2.6 “Code” means the Internal Revenue Code of 1986 of the United States, as amended.2.7 “Committee” means the committee of the Board described in Article 11.2.8 “Consultant” means any consultant or adviser if: (a) the consultant or adviserrenders bona fide services to a Service Recipient; (b) the services rendered by the consultant oradviser are not in connection with the offer or sale of securities in a capital-raising transactionand do not directly or indirectly promote or maintain a market for the Company’s securities; and(c) the consultant or adviser is a natural person who has contracted directly with the ServiceRecipient to render such services.2.9 “Corporate Transaction” means any of the following transactions, provided,however, that the Committee shall determine under (d) and (e) whether multiple transactions arerelated, and its determination shall be final, binding and conclusive:(a) an amalgamation, arrangement or consolidation in which the Company is not the survivingentity, except for a transaction the principal purpose of which is to change the jurisdiction inwhich the Company is incorporated;(b) the sale, transfer or other disposition of all or substantially all of the assets of theCompany;(c) the complete liquidation or dissolution of the Company;(d) any reverse takeover or series of related transactions culminating in a reverse takeover(including, but not limited to, a tender offer followed by a reverse takeover) in which the Companyis the surviving entity but (A) the Ordinary Shares outstanding immediately prior to such takeoverare converted or exchanged by virtue of the takeover into other property, whether in the form ofsecurities, cash or otherwise, or (B) in which securities possessing more than fifty percent (50%)of the total combined voting power of the Company’s outstanding securities are transferred to aperson or persons different from those who held such securities immediately prior to such takeoveror the initial transaction culminating in such takeover, but excluding any such transaction orseries of related transactions that the Committee determines shall not be a Corporate Transaction;or(e) acquisition in a single or series of related transactions by any person or related groupof persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficialownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more thanfifty percent (50%) of the total combined voting power of the Company’s outstanding securities butexcluding any such transaction or series of related transactions that the Committee determinesshall not be a Corporate Transaction.2.10 “Deferred Share” means a right to receive a specified number of Shares duringspecified time periods pursuant to Article 8.2.11 “Director” means a director of the Board.2.12 “Disability” means that the Participant qualifies to receive long-term disabilitypayments under the Service Recipient’s long-term disability insurance program, as it may beamended from time to time, to which the Participant provides services regardless of whether theParticipant is covered by such policy. If the Service Recipient to which the Participant providesservice does not have a long-term disability plan in place, “Disability” means that a Participantis unable to carry out the responsibilities and functions of the position held by the Participantby reason of any medically determinable physical or mental impairment for a period of not less thanninety (90) consecutive days. A Participant will not be considered to have incurred a Disabilityunless he or she furnishes proof of such impairment sufficient to satisfy the Committee in itsdiscretion.2.13 “Dividend Equivalents” means a right granted to a Participant pursuant to Article8 to receive the equivalent value (in cash or Share) of dividends paid on Share.2.14 “Effective Date” shall have the meaning set forth in Section 12.1.2.15 “Employee” means any person, including an officer or member of the Board of theCompany, any Parent or Subsidiary of the Company, who is in the employ of a Service Recipient,subject to the control anddirection of the Service Recipient as to both the work to be performed and the manner andmethod of performance. The payment of a director’s fee by a Service Recipient shall not besufficient to constitute “employment” by the Service Recipient.Share Incentive Plan Issue 2
 
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2.16 “Exchange Act” means the Securities Exchange Act of 1934 of the United States, asamended.2.17 “Fair Market Value” means, as of any date, the value of Shares determined asfollows:(a) If the Shares are listed on one or more established Share exchanges or national marketsystems, including without limitation, The Nasdaq National Market or The Nasdaq SmallCap Market ofThe Nasdaq Share Market, its Fair Market Value shall be the closing sales price for such shares (orthe closing bid, if no sales were reported) as quoted on the principal exchange or system on whichthe Shares are listed (as determined by the Committee) on the date of determination (or, if noclosing sales price or closing bid was reported on that date, as applicable, on the last tradingdate such closing sales price or closing bid was reported), as reported in The Wall Street Journalor such other source as the Committee deems reliable;(b) If the Shares are regularly quoted on an automated quotation system (including the OTCBulletin Board) or by a recognized securities dealer, its Fair Market Value shall be the closingsales price for such shares as quoted on such system or by such securities dealer on the date ofdetermination, but if selling prices are not reported, the Fair Market Value of an Share shall bethe mean between the high bid and low asked prices for the Shares on the date of determination (or,if no such prices were reported on that date, on the last date such prices were reported), asreported in The Wall Street Journal or such other source as the Committee deems reliable; or(c) In the absence of an established market for the Shares of the type described in (i) and(ii), above, the Fair Market Value thereof shall be determined by the Committee in good faith byreference to the placing price of the latest private placement of the Shares and the development ofthe Company’s business operations and the general economic and market conditions since such latestprivate placement.2.18 “Hong Kong” means the Hong Kong Special Administrative Region of the PRC.2.19 “Incentive Share Option” means an Option that is intended to meet therequirements of Section 422 of the Code or any successor provision thereto.2.20 “Macau” means the Macau Special Administrative Region of the PRC.2.21 “Non-Qualified Share Option” means an Option that is not intended to be anIncentive Share Option.2.22 “Option” means a right granted to a Participant pursuant to Article 5 of the Planto purchase a specified number of Shares at a specified price during specified time periods. AnOption may be either an Incentive Share Option or a Non-Qualified Share Option.2.23 “Participant” means a person who, as a member of the Board, Consultant orEmployee, has been granted an Award pursuant to the Plan.2.24 “Parent” means: (i) a parent corporation under Section 424(e) of the Code; (ii)Melco International Development Limited or any Subsidiary thereof, or (iii) Publishing andBroadcasting Limited or any Subsidiary thereof.2.25 “Plan” means this Melco PBL Entertainment (Macau) Limited. Share Incentive AwardPlan, as it may be amended from time to time.2.26 “PRC” means the People’s Republic of China, other than Hong Kong, Macau andTaiwan.2.27 “Related Entity” means any business, corporation, partnership, limited liabilitycompany or other entity in which the Company, a Parent or Subsidiary of the Company holds asubstantial ownership interest, directly or indirectly but which is not a Subsidiary and which theBoard designates as a Related Entity for purposes of the Plan.Share Incentive Plan Issue 2
 
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2.28 “Restricted Share” means a Share awarded to a Participant pursuant to Article 6that is subject to certain restrictions and may be subject to risk of forfeiture.2.29 “Restricted Share Unit” means an Award granted pursuant to Section 8.4.2.30 “Securities Act” means the Securities Act of 1933 of the United States, asamended.2.31 “Service Recipient” means the Company, any Parent or Subsidiary of the Companyand any Related Entity to which a Participant provides services as an Employee, Consultant or as aDirector.2.32 “Share” means the ordinary share capital of the Company, par value US$0.01 pershare, and such other securities of the Company that may be substituted for Shares pursuant toArticle 10.2.33 “Share Appreciation Right” or “SAR” means a right granted pursuant toArticle 7 to receive a payment equal to the excess of the Fair Market Value of a specified numberof Shares on the date the SAR is exercised over the Fair Market Value on the date the SAR wasgranted as set forth in the applicable Award Agreement.2.34 “Share Payment” means (a) a payment in the form of Shares, or (b) an option orother right to purchase Shares, as part of any bonus, deferred compensation or other arrangement,made in lieu of all or any portion of the compensation, granted pursuant to Article 8.2.35 “Subsidiary” means any corporation or other entity of which a majority of theoutstanding voting shares or voting power is beneficially owned directly or indirectly by theCompany.2.36 “Trading Date” means the first day on which Shares are publicly traded on anexchange or national market system or other quotation system.**ARTICLE 3****SHARES SUBJECT TO THE PLAN**3.1 Number of Shares.(a) Subject to the provisions of Article 10 and Section 3.1(b), the maximum aggregate numberof Shares which may be issued pursuant to all Awards (including Incentive Share Options) is100,000,000.(b) To the extent that an Award terminates, expires, or lapses for any reason, any Sharessubject to the Award shall again be available for the grant of an Award pursuant to the Plan. Tothe extent permitted by Applicable Law or any exchange rule, Shares issued in assumption of, or insubstitution for, any outstanding awards of any entity acquired in any form or combination by theCompany or any Parent or Subsidiary of the Company shall not be counted against Shares availablefor grant pursuant to the Plan. Shares delivered by the Participant or withheld by the Companyupon the exercise of any Award under the Plan, in payment of the exercise price thereof or taxwithholding thereon, may again be optioned, granted or awarded hereunder, subject to thelimitations of Section 3.1(a), If any Restricted Shares are forfeited by the Participant orrepurchased by the Company, such Shares may again be optioned, granted or awarded hereunder,subject to the limitations of Section 3.1(a). Notwithstanding the provisions of this Section3.1(b), no Shares may again be optioned, granted or awarded if such action would cause an IncentiveShare Option to fail to qualify as an incentive stock option under Section 422 of the Code.3.2 Shares Distributed. Any Shares distributed pursuant to an Award may consist, inwhole or in part, of authorized and unissued Shares, treasury or Shares purchased on the openmarket. Additionally, in the discretion of the Committee, American Depository Shares in an amountequal to the number of Shares which otherwise would be distributed pursuant to an Award may bedistributed in lieu of Shares in settlement of any Award. If the number of Shares represented byan American Depository Share is other than on a one-to-one basis, the limitations of Section 3.1shall be adjusted to reflect the distribution of American Depository Shares in lieu of Shares.Share Incentive Plan Issue 2
 
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**ARTICLE 4****ELIGIBILITY AND PARTICIPATION**4.1 Eligibility. Persons eligible to participate in this Plan include Employees,Consultants, and all members of the Board, as determined by the Committee.4.2 Participation. Subject to the provisions of the Plan, the Committee may, fromtime to time, select from among all eligible individuals, those to whom Awards shall be granted andshall determine the nature and amount of each Award. No individual shall have any right to begranted an Award pursuant to this Plan.4.3 Jurisdictions. In order to assure the viability of Awards granted to Participantsemployed in various jurisdictions, the Committee may provide for such special terms as it mayconsider necessary or appropriate to accommodate differences in local law, tax policy, or customapplicable in the jurisdiction in which the Participant resides or is employed. Moreover, theCommittee may approve such supplements to, or amendments, restatements, or alternative versions of,the Plan as it may consider necessary or appropriate for such purposes without thereby affectingthe terms of the Plan as in effect for any other purpose; *provided, however*, that no suchsupplements, amendments, restatements, or alternative versions shall increase the share limitationscontained in Section 3.1 of the Plan. Notwithstanding the foregoing, the Committee may not take anyactions hereunder, and no Awards shall be granted, that would violate any Applicable Laws.**ARTICLE 5****OPTIONS**5.1 General. The Committee is authorized to grant Options to Participants on thefollowing terms and conditions:(a) Exercise Price. The exercise price per Share subject to an Option shall bedetermined by the Committee and set forth in the Award Agreement which may be a fixed or variableprice related to the Fair Market Value of the Shares.(b) Time and Conditions of Exercise. The Committee shall determine the time or timesat which an Option may be exercised in whole or in part, including exercise prior to vesting;*provided*that the term of any Option granted under the Plan shall not exceed ten years, except asprovided in Section 12.2. The Committee shall also determine any conditions, if any, that must besatisfied before all or part of an Option may be exercised.(c) Payment. The Committee shall determine the methods by which the exercise price ofan Option may be paid, the form of payment, including, without limitation (i) cash or checkdenominated in U.S. Dollars, Hong Kong Dollars, or any other local currency as approved by theCommittee, (ii) Shares held for such period of time as may be required by the Committee in order toavoid adverse financial accounting consequences and having a Fair Market Value on the date ofdelivery equal to the aggregate exercise price of the Option or exercised portion thereof, (iii)after the Trading Date the delivery of a notice that the Participant has placed a market sell orderwith a broker with respect to Shares then issuable upon exercise of the Option, and that the brokerhas been directed to pay a sufficient portion of the net proceeds of the sale to the Company insatisfaction of the Option exercise price; *provided*that payment of such proceeds is then made tothe Company upon settlement of such sale, and the methods by which Shares shall be delivered ordeemed to be delivered to Participants, (iv) other property acceptable to the Committee with a FairMarket Value equal to the exercise price, or (v) any combination of the foregoing. Notwithstandingany other provision of the Plan to the contrary, no Participant who is a member of the Board or an“executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act shall bepermitted to pay the exercise price of an Option in any method which would violate Section 13(k) ofthe Exchange Act.(d) Evidence of Grant. All Options shall be evidenced by an Award Agreement betweenthe Company and the Participant. The Award Agreement shall include such additional provisions asmay be specified by the Committee.Share Incentive Plan Issue 2
 
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5.2 Incentive Share Options. Incentive Share Options shall be granted only toEmployees of theCompany, a Parent or Subsidiary of the Company. Incentive Share Options may not be granted toEmployees of a Related Entity. The terms of any Incentive Share Options granted pursuant to thePlan, in addition to the requirements of Section 5.1, must comply with the following additionalprovisions of this Section 5.2:(a) Expiration of Option. An Incentive Share Option may not be exercised to anyextent by anyone after the first to occur of the following events:(i) Ten years from the date it is granted, unless an earlier time is set in the AwardAgreement;(ii) Three months after the Participant’s termination of employment as an Employee; and(iii) One year after the date of the Participant’s termination of employment or service onaccount of Disability or death. Upon the Participant’s Disability or death, any Incentive ShareOptions exercisable at the Participant’s Disability or death may be exercised by the Participant’slegal representative or representatives, by the person or persons entitled to do so pursuant to theParticipant’s last will and testament, or, if the Participant fails to make testamentarydisposition of such Incentive Share Option or dies intestate, by the person or persons entitled toreceive the Incentive Share Option pursuant to the applicable laws of descent and distribution.(b) Individual Dollar Limitation. The aggregate Fair Market Value (determined as ofthe time the Option is granted) of all Shares with respect to which Incentive Share Options arefirst exercisable by a Participant in any calendar year may not exceed $100,000 or such otherlimitation as imposed by Section 422(d) of the Code, or any successor provision. To the extentthat Incentive Share Options are first exercisable by a Participant in excess of such limitation,the excess shall be considered Non-Qualified Share Options.(c) Ten Percent Owners. An Incentive Share Option shall be granted to any individualwho, at the date of grant, owns Shares possessing more than ten percent of the total combinedvoting power of all classes of shares of the Company only if such Option is granted at a price thatis not less than 110% of Fair Market Value on the date of grant and the Option is exercisable forno more than five years from the date of grant.(d) Transfer Restriction. The Participant shall give the Company prompt notice of anydisposition of Shares acquired by exercise of an Incentive Share Option within (i) two years fromthe date of grant of such Incentive Share Option or (ii) one year after the transfer of such Sharesto the Participant.(e) Expiration of Incentive Share Options. No Award of an Incentive Share Option maybe made pursuant to this Plan after the tenth anniversary of the Effective Date.(f) Right to Exercise. During a Participant’s lifetime, an Incentive Share Option maybe exercised only by the Participant.5.3 Substitution of Share Appreciation Rights. The Committee may provide in the AwardAgreement evidencing the grant of an Option that the Committee, in its sole discretion, shall havethe right to substitute a Share Appreciation Right for such Option at any time prior to or uponexercise of such Option, provided that such Share Appreciation Right shall be exercisable for thesame number of shares of Share as such substituted Option would have been exercisable for.**ARTICLE 6****RESTRICTED SHARES**6.1 Grant of Restricted Shares. The Committee is authorized to make Awards ofRestricted Shares to any Participant selected by the Committee in such amounts and subject to suchterms and conditions as determined by the Committee. All Awards of Restricted Shares shall beevidenced by an Award Agreement.6.2 Issuance and Restrictions. Subject to Section 9.4, Restricted Shares shall besubject to such restrictions on transferability and other restrictions as the Committee may impose(including, without limitation,limitations on the right to vote Restricted Shares or the right to receive dividends on theRestricted Share). These restrictions may lapse separately or in combination at such times,pursuant to such circumstances, in such installments, or otherwise, as the Committee determines atthe time of the grant of the Award or thereafter.Share Incentive Plan Issue 2
 
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6.3 Forfeiture. Except as otherwise determined by the Committee at the time of thegrant of the Award or thereafter, upon termination of employment or service during the applicablerestriction period, Restricted Shares that are at that time subject to restrictions shall beforfeited; *provided, however*, that, except as otherwise provided by Section 9.4, the Committee may(a) provide in any Restricted Share Award Agreement that restrictions or forfeiture conditionsrelating to Restricted Shares will be waived in whole or in part in the event of terminationsresulting from specified causes, and (b) in other cases waive in whole or in part restrictions orforfeiture conditions relating to Restricted Shares.6.4 Certificates for Restricted Shares. Restricted Shares granted pursuant to thePlan may be evidenced in such manner as the Committee shall determine. If certificatesrepresenting Restricted Shares are registered in the name of the Participant, certificates mustbear an appropriate legend referring to the terms, conditions, and restrictions applicable to suchRestricted Shares, and the Company may, at its discretion, retain physical possession of thecertificate until such time as all applicable restrictions lapse.**ARTICLE 7****SHARE APPRECIATION RIGHTS**7.1 Grant of Share Appreciation Rights.(a) A Share Appreciation Right may be granted to any Participant selected by the Committee. AShare Appreciation Right shall be subject to such terms and conditions not inconsistent with thePlan as the Committee shall impose and shall be evidenced by an Award Agreement.(b) A Share Appreciation Right shall entitle the Participant (or other person entitled toexercise the Share Appreciation Right pursuant to the Plan) to exercise all or a specified portionof the Share Appreciation Right (to the extent then exercisable pursuant to its terms) and toreceive from the Company an amount determined by multiplying the difference obtained by subtractingthe exercise price per share of the Share Appreciation Right from the Fair Market Value of a Shareon the date of exercise of the Share Appreciation Right by the number of Shares with respect towhich the Share Appreciation Right shall have been exercised, subject to any limitations theCommittee may impose.7.2 Payment and Limitations on Exercise.(a) Payment of the amounts determined under Section 7.1(b) above shall be in cash, in Shares(based on its Fair Market Value as of the date the Share Appreciation Right is exercised) or acombination of both, as determined by the Committee in the Award Agreement.(b) To the extent any payment under Section 7.1(b) is effected in Shares it shall be madesubject to satisfaction of all provisions of Article 5 above pertaining to Options.**ARTICLE 8****OTHER TYPES OF AWARDS**8.1 Dividend Equivalents. Any Participant selected by the Committee may be grantedDividend Equivalents based on the dividends declared on the Shares that are subject to any Award,to be credited as of dividend payment dates, during the period between the date the Award isgranted and the date the Award is exercised, vests or expires, as determined by the Committee.Such Dividend Equivalents shall be converted to cash or additional Shares by such formula and atsuch time and subject to such limitations as may be determined by the Committee.8.2 Share Payments. Any Participant selected by the Committee may receive SharePayments in the manner determined from time to time by the Committee; *provided*, that unlessotherwise determined by the Committee such Share Payments shall be made in lieu of base salary,bonus, or other cash compensation otherwise payable to such Participant. The number of sharesshall be determined by the Committee and maybe based upon the such performance criteria or other specific criteria determined appropriateby the Committee, determined on the date such Share Payment is made or on any date thereafter.Share Incentive Plan Issue 2
 
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8.3 Deferred Shares. Any Participant selected by the Committee may be granted anaward of Deferred Shares in the manner determined from time to time by the Committee. The numberof shares of Deferred Shares shall be determined by the Committee and may be linked to suchspecific criteria determined to be appropriate by the Committee, in each case on a specified dateor dates or over any period or periods determined by the Committee. Shares underlying a DeferredShare award will not be issued until the Deferred Share award has vested, pursuant to a vestingschedule or criteria set by the Committee. Unless otherwise provided by the Committee, aParticipant awarded Deferred Shares shall have no rights as a Company shareholder with respect tosuch Deferred Shares until such time as the Deferred Share Award has vested and the Sharesunderlying the Deferred Share Award has been issued.8.4 Restricted Share Units. The Committee is authorized to make Awards of RestrictedShare Units to any Participant selected by the Committee in such amounts and subject to such termsand conditions as determined by the Committee. At the time of grant, the Committee shall specifythe date or dates on which the Restricted Share Units shall become fully vested and nonforfeitable,and may specify such conditions to vesting as it deems appropriate. At the time of grant, theCommittee shall specify the maturity date applicable to each grant of Restricted Share Units whichshall be no earlier than the vesting date or dates of the Award and may be determined at theelection of the grantee. On the maturity date, the Company shall transfer to the Participant oneunrestricted, fully transferable Share for each Restricted Share Unit scheduled to be paid out onsuch date and not previously forfeited. The Committee shall specify the purchase price, if any, tobe paid by the grantee to the Company for such Shares.8.5 Term. Except as otherwise provided herein, the term of any Award of DividendEquivalents, Share Payments, Deferred Share, or Restricted Share Units shall be set by theCommittee in its discretion.8.6 Exercise or Purchase Price. The Committee may establish the exercise or purchaseprice, if any, of any Award of Deferred Share, Share Payments or Restricted Share Units; provided,however, that such price shall not be less than the par value of a Share, unless otherwisepermitted by Applicable Law.8.7 Exercise Upon Termination of Employment or Service. An Award of DividendEquivalents, Deferred Share, Share Payments, and Restricted Share Units shall only be exercisableor payable while the Participant is an Employee, Consultant or a member of the Board, asapplicable; *provided, however*, that the Committee in its sole and absolute discretion may providethat an Award of Dividend Equivalents, Share Payments, Deferred Share, or Restricted Share Unitsmay be exercised or paid subsequent to a termination of employment or service, as applicable, orfollowing a Change of Control of the Company, or because of the Participant’s retirement, death orDisability, or otherwise.8.8 Form of Payment. Payments with respect to any Awards granted under this Article 8shall be made in cash, in Shares or a combination of both, as determined by the Committee.8.9 Award Agreement. All Awards under this Article 8 shall be subject to suchadditional terms and conditions as determined by the Committee and shall be evidenced by an AwardAgreement.**ARTICLE 9****PROVISIONS APPLICABLE TO AWARDS**9.1 Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan may, in thediscretion of the Committee, be granted either alone, in addition to, or in tandem with, any otherAward granted pursuant to the Plan. Awards granted in addition to or in tandem with other Awardsmay be granted either at the same time as or at a different time from the grant of such otherAwards.9.2 Award Agreement. Awards under the Plan shall be evidenced by Award Agreementsthat set forth the terms, conditions and limitations for each Award which may include the term ofan Award, the provisions applicable in the event the Participant’s employment or serviceterminates, and the Company’s authority to unilaterally or bilaterally amend, modify, suspend,cancel or rescind an Award.Share Incentive Plan Issue 2
 
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9.3 Limits on Transfer. No right or interest of a Participant in any Award may bepledged, encumbered, or hypothecated to or in favor of any party other than the Company or aSubsidiary, or shall be subject to any lien, obligation, or liability of such Participant to anyother party other than the Company or a Subsidiary. Except as otherwise provided by the Committee,no Award shall be assigned, transferred, or otherwise disposed of by a Participant other than bywill or the laws of descent and distribution. The Committee by express provision in the Award oran amendment thereto may permit an Award (other than an Incentive Share Option) to be transferredto, exercised by and paid to certain persons or entities related to the Participant, including butnot limited to members of the Participant’s family, charitable institutions, or trusts or otherentities whose beneficiaries or beneficial owners are members of the Participant’s family and/orcharitable institutions, or to such other persons or entities as may be expressly approved by theCommittee, pursuant to such conditions and procedures as the Committee may establish. Anypermitted transfer shall be subject to the condition that the Committee receive evidencesatisfactory to it that the transfer is being made for estate and/or tax planning purposes (or to a“blind trust” in connection with the Participant’s termination of employment or service with theCompany or a Subsidiary to assume a position with a governmental, charitable, educational orsimilar non-profit institution) and on a basis consistent with the Company’s lawful issue ofsecurities.9.4 Beneficiaries. Notwithstanding Section 9.3, a Participant may, in the mannerdetermined by the Committee, designate a beneficiary to exercise the rights of the Participant andto receive any distribution with respect to any Award upon the Participant’s death. A beneficiary,legal guardian, legal representative, or other person claiming any rights pursuant to the Plan issubject to all terms and conditions of the Plan and any Award Agreement applicable to theParticipant, except to the extent the Plan and Award Agreement otherwise provide, and to anyadditional restrictions deemed necessary or appropriate by the Committee. If the Participant ismarried and resides in a community property jurisdiction, a designation of a person other than theParticipant’s spouse as his or her beneficiary with respect to more than 50% of the Participant’sinterest in the Award shall not be effective without the prior written consent of the Participant’sspouse. If no beneficiary has been designated or survives the Participant, payment shall be madeto the person entitled thereto pursuant to the Participant’s will or the laws of descent anddistribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by aParticipant at any time provided the change or revocation is filed with the Committee.9.5 Share Certificates. Notwithstanding anything herein to the contrary, the Companyshall not be required to issue or deliver any certificates evidencing shares of Share pursuant tothe exercise of any Award, unless and until the Board has determined, with advice of counsel, thatthe issuance and delivery of such certificates is in compliance with all Applicable Laws,regulations of governmental authorities and, if applicable, the requirements of any exchange onwhich the Shares are listed or traded. All Share certificates delivered pursuant to the Plan aresubject to any stop-transfer orders and other restrictions as the Committee deems necessary oradvisable to comply with federal, state, or foreign jurisdiction, securities or other laws, rulesand regulations and the rules of any national securities exchange or automated quotation system onwhich the Shares are listed, quoted, or traded. The Committee may place legends on any Sharecertificate to reference restrictions applicable to the Share. In addition to the terms andconditions provided herein, the Board may require that a Participant make such reasonablecovenants, agreements, and representations as the Board, in its discretion, deems advisable inorder to comply with any such laws, regulations, or requirements. The Committee shall have theright to require any Participant to comply with any timing or other restrictions with respect tothe settlement or exercise of any Award, including a window-period limitation, as may be imposed inthe discretion of the Committee.9.6 Paperless Administration. Subject to Applicable Laws, the Committee may makeAwards, provide applicable disclosure and procedures for exercise of Awards by an internet websiteor interactive voice response system for the paperless administration of Awards.9.7 Foreign Currency. A Participant may be required to provide evidence that anycurrency used to pay the exercise price of any Award were acquired and taken out of thejurisdiction in which the Participant resides in accordance with Applicable Laws, including foreignexchange control laws and regulations.**ARTICLE 10****CHANGES IN CAPITAL STRUCTURE**10.1 Adjustments. In the event of any dividend, share split, combination or exchangeof Shares, amalgamation, arrangement or consolidation, spin-off, recapitalization or otherdistribution (other than normalcash dividends) of Company assets to its shareholders, or any other change affecting theshares of Shares or the share price of a Share, the Committee shall make proportionate andequitable adjustments to reflect such change with respect to (a) the aggregate number and type ofshares that may be issued under the Plan (including, but not limited to, adjustments of thelimitations in Section 3.1); (b) the terms and conditions of any outstanding Awards (including,without limitation, any applicable performance targets or criteria with respect thereto); and (c)the grant or exercise price per share for any outstanding Awards under the Plan. Any suchadjustments shall be made in such manner as the Committee may determine in its discretion.Share Incentive Plan Issue 2
 
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10.2 Acceleration upon a Change of Control. Except as may otherwise be provided inany Award Agreement or any other written agreement entered into by and between the Company and aParticipant, if a Change of Control occurs and a Participant’s Options or Restricted Shares are notconverted, assumed, or replaced by a successor, such Awards shall become fully exercisable and allforfeiture restrictions on such Awards shall lapse. Upon, or in anticipation of, a Change ofControl, the Committee may in its sole discretion provide for (i) any and all Awards outstandinghereunder to terminate at a specific time in the future and shall give each Participant the rightto exercise such Awards during a period of time as the Committee shall determine, (ii) either thepurchase of any Award for an amount of cash equal to the amount that could have been attained uponthe exercise of such Award or realization of the Participant’s rights had such Award been currentlyexercisable or payable or fully vested (and, for the avoidance of doubt, if as of such date theCommittee determines in good faith that no amount would have been attained upon the exercise ofsuch Award or realization of the Participant’s rights, then such Award may be terminated by theCompany without payment), or (iii) the replacement of such Award with other rights or propertyselected by the Committee in its sole discretion the assumption of or substitution of such Award bythe successor or surviving corporation, or a parent or subsidiary thereof, with appropriateadjustments as to the number and kind of Shares and prices.10.3 Outstanding Awards — Corporate Transactions. In the event of a CorporateTransaction, each Award will terminate upon the consummation of the Corporate Transaction, unlessthe Award is assumed by the successor entity or Parent thereof in connection with the CorporateTransaction. Except as provided otherwise in an individual Award Agreement, in the event of aCorporate Transaction and:(a) the Award either is (x) assumed by the successor entity or Parent thereof or replacedwith a comparable Award (as determined by the Committee) with respect to shares of the capitalstock of the successor entity or Parent thereof or (y) replaced with a cash incentive program ofthe successor entity which preserves the compensation element of such Award existing at the time ofthe Corporate Transaction and provides for subsequent payout in accordance with the same vestingschedule applicable to such Award, then such Award (if assumed), the replacement Award (ifreplaced), or the cash incentive program automatically shall become fully vested, exercisable andpayable and be released from any restrictions on transfer (other than transfer restrictionsapplicable to Options) and repurchase or forfeiture rights, immediately upon termination of theParticipant’s employment or service with all Service Recipient within twelve (12) months of theCorporate Transaction without cause; and(b) For each Award that is neither assumed nor replaced, such portion of the Award shallautomatically become fully vested and exercisable and be released from any repurchase or forfeiturerights (other than repurchase rights exercisable at Fair Market Value) for all of the Shares at thetime represented by such portion of the Award, immediately prior to the specified effective date ofsuch Corporate Transaction, provided that the Participant remains an Employee, Consultant orDirector on the effective date of the Corporate Transaction.10.4 Outstanding Awards — Other Changes. In the event of any other change in thecapitalization of the Company or corporate change other than those specifically referred to in thisArticle 10, the Committee may, in its absolute discretion, make such adjustments in the number andclass of shares subject to Awards outstanding on the date on which such change occurs and in theper share grant or exercise price of each Award as the Committee may consider appropriate toprevent dilution or enlargement of rights.10.5 No Other Rights. Except as expressly provided in the Plan, no Participant shallhave any rights by reason of any subdivision or consolidation of Shares of any class, the paymentof any dividend, any increase or decrease in the number of shares of any class or any dissolution,liquidation, merger, or consolidation of the Company or any other corporation. Except as expresslyprovided in the Plan or pursuant to action of the Committee under the Plan, no issuance by theCompany of shares of any class, or securities convertible into shares of any class, shall affect,and no adjustment by reason thereof shall be made with respect to, the number of shares subject toan Award or the grant or exercise price of any Award.Share Incentive Plan Issue 2
 
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**ARTICLE 11****ADMINISTRATION**11.1 Committee. The Plan shall be administered by the Compensation Committee of theBoard. Reference to the Committee shall refer to the Board if the Compensation Committee does notyet exist or ceases to exist and the Board does not appoint a successor Committee. Notwithstandingthe foregoing, the full Board, acting by majority of its members in office shall conduct thegeneral administration of the Plan if required by Applicable Law, and with respect to Awardsgranted to Independent Directors and for purposes of such Awards the term “Committee” as used inthe Plan shall be deemed to refer to the Board.11.2 Action by the Committee. A majority of the Committee shall constitute a quorum.The acts of a majority of the members present at any meeting at which a quorum is present, and actsapproved in writing by a majority of the Committee in lieu of a meeting, shall be deemed the actsof the Committee. Each member of the Committee is entitled to, in good faith, rely or act upon anyreport or other information furnished to that member by any officer or other employee of theCompany or any Subsidiary, the Company’s independent certified public accountants, or any executivecompensation consultant or other professional retained by the Company to assist in theadministration of the Plan.11.3 Authority of Committee. Subject to any specific designation in the Plan, theCommittee has the exclusive power, authority and discretion to:(a) Designate Participants to receive Awards;(b) Determine the type or types of Awards to be granted to each Participant;(c) Determine the number of Awards to be granted and the number of Shares to which an Awardwill relate;(d) Determine the terms and conditions of any Award granted pursuant to the Plan, including,but not limited to, the exercise price, grant price, or purchase price, any restrictions orlimitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on theexercisability of an Award, and accelerations or waivers thereof, any provisions related tonon-competition and recapture of gain on an Award, based in each case on such considerations as theCommittee in its sole discretion determines;(e) Determine whether, to what extent, and pursuant to what circumstances an Award may besettled in, or the exercise price of an Award may be paid in, cash, Shares, other Awards, or otherproperty, or an Award may be canceled, forfeited, or surrendered;(f) Prescribe the form of each Award Agreement, which need not be identical for eachParticipant;(g) Decide all other matters that must be determined in connection with an Award;(h) Establish, adopt, or revise any rules and regulations as it may deem necessary oradvisable to administer the Plan;(i) Interpret the terms of, and any matter arising pursuant to, the Plan or any AwardAgreement; and(j) Make all other decisions and determinations that may be required pursuant to the Plan oras the Committee deems necessary or advisable to administer the Plan.11.4 Decisions Binding. The Committee’s interpretation of the Plan, any Awardsgranted pursuant to the Plan, any Award Agreement and all decisions and determinations by theCommittee with respect to the Plan are final, binding, and conclusive on all parties.Share Incentive Plan Issue 2
 
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**ARTICLE 12****EFFECTIVE AND EXPIRATION DATE**12.1 Effective Date. The Plan is effective as of the date the Plan is approved by theCompany’s shareholders (the “Effective Date”). The Plan will be deemed to be approved bythe shareholders if it receives the affirmative vote of the holders of a majority of the sharecapital of the Company present or represented and entitled to vote at a meeting duly held inaccordance with the applicable provisions of the Company’s Memorandum of Association and Articlesof Association.12.2 Expiration Date. The Plan will expire on, and no Award may be granted pursuantto the Plan after, the tenth anniversary of the Effective Date. Any Awards that are outstanding onthe tenth anniversary of the Effective Date shall remain in force according to the terms of thePlan and the applicable Award Agreement.**ARTICLE 13****AMENDMENT, MODIFICATION, AND TERMINATION**13.1 Amendment, Modification, And Termination. With the approval of the Board, at anytime and from time to time, the Committee may terminate, amend or modify the Plan; *provided,however*, that (a) to the extent necessary and desirable to comply with any applicable law,regulation, or stock exchange rule, the Company shall obtain shareholder approval of any Planamendment in such a manner and to such a degree as required, and (b) shareholder approval isrequired for any amendment to the Plan that (i) increases the number of Shares available under thePlan (other than any adjustment as provided by Article 10), (ii) permits the Committee to grantOptions with an exercise price that is below Fair Market Value on the date of grant, (iii) permitsthe Committee to extend the exercise period for an Option beyond ten years from the date of grant,or (iv) results in a material increase in benefits or a change in eligibility requirements.13.2 Awards Previously Granted. Except with respect to amendments made pursuant toSection 13.1, no termination, amendment, or modification of the Plan shall adversely affect in anymaterial way any Award previously granted pursuant to the Plan without the prior written consent ofthe Participant.**ARTICLE 14****GENERAL PROVISIONS**14.1 No Rights to Awards. No Participant, employee, or other person shall have anyclaim to be granted any Award pursuant to the Plan, and neither the Company nor the Committee isobligated to treat Participants, employees, and other persons uniformly.14.2 No Shareholders Rights. No Award gives the Participant any of the rights of aShareholder of the Company unless and until Shares are in fact issued to such person in connectionwith such Award.14.3 Taxes. No Shares shall be delivered under the Plan to any Participant until suchParticipant has made arrangements acceptable to the Committee for the satisfaction of any incomeand employment tax withholding obligations under Applicable Laws, including without limitation theMacau, Hong Kong or PRC tax laws, rules, regulations and government orders or the U.S. Federal,state or local tax laws, as applicable. The Company or any Subsidiary shall have the authority andthe right to deduct or withhold, or require a Participant to remit to the Company, an amountsufficient to satisfy federal, state, local and foreign taxes (including the Participant’s payrolltax obligations) required by law to be withheld with respect to any taxable event concerning aParticipant arising as a result of this Plan. The Committee may in its discretion and insatisfaction of the foregoing requirement allow a Participant to elect to have the Company withholdShares otherwise issuable under an Award (or allow the return of Shares) having a Fair Market Valueequal to the sums required to be withheld. Notwithstanding any other provision of the Plan, thenumber of Shares which may be withheld with respect to the issuance, vesting, exercise or paymentof any Award (or which may be repurchased from the Participant of such Award after such Shares wereacquired by the Participant from the Company) in order to satisfy the Participant’s federal, state,local and foreign income and payroll tax liabilities with respect to the issuance, vesting,exercise or payment of the Award shall, unless specifically approved by the Committee, be limitedto the number of Shares which have a Fair Market Value on the date of withholding or repurchaseequal to the aggregate amount of such liabilities based on the minimum statutory withholding ratesfor federal,state, local and foreign income tax and payroll tax purposes that are applicable to suchsupplemental taxable income.Share Incentive Plan Issue 2
 
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14.4 No Right to Employment or Services. Nothing in the Plan or any Award Agreementshall interfere with or limit in any way the right of the Service Recipient to terminate anyParticipant’s employment or services at any time, nor confer upon any Participant any right tocontinue in the employ or service of any Service Recipient.14.5 Unfunded Status of Awards. The Plan is intended to be an “unfunded” plan forincentive compensation. With respect to any payments not yet made to a Participant pursuant to anAward, nothing contained in the Plan or any Award Agreement shall give the Participant any rightsthat are greater than those of a general creditor of the Company or any Subsidiary.14.6 Indemnification. To the extent allowable pursuant to applicable law, each memberof the Committee or of the Board shall be indemnified and held harmless by the Company from anyloss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member inconnection with or resulting from any claim, action, suit, or proceeding to which he or she may bea party or in which he or she may be involved by reason of any action or failure to act pursuant tothe Plan and against and from any and all amounts paid by him or her in satisfaction of judgment insuch action, suit, or proceeding against him or her; *provided*he or she gives the Company anopportunity, at its own expense, to handle and defend the same before he or she undertakes tohandle and defend it on his or her own behalf. The foregoing right of indemnification shall not beexclusive of any other rights of indemnification to which such persons may be entitled pursuant tothe Company’s Memorandum of Association and Articles of Association, as a matter of law, orotherwise, or any power that the Company may have to indemnify them or hold them harmless.14.7 Relationship to other Benefits. No payment pursuant to the Plan shall be takeninto account in determining any benefits pursuant to any pension, retirement, savings, profitsharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except tothe extent otherwise expressly provided in writing in such other plan or an agreement thereunder.14.8 Expenses. The expenses of administering the Plan shall be borne by the Companyand its Subsidiaries.14.9 Titles and Headings. The titles and headings of the Sections in the Plan are forconvenience of reference only and, in the event of any conflict, the text of the Plan, rather thansuch titles or headings, shall control.14.10 Fractional Shares. No fractional shares of Share shall be issued and theCommittee shall determine, in its discretion, whether cash shall be given in lieu of fractionalshares or whether such fractional shares shall be eliminated by rounding up or down as appropriate.14.11 Government and Other Regulations. The obligation of the Company to make paymentof awards in Share or otherwise shall be subject to all Applicable Laws, rules, and regulations,and to such approvals by government agencies as may be required. The Company shall be under noobligation to register any of the Shares paid pursuant to the Plan under the Securities Act or anyother similar law in any applicable jurisdiction. If the Shares paid pursuant to the Plan may incertain circumstances be exempt from registration pursuant to the Securities Actor other ApplicableLaws the Company may restrict the transfer of such shares in such manner as it deems advisable toensure the availability of any such exemption.14.12 Governing Law. The Plan and all Award Agreements shall be construed inaccordance with and governed by the laws of the Cayman Islands.Share Incentive Plan Issue 2
 
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* * * * *I hereby certify that the foregoing Plan, as revised, was duly adopted by the Board ofDirectors of Melco Crown Entertainment Limited on 28th November, 2006 and17th March, 2009.* * * * *I hereby certify that the foregoing Plan, as revised, was approved by the shareholders ofMelco Crown Entertainment Limited on 1st December, 2006 and 19th May, 2009.Executed on this 12 day of February, 2010.         Corporate Secretary  Issue No. 2Share Incentive Plan Issue 2
 
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