Document:

2010 Employee Stock Purchase Plan

 Exhibit 10.5 

FORCE10 NETWORKS, INC. 

2010 EMPLOYEE STOCK PURCHASE PLAN 

1.        Establishment of Plan.    Force10 Networks,
Inc. (the “Company”) proposes to grant options for purchase of the Company’s Common Stock to eligible employees of the Company and its Participating Corporations (as hereinafter defined) pursuant to this Employee Stock
Purchase Plan (this “Plan”). For purposes of this Plan, “Parent” and “Subsidiary” shall have the same meanings as “parent corporation” and “subsidiary corporation” in Sections 424(e)
and 424(f), respectively, of the Internal Revenue Code of 1986, as amended (the “Code”), and “Corporate Group” shall refer collectively to the Company and all its Parents and Subsidiaries. “Participating
Corporations” are the Company and any Parents or Subsidiaries that the Board of Directors of the Company (the “Board”) designates from time to time as corporations that shall participate in this Plan. The Company intends
this Plan to qualify as an “employee stock purchase plan” under Section 423 of the Code (including any amendments to or replacements of such Section), and this Plan shall be so construed. Any term not expressly defined in this Plan
but defined for purposes of Section 423 of the Code shall have the same definition herein. Subject to Section 14, two percent (2%) of the Company’s Common Stock as measured on the date immediately prior to the date on which the
Registration Statement covering the initial public offering of shares of the Company’s Common Stock is declared effective by the U.S. Securities and Exchange Commission is reserved for issuance under this Plan. In addition, on each
January 1 for the first ten calendar years after the first Offering Date, the aggregate number of shares of the Company’s Common Stock reserved for issuance under the Plan shall be increased automatically by the number of shares equal to
one percent (1%) of the total number of outstanding shares of the Company Common Stock on the immediately preceding December 31 (rounded down to the nearest whole share); provided, that the Board or the Committee may in its sole discretion
reduce the amount of the increase in any particular year; and, provided further, that the maximum aggregate number of shares issued pursuant to the Plan over the term of this Plan shall not exceed fifty million (50,000,000) shares of Common
Stock. The number of shares reserved for issuance under this Plan and the maximum number of shares that may be issued under this Plan shall be subject to adjustments effected in accordance with Section 14 of this Plan. 

2.        Purpose.    The purpose of this Plan is to
provide eligible employees of the Company and Participating Corporations with a means of acquiring an equity interest in the Company through payroll deductions, to enhance such employees’ sense of participation in the affairs of the Company and
Participating Corporations, and to provide an incentive for continued employment. 

3.        Administration.    The Plan will be
administered by the Compensation Committee of the Board or by the Board (either referred to herein as the “Committee”). Subject to the provisions of this Plan and the limitations of Section 423 of the Code or any
successor provision in the Code, all questions of interpretation or application of this Plan shall be determined by the Committee and its decisions shall be final and binding upon all Participants. The Committee will have full and exclusive
discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility and decide upon any and all claims filed under the Plan. Every finding, decision and determination made by the Committee will, to the full
extent permitted by law, be final and binding upon all parties. Notwithstanding any provision to the contrary in this Plan, the Committee may adopt rules and/or procedures relating to the operation and administration of the Plan to accommodate
requirements of local law and procedures outside of the United States. Members of the Committee shall receive no compensation for their services in connection with the administration of this Plan, other than standard fees as established from time to
time by the Board for services rendered by Board members serving on Board committees. All expenses incurred in connection with the administration of this Plan shall be paid by the Company. 

4.        Eligibility.    Any employee of the Company
or the Participating Corporations is eligible to participate in an Offering Period (as hereinafter defined) under this Plan except the following: 

(a)    employees who are customarily employed for twenty (20) hours or less per week;

  

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 (b)    employees who, together with any other person
whose stock would be attributed to such employee pursuant to Section 424(d) of the Code, own stock or hold options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock
of the Company or any of its Participating Corporations or who, as a result of being granted an option under this Plan with respect to such Offering Period, would own stock or hold options to purchase stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the Company or any of its Participating Corporations; 

(c)    employees who do not meet any other eligibility requirements that the Committee may choose to
impose (within the limits permitted by the Code); and 
 (d)    individuals who provide
services to the Company or any of its Participating Corporations as independent contractors who are reclassified as common law employees for any reason except for federal income and employment tax purposes. 

5.        Offering Dates. 

(a)    The offering periods of this Plan (each, an “Offering Period”) may be
of up to twenty-four (24) months duration and shall commence and end at the times designated by the Committee. Each Offering Period may consist of up to five (5) purchase periods (individually, a “Purchase Period”)
during which payroll deductions of Participants are accumulated under this Plan. 

(b)    The initial Offering Period shall commence on (i) the first day following the close of
the first fiscal period for which projected GAAP expense of equity incentives (including expenses associated with the Company’s equity incentive plans) does not exceed thirty percent (30%) of projected GAAP earnings prior to such
compensation charges or (ii) such other date as determined by the Committee (the “Effective Date”), and shall end with the Purchase Date that occurs on or prior to either March 14 or September 14 that first
occurs twelve (12) months or more after the Effective Date. The initial Offering Period shall consist of no more than three (3) and no fewer than two (2) Purchase Periods, any of which may be greater or less than six (6) months
as determined by the Committee. Thereafter, a twelve (12) month Offering Period shall commence on each March 15 and September 15 and shall respectively end on each March 14 and September 14. Each Offering Period shall
consist of two (2) six month Purchase Periods. 
 (c)    The first business day of each
Offering Period is referred to as the “Offering Date,” however, for the initial Offering Period this shall be the Effective Date. The last business day of each Purchase Period is referred to as the “Purchase
Date.” The Committee shall have the power to change these terms as provided in Section 25 below. 

6.        Participation in this Plan. 

(a)    Any employee determined in accordance with Section 4 will be eligible to participate in
this Plan, subject to the requirement of Section 6(b) hereof and the other terms and provisions of this Plan. Eligible employees who meet the eligibility requirements set forth in Section 4 and who elect to participate in the this Plan
pursuant to Section 6(b) are referred to herein as a “Participant” or collectively as “Participants.” 

(b)    A Participant may elect to participate in this Plan by submitting a subscription agreement
prior to the commencement of the Offering Period (or such earlier date as the Committee may determine) to which such agreement relates. 

(c)    Once an employee becomes a Participant in an Offering Period, then such Participant will
automatically participate in the Offering Period commencing immediately following the last day of such prior Offering Period unless the Participant withdraws or is deemed to withdraw from this Plan or terminates further participation in the Offering
Period as set forth in Section 11 below. Such Participant is not required to file any additional subscription agreement in order to continue participation in this Plan. 

 

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 7.        Grant of Option on
Enrollment.    Becoming a Participant with respect to an Offering Period will constitute the grant (as of the Offering Date) by the Company to such Participant of an option to purchase on the Purchase Date up to that number
of shares of Common Stock of the Company determined by a fraction, the numerator of which is the amount accumulated in such Participant’s payroll deduction account during such Purchase Period and the denominator of which is the lower
of (i) eighty-five percent (85%) of the fair market value of a share of the Company’s Common Stock on the Offering Date (but in no event less than the par value of a share of the Company’s Common Stock), or (ii) eighty-five
percent (85%) of the fair market value of a share of the Company’s Common Stock on the Purchase Date (but in no event less than the par value of a share of the Company’s Common Stock); provided, however, that the number of shares of
the Company’s Common Stock subject to any option granted pursuant to this Plan shall not exceed the lesser of (x) the maximum number of shares set by the Committee pursuant to Section 10(b), or (y) the maximum number of shares
which may be purchased pursuant to Section 10(a). The fair market value of a share of the Company’s Common Stock shall be determined as provided in Section 8 below. 

8.        Purchase Price.    The purchase price per
share at which a share of Common Stock will be sold in any Offering Period shall be eighty-five percent (85%) of the lesser of: 

(a)    The fair market value on the Offering Date; or 

(b)    The fair market value on the Purchase Date. 

The term “fair market value” means, as of any date, the value of a share of the Company’s
Common Stock determined as follows: 
 (i)    if such Common Stock is then quoted on the New
York Stock Exchange (the “NYSE”), its closing price on the NYSE on the date of determination, or if there are no sales for such date, then the last preceding business day on which there were sales, as reported in The Wall
Street Journal or such other source as the Board or the Committee deems reliable; or 

(ii)    if such Common Stock is publicly traded and is then listed on a national securities exchange,
its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal or such other source as the Board or the Committee
deems reliable; or 
 (iii)    if such Common Stock is publicly traded but is neither quoted
on the NYSE nor listed or admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal or such other source as the Board or the
Committee deems reliable; or 
 (iv)    with respect to the initial Offering Period,
“fair market value” on the Offering Date shall be the price at which shares of Common Stock are offered to the public pursuant to the Registration Statement covering the initial public offering of shares of the Company’s Common Stock;
and 
 (v)    if none of the foregoing is applicable, by the Board or the Committee in good
faith. 
 9.        Payment of Purchase Price; Payroll Deduction
Changes; Share Issuances. 
 (a)     The purchase price of the shares is
accumulated by regular payroll deductions made during each Offering Period. The deductions are made as a percentage of the Participant’s compensation in one percent (1%) increments not less than one percent (1%), nor greater than fifteen
percent (15%) or such lower limit set by the Committee. Compensation shall mean all W-2 cash compensation categorized by the Company as base salary or regular hourly wages, and expressly excluding commissions, overtime, shift premiums, bonuses
and incentive compensation, plus draws against commissions, provided, however, that for purposes of determining a Participant’s compensation, any election by such Participant to reduce his or her regular cash remuneration under Sections 125 or
401(k) of the Code shall be treated as if the Participant did not make such election. Payroll deductions shall commence on the first payday following the last Purchase Date (or the first payday following the Effective Date for the initial Offering
Period) and shall continue to the end of the Offering Period unless sooner altered or terminated as provided in this Plan. 
  

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   (b)    A Participant may decrease the rate
of payroll deductions during an Offering Period by filing with the Company a new authorization for payroll deductions, with the new rate to become effective for the next payroll period commencing after the Company’s receipt of the authorization
and continuing for the remainder of the Offering Period unless changed as described below. Such change in the rate of payroll deductions may be made at any time during an Offering Period, but not more than one (1) decrease may be made effective
during any Purchase Period. A Participant may increase or decrease the rate of payroll deductions for any subsequent Offering Period by filing with the Company a new authorization for payroll deductions prior to the beginning of such Offering
Period, or such other time period as specified by the Committee. 
   (c)    A
Participant may reduce his or her payroll deduction percentage to zero during an Offering Period by filing with the Company a request for cessation of payroll deductions. Such reduction shall be effective beginning with the next payroll period after
the Company’s receipt of the request and no further payroll deductions will be made for the duration of the Offering Period. Payroll deductions credited to the Participant’s account prior to the effective date of the request shall be used
to purchase shares of Common Stock of the Company in accordance with Section (e) below. A reduction of the payroll deduction percentage to zero shall be treated as such Participant’s withdrawal from such Offering Period, and the Plan,
effective as of the day after the next Purchase Date following the filing date of such request with the Company. 

  (d)    All payroll deductions made for a Participant are credited to his or her account
under this Plan and are deposited with the general funds of the Company. No interest accrues on the payroll deductions. All payroll deductions received or held by the Company may be used by the Company for any corporate purpose, and the Company
shall not be obligated to segregate such payroll deductions. 
   (e)    On each
Purchase Date, so long as this Plan remains in effect and provided that the Participant has not submitted a signed and completed withdrawal form before that date which notifies the Company that the Participant wishes to withdraw from that Offering
Period under this Plan and have all payroll deductions accumulated in the account maintained on behalf of the Participant as of that date returned to the Participant, the Company shall apply the funds then in the Participant’s account to the
purchase of whole shares of Common Stock reserved under the option granted to such Participant with respect to the Offering Period to the extent that such option is exercisable on the Purchase Date. The purchase price per share shall be as specified
in Section 8 of this Plan. Any amount remaining in a Participant’s account on a Purchase Date which is less than the amount necessary to purchase a full share of the Company’s Common Stock shall be carried forward, without interest,
into the next Purchase Period or Offering Period, as the case may be. In the event that this Plan has been oversubscribed, all funds not used to purchase shares on the Purchase Date shall be returned to the Participant, without interest. No Common
Stock shall be purchased on a Purchase Date on behalf of any employee whose participation in this Plan has terminated prior to such Purchase Date. 

  (f)    As promptly as practicable after the Purchase Date, the Company shall issue shares
for the Participant’s benefit representing the shares purchased upon exercise of his or her option. 

  (g)    During a Participant’s lifetime, his or her option to purchase shares
hereunder is exercisable only by him or her. The Participant will have no interest or voting right in shares covered by his or her option until such option has been exercised. 

10.        Limitations on Shares to be Purchased. 

  (a)    No Participant shall be entitled to purchase stock under any Offering Period at a
rate which, when aggregated with such Participant’s rights to purchase stock, that are also outstanding in the same calendar year(s) (whether under other Offering Periods or other employee stock purchase plans of the Company, its parent and its
subsidiaries), exceeds $25,000 in fair market value, determined as of the Offering Date, (or such other limit as may be imposed by the Code) for each calendar year in which such Offering Period is

  

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in effect (hereinafter the “Maximum Share Amount”). The Company shall automatically suspend the payroll deductions of any Participant as necessary to enforce such limit provided that
when the Company automatically resumes such payroll deductions, the Company must apply the rate in effect immediately prior to such suspension. 

  (b)    The Committee may, in its sole discretion, set a lower maximum number of shares
which may be purchased by any Participant during any Offering Period than that determined under Section 10(a) above, which shall then be the Maximum Share Amount for subsequent Offering Periods; provided, however, in no event shall a
Participant be permitted to purchase more than 75,000 Shares during any one Offering Period, irrespective of the Maximum Share Amount set forth in (a) and (b) hereof. If a new Maximum Share Amount is set, then all Participants must be
notified of such Maximum Share Amount prior to the commencement of the next Offering Period for which it is to be effective. The Maximum Share Amount shall continue to apply with respect to all succeeding Offering Periods unless revised by the
Committee as set forth above. 
   (c)    If the number of shares to be purchased
on a Purchase Date by all Participants exceeds the number of shares then available for issuance under this Plan, then the Company will make a pro rata allocation of the remaining shares in as uniform a manner as shall be reasonably practicable and
as the Committee shall determine to be equitable. In such event, the Company shall give written notice of such reduction of the number of shares to be purchased under a Participant’s option to each Participant affected. 

  (d)    Any payroll deductions accumulated in a Participant’s account which are not
used to purchase stock due to the limitations in this Section 10, and not covered by Section 9(e), shall be returned to the Participant as soon as practicable after the end of the applicable Purchase Period, without interest. 

11.        Withdrawal. 

  (a)    Each Participant may withdraw from an Offering Period under this Plan by signing
and delivering to the Company a written notice to that effect on a form provided for such purpose by the Company. Such withdrawal may be elected at any time prior to the end of an Offering Period, or such other time period as specified by the
Committee. 
   (b)    Upon withdrawal from this Plan, the accumulated payroll
deductions shall be returned to the withdrawn Participant, without interest, and his or her interest in this Plan shall terminate. In the event a Participant voluntarily elects to withdraw from this Plan, he or she may not resume his or her
participation in this Plan during the same Offering Period, but he or she may participate in any Offering Period under this Plan which commences on a date subsequent to such withdrawal by filing a new authorization for payroll deductions in the same
manner as set forth in Section 6 above for initial participation in this Plan. 

  (c)    If the Fair Market Value on the first day of the current Offering Period in which
a participant is enrolled is higher than the Fair Market Value on the first day of any subsequent Offering Period, the Company will automatically enroll such participant in the subsequent Offering Period. Any funds accumulated in a
participant’s account prior to the first day of such subsequent Offering Period will be applied to the purchase of shares on the Purchase Date immediately prior to the first day of such subsequent Offering Period, if any. 

12.        Termination of Employment.    Termination
of a Participant’s employment for any reason, including retirement, death, disability, or the failure of a Participant to remain an eligible employee of the Company or of a Participating Corporation, immediately terminates his or her
participation in this Plan. In such event, accumulated payroll deductions credited to the Participant’s account will be returned to him or her or, in the case of his or her death, to his or her legal representative, without interest. For
purposes of this Section 12, an employee will not be deemed to have terminated employment or failed to remain in the continuous employ of the Company or of a Participating Corporation in the case of sick leave, military leave, or any other
leave of absence approved by the Company; provided that such leave is for a period of not more than ninety (90) days or reemployment upon the expiration of such leave is guaranteed by contract or statute. 

 

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 13.        Return of Payroll
Deductions.    In the event a Participant’s interest in this Plan is terminated by withdrawal, termination of employment or otherwise, or in the event this Plan is terminated by the Board, the Company shall deliver to
the Participant all accumulated payroll deductions credited to such Participant’s account. No interest shall accrue on the payroll deductions of a Participant in this Plan. 

14.        Capital Changes.    If the number of
outstanding Shares is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company, without consideration, then the Committee
shall adjust the number and class of Common Stock that may be delivered under the Plan, the purchase price per share and the number of shares of Common Stock covered by each option under the Plan which has not yet been exercised, and the numerical
limits of Sections 1 and 10 shall be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and in compliance with applicable securities laws; provided that fractions of a Share will not be issued.

 15.        Nonassignability.    Neither
payroll deductions credited to a Participant’s account nor any rights with regard to the exercise of an option or to receive shares under this Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will,
the laws of descent and distribution or as provided in Section 22 below) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be void and without effect. 

16.        Use of Participant Funds and
Reports.    The Company may use all payroll deductions received or held by it under the Plan for any corporate purpose, and the Company will not be required to segregate Participant payroll deductions. Until Shares are
issued, Participants will only have the rights of an unsecured creditor. Each Participant shall receive promptly after the end of each Purchase Period a report of his or her account setting forth the total payroll deductions accumulated, the number
of shares purchased, the per share price thereof and the remaining cash balance, if any, carried forward to the next Purchase Period or Offering Period, as the case may be. 

17.        Notice of Disposition.    Each Participant
shall notify the Company in writing if the Participant disposes of any of the shares purchased in any Offering Period pursuant to this Plan if such disposition occurs within two (2) years from the Offering Date or within one (1) year from
the Purchase Date on which such shares were purchased (the “Notice Period”). The Company may, at any time during the Notice Period, place a legend or legends on any certificate representing shares acquired pursuant to
this Plan requesting the Company’s transfer agent to notify the Company of any transfer of the shares. The obligation of the Participant to provide such notice shall continue notwithstanding the placement of any such legend on the certificates.

 18.        No Rights to Continued
Employment.    Neither this Plan nor the grant of any option hereunder shall confer any right on any employee to remain in the employ of the Company or any Participating Corporation, or restrict the right of the Company or
any Participating Corporation to terminate such employee’s employment. 

19.        Equal Rights And Privileges.    All
eligible employees shall have equal rights and privileges with respect to this Plan so that this Plan qualifies as an “employee stock purchase plan” within the meaning of Section 423 or any successor provision of the Code and the
related regulations. Any provision of this Plan which is inconsistent with Section 423 or any successor provision of the Code shall, without further act or amendment by the Company, the Committee or the Board, be reformed to comply with the
requirements of Section 423. This Section 19 shall take precedence over all other provisions in this Plan. 

20.        Notices.    All notices or other
communications by a Participant to the Company under or in connection with this Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the
receipt thereof. 
  

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 21.        Term; Stockholder
Approval.    This Plan will become effective on the Effective Date. This Plan shall be approved by the stockholders of the Company, in any manner permitted by applicable corporate law, within twelve (12) months before or
after the date this Plan is adopted by the Board. No purchase of shares that are subject to such stockholder approval before becoming available under this Plan shall occur prior to stockholder approval of such shares and the Board or Committee may
delay any Purchase Date and postpone the commencement of any Offering Period subsequent to such Purchase Date as deemed necessary or desirable to obtain such approval (provided that if a Purchase Date would occur more than twenty-four
(24) months after commencement of the Offering Period to which it relates, then such Purchase Date shall not occur and instead such Offering Period shall terminate without the purchase of such shares and Participants in such Offering Period
shall be refunded their contributions without interest). This Plan shall continue until the earlier to occur of (a) termination of this Plan by the Board (which termination may be effected by the Board at any time pursuant to Section 25
below), (b) issuance of all of the shares of Common Stock reserved for issuance under this Plan, or (c) the tenth anniversary of the first Purchase Date under the Plan. 

22.        Designation of Beneficiary. 

  (a)    A Participant may file a written designation of a beneficiary who is to receive
any shares and cash, if any, from the Participant’s account under this Plan in the event of such Participant’s death subsequent to the end of a Purchase Period but prior to delivery to him of such shares and cash. In addition, a
Participant may file a written designation of a beneficiary who is to receive any cash from the Participant’s account under this Plan in the event of such Participant’s death prior to a Purchase Date. 

  (b)    Such designation of beneficiary may be changed by the Participant at any time by
written notice. In the event of the death of a Participant and in the absence of a beneficiary validly designated under this Plan who is living at the time of such Participant’s death, the Company shall deliver such shares or cash to the
executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares or cash to the spouse or to any one or
more dependents or relatives of the Participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate. 

23.        Conditions Upon Issuance of Shares; Limitation on Sale of
Shares.    Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or
foreign, including, without limitation, the Securities Act, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, and the requirements of any stock exchange or automated quotation system upon which the
shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. 

24.        Applicable Law.    The Plan shall be
governed by the substantive laws (excluding the conflict of laws rules) of the State of California. 

25.        Amendment or Termination.    The Committee,
in its sole discretion, may amend, suspend, or terminate the Plan, or any part thereof, at any time and for any reason. If the Plan is terminated, the Committee, in its discretion, may elect to terminate all outstanding Offering Periods either
immediately or upon completion of the purchase of shares of Common Stock on the next Purchase Date (which may be sooner than originally scheduled, if determined by the Committee in its discretion), or may elect to permit Offering Periods to expire
in accordance with their terms (and subject to any adjustment pursuant to Section 14). If an Offering Period is terminated prior to its previously-scheduled expiration, all amounts then credited to Participants’ accounts for such Offering
Period, which have not been used to purchase shares of the Company’s Common Stock, shall be returned to those Participants (without interest thereon, except as otherwise required under local laws) as soon as administratively practicable.
Further, the Committee will be entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other
than U.S. dollars, permit payroll withholding in excess of the 
  

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amount designated by a Participant in order to adjust for delays or mistakes in the administration of the Plan, establish reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of the Company’s Common Stock for each Participant properly correspond with amounts withheld from the Participant’s base salary or regular hourly wages, and establish such other
limitations or procedures as the Committee determines in its sole discretion advisable which are consistent with the Plan. Such actions will not require stockholder approval or the consent of any Participants. However, no amendment shall be made
without approval of the stockholders of the Company (obtained in accordance with Section 21 above) within twelve (12) months of the adoption of such amendment (or earlier if required by Section 21) if such amendment would:
(a) increase the number of shares that may be issued under this Plan; or (b) change the designation of the employees (or class of employees) eligible for participation in this Plan. 

26.        Corporate Transactions. 

  (a)    In the event of a Corporate Transaction (as defined below), each outstanding right
to purchase Company Common Stock will be assumed or an equivalent option substituted by the successor corporation or a parent or a subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute
for the purchase right, the Offering Period with respect to which such purchase right relates will be shortened by setting a new Purchase Date (the “New Purchase Date”) and will end on the New Purchase Date. The New Purchase
Date shall occur on or prior to the consummation of the Corporate Transaction. 

  (b)    “Corporate Transaction” means the occurrence of any of the
following events: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities
of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities; or (ii) the consummation of the sale or disposition by the Company of all or
substantially all of the Company’s assets; or (iii) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation. 
  

 - 8 -Unassociated Document

 

Exhibit 10.1

 

ASSET PURCHASE AGREEMENT

BETWEEN

SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED,

GULF RESOURCES, INC.

AND

Jinjin Li and Qiuzhen Wang

DATED AS OF

June 7, 2010

  

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INDEX OF SCHEDULES AND EXHIBITS

 

1. Asset Checklist

 

  

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This ASSET PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of June 7, 2010 (the "Effective Date") by and between the following Parties:

(1) SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED, a company validly existing under the laws of China ("SCHC"), a subsidiary of Gulf Resources, Inc.;

(2) GULF RESOURCES, INC. (“GUFR”); and

(3) Jinjin Li and Qiuzhen Wang, two individual residents of China (the “Sellers”) who collectively own private land use rights located for 3.07 square kilometers of land in the Shouguang City Yangkou Township, East of the Yangzhuang Villageas (the “Leased Property”)

WHEREAS: THE SELLERS wish to sell, transfer and convey certain assets listed on Schedule 1 hereto with annual bromine production capacity of 3,000 tons and annual crude salt production capacity of 100,000 tons to SCHC, its successors and assigns forever, by duly executed deed(s), bills of sale, assignment(s) or other instrument(s) of conveyance, for the consideration hereinafter provided, all of THE SELLERS’ right, title and interest in and to all assets owned by THE SELLERS located on the Leased Property, including, but not limited to, machinery, equipment, inventory (raw materials, work-in-progress and finished goods), and any warranties associated therewith; said assets to be limited to those listed and described on Schedule 1 attached hereto and incorporated herein by reference (collectively the “Purchased Assets”), to SCHC, and SCHC wishes to purchase and acquire the same from THE SELLERS.

NOW, THEREFORE, in consideration of the mutual promises contained herein, and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

1. CERTAIN DEFINITIONS

"Ordinary Course of Business" shall mean an action taken by THE SELLERS if such action is taken in normal operation of the assets, consistent with past practices.

"Closing" The closing of the transactions contemplated by this Agreement (the "Closing") shall take place within 10 days from the date that SCHC receives a satisfactory report from its assessment team as set forth in Section 2.4 (the "Closing Date").

 

  

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"GUFR" shall mean Gulf Resources, Inc., a Delaware corporation and parent of SCHC.

"GUFR Common Stock" shall mean the common stock of GUFR.

"Person" shall mean any individual, entity or governmental body.

2. TRANSFER OF THE ASSETS

2.1 THE SELLERS agree that, upon the Closing, they will sell, transfer and deliver the Purchased Assets.

2.2 The parties understand and acknowledge that the total purchase price for the Purchased Assets and the Leased Property is RMB95,000,000 (the "Purchase Price") and that the Purchase Price is based upon an approximate valuation of the Leased Property and Purchased Assets.  As full consideration for the sale, assignment, transfer and delivery of Purchased Assets to SCHC and for the value of the rights to the Leased Property  and upon the terms and subject to all of the conditions contained herein, the Purchase Price shall be paid as follows:

(a) SCHC shall pay to Jinjin Li the sum of RMB90,250,000 in cash (95% of the total purchase price) in the aggregate (the “Cash Purchase Price”); and

(b) GUFR shall issue to THE SELLERS GUFR Common Stock in the principal amount of RMB4,750,000 in the aggregate (the “Purchase Price Shares”).

2.3 The number of "Purchase Price Shares" shall be SEVENTY THOUSAND FIVE HUNDRED SIXTY] (70,560), based on a price of $9.859 per share, which is the average closing price of the Company’s Common Stock on the NASDAQ Stock Market for the 30 trading days prior to the Effective Date and an exchange rate of $1 = RMB6.82810, which is the published average exchange rate of the People’s Bank of China on June 4, 2010. The Purchase Price Shares will be delivered to THE SELLERS within twenty (20) days after the Closing Date; 65,560 Purchase Price Shares shall be delivered to Jinjin Li and 5,000 Purchase Price shares shall be delivered to Qiuzhen Wang.

 

  

4

  

 

 

2.4 Upon execution of this Agreement by all of the parties, SCHC shall deliver to Jinjin Li a security deposit of RMB18,050,000 (the "Security Deposit"). Three days after the date hereof, SCHC will establish an asset assessment team to assess the condition and the operation of the Purchased Assets and the Leased Property for transfer and conveyance to SCHC. Thereafter, SCHC shall pay the remainder of the Cash Purchase Price on or before the Closing Date if it has received a receipt of a report from its assessment team that is acceptable to SCHC with respect to the Purchased Assets and Leased Property.  If the report concludes that the condition of the Purchased Assets is not acceptable, SCHC and THE SELLERS shall negotiate a reduction in the Purchase Price.  If such amount can not be mutually agreed, SCHC shall have the right to terminate this Agreement and the Security Deposit shall be returned to SCHC.  As of the date hereof, both parties have started the formal transfer procedures (including the related property lease contracts, etc.). Upon the Closing, the SELLERS shall pay the land lease fees relating to Leased Property incurred up to June 30, 2010, and SCHC shall pay the land lease fees relating to the Leased Property incurred from July 1, 2010 forward.

 

2.5 If SCHC cannot pay off the remainder of the cash portion within the time period provided in Section 2.4 above, THE SELLERS have the right to terminate this Agreement and to retain the Security Deposit with no further obligations or liabilities to SCHC or GUFR.

2.6 As a result of this Agreement, the Purchased Assets including, without limitation, any and all bromine and crude salt that can be produced on the Leased Property, buildings, equipment, wells, pipelines, and power circuits will be acquired by SCHC; provided, however, that any and all debts, obligations and liabilities (the “’Obligations”) of THE SELLERS relating to the Purchased Assets and the Leased Property are specifically excluded from such Purchased Assets and shall remain the Obligations of THE SELLERS after the Closing.

3. REPRESENTATIONS AND WARRANTIES

3.1 Each of THE SELLERS represent and warrant to SCHC the following:

(a) Authority.  THE SELLERS each has the individual power and authority to execute and deliver this Agreement and to perform his respective obligations hereunder, and to consummate the transactions hereby, and upon the execution and delivery of the instruments and documents specified herein, except for the covenant by THE SELLERS to assist SCHC to sign a new 50 year land lease contract with the village for the Leased Property. no further action will be required of  THE SELLERS to vest legal title to and possession of the Purchased Assets and the Leased Property in the name of the Purchaser, its successors and assigns forever.

(b) Title to Assets. THE SELLERS have good and marketable title to the Purchased Assets and have the appropriate land use right certificates, or other required governmental approval evidencing the rights to use the Leased Property and ability to transfer the Leased Property, free and clear of liens or encumbrances of any kind and no person, firm or corporation has any undisclosed adverse interest therein.  The lease payment due under the 50-year land lease for the Leased Property has been paid-off.

 

  

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(c) Condition of Purchased Assets. The Purchased Assets are in good operating condition and repair, ordinary wear and tear excepted, and are suitable for continued use by SCHC in the production of bromine. The material buildings, plants, machinery and equipment and other Purchased Assets listed on Schedule 1 hereto, necessary in connection with the production of bromine located on the Leased Property as presently conducted are structurally sound, are in good operating condition and repair and are adequate for the uses to which they are being put or would be put in the Ordinary Course of Business, in each case, taken as a whole, and none of such buildings, plants, machinery or equipment is in need of maintenance or repairs, except for ordinary, routine maintenance and repairs that are not material in nature or cost.

(d) Disclosure. No representation or warranty by THE SELLERS contained in this Agreement or any written statement furnished to SCHC pursuant hereto or in connection with the transactions contemplated by this Agreement, contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statement contained herein or therein true and not misleading.

(e) Reliance. The foregoing representations and warranties have been made by  THE SELLERS with the knowledge and expectation that SCHC is placing reliance thereon, and all such representations and warranties shall survive the Closing for a period of one (1) year.

3.2 Each of SCHC and THE SELLERS represents and warrants respectively to the other as follows:

(a) Each of SCHC and THE SELLERS warrants that has taken all necessary actions for the execution and performance of this Agreement.

(b) Except as otherwise disclosed, the performance of the transaction contemplated hereunder is not subject to the consent, approval or order of any governmental authorities or any other third parties, nor is it subject to any conditions precedent as registration with, qualification verification by or document delivery to any governmental authorities or any other third parties.

 

  

6

  

 

  

3.3 Investment Representations of THE SELLERS:

 

(a)  Intent. Each of THE SELLERS warrants that they are acquiring the Purchase Price Shares for their own account and not for the account or benefit of any U.S. person, and not with a view towards the distribution or dissemination thereof.

 

(b)  Independent Investigation.  Each of THE SELLERS, in making the decision to acquire the Purchase Price Shares has relied upon an independent investigation of the Company and has not relied upon any information or representations made by any third parties or upon any oral or written representations or assurances from the Company, its officers, directors or employees or any other representatives or agents of the Company, other than as set forth in this Agreement. Each of THE SELLERS is familiar with the business, operations and financial condition of the Company and has had an opportunity to ask questions of, and receive answers from, the Company’s officers and directors concerning the Company and the Purchase Price Shares and has had full access to such other information concerning the Company as each of THE SELLERS has requested.

 

(c) Reliance on Representations and Warranties.  Each of THE SELLERS understands that the Purchase Price Shares are being offered and sold to the Purchaser in reliance on specific provisions of United States federal and state securities laws and that the Seller is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of each of THE SELLERS set forth in this Agreement in order to determine the applicability of such provisions.

 

(d)  Each of THE SELLERS is a “non-US person” as defined in Regulation S and further makes the representations and warranties as set forth on Exhibit “B” attached hereto.

4.  COVENANTS OF THE SELLERS

4.1  THE SELLERS covenant that if there are more than ten wells that cannot be used and if there is more than 200 meters of pipeline that cannot be used located at the Leased Premises, THE SELLERS will deduct an amount equal to 2 times the total replacement value of such wells and pipelines from the Purchase Price.

4.2  THE SELLERS covenant that upon the Closing, the contract signed between THE SELLERS and the village for the Leased Property will be cancelled, and THE SELLERS will help SCHC to sign a new lease for the remainder of the lease term with the village, and if THE SELLERS do not provide such assistance, THE SELLERS shall pay to SCHC 10% of the Security Deposit as a compensation fee.

 

  

7

  

 

  

4.3 As of the Closing, THE SELLERS shall cancel the employment contract with any previous employees and pay staff wages and compensation according to relevant national laws and regulations.

4.4 As of the Closing, THE SELLERS shall settle all the contacts with original suppliers and customers, and shall pay at Closing, or be bound in their individual capacities to pay all the corresponding debt and obligations. .

4.5  SCHC is buying  the Purchased Assets from THE SELLERS , and has no relationship or affiliation with THE SELLERS or the original operations of the Purchased Assets, and as a result is not assuming any rights and/or duties with respect to the operations of the Purchased Assets, including without limitation, no rights to (a) customers and supplier lists (other than such customers or suppliers who have pre-existing relationships with SCHC), (b) employees; (c) market distribution systems; (d) sales force; (e) operating rights; (f) production techniques, or (g) trade names.

5. INDEMNIFICATION

5.1  THE SELLERS agrees to indemnify, hold harmless and reimburse SCHC at all times after the Closing, against and with respect to:

(a) any damage or deficiency resulting from any misrepresentation, breach of warranty or non-fulfillment of any covenant or agreement on the part of THE SELLERS made in this Agreement, any other agreement or instrument delivered by THE SELLERS at the Closing;

(b) any damages or claims asserted against the Purchaser on account of any liability of THE SELLERS in connection with his ownership of the Purchased Assets and the Leased Property, whether arising prior to or after the transfer of ownership of the Leased Property from THE SELLERS to SCHC,

(c) all actions, suits, proceedings, demands, assessments, judgments, costs and expenses, including reasonable attorneys' fees, incident to the foregoing.

6. MISCELLANEOUS PROVISIONS.

6.1 No Assumption of Liabilities. Except as specifically set forth in this Agreement, nothing in this Agreement shall be construed to impose upon SCHC the assumption of any claim against or liability or obligation of  THE SELLERS, arising out of his business, or the use, operation or possession of the Purchased Assets, through the Closing, or thereafter.

 

  

8

  

 

  

6.2 Restrictive Legend.  Each certificate representing Purchase Price Shares shall be stamped or otherwise imprinted with a legend substantially in the following form:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, AND BASED ON AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT THE PROVISIONS OF REGULATION S HAVE BEEN SATISFIED, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.  HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”

6.3 Books and Records. Those books and records reasonably deemed primarily to relate to the Purchased Assets and maintained separately from the other records of THE SELLERS shall be delivered to and become the property of SCHC.

6.4 Expenses of Negotiation and Transfer. Each party to this Agreement shall pay its own expenses and other costs incidental to or resulting from this Agreement, whether or not the transactions contemplated hereby are consummated.

 

  

9

  

  

6.5 Entire Agreement. This Agreement, along with the documents and agreements to be executed in connection herewith, constitutes the full understanding of the parties, a complete allocation of risks between them and a complete and exclusive statement of the terms and conditions of their agreement relating to the subject matter hereof and supersedes any and all prior agreements, whether written or oral, that may exist between the parties with respect thereto. Except as otherwise specifically provided in this Agreement, no conditions, usage of trade, course of dealing or performance, understanding or agreement purporting to modify, vary, explain or supplement the terms or conditions of this Agreement shall be binding unless hereafter made in writing and signed by the party to be bound, and no modification shall be effected by the acknowledgment or acceptance of documents containing terms or conditions at variance with or in addition to those listed in this Agreement. No waiver by any party with respect to any breach or default or of any right or remedy and no course of dealing shall be deemed to constitute a continuing waiver of any other breach or default or of any other right or remedy, unless such waiver be expressed in writing signed by the party to be bound. Failure of a party to exercise any right shall not be deemed a waiver of such right or rights in the future.

6.6 Binding Effect. All of the covenants, conditions, agreements and undertakings set forth in this Agreement shall extend to and be binding upon  THE SELLERS and SCHC and their respective successors and assigns.

6.7 Assignability. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof nor any of the documents executed in connection herewith may be assigned by any party without the consent of the other parties

6.8 Headings. Headings as to the contents of particular Sections are for convenience only and are in no way to be construed as part of this Agreement or as a limitation of the scope of the particular Sections to which they refer.

6.9 Exhibits and Schedules. The Exhibits and Schedules (and any appendices thereto) referred to in this Agreement are and shall be incorporated herein and made a part hereof.

6.10 Counterparts. This Agreement may be executed in three (3) or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together will constitute an integral party of this Agreement.

[Signature page follows]

 

  

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IN WITNESS HEREOF the Parties hereto  have caused this Agreement to be executed by their duly authorized representatives as of the date first hereinabove mentioned.

 

SCHC: SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED

 

	 	 	 
	
Signed by:   

	/s/ Ming Yang 	 
	Name:  	Ming Yang	 
	Position:  	CEO	 
	 	 	 

 

THE SELLERS: Owners of Shouguang City Yangkou Township, East of the Yangzhuang Village

 

	 	 	 
	
Signed by:   

	/s/ Jinjin Li	 
	Name:  	JINJIN LI	 

 

	 	 	 
	
Signed by:   

	/s/ Qiuzhen Wang	 
	Name:  	QIUZHEN WANG	 

As to Section 2.2(b) and 2.3 only:

AGREED as of the date first above written:

 

 

GUFR: GULF RESOURCES, INC.

 

	 	 	 
	
Signed by:   

	/s/ Xiaobin Liu	 
	Name:  	Xiaobin Liu	 
	Position:  	CEO	 
	 	 	 

 

  

11

  

 

SCHEDULE 1

ASSET CHECKLIST

	
No.9 Asset List

 

	
Index

	
  Name

	
Units

	
1

	
Office

	
1

	
2

	
Warehouse

	
3

	
3

	
Maintenance Room

	
2

	
4

	
Guard Room

	
1

	
5

	
Garbage

	
2

	
6

	
Power Distribution Room

	
4

	
7

	
Central Control Room

	
1

	
8

	
Steaming Building

	
1

	
9

	
Sulfur Warehouse

	
1

	
10

	
Boiler Room

	
1

	
11

	
Chemical Laboratory

	
2

	
12

	
Wash Room

	
2

	
13

	
Boiler

	
1 set

	
14

	
Brine Reservoir

	
1

	
15

	
Halogen Water Reservoir

	
1

	
16

	
Tea Furnace(small)

	
1

	
17

	
rail-mounted gantry crane

	
1 set

	
18

	
air choke valve

	
1 set

	
19

	
Liquid chlorine cylinders

	
18

	
20

	
Draught Fan

	
1 set

	
21

	
Sulphur-furnace

	
1 set

	
22

	
Water Scrubber

	
1 set

	
23

	
Distillation Tower

	
1 set

	
24

	
Glass Tower

	
1 set

	
Secondary Extraction of Bromine Equipment

	
25

	
Steam Pot Equipment

	
1 set

	
26

	
Bromine Can

	
3 sets

	
27

	
Hydrotreater

	
1 set

	
28

	
Deep Wells

	
1

	
29

	
Pressure Tank

	
1

	
30

	
FRP Sulfuric Acid

	
1

	
31

	
The circulating water (boiler)

	
1

 

  

12

  

 

 

	
32

	
Tea Room

	
1

	
33

	
Mother Liquor Pool

	
1

	
34

	
Freshwater Pool

	
1

	
35

	
Boiled Water Pool

	
1

	
36

	
Water Softening Pool

	
1

	
37

	
Drinking Water Pool

	
1

	
38

	
Glass Reinforced Plastics

	
2

	
39

	
Tractor

	
1 set

	
40

	
Steel frame structure chlorine shed

	
1

	
41

	
Stripping tower

	
1

	
42

	
Absorbency

	
1

	
43

	
Mist Eliminator

	
1

	
44

	
Office

	
3

	
45

	
Kitchen

	
2

	
46

	
Accomodation

	
4

	
47

	
Accomodation

	
12

	
48

	
Water Line Canal(large)

	
20800 meters

	
Water Line Canal(Small)

	
11048 meters

	
49

	
Waste water drainage (sewer )

	
2600 meters

	
50

	
Wells

	
359 meters

	
51

	
Yu pump child (alternate)

	
20

	
52

	
Transformer(315)

	
1 set

	
Transformer (200)

	
5 sets

	
Transformer (160)

	
1 set

	
53

	
low-voltage line

	
11680 meters

	
54

	
Crude Salt Pan

	
30,000 KM2

	
55

	
Air-conditioner

	
1 set

 

13

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