EURO TECH HOLDINGS COMPANY LIMITED
2019 STOCK OPTION AND INCENTIVE PLAN
1.
Purpose
Euro
Tech Holdings Company Limited, a British Virgin Islands company
(“ETHC”) hereby establishes the Euro Tech Holdings
Company Limited 2019 Stock Option and Incentive Plan (the
“Plan”). The purpose of the 2019 Plan is to enable ETHC
and its subsidiaries to attract, retain, and reward Officers,
Directors and Key Employees of ETHC and its subsidiaries
(references hereinafter to “Board” mean the Board of
Directors of ETHC and any subsidiary of ETHC, as the context
dictates, unless otherwise indicated), by offering them an
opportunity to have a proprietary interest in and closer identity
with ETHC and its subsidiaries and with their financial success.
Proceeds received by ETHC from the issue or sale of Ordinary Shares
acquired pursuant to Options granted under the Plan shall be used
for general corporate purposes.
2.
Administration
This
Plan shall be administered by the Board of ETHC or a committee of
the Board of ETHC (“Committee”) established by the
Board of ETHC. Except as otherwise provided in this Plan, the Board
or the Committee may interpret this Plan, prescribe, amend and
rescind rules and regulations relating to it, determine the terms
and provisions of options granted under this Plan (which need not
be identical), and make such other determinations as it deems
necessary and advisable for the administration of this Plan. The
decisions of the Committee under this Plan shall be conclusive and
binding. No member of the Board or the Committee, shall be liable
for any action taken or determination made hereunder in good faith.
Service on the Committee shall constitute service as a director of
ETHC so that the members of the Committee shall be entitled to
indemnification and reimbursement as directors of ETHC pursuant to
its Memorandum and Articles of Association. If this Plan is
administered by the Board, the Board shall administer this Plan as
if it were the Committee having the authority
hereunder.
3.
Eligibility
Officers, Directors
and Key Employees who have been selected to receive an Option shall
participate in this Plan and shall be collectively referred to as
“Participants”. The Board or the Committee, as
applicable, shall determine, within the limits of the express
provisions of this Plan, those Participants to whom, and the time
or times at which, Options shall be granted. The Board or the
Committee, as applicable, shall also determine, with respect to
Options granted to Participants, the number of Ordinary Shares to
be subject to each such Option; the duration of each Option; the
exercise price under each Option; the time or times within which
(during the term of the Option) all or portions of each Option may
be exercised; whether cash, Ordinary Shares, or other property may
be accepted in full or partial payment upon exercise of an Option;
and any other terms and conditions of such Options. In making such
determinations, the Board or the Committee, as applicable, may take
into account the nature of the services rendered by the
Participant, his or her present and potential contributions to
ETHC’s success and such other factors as the Board or the
Committee, as applicable, in its discretion shall deem
relevant.
4.
Ordinary Shares
The
Ordinary Shares issuable under the Plan shall be authorized but
unissued shares or treasury shares. Such shares may be either
authorized but unissued shares or reacquired shares. In the event
that any Option granted under this Plan expires unexercised or is
terminated, surrendered, forfeited, canceled or reacquired without
being exercised, in whole or in part, for any reason, then the
number of Ordinary Shares theretofore subject to such Option, or
the unexercised, terminated, surrendered, forfeited, canceled or
reacquired portion thereof, shall be added to the remaining number
of Ordinary Shares that may be made subject to Options granted
under this Plan. Such Options include Options to former holders of
such Options, upon such terms and conditions as the Board or the
Committee, as applicable, shall determine, which terms may be more
or less favorable than those applicable to such former holders of
Options. Subject to adjustment as provided in Section 9, the
maximum aggregate number of Shares that may be issued:
(i) under
the Plan shall not exceed 300,000 Shares (the “Share
Limit”).
(ii) Notwithstanding
Section 4(i) hereof, on the first day of each fiscal year
commencing on January 1, 2020, the Share Limit shall automatically
be increased by that number of shares equal to 5% of the number of
Ordinary Shares outstanding as of such date.
5.
Grants
Options
may be granted at any time and from time to time as shall be
determined by the Board or the Committee. Subject to the limitation
on the total number of shares subject to issuance in subsections
6(a) and (d), the Board or the Committee, as applicable, shall have
complete discretion in determining the number of Ordinary Shares
subject to Options granted. The Board or the Committee, as
applicable, may grant any type of Option to purchase Ordinary
Shares that is permitted by law at the time of the
grant.
6.
Required Terms and Conditions of Options
Each
Option granted shall be in such form and subject to such
restrictions and conditions and other terms as the Board or the
Committee, as applicable, may determine at the time of grant,
subject to the general provisions of this Plan, the applicable
Option Agreement and the following specific rules:
(a)
Exercise Price. Except as otherwise provided, the per share
exercise price of each Option shall be at least 100% of the Fair
Market Value of the Ordinary Shares at the time such Option is
granted.
(b)
Maximum Term. Subject to earlier termination as provided in Section
7, each Option shall expire on the date determined in the
applicable Option Agreement at the time the Option is granted,
provided that no Option shall be exercisable after the expiration
of 10 years from the date it is granted, except as otherwise
provided in subsection (a) next above.
(c)
Time of Exercise. The Board or the Committee, as applicable, shall
specify in the Option Agreement, at the time each Option is
granted, the duration of each Option and the time or times within
which (during the term of the Option) all or portions of each
Option may be exercised, except to the extent that other terms of
exercise are specifically provided by other provisions of the
Plan.
7.
Expiration of Options; Termination of Employment, Disability,
Death, and Expiration of Restrictions Upon Occurrence of Specified
Events
(a)
General Rule. Except with respect to Options expiring pursuant to
subsections 7(b), (c) or (d) below, each Option granted to a
Participant shall expire on the expiration date or dates set forth
in the applicable Option Agreement. Each Option expiring pursuant
to subsections 7(b), (c) or (d) below shall expire on the date set
forth in subsections 7(b), (c) or (d) notwithstanding any
restrictions and conditions that may be contained in a
Participant’s Option Agreement.
(b)
Expiration Upon Termination of Employment or Service on the Board.
If a Participant ceases to be an Officer, Director or Key Employee
of ETHC or any of its subsidiaries, or ceases to serve on the
Board, due to the voluntary resignation of the Participant, or a
termination by ETHC or any of its subsidiaries for Cause, then all
of such Participant’s Options shall be null and void and
shall terminate. If a Participant ceases to be an Officer, Director
or Key Employee of ETHC or any of its subsidiaries or ceases to
serve on the Board of ETHC or any of its subsidiaries due to
termination without Cause by ETHC or any of its subsidiaries, then
all of such Participant’s Options shall expire on the first
to occur of (i) the applicable date or dates determined pursuant to
subsection
7(a), or
(ii) the date ninety (90) days after the date that the employment
of the Participant with ETHC or its subsidiaries, or service of the
Participant on the Board,
terminates.
(c)
Expiration Upon Disability or Death. If the employment of a
Participant with ETHC or one of its subsidiaries,
or service on the
Board,
terminates by
reason of disability (as determined by the Board or the Committee,
as applicable), all of the Participant’s unexercised Options
may be exercised by the Participant, whether or not otherwise
exercisable at the date of disability, within twelve (12) months
after the date of disability, but in no event later than the
expiration date of such Options. If a Participant dies while in the
employ of ETHC or one of its subsidiaries, or during such
Participant’s service on the Board,
all of the Participant’s
unexercised Options, whether or not otherwise exercisable at the
date of death, may be exercised within twelve (12) months after the
date of death by the person specified in Section 8, but in no event
later than the expiration date of such Options.
(d)
Expiration of Restrictions Upon Occurrence of Specified Events.
Upon the occurrence of any event described in subsection 9(b), each
Participant’s outstanding Options shall become immediately
vested and exercisable. In such event, the Participant may elect to
exercise in whole or in part any or all of his or her Options, in
accordance with the terms of Section 8, notwithstanding any
restrictions and conditions that may be contained in his or her
Option Agreement.
(e)
“Cause” shall mean: a) the willful failure of
Participant to substantially perform his or her duties with ETHC or
any of its subsidiaries (other than any such failure resulting from
Participant’s incapacity due to physical or mental illness)
after a written demand for substantial performance is delivered to
Participant specifically identifying the manner in which
Participant has not substantially performed his or her duties; b)
any willful act of misconduct by Participant which is materially
injurious to ETHC or it subsidiaries (monetarily or otherwise); c)
criminal indictment or conviction of Participant for any felony or
act involving dishonesty, breach of trust, or a violation of the
laws of the United States or any state of the United States or a
violation of the laws of Hong Kong or of any other jurisdiction; d)
a breach of fiduciary duty involving personal profit; e) a willful
violation of any law, rule, regulation or final cease and desist
order; f) incompetence, personal dishonesty or material violation
of any employment policy of ETHC or any of its subsidiaries
relating to Participant which would have a material adverse effect
on ETHC or any of its subsidiaries; or g) suspension, removal
and/or prohibition (whether temporary or permanent) by any banking,
securities or similar regulatory authority from participation in
the affairs of ETHC or any of its subsidiaries.
8.
Method of Exercise of Options
Any
Option may be exercised by the Participant, by a legatee or
legatees of such Option under the Participant’s last will, by
his or her executors, personal representatives or distributees by
his or her assignee or assignees as provided in Section 11 below,
by delivering to the Secretary of ETHC (or where there is no
Secretary, a director of ETHC) written notice of the number of
Ordinary Shares with respect to which the Option is being
exercised, accompanied by full payment to ETHC of the exercise
price of the shares being purchased under the Option, and by
satisfying all other conditions provided for in this Plan. Except
as otherwise provided in this Plan or in any Option Agreement, the
exercise price of Ordinary Shares upon exercise of any Option by a
Participant shall be paid in full (i) in cash, (ii) in Ordinary
Shares which have been held by the Participant for not less than
six months prior to the exercise of the Option, valued at its Fair
Market Value on the date of exercise, (iii) in cash by a
broker-dealer to whom the holder of the Option has submitted an
exercise notice consisting of a fully endorsed Option, or (iv) by
such other medium of payment as the Board or the Committee, as
applicable, in its sole discretion, shall authorize, or by any
combination of (i), (ii), or (iii), at the sole discretion of the
Board or the Committee, as applicable, or in any manner
provided in the Option Agreement, except by directing ETHC to
withhold Ordinary Shares otherwise issuable upon the exercise of
the Option in payment of the exercise price. In the case of payment
pursuant to (ii) or (iii), above, the Participant’s election
must be made on or prior to the date of exercise of the Option and
must be irrevocable. In lieu of a separate election governing each
exercise of an Option, a Participant may file a blanket election
which shall govern all future exercises of Options until revoked by
the Participant. ETHC shall cause its register of members to be
updated to reflect the issue to the Participant (or, if applicable,
the legatee(s), executor(s), personal representative(s), or
distributee(s) of a deceased Participant, or the assignee(s) as
provided in Section 11) of the total number of Ordinary Shares
issuable pursuant to the exercise of any Option as soon as
reasonably practicable after such exercise.
9.
Adjustments
(a)
Appropriate adjustment in the maximum number of Ordinary Shares
issuable pursuant to this Plan, the maximum number of Ordinary
Shares with respect to which Options may be granted within any
12-month period to any Participant during the duration of this
Plan, the number of shares subject to Options granted under this
Plan, and the exercise price with respect to Options, shall be made
to give effect to any increase or decrease in the number of issued
Ordinary Shares resulting from a subdivision or consolidation of
shares whether through reorganization, recapitalization, division
of shares, reverse share split, spin-off, split-off, spin-out, or
other distribution of assets to shareholders, issue of bonus shares
or combination of shares, assumption and conversion of outstanding
Options due to an acquisition by ETHC of the shares, stock or
assets of any other company or corporation, other increase or
decrease in the number of such shares outstanding effected, without
receipt of consideration by ETHC, or any other occurrence for which
the Committee determines an adjustment is appropriate. If the
number of Ordinary Shares subject to an Option has been adjusted
pursuant to this paragraph, the decision of the Board or the
Committee, as applicable, as to the amount and timing of any such
adjustments shall be conclusive.
(b)
The Committee shall make all determinations relating to the
applicability and interpretation of this Section 9, and all
such determinations shall be conclusive and binding.
10.
Terms and Conditions of Options
(a)
In order for an Option to be effective, each Participant shall
agree to such restrictions and conditions and other terms in
connection with the exercise of an Option, including restrictions
and conditions on the disposition of the Ordinary Shares acquired
upon the exercise, grant or sale thereof, as the Committee may deem
appropriate. The certificates (if any) delivered to a Participant
evidencing the Ordinary Shares acquired upon exercise of an Option
may bear a legend referring to the restrictions and conditions and
other terms contained in the respective Option Agreement and this
Plan, and ETHC may place a stop transfer order with its transfer
agent against the transfer of such shares. If requested to do so by
the Board or the Committee, as applicable, at the time of exercise
of an Option, each Participant shall execute a written instrument
stating that he or she is purchasing the Ordinary Shares for
investment and not with any present intention to sell the
same.
(b)
The obligation of ETHC to sell and issue Ordinary Shares under the
Plan shall be subject to all applicable laws, regulations, rules
and approvals. A Participant shall have no rights as a shareholder
with respect to any shares covered by an Option granted to, or
exercised by, him or her until the date on which his or her name is
entered on the register of members of ETHC as the holder of such
shares. No adjustment other than pursuant to Section 9 (a) hereof
shall be made for dividends or other rights for which the record
date is prior to the date on which his or her name is entered on
the register of members of ETHC as the holder of the applicable
shares.
11.
Nontransferability
(a)
Except as provided in subsection (b) next below, Options governed
hereby and any rights and privileges pertaining thereto, may not be
transferred, assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the laws of
descent and distribution, and shall not be subject to execution,
attachment or similar process. The granting of an Option shall
impose no obligation upon the applicable Participant to exercise
such Option.
(b)
Notwithstanding the provisions of subsection (a) above, a
Participant, at any time prior to his or her death, may assign all
or any portion of an Option granted to him or her to (i) his or her
spouse or lineal descendant, (ii) the trustee of a trust for the
primary benefit of his or her spouse or lineal descendant, (iii) a
partnership of which his or her spouse and lineal descendants are
the only partners, or (iv) a tax exempt organization. In such
event, the spouse, lineal descendant, trustee, partnership or tax
exempt organization will be entitled to all of the rights of the
Participant with respect to the assigned portion of such Option,
and such portion of the Option will continue to be subject to all
of the terms, conditions and restrictions applicable to the Option,
as set forth herein and in the related Option Agreement immediately
prior to the effective date of the assignment. Any such assignment
will be permitted only if (i) the Participant does not receive any
consideration therefore, and (ii) the assignment is expressly
permitted by the applicable Option Agreement and approved by the
Committee. Any such assignment shall be evidenced by an appropriate
written document executed by the Participant, and a copy thereof
shall be delivered to ETHC on or prior to the effective date of the
assignment.
(c)
The offer and sale of Ordinary Shares underlying the Options have
not been registered under the United States Securities Act of 1933,
as amended (the “Act”). A Participant shall not sell or
otherwise dispose of the Ordinary Shares acquired pursuant to the
exercise of such Options, in violation of the Act.
12.
Indemnification of the Committee
Subject always to the terms of the
Memorandum and Articles of Association of ETHC, i
n addition
to such other rights of indemnification as they may have as members
of the Board, or as members of the Committee, or as its delegatees,
the members of the Committee and its delegatees shall be
indemnified by ETHC against (a) the reasonable expenses (as such
expenses are incurred), including attorneys’ fees actually
and necessarily incurred in connection with the defense of any
action, suit or proceeding (or in connection with any appeal
therein), to which they or any of them may be a party by reason of
any action taken or failure to act under or in connection with the
Plan, or any Option granted hereunder; and (b) all amounts paid by
them in settlement thereof (provided such settlement is approved by
independent legal counsel selected by ETHC) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in
such action, suit or proceeding that such Committee member or
delegatee, as applicable, is liable for gross negligence or gross
misconduct in the performance of his or her duties; provided that
within 60 days after institution of any such action, suit or
proceeding a Committee member or delegatee shall in writing offer
ETHC the opportunity, at its own expense, to handle and defend the
same.
13.
No Contract of Employment or Service on the Board
Neither
the adoption of this Plan nor the grant of any Option shall be
deemed to obligate ETHC or any subsidiary to continue the
employment or service on the Board of any Participant for any
particular period, nor shall the granting of an Option constitute a
request or consent to postpone the retirement date of any
Participant.
14.
Termination and Amendment of this Plan
Unless
required by law, no termination, suspension, amendment or
modification of this Plan shall adversely affect any right acquired
by any Participant under an Option granted before the date of such
termination, suspension, amendment or modification, unless such
Participant shall consent; but it shall be conclusively presumed
that any adjustment for changes in capitalization as provided for
herein does not adversely affect any such right.
15.
Effective Date of this Plan
This Plan shall become effective
upon its approval
pursuant to a resolution of the members of
ETHC passed in accordance with the Memorandum and Articles of
Association of ETHC
.
16.
Withholding Taxes
Whenever
ETHC proposes or is required to issue or transfer Ordinary Shares
to a Participant under this Plan, the Board or the Committee, as
applicable, shall have the right to require the Participant to
remit to ETHC an amount sufficient to satisfy any withholding tax
requirements prior to the
register of members of ETHC being
updated to reflect the issue of
such shares. If the
register of members of
ETHC has been updated to reflect the issue of
such shares
prior to the time a withholding obligation arises, ETHC shall have
the right to require the Participant to remit to ETHC an amount
sufficient to satisfy all withholding tax requirements at the time
such obligation arises and to withhold from other amounts payable
to the Participant, as compensation or otherwise, as necessary. A
Participant may elect to satisfy any such tax withholding
obligation incurred with respect to the Taxable Date of an Option
by (a) directing ETHC to not issue or transfer to the Participant a
portion of the Ordinary Shares otherwise issuable or transferrable
to the Participant, or (b) transferring to ETHC a certain number of
Ordinary Shares either subject to an Option being exercised or
previously owned, such shares being valued at the Fair Market Value
thereof on the Taxable Date
(provided always that a Participant
may only transfer to ETHC Ordinary Shares where ETHC consents to
such transfer and such transfer is, in the determination of the
Board, permitted having regard to the requirements contained in the
Memorandum and Articles of Association of ETHC and the BVI
Act)
. Notwithstanding any provision of this Plan to the
contrary, a Participant’s election pursuant to the preceding
sentence (a) must be made on or prior to the Taxable Date with
respect to such Option, and (b) must be irrevocable. In lieu of a
separate election on each Taxable Date of an Option, a Participant
may make a blanket election with the Board or the Committee that
shall govern all future Taxable Dates until revoked by the
Participant. If the holder of Ordinary Shares purchased in
connection with the exercise of an Option disposes of such shares
within two years of the date such Option was granted or within one
year of such exercise, he or she shall notify ETHC of such
disposition and remit an amount necessary to satisfy any applicable
withholding requirements. If such holder does not remit such
amount, ETHC may withhold all or a portion of any amounts then or
in the future owed to such holder as necessary to satisfy such
requirements. Taxable Date means the date a Participant recognizes
income with respect to an Option under any applicable tax
law.
17.
Ratification of Awards
The
determination by a Committee to grant any Award under this Plan,
must be ratified in full by the Board of Directors of ETHC. Any
such Award which is not ratified in full by the Board of Directors
of ETHC within 60 days after the date of grant thereof shall be
null and void.
18.
Leaves of Absence
A
period of leave of absence shall not be deemed a termination of
employment or service for purposes of Options granted under this
Plan, if such leave of absence is expressly approved in writing by
the Board or the Committee, as applicable, as a leave of absence
for purposes of this Plan.
19.
Governing Law
This
Plan, and all agreements hereunder, shall be construed in
accordance with and governed by the laws of Hong Kong.
20.
Fair Market Value
“Fair Market
Value” as of a given date for all purposes of this Plan and
any Option Agreement means (a) if the Ordinary Shares are listed on
a national securities exchange or the Nasdaq Stock Market’s
National Market, NASDAQ Small Cap or similar market, the average of
the closing prices of the Ordinary Shares for the 10 consecutive
trading days immediately preceding such given date; (b) if the
Ordinary Shares are principally traded on a national securities
exchange, NASDAQ or similar market but there are no reported
closing sales prices on such exchange, NASDAQ or similar market
during the 10 consecutive trading days immediately preceding such
given date or if the Ordinary Shares are principally traded on the
over-the-counter market, the average of the mean between the bid
and the asked price for the Ordinary Shares at the close of trading
for the 10 consecutive trading days immediately preceding such
given date; or (c) if the Ordinary Shares are neither listed on a
national securities exchange, NASDAQ or similar market, nor traded
on the over-the-counter market, or if no such bid and asked prices
are otherwise available, such value as the Board, in good faith,
shall determine. The Board or any Committee shall have broad
discretion in selecting a valuation method consistent with this
Section 20 for purposes of determining “Fair Market
Value.”
21.
Successors
In the
event of a liquidation, dissolution, sale or transfer of
substantially all of the assets of ETHC, or a merger or
consolidation involving ETHC, all obligations of ETHC under this
Plan with respect to Options governed by this Plan shall be binding
on the successor to the transaction. Employment of a Participant
with such a successor or service on the board of directors of a
successor shall be considered employment of the Participant with
ETHC, or service on the Board, for purposes of this
Plan.
22.
Notices
Notices
given pursuant to this Plan shall be in writing and shall be deemed
received when personally delivered or five days after mailed by
registered or certified mail, return receipt requested, addressee
only, postage prepaid. Notice to ETHC shall be directed
to:
Mr.
T.C. Leung, Chairman
Euro
Tech (Far East) Ltd.
18/F
Gee Chang Hong Centre
65 Wong
Chuk Hang Road
Hong
Kong
Notices to or with respect to a
Participant shall be directed to the Participant, or the executors,
personal representatives or distributees of a deceased Participant
or to a Participant’s assignee, at the Participant’s or
assignee’s home address on the records of ETHC.
IN
WITNESS WHEREOF, ETHC has caused this Plan to be executed on its
behalf by its duly authorized officer on April 18,
2019.
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EURO
TECH HOLDINGS COMPANY LIMITED
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By:
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/s/
T.C. Leung
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T.C. Leung, Chief
Executive Officer
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