Document:

Exhibit 4.39

 

SINA CORPORATION
 2015 SHARE INCENTIVE PLAN

 

 

Table of Content

 

	
Section
    	
 
    	
Page No.
    
	
SECTION 1.   INTRODUCTION
    	
 
    	
1
    
	
SECTION 2.   DEFINITIONS
    	
 
    	
1
    
	
SECTION 3.   ADMINISTRATION
    	
 
    	
6
    
	
(a)
    	
Committee Composition
    	
 
    	
6
    
	
(b)
    	
Authority of the   Committee
    	
 
    	
6
    
	
(c)
    	
Indemnification
    	
 
    	
7
    
	
SECTION 4.   GENERAL
    	
 
    	
7
    
	
(a)
    	
General Eligibility
    	
 
    	
7
    
	
(b)
    	
Incentive Share Options
    	
 
    	
8
    
	
(c)
    	
Restrictions on Shares
    	
 
    	
8
    
	
(d)
    	
Beneficiaries
    	
 
    	
8
    
	
(e)
    	
No Rights as a   Shareholder
    	
 
    	
8
    
	
(f)
    	
Termination of Service
    	
 
    	
8
    
	
SECTION 5.   SHARES SUBJECT TO PLAN AND SHARE LIMITS
    	
 
    	
9
    
	
(a)
    	
Basic Limitation
    	
 
    	
9
    
	
(b)
    	
Limits on Awards
    	
 
    	
9
    
	
(c)
    	
Limits on Incentive   Stock Options
    	
 
    	
9
    
	
(d)
    	
Share Count
    	
 
    	
9
    
	
(e)
    	
Dividend Equivalents
    	
 
    	
9
    
	
SECTION 6.   TERMS AND CONDITIONS OF OPTIONS
    	
 
    	
9
    
	
(a)
    	
Share Option Agreement
    	
 
    	
9
    
	
(b)
    	
Number of Shares
    	
 
    	
10
    
	
(c)
    	
Exercise Price
    	
 
    	
10
    
	
(d)
    	
Exercisability and Term
    	
 
    	
10
    
	
(e)
    	
Method of Exercise
    	
 
    	
10
    
	
(f)
    	
Payment for Option   Shares
    	
 
    	
10
    
	
(g)
    	
Modifications or   Assumption of Options
    	
 
    	
11
    
	
(h)
    	
Assignment or Transfer   of Options
    	
 
    	
11
    
	
(i)
    	
Incentive Share Options
    	
 
    	
11
    
	
SECTION 7.   TERMS AND CONDITIONS OF SHARE APPRECIATION RIGHTS
    	
 
    	
12
    
	
(a)
    	
SAR Agreement
    	
 
    	
12
    
	
(b)
    	
Number of Shares
    	
 
    	
12
    
	
(c)
    	
Exercise Price
    	
 
    	
12
    
	
(d)
    	
Exercisability and Term
    	
 
    	
12
    
	
(e)
    	
Exercise of SARs
    	
 
    	
12
    
	
(f)
    	
Modification or   Assumption of SARs
    	
 
    	
12
    
	
(g)
    	
Assignment or Transfer   of SARs
    	
 
    	
13
    
	
SECTION 8.   TERMS AND CONDITIONS FOR SHARE GRANTS
    	
 
    	
13
    
	
(a)
    	
Time, Amount and   Form of Awards
    	
 
    	
13
    
	
(b)
    	
Share Grant Agreement
    	
 
    	
13
    
	
(c)
    	
Payment for Share   Grants
    	
 
    	
13
    
	
(d)
    	
Vesting Conditions
    	
 
    	
13
    
	
(e)
    	
Assignment or Transfer   of Share Grants
    	
 
    	
13
    

 

i

 

	
(f)
    	
Voting and Dividend   Rights
    	
 
    	
13
    
	
(g)
    	
Modification or   Assumption of Share Grants
    	
 
    	
14
    
	
SECTION 9.   TERMS AND CONDITIONS OF RESTRICTED SHARE UNITS
    	
 
    	
14
    
	
(a)
    	
Restricted Share Unit   Agreement
    	
 
    	
14
    
	
(b)
    	
Number of Shares
    	
 
    	
14
    
	
(c)
    	
Payment for Restricted   Share Units
    	
 
    	
14
    
	
(d)
    	
Vesting Conditions
    	
 
    	
14
    
	
(e)
    	
Form and Time of   Settlement of Restricted Share Units
    	
 
    	
14
    
	
(f)
    	
Voting and Dividend   Rights
    	
 
    	
14
    
	
(g)
    	
Creditors’ Rights
    	
 
    	
15
    
	
(h)
    	
Modification or   Assumption of Restricted Share Units
    	
 
    	
15
    
	
(i)
    	
Assignment or Transfer   of Restricted Share Units
    	
 
    	
15
    
	
SECTION 10.   PROTECTION AGAINST DILUTION
    	
 
    	
15
    
	
(a)
    	
Adjustments
    	
 
    	
15
    
	
(b)
    	
Participant Rights
    	
 
    	
15
    
	
(c)
    	
Fractional Shares
    	
 
    	
16
    
	
SECTION 11.   EFFECT OF A CHANGE IN CONTROL
    	
 
    	
16
    
	
(a)
    	
Change in Control
    	
 
    	
16
    
	
(b)
    	
Acceleration
    	
 
    	
16
    
	
(c)
    	
Dissolution
    	
 
    	
16
    
	
SECTION 12.   LIMITATIONS ON RIGHTS
    	
 
    	
16
    
	
(a)
    	
Participant Rights
    	
 
    	
16
    
	
(b)
    	
Shareholders’ Rights
    	
 
    	
17
    
	
(c)
    	
Regulatory Requirements
    	
 
    	
17
    
	
SECTION 13.   WITHHOLDING TAXES
    	
 
    	
17
    
	
(a)
    	
General
    	
 
    	
17
    
	
(b)
    	
Share Withholding
    	
 
    	
17
    
	
SECTION 14.   DURATION AND AMENDMENTS
    	
 
    	
18
    
	
(a)
    	
Term of the Plan
    	
 
    	
18
    
	
(b)
    	
Right to Amend or   Terminate the Plan
    	
 
    	
18
    

 

ii

 

SINA CORPORATION
 2015 SHARE INCENTIVE PLAN

 

SECTION 1. INTRODUCTION.

 

On July 30, 2015, the Board adopted this 2015 Share Incentive Plan which has become effective upon the date of its adoption by the Board (the “Effective Date”).

 

The purpose of this Plan is to promote the long-term success of the Company and the creation of shareholder value by offering Participants the opportunity to share in such long-term success by acquiring a proprietary interest in the Company.

 

The Plan seeks to achieve this purpose by providing for discretionary long-term incentive Awards in the form of Options (which may be Incentive Share Options or Nonstatutory Share Options), Share Appreciation Rights, Share Grants and Restricted Share Units.

 

The Plan shall be governed by, and construed in accordance with, the laws of the Cayman Islands. Capitalized terms shall have the meaning provided in Section 2 unless otherwise provided in this Plan or any related Award Agreement.

 

SECTION 2. DEFINITIONS.

 

(a)                                 “Affiliate” means any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less than 50% of such entity.

 

(b)                                 “Annual Pool” has the meaning set forth in Section 5(b).

 

(c)                                  “Applicable Laws” means all applicable laws, rules, regulations and requirements relating to the administration of share plans, including, but not limited to, all applicable Cayman laws, the laws of the People’s Republic of China, U.S. federal and state laws, the rules and regulations of any stock exchange or quotation system on which the Ordinary Shares are listed or quoted, and the applicable laws, rules, regulations or requirements of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan or where Participants reside or provide services, as such laws, rules, regulations and requirements shall be in place from time to time.

 

(d)                                 “Award” means an Option, SAR, Share Grant or Restricted Share Unit.

 

(e)                                  “Award Agreement” means any Share Option Agreement, SAR Agreement, Share Grant Agreement or Restricted Share Unit Agreement.

 

(f)                                   “Board” means the board of directors of the Company, as constituted from time to time.

 

(g)                                  “Cashless Exercise” means, to the extent that a Share Option Agreement so provides and as permitted by Applicable Laws, a program approved by the Committee in which payment of the aggregate Exercise Price and/or satisfaction of any applicable tax withholding obligations may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares subject to an Option and to deliver all or part of the sale proceeds to the Company.

 

 

(h)                                 “Cause” means, except as may otherwise be provided in a Participant’s employment agreement, Award Agreement, or other written agreement, (i) Participant’s willful failure to perform his or her duties and responsibilities to the Company or material violation of a written Company policy; (ii) Participant’s commission of any act of fraud, embezzlement, dishonesty or any other willful misconduct that has caused or is reasonably expected to result in material injury to the Company; (iii) unauthorized use or disclosure by Participant of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (iv) Participant’s willful breach of any of his or her obligations under any written agreement or covenant with the Company. The determination as to whether a Participant is being terminated for Cause shall be made in good faith by the Committee and shall be conclusive and binding on the Participant. The foregoing definition does not in any way limit the Company’s ability to terminate a Participant’s Service at any time as provided in Section 12(a), and the term “Company” will be interpreted to include any Subsidiary, Parent, Affiliate, or any successor thereto, if appropriate.

 

(i)                                     “Change in Control” means the consummation of any of the following transactions:

 

(i)                                     The sale of all or substantially all of the Company’s assets;

 

(ii)                                  The merger of the Company with or into another corporation in which securities possessing more than 50% of the total combined voting power of the Company are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction; or

 

(iii)                               The acquisition, directly or indirectly, by any person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities of the Company representing more than 50% of the total combined voting power of the Company’s then outstanding securities. For purposes of this paragraph, the term “person” shall not include: (1) a trustee of other fiduciary holding securities under an employee benefit plan of the Company, a Subsidiary or an Affiliate; or (2) corporation or other entity owned directly or indirectly by the shareholders of the Company in substantially the same proportions as their ownership of the Ordinary Shares.

 

A transaction shall not constitute a Change in Control if its sole purpose is to change the place of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transactions.

 

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(j)                                    “Code” means the Internal Revenue Code of 1986, as amended, and the regulations and interpretations promulgated thereunder.

 

(k)                                 “Committee” means the compensation committee of the Board and/or any other committee appointed by the Board as described in Section 3(a).

 

(l)                                     “Company” means Sina Corporation, a Cayman Islands corporation.

 

(m)                             “Consultant” means an individual who provides bona fide services to the Company, a Parent, a Subsidiary or an Affiliate, other than as an Employee, Director or Non-Employee Director.

 

(n)                                 “Director” means a member of the Board who is also an Employee.

 

(o)                                 “Disability” means that the Participant is classified as disabled under the long-term disability policy of the Company or, if no such policy applies, the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.

 

(p)                                 “Employee” means any individual who is an employee of the Company, a Parent, a Subsidiary or an Affiliate.

 

(q)                                 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(r)                                    “Exercise Price” means, in the case of an Option, the amount for which a Share may be purchased upon exercise of such Option, as specified in the applicable Share Option Agreement. “Exercise Price,” in the case of a SAR, means an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value in determining the amount payable upon exercise of such SAR.

 

(s)                                   “Fair Market Value” means the market price of a Share as determined in good faith by the Committee. Such determination shall be conclusive and binding on all persons. The Fair Market Value shall be determined by the following:

 

(i)                                     if the Shares are admitted to trading on any established national stock exchange or market system, including without limitation NASDAQ, on the date in question, then the Fair Market Value shall be equal to the closing sales price for such Shares as quoted on such national exchange or system on such date; or

 

(ii)                                  if the Shares are admitted to quotation on NASDAQ or are regularly quoted by a recognized securities dealer but selling prices are not reported on the date in question, then the Fair Market Value shall be equal to the mean between the bid and asked prices of the Shares reported for such date.

 

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In each case, the applicable price shall be the price reported in such source as the Committee deems reliable; provided, however, that if there is no such reported price for the Shares for the date in question, then the Fair Market Value shall be equal to the price reported on the last preceding date for which such price exists. If neither (i) or (ii) are applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate.

 

(t)                                    “Fiscal Year” means the Company’s fiscal year.

 

(u)                                 “Grant Date” means the grant effective date of an Award.

 

(v)                                 “Incentive Share Option” or “ISO” means an incentive stock option described in Code Section 422.

 

(w)                               “Non-Employee Director” means a member of the Board who is not an Employee.

 

(x)                                 “Nonstatutory Share Option” or “NSO” means a share option that is not an ISO.

 

(y)                                 “Option” means an ISO or NSO granted under the Plan entitling the Optionee to purchase Shares.

 

(z)                                  “Optionee” means an individual, estate or other entity that holds an Option.

 

(aa)                          “Ordinary Shares” means the Company’s ordinary shares.

 

(bb)                          “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns share possessing 50% or more of the total combined voting power of all classes of shares in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.

 

(cc)                            “Participant” means an Employee, Director, Non-Employee Director or Consultant who has been selected by the Committee to receive an Award under the Plan or any individual, estate or other entity that holds an Award.

 

(dd)                          “Performance Goals” means one or more objective measurable performance goals established by the Committee with respect to a Performance Period based upon one or more factors, including: (i) operating income; (ii) earnings before interest, taxes, depreciation and amortization; (iii) earnings; (iv) cash flow; (v) market share; (vi) sales or revenue; (vii) expenses; (viii) cost of goods sold; (ix) profit/loss or profit margin; (x) working capital; (xi) return on equity or assets; (xii) earnings per share; (xiii) economic value added; (xiv) price/earnings ratio; (xv) debt or debt-to-equity; (xvi) accounts receivable; (xvii) writeoffs; (xviii) cash; (xix) assets; (xx) liquidity; (xxi) operations; (xxii) intellectual property (e.g., patents); (xxiii) product development; (xxiv) regulatory activity; (xxv) manufacturing, production or inventory; (xxvi) mergers and acquisitions or divestitures; and/or (xxvii) financings, each with respect to the Company and/or one or more of its Parent, Subsidiaries, Affiliates or operating units.

 

4

 

(ee)                            “Performance Period” means any period not exceeding 60 months as determined by the Committee, in its sole discretion. The Committee may establish different Performance Periods for different Participants, and the Committee may establish concurrent or overlapping Performance Periods.

 

(ff)                              “Plan” means this Sina Corporation 2015 Share Incentive Plan as it may be amended from time to time.

 

(gg)                            “Restricted Share Unit” means a bookkeeping entry representing the equivalent of one Share awarded under the Plan.

 

(hh)                          “Restricted Share Unit Agreement” means the agreement described in Section 9 evidencing a Restricted Share Unit.

 

(ii)                                  “SAR Agreement” means the agreement described in Section 7 evidencing a Share Appreciation Right.

 

(jj)                                “SEC” means the Securities and Exchange Commission.

 

(kk)                          “Section 16 Persons” means those officers, directors or other persons who are subject to Section 16 of the Exchange Act.

 

(ll)                                  “Securities Act” means the Securities Act of 1933, as amended.

 

(mm)                  “Service” means service as an Employee, Director, Non-Employee Director or Consultant. A Participant’s Service does not terminate if he or she is an Employee and goes on a bona fide leave of absence that was approved by the Company in writing and the terms of the leave provide for continued service crediting, or when continued service crediting is required by Applicable Laws. However, for purposes of determining whether an Option is entitled to continuing ISO status, an Employee’s Service will be treated as terminating 90 days after such Employee went on leave, unless such Employee’s right to return to active work is guaranteed by law or by a contract. Service terminates in any event when the approved leave ends, unless such Employee immediately returns to active work. Further, unless otherwise determined by the Committee, a Participant’s Service will not terminate merely because of a change in the capacity in which the Participant provides service to the Company, a Parent, Subsidiary or Affiliate, or a transfer between entities (the Company or any Parent, Subsidiary, or Affiliate); provided that there is no interruption or other termination of Service.

 

(nn)                          “Share” means one share of Ordinary Shares.

 

(oo)                          “Share Appreciation Right” or “SAR” means a share appreciation right awarded under the Plan.

 

(pp)                          “Share Grant” means Shares awarded under the Plan.

 

(qq)                          “Share Grant Agreement” means the agreement described in Section 8 evidencing a Share Grant.

 

5

 

(rr)                                “Share Option Agreement” means the agreement described in Section 6 evidencing an Option.

 

(ss)                              “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns shares possessing 50% or more of the total combined voting power of all classes of shares in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

 

(tt)                                “10-Percent Shareholder” means an individual who owns more than 10% of the total combined voting power of all classes of outstanding shares of the Company, its Parent or any of its Subsidiaries. In determining share ownership, the attribution rules of Code Section 424(d) shall be applied.

 

SECTION 3. ADMINISTRATION.

 

(a)                     Committee Composition. The Board or the Committee shall administer the Plan. The Committee shall generally have membership composition which enables Awards to Section 16 Persons to qualify as exempt from liability under Section 16(b) of the Exchange Act. However, the Board may also appoint one or more separate Committees, each composed of one or more directors of the Company who need not qualify under Rule 16b-3, that may administer the Plan with respect to Participants who are not Section 16 Persons, respectively, may grant Awards under the Plan to such Participants and may determine all terms of such Awards. Members of any such Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time. The Board may also at any time terminate the functions of the Committee and reassume all powers and authority previously delegated to the Committee.

 

Notwithstanding the foregoing, the Board shall administer the Plan with respect to all Awards granted to Non-Employee Directors.

 

The Board and any Committee appointed to administer the plan is collectively referred to hereinafter as the “Committee”.

 

(b)                     Authority of the Committee. Subject to the provisions of the Plan, the Committee shall have the full authority, in its sole discretion, to take any actions it deems necessary or advisable for the administration of the Plan. Such actions shall include:

 

(i)                                     selecting Participants who are to receive Awards under the Plan;

 

(ii)                                  determining the Fair Market Value;

 

(iii)                               determining the type, number, Grant Date, vesting requirements and other features and conditions of such Awards;

 

(iv)                              approving the forms of agreements to be used under the Plan;

 

6

 

(v)                                 amending any outstanding Awards;

 

(vi)                              accelerating the vesting, or extending the post-termination exercise term, of Awards at any time and under such terms and conditions as it deems appropriate;

 

(vii)                           interpreting the Plan and any Award Agreement;

 

(viii)                        correcting any defect, supplying any omission or reconciling any inconsistency in the Plan or any Award Agreement;

 

(ix)                              adopting such rules or guidelines as it deems appropriate to implement the Plan;

 

(x)                                 authorizing any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously authorized by the Committee;

 

(xi)                              making all other decisions relating to the operation of the Plan; and

 

(xii)                           adopting such plans or subplans as may be deemed necessary or appropriate to comply with the laws of certain countries, allow for tax-preferred treatment of the Awards or otherwise provide for the participation by Participants who reside in such countries.

 

The Committee’s determinations under the Plan shall be final and binding on all persons.

 

(c)                      Indemnification. To the maximum extent permitted by Applicable Laws, each member of the Committee shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or any Award Agreement, and (ii) from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled to by contract, as a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold them harmless.

 

SECTION 4. GENERAL.

 

(a)                     General Eligibility. Only Employees, Directors, Non-Employee Directors and Consultants shall be eligible to participate in the Plan.

 

7

 

(b)                     Incentive Share Options. Only Participants who are Employees of the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs. In addition, a Participant who is a 10-Percent Shareholder shall not be eligible for the grant of an ISO unless the requirements set forth in Code Section 422(c)(5) are satisfied.

 

(c)                      Restrictions on Shares. Any Shares issued pursuant to an Award shall be subject to such rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine, in its sole discretion. Such restrictions shall apply in addition to any restrictions that may apply to holders of Shares generally and shall also comply to the extent necessary with Applicable Laws. In no event shall the Company be required to issue fractional Shares under this Plan.

 

(d)                     Beneficiaries. Unless stated otherwise in an Award Agreement and then only to the extent permitted by and enforceable under Applicable Laws, a Participant may designate one or more beneficiaries with respect to an Award by timely filing the prescribed form with the Company or the Company’s designee. A beneficiary designation may be changed by filing the prescribed form with the Company (or the Company’s designee) at any time before the Participant’s death. If no beneficiary was designated or if no designated beneficiary survives the Participant, then after a Participant’s death any vested Award(s) shall be transferred or distributed to the Participant’s estate or to such other person as the Company may designate.

 

(e)                      No Rights as a Shareholder. A Participant, or a transferee of a Participant, shall have no rights as a shareholder with respect to any Ordinary Shares covered by an Award until such person has satisfied all of the terms and conditions to receive such Ordinary Shares, has satisfied any applicable withholding or tax obligations relating to the Award and the Shares have been issued (as evidenced by an appropriate entry on the books of the Company or a duly authorized transfer agent of the Company).

 

(f)                       Termination of Service. Unless the applicable Award Agreement or, with respect to a Participant who resides in the U.S., the applicable employment agreement provides otherwise, the following rules shall govern the vesting, exercisability and term of outstanding Awards held by a Participant in the event of termination of such Participant’s Service (in all cases subject to the maximum term of the Option and/or SAR as applicable): (i) upon termination of Service for any reason, the unvested portions of any outstanding Restricted Share Units or Share Grants shall be immediately forfeited without consideration; (ii) if Service is terminated for Cause, then all unexercised Options and/or SARs, unvested portions of Restricted Share Units and unvested portions of Share Grants shall terminate and be forfeited immediately without consideration; (iii) if Service is terminated for any reason other than for Cause, death or Disability, then the vested portion of the Participant’s then-outstanding Options and/or SARs may be exercised by such Participant or his or her personal representative within ninety (90) days after the date of such termination and the unvested portions of any such Awards shall be forfeited without consideration at the end of such period; or (iv) if Service is terminated due to death or Disability, the vested portion of the Participant’s then-outstanding Options and/or SARs may be exercised within six (6) months after the date of such termination and the unvested portions of any such Awards shall be forfeited without consideration at the end of such period.

 

8

 

SECTION 5. SHARES SUBJECT TO PLAN AND SHARE LIMITS.

 

(a)                     Basic Limitation. The shares issuable under the Plan shall be authorized, but unissued, or reacquired Shares. The aggregate number of Shares reserved for Awards under the Plan is 6,000,000 Shares, subject to adjustment pursuant to Section 10.

 

(b)                     Limits on Awards.The aggregate maximum number of Shares that may be granted in connection with all Awards during any Fiscal Year shall not exceed three percent (3%) of the total number of the Company’s outstanding Shares as of the last day of the immediately preceding Fiscal Year (“Annual Pool”), plus any Shares remaining available pursuant to the Annual Pool for the immediately preceding Fiscal Year, subject to adjustment pursuant to Section 10.

 

(c)                      Limits on Incentive Stock Options. The aggregate maximum number of Shares that may be issued in connection with ISOs shall be 6,000,000 Shares, subject to adjustment pursuant to Section 10.

 

(d)                     Share Count. Shares issued as Share Grants or pursuant to Restricted Share Units will count against the Shares available for issuance under the Plan, and against the Shares available for grant during any Fiscal Year, as one point seven five (1.75) Shares for every one (1) Share issued in connection with the Award. Shares issued as Options or Share Appreciation Rights will count against the Shares available for issuance under the Plan, and against the Shares available for grant during any Fiscal Year, as one (1) Share for every one (1) Share subject thereto. The total number of Shares subject to Share Appreciation Rights that are settled in Shares shall be counted in full against the number of Shares available for issuance under the Plan, regardless of the number of Shares actually issued upon settlement of the Share Appreciation Rights. If Awards are settled in cash, the Shares that would have been delivered had there been no cash settlement shall not be counted against the Shares available for issuance under the Plan. If Awards are forfeited or are terminated for any reason before vesting or being exercised, then the Shares underlying such Awards shall again become available for Awards under the Plan; provided that, any one (1) Share issued as a Share Grant or pursuant to Restricted Share Units that is forfeited or terminated shall be credited as one point seven five (1.75) Shares when determining the number of Shares that shall again become available for Awards under the Plan. For purposes of clarity, no Shares surrendered pursuant to Section 6(f)(i) and no Shares withheld pursuant to Section 13(b) shall again become available for Awards under the Plan.

 

(e)                      Dividend Equivalents. Any dividend equivalents distributed under the Plan shall reduce the number of Shares available for Awards.

 

SECTION 6. TERMS AND CONDITIONS OF OPTIONS.

 

(a)                     Share Option Agreement. Each Option granted under the Plan shall be evidenced and governed exclusively by a Share Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan and that the Committee deems appropriate for inclusion in a Share Option Agreement. The provisions of the various Share Option Agreements entered into under the Plan need not be identical. The Share Option Agreement shall specify whether the Option is an ISO or an NSO.

 

9

 

(b)                     Number of Shares. Each Share Option Agreement shall specify the number of Shares that are subject to the Option, which number is subject to adjustment in accordance with Section 10.

 

(c)                      Exercise Price. Each Share Option Agreement shall specify the Option’s Exercise Price which shall be established by the Committee and is subject to adjustment in accordance with Section 10. The Exercise Price per Share subject to an Option may be adjusted in the absolute discretion of the Committee, the determination of which shall be final, binding and conclusive.

 

(d)                     Exercisability and Term. Each Share Option Agreement shall specify the date when all or any installment of the Option is to become exercisable and may include performance conditions or Performance Goals. The Share Option Agreement shall also specify the maximum term of the Option; provided that the maximum term of an Option shall in no event exceed seven (7) years from the Grant Date. A Share Option Agreement may provide for accelerated vesting in the event of the Participant’s death, Disability or other events. Notwithstanding any other provision of the Plan or the Share Option Agreement, no Option can be exercised after the expiration date provided in the applicable Share Option Agreement.

 

(e)                      Method of Exercise. An Option may be exercised, in whole or in part, by giving written notice of exercise to the Company (or, subject to Applicable Laws and if the Company permits, by electronic or voice methods) of the number of Shares to be purchased. Such notice shall be accompanied by payment in full of the aggregate Exercise Price, plus any required withholdings (unless satisfactory arrangements have been made to satisfy such withholdings). The Company reserves the right to delay issuance of the Shares if such payments are not satisfactory.

 

(f)                       Payment for Option Shares. The Exercise Price of an Option shall be paid in cash at the time of exercise, except as follows and if so provided for in the applicable Share Option Agreement:

 

(i)                                     Surrender of Share. Payment of all or a part of the Exercise Price may be made with Shares which have already been owned by the Optionee; provided that the Committee may, in its sole discretion, require that Shares tendered for payment be previously held by the Optionee for a minimum duration (e.g., to avoid financial accounting charges to the Company’s earnings).

 

(ii)                                  Cashless Exercise. Payment of all or a part of the Exercise Price may be made through Cashless Exercise.

 

(iii)                               Other Forms of Payment. Payment may be made in any other form that is consistent with Applicable Laws, regulations and rules and approved by the Committee.

 

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In the case of an ISO granted under the Plan, except to the extent permitted by Applicable Laws, payment shall be made only pursuant to the express provisions of the applicable Share Option Agreement. In the case of an NSO granted under the Plan, the Committee may, in its discretion at any time, accept payment in any form(s) described in this Section 6(f).

 

(g)                      Modifications or Assumption of Options. Within the limitations of the Plan, the Committee may modify, extend or assume outstanding options or may accept the cancellation of outstanding options (whether granted by the Company or by another issuer) in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price. Notwithstanding the preceding sentence or anything to the contrary, no modification of an Option shall, without the consent of the Optionee, impair his or her rights or obligations under such Option.

 

(h)                     Assignment or Transfer of Options. Except as otherwise provided in the applicable Share Option Agreement and then only to the extent such transfer is otherwise permitted by Applicable Laws, no Option or interest therein shall be transferred, assigned, pledged or hypothecated by the Optionee during his or her lifetime, whether by operation of law or otherwise, or be made subject to execution, attachment or similar process, other than by will or by the laws of descent and distribution and an Option may be exercised during the lifetime of the Optionee only or by the guardian or legal representative of the Optionee.

 

(i)                         Incentive Share Options. ISOs may be granted to Employees of the Company, a Parent or Subsidiary of the Company.  ISOs may not be granted to Non-Employee Directors or Consultants.  The terms of any ISO granted pursuant to the Plan, in addition to the requirements of Section 6(a) to Section 6(h), must comply with the following additional provisions:

 

(i)                                     Individual Dollar Limitation.  The aggregate Fair Market Value (determined as of the time the Share Option is granted) of all Shares with respect to which ISOs are first exercisable by a Participant in any calendar year may not exceed $100,000 or such other limitation as imposed by Section 422(d) of the Code, or any successor provision.  To the extent that ISOs are first exercisable by a Participant in excess of such limitation, the excess shall be considered Non-Qualified Share Options.

 

(ii)                                  Exercise Price.  The exercise price of an ISO shall be equal to the Fair Market Value on the date of grant.  However, the exercise price of any ISO granted to any individual who, at the date of grant, owns Shares possessing more than ten percent of the total combined voting power of all classes of shares of the Company may not be less than 110% of Fair Market Value on the date of grant and such Option may not be exercisable for more than five years from the date of grant.

 

(iii)                               Transfer Restriction.  The Participant shall give the Company prompt notice of any disposition of Shares acquired by exercise of an ISO within (i) two years from the date of grant of such ISO or (ii) one year after the transfer of such Shares to the Participant.

 

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(iv)                              Expiration of Incentive Share Options.  No Award of an ISO may be made pursuant to this Plan after the seventh anniversary of the Effective Date.

 

(v)                                 Right to Exercise.  During a Participant’s lifetime, an ISO may be exercised only by the Participant.

 

SECTION 7. TERMS AND CONDITIONS OF SHARE APPRECIATION RIGHTS.

 

(a)                     SAR Agreement. Each SAR granted under the Plan shall be evidenced by a SAR Agreement between the Participant and the Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. A SAR Agreement may provide for a maximum limit on the amount of any payout notwithstanding the Fair Market Value on the date of exercise of the SAR. The provisions of the various SAR Agreements entered into under the Plan need not be identical. SARs may be granted in consideration of a reduction in the Participant’s compensation.

 

(b)                     Number of Shares. Each SAR Agreement shall specify the number of Shares to which the SAR pertains, which number is subject to adjustment in accordance with Section 10.

 

(c)                      Exercise Price. Each SAR Agreement shall specify the Exercise Price, which is subject to adjustment in accordance with Section 10. A SAR Agreement may specify an Exercise Price that varies in accordance with a predetermined formula while the SAR is outstanding. The Exercise Price may be adjusted in the absolute discretion of the Committee, the determination of which shall be final, binding and conclusive.

 

(d)                     Exercisability and Term. Each SAR Agreement shall specify the date when all or any installment of the SAR is to become exercisable and may include performance conditions or Performance Goals. The SAR Agreement shall also specify the maximum term of the SAR which shall not exceed seven (7) years from the Grant Date. A SAR Agreement may provide for accelerated exercisability in the event of the Participant’s death, Disability or other events. SARs may be awarded in combination with Options or Share Grants, and such an Award shall provide that the SARs will not be exercisable unless the related Options or Share Grants are forfeited. A SAR may be included in an ISO only at the time of grant but may be included in an NSO at the time of grant or at any subsequent time, but not later than six (6) months before the expiration of such NSO. Notwithstanding any other provision of the Plan or the SAR Agreement, no SAR can be exercised after the expiration date provided in the applicable SAR Agreement.

 

(e)                      Exercise of SARs. Upon exercise of a SAR, the Participant (or any person having the right to exercise the SAR after Participant’s death) shall receive from the Company (i) Shares, (ii) cash or (iii) any combination of Shares and cash, as the Committee shall determine at the time of grant of the SAR, in its sole discretion. The amount of cash and/or the Fair Market Value of Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Shares subject to the SARs exceeds the Exercise Price of the Shares.

 

(f)                       Modification or Assumption of SARs. Within the limitations of the Plan, the Committee may modify, extend or assume outstanding SARs or may accept the cancellation of outstanding SARs (including share appreciation rights granted by another issuer) in return for the grant of new SARs for the same or a different number of Shares and at the same or a different Exercise Price. Notwithstanding the preceding sentence or anything to the contrary, no modification of an SAR shall, without the consent of the Participant, impair his or her rights or obligations under such SAR.

 

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(g)                      Assignment or Transfer of SARs. Except as otherwise provided in the applicable SAR Agreement and then only to the extent such transfer is otherwise permitted by Applicable Laws, no SAR or interest therein shall be transferred, assigned, pledged or hypothecated by the Participant during his or her lifetime, whether by operation of law or otherwise, or be made subject to execution, attachment or similar process, other than by will or by the laws of descent and distribution and a SAR may be exercised during the lifetime of the Participant only or by the guardian or legal representative of the Participant.

 

SECTION 8. TERMS AND CONDITIONS FOR SHARE GRANTS.

 

(a)                     Time, Amount and Form of Awards. Awards under this Section 8 may be granted in the form of a Share Grant. A Share Grant may be awarded in combination with NSOs, and such an Award may provide that the Share Grant will be forfeited in the event that the related NSOs are exercised.

 

(b)                     Share Grant Agreement. Each Share Grant awarded under the Plan shall be evidenced and governed exclusively by a Share Grant Agreement between the Participant and the Company. Each Share Grant shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan that the Committee deems appropriate for inclusion in the applicable Share Grant Agreement. The provisions of the Share Grant Agreements entered into under the Plan need not be identical.

 

(c)                      Payment for Share Grants. Share Grants may be issued with or without cash consideration under the Plan.

 

(d)                     Vesting Conditions. The Committee shall determine the vesting schedule of each Share Grant. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Share Grant Agreement which may include performance conditions or Performance Goals. A Share Grant Agreement may provide for accelerated vesting in the event of the Participant’s death, Disability, or other events.

 

(e)                      Assignment or Transfer of Share Grants. Except as otherwise provided in the applicable Share Grant Agreement and then only to the extent such transfer is otherwise permitted by Applicable Laws, no unvested Share Grant or interest therein shall be transferred, assigned, pledged or hypothecated by the Participant during his or her lifetime, whether by operation of law or otherwise, or be made subject to execution, attachment or similar process, other than by will or by the laws of descent and distribution.

 

(f)                       Voting and Dividend Rights. The holder of a Share Grant awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other shareholders. A Share Grant Agreement may require that the holder of such Share Grant invest any cash dividends received in additional Shares subject to the Share Grant. Such additional Shares and any Shares received as a dividend pursuant to the Share Grant shall be subject to the same conditions and restrictions as the Share Grant with respect to which the dividends were paid. Such additional Shares subject to the Share Grant shall not reduce the number of Shares available for issuance under Section 5.

 

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(g)                      Modification or Assumption of Share Grants. Within the limitations of the Plan, the Committee may modify or assume outstanding Share Grants or may accept the cancellation of outstanding share grants (including share granted by another issuer) in return for the grant of new Share Grants for the same or a different number of Shares. Notwithstanding the preceding sentence or anything to the contrary, no modification of a Share Grant shall, without the consent of the Participant, impair his or her rights or obligations under such Share Grant.

 

SECTION 9. TERMS AND CONDITIONS OF RESTRICTED SHARE UNITS.

 

(a)                     Restricted Share Unit Agreement. Each Restricted Share Unit granted under the Plan shall be evidenced by a Restricted Share Unit Agreement between the Participant and the Company. Such Restricted Share Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Share Unit Agreements entered into under the Plan need not be identical. Restricted Share Units may be granted in consideration of a reduction in the Participant’s other compensation.

 

(b)                     Number of Shares. Each Restricted Share Unit Agreement shall specify the number of Shares to which the Restricted Share Unit pertains, which number is subject to adjustment in accordance with Section 10.

 

(c)                      Payment for Restricted Share Units. To the extent that an Award is granted in the form of Restricted Share Units, no cash consideration shall be required of the Award recipients.

 

(d)                     Vesting Conditions. The Committee shall determine the vesting schedule of each Restricted Share Unit. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Share Unit Agreement which may include performance conditions or Performance Goals. A Restricted Share Unit Agreement may provide for accelerated vesting in the event of the Participant’s death, Disability, or other events.

 

(e)                      Form and Time of Settlement of Restricted Share Units. Settlement of vested Restricted Share Units may be made in the form of (i) cash, (ii) Shares or (iii) any combination of both, as determined by the Committee at the time of the grant of the Restricted Share Units, in its sole discretion. Vested Restricted Share Units may be settled in a lump sum or in installments. The distribution may occur or commence when the vesting conditions applicable to the Restricted Share Units have been satisfied or have lapsed, or it may be deferred, in accordance with Applicable Laws, to any later date. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents.

 

(f)                       Voting and Dividend Rights. The holders of Restricted Share Units shall have no voting rights. Prior to settlement or forfeiture, any Restricted Share Unit awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Restricted Share Unit is outstanding. Dividend equivalents may be converted into additional Restricted Share Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of both. Prior to distribution, any dividend equivalents which are not paid shall be subject to the same conditions and restrictions as the Restricted Share Units to which they attach.

 

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(g)                      Creditors’ Rights. A holder of Restricted Share Units shall have no rights other than those of a general creditor of the Company. Restricted Share Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Restricted Share Unit Agreement.

 

(h)                     Modification or Assumption of Restricted Share Units. Within the limitations of the Plan, the Committee may modify or assume outstanding Restricted Share Units or may accept the cancellation of outstanding restricted share units (including restricted share units granted by another issuer) in return for the grant of new Restricted Share Units for the same or a different number of Shares. Notwithstanding the preceding sentence or anything to the contrary, no modification of a Restricted Share Unit shall, without the consent of the Participant, impair his or her rights or obligations under such Restricted Share Unit.

 

(i)                         Assignment or Transfer of Restricted Share Units. Except as otherwise provided in the applicable Restricted Share Unit Agreement and then only to the extent such transfer is otherwise permitted by Applicable Laws, no Restricted Share Unit or interest therein shall be transferred, assigned, pledged or hypothecated by the Participant during his or her lifetime, whether by operation of law or otherwise, or be made subject to execution, attachment or similar process, other than by will or by the laws of descent and distribution.

 

SECTION 10. PROTECTION AGAINST DILUTION.

 

(a)                     Adjustments. In the event of a subdivision of the outstanding Shares, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Shares (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence, the Committee shall make appropriate adjustments in one or more of:

 

(i)                                     the number of Shares and the kind of shares or securities available for future Awards under Section 5(a);

 

(ii)                                  the limits on all Awards per Fiscal Year specified in Section 5(b);

 

(iii)                               the limits on ISOs specified in Section 5(c);

 

(iv)                              the number of Shares and the kind of shares or securities covered by each outstanding Award; or

 

(v)                                 the Exercise Price under each outstanding Option or SAR.

 

(b)                     Participant Rights. Except as provided in this Section 10, a Participant shall have no rights by reason of any issue by the Company of shares of any class or securities convertible into shares of any class, any subdivision or consolidation of shares of any class, the payment of any share dividend or any other increase or decrease in the number of shares of any class. If by reason of an adjustment pursuant to this Section 10 a Participant’s Award covers additional or different shares or securities, then such additional or different shares and the Award in respect thereof shall be subject to all of the terms, conditions and restrictions which were applicable to the Award and the Shares subject to the Award prior to such adjustment.

 

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(c)                      Fractional Shares. Any adjustment of Shares pursuant to this Section 10 shall be rounded down to the nearest whole number of Shares. Under no circumstances shall the Company be required to authorize or issue fractional shares and no consideration shall be provided as a result of any fractional shares not being issued or authorized.

 

SECTION 11. EFFECT OF A CHANGE IN CONTROL.

 

(a)                     Change in Control. In the event that the Company is a party to a Change in Control, outstanding Awards shall be subject to the applicable agreement of merger or reorganization. Such agreement may provide, without limitation, for the assumption of outstanding Awards by the surviving corporation or its parent, for their continuation by the Company (if the Company is a surviving corporation), for accelerated vesting or for their cancellation with or without consideration, in all cases without the consent of the Participant.

 

(b)                     Acceleration. Notwithstanding the foregoing, the Committee may determine, at the time of grant of an Award or thereafter, that such Award shall become vested and exercisable, in full or in part, in the event that the Company is a party to a Change in Control.

 

(c)                      Dissolution. To the extent not previously exercised or settled, Options, SARs and Restricted Share Units shall terminate immediately prior to the dissolution or liquidation of the Company.

 

SECTION 12. LIMITATIONS ON RIGHTS.

 

(a)                     Participant Rights. A Participant’s rights, if any, in respect of or in connection with any Award is derived solely from the discretionary decision of the Company to permit the individual to participate in the Plan and to benefit from a discretionary Award. By accepting an Award under the Plan, a Participant expressly acknowledges that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Awards. Any Award granted hereunder is not intended to be compensation of a continuing or recurring nature, or part of a Participant’s normal or expected compensation, and in no way represents any portion of a Participant’s salary, compensation, or other remuneration for purposes of pension benefits, severance, redundancy, resignation or any other purpose.

 

Neither the Plan nor any Award granted under the Plan shall be deemed to give any individual a right to remain an employee, consultant or director of the Company, a Parent, a Subsidiary or an Affiliate. The Company and its Parent, Subsidiaries and Affiliates reserve the right to terminate the Service of any person at any time, and for any reason, subject to Applicable Laws, and any applicable written employment agreement (if any), and such terminated person shall be deemed irrevocably to have waived any claim to damages or specific performance for breach of contract or dismissal, compensation for loss of office, tort or otherwise with respect to the Plan or any outstanding Award that is forfeited and/or is terminated by its terms or to any future Award.

 

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(b)                     Shareholders’ Rights. Except as provided in Section 9(f), a Participant shall have no dividend rights, voting rights or other rights as a shareholder with respect to any Shares covered by his or her Award prior to the issuance of such Shares (as evidenced by an appropriate entry on the books of the Company or a duly authorized transfer agent of the Company). No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date when such Shares are issued, except as expressly provided in Section 9(f) and Section 10.

 

(c)                      Regulatory Requirements. Any other provision of the Plan notwithstanding, the obligation of the Company to issue Shares or other securities under the Plan shall be subject to all Applicable Laws and such approval by any regulatory body as may be required. The Company reserves the right to restrict, in whole or in part, the delivery of Shares or other securities pursuant to any Award prior to the satisfaction of all legal requirements relating to the issuance of such Shares or other securities, to their registration, qualification or listing or to an exemption from registration, qualification or listing.

 

SECTION 13. WITHHOLDING TAXES.

 

(a)                     General. A Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with his or her Award. The Company shall have the right to deduct from any amount payable under the Plan, including delivery of Shares to be made pursuant to an Award granted under the Plan, all federal, state, city, local or foreign taxes of any kind required by law to be withheld with respect to such payment and the Company may take any such actions as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes. The Company shall not be required to issue any Shares or make any cash payment under the Plan until such obligations are satisfied.

 

(b)                     Share Withholding. The Committee may permit a Participant to satisfy all or part of his or her withholding or income tax obligations by Cashless Exercise, by having the Company withhold all or a portion of any Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Shares that he or she previously acquired; provided that Shares withheld or previously owned Shares that are tendered shall not exceed the amount necessary to satisfy the Company’s tax withholding obligations at the minimum statutory withholding rates, including, but not limited to, U.S. federal and state income taxes, payroll taxes and foreign taxes, if applicable, unless the previously owned Shares have been held for the minimum duration necessary to avoid financial accounting charges under applicable accounting guidance or as otherwise permitted by the Committee in its sole and absolute discretion. Any payment of taxes by assigning Shares to the Company may be subject to restrictions, including, but not limited to, any restrictions required by rules of the SEC. If any Shares are used to satisfy withholding taxes, such Shares shall be valued based on the Fair Market Value thereof on the date when the withholding for taxes is required to be made.

 

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SECTION 14. DURATION AND AMENDMENTS.

 

(a)                     Term of the Plan. The Plan will expire on, and no Award may be granted pursuant to the Plan after, the seventh anniversary of the Effective Date, and the Plan may be terminated on any earlier date pursuant to this Section 14. Any Awards that are outstanding at the time of expiration or termination of this Plan shall remain in force according to the terms of the Plan and the applicable Award Agreement.

 

(b)                     Right to Amend or Terminate the Plan. The Board may amend or terminate the Plan at any time and for any reason. Any such termination of the Plan, or any amendment thereof, shall not impair any Award previously granted under the Plan unless permitted under Applicable Laws. No Awards shall be granted under the Plan after the Plan’s termination.

 

18Exhibit 4.8

 

Cooperation Agreement

 

This Cooperation Agreement (the “Agreement”) was entered into on October 22, 2015 by and between:

 

Banco de Chile (“Banco de Chile”), a corporation duly established and currently existing under the laws of the Republic of Chile (“Chile”), herein represented by Mr. Arturo Tagle Quiroz, Chief Executive Officer, and Citigroup Inc. (“Citigroup”), a corporation duly established and validly existing under the laws of the State of Delaware, United States of America (“United States of America”) herein represented by its Chief Executive Officer for Latin America, Mrs. Jane Fraser, all of them hereinafter referred to as the Parties.

 

BACKGROUND INFORMATION

 

I.  On December 26, 2007 Banco de Chile and Citibank Chile, a subsidiary of Citigroup, entered into a Merger Agreement to merge both Parties’ operations, where Banco de Chile remained as successor of Citibank Chile’s business;

 

II.  On December 27, 2007 the Parties entered into a Cooperation Agreement, amended on February 27, 2009 (the “Former Cooperation Agreement”), to regulate, among others, certain common aspects of the direct relation that Banco de Chile, on the hand, and Citigroup, on the other, will have, pursuant to certain agreements between both Parties.  Likewise, on December 27, 2007 the Parties entered into a Global Connectivity Agreement, amended on February 27, 2009 (the “Former Connectivity Agreement”), to establish the relation of the Parties regarding the provision of banking services in Chile and abroad, among others;

 

III.  In the Former Cooperation Agreement the Parties acknowledged that their relationship would change during time and therefore certain changes to the terms and conditions of the agreements establishing the relation of the Parties would be required, including the Former Connectivity Agreement.  This has occurred from time to time through decisions taken by the Management Committee established in the Former Connectivity Agreement.

 

IV.  The referred Former Cooperation Agreement and Former Connectivity Agreement shall end, pursuant to their own terms, on January 1, 2016;

 

V.  The Parties have agreed to enter into a new Cooperation Agreement (the “Cooperation Agreement”) and a new Connectivity Agreement (the “Agreement” or the “Connectivity Agreement”), by means of separate instruments, effective as from January 1, 2016, to keep their relation under these documents.  Such terms and conditions are established herein to define and govern the relation between the Parties as to the provision of banking services in Chile and abroad;

 

NOW, THEREFORE, and taking into account the background information and the terms and conditions established herein and other valuable considerations received by both Parties, the receipt of which the Parties confirm by means of this agreement, and with the 

 

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intention that the Parties are legally bounded by the agreements defined herein since the effective date hereof, that is, January 1, 2016, provided this Agreement does not amend any income distribution agreed by the Parties before the date of this Agreement regarding any specific transaction, the Parties agree as follows:

 

First.  Purpose of the Agreement.  This Agreement aims at regulating certain common issues of the future direct relationship between Banco de Chile and its wholly owned subsidiaries, on the one hand, and Citigroup and its subsidiaries, on the other, under the Global Connectivity and the Licensing Agreement (jointly, the “Operating Agreements”).

 

Second.  Steering Committee.  The Parties agree that the Steering Committee will be the one defined in the Global Connectivity.  Any of the Parties may substitute the members designated for the Steering Committee, but shall in any case, procure and make all arrangements for the substituting members to have a position similar to the substituted members.

 

Notwithstanding the above, the Parties agree upon a Processing Mechanism for the Global Connectivity Agreement.  Annex “A” hereto, which is an integral part hereof, includes the principles to be applied for the processing Mechanism required for the Global Connectivity.  The Processing Mechanism will be adjusted in accordance with the principles set forth in the Second clause of the Global Connectivity and the substitutions of people shown in Annex “A”.

 

Third.  Communication and Escalation Mechanisms.  The Parties acknowledge and agree that the possibilities of success of Operating Agreements will increase and be strengthened as long as fluid mechanisms are in place for the communication and discussion of the different viewpoints of the Parties.  For this purpose, the Parties agree that any issues referred to in one or several of the Operating Agreements or any issues resulting and derived therefrom will be addressed as follows:

 

(a)         In the first place, the officers of each Party will seek to settle any issues resulting or derived from the Operating Agreements by acting on a basis of good faith and diligence;

 

(b)         Should the officers of each Party be unable to settle the relevant issue to the satisfaction of the Parties, the issue will be referred to the Steering Committee;

 

(c)          If the issue is not settled by the Steering Committee, the Parties, acting through Mr. Andrónico Luksic Craig, for Banco de Chile, and Chief Executive Officer for Latin America, for Citigroup, will seek to reach a final solution for the issue in question;

 

(d)         The coordination and escalation mechanisms provided herein are in addition to, and not in replacement of, the different solution mechanisms provided in the Operating Agreements or the termination set forth in the Sixth clause hereof; and

 

(e)          The agreements to be reached by the Parties pursuant to the mechanism provided in this Clause will be documented and signed, and will be supplemented and modified as provided in the Operating Agreements.

 

Fourth.  Preference and Validity of the Operating Agreements.  The obligations of each Party under the Operating Agreements will prevail and continue to be fully effective even though 

 

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any of the Parties may be merged, divided, may wholly or partly sell its operations, may be reorganized, may change its control or may establish any alliance.  In this connection, the Parties will arrange for the assigns, assignees, or buyers of any of the Parties and/or the new entities that may arise from the above to be bound under the same terms of the Operating Agreements.

 

Fifth.  Exchange of Information for Incentives.  With the purpose of applying and ensuring due compliance with the agreements and clauses within the respective Operating Agreements, subject to the non-disclosure obligations set forth therein, as to any laws, administrative regulations and internal policies applicable therewith, especially those related to banking secrecy or reserve, the Parties hereby agree to make their best efforts in order to exchange any information required for the accomplishment of the above mentioned purpose.

 

Specifically, looking forward to encourage Banco de Chile’s Account Executives to maximize the relationship with their Chilean Clients (as defined in the Global Connectivity), through a comprehensive offer of products that includes both local products in Chile and global products offered by Citigroup abroad, and also with a view to encouraging the Parent Account Managers or (PAMs) (as defined in the Global Connectivity) to promote the deals with their GSG Clients (as defined in the Global Connectivity) through the subsidiaries of said clients in Chile, it is hereby agreed to exchange information on the spreads obtained in the business relationship with said clients.

 

Citigroup will provide Banco de Chile, with the periodicity agreed by the Parties, with the necessary information relating the Chilean Clients having business relationships with Citigroup abroad under the Partnership, so that the Parties can understand the net income of fund and fee costs (and other financial information, quality services and product related as well) recorded in Citigroup’s books, so as to comply with the Operating Agreements.

 

Banco de Chile will provide Citigroup, with the periodicity agreed by the Parties, the necessary information related to the Chilean Clients which have a relationship with Banco de Chile and the agreements with them within the framework of the Association, in order to allow the Parties to understand the net income of the funding costs and fee costs (in addition to other financial, costumer and product service information related thereof) acknowledged in Banco de Chile’s books in order to comply with the Operating Agreements.

 

Citigroup’s Regional Compliance Officer for Latin America and Banco de Chile’s Compliance Officer shall define a formal process of information flow between both Parties, regarding changes in the regulatory or institutional environment in Chile and in the United States of America with effect on Banco de Chile’s business or Citigroup’s investment in Banco de Chile, only to the extent and subject to the condition that there is no regulatory restriction to share the above mentioned information.Said flow information process may include periodic conference calls, sending monthly (Monthly/Dashboard) Compliance reports, sending information presented to Banco de Chile’s Directors/Audit Committee, among others.  This clause shall not replace or substitute any other agreement or reporting / communication process between the Parties’ Compliance Officers; moreover, any contradiction or mismatch between the process set forth herein and any other agreement or reporting / communication process between said officers, shall be solved by virtue of the mutual consent of the Parties.

 

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Sixth.  Term of the Agreements.  The Parties agree that this Agreement and the Operating Agreements, jointly with their corresponding accessory agreements (the “Relevant Agreements”) will be valid for two (2) years from January 1, 2016 through January 1, 2018.  However, the Parties may agree on an extension of such agreements for another two (2) years from January 1, 2018 through January 1, 2020, an extension that will be agreed in writing by August 31, 2017; otherwise, the Relevant Agreements will be extended – once – for one (1) year from January 1, 2018 through January 1, 2019, when they will expire without any further proceeding.

 

Four months before the expiration of the extension that the Parties may agree until January 1, 2020, the Parties may renew the Relevant Agreements by using the same procedure provided in the preceding paragraph.  Should the extension not be agreed in writing, such agreements will terminate upon one (1) years from the expiration of the latest term agreed.  The same renewal procedure may be used thereafter for as many times as agreed by the Parties.

 

Notwithstanding the above, either Party may terminate the Relevant Agreements in case of termination of the Framework Agreement between Quiñenco S.A. and Citigroup Inc. and Citibank Overseas Investment Corporation dated on July 19, 2007.  In such case, the Party enforcing such cause will notify the other as provided in letter (l) of the Seventh clause, in which case, the Relevant Agreements will be terminated within one year from the first day of the month following such notification.

 

Notwithstanding the above, should one or both Parties fail to meet their obligations pursuant this Agreement or under the Operating Agreements, during the validity of the Relevant Agreements, the Parties may (a) request the execution of unfulfilled obligations; and (b) as the case may be, the payment for the direct (rather than consequential or punitive) damages and losses caused by the defaulting party to the non-defaulting party.  Before selecting the referenced alternatives (a) and/or (b), the Parties will use the communication and escalation mechanisms provided in the Third clause hereof, and in case of any conflict regarding the existence or non-existence of the unfulfilled obligations (s), the procedure provided under paragraph (n) of the Seventh clause hereof.

 

Seventh.  General Provisions.

 

(a)         Market Conditions.  The Parties agree that all the remunerations and/or fees to be paid or charged for the services mutually provided will be adjusted to the equity conditions usually prevailing on the market.

 

(b)         Authorized Operations.  The Parties declare that all the services to be provided by one of the Parties to the other or the transactions to be carried out will be authorized or permitted by the law and/or regulations of the relevant country.

 

(c)          Confidentiality of the Operating Agreements.  The Parties are subject to the Confidentiality Agreement provided in the relevant Operating Agreements.

 

(d)         Assignment.  The Parties may not assign their rights and obligations hereunder without the prior written authorization from the other Parties, notwithstanding the provisions of the Fourth clause hereof.

 

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(e)          Mandatory Capability.  This Agreement will be mandatory and for the benefit of its Parties and their respective authorized assigns and assignees.

 

(f)           Entirety of the Agreement.  This Agreement is the entire agreement between the Parties regarding the issues referred to therein and supersedes any previous contracts, statements and agreements of the Parties.  There are no terms, obligations, commitments, statements, representations or conditions existing other than those included herein.  Any restatement or modification to this Agreement or the exemption of the terms and provisions hereof will not be deemed valid, unless made in writing and signed by the Parties.

 

(g)          Waivers.  The failure of any of the Parties to insist on the stringent compliance of any obligation, agreement, term or condition hereof, or the failure of any of the Parties to exercise any right or claim any compensation as a result of the non-compliance with this Agreement will not be understood as an exemption of such non-compliance or any future non-compliance of such obligation, agreement, term or condition.  No obligation, agreement, term or condition hereof will be exempted, altered or modified, but in writing.  The exemption of any non-compliance will not affect or alter this Agreement, and any and all the obligations, agreements, terms and conditions hereof will remain effective, becoming effective in the event of any future non-compliance.

 

(h)         Modifications.  No authorization or consent to modify, waive or exempt the compliance with the terms and conditions hereof will become effective, unless evidenced in writing and signed by all the Parties hereto; even so, such modification, waiver or exemption will only become effective for the particular and/or specific case for which it was issued.

 

(i)             Unenforceability.  If any provision hereof becomes null or unenforceable, the remaining provisions will remain fully valid and effective.

 

(j)            Expenses and Costs.  Each Party will be responsible for its own expenses and costs incurred or to be incurred in the negotiation and execution of this Agreement.

 

(k)         Taxes.  Each Party will cover the taxes charged to it under the applicable law and derived from any of the acts and payments provided herein.

 

(l)             Notifications.  All notices and communications required or permitted under this Agreement shall be in writing.  Any such notice or communication shall be deemed to have been duly received when personally delivered, by certified or registered mail, facsimile, with receiver’s stamp to the address of the corresponding Party, which unless otherwise stated must be understood as follows:

 

Banco de Chile:

 

Ahumada 251

Santiago, Chile

Attention:  Arturo Tagle Quiroz

 

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Citigroup:

 

201 South Biscayne Blvd., 29th Floor.

Miami, Florida 33131

United States of America

Attention:  CEO for Latin America

 

(m)     Language.  This Agreement will be executed in both Spanish and may be translated into English, In the event of any discrepancy between one version and the other, the Spanish version shall prevail in relation to the intention of the Parties.

 

(n)         Applicable Law and Jurisdiction.  This Agreement shall be subject to the laws of Chile.  Any dispute between the parties in connection with this agreement shall be definitively settled under the Rules of Arbitration of the International Chamber of Commerce (ICC) by three arbitrators appointed according to said Regulations.  The arbitration shall be held in the city of Paris and all the procedures shall be carried out in Spanish.  Each party promises to pay an aliquot of administrative expenses and advanced costs of the ICC, unless the arbitrators shall find otherwise in their final award.  The arbitrators may impose in said award payment of attorney’s fees and other costs in favor of the prevailing party, as they deem convenient.  Any party to this contract shall have the right to have recourse to and shall be bound by the pre-arbitral referee procedure of the International Chamber of Commerce in accordance with its Rules for a Pre-Arbitral referee Procedure.

 

Eighth.  Confirmation and Ratification.  The Parties acknowledge and agree that any reference within the Former Cooperation Agreement, as those in this Agreement, to Banco de Chile and to Citigroup consider, and have consider thereto since they were subscripted, their affiliates and their wholly owned subsidiaries.

 

Ninth.  Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and shall produce the same effects as if the signatures contained therein would be placed in a same instrument, but all of such counterparts shall jointly constitute one sole and same instrument.  This Agreement shall be effective once each counterpart of the Agreement signed by each Party is received by fax or email.

 

IN WITNESS WHEREOF, the Parties hereunto subscribe this Agreement through their duly authorized representatives on the first date indicated above.

 

	
Banco de Chile
    	
 
    	
Citigroup Inc.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Arturo Tagle Quiroz
    	
 
    	
Jane Fraser
    
	
Chief Executive Officer
    	
 
    	
Chief Executive Officer
    
	
 
    	
 
    	
For Latin America
    

 

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Annex “A”
 Principles of the Processing Mechanism for the Global Connectivity Contract

 

The formulations of the operational mechanism incorporated in this document aim at optimizing the way in which Banco de Chile and Citigroup operate, so as Banco de Chile optimize the value of the strategic alliance with Citigroup, to benefit from the advantages to form an important part of the global Citigroup network and to maximize the value of the combination of the best of the local and the best of the global.

 

The Processing Mechanism described in this document specifies several implementation formulas of the Connectivity Contract but does not cover more than one part of the processes to maximize the value of the Connectivity Contract.

 

Both parties may extend and improve these processes in a good faith dialogue trying to adjust them to market conditions, in order to achieve competitive advantages for the Parties, with full respect to the framework of the Connectivity Contract.

 

References to specific names are understood as reference to those name’s position in the corresponding institution.  Consequently the activities carry out in accordance with the present Annex may be performed in the future by those who replace them in the positions held at the date of this Contract.

 

·                                          Citigroup will describe to Banco de Chile on the Steering Committee the transactions as to which Citigroup CMB has received mandates; in such a way that both Parties make sure the merger does not limit but rather benefits the execution of these mandates.

 

·                                          The “pipeline” of mandates obtained will be updated monthly according to which is required in the meetings of the Steering Committee.

 

·                                          Steering Committee is defined in the Connectivity Contract and may include people the parties deem convenient to invite in accordance with the relevant chapters.

 

·                                          Citigroup will present the complete catalogue of GTS products and then the design and approval of the launching plan of these products.

 

·                                          The objective is to create immediately a competitive advantage for Banco de Chile and for its Chilean Customers derived from its access to global products.

 

·                                          Each Product Plan should have well-defined objectives on market targets and expected financial results.

 

·                                          The Steering Committee will determine the necessity of incorporate the necessary Citigroup in Latin America or Global support for the design and launching of these plans.

 

·                                          Citigroup Steering Committee’s representatives will be the liaison with Citigroup enabling Banco de Chile’s Chairman and CEO to establish their own network in Citigroup.

 

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·                                          The Product Launching Plans do not only apply to the GTS but also to those of Sales & Trading and other products of CMB Citigroup.

 

·                                          The Plans for Global Product Launch of Citigroup in Chile through the present Contract will include everything necessary for the training of the Sales Forces.

 

·                                          Any training support will be supplied by the Latin American or New York team of Citigroup.

 

·                                          The Parties will monitor the new and traditional delivery of the Citigroup Products in CIB de Banco de Chile and in Large Company Banking and they will do this together with the people in charge of these businesses in Banco de Chile.

 

·                                          It is important that the responsible of Wholesale Banking, Corporate Banking and of Investment Banking and Large Company Banking and GTS to prepare together with Corporate Banking and GTS of Latin America an Offer Plan of Banco de Chile Products and Services to the Citigroup Global and Regional clientele.

 

·                                          The objective is to highlight to this clientele (GRB Customers) the continuity of their services in Chile .

 

·                                          In the same way, Citigroup’s catalogues and products will be prepared for the clientele of Wholesale Banking, Corporate Banking and particularly Large Company Banking of Banco de Chile so as they have access to them.

 

·                                          The meetings of the Steering Committee will have the objective of, among those mentioned in the Connectivity Contract,monitoring an adequate flow of global and local products and make all necessary adjustments to CMB or GCG products.

 

·                                          For these purposes the people responsible for these activities in Banco de Chile will be invited to follow-up the results and to assist the Parties to continuously make their best effort to guarantee the best results.

 

·                                          Both Parties may be able to create in Treasury an operational model of “Joint Book” under the following parameters:

 

·                                          Exchange of market information

 

·                                          Continuous support between the NY Hub and the regional and local treasuries of Citigroup CMB and that of Banco de Chile

 

·                                          Joint design and preparation of operations of derivatives for customers

 

·                                          Joint design and preparation of structured notes for the Banco de Chile or Citigroup clientele in other parts of Latin America or the world.

 

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·                                          Coordination of directional bets (Risk Treasury) on the same address, with full respect at all times of the regulatory frameworks of Chile, the United States and any other applicable country in each transaction or trades.

 

·                                          In directional bets each Party will determine their own levels and their own risk limits.

 

·                                          Exchange of information on flows, markets in such a way that the traders of the public side of both Parties have the same reading and the advantage of the local, Latin American and global visibility.

 

·                                          Exchange of staff, in such a way there are continuous opportunities for traders and staff of Sales & Trading of Banco de Chile to train and work in any of the Citigroup Trading Desks in Latin America, NY, London or anywhere else in the world.

 

·                                          In the same way the invitation for Citigroup staff to collaborate in the activity of Sales & Trading of Banco de Chile.

 

·                                          Exchange and joint collaboration in Hedging strategies.

 

·                                          The responsible of CIB Division of Banco de Chile will continuously design Account Plans for its customers and will react to the customers’ requests as to global and local transactions (RFPs:  Requests for Proposals).

 

·                                          The responsible of CIB Division and Large Company Banking as well as Division of Persons and Consumption and of the brokerage house of Banco de Chile will have access to any support required from Citigroup.

 

·                                          The communication channels of everyday may be channeled through the following people in Citigroup or those who serve in similar position from time to time:

 

·                                          Head of Corporate Banking for Latin America

 

·                                          Head of Investment Banking for Latin America

 

·                                          Head of Equity Capital Markets for Latin America

 

·                                          Head of Debt Capital Markets for Latin America

 

·                                          Head of Sales & Trading Products for Latin America

 

·                                          Head of Global Loans for Latin America

 

·                                          Head of GTS for Latin America

 

·                                          Head of Entrepreneurial Banking for Latin America

 

·                                          Head of Retail Brokerage for Latin America

 

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·                                          The Parties, together with the person in charge of CIB Division of Banco de Chile and its team, will follow-up (as often as Parties agreed) the transactions of Sales & Trading, Capital Markets and Banking and will monitor the adequate support of Citigroup to these operations and businesses.

 

·                                          A visit of the Chairman and CEO of Banco de Chile and the executives assigned by them will be organized in the shortest possible term in order to establish contact with high ranked executives of Citigroup in the Corporate Banking Unit and the teams of the PAMs in New York.

 

·                                          Establishment of an Information System (access to Citivision or the system that replaces it from time to time) and continuous monitoring of the GRB Customer service.

 

·                                          Monthly monitoring in any of the meetings of the Steering Committee Partners of the evolution of the Banco de Chile business flow to Citigroup books both for the business of physical persons and the business of companies and evaluation and approval of actions to correct or to improve business flows.

 

·                                          Steering Committee’s meetings should be held in the same weeks of the monthly or bimonthly Board of Directors of Banco de Chile.

 

·                                          The information on customers and transactions will be handled totally confidential designing firewalls so as the information be accessible only by the Board of Directors of the Brokerage house explicitly authorized to access it.

 

·                                          The Banco de Chile teams serving physical persons in the high market segment whether through Banco Edwards — Citi or other channels such as Banchile, will work in a team to refer customers to the offshore business via onshore staff.

 

·                                          Both Parties will stimulate the development of Capital Banking and onshore Private Banking, aiming at serving these market segments with local chilean products which will be developed within the Banco de Chile organization.

 

·                                          In the creation and/or strengthening of these activities Parties will look for combining knowledge and the best practices of Banco de Chile as well as Citigroup, whether of Latin America, Asia or at another global level.

 

·                                          Both Parties will decide the vehicles or divisions, within the Banco de Chile, that should developed and/or strengthened in order to stimulate fast growing of the business and benefit from the development of a competitive advantage for Banco de Chile.

 

10

 

·                                          It is proposed to create in Banco de Chile an Investment Banking Committee formed by, at least, by the Chairman and CEO of Banco de Chile and other personnel of the organization, including Citi’s Representatives or other people nominated by them.  The objectives would be the following:

 

·                                          To favor an accelerated development of M&A, Infrastructure and other transactions with Chilean Customers and investors, multinational companies and risk and investment capital funds looking for new businesses in Chile.

 

·                                          This effort will focus on the production of ideas of added value to the clientele, both corporate as well as entrepreneurial, to create a pipeline of transactions achieving:  (i) the creation in the market of a powerful image of high-value transactions which Banco de Chile may carry out for its clientele; and (ii) the development of a business which significantly contributes in new commissions to the already positive profitability of Banco de Chile.

 

·                                          The idea is to achieve transfer of solid know-how to Banco de Chile and Citigroup will assure the contribution of its best talent for the design and execution of these transactions.

 

·                                          The proposal is to invite the Chairman and CEO of Banco de Chile and other executives nominated by them to be part of the Citigroup Senior Executives Regional Forums for Latin America so as Banco de Chile may have visibility of all and each one of the CMB Latin America initiatives in the region and may participate in the decision-making of Citigroup in this region.

 

·                                          Another proposal is to invite the Chairman and CEO of Banco de Chile and other executives nominated by them to participate in the Global CMB Forums of planning and follow-up of global initiatives of Citigroup and the Citigroup Senior Executives Regional Forums, such as the annual meeting of Global and Latam Citi Country Officers.

 

·                                          In order to strengthen the Citigroup support to Banco de Chile, the Parties aim to the the creation of a CMB Committee for the Alliance with Banco de Chile.  The committee on the Citigroup side will be formed by Corporate Banking Senior Executives of Latin American.  It is proposed to organize three meetings a year, both in Chile and in New York, with the Chairman and CEO of Banco de Chile and other executives nominated by them to guarantee that in these meetings the flow of support to Banco de Chile will be of the highest standard.

 

·                                          Citigroup will supply Banco de Chile with:

 

·                                          A list and catalogue of all training courses supplied to the Citigroup employees in Latin America

 

·                                          A proposal for staff exchange between Banco de Chile and Citigroup in such a way that the staff of both organizations can work temporarily in either organization.

 

11

 

·                                          Banco de Chile may request from Citigroup the development of special courses according to its needs.  Such request will be done three months in advance in order for Citigroup to have enough time to prepare it adequately.

 

·                                          The courses will be charged to Banco de Chile at Citigroup cost plus 5%.

 

·                                          Citigroup will monthly report on the pipeline of transactions of Cash Management and multi-regional TTS in order for Banco de Chile to be able to:

 

·                                          Have full visibility of the transactions Citigroup participates with multinational and multiregional companies

 

·                                          Enable the Banco de Chile team to include the Citigroup teams to draw up proposals jointly

 

·                                          Achieve competitive pricing in these transactions

 

·                                          Optimize the added value of the Banco de Chile franchising in these transactions derived from its network of branches and its local products

 

·                                          The Latin America Citigroup Treasury and the Division of Sales & Trading of Citigroup Latin America will supply Banco de Chile with the following elements:

 

·                                          the list of products of Sales & Trading which may be sold to the Company Client Base of Banco de Chile

 

·                                          the suggested pricing, which should be adjusted with Banco de Chile in order to be offered under competitive conditions in Chile

 

·                                          the necessary training for the sales forces of the Banco de Chile to be able to offer these products

 

·                                          the proposal to share the economics of these complex products and products developed especially for Banco de Chile

 

·                                          the experiences of this kind of effort in other parts of the world, particularly in Mexico, Asia and Europe

 

·                                          Citigroup will invite Banco de Chile staff to examine in any part of the world, of its choice, the experiences of Citigroup in the sale of products of Sales & Trading to entrepreneurial customers

 

·                                          In its category of a Preferred Banking Provider of Correspondent Banking, Citigroup will present Banco de Chile with a proposal of Products, Tariffs and Funding to be considered by Banco de Chile, and the same will not limit Banco de Chile other activities of Correspondent Banking with other Banks.

 

12

 

·                                          The Citigroup Latin America Corporate Banking, the Citigroup Latin America Commercial Banking and the PAMs will have a continuous communication channel with the Corporate Banking of Banco de Chile for:

 

·                                          achieving that the PAMS get to know each other fast

 

·                                          reporting on relevant aspects regarding the evolution of the multinational companies

 

·                                          reporting changes in risk conditions of credit, improvements or deteriorations on a timely fashion.

 

·                                          joint develop of account plans

 

·                                          informing and sharing expansion plans

 

·                                          monitoring quality service and improvements actions if necessary

 

·                                          design and execution of transactions

 

·                                          CIB Division of Banco de Chile will have access to the industry specialists of Citigroup which operate at global level both in the chapters of Corporate Banking and Risk and in Investment Banking.  These specialists have the global knowledge of industries and companies which may be of high value to Banco de Chile risk-taking and the design of new transactions for the clientele.

 

·                                          With the frequency determined by Banco de Chile and its CIB Division, Citigroup may organize periodic meetings in the US or in Chile with the industry specialists for the purpose of:

 

·                                          transmitting an update of the global conditions of the industries

 

·                                          reporting on important aspects which might affect values of capitalization and risks in the industries

 

·                                          exercising account plans, incorporating global knowledge

 

·                                          the list of the support required from industry specialists for the achievement of transactions

 

·                                          The Risk Area of Citigroup Latin America and Global will present the Banco de Chile with evaluation mechanism, risk determination, evaluations and reserve mechanism.  The objective is for Banco de Chile to gain a better knowledge of the credit risk policies and processes of Citigroup.

 

·                                          This way Banco de Chile will have access to the best practices of Citigroup in matters of:

 

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·                                          processes and policies of approval

 

·                                          industry programs

 

·                                          credit manuals

 

·                                          policies of company credit risk qualification

 

·                                          measurement of market risk

 

·                                          risk monitoring

 

·                                          policies of creation of reserves according to international standards and Citigroup standards

 

·                                          Banco de Chile may include this information to evaluate what elements of the global and Latin American risk platform may be convenient.

 

The Banco de Chile team is invited to carry out all the visits they desire in Latin America or Global to study the Citigroup risk practices.

 

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