Guohao law firm (Shanghai)
About Konfoong Materials International Co.Ltd(300666)
Phase I stock option incentive plan
Matters related to the third exercise of stock options granted for the first time
Legal opinion
To: Konfoong Materials International Co.Ltd(300666)
Guohao law firm (Shanghai) (hereinafter referred to as “the firm”) accepts the entrustment of Konfoong Materials International Co.Ltd(300666) (hereinafter referred to as ” Konfoong Materials International Co.Ltd(300666) ” or “the company”) to act as the special legal counsel for the first phase of the company’s stock option incentive plan (hereinafter referred to as “the incentive plan”).
In accordance with the relevant provisions of the measures for the administration of equity incentive of listed companies issued by the China Securities Regulatory Commission (hereinafter referred to as the “CSRC”), and in accordance with the business standards, ethics and the spirit of diligence recognized by the lawyer industry, the lawyers of this office have carried out verification on the third exercise of stock options granted for the first time in this incentive plan (hereinafter referred to as “this exercise”) and issued this legal opinion.
Section I Introduction
The lawyer of our firm gives legal opinions according to the facts that have occurred or existed before the date of issuance of this legal opinion, the current laws and regulations of China and the relevant provisions of the CSRC, and declares as follows:
(I) in accordance with the securities law of the people’s Republic of China, the measures for the administration of securities legal business of law firms and the rules for the practice of securities legal business of law firms (for Trial Implementation), and the facts that have occurred or exist before the date of issuance of this legal opinion, the firm and its lawyers have strictly performed their statutory duties, followed the principles of diligence, good faith and full verification, Ensure that the facts identified in this legal opinion are true, accurate and complete, that the concluding opinions issued are legal and accurate, and that there are no false records, misleading statements or major omissions, and bear corresponding legal liabilities;
(II) the company guarantees that it has provided the lawyers of the firm with authentic, complete and effective original written materials, copies or oral testimony necessary for the issuance of this legal opinion;
(III) for the fact that this legal opinion is very important and cannot be supported by independent evidence, our lawyers rely on the supporting documents issued by relevant government departments, companies or other relevant units and individuals or the interview transcripts of our lawyers;
(IV) when issuing legal opinions, our lawyers have fulfilled the special duty of care of legal professionals for legal related business matters and the general duty of care of ordinary people for other business matters;
(V) our lawyers only express their opinions on the legality and relevant legal issues of this exercise, and do not express any opinions on the accounting, auditing and other professional matters involved in this exercise. The reference of some data or conclusions in relevant accounting statements and audit reports in this legal opinion does not mean that we make any express or implied guarantee for the authenticity and accuracy of these data and conclusions, Our lawyers are not qualified to verify and evaluate the contents of these documents;
(VI) our lawyer agrees to take this legal opinion as the necessary legal document for the company’s exercise of power this time, and is willing to bear corresponding legal liabilities;
(VII) our lawyer has not authorized any unit or individual to make any explanation or explanation on this legal opinion; (VIII) this legal opinion is only used by the company for the purpose of this exercise, and shall not be used for any other purpose.
Section II main body
1、 Approval and authorization of this exercise
Verified by our lawyer:
1. On March 15, 2019, Konfoong Materials International Co.Ltd(300666) the second extraordinary general meeting of shareholders in 2019 deliberated and approved the proposal on the company’s first stock option incentive plan (Draft) and its summary, the proposal on the company’s measures for the implementation and assessment of the first stock option incentive plan, and the proposal on requesting the general meeting of shareholders to authorize the board of directors to handle matters related to the company’s first stock option incentive plan, Approve the company’s implementation of the incentive plan, and authorize the board of directors to handle relevant matters of the incentive plan, including authorizing the board of directors to review and confirm the exercise qualification and exercise conditions of the incentive object, decide whether the incentive object can exercise the right, and cancel the stock options of the incentive object that have not been exercised.
2. On April 25, 2022, the 21st Meeting of Konfoong Materials International Co.Ltd(300666) the third board of directors deliberated and approved the proposal on the achievement of the exercise conditions in the third exercise period of the first stock option incentive plan, and considered that the exercise conditions in the third exercise period of the first stock option incentive plan have been achieved, It is agreed that 188 incentive objects who meet the exercise conditions can exercise a total of 4.236 million stock options in the third exercise period. The independent directors of the company expressed their independent opinions on this exercise.
3. On April 25, 2022, the 19th meeting of Konfoong Materials International Co.Ltd(300666) the third session of the board of supervisors deliberated and approved the above proposal on the achievement of the exercise conditions of the third exercise period of stock options granted for the first time in the first stock option incentive plan, and considered that the exercise conditions of the third exercise period of stock options granted for the first time in the company’s incentive plan had been met; The exercise qualification of 188 incentive objects with feasible rights is legal and effective, and meets the relevant provisions of this incentive plan and the measures for the administration of the implementation and assessment of the first stock option incentive plan; It is agreed that 188 incentive objects who meet the exercise conditions can exercise a total of 4.236 million stock options in the third exercise period.
Our lawyers believe that as of the date of issuance of this legal opinion, Konfoong Materials International Co.Ltd(300666) has obtained the necessary approval and authorization for this exercise, which is in line with the relevant provisions of this incentive plan.
2、 Conditions for this exercise
(I) the company does not have any circumstances that prohibit the exercise of rights as stipulated in the incentive plan
Our lawyers examined the audit report and financial statements and internal control assurance report of the Konfoong Materials International Co.Ltd(300666) latest fiscal year, i.e. 2021 issued by Lixin Certified Public Accountants (special general partnership), as well as the implementation announcement of equity distribution in the last 36 months after the company’s listing, and inquired about the issuer’s commitments and performance on the website of Shenzhen Stock Exchange.
After verification by our lawyers and confirmation by the company, as of the date of issuance of this legal opinion, Konfoong Materials International Co.Ltd(300666) no one of the following circumstances has occurred:
(1) The financial and accounting report of the most recent fiscal year is an audit report with a negative opinion or unable to express an opinion issued by a certified public accountant;
(2) The internal control of the financial report of the latest fiscal year is an audit report with a negative opinion or unable to express an opinion issued by a certified public accountant;
(3) Failure to distribute profits in accordance with laws, regulations, articles of association and public commitments within the last 36 months after listing;
(4) Equity incentive is not allowed according to laws and regulations;
(5) Other circumstances recognized by the CSRC.
(II) except for one incentive object who resigned due to resignation, the incentive object has not been prohibited from exercising his rights as stipulated in the incentive plan
1. According to the proposal on cancellation of some granted stock options in the first stock option incentive plan deliberated and adopted at the 21st Meeting of Konfoong Materials International Co.Ltd(300666) the third board of directors, one incentive object resigned for personal reasons and was no longer qualified as an incentive object.
After verification by the lawyers of the firm, as of the date of issuance of this legal opinion, the incentive object resigned due to resignation. According to the relevant provisions of the incentive plan “changes in the personal situation of the incentive object”, if the incentive object resigns due to resignation, the stock options that are not approved to exercise shall not be exercised and shall be cancelled by the company.
2. Our lawyers checked the list of incentive objects of the incentive plan, and inquired the public information of “Securities and futures market dishonesty record query platform”, the websites of CSRC and stock exchange, and “China executive information disclosure network”.
After verification by lawyers of the firm and confirmation by other incentive objects other than the resigned object, these incentive objects have not been under any of the following circumstances:
(1) Being identified as an inappropriate candidate by the stock exchange within the last 12 months;
(2) In the last 12 months, it has been identified as an inappropriate candidate by the CSRC and its dispatched offices;
(3) Being administratively punished by the CSRC and its dispatched offices or taking market entry prohibition measures for major violations of laws and regulations in the last 12 months;
(4) Those who are not allowed to serve as directors or senior managers of the company as stipulated in the company law of the people’s Republic of China;
(5) Those who are not allowed to participate in the equity incentive of listed companies according to laws and regulations;
(6) Other circumstances recognized by the CSRC.
(III) the company meets the company’s performance assessment requirements specified in the incentive plan
The lawyers of the firm examined the audit report and financial statements of Konfoong Materials International Co.Ltd(300666) 2021 issued by Lixin Certified Public Accountants (special general partnership), and confirmed by the company that the actual growth rate of the company’s operating revenue in 2021 is not less than 48% based on the average operating revenue from 2016 to 2018.
Therefore, Konfoong Materials International Co.Ltd(300666) in the third exercise period of stock option granted for the first time in this incentive plan, it meets the performance assessment requirements of the company specified in this incentive plan.
(IV) performance appraisal of incentive objects at individual level
According to the assessment form for the third exercise period of stock option granted by the first stock option incentive plan of the company for the first time, the assessment results of the remaining 188 incentive objects granted by the company for the first time are as follows, except for the disqualified incentive objects, according to the salary and assessment committee of Konfoong Materials International Co.Ltd(300666) the third session of the board of directors:
(1) 184 incentive objects have a personal performance appraisal grade of “a”; and
(2) The individual performance appraisal grade of the four incentive objects is “B”.
Therefore, except for the disqualified incentive objects, the other 188 incentive objects granted stock options for the first time in this incentive plan are not unable to exercise their rights due to the performance evaluation at the individual level.
To sum up, the lawyers of our firm, after verification, believe that as of the date of issuance of this legal opinion, except for one object who is no longer qualified as an incentive object of this incentive plan due to resignation, Konfoong Materials International Co.Ltd(300666) and the other 188 incentive objects granted stock options for the first time in this incentive plan do not have the situation of being unable to exercise their rights, which can be based on the results of performance appraisal at the company and individual level, Exercise stock options in accordance with the provisions of this incentive plan. 3、 The number and exercise price of stock options exercised this time
1. Number of stock options exercised this time
According to the proposal on the achievement of the exercise conditions for the first time granting stock options in the third exercise period of the first stock option incentive plan deliberated and adopted at the 21st Meeting of Konfoong Materials International Co.Ltd(300666) the third board of directors, the board of directors agreed that 188 incentive objects meeting the exercise conditions could exercise a total of 4.236 million stock options in the third exercise period.
Verified by our lawyer:
(1) According to the proposal on granting stock options to incentive objects deliberated and adopted at the 12th meeting of Konfoong Materials International Co.Ltd(300666) the second board of directors, the board of directors considered that the granting conditions of the company’s incentive plan had been met, and determined to grant 14.64 million stock options to 200 incentive objects;
(2) According to the proposal on the cancellation of some granted stock options under the first stock option incentive plan deliberated and approved by the Konfoong Materials International Co.Ltd(300666) board of directors and the announcement on the completion of the cancellation of stock options disclosed by the company, a total of 12 incentive objects have resigned as of the date of issuance of this legal opinion. A total of 520000 stock options were granted to the company;
(3) Konfoong Materials International Co.Ltd(300666) in the third exercise period of stock option granted for the first time in this incentive plan, it meets the performance assessment requirements of the company specified in this incentive plan. According to the provisions of this incentive plan, the exercise proportion of the third exercise period of stock options granted for the first time in this incentive plan is 30%;
(4) The appraisal results of 188 incentive objects were “a” or “B” respectively. According to the provisions of the “individual level performance appraisal requirements” of this incentive plan, the standard coefficient of incentive objects with individual performance appraisal grades of “a” and “B” is 1.0, and all rights can be exercised.
Therefore, after verification, our lawyers believe that Konfoong Materials International Co.Ltd(300666) agrees that 188 incentive objects who meet the exercise conditions can exercise a total of 4.236 million stock options in the third exercise period, which is in line with the provisions of this incentive plan. 2. Exercise price of this exercise
According to the provisions of the “adjustment method of exercise price” of this incentive plan, after the grant of corresponding stock options, if the company has matters such as dividend distribution, conversion of capital reserve into share capital, distribution of stock dividends, stock subdivision, allotment or reduction of shares before the exercise of incentive objects, the exercise price shall be adjusted accordingly. In case of the above circumstances, the board of directors of the company shall consider and pass the proposal on adjusting the exercise price of stock options. After the adjustment proposal is deliberated and approved by the board of directors, the company shall timely disclose the announcement of the resolution of the board of directors.
After verification by the lawyers of the firm, on May 28, 2021, Konfoong Materials International Co.Ltd(300666) the sixth meeting of the third board of directors deliberated and approved the proposal on adjusting the exercise price of stock options granted for the first time in the first stock option incentive plan, and agreed to adjust the exercise price of stock options granted for the first time in the incentive plan to 39.24 yuan / share from the ex right and ex dividend date of equity distribution in 2020 (Note: May 31, 2021). On May 28, 2021, the company disclosed the corresponding announcement on the resolution of the sixth meeting of the third board of directors and the announcement on adjusting the exercise price of stock options granted for the first time in the first stock option incentive plan.
4、 Cancellation of stock options not approved to exercise this time
According to the proposal on Canceling Part of the granted stock options in the first stock option incentive plan deliberated and adopted at the 21st Meeting of Konfoong Materials International Co.Ltd(300666) the third board of directors, since one incentive object is no longer qualified as an incentive object due to resignation, the board of directors agreed to cancel a total of 15000 stock options granted to the incentive object but not exercised.
After verification by the lawyers of the firm, as of the date of issuance of this legal opinion, the incentive object resigned due to resignation. According to the relevant provisions of “changes in the personal situation of the incentive object” in the incentive plan, the incentive object resigned due to resignation, and the 15000 stock options that were not approved to be exercised shall not be exercised and shall be cancelled by the company. Therefore, our lawyers believe that Konfoong Materials International Co.Ltd(300666) canceling the 15000 stock options granted but not exercised by one leaving object is in line with the provisions of this incentive plan.
5、 Concluding observations
To sum up, our lawyers believe that as of the date of issuance of this legal opinion, the exercise has obtained the necessary approval and authorization at this stage, and the number and price of stock options exercised this time and the cancellation of stock options not allowed to exercise are in line with this incentive
