Document:

slb-ex106_162.htm

 

Exhibit 10.6

SCHLUMBERGER [       ] OMNIBUS STOCK INCENTIVE PLAN

INCENTIVE STOCK OPTION AGREEMENT

(Includes Confidentiality, Intellectual Property, Non-Competition,

And Non-Solicitation Provisions in Section 8 and Attachment 1)

Effective Date:  [          ]

Please note: If you do not wish to accept this Stock Option Agreement, you must notify the Stock Department no later than 30 days after this Agreement is made available to you.

SCHLUMBERGER LIMITED, a Curaçao corporation (the “Company”), hereby grants to the employee named in the Notice of Grant of Award (“Employee”) an incentive stock option (the “ISO”) to purchase common stock of the Company, par value $0.01 per share (“Common Stock”) pursuant to this option agreement (as may be amended, the “Agreement”).  Your ISO is subject to all the terms and conditions of the Schlumberger [          ] Omnibus Stock Incentive Plan, as may be amended (the “Plan”) and this Agreement.  Your ISO is intended to constitute an “incentive stock option” under Section 422 of the U.S. Internal Revenue Code of 1986 and the Treasury Regulations promulgated thereunder.

1. Award. The date of grant of this ISO (the “Grant Date”), the ISO exercise price and the number of shares of Common Stock subject to this ISO (collectively, the “Option Shares”) are set forth in the Notice of Grant of Award.  Except as set forth below, this ISO expires on the tenth anniversary of the Grant Date.

2. Vesting of ISO.

(a) The Option Shares will become purchasable in installments, which are cumulative.  The date on which each installment will become exercisable and the number of shares of Common Stock comprising each installment are as follows:

 

	
DATE
	
 
	
OPTION SHARES EXERCISABLE

	
1st Anniversary of the Grant Date
	
 
	
20%

	
2nd Anniversary of the Grant Date
	
 
	
20%

	
3rd Anniversary of the Grant Date
	
 
	
20%

	
4th Anniversary of the Grant Date
	
 
	
20%

	
5th Anniversary of the Grant Date
	
 
	
20%

(b) In keeping with the Company’s general policy, the terms of this Agreement, including the vesting schedules, are put in place in certain countries to comply with local regulations. The vesting schedule above, and therefore your ability to exercise your ISO at certain times and certain other terms of the ISO, may change if you move from one country to another.  Currently, the Company has in place a sub-plan for France that governs stock options issued to grantees residing in France or who are on a French payroll.

3. Exercise of ISO.

(a) This ISO may be exercised only by delivering to the Company a written notice (or an electronic notice in the manner specified by the Compensation Committee of the Board of Directors (the “Board”) of the Company (the “Committee”)) specifying the number of shares of Common Stock you wish to purchase.  The Committee, which is authorized by the Board to administer the Plan, hereby notifies you that the ISO price may be paid, subject to such rules and procedures in effect at such time and as the Committee may prescribe from time to time, (i) in cash or certified check, (ii) by the delivery of shares of Common Stock with a Fair Market Value at the time of exercise equal to the total ISO price, (iii) by a combination of the methods described in (i) and (ii), and (iv) subject to applicable law, and the Company’s Securities Transactions – Insider Trading Standard through a broker-assisted cashless exercise, or “sell-to-cover” arrangement in accordance with the procedures approved by the Committee.

(b) Please see the Company’s Stock Department website, which is set forth in the last paragraph of this Agreement for further information.  Any changes in the terms and procedures of this program, and any additional program that the Committee may authorize in the future, will be communicated to you on the Company’s Stock Department website. 

4. Termination of Employment. This ISO will expire earlier than the date set forth above if you terminate employment with the Company and its Subsidiaries.

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(a) Termination with Company Consent. If you terminate employment with consent of the Company or a Subsidiary, as applicable, any exercise of this ISO must be made within three (3) months of termination of employment (or expiration date, if earlier) and then only to the extent the ISO was exercisable upon termination, unless you terminate employment due to Retirement (as provided in Section 4(b) below) or Special Retirement (as provided in Section 4(c) below), or terminate employment as a result of death or Disability (as provided in Section 4(d) below).

(b) Retirement. If your employment with the Company and its Subsidiaries is terminated due to Retirement (as defined in Section 11 below), your ISO will, subject to forfeiture provisions in the event you engage in Detrimental Activity (as defined in Section 11 below): (i) continue to vest post-Retirement as if you remained employed with the Company and its Subsidiaries and (ii) have an exercise period of 10 years from the original date of grant (the “Retirement Exercise Period”). As more fully described in the Prospectus related to the Plan, if you exercise your option more than three (3) months following your Retirement or Special Retirement, your Option Shares will be treated as attributable to the exercise of a non-qualified stock option for tax purposes.

(c) Special Retirement. If your employment with the Company and its Subsidiaries is terminated due to Special Retirement (as defined in Section 11 below), your ISO will be exercisable at any time during the period of sixty (60) months after such termination or the remainder of the term of the ISO, whichever is less (the “Special Retirement Exercise Period”), provided that such option may be exercised after such termination and before expiration only to the extent that it is exercisable on the date of such termination.

(d) Death or Disability. If your employment with the Company and its Subsidiaries is terminated due to death or Disability (as defined in Section 11 below), your ISO will automatically become fully vested and exercisable.  You may exercise the outstanding ISO at any time during the period of 60 months after such termination or the remainder of the term of the ISO, whichever is less (the “Disability Exercise Period” or “Death Exercise Period”, as applicable).  As more fully described in the Prospectus related to the Plan, if you exercise your option more than 12 months after you terminate employment due to Disability, your Option Shares will be treated as attributable to the exercise of a non-qualified stock option for tax purposes. In the event that you die while employed with the Company or any Subsidiary or during the Special Retirement Exercise Period, the Retirement Exercise Period or the Disability Exercise Period, your ISO may be exercised only by the person or persons entitled thereto under your will or under the laws of descent and distribution to the extent exercisable by you on the date of your death and to the extent the term of the ISO has not expired within such Special Retirement Exercise Period, the Retirement Exercise Period or Disability Exercise Period, as applicable.

(e) Breach or Misconduct; Without Consent. If termination of your employment with the Company and its Subsidiaries is because of breach of your employment contract, if any, or your misconduct, this ISO will immediately and automatically expire and terminate. Termination of your employment without consent of the Company or a Subsidiary, as applicable, will cause your ISO to expire immediately.

(f) Detrimental Activity. This ISO may be forfeited, and any exercise you have made of this ISO may be rescinded, as further described below, if you engage in certain Detrimental Activity (as defined in Section 11 below). Specifically, if you engage in Detrimental Activity while employed with the Company or its Subsidiaries or within one year following termination of employment for any reason other than Retirement, Special Retirement or Disability, this ISO will immediately and automatically expire and terminate and the Committee may rescind any exercise that you made under this option within six months preceding or three months following your termination.

If you engage in Detrimental Activity while employed with the Company or its Subsidiaries or within five years following termination of employment by reason of Special Retirement or Disability, this ISO will immediately and automatically expire and terminate and the Committee may rescind any exercise that you made under this option within the period beginning six months prior to your termination by Special Retirement or Disability and ending on the expiration of your Special Retirement Exercise Period or Disability Exercise Period. 

If you engage in Detrimental Activity while employed with the Company or its Subsidiaries or within your Retirement Exercise Period, this ISO will immediately and automatically expire and terminate and the Committee may rescind any exercise that you made under this option within the period beginning six months prior to your termination by Retirement and ending on the expiration of your Retirement Exercise Period.  In the event that any option exercise is rescinded by the Committee as described above, you will be obligated to pay the Company within 10 days following written demand an amount equal to the spread on the shares of Common Stock with respect to which the rescinded exercise applied.   (The “spread” for this purpose is the difference between the aggregate exercise price and aggregate Fair Market Value of the shares as to which you exercised your option, with Fair Market Value determined as of the exercise date.)  

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5. Restrictions Imposed by Law. As contemplated by the Plan, you may not exercise your ISO or any portion thereof, and no obligation exists to issue or release shares of Common Stock or accept an exercise of this ISO, if the issuance or release of shares or the acceptance of the ISO exercise by the Company or a Subsidiary constitutes a violation of any governmental law or regulation.

6. Assignability. This ISO is not transferable or assignable except by will or laws of descent and distribution and then only to the extent exercisable at death.

7. Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Texas (except that no effect will be given to any conflicts of law principles thereof that would require the application of the laws of another jurisdiction).  Venue for any dispute arising under this Agreement will lie exclusively in the state and federal courts, as applicable, of Harris County, Texas and the Southern District of Texas, Houston Division, respectively.

8. Confidential Information, Intellectual Property and Noncompetition. Employee acknowledges that Employee is in possession of and has access to confidential information of the Company and its Subsidiaries, including material relating to the business, products and services of the Company and its Subsidiaries, and that he or she will continue to have such possession and access during employment by the Company and its Subsidiaries. Employee also acknowledges that the business, products and services of the Company and its Subsidiaries are highly specialized and that it is essential that they be protected. Accordingly, Employee agrees to be bound by the terms and conditions set forth on Attachment I.

9. No Right to Future Awards. The grant of this ISO is subject to the terms of the Plan, which is discretionary in nature, and the terms of this Agreement. The grant of this ISO is a one-time benefit, and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options.  All determinations with respect to any such future grants, including, but not limited to, the times when options will be granted, the number of shares of Common Stock subject to each option, the option price, and the time or times when each option will be exercisable, will be at the sole discretion of the Committee.  Your participation in the Plan is voluntary.  The grant of this ISO is an extraordinary item of compensation which is outside the scope of your oral, written or implied employment contract, if any.  This ISO is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.  The vesting of this ISO ceases upon termination of employment for any reason except as otherwise explicitly provided in this Agreement.

10. Disclosure. You (i) authorize the Committee, the Company and any affiliated employer entity, and any agent of the Committee administering the Plan or providing Plan recordkeeping services, to disclose to the Committee, the Company or any of its affiliates such information and data as the Committee or the Company will request in order to facilitate the grant of options and the administration of the Plan; (ii) waive any data privacy rights you may have with respect to such information, to the extent permitted under applicable law; and (iii) authorize the Company and any such agent to store and transmit such information in electronic form.

11. Definitions.

(a) “Agreement” is defined in the introduction.

(b) “Board” is defined in Section 3(a). 

(c) “Clawback Policy” is defined in Section 12.

(d) “Committee” is defined in Section 3(a).

(e) “Common Stock” is defined in the introduction.

(f) “Company” means Schlumberger Limited.

(g) “Detrimental Activity” means activity that is determined by the Committee in its sole and absolute discretion to be detrimental to the interests of the Company or any of its Subsidiaries, including but not limited to situations where you: (i) divulge trade secrets, proprietary data or other confidential information relating to the Company or to the business of the Company and any Subsidiaries; (ii) enter into employment with or otherwise provides services to (A) any company listed, as of the date of your termination of employment, on the Philadelphia Oil Service Sector Index (or any successor index) or (B) any affiliate of any such listed company, in either case under circumstances suggesting that you will be using unique or special knowledge gained as a Company employee or Subsidiary employee with the effect of competing with the Company or its Subsidiaries; (iii) enter into employment with or otherwise provides services to any Direct Competitor; (iv) engage or employ, or solicit or contact with a view to the engagement or employment of, any person who is an employee of the Company or its Subsidiaries; (v) canvass, solicit, approach 

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or entice away or cause to be canvassed, solicited, approached or enticed away from the Company or its Subsidiaries any person who or which is a customer of any of such entities during the period of time between the Grant Date and the vesting of the Option Shares; (vi) are determined to have engaged (whether or not prior to termination) in either gross misconduct or criminal activity harmful to the Company or a Subsidiary; or (vii) take any action that otherwise harms the business interests, reputation, or goodwill of the Company or its Subsidiaries.  The Committee may delegate, to an officer of the Company or to a subcommittee of the Committee, its authority to determine whether you have engaged in “Detrimental Activity.”

(h) “Direct Competitor” means, as of the date of this Agreement any of the following: (i) Halliburton Company, Baker Hughes, Incorporated, Weatherford International plc, and any other oilfield equipment and services company; and (ii) any entity engaged in seismic data acquisition, processing and reservoir geosciences services to the oil and natural gas industry, including in all cases in (i) and (ii) above, any and all of their parents, subsidiaries, affiliates, joint ventures, divisions, successors, or assigns.

(i) “Death Exercise Period” is defined in Section 4(d).

(j) “Disability” means such disability (whether through physical or mental impairment) which totally and permanently incapacitates you from any gainful employment in any field which you are suited by education, training, or experience, as determined by the Committee in its sole and absolute discretion.

(k) “Disability Exercise Period” is defined in Section 4(d).

(l) “Fair Market Value” means, with respect to a share of Common Stock on a particular date, the mean between the highest and lowest composite sales price per share of the Common Stock, as reported on the consolidated transaction reporting system for the New York Stock Exchange for that date, or, if there will have been no such reported prices for that date, the reported mean price on the last preceding date on which a composite sale or sales were effected on one or more of the exchanges on which the shares of Common Stock were traded will be the Fair Market Value.

(m) “Grant Date” is defined in Section 1.

(n) “ISO” is defined in the introduction.

(o) “Option Shares” is defined in Section 1.

(p) “Plan” is defined in the introduction.

(q) “Retirement” means either: (i) your voluntary election to retire from employment with the Company and its Subsidiaries at any time after you have reached both the age of 60 and 25 years of service, or (ii) your voluntary election to retire from employment with the Company and its Subsidiaries at any time after you have reached both the age of 55 and 20 years of service; subject, however, to the approval of either (A) the Committee, if you are an executive officer of the Company at the time of your election to retire, or (B) the Retirement Committee, if you are not an executive officer of the Company at the time of your election to retire, which approval under clauses (A) or (B) may be granted or withheld in the sole discretion of the Committee or the Retirement Committee, as applicable.

(r) “Retirement Committee” means a committee consisting of the Company’s Vice President of Human Resources, the Director of HR Operations and the Compensation & Benefits Manager. 

(s) “Retirement Exercise Period” is defined in Section 4(b).

(t) “Special Retirement” means termination of your employment with the Company and all Subsidiaries at or after (i) age 55 or (ii) age 50 and completion of at least 10 years of service with the Company and all Subsidiaries. 

(u) “Special Retirement Exercise Period” is defined in Section 4(c).

(v) “Subsidiary” means (i) in the case of a corporation, a “subsidiary corporation” of the Company as defined in Section 424(f) of the Code and (ii) in the case of a partnership or other business entity not organized as a corporation, any such business entity of which the Company directly or indirectly owns 50% or more of the voting, capital or profits interests (whether in the form of partnership interests, membership interests or otherwise). 

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12. Clawback Policy. The Company’s policy on recoupment of performance-based bonuses, as amended from time to time (its “Clawback Policy”), will apply to the ISO, any shares of Common Stock delivered hereunder, and any profits realized on the sale of such shares to the extent that you are covered by the Clawback Policy. You acknowledge that if you are covered by such policy, the policy may result in the recoupment of the ISO, any shares of Common Stock delivered hereunder and profits realized on the sale of such shares either before, on or after the date on which you become subject to such policy.

13. More Information. The Plan and prospectus are both available on-line at www.myshares.slb.com. A paper copy of the Plan and prospectus may be obtained by contacting the Stock Department, Schlumberger Limited, 5599 San Felipe, 17th Floor, Houston, Texas 77056.

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ATTACHMENT I

Confidential Information, Intellectual Property,

Non-Compete and Non-Solicitation Agreement

1. Definitions. 

1.1. “Company Confidential Information” is any and all information in any form or format relating to the Company or any Affiliate (whether communicated orally, electronically, visually, or in writing), including but is not limited to technical information, software, databases, methods, know-how, formulae, compositions, drawings, designs, data, prototypes, processes, discoveries, machines, inventions, well logs or other data, equipment, drawings, notes, reports, manuals, business information, compensation data, clients lists, client preferences, client needs, client designs, financial information, credit information, pricing information, information relating to future plans, marketing strategies, new product research, pending projects and proposals, proprietary design processes, research and development strategies, information relating to employees, consultants and independent contractors including information relating to salaries, compensation, contracts, benefits, inceptive plans, positions, duties, qualifications, project knowledge, other valuable confidential information, intellectual property considered by the Company or any of its Affiliates to be confidential, trade secrets, patent applications, and related filings and similar items regardless of whether or not identified as confidential or proprietary. For the purposes of this Attachment I, Company Confidential Information also includes any type of information listed above generated by the Company or any of its Affiliates for client or that has been entrusted to the Company or any of its Affiliates by a client or other third party. 

1.2. “Intellectual Property” is all patents, trademarks, copyrights, trade secrets, Company Confidential Information, new or useful arts, ideas, discoveries, inventions, improvements, software, business information, lists, designs, drawings, writings, contributions, works of authorship, findings or improvements, formulae, processes, product development, manufacturing techniques, business methods, information considered by Company to be confidential, tools, routines and methodology, documentation, systems, enhancements or modifications thereto, know-how, and developments, any derivative works and ideas whether or not patentable, and any other form of intellectual property. 

1.3. “Pre-existing Intellectual Property” is all Intellectual Property that was authored, conceived, developed, or reduced to practice by Employee before the term of Employee’s employment with the Company or any Affiliate began. 

1.4 “Company Intellectual Property” is all Intellectual Property that was authored, conceived, developed, or reduced to practice by Employee (either solely or jointly with others), in the term of his/her employment: (a) at the Company’s expense or the expense of any Affiliate; (b) using any of the Company’s materials or facilities or the materials or facilities of any Affiliate; (c) during the Employee’s working hours; or (d) that is applicable to any activity of Company or any of its Affiliates, including but not limited to business, research, or development activities. Company Intellectual Property may be originated or conceived during the term of Employee’s employment but completed or reduced to practice thereafter. Company Intellectual Property will be deemed a “work made for hire” as that term is defined by the copyright laws of the United States. Company Intellectual Property includes any Pre-existing Intellectual Property assigned, licensed, or transferred to Company, and any Pre-existing Intellectual Property in which Company has a vested or executory interest. 

1.5. “Affiliate” means any entity that now or in the future directly or indirectly controls, is controlled by, or is under common control with Company, where “control” in relation to a company means the direct or indirect ownership of at least fifty-percent of the voting securities or shares. 

2. Employee agrees to comply with all of the Company’s policies and codes of conduct as it may promulgate from time to time, including those related to confidential information and intellectual property. Nothing in those policies will be deemed to modify, reduce, or waive Employee’s obligations in this Attachment I. In the event of any conflict or ambiguity, this Attachment I prevails. 

3. Company does not wish to receive from Employee any confidential or proprietary information of a third party to which Employee owes an obligation of confidence. Employee will not disclose to Company or any of its Affiliates or use while employed by Company or any of its Affiliates any information for which he or she is subject to an obligation of confidentiality to any former employer or other third party. Employee represents that his or her duties as an employee of Company and Employee’s performance of this Attachment I do not and will not breach any agreement or duty to keep in confidence information, knowledge, or data acquired by Employee outside of Employee’s employment with Company or any of its Affiliates. 

4. During the Employee’s term of employment, the Company or, applicable its Affiliates, will provide Employee and Employee will receive access to Company Confidential Information that is proprietary, confidential, valuable, and relates to Company’s business. 

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5. Other than in the proper performance of Employee’s duties for the Company or any of its Affiliates, Employee agrees not publish, disclose or transfer to any person or third party, or use in any way other than in Company’s business or that of or any of its Affiliates, any confidential information or material of Company or any of its Affiliates, including Company Confidential Information and Company Intellectual Property, either during or after employment with Company. 

6. Except as required in performing Employee's duties for the Company or any of its Affiliates, Employee agrees not remove from Company’s premises or its control any Company Confidential Information including but not limited to equipment, drawings, notes, reports, manuals, invention records, software, customer information, well logs or other data, or other material, whether produced by Employee or obtained from Company. This includes copying or transmitting such information via personal digital devices, mobile phones, external hard drives, USB “flash” drives, USB storage devices, FireWire storage devices, floppy discs, CD’s, DVD’s, personal email accounts, online or cloud storage accounts, memory cards, Zip discs, and any other similar media or means of transmitting, storing or archiving data outside of Schlumberger-supported systems. 

7. During the term of employment with Company or any of its Affiliates, Employee agrees not to engage, as an employee, officer, director, consultant, partner, owner or another capacity, in any activity or business competitive to that of the Company or any of its Affiliates. 

8. Employee agrees to deliver all Company Confidential Information and materials to Company immediately upon request, and in any event upon termination of employment. If any such Company Confidential Information has been stored on any personal electronic data storage device, including a home or personal computer, or personal email, online or cloud storage accounts, Employee agrees to notify the Company and its Affiliates and make available the device and account to the Company for inspection and removal of the information. 

9. Employee recognizes and acknowledges that Company Confidential Information constitutes protectable information belonging to Company and its Affiliates, including deemed trade secrets defined under applicable laws. In order to protect Company and its Affiliates against any unauthorized use or disclosure of Company Confidential Information and in exchange for the Company's promise to provide Employee with access to Company Confidential Information and other consideration during employment with Company and its Affiliates, Employee agrees that for a period of one year following the end of employment with Company, Employee will not within the Restricted Territory directly or indirectly work for or assist (whether as an owner, employee, consultant, contractor or otherwise) any business or commercial operation whose business directly or indirectly competes with any area of the Company’s business in which Employee was employed by Company. Moreover, Employee agrees that Company may provide a copy of this Attachment I to any entity for whom Employee provides services in the one-year period following the date of termination of Employee's employment with Company and its Affiliates. In the event of breach by the Employee, the specified period will be extended by the period of time of the breach. 

Employee recognizes and acknowledges that the business, research, products, and services of Company and its Affiliates are by nature worldwide in scope, and that Company and its Affiliates are not required to maintain a physical location in close proximity to its customers. Employee agrees that in order to protect Company Confidential Information, business interests and goodwill, the “Restricted Territory” includes any county, parish, borough, or foreign equivalent: (1) in which Company has customers or service assignments about which Employee received or obtained Company Confidential Information during his/her employment with Company; (2) in which Employee had a customer or service assignment for Company in the one-year period preceding Employee's termination; or (3) in which Company had a work site, job site, facility, or office, at which Employee had a work activity for Company in the one-year period preceding Employee’s termination. With respect to competitive activities in Louisiana, the Restricted Territory will be limited to the following parishes: Acadia, Allen, Bossier, Caddo, Calcasieu, Cameron, Claiborne, De Soto, Evangeline, Iberia, Jefferson, Lafayette, Lafourche, Orleans, Ouachita, Plaquemines, Red River, Sabine, St. Charles, St. Landry, St. Mary’s, Tangipahoa, Terrabone, Union, Vermillion, and West Baton Rouge.

10. Company has attempted to place the most reasonable limitations on Employee’s subsequent employment opportunities consistent with the protection of Company’s and its Affiliates’ valuable trade secrets, Company Confidential Information, business interests, and goodwill. Employee acknowledges that the limitations contained herein, especially limitations as to time, scope, and geography, are reasonable. In order to accommodate Employee in obtaining subsequent employment, Company and its Affiliates may, in their discretion, grant a waiver of one or more of the restrictions on subsequent employment herein. A request for a waiver must be in writing and must be received by Company at least 45 days before the proposed starting date of the employment for which Employee is seeking a waiver. The request must include the full name and address of the organization with which Employee is seeking employment; the department or area in which Employee proposes to work; the position or job title to be held by Employee; and a complete description of the duties Employee expects to perform for such employer. The decision to grant a waiver will be in the Company’s discretion. If Company decides to grant a waiver, the waiver may be subject to such restrictions or conditions as Company may impose and will not constitute a waiver of any other term. 

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11. While employed by Company and its Affiliates, and during the 18-month period or after employment with Company and its Affiliates ends, Employee will not directly nor indirectly, on Employee’s own behalf or on behalf of any person or entity, recruit, hire, solicit, or assist others in recruiting, hiring, or soliciting any person, who is, at the time of the recruiting, hiring, or solicitation, an employee, consultant, or contractor of Company to leave Company and its Affiliates, diminish their relationship with the Company and its Affiliates, or work for a competing business. This restriction will be limited to persons: (1) with whom Employee had contact or business dealings while employed by Company and its Affiliates; (2) who worked in Employee’s business unit (Group); or (3) about whom Employee had access to confidential information. In the event of breach by the Employee, the specified period will be extended by the period of time of the breach. 

12. While employed by Company and its Affiliates, and during the 18-month period after employment with the Company and its Affiliates ends, Employee will not, directly or indirectly, on behalf of himself or others, contact for business purposes, solicit or provide services to clients, or entities considered prospective clients, of Company and its Affiliates for the purpose of selling products or services of the types for which Employee had responsibility or knowledge, or for which Employee had access to Company Confidential Information while employed by the Company and its Affiliates. This restriction applies only to clients of the Company and its Affiliates and entities considered prospective clients by the Company and its Affiliates with whom Employee had contact during the two years prior to the end of his/her employment with the Company and its Affiliates. 

13. (a) Employee acknowledges that Company has agreed to provide Employee with Company Confidential Information during Employee's employment with Company and its Affiliates. Employee further acknowledges that, if Employee was to leave the employ of Company and its Affiliates for any reason and use or disclose Company Confidential Information, that use or disclosure would cause Company and its Affiliates irreparable harm and injury for which no adequate remedy at law exists. Therefore, in the event of the breach or threatened breach of the provisions of this Attachment I by Employee, Company and its Affiliates will be entitled to:  (i) recover from the Employee the value of any portion of the Award that has been paid or delivered; (ii) seek injunctive relief against the Employee pursuant to the provisions of subsection (b) below; (iii) recover all damages, court costs, and attorneys’ fees incurred by the Company in enforcing the provisions of this Award, and (iv) set-off any such sums to which the Company or any of its Affiliates may be entitled hereunder against any sum which may be owed the Employee by the Company and its Affiliates.

(a) (b) Because of the difficulty of measuring economic losses to the Company or Employer as a result of a breach of the foregoing covenants, and because of the immediate and irreparable damage that could be caused to the Company for which it would have no other adequate remedy, the Employee agrees that the foregoing covenants may be enforced by the Company in the event of breach by him/her by injunction relief and restraining order, without the necessity of posting a bond, and that such enforcement will not be the Company's exclusive remedy for a breach but instead will be in addition to all other rights and remedies available to the Company. 

(b) (c) Each of the covenants in this Attachment I will be construed as an agreement independent of any other provision in this Attachment I, and the existence of any claim or cause of action of the Employee against the Company, whether predicated on this Attachment I or otherwise, will not constitute a defense to the enforcement by the Company of such covenants or provisions.

Employee acknowledges that the remedies contained in the Attachment I for violation of this Attachment I are not the exclusive remedies that Company may pursue. 

14. Employee agrees to promptly disclose in writing to Company all Company Intellectual Property conceived, developed, improved or reduced to practice by Employee during Employee’s employment with Company and its Affiliates. 

Employee will disclose to Company Employee’s complete written record of any Company Intellectual Property, including any patent applications, correspondence with patent agents and patent offices, research, written descriptions of the technology, test data, market data, notes, and any other information relating to Company Intellectual Property. Employee will also identify all co-inventors, co-authors, co-composers, partners, joint venture partners and their employees, assistants, or other people to whom the Company Intellectual Property was disclosed in whole or in part, who participated in developing the Company Intellectual Property, or who claim an interest in the Company Intellectual Property. Employee’s disclosure will conform to the policies and procedures in place at the time governing such disclosures. 

During and after employment with Company, Employee will assist Company in establishing and enforcing intellectual property protection, including obtaining patents, copyrights, or other protections for inventions and copyrightable materials, including participating in, or, if necessary, joining any suit (for which Employee’s reasonable expenses will be reimbursed), or including completing and any signing documents necessary to secure such protections, such contracts, assignments, indicia of ownership, agreements, or any other related documents pertaining to Company Intellectual Property which Company may, in its sole discretion, determine to obtain. 

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Employee agrees to assign and hereby assigns to Company all Company Intellectual Property including any and all rights, title, and ownership interests that Employee may have in or to Company Intellectual Property patent application, including copyright and any tangible media embodying such Company Intellectual Property, during and subsequent to Employee’s employment. Company has and will have the royalty-free right to use or otherwise exploit Company Intellectual Property without any further agreement between Company and Employee. Company Intellectual Property remains the exclusive property of Company whether or not deemed to be a “work made for hire” within the meaning of the copyright laws of the United States. For clarity, Employee does not hereby assign or agree to assign any Pre-existing Intellectual Property to Company. 

Employee is hereby notified that certain statutes in some U.S. states relate to ownership and assignment of inventions.  At relevant locations and in accordance with those statutes, Company agrees that this Attachment I does not apply to an invention developed by Employee entirely on his or her own time without use of the Company Group’s equipment, supplies, facilities, systems, or confidential information, except for inventions that relate to Company Group’s business, or actual or anticipate research or development of Company Group or work performed by Employee for Company Group. For this purpose, “Company Group” means the Company and all Affiliates.

Employee will not destroy, modify, alter, or secret any document, tangible thing, or information relating to Company Intellectual Property or Company Confidential Information except as occurs in the ordinary performance of Employee’s employment. 

15. Waiver of any term of this Attachment I by Company will not operate as a waiver of any other term of this Attachment I. A failure to enforce any provision of this Attachment I will not operate as a waiver of Company’s right to enforce any other provision of this Attachment I. 

16. Employee represents and warrants that Employee is not a party to any other agreement that will interfere with Employee’s full compliance with this Attachment I or that otherwise may restrict Employee’s employment by Company or the performance of Employee’s duties for Company. Employee agrees not to enter into any agreement, whether oral or written, in conflict with this Attachment I.  

17. This Attachment I may be enforced by, will inure to the benefit of, and be binding upon Company, its successors, and assigns. This Attachment I is binding upon Employee’s heirs and legal representatives. 

18. Nothing in this Attachment I prohibits Employee from reporting possible violation of federal law or regulation to any governmental agency or entity, or making disclosures that are protected under a “whistleblower” provision of federal law or regulation. 

19. If Employee is employed by an Affiliate of the Company or by accepting a transfer to an Affiliate of Company, Employee agrees to the automatic application of all of the terms of this Attachment I to said Affiliate contemporaneously with the acceptance of such transfer, subject to subsequent agreements, if any, executed by Employee and Affiliate of Company or Company, and to the fullest extent allowed by law. 

20. Should any portion of this Attachment I be held invalid, unenforceable, or void, such holding will not have the effect of invalidating or voiding the other portions of this Attachment I. The parties hereby agree that any portion held to be invalid, unenforceable, or void will be deemed amended, reduced in scope or deleted to the extent required to be valid and enforceable in the jurisdiction of such holding. The parties agree that, upon a judicial finding of invalidity, unenforceability, or void, the court so finding may reform the agreement to the extent necessary for enforceability, and enter an order enforcing the reformed Attachment I. No court ordered reformation or amendment will give rise to a finding of knowing, willful, or bad faith unreasonableness against Company regarding this Attachment I. 

21. This Confidential Information, Intellectual Property and Non-Compete Agreement supersedes any previous agreement, oral or written, between Employee and Company relating to the subject matter thereof.

Page 9 to 10

 

APPENDIX: INTELLECTUAL PROPERTY ASSIGNMENT,

DISCLOSURE AND WAIVER

The Attachment II, Confidential Information, Intellectual Property, and Non-Compete Agreement incorporates this Appendix, and Employee promises to comply with the terms in this Appendix, and all rules, procedures, policies, and requirements that Company may promulgate consistent with this Appendix. 

Automatic Assignment 

The Attachment II, Confidential Information, Intellectual Property, and Non-Compete Agreement contains assignment of all Company Intellectual Property. 

Employee’s Duty to Disclose 

For all Company Intellectual Property, Employee will complete and submit to Company an IP Disclosure Form. Company’s receipt or acceptance of an IP Disclosure Form does not constitute an admission or agreement to any responses contained therein, does not waive or modify any terms of any agreement between Company and Employee, and does not obligate or bind Company. 

Employee must complete and submit an IP Disclosure Form at conception of the invention, any derivative ideas or works, and any improvements or changes to existing knowledge or technology, or as soon as possible thereafter. Employee has a continuing obligation to update the IP Disclosure Form to maintain the form’s completeness and correctness. 

Employee may obtain an IP Disclosure Form from the Intellectual Property Department. Employee will submit the completed form to the Intellectual Property Department. If desired, Employee may request waiver any time after submitting the IP Disclosure Form. 

Employee must retain and prevent destruction of any material referenced in the IP Disclosure Form, including and not limited to photographs, drawings, schematics, diagrams, figures, testing and development logs, notes, journals, and results, applications to, correspondence with, or registrations from, any patent office, trademark office, copyright office, customs office, or other authority, contracts, licenses, assignments, liens, conveyances, pledges, or other documentation potentially affecting your ownership rights, marketing materials, web sites, press releases, brochures, or other promotional or informational material, any materials evidencing or related to reduction to practice, and other related documentation. 

Waiver of Automatic Assignment 

Company may, in its sole discretion, waive the automatic assignment provision using such criteria as Company, in its sole discretion, may decide to use. No waiver of the automatic assignment provision is effective unless in a writing signed by a person authorized by the Company. 

No waiver of the automatic assignment provision of any Company Intellectual Property relating to the business of the Company or arising out of Employee’s employment with the Company will be effective without the submission of a complete and correct IP Disclosure Form. No waiver of the automatic assignment provision is effective if Employee’s IP Disclosure Form is incomplete, incorrect, otherwise defective, or if any misrepresentation has been made. Employee is estopped from asserting waiver, and any waiver will be void and/or voidable, if the waiver is obtained in violation of the Attachment II, Confidential Information, Intellectual Property and Non-Compete Agreement, this Appendix, or obtained through fraud, negligence, failure to disclose, or incorrect, incomplete, or defective information on an IP Disclosure Form.

Page 10 to 10Exhibit 4.1

 

KINGSOFT INTERNET SECURITY

 

SOFTWARE HOLDINGS LIMITED

 

(a Cayman Islands exempted company with limited liability)

 

 

RULES RELATING TO

 

THE SHARE AWARD SCHEME

 

 

 

ADOPTED ON 26 MAY 2011

 

 

1                                         DEFINITIONS AND INTERPRETATION

 

1.1                               In these rules of the Scheme, unless the context otherwise requires, the following words and expressions shall have the following meanings:-

 

	
“Adoption Date”
    	
 
    	
26 May 2011 (the date on which the Scheme is   adopted by the Board);
    
	
 
    	
 
    	
 
    
	
“Award”
    	
 
    	
an award of Shares, by the Board pursuant to   Paragraph 4.1 or by the Trustee pursuant to Paragraph 6, to a Selected   Employee pursuant to the Scheme;
    
	
 
    	
 
    	
 
    
	
“Award Notice”
    	
 
    	
shall have the meaning as set out in Paragraph 4.3;
    
	
 
    	
 
    	
 
    
	
“Awarded Shares”
    	
 
    	
in respect of a Selected Employee, such number of   Shares determined by the Board and purchased by the Trustee out of cash paid   by the Company by way of settlement to the Trustee pursuant to Paragraph 4.4   or such number of Returned Shares awarded by the Trustee pursuant to   Paragraph 7, in each case as proportionally adjusted for any subdivision,   consolidation, reclassification or reconstruction of the share capital of the   Company from time to time;
    
	
 
    	
 
    	
 
    
	
“Banks”
    	
 
    	
banks licensed to operate as banks in Hong Kong   under the Banking Ordinance (Chapter 155 of the Laws of Hong Kong);
    
	
 
    	
 
    	
 
    
	
“Board”
    	
 
    	
the board of directors of the Company or such   committee or such sub-committee or person(s) delegated with the power   and authority by the board of directors of the Company to administer the   Scheme;
    

 

2

 

	
“Business Day”
    	
 
    	
any day (other than Saturday and Sunday and public   holidays) on which banks are open for normal banking business in Hong Kong   (excluding those days on which only internet enabled services or automated   teller machines are available) and/or such date or dates as the Board may   from time to time determine provided that where, as a result of a Number 8   Typhoon Signal, Black Rainstorm Warning or similar event, the period during   which banks in Hong Kong are open on any day is reduced, such day shall not   be a Business Day unless the Board otherwise determines;
    
	
 
    	
 
    	
 
    
	
“Company”
    	
 
    	
Kingsoft Internet Security Software Holdings   Limited, an exempted limited liability company incorporated in the Cayman   Islands whose registered office is at Offshore Incorporations (Cayman)   Limited, Scotia Centre, 4th Floor,   P.O. Box 2804, George Town, Grand Cayman KY1-1112, Cayman Islands;
    
	
 
    	
 
    	
 
    
	
“connected person(s)”
    	
 
    	
has the meaning ascribed hereto under the Listing   Rules;
    
	
 
    	
 
    	
 
    
	
“Consideration”
    	
 
    	
in relation to the purchase by the Trustee of the   Awarded Shares, an amount equal to the par value per Awarded Share, multiplied   by the relevant number of Awarded Shares granted;
    
	
 
    	
 
    	
 
    
	
“Employee”
    	
 
    	
any employee (including without limitation an   employee who is also a director) of the Group;
    

 

3

 

	
“Excluded Employee”
    	
 
    	
any Employee who is resident in a place where   (a) the award of the Awarded Shares, the award of the Returned Shares or   the vesting or transfer of Shares pursuant to the terms of the Scheme is not   permitted under the laws and regulations of such place or (b) in the   view of the Board, the need to comply with applicable laws and regulations in   such place makes it necessary or expedient to exclude such Employee, in each   case as determined by the Board in its absolute discretion;
    
	
 
    	
 
    	
 
    
	
“Group”
    	
 
    	
the Company and its subsidiaries or any of them and   the expression “member of the Group” shall be construed accordingly;
    
	
 
    	
 
    	
 
    
	
“Hong Kong”
    	
 
    	
the Hong Kong Special Administrative Region of the   People’s Republic of China;
    
	
 
    	
 
    	
 
    
	
Kingsoft Corporation Limited
    	
 
    	
an exempted limited liability company incorporated   in the British Virgin Islands, discontinued in the British Virgin Islands and   then continued into the Cayman Islands, with its shares listed on the Stock   Exchange;
    
	
 
    	
 
    	
 
    
	
“Lapse”
    	
 
    	
shall have the meaning as set out in Paragraph 4.6;
    
	
 
    	
 
    	
 
    
	
“Listing Rules”
    	
 
    	
the rules governing the listing of securities   on the Stock Exchange;
    
	
 
    	
 
    	
 
    
	
“Partial Lapse”
    	
 
    	
shall have the meaning as set out in Paragraph 4.7;
    
	
 
    	
 
    	
 
    
	
“Reference Date”
    	
 
    	
the date of final approval by the Board of the total   number of Shares to be awarded to the Selected Employees in a single occasion   pursuant to the Scheme;
    

 

4

 

	
“Residual Cash”
    	
 
    	
being cash remaining in the trust fund (including   but not limited to interest income derived from deposits maintained with   Banks and cash income;
    
	
 
    	
 
    	
 
    
	
“Returned Shares”
    	
 
    	
such Awarded Shares which are not vested in   accordance with the terms of the Scheme (whether as a result of a Lapse or a   Partial Lapse or otherwise), or was forfeited in accordance with the terms of   the Scheme, or such Shares being deemed under the Scheme or the Scheme   Rules to be Returned Shares;
    
	
 
    	
 
    	
 
    
	
“Scheme”
    	
 
    	
the “Share Award Scheme” constituted by the   rules hereof, in its present form or as amended from time to time in   accordance with the provisions hereof;
    
	
 
    	
 
    	
 
    
	
“Selected Employee(s)”
    	
 
    	
Employee(s) selected by the Board pursuant to   Paragraph 4.1 hereof and Employee(s) selected by the Trustee after   having taken into consideration recommendations of the board of directors of   Kingsoft Corporation Limited pursuant to Paragraph 6 hereof for participation   in the Scheme;
    
	
 
    	
 
    	
 
    
	
“Shares”
    	
 
    	
ordinary shares of US$0.000025 each in the capital   of the Company (or of such other nominal amount as shall result from a   sub-division, consolidation, reclassification or reconstruction of the share   capital of the Company from time to time);
    
	
 
    	
 
    	
 
    
	
“Stock Exchange”
    	
 
    	
the Stock Exchange of Hong Kong Limited;
    
	
 
    	
 
    	
 
    
	
“subsidiary”
    	
 
    	
has the meaning given to such term in the Companies   Ordinance (Chapter 32 of the Laws of Hong Kong);
    

 

5

 

	
“Trust”
    	
 
    	
the trust constituted by the Trust Deed and known as   the “Share Award Scheme Trust” or such other name as the Board may determine   from time to time;
    
	
 
    	
 
    	
 
    
	
“Trust Deed”
    	
 
    	
a trust deed dated 26 May 2011 entered into   between the Company and the Trustee (as restated, supplemented and amended   from time to time);
    
	
 
    	
 
    	
 
    
	
“Trust Period”
    	
 
    	
shall have the meaning as set out in Clause 1.1 of   the Trust Deed;
    
	
 
    	
 
    	
 
    
	
“Trustee”
    	
 
    	
Core Pacific-Yamaichi International (H.K.) Nominees   Limited, and any additional or replacement trustees, being the trustee or   trustees for the time being of the trusts declared in the Trust Deed; and
    
	
 
    	
 
    	
 
    
	
“Vesting Date”
    	
 
    	
shall have the meaning as set out in Paragraph 4.5.
    

 

1.2                               In these rules of the Scheme, save where the context otherwise requires:-

 

(a)                                 the headings are inserted for convenience only and shall not limit, vary, extend or otherwise affect the construction of any provision of these rules of the Scheme;

 

(b)                                 references to Paragraphs are references to paragraphs of these rules of the Scheme;

 

(c)                                  references to any statute or statutory provision shall be construed as references to such statute or statutory provision as respectively amended, consolidated or re-enacted, or as its operation is modified by any other statute or statutory provision (whether with or without modification), and shall include any subsidiary legislation enacted under the relevant statute;

 

(d)                                 expressions in the singular shall include the plural and vice versa;

 

(e)                                  expressions in any gender shall include other genders; and

 

(f)                                   references to persons shall include bodies corporate, corporations, partnerships, sole proprietorships, organisations, associations, enterprises, branches and entitles of any other kind.

 

6

 

2                                         PURPOSE

 

2.1                               The purpose of the Scheme is to recognise the contributions by certain Employees and  to give incentives thereto in order to retain them for the continual operation and development of the Group and to attract suitable personnel for further development of the Group.

 

3                                         DURATION AND ADMINISTRATION

 

3.1                               Subject to any early termination as may be determined by the Board pursuant to Paragraph 9, the Scheme shall be valid and effective for a period of ten (10) years commencing on the Adoption Date.

 

3.2                               The Scheme shall be subject to the administration of the Board whose decision as to all matters arising in relation to the Scheme or its interpretation or effect (save as otherwise provided herein) shall be final, conclusive and binding on all parties.

 

3.3                               The Trustee will hold the Shares and the income derived therefrom in accordance with the terms of the Trust Deed.

 

4                                         OPERATION OF SCHEME

 

4.1                               Subject to Paragraph 6, the Board may, from time to time, in its absolute discretion and subject to such terms and conditions as it may think fit (including the basis of eligibility of each Employee determined by the Board from time to time) select an Employee (excluding any Excluded Employee) for participation in the Scheme as a Selected Employee and determine the number of Awarded Shares, provided that where any Award is proposed to be made to any Selected Employee who is a director of the Company or a connected person of Kingsoft Corporation Limited and its subsidiaries, such Award must first be approved by the board of directors of Kingsoft Corporation Limited as long as the Company remains a subsidiary of Kingsoft Corporation Limited. However, until so selected, no Employee shall be entitled to participate in the Scheme. Subject to the provisions of the Scheme, the Board may impose any conditions, restrictions or limitations or waive any such conditions, restrictions or limitations from time to time in relation to the Award as it may at its absolute discretion think fit. Where a Selected Employee or his associate is a member of the board of directors of Kingsoft Corporation Limited, such person will abstain from voting on any approval by the board of directors of Kingsoft Corporation Limited of an award of Shares to such Selected Employee.

 

4.2                               Where any Award is proposed to be made to any Selected Employee who is a director of the Company or where the Board proposes to waive any conditions, restrictions or limitations imposed on any Award made to any Selected Employee who is a director of the Company, or a connected person of Kingsoft Corporation Limited and its subsidiaries, such Award or waiver (as the case may be) must first be approved by the board of directors of Kingsoft Corporation Limited as long as the Company remains a subsidiary of Kingsoft Corporation Limited.

 

4.3                               After the selection of the Selected Employee(s) and the determination of the number of Awarded Shares, the Company shall inform the Trustee accordingly. The Company shall also inform the Selected Employee(s) by written notice in such form as the Company may from time to time determine (the “Award Notice”) requiring the Selected Employee(s) to undertake to hold the Award on the terms on which it is to be granted and to be bound by the rules of the Scheme. The Company shall, after having regard to the requirement under Paragraph 4.11, cause the Consideration to be paid to the Trustee as soon as practicable.

 

7

 

4.4                               Within twenty (20) Business Days (or such other period as the Trustee and the Company may agree from time to time having regard to the circumstances of the purchase concerned) after receipt of the Consideration, the Trustee shall apply the same towards the purchase of the Awarded Shares. The Shares so purchased shall form part of the trust fund of the Trust.

 

4.5                               Unless otherwise determined by the Board at its discretion, the Awarded Shares held by the Trustee upon the Trust and which are referable to a Selected Employee shall vest in that Selected Employee in accordance with the Award Notice, provided that the Selected Employee remains at all times after the Reference Date and on the relevant vesting dates (if applicable) an Employee. Notwithstanding any other provision of these rules of the Scheme and the terms and conditions of any Award, the Board (or where the relevant Selected Employee is a director of the Company, or a connected person of Kingsoft Corporation Limited and its subsidiaries, the board of directors of Kingsoft Corporation Limited as long as the Company remains a subsidiary of Kingsoft Corporation Limited) in its sole and absolute discretion may determine from time to time on a general or case by case basis that an Award may be vested at such time determined by the Board (or the board of directors of Kingsoft Corporation Limited, as the case may be) subsequent to and notwithstanding a termination of employment of a Selected Employee (including but not limited to as a result of the Selected Employee’s retirement or death).  The date or each such date on which the Awarded Shares are to vest is hereinafter referred to as a “Vesting Date”.

 

4.6                               Save as provided in Paragraph 4.5, in the event (i) a Selected Employee ceases to be an Employee, or (ii) the company by which a Selected Employee is employed ceases to be a member of the Group, or (iii) an order for the winding-up of the Company is made or a resolution is passed for the voluntary winding-up of the Company (otherwise than for the purposes of an amalgamation, reconstruction or scheme of arrangement) (each of these, an event of “Lapse”), an Award shall automatically lapse forthwith and all the Awarded Shares shall not vest on the relevant Vesting Date but shall become Returned Shares for the purposes of the Scheme. The Selected Employees shall have no claims against the Company or the Trustee.

 

4.7                               In the event a Selected Employee is found to be an Excluded Employee (an event of “Partial Lapse”), the relevant part of an Award made to the relevant Selected Employee shall automatically lapse forthwith and the relevant Awarded Shares shall not vest on the relevant Vesting Date but shall become Returned Shares for the purposes of the Scheme. The Selected Employees shall have no claims against the Company or the Trustee.

 

4.8                               Save for a Lapse or Partial Lapse, barring any unforeseen circumstances and subject to the receipt by the Trustee of a confirmation from the Company that all vesting conditions having been fulfilled, the Trustee shall effect the transfer of the relevant Awarded Shares to the relevant Selected Employee on the Vesting Date, or as soon as possible thereafter if it is not practicable to effect such transfer on such Vesting Date.

 

4.9                               Any Award made hereunder shall be personal to the Selected Employee to whom it is made and shall not be assignable and no Selected Employee shall in any way sell, transfer, assign, charge, mortgage, encumber or create any interests in favour of any other third party over or in relation to either the Reference Amount or the Awarded Shares referable to him pursuant to such Award or any of the Returned Shares under the Scheme.

 

8

 

4.10                        For the avoidance of doubt,

 

(a)                 a Selected Employee shall only have a contingent interest in the Awarded Shares which are referable to him subject to the vesting of such Shares in accordance with Paragraph 4.5 and the Award Notice;

 

(b)                 a Selected Employee shall have no rights in Residual Cash or any of the Returned Shares;

 

(c)                  no instructions may be given by a Selected Employee to the Trustee in respect of the Awarded Shares or other properties of the Trust;

 

(d)                 the Trustee shall not exercise or purport to exercise any of the rights attached to  any Shares held under the Trust (including but not limited to the Awarded Shares and the Returned Shares) including but not limited to voting rights and the right to the Company’s profit distribution or any forms of distributions. For the avoidance of doubt, at such time as when the Shares are transferred to the relevant Selected Employees pursuant to the Scheme Rules, on the relevant Vesting Date, the Selected Employees will be able to enjoy and exercise all rights attaching to the Shares, including but not limited to voting rights and the right to the Company’s profit distribution or any forms of distributions, in the same way as all other ordinary shareholders of the same class;

 

(e)                  subject to Paragraph 10.2, any cash generated from a Share held upon the Trust shall form part of the trust fund of the Trust and the Trustee may (a) apply such cash for the purchase of Shares which shall become Returned Shares for the purpose of the Scheme, (b) apply such cash to defray such fees, costs and expenses as referred to in Paragraph 10.2, or (c) return such cash to the Company, as the Trustee in its absolute discretion shall at any time determine, after having taken into consideration recommendations of the Board; and

 

(f)                   save as provided in Paragraph 4.6, in the event a Selected Employee ceases to be an Employee on the relevant Vesting Date, the relevant part of the Award made to such Selected Employee which has not been vested on the date of such cessation shall lapse and the relevant Awarded Shares shall not vest on the relevant Vesting Date but shall become Returned Shares for the purpose of the Scheme and the Selected Employee shall have no claims against the Company or the Trustee.

 

4.11                        No new instructions to acquire Shares shall be given to the Trustee under the Scheme where dealings by directors are prohibited under any and all applicable laws and regulations from time to time.

 

4.12                        In respect of the administration of the Scheme, the Company shall comply with all applicable disclosure regulations.

 

4.13                        The Trustee shall not be required to withhold any withholding or other tax in relation to the grant of the Award or the transfer of Awarded Shares.  It shall be the duty of the Company to establish appropriate procedures to provide for any such payment.

 

9

 

5                                         SCHEME LIMIT

 

5.1                               The Board shall not grant any Award which would result in the total number of Shares which are the subject of Awards granted by the Board under the Scheme (but not counting any which have lapsed or have been forfeited) being greater than 100,000,000 Shares, as at the date of such grant.

 

6                                         RETURNED SHARES

 

Subject to Paragraph 9.2, the Trustee shall hold the Returned Shares exclusively for the benefit of all or one or more of the Employees (excluding any Excluded Employee).  When Returned Shares have been awarded by the Trustee to a specified Selected Employee or Selected Employees, the Trustee shall notify the Company accordingly and such Returned Shares shall be deemed from the time of such award to be held by the Trustee as Awarded Shares for such Selected Employee(s) and no longer Returned Shares.

 

7                                         DISPUTES

 

Any dispute arising in connection with the Scheme shall be referred to the decision of the Board who shall act as experts and not as arbitrators and whose decision shall be final and binding.

 

8                                         ALTERATION OF THE SCHEME

 

The Scheme may be altered in any respect by a resolution of the Board provided that no such alteration shall operate to affect adversely in any material respect any subsisting rights of any Selected Employee hereunder except with the prior written consent of the relevant Selected Employee. Written notice of any amendment to the Scheme shall be given to all Selected Employees with subsisting Awards.

 

9                                         TERMINATION

 

9.1                               The Scheme shall terminate on the earliest of:

 

(a)                 the end of 26 May 2021, being the day before the 10th anniversary of the Adoption Date;

 

(b)                 the date when an order for the winding up of the Company is made or a resolution is passed for the voluntary winding-up of the Company (otherwise than for the purposes of an amalgamation, reconstruction or scheme of arrangement); and

 

(c)                  such date of early termination as determined by the Board.

 

10

 

9.2                               Upon termination,

 

(a)                 no further Award shall be made and the Trustee shall act upon the decision of the Board upon such termination.

 

(b)                 For the avoidance of doubt, the Trustee may not transfer any Shares to the Company nor may the Company otherwise hold any interest in the Shares whatsoever.

 

9.3                               For the avoidance of doubt, the temporary suspension of the granting of any Award shall not be construed as a decision to terminate the operation of the Scheme.

 

10                                  MISCELLANEOUS

 

10.1                        The Scheme shall not form part of any contract of employment, service contract or engagement contract between the relevant member of the Group and any Selected Employee, and the rights and obligations of any Selected Employee under the terms of his office, employment, appointment or engagement shall not be affected by his participation in the Scheme or any right which he may have to participate in it and the Scheme shall afford such a Selected Employee no additional rights to compensation or damages in consequence of the termination of such office, employment, appointment or engagement for any reason.

 

10.2                        The Trustee in its absolute discretion may at any time apply any Residual Cash to defray the costs of establishing and administering the Scheme, including, for the avoidance of doubt, remuneration of the Trustee for work done by it in connection with the Trust, costs arising from communication as referred to in Paragraph 10.4, expenses incurred in the purchase of Shares by the Trustee and stamp duty and normal registration fee (i.e. not being fee chargeable by the share registrar of an express service of registration) in respect of, and other costs, liabilities or expense which may arise as a result of, the transfer of or agreement to transfer Shares to a Selected Employee on the relevant Vesting Date, or which may otherwise arise out of the administration of the trust fund of the Trust. To the extent such application of Residual Cash is not sufficient to fund all such fees, costs and expenses, the Company will provide the Trustee with the shortfall amount to settle such fees, costs and expenses upon demand by the Trustee.  For the avoidance of doubt, the Company shall not be liable for any tax, costs or expenses of any other nature payable on the part of any Selected Employee in respect of any award, sale, purchase, vesting or transfer of Shares, and the Selected Employee shall be liable therefor.

 

10.3                        Save as specifically provided herein, the Scheme shall not confer on any person any legal or equitable rights (other than those constituting and attaching to the Shares themselves) against the Company directly or indirectly or give rise to any cause of action at law or in equity against the Company.

 

10.4                        Any notice or other communication between the Company and any Selected Employee may be given by sending the same by prepaid post or by personal delivery to, in the case of the Company, its registered office in Cayman Islands or such other address as notified to the Selected Employee from time to time and in the case of a Selected Employee, his address as notified to the Company from time to time.  Any notice or other communication served by post shall be deemed to have been served 24 hours after the same was put in the post.

 

11

 

10.5                        The Company shall not be responsible for any failure by any Employee to obtain any consent or approval required for such Employee to participate in the Scheme as a Selected Employee or for any tax, duty, expenses, fees or any other liability to which he may become subject as a result of his participation in the Scheme.

 

10.6                        Each and every provision hereof shall be treated as a separate provision and shall be severally enforceable as such and in the event of any provision or provisions being or becoming unenforceable, they shall be deemed to be deleted from these rules of the Scheme, and any such deletion shall not affect the enforceability of the rules of the Scheme as remain not so deleted.

 

11                                  GOVERNING LAW, ETC.

 

11.1                        The Scheme shall operate subject to the articles of association of the Company from time to time and any applicable law, regulations, rules and codes.

 

11.2                        The Scheme shall be governed by and construed in accordance with the laws of Hong Kong in force from time to time.

 

12

 

KINGSOFT INTERNET SECURITY

 

SOFTWARE HOLDINGS LIMITED

 

(a Cayman Islands exempted company with limited liability)

 

 

AMENDMENT TO RULES RELATING TO

 

THE SHARE AWARD SCHEME

 

 

ADOPTED ON SEPTEMBER 11, 2013

 

13

 

12                                  BACKGROUND

 

Kingsoft Internet Security Software Holdings Limited (the “Company”) adopted Rules Relating to the Share Award Scheme (the “Scheme”) on 26 May 2011. Paragraph 8 of the Scheme provides that the board of directors of the Company (the “Board”) may amend the Scheme. The Board desires to amend the Scheme as detailed below.

 

13                                  AMENDMENTS

 

13.1                        The definition of “Awarded Shares” shall be deleted and replaced with the following:

 

in respect of a Selected Employee, such number of Shares determined by the Board and purchased by the Trustee from the Company out of cash paid by the Company by way of settlement to the Trustee pursuant to Paragraph 4.4 or such number of Returned Shares awarded by the Trustee pursuant to Paragraph 6, in each case as proportionally adjusted for any subdivision, consolidation, reclassification or reconstruction of the share capital of the Company from time to time;

 

13.2                        The definition of “Selected Employee(s)” shall be deleted and replaced with the following:

 

Employee(s) selected by the Board pursuant to Paragraph 4.1 hereof for participation in the Scheme.

 

13.3                        The following is hereby added at the end of Paragraph 4.6 :

 

Detailed terms and conditions of the vesting of Award Shares,  forfeiture or lapse (“Lapse”) of unvested Awarded Shares, and repurchase of vested Awarded Share shall be set forth in the Award Notice or any supplementary thereto.

 

13.4                        Paragraph 4.7 of the Scheme is hereby replaced with the following:

 

In the event a Selected Employee is found to be an Excluded Employee (an event of “Partial Lapse”), unvested Award Shares of an Award made to such Selected Employee shall automatically lapse forthwith and such unvested Awarded Shares shall not vest on the relevant Vesting Date but shall become Returned Shares for the purposes of the Scheme. The Selected Employees shall have no claims against the Company or the Trustee.

 

13.5                        Paragraph 8 of the Scheme is hereby replaced with the following:

 

The Scheme may be altered in any respect by a resolution of the Board provided that no such alteration shall operate to affect adversely in any material respect any subsisting rights of any Selected Employee hereunder except with the prior written consent of the relevant Selected Employee. Written notice of any amendment to the Scheme shall be given to all Selected Employees with subsisting Awards. Notwithstanding the foregoing, the Board may for tax planning purposes, without the prior written consent of any Selected Employee, alter or restructure the Scheme and the terms of Awarded Share.

 

14

 

14                                  MISCELLANEOUS

 

Except as provided herein, all other terms of the Scheme remain in full force and effect.

 

15

 

CHEETAH MOBILE INC.

 

(a Cayman Islands exempted company with limited liability)

 

 

AMENDMENT TO RULES RELATING TO

 

THE SHARE AWARD SCHEME

 

 

ADOPTED ON NOVEMBER 19, 2016

 

1                      BACKGROUND

 

Cheetah Mobile Inc., formerly known as Kingsoft Internet Security Software Holdings Limited (the “Company”), adopted Rules Relating to the Share Award Scheme (the “Scheme”) on 26 May 2011. Paragraph 8 of the Scheme provides that the board of directors of the Company (the “Board”) may amend the Scheme. The Board amended the Scheme on 11 September 2013 and the Board desires to further amend the Scheme as detailed below.

 

2       AMENDMENT

 

2.1                     Paragraph 4.8 of the Scheme is hereby replaced with the following:

 

At any time on or after the Vesting Date, at the request of the Selected Employee, barring any unforeseen circumstances and subject to the receipt by the Trustee of a confirmation from the Company that all vesting conditions having been fulfilled, the Trustee shall:

 

(a) effect the transfer of the relevant Awarded Shares to the relevant Selected Employee; or

 

(b) sell the relevant Awarded Shares on behalf of the relevant Selected Employee and transfer the proceeds, which may, at the sole discretion of the Company, be net of any stamp duty or other taxes payable as a result of such sale of Awarded Shares, to the Selected Employee.

 

3       MISCELLANEOUS

 

Except as provided herein, all other terms of the Scheme remain in full force and effect.

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