchased shares plus all applicable income and
employment taxes required to be withheld by the Company by reason of such
exercise and (b) to the Company to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the
sale.

       

      
        
          
          

        

        
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      Except to
the extent the sale and remittance procedure is utilized in connection with the
option exercise, payment of the Exercise Price must accompany the Purchase
Agreement delivered to the Company in connection with the option
exercise.

       

      (iii)           Furnish
to the Company appropriate documentation that the person or persons exercising
the option (if other than Optionee) have the right to exercise this
option.

       

      (iv)           Execute
and deliver to the Company such written representations as may be requested by
the Company in order for it to comply with the applicable requirements of
applicable securities laws.

       

      (v)           Make
appropriate arrangements with the Company (or Parent or Subsidiary employing or
retaining Optionee) for the satisfaction of all applicable income and employment
tax withholding requirements applicable to the option exercise.

       

      (b)           As
soon as practical after the Exercise Date, the Company shall issue to or on
behalf of Optionee (or any other person or persons exercising this option) a
certificate for the purchased Option Shares, with the applicable appropriate
legends affixed thereto.

       

      (c)           In
no event may this option be exercised for any fractional shares.

       

      10.           REPURCHASE
RIGHTS.  ALL
OPTION SHARES ACQUIRED UPON THE EXERCISE OF THIS OPTION SHALL BE SUBJECT TO
CERTAIN RIGHTS OF THE COMPANY AND ITS ASSIGNS TO REPURCHASE THOSE SHARES IN
ACCORDANCE WITH THE TERMS SPECIFIED IN THE PURCHASE
AGREEMENT.

       

      11.           Compliance
with Laws and Regulations.

       

      (a)           The
exercise of this option and the issuance of the Option Shares upon such exercise
shall be subject to compliance by the Company and Optionee with all applicable
requirements of law relating thereto and with all applicable regulations of any
Stock Exchange on which the Common Stock may be listed for trading at the time
of such exercise and issuance.

       

      (b)           The
inability of the Company to obtain approval from any regulatory body having
authority deemed by the Company to be necessary to the lawful issuance and sale
of any Common Stock pursuant to this option shall relieve the Company of any
liability with respect to the non-issuance or sale of the Common Stock as to
which such approval shall not have been obtained.  The Company,
however, shall use its best efforts to obtain all such approvals.

       

      
        
          
          

        

        
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      (c)           The
Company intends that this option not be considered to provide for the deferral
of compensation under Section 409A of the Code and that this Agreement shall be
so administered and construed.  Further, the Company may modify this
award to the extent necessary to fulfill this intent.

       

      12.           Successors
and Assigns.  Except to the extent otherwise provided in
Paragraph 3, the provisions of this Agreement shall inure to the benefit of, and
be binding upon, the Company and its successors and assigns and Optionee,
Optionee’s assigns and the legal representatives, heirs and legatees of
Optionee’s estate.

       

      13.           Notices.  Any
notice required to be given or delivered to the Company under the terms of this
Agreement shall be in writing and addressed to the Company at its principal
corporate offices.  Any notice required to be given or delivered to
Optionee shall be in writing and addressed to Optionee at the address indicated
below Optionee’s signature line on the this Agreement.  All notices
shall be deemed effective upon personal delivery or upon deposit in the U.S.
mail, postage prepaid and properly addressed to the party to be
notified.

       

      14.           Construction.  This
Agreement and the option evidenced hereby are made and granted pursuant to the
Employment Agreement and are in all respects limited by and subject to the terms
of the Employment Agreement.  All decisions of the Board with respect
to any question or issue arising under the Employment Agreement or this
Agreement shall be conclusive and binding on all persons having an interest in
this option.

       

      15.           Governing
Law.  The interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of Delaware without resort
to that State’s conflict-of-laws rules.

       

      

       

      

      

      

       

      [SIGNATURES
ON FOLLOWING PAGE]

       

      
        
          
          

        

        
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      WHEREFORE, the parties hereto have
executed this Agreement on the dates indicated below.

       

      

       

      
        	 
      	

                ZST
      DIGITAL NETWORKS, INC.

                 

                 

              
	 
      	
                By:

              	 
	 
      	 
      	
                Name:
      Zhong Bo

              
	 
      	 
      	
                Title:
      Chief Executive Officer

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	

                JOHN
      CHEN, M.D.

                 

                 

                 

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                Address
      for Notice:

              	 
	 
      	 	 
	 
      	 
	 
      	 	 
	 
      	 

      

       

       

      
        
          
          

        

        
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      APPENDIX

       

      The following definitions shall be in
effect under the Agreement:

       

      A.           Agreement
shall mean this Stock Option Agreement.

       

      B.           Board
shall mean the Company’s Board of Directors or the Compensation Committee or
other similar committee of the Board acting in its capacity.

       

      C.           Cause shall mean (i) the
commission of an act or acts of dishonesty, fraud, embezzlement, or
misappropriation of funds or proprietary information by Optionee in connection
with his employment duties or responsibilities; or (ii) Optionee’s conviction
of, or plea of nolo contendere to, a felony or a crime involving moral turpitude
(other than minor traffic violations); or (iii) Optionee materially breaches his
obligations under the Employment Agreement, including failure to perform his job
duties satisfactorily or failure to follow the Company’s policies or any
directive of the Company, if such failure or refusal is not cured by Optionee
within ten (10) days after receiving written notice of such from the Company; or
(iv) Optionee’s willful or gross misconduct in connection with his employment
duties.

       

      D.           Code
shall mean the Internal Revenue Code of 1986, as amended.

       

      E.           Common
Stock shall mean the Company’s common stock, $0.0001 par value per
share.

       

      F.           Company
shall mean ZST Digital Networks, Inc., a Delaware corporation, and any successor
corporation to all or substantially all of the assets or voting stock of ZST
Digital Networks, Inc.

       

      G.           Employee
shall mean an individual who is in the employ of the Company (or any Parent or
Subsidiary), subject to the control and direction of the employer entity as to
both the work to be performed and the manner and method of
performance.

       

      H.           Employment
Agreement shall mean that certain employment agreement dated October 8,
2009 by and between the Company and Optionee.

       

      I.           Exercise
Date shall mean the date on which the option shall have been exercised in
accordance with Paragraph 9 of the Agreement.

       

      J.           Exercise
Price shall have the meaning set forth in Paragraph 1 of the
Agreement

       

      K.           Expiration
Date shall have the meaning set forth in Paragraph 2 of the Agreement,
unless sooner terminated in accordance with Paragraph 5.

       

      
        
          
          

        

        
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      L.           Fair
Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:

       

      (i)           If
the Common Stock is at the time listed on any Stock Exchange, then the Fair
Market Value shall be the closing selling price per share of Common Stock on the
date in question on the Stock Exchange determined by the Board to be the primary
market for the Common Stock, as such price is officially quoted in the composite
tape of transactions on such exchange and published in The Wall Street
Journal.  If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation
exists.

       

      (ii)           If
the Common Stock is at the time not listed on any Stock Exchange, then the Fair
Market Value shall be determined by the Board after taking into account such
factors as the Board shall deem appropriate.

       

      M.           Good
Reason shall mean any of the following, without Optionee’s written
consent: (a) upon a material breach or default of any term of the Employment
Agreement by the Company, or (b) any material reduction in the Optionee’s
duties, position, authority or responsibilities with the Company relative to the
duties, position, authority or responsibilities in effect immediately prior to
such reduction; provided that the Company has not cured or remedied such Good
Reason within fifteen (15) days after written notice of the Good Reason from the
Optionee.

       

      N.           Grant
Date shall.have the meaning set forth in Paragraph 1 of the
Agreement

       

      O.           1934
Act shall mean the Securities Exchange Act of 1934, as
amended.

       

      P.           Non-Statutory
Option shall mean an option not intended to satisfy the requirements of
Code Section 422.

       

      Q.           Option
Shares shall have the meaning set forth in Paragraph 1 of the
Agreement.

       

      R.           Optionee shall mean John Chen,
M.D.

       

      S.           Parent
shall mean any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, provided each corporation in the unbroken
chain (other than the Company) owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

       

      T.           Purchase
Agreement shall mean the stock purchase agreement in substantially the
form of Exhibit A to this Agreement.

       

      U.           Service
shall mean the Optionee’s performance of services for the Company (or any Parent
or Subsidiary) in the capacity of an Employee, a non-employee member of the
board of directors or an independent consultant.

       

      
        
          
          

        

        
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      V.           Stock
Exchange shall mean the NYSE Amex, New York Stock Exchange, Nasdaq Global
Market, Nasdaq Capital Market or the OTC Bulletin Board.

       

      W.           Subsidiary
shall mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company, provided each corporation (other than
the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

       

      X.           Vesting
Schedule shall have the meaning set forth in Paragraph 4 of the
Agreement.

       

      
        
          
          

        

        
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      Exhibit
A

      

      Form
of Stock Purchase Agreement

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          10Unassociated Document

    STOCK
PURCHASE AGREEMENT

     

     

     

    THIS
STOCK PURCHASE AGREEMENT (“Agreement”) is made
and entered into by and between ZST Digital Networks, Inc. (“Company”), a Delaware
corporation, and John Chen, M.D. (“Participant”),
effective as of ____________________, 20___.  (Company and Participant
are sometimes referred to herein as “party” or
collectively as the “parties.”)  All
capitalized terms in this Agreement shall have the meaning assigned to them in
this Agreement or in the attached Appendix.

     

    

    RECITALS

    

    WHEREAS, the Company granted to
Participant an option to purchase Twenty-Five Thousand shares of Common Stock of
the Company pursuant to a Stock Option Agreement dated as of October [__], 2009;
and

    

    WHEREAS, Participant is hereby
exercising as described below the option pursuant to the terms of the Stock
Option Agreement.

    

    NOW, THEREFORE, it is hereby agreed as
follows:

    

    A.           PURCHASE
OF SHARES

     

    1.           Purchase.  Participant
hereby purchases ___________________ shares of Common Stock (the “Purchased Shares”)
pursuant to the provisions of the Option Agreement at the purchase price of
$_____________ per share (the “Purchase
Price”).

     

    2.           Payment.  Concurrently
with the delivery of this Agreement to the Company, Participant shall pay the
Purchase Price for the Purchased Shares in cash or cash equivalent and shall
deliver a duly-executed blank Assignment Separate from Certificate (in the form
attached hereto as Exhibit I) with
respect to the Purchased Shares.

     

    3.           Stockholder
Rights.  Until such time as the Company exercises the
Repurchase Right, Participant (or any successor in interest) shall have all
stockholder rights (including voting, dividend and liquidation rights) with
respect to the Purchased Shares, subject, however, to the transfer restrictions
of Articles B and C herein.

     

    B.           TRANSFER
RESTRICTIONS

     

    1.           Restriction
on Transfer.  Except for any Permitted Transfer, Participant
shall not transfer, assign, encumber or otherwise dispose of any of the
Purchased Shares which are subject to the Repurchase Right.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

    2.           Transferee
Obligations.  Each person (other than the Company) to whom the
Purchased Shares are transferred by means of a Permitted Transfer must, as a
condition precedent to the validity of such transfer, acknowledge in writing to
the Company that such person is bound by the provisions of this Agreement and
that the transferred shares are subject to the Repurchase Right to the same
extent such shares would be so subject if retained by Participant.

     

    3.           Restrictive
Legends.  The stock certificates for the Purchased Shares shall
be endorsed with one or more of the following restrictive legend:

     

    “The
shares represented by this certificate are subject to certain repurchase rights
granted to the Corporation and accordingly may not be sold, assigned,
transferred, encumbered, or in any manner disposed of except in conformity with
the terms of a written agreement dated __________, 20___, between the
Corporation and the registered holder of the shares (or the predecessor in
interest to the shares).  A copy of such agreement is maintained at
the Corporation’s principal corporate offices.”

     

    

                          4.           Void Transfers.  The
Corporation shall not be required (i)
to transfer on its books any Purchased Shares which have been sold or
transferred in violation of the provisions of this Agreement or (ii) to treat as
the owner of the Purchased Shares, or otherwise to accord voting, dividend or
liquidation rights to, any transferee to whom the Purchased Shares have been
transferred in contravention of this Agreement.

    

    C.           REPURCHASE
RIGHT

     

    1.           Grant.  The
Company is hereby granted the right (the “Repurchase Right”),
exercisable at any time during the sixty (60)-day period following the date
Participant ceases for any reason to remain in Service (other than termination
by the Company without Cause or by Participant for Good Reason), to repurchase
at the Repurchase Price any or all of the Purchased Shares in which Participant
is not, at the time of his or her cessation of Service, vested in accordance
with the provisions of the Vesting Schedule set forth in Paragraph C.0 (such
shares to be hereinafter referred to as the “Unvested
Shares”).

     

    2.           Exercise
of the Repurchase Right.  The Repurchase Right shall be
exercisable by written notice delivered to each Owner of the Unvested Shares
prior to the expiration of the sixty (60)-day exercise period.  The
notice shall indicate the number of Unvested Shares to be repurchased, the
Repurchase Price to be paid per share and the date on which the repurchase is to
be effected, such date to be not more than thirty (30) days after the date of
such notice.  The certificates representing the Unvested Shares to be
repurchased shall be delivered to the Company on the closing date specified for
the repurchase.  Concurrently with the receipt of such stock
certificates, the Company shall pay to Owner, in cash or cash equivalents
(including the cancellation of any purchase-money indebtedness), an amount equal
to the Repurchase Price for the Unvested Shares which are to be repurchased from
Owner.

     

    
      
        
        

      

      
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    3.           Termination
of the Repurchase Right.

     

    (a)           The
Repurchase Right shall terminate with respect to any Unvested Shares for which
it is not timely exercised under Paragraph C.0.  In addition, the
Repurchase Right shall terminate and cease to be exercisable with respect to any
and all Purchased Shares in which Participant vests in accordance with the
following Vesting Schedule:

     

    (i)           Participant
shall vest in fifty percent (50%) of the Purchased Shares, and the Repurchase
Right shall concurrently lapse with respect to those Purchased Shares, upon
Participant’s completion of six (6) months of Service measured from October
[__], 2009.

     

    (ii)           Participant
shall vest in the remaining fifty percent (50%) of the Purchased Shares, and the
Repurchase Right shall concurrently lapse with respect to those Purchased
Shares, upon October [__], 2010.

     

    (b)           The
Repurchase Right shall automatically terminate in its entirety, and all the
Purchased Shares shall vest in full, immediately if Participant ceases to remain
in Service as a result of Participant’s termination of his employment for Good
Reason or the Company’s termination of Participant’s employment without
Cause.

     

    4.           Recapitalization.  Any
new, substituted or additional securities or other property (including cash paid
other than as a regular cash dividend) which is by reason of any
Recapitalization distributed with respect to the Purchased Shares shall be
immediately subject to the Repurchase Right and any escrow requirements
hereunder, but only to the extent the Purchased Shares are at the time covered
by such right or escrow requirements.  Appropriate adjustments to
reflect such distribution shall be made to the number and/or class of Purchased
Shares subject to this Agreement and to the Repurchase Price per share to be
paid upon the exercise of the Repurchase Right in order to reflect the effect of
any such Recapitalization upon the Company’s capital structure; provided, however,
that the aggregate Repurchase Price shall remain the same.

     

    D.           SPECIAL
TAX ELECTION

     

    1.           Section
83(b) Election.  Under Code Section 83, the excess of the Fair
Market Value of the Purchased Shares on the date any forfeiture restrictions
applicable to such shares lapse over the Purchase Price paid for those shares
will be reportable as ordinary income on the lapse date.  For this
purpose, the term “forfeiture restrictions” includes the right of the Company to
repurchase the Purchased Shares pursuant to the Repurchase
Right.  Participant may elect under Code Section 83(b) to be taxed at
the time the Purchased Shares are acquired, rather than when and as such
Purchased Shares cease to be subject to such forfeiture
restrictions.  Such election must be filed with the Internal Revenue
Service within thirty (30) days after the date of this
Agreement.  Even if the Fair Market Value of the Purchased Shares on
the date of this Agreement equals the Purchase Price paid (and thus no tax is
payable), the election must be made to avoid adverse tax consequences in the
future.

     

    
      
        
        

      

      
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    THE FORM FOR MAKING THIS ELECTION IS
ATTACHED AS EXHIBIT II HERETO.  PARTICIPANT UNDERSTANDS THAT FAILURE
TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30)-DAY PERIOD WILL RESULT IN
THE RECOGNITION OF ORDINARY INCOME AS THE FORFEITURE RESTRICTIONS
LAPSE.

     

    2.           FILING
RESPONSIBILITY.  PARTICIPANT ACKNOWLEDGES
THAT IT IS PARTICIPANT’S SOLE RESPONSIBILITY, AND NOT THE COMPANY’S, TO FILE A
TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF PARTICIPANT REQUESTS THE
COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER
BEHALF.

     

    E.           GENERAL
PROVISIONS

     

    1.           Assignment.  The
Company may assign the Repurchase Right to any person or entity selected by the
Board, including (without limitation) one or more stockholders of the
Company.

     

    2.           Notices.  Any
notice required to be given under this Agreement shall be in writing and shall
be deemed effective upon personal delivery or upon deposit in the U.S. mail,
registered or certified, postage prepaid and properly addressed to the party
entitled to such notice at the address indicated below such party’s signature
line on this Agreement or at such other address as such party may designate by
ten (10) days advance written notice under this paragraph to all other parties
to this Agreement.

     

    3.           No
Waiver.  The failure of the Company in any instance to exercise
the Repurchase Right shall not constitute a waiver of any other repurchase
rights that may subsequently arise under the provisions of this Agreement or any
other agreement between the Company and Participant.  No waiver of any
breach or condition of this Agreement shall be deemed to be a waiver of any
other or subsequent breach or condition, whether of like or different
nature.

     

    4.           Cancellation
of Shares.  If the Company shall make available, at the time
and place and in the amount and form provided in this Agreement, the
consideration for the Purchased Shares to be repurchased in accordance with the
provisions of this Agreement, then from and after such time, the person from
whom such shares are to be repurchased shall no longer have any rights as a
holder of such shares (other than the right to receive payment of such
consideration in accordance with this Agreement).  Such shares shall
be deemed purchased in accordance with the applicable provisions hereof, and the
Company shall be deemed the owner and holder of such shares, whether or not the
certificates therefor have been delivered as required by this
Agreement.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

     

    F.           MISCELLANEOUS
PROVISIONS

     

    1.           Governing
Law.  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware without resort to that
State’s conflict-of-laws rules.

     

    2.           Participant
Undertaking.  Participant hereby agrees to take whatever
additional action and execute whatever additional documents the Company may deem
necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on either Participant or the Purchased
Shares pursuant to the provisions of this Agreement.

     

    3.           Agreement
is Entire Contract.  This Agreement constitutes the entire
contract between the parties hereto with regard to the subject matter
hereof.  This Agreement is made pursuant to the provisions of the
Employment Agreement and the Option Agreement and shall in all respects be
construed in conformity with the  terms of the Employment Agreement
and the Option Agreement.

     

    4.           Counterparts.  This
Agreement may be executed in counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument.

     

    5.           Successors
and Assigns.  The provisions of this Agreement shall inure to
the benefit of, and be binding upon, the Company and its successors and assigns
and upon Participant, Participant’s assigns and the legal representatives, heirs
and legatees of Participant’s estate, whether or not any such person shall have
become a party to this Agreement and have agreed in writing to join herein and
be bound by the terms hereof.

     

    

    

    

    

     

    [SIGNATURES
ON FOLLOWING PAGE]

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

     

     

    

    WHEREFORE, the parties hereto have
executed this Agreement on the dates indicated below.

     

     

    

     

    
      	 
      	
              ZST
      DIGITAL NETWORKS, INC.

               

               

            
	 
      	
              By:

            	
               

            
	 
      	 
      	
              Name:
      Zhong Bo

            
	 
      	 
      	
              Title:
      Chief Executive Officer

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              Address:

            	 	
               

            
	 
      	 
      	 
      
	 
      	 	
               

            
	 
      	 
      	 
      
	 
      	 	
               

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	

              JOHN
      CHEN, M.D.

            
	 
      	 
      	 
	 
      	 	 
	 
      	 	 
	 	 	 
	 	 	 
	 	 	 
	
              Address:

            	 	
               

            
	 
      	 	 
	 
      	 	
               

            
	 
      	 	 
	 
      	 	
               

            

    

     

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

    SPOUSAL
ACKNOWLEDGMENT

     

    The
undersigned spouse of Participant has read and hereby approves the foregoing
Stock Purchase Agreement.  In consideration of the Company’s granting
Participant the right to acquire the Purchased Shares in accordance with the
terms of such Agreement, the undersigned hereby agrees to be irrevocably bound
by all the terms of such Agreement, including (without limitation) the right of
the Company (or its assigns) to purchase any Purchased Shares in which
Participant is not vested at the time of his or her cessation of
Service.

     

    
      	 
      	 	 
      
	 
      	 	
              PARTICIPANT’S
      SPOUSE

            
	 
      	 	 
      
	
               

            	

              Address:

            	 
	 
      	 	 

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    EXHIBIT
I

     

    ASSIGNMENT
SEPARATE FROM CERTIFICATE

     

     

    FOR VALUE RECEIVED
________________ hereby sell(s), assign(s) and transfer(s) unto ZST Digital
Networks, Inc. (the “Company”), ______________ (_____) shares of the Common
Stock of the Company standing in his or her name on the books of the Company
represented by Certificate No. _______________ herewith and do(es) hereby
irrevocably constitute and appoint _________________ Attorney to transfer the
said stock on the books of the Company with full power of substitution in the
premises.

     

    
      	
              Dated:  ___________

            	 
      	 
      
	 
      	
              Signature

            	_________________________________

    

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    Instruction:  Please
do not fill in any blanks other than the signature line.  Please sign
exactly as you would like your name to appear on the issued stock
certificate.  The purpose of this assignment is to enable the Company
to exercise the Repurchase Right without requiring additional signatures on the
part of Participant.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
II

    
 

    SECTION
83(b) TAX ELECTION

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    SECTION
83(b) TAX ELECTION

     

    This
statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.

     

    
      	
              (1)

            	
              The
      taxpayer who performed the services is:

               

            
	 
      	
              Name:

            
	 
      	
              Address:

            
	 
      	
              Taxpayer
      Ident. No.:

               

            
	
              (2)

            	
              The
      property with respect to which the election is being made is
      ______________ shares of the common stock of ZST Digital Networks,
      Inc.

               

            
	
              (3)

            	
              The
      property was issued on __________________, _____.

               

            
	
              (4)

            	
              The
      taxable year in which the election is being made is the calendar year
      _____.

               

            
	
              (5)

            	
              The
      property is subject to a repurchase right pursuant to which the issuer has
      the right to acquire the property at the lower of the purchase
      price paid per share or the fair market value per share, if for any reason
      taxpayer’s service with the issuer terminates.  The issuer’s
      repurchase right will lapse in a series of installments over a one
      (1)-year period ending on October [__], 2010.

               

            
	
              (6)

            	
              The
      fair market value at the time of transfer (determined without regard to
      any restriction other than a restriction which by its terms will never
      lapse) is $_____ per share.

               

            
	
              (7)

            	
              The
      amount paid for such property is $ _______ per share.

               

            
	
              (8)

            	
              A
      copy of this statement was furnished to ZST Digital Networks, Inc. for
      whom taxpayer rendered the services underlying the transfer of
      property.

               

            
	
              (9)

            	
              This
      statement is executed on _______________,
_____.

            

    

    

    
      	 
      	 	 
      
	
              Spouse
      (if any)

            	 	
              Taxpayer

            

    

     

    This
election must be filed with the Internal Revenue Service Center with which
taxpayer files his or her Federal income tax returns and must be made within
thirty (30) days after the execution date of the Stock Purchase
Agreement.  This filing should be made by registered or certified
mail, return receipt requested.  Participant must retain two (2)
copies of the completed form for filing with his or her Federal and state tax
returns for the current tax year and an additional copy for his or her
records.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

    APPENDIX

     

    The
following definitions shall be in effect under the Agreement:

     

    A.           Agreement
shall mean this Stock Purchase Agreement.

     

    B.           Board
shall mean the Company’s Board of Directors or the Compensation Committee or
other similar committee of the Board acting in its capacity.

     

    C.           Cause shall mean (i) the
commission of an act or acts of dishonesty, fraud, embezzlement, or
misappropriation of funds or proprietary information by Participant in
connection with his employment duties or responsibilities; or (ii) Participant’s
conviction of, or plea of nolo contendere to, a felony or a crime involving
moral turpitude (other than minor traffic violations); or (iii) Participant
materially breaches his obligations under the Employment Agreement, including
failure to perform his job duties satisfactorily or failure to follow the
Company’s policies or any directive of the Company, if such failure or refusal
is not cured by Participant within ten (10) days after receiving written notice
of such from the Company; or (iv) Participant’s willful or gross misconduct in
connection with his employment duties.

     

    D.           Code
shall mean the Internal Revenue Code of 1986, as amended.

     

    E.           Common
Stock shall mean the Company’s common stock, $0.0001 par value per
share.

     

    F.           Company
shall mean ZST Digital Networks, Inc., a Delaware corporation, and any successor
corporation to all or substantially all of the assets or voting stock of ZST
Digital Networks, Inc.

     

    G.           Fair
Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:

     

    (i)          If
the Common Stock is at the time listed on any Stock Exchange, then the Fair
Market Value shall be the closing selling price per share of Common Stock on the
date in question on the Stock Exchange determined by the Board to be the primary
market for the Common Stock, as such price is officially quoted in the composite
tape of transactions on such exchange and published in The Wall Street
Journal.  If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation
exists.

     

    (ii)           If
the Common Stock is at the time neither listed on any Stock Exchange nor traded
on the Nasdaq National Market, then the Fair Market Value shall be determined by
the Board after taking into account such factors as the Board shall deem
appropriate.

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

     

    H.          Good
Reason shall mean any of the following, without Participant’s written
consent: (a) upon a material breach or default of any term of the Employment
Agreement by the Company, or (b) any material reduction in the Participant’s
duties, position, authority or responsibilities with the Company relative to the
duties, position, authority or responsibilities in effect immediately prior to
such reduction; provided that the Company has not cured or remedied such Good
Reason within fifteen (15) days after written notice of the Good Reason from the
Participant.

     

    I.          Owner
shall mean Participant and all subsequent holders of the Purchased Shares who
derive their chain of ownership through a Permitted Transfer from
Participant.

     

    J.          Parent
shall mean any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, provided each corporation in the unbroken
chain (other than the Company) owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

     

    K.          Participant
shall mean John Chen, M.D.

     

    L.          Permitted
Transfer shall mean (i) a gratuitous transfer of the Purchased Shares,
provided and only
if Participant obtains the Company’s prior written consent to such
transfer, (ii) a transfer of title to the Purchased Shares effected pursuant to
Participant’s will or the laws of inheritance following Participant’s death or
(iii) a transfer to the Company in pledge as security for any purchase-money
indebtedness incurred by Participant in connection with the acquisition of the
Purchased Shares.

     

    M.          Purchase
Price shall have the meaning assigned to such term in Paragraph
A.1.

     

    N.          Purchased
Shares shall have the meaning assigned to such term in
Paragraph A.1.

     

    O.          Recapitalization
shall mean any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the Company’s outstanding
Common Stock as a class without the Company’s receipt of
consideration.

     

    P.          Repurchase
Price shall mean the lower of (i) the Exercise
Price or (ii) the Fair Market Value per share of Common Stock on the date
of Participant’s cessation of Service.

     

    Q.          Repurchase
Right shall mean the right granted to the Company in accordance with
Article 0.

     

    R.          SEC
shall mean the Securities and Exchange Commission.

     

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

    

    

    

    S.          Service
shall mean the Participant’s performance of services for the Company (or any
Parent or Subsidiary) in the capacity of an employee, subject to the control and
direction of the employer entity as to both the work to be performed and the
manner and method of performance, a non-employee member of the board of
directors or an independent consultant.

     

    T.          Stock
Option Agreement shall mean that certain
stock option agreement dated October [__], 2009 by and between the Company and
Participant.

     

    U.          Subsidiary
shall mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company, provided each corporation (other than
the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

     

    V.          Vesting
Schedule shall mean the vesting schedule specified in Paragraph C.3.
pursuant to which Participant is to vest in the Purchased Shares in a series of
installments over the Participant’s period of Service.

     

    W.          Unvested
Shares shall have the meaning assigned to such term in Paragraph
C.1.

     

    

    
      
        
        

      

      
        A-3

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