Document:

Exhibit 4.5

 

Execution Version

 

OneSmart International Education Group Limited

精銳國際教育集團有限公司

AMENDMENT TO SHAREHOLDERS AGREEMENT

 

This AMENDMENT TO SHAREHOLDERS AGREEMENT (“Amendment”) is entered into on December 11, 2017 by the following persons:

 

(1)                                 OneSmart International Education Group Limited 精銳國際教育集團有限公司 (previously known as ONESMART EDUCATION GROUP LIMITED and One Smart Education Group Limited), an exempted company incorporated and existing under the Laws of the Cayman Islands with registered number 320611 (the “Company”);

 

(2)                                 ONESMART EDU INC. (previously known as Great Edu Inc.), a company incorporated and existing under the Laws of the British Virgin Islands with registered number 1916296 (the “BVI Company”);

 

(3)                                 ONESMART EDU (HK) LIMITED (previously known as Great Edu (HK) Limited), a company incorporated and existing under the Laws of Hong Kong with company number of 2401253 (the “HK Company”);

 

(4)                                 Shanghai OneSmart Education and Training Co., Ltd. (上海精锐教育培训有限公司), a limited liability company incorporated and existing under the Laws of the PRC (the “PRC Company”);

 

(5)                                 Shanghai Rui Si Science and Technology Information Consulting Co., Ltd. (上海锐思科技信息咨询有限公司), a limited liability company incorporated and existing under the Laws of the PRC (“Shanghai Rui Si”);

 

(6)                                 Shanghai Jingxuerui Information Technology Co, Ltd. (上海精学锐信息科技有限公司), a limited liability company incorporated and existing under the Laws of the PRC (the “WFOE”);

 

(7)                                 the individual and his holding company listed on Part A of Schedule I attached hereto (such individual, the “Principal”, such holding company, the “Ordinary Shareholder”);

 

(8)                                 CW One Smart Limited, a company incorporated and existing under the Laws of the British Virgin Islands (“Chengwei”);

 

(9)                                 Supar Inc., a company incorporated and existing under the Laws of the British Virgin Islands (“Supar”);

 

(10)                          HT International Happy Edu Limited, a company incorporated and existing under the Laws of the British Virgin Islands (“HT”);

 

(11)                          each of the individuals and their respective holding companies listed on Part B of Schedule I attached hereto (each such individual, a “Series A Individual Investor”, and collectively, the “Series A Individual Investors”, each holding company of such individual, a “Series A Holding Company” and collectively, the “Series A Holding Companies”, together with Chengwei, Supar and HT, the “Series A Investors”); and

 

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(12)                          each of the investors listed on Schedule II (each a “Series A-1 Investor” and collectively, the “Series A-1 Investors”, together with Series A Investors, each an “Investor”, and collectively, the “Investors”.).

 

Each of the parties to this Amendment is referred to herein individually as a “Party” and collectively as the “Parties”.

 

RECITALS

 

A.                                    As of the date hereof, the Company owns 100% of the issued shares of the BVI Company, and the BVI Company owns 100% of the share capital of the HK Company. The HK Company owns 100% of the share capital of the WFOE. The WFOE Controls each of the PRC Company and Shanghai Rui Si by a Captive Structure, and the PRC Company owns 100% of the share capital of Shanghai Jing Yu Investment Co., Ltd. (上海精育投资有限公司).

 

B.                                    The Company, the Series A Individual Investors, the Series A Holding Companies, the Series A-1 Investors and other parties thereto entered into a Series A-1 Preferred Share Purchase Agreement dated April 21, 2017 (the “Purchase Agreement” or “SPA 1”), pursuant to which, the Series A-1 Investors have purchased from the Company, and the Company has sold to the Series A-1 Investors, certain number of Series A-1 Preferred Shares, and the Company has repurchased from certain Sellers (as defined in SPA 1), and such Sellers have sold to the Company, certain number of Class A Ordinary Shares or Series A Preferred Shares, each on the terms and conditions set forth in SPA 1. The consummation of the aforesaid purchase and repurchase (the “Closing”) have taken place on September 21, 2017 (the “Closing Date”).

 

C.                                    The Company, the Ordinary Shareholder and certain Series A Investors entered into a Share Purchase Agreement dated October 31, 2017 (“SPA 2”), pursuant to which, the Ordinary Shareholder and the relevant Series A Investors have purchased from the Company, and the Company has sold to the Ordinary Shareholder and the relevant Series A Investors, certain number of Class A Ordinary Shares or Series A Preferred Shares, each on the terms and conditions set forth in SPA 2.

 

D.                                    The Company, the Principal, the Ordinary Shareholder and Angus Holdings Limited(“VKC”) entered into a share purchase agreement dated October 27, 2017 (the “VKC Transfer Agreement”), pursuant to which, VKC purchased certain shares from the Ordinary Shareholder (and each of such shares were reclassified as one Series A-1 Preferred Share) and became a Series A-1 Investor.

 

E.                                     Juniperbridge Capital Limited and Brilight Limited entered into a share transfer agreement dated October 30, 2017 (the “HT Transfer Agreement”), pursuant to which, HT, as designated by Brilight Limited, purchased certain Series A Preferred Shares from Juniperbridge Capital Limited and became a Series A Investor.

 

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F.                                      Concurrently with the execution of the Purchase Agreement, The Parties (other than Shanghai Rui Si, the WFOE, HT and VKC) entered into a Shareholders Agreement (the “Shareholders Agreement” or the “Agreement”).

 

G.                                    WFOE entered into a deed of accession to the Shareholders Agreement dated September 12, 2017. HT entered into a deed of accession to the Shareholders Agreement dated November 23, 2017. VKC entered into a deed of accession to the Shareholders Agreement dated December 11, 2017.

 

H.                                   In connection with the transactions consummated pursuant to SPA 2, the VKC Transfer Agreement and HT Transfer Agreement, and certain other changes in connection with the restructuring of the Group Companies as contemplated by the Restructuring Agreement, the Parties desire to enter into this Amendment to amend the Shareholders Agreement (and in the case of Shanghai Rui Si, to be bound by the Shareholders Agreement as amended herein) and make the respective representations, warranties, covenants and agreements set forth herein on the terms and conditions set forth herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual promises, covenants and conditions hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the Parties agree as follows:

 

1.                                      DEFINITIONS

 

1.1                               Certain Defined Terms. Unless the context otherwise requires, capitalized terms used in this Amendment but not defined or amended in this Amendment shall have the meanings given to them in the Shareholders Agreement.

 

2.                                      AMENDMENTS

 

2.1                               Amendments to Section 1.1 of the Shareholders Agreement:

 

(a)                            The definitions of the following capitalized and underlined terms as stipulated in Section 1.1 of the Shareholders Agreement shall be deleted in its entirety and replaced by the followings:

 

“Amended M&AA” means the Fourth Amended and Restated Memorandum of Association and Articles of Association of the Company, as amended, supplemented and restated from time to time.

 

“Approving Person” means any of the following two Persons: the Series A-1 Director appointed by Carlyle (or Carlyle in lieu of the Series A-1 Director appointed by Carlyle) and the Series A-1 Director appointed by GS (or GS in lieu of the Series A-1 Director appointed by GS).

 

“Controlling Documents” means all of Contracts signed by, inter alios, (i) the WFOE, the PRC Company, its shareholders that provide Control (financially, operationally or otherwise) to the WFOE over the PRC Company and (ii) the WFOE, Shanghai Rui Si, its shareholders that provide Control (financially, operationally or otherwise) to the WFOE over Shanghai Rui Si (and any other similar Contracts entered or to be entered into by the Group Companies through which a Group Company (the “Controller”) Controls (financially, operationally or otherwise) another Group Company (the “Controlled Company”) and the financial results for such Controlled Company shall be consolidated into the consolidated financial statements for the Company even though the Controller does not have any equity interest in the Controlled Company), including the exclusive business cooperation and services agreement, loan agreement, equity interest pledge agreement, exclusive option agreement and power of attorney, each as amended, supplemented and restated from time to time.

 

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“Group Companies” means the Company, the BVI Company, the HK Company, the WFOE, the PRC Company, Shanghai Rui Si and Shanghai Jing Yu Investment Co., Ltd. (上海精育投资有限公司), together with all other direct or indirect, current and future Subsidiaries and branches of any of the foregoing, and “Group Company” means any of them.

 

“Preferred Directors” means the Series A-1 Directors.

 

“Qualified IPO” means a firm commitment underwritten public offering by the Company of its Class A Ordinary Shares (or depositary receipts or depositary shares thereof) in the United States on the New York Stock Exchange or the NASDAQ Global Market pursuant to an effective Registration Statement under the Securities Act, or on the Main Board of Hong Kong Stock Exchange or another internationally recognized stock exchange approved by the Board and by two (2) Approving Persons, in any case, with an offering price that implies a market capitalization of the Company immediately prior to such offering (excluding the amount of any investment proceeds received by the Company from any equity or equity linked financings conducted by the Company between the Closing Date and the occurrence of a Qualified IPO) of not (i) less than RMB 7.6 billion or its US$ equivalent if the Qualified IPO occurs during the period from and including the Closing Date to but excluding the date that is eighteen (18) months following the Closing Date, (ii) RMB 8.3 billion or its US$ equivalent if the Qualified IPO occurs during the period from and including the date that is eighteen (18) months following the Closing Date to but excluding the date that is twenty-seven (27) months following the Closing Date, or (iii) RMB 8.9 billion or its US$ equivalent if the Qualified IPO occurs during the period from and including the date that is twenty-seven (27) months following the Closing Date to but excluding the third anniversary of the Closing Date, or such lesser market capitalization as approved by the Board and by two (2) Approving Persons.

 

2.2                          Amendments to Section 14 of the Shareholders Agreement:

 

(a)                            Section 14.1(i) of the Shareholders Agreement shall be deleted in its entirety and replaced by the following:

 

“Board of Directors. The Company shall have, and the Parties agree to cause the Company to have, a Board consisting of six (6) Directors, (a) the holders of a majority of the voting power of the outstanding Ordinary Shares shall have the right to designate, appoint, remove, replace and reappoint four (4) Directors on the Board (each, an “Ordinary Director”, and collectively, the “Ordinary Directors”), and (b) the holders of the outstanding Series A-1 Preferred Shares shall have the right to designate, appoint, remove, replace and reappoint two (2) Directors on the Board, provided that each of Carlyle (for so long as Carlyle holds any Shares) and GS (for so long as GS holds any Shares) shall have the right to designate, appoint, remove, replace and reappoint one (1) Director on the Board (each, a “Series A-1 Director”, and collectively, the “Series A-1 Directors”).”

 

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(b)                            Section 14.3 of the Shareholders Agreement shall be deleted in its entirety and replaced by the following:

 

“Quorum. The Board shall hold no less than one (1) board meeting during each fiscal quarter. A meeting of the Board shall only proceed where there are present (whether in person or by means of a conference telephone or any other communications equipment which allows all participants in the meeting to speak to and hear each other simultaneously in accordance with the Amended M&AA) a majority of all Directors of the Company then in office, provided that such majority includes two (2) Preferred Directors, and the Parties shall cause the foregoing to be the quorum requirements for the Board. If a quorum is not present at any meeting of the Board, the Directors present thereat may adjourn the meeting, until a quorum shall be present, provided that, if notice of the board meeting has been duly delivered in accordance with the then effective memorandum of association and articles of association of the Company to all Directors prior to the scheduled meeting, and the quorum is not present within three hours from the time appointed for the meeting solely because of the absence of one (1) or more Preferred Directors, the meeting shall be adjourned to the fifth (5th) following Business Day at the same time and place (or to such other time or such other place as the Directors may determine) with notice duly delivered to all Directors no less than three (3) Business Days prior to the adjourned meeting and, if at the adjourned meeting, the quorum is not present within three hours from the time appointed for the meeting solely because of the absence of one (1) or more Preferred Directors, then the presence of a majority of the number of the Directors in office elected in accordance with Section 14.1 shall be necessary and sufficient to constitute a quorum for the transaction of business at such adjourned meeting.”

 

(c)                                  Section 14.8(i) of the Shareholders Agreement shall be deleted in its entirety and replaced by the following:

 

“In the event the Company has not achieved a Qualified IPO within eighteen (18) months after the Closing and to the extent permitted by applicable Laws, the PRC Company, Shanghai Rui Si, the BVI Company, the HK Company and the WFOE shall cause its board of directors to be the same size as the Board and to include directors and observer(s) nominated by the Shareholders in the same proportion as each such Shareholder is represented on the Board. The right of nomination by each Shareholder shall also carry the right to remove or replace the director or observer so nominated, and if a nominating Shareholder ceases to be a Shareholder, such Shareholder shall immediately cause the directors on the board of directors of the BVI Company, the PRC Company, Shanghai Rui Si, the HK Company and the WFOE appointed by such Shareholder to resign or be removed.”

 

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(d)                                 Section 14.8(iv) of the Shareholders Agreement shall be deleted in its entirety and replaced by the following:

 

“The provisions of Section 14.1(ii) shall apply equally to the BVI Company, the PRC Company, Shanghai Rui Si, the HK Company and the WFOE mutatis mutandis.”

 

2.3                               Amendment to Section 16 of the Shareholders Agreement:

 

Section 16 of the Shareholders Agreement shall be deleted in its entirety and replaced by the following:

 

“Existing Incentive Plans. The Parties hereby agree and confirm that (i) the Company has reserved and kept available out of its authorized but unissued Class A Ordinary Shares a total amount of 336,642,439 shares of Class A Ordinary Shares for issuance to current or previous officers, directors, employees or consultants of the Group Companies pursuant to the existing incentive plan of the Company (the “ESOP”); and (ii) Beijing Jing Rui Pei You Education Consulting Co. Ltd, (北京精锐培优教育咨询有限公司) (“Beijing Subsidiary”), which is a Subsidiary of Shanghai Jing Yu has reserved 30% of its registered capital for issuance to its officers, directors, employees or consultants subject to the terms and conditions of the relevant resolutions set forth in Exhibit D and (iii) each Subsidiary of Shanghai Jing Yu (except for Beijing Subsidiary ) has respectively reserved 10% of its registered capital for issuance to its officers, directors, employees or consultants pursuant to the existing incentive plan of Shanghai Jing Yu subject to the terms and conditions of the relevant resolutions set forth in Exhibit D (“Domestic Incentive Plan”, together with the ESOP, the “Existing Incentive Plans”).”

 

2.4                               Amendment to Section 17.7 of the Shareholders Agreement:

 

Section 17.7 of the Shareholders Agreement shall be deleted in its entirety and replaced by the following:

 

“Controlling Documents. If the Company becomes permitted under applicable PRC Laws and other requirements by any applicable Governmental Authority to directly or indirectly hold any or all of the equity interests of the PRC Company, Shanghai Rui Si and/or any other Group Companies currently Controlled by or will be Controlled by the PRC Company, through the Captive Structure or otherwise, then as soon as reasonably practicable, the Company shall and the Principal and the Ordinary Shareholder shall take all necessary actions to transfer, or cause to be transferred any and all of the equity interests in or assets of the PRC Company, Shanghai Rui Si and/or any such other Group Company Controlled by the Company through Controlling Documents or otherwise to the WFOE, the HK Company or another wholly-owned Subsidiary of the Company designated by the Majority Preferred Holders (or by effecting a transaction with similar effect) at nil consideration of the Company and/or its wholly-owned Subsidiaries, and to terminate the then existing Controlling Documents without any residual liability on the Company, the HK Company or the WFOE.”

 

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2.5                               Amendment to Sections 8.1, 9.1, 15.2 and 17.1 of the Shareholders Agreement

 

Any matters requiring consent or approval of “at least three (3) Approving Persons” in Sections 8.1, 9.1, 15.2 and 17.1 of the Shareholders Agreement shall be amended and replaced by requiring consent or approval of “two (2) Approving Persons”.

 

2.6                               Amendment to References in the Shareholders Agreement

 

(a)                                 References to “Restructuring Agreement” herein and in the Shareholders Agreement shall refer to the restructuring agreement (重组协议契据) dated April 21, 2017, the escrow arrangement deed (监管安排协议契据) dated September 21, 2017, the amendment to restructuring agreement (重组协议补充协议契据) dated October 31, 2017, each by and among the Company and the other parties named therein, as amended from time to time.

 

(b)                                 References to “WFOE” herein and in the Shareholders Agreement shall refer to Shanghai Jingxuerui Information Technology Co, Ltd. (上海精学锐信息科技有限公司), a limited liability company incorporated and existing under the Laws of the PRC.

 

2.7                               Amendment to Schedules attached to the Shareholders Agreement

 

(a)                                 Part A of Schedule I attached to the Shareholders Agreement shall be deleted in its entirety and replaced by Part A of Schedule I attached to this Amendment.

 

(b)                                 Part B of Schedule I attached to the Shareholders Agreement shall be deleted in its entirety and replaced by Part B of Schedule I attached to this Amendment.

 

(c)                                  Schedule II attached to the Shareholders Agreement shall be deleted in its entirety and replaced by Schedule II attached to this Amendment.

 

(d)                                 Schedule of Notice attached to the Shareholders Agreement shall be deleted in its entirety and replaced by Schedule of Notice attached to this Amendment.

 

3.                                      EFFECT OF AMENDMENT

 

3.1                               Except as expressly amended hereby, all of the terms and provisions of the Shareholders Agreement shall remain in full force and effect and be binding on each of the Parties.

 

3.2                               This Amendment shall take effect and become binding on the Parties upon the execution by all Parties. Upon the execution of this Amendment, each reference in the Shareholders Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import, and each reference to the Shareholders Agreement by “thereunder”, “thereof” or words of like import in any document, shall mean and be a reference to the Shareholders Agreement, as amended by this Amendment.

 

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4.                                      GOVERNING LAW AND DISPUTE RESOLUTION

 

4.1                               This Amendment shall be governed by and construed under the Laws of Hong Kong without regard to principles of conflict of laws thereunder.

 

4.2                               The provisions of Section 18.5 (Dispute Resolution) of the Shareholders Agreement shall apply to this Amendment mutatis mutandis as if set out in full herein, provided that in each case reference to “this Agreement” in such provision of the Shareholders Agreement shall refer to this Amendment.

 

5.                                      MISCELLANEOUS

 

5.1                               This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Facsimile and e-mailed copies of signatures shall be deemed to be originals for purposes of the effectiveness of this Amendment.

 

[Signature pages follow]

 

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IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

COMPANY:  

 

OneSmart International Education Group Limited 
 

 

	
By:
    	
/s/ Zhang Xi 
    	
 
    
	
Name: Zhang Xi 
    	
 
    
	
Title: Director
    	
 
    

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

BVI COMPANY

 

ONESMART EDU INC.

 

	
By:
    	
/s/ Zhang Xi 
    	
 
    
	
Name: Zhang Xi 
    	
 
    
	
Title: Director
    	
 
    

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

HK COMPANY:

 

ONESMART EDU (HK) LIMITED

 

	
By:
    	
/s/ Zhang Xi 
    	
 
    
	
Name: Zhang Xi 
    	
 
    
	
Title: Director
    	
 
    

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

PRC COMPANY:

	
 
    	

    
	
Shanghai   OneSmart Education and Training Co., Ltd.
    
	

    
	
 
    
	
By:
    	
/s/ Zhang Xi 
    
	
Name: Zhang Xi 
    
	
Title: Authorized   Signatory
    
			

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

Principal:

 

	
Zhang Xi 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Zhang Xi 
    	
 
    
	
 
    	
 
    	
 
    
	
Ordinary Shareholder:
    	
 
    
	
 
    	
 
    	
 
    
	
Happy Edu Inc.
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Zhang Xi 
    	
 
    
	
Name: Zhang Xi 
    	
 
    
	
Title: Director
    	
 
    

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

SHANGHAI RUI SI:

 

	
Shanghai Rui Si Science   and Technology Information Consulting Co., Ltd
    
	

    	

    
	
 
    
	
 
    
	
By:
    	
/s/ Shi Wei
    
	
Name: SHI WEI
    
	
Title: Authorized   Signatory
    
			

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

	
Shanghai Jingxuerui   Information Technology Co., Ltd.
    
	

    	

    
	
 
    
	
 
    
	
By:
    	
/s/ Meng Xiaoqiang
    
	
Name: Meng Xiaoqiang
    
	
Title: Authorized   Signatory
    
			

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

Series A Investor:

 

HT  International Happy Edu Limited

 

	
By:
    	
/s/ Bian   Jin 
    	
 
    
	
Name:
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

	
Series A Individual Investor:
    	
 
    
	
 
    	
 
    
	
Geng Xiaofei 
    	
 
    
	
 
    	
 
    
	
By: 
    	
/s/ Geng Xiaofei
    	
 
    
	
 
    	
 
    	
 
    
	
Series A Holding Company:
    	
 
    
	
 
    	
 
    	
 
    
	
Jiia Hong Limited
    	
 
    
	
 
    	
 
    	
 
    
	
By: 
    	
/s/ Geng Xiaofei
    	
 
    
	
Name: 
    	
Geng Xiaofei 
    	
 
    
	
Title: 
    	
Director
    	
 
    

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

	
Series A Individual Investor:
    	
 
    
	
 
    	
 
    
	
Wang Dongdong 
    	
 
    
	
 
    	
 
    
	
By: 
    	
/s/ Wang Dongdong 
    	
 
    
	
 
    	
 
    	
 
    
	
Series A Holding Company:
    	
 
    
	
 
    	
 
    	
 
    
	
Vicentsight   Limited
    	
 
    
	
 
    	
 
    	
 
    
	
By: 
    	
/s/ Wang Dongdong
    	
 
    
	
Name: 
    	
Wang Dongdong 
    	
 
    
	
Title: 
    	
Director
    	
 
    

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

	
Series A Individual Investor:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Li Ye 
    	
 
    
	
 
    	
 
    	
 
    
	
By: 
    	
/s/ Li Ye 
    	
 
    
	
 
    	
 
    	
 
    
	
Series A Holding Company:
    	
 
    
	
 
    	
 
    	
 
    
	
Li   Yeah Limited
    	
 
    
	
 
    	
 
    	
 
    
	
By: 
    	
/s/ Li Ye 
    	
 
    
	
Name: 
    	
Li Ye 
    	
 
    
	
Title: 
    	
Director
    	
 
    

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

	
Series A Individual Investor:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Bian Jin 
    	
 
    
	
 
    	
 
    	
 
    
	
By: 
    	
/s/ Bian Jin 
    	
 
    
	
 
    	
 
    	
 
    
	
Series A Holding Company:
    	
 
    
	
 
    	
 
    	
 
    
	
Brilight   Limited
    	
 
    
	
 
    	
 
    	
 
    
	
By: 
    	
/s/ Bian Jin 
    	
 
    
	
Name: 
    	
Bian Jin 
    	
 
    
	
Title: 
    	
Director
    	
 
    

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

	
Series A Individual Investor:
    	
 
    
	
 
    	
 
    
	
Wu Junbao 
    	
 
    
	
 
    	
 
    
	
By: 
    	
/s/ Wu Junbao 
    	
 
    
	
 
    	
 
    	
 
    
	
Series A Holding Company:
    	
 
    
	
 
    	
 
    	
 
    
	
XINHUA   GROUP INVESTMENT LIMITED
    	
 
    
	
 
    	
 
    	
 
    
	
By: 
    	
/s/ Wu Junbao 
    	
 
    
	
Name: 
    	
Wu Junbao 
    	
 
    
	
Title: 
    	
Director
    	
 
    

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

	
Series A Investor:
    	
 
    
	
 
    	
 
    
	
CW One Smart Limited
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Aline Moulia
    	
 
    
	
Name: 
    	
Aline Moulia
    	
 
    
	
Title: 
    	
Authorized Signatory
    	
 
    

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

	
Series A Investor:
    	
 
    
	
 
    	
 
    
	
Supar Inc.
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Lingtao Yan 
    	
 
    
	
Name: 
    	
Lingtao Yan 
    	
 
    
	
Title: 
    	
Director
    	
 
    

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

	
Series A Individual Investor:
    	
 
    
	
 
    	
 
    
	
Zheng Lina 
    	
 
    
	
 
    	
 
    
	
By: 
    	
/s/ Zheng Lina 
    	
 
    
	
 
    	
 
    	
 
    
	
Series A Holding Company:
    	
 
    
	
 
    	
 
    	
 
    
	
Juniperbridge   Capital Limited
    	
 
    
	
 
    	
 
    	
 
    
	
By: 
    	
/s/ Zheng Lina 
    	
 
    
	
Name: 
    	
Zheng Lina 
    	
 
    
	
Title: 
    	
Director
    	
 
    

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

	
Series A Individual Investor:
    	
 
    
	
 
    	
 
    
	
Feng Juan 
    	
 
    
	
 
    	
 
    
	
By: 
    	
/s/ Feng Juan 
    	
 
    
	
 
    	
 
    	
 
    
	
Series A Holding Company:
    	
 
    
	
 
    	
 
    	
 
    
	
Teakbridge   Capital Limited
    	
 
    
	
 
    	
 
    	
 
    
	
By: 
    	
/s/ Feng Juan 
    	
 
    
	
Name: 
    	
Feng Juan 
    	
 
    
	
Title: 
    	
Director
    	
 
    

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

Series A-1 Investor:

 

FPCI Sino-French (Mid Cap) Fund,

represented by its management company Cathay Capital Private Equity,

itself represented by Mingpo Cai

 

 

	
By: 
    	
/s/ Mingpo Cai
    	
 
    
	
Name: 
    	
Mingpo Cai
    	
 
    
	
Title: 
    	
President of CCPE, the   management Company of FPCI Sino - French (Mid Cap) Fund
    	
 
    

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

Series A-1 Investor:

 

Origin Investment Holdings Limited

 

	
By:
    	
/s/ David Pearson
    	
 
    
	
Name: David Pearson
    	
 
    
	
Title: Director
    	
 
    

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

Series A-1 Investor:

 

Goldman Sachs Asia Strategic Pte. Ltd.

 

	
By:
    	
/s/ Tan Ching Chek
    	
 
    
	
Name: Tan Ching Chek
    	
 
    
	
Title: Director
    	
 
    

 

Stonebridge 2017 (Singapore) Pte. Ltd.

 

	
By:
    	
/s/ Heng Michelle Fiona
    	
 
    
	
Name: Heng Michelle   Fiona
    	
 
    
	
Title: Director
    	
 
    

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

IN WITNESS WHEREOF, the party hereto has caused its duly authorized representative to execute this Amendment on the date and year first above written.

 

Series A-1 Investor:

 

For and on behalf of

Angus Holdings Limited

 

	
By:
    	
/s/ Daming Zhu
    	
 
    
	
Name: 
    	
Daming Zhu
    	
 
    
	
Title: 
    	
 Authorized Signature(s)
    	
 
    
				

 

[Signature Page to Amendment to Shareholders Agreement]

 

 

SCHEDULE I 

 

Part A

 

LIST OF PRINCIPAL AND ORDINARY SHAREHOLDER

 

	
Principal
    	
PRC ID Card Number
    	
Holding Company
    	
Percentage of 
   Shareholding in Holding 
   Company
    
	
Zhang Xi 
   (张熙)
    	
 
    	
Happy Edu Inc.
    	
100%
    

 

 

SCHEDULE I

 

Part B

 

LIST OF SERIES A INDIVIDUAL INVESTORS AND SERIES A HOLDING COMPANIES

 

	
Series   A 
   Individual 
   Investors
    	
PRC ID Card 
   Number
    	
Series A Holding 
   Companies
    	
Percentage of 
   Shareholding in the 
   Series A Holding 
   Company
    
	
Feng Juan 
    (冯娟)
    	
 
    	
Teakbridge   Capital Limited
    	
100%
    
	
Zheng Lina
 
    	
 
    	
Juniperbridge   Capital Limited
    	
100%
    
	
Geng Xiaofei
 
    	
 
    	
Jiia Hong   Limited
    	
100%
    
	
Wang Dongdong
 
    	
 
    	
Vicentsight   Limited
    	
100%
    
	
Wu Junbao
 
    	
 
    	
XINHUA GROUP   INVESTMENT LIMITED
    	
100%
    
	
Li Ye
   (李晔)
    	
 
    	
Li Yeah Limited
    	
100%
    
	
Bian Jin
   (卞进)
    	
 
    	
Brilight Limited
    	
100%
    

 

 

SCHEDULE II

 

LIST OF SERIES A-1 INVESTORS

 

	
Series A-1   Investors

 
    
	
Goldman Sachs   Asia Strategic Pte. Ltd.
    
	
Stonebridge 2017   (Singapore) Pte. Ltd.
    
	
Origin   Investment Holdings Limited
    
	
FPCI Sino-French   (Mid Cap) Fund
    
	
Angus Holdings   Limited
    

 

 

Schedule of Notice

 

For the purpose of the notice provisions contained in the Shareholders Agreement, the following are the initial addresses of each Party:

 

If to the Company, the BVI Company, the HK Company, the WFOE, the PRC Company or Shanghai Rui Si:

 

Attention: Zhang Xi (张熙)

Address: 

Email: 

 

If to the Principal or the Ordinary Shareholder: 

 

Attention: Zhang Xi (张熙)

Address: 

Email: 

 

If to the Series A Individual Investors or the Series A Investors:

 

Feng Juan (冯娟) and Teakbridge Capital Limited 

 

Attention: Feng Juan (冯娟)

Address: 

Email: 

 

Zheng Lina  and Juniperbridge Capital Limited 

 

Attention: Zheng Lina 

Address: 

Email: 

 

Geng Xiaofei  and Jiia Hong Limited 

 

Attention: Geng Xiaofei 

Address: 

Email: 

 

Wang Dongdong  and Vicentsight Limited 

 

Attention: Wang Dongdong 

Address: 

Email: 

 

Wu Junbao (吴俊保) and XINHUA GROUP INVESTMENT LIMITED 

 

Attention: Wu Junbao (吴俊保)

Address: 

Email: 

 

Li Ye  and Li Yeah Limited 

 

Attention: Li Ye 

Address: 

Email: 

 

Bian Jin (卞进) and Brilight Limited 

 

Attention: Bian Danyang

Address: 

Email: 

 

 

CW One Smart Limited

Attention: Sha Ye

Address: 

Email: 

 

Supar Inc.

Attention: Lingtao Yan

Address: 

Email: 

 

HT International Happy Edu Limited

Attention: Bian Danyang

Address: 

Email: 

 

If to the Series A-1 Investors:

 

GS

Goldman Sachs Asia Strategic Pte. Ltd.

Attention: Asia Loan Operations

Address:

c/o Goldman Sachs (Asia) L.L.C.

Fax: 

Email: 

 

With a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison

Address: 

Attention: Betty Yap

Fax No.: 

Email Address: 

 

Stonebridge 2017 (Singapore) Pte. Ltd.

Attention: Richard Zhu

Address:

c/o Goldman Sachs (Asia) L.L.C.

Fax: 

Email: 

 

With a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison

Address: 

Hong Kong

Attention: Betty Yap

Fax No.: 

Email Address: 

 

Carlyle

Attention: Norma Kuntz

Address: 

Phone Number: 

Email: 

 

4

 

With a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison

Address: 

Hong Kong

Attention: Betty Yap

Fax No.: 

Email Address: 

 

Cathay

Attention: Lanchun Duan

Address: 

Fax: 

Email: 

 

Angus Holdings Limited

Attention: Jim He

Address: 

Phone Number: 

Email: 

 

5Exhibit 10.1

 

ONE SMART EDUCATION GROUP LIMITED

 

AMENDED AND RESTATED 2015 SHARE INCENTIVE PLAN

 

(Adopted by the Board of Directors of One Smart Education Group Limited (the “Company”) on February 5, 2018)

 

1.             Purposes of the Plan.  The purpose of this Plan is to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentives to selected Employees, Directors, and Consultants and to promote the success of the Company’s business by offering these individuals an opportunity to acquire a proprietary interest in the success of the Company or to increase this interest, by permitting them to acquire Shares of the Company or granting Options to purchase Shares of the Company.  The Plan provides both for the direct award or sale of Shares and for the grant of Options to purchase Shares. Options granted under the Plan may be Incentive Stock Options or Non-statutory Stock Options, as determined by the Administrator at the time of grant. In connection with the restructuring of the Company so that the entire outstanding share capital of Shanghai One Smart Education and Training Co. Ltd (“Shanghai One Smart”) will be replicated in the offshore shareholding structure of the Company, the share incentive plan promulgated by Shanghai One Smart in 2015 (the “Onshore Share Incentive Plan”) was amended and restated in April 2017 and is hereby amended and restated by this Plan and all rights and interests under the Amended and Restated 2015 Share Incentive Plan will therefore be acknowledged and replaced by the grants to be made hereunder.

 

2.             Definitions.  For the purposes of this Plan, the following terms shall have the following meanings:

 

(a)           “Acquisition Date” means, with respect to Shares, the respective dates on which the Shares are issued under the Plan pursuant to the exercise of an Option or in accordance with the Restricted Share Purchase Agreement.

 

(b)           “Administrator” means the Board or any of its Committees as shall be administering the Plan in accordance with Section 4 hereof.

 

(c)           “Applicable Law” means any applicable legal requirements relating to the administration of and the issuance of securities under equity securities-based compensation plans, including, without limitation, the requirements of laws of the state securities laws, U.S. federal law, the Code, and the requirements of any stock exchange or quotation system upon which the Shares may then be listed or quoted and the applicable laws of any other country or jurisdiction where Awards are granted under the Plan.  For all purposes of this Plan, references to statutes and regulations shall be deemed to include any successor statutes or regulations, to the extent reasonably appropriate as determined by the Administrator.

 

(d)           “Award” means an Option or a Restricted Share Purchase Right or other types of award approved by the Administrator and granted to an Awardee pursuant to this Plan.

 

(e)           “Awardee” means a recipient of an Award.

 

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(f)            “Board” means the Board of Directors of the Company.

 

(g)           “Cause” means, as determined by the Board and unless otherwise provided in an applicable agreement with the Company or a Subsidiary, the Service Provider (i) is proved to be incompetent during the probationary period, (ii) is in material breach of the rules and regulations of the Group Companies (including without limitation labor discipline) (for avoidance of doubt, commercial bribery and bribery shall be regarded as material breaches of rules and regulations in any event), (iii) commits serious dereliction of duty or malpractice, which causes material damages to the Group Companies, (iv) comes into employment relationship with other employer at the same time, which has material negative effects on the completion of his/her work at the Group Companies, or refuses to make correction as required by the Group Companies; (v) uses such means as fraud, coercion or taking advantage of the unfavorable position of the Group Companies to have the Group Companies execute or modify the employment contract against its true intention, which renders such employment contract invalid, or (vi) is prosecuted.

 

(h)           “Change in Control” means the occurrence of any of the following events:

 

(i)            any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities; or

 

(ii)           the consummation of the sale, lease, or disposition by the Company of all or substantially all of the Company’s assets; or

 

(iii)          the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

 

Anything in the foregoing to the contrary notwithstanding, a transaction shall not constitute a Change in Control if its sole purpose is to change the legal jurisdiction 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 transaction.  In addition, a sale by the Company of its securities in a transaction, the primary purpose of which is to raise capital for the Company’s operations and business activities including, without limitation, an initial public offering of Shares under the Securities Act or other Applicable Law, shall not constitute a Change in Control.

 

(i)            “Code” means the U.S. Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

 

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(j)            “Committee” means a committee of Directors appointed by the Board in accordance with Section 4 hereof.

 

(k)           “Company” means One Smart Education Group Limited, a company organized under the laws of the Cayman Islands, or any successor corporation thereto.

 

(l)            “Consultant” means any natural person who is engaged by the Company, or any Parent, Subsidiary or variable interest entity whose financial statements are intended to be consolidated with the Company, any Parent or Subsidiary to render consulting or advisory services to such entity and who is compensated for the services; provided that the term “Consultant,” does not include (i) Employees or (ii) securities promoters.

 

(m)          “Date of Grant” means the date an Award is granted to an Awardee in accordance with Section 13 hereof.

 

(n)           “Director” means a member of the Board.

 

(o)           “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.

 

(p)           “Employee” means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary.  A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or any Parent or Subsidiary, including sick leave, military leave, or any other personal leave, or (ii) transfers between locations of the Company or between the Company or any Parent or Subsidiary, or any successor.  For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract.  If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the 91st day of such leave, any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Non-statutory Stock Option.  Neither service as a Director nor payment of a director’s fee by the Company or any Parent or Subsidiary shall be sufficient to constitute “employment” by the Company or any Parent or Subsidiary.

 

(q)           “Exercise Price” means the amount for which one Share may be purchased upon exercise of an Option, as specified by the Administrator in the applicable Option Agreement in accordance with Section 6(d) hereof.

 

(r)            “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

(s)            “Fair Market Value” means, as of any date, the value of the Shares determined as follows:

 

(i)            if the Shares are listed on any established stock exchange or a national market system, including, without limitation, The New York Stock Exchange, The Nasdaq Global Market or The Nasdaq Capital Market of The Nasdaq Stock Market, Hong Kong Stock Exchange and the London Stock Exchange (Main Listing or Alternative Investment

 

3

 

Market), the Fair Market Value shall be the closing sales price for the Shares (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

 

(ii)           if the Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value shall be the mean of the high bid and low asked prices for the Shares on the day of determination, as reported in The Wall Street Journal or any other source as the Administrator deems reliable; or

 

(iii)          in the absence of an established market for the Shares, the Fair Market Value thereof shall be determined in good faith by the Administrator in accordance with Applicable Law.

 

(t)            “Group Companies” means the Company, Shanghai One Smart Education and Training Co. Ltd., and / or any of their Subsidiary.

 

(u)           “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code, as designated in the applicable Option Agreement.

 

(v)           “Market Stand-Off Period”  shall mean period of the longer term of the following: (i) a year since the consummation of initial public offering of Shares, (ii) the applicable lock-up period for the Optioned Shares as stipulated by the Applicable Laws of the place of the initial public offering of Shares.

 

(w)          “Non-statutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option, as designated in the applicable Option Agreement, or an Incentive Stock Option that does not so qualify.

 

(x)           “Option” means an option to purchase Shares that is granted pursuant to the Plan in accordance with Section 6 hereof.

 

(y)           “Option Agreement” means a written or electronic agreement between the Company and an Optionee, the form(s) of which shall be approved from time to time by the Administrator, evidencing the terms and conditions of an individual Option granted under the Plan, and includes any documents attached to or incorporated into the Option Agreement, including, but not limited to, a notice of option grant and a form of exercise notice.  The Option Agreement shall be subject to the terms and conditions of the Plan.

 

(z)           “Optioned Shares” means the Shares subject to an Option.

 

(aa)         “Optionee” means the holder of an outstanding Option granted under the Plan.

 

(bb)         “Parent” means a “parent corporation” with respect to the Company, whether now or hereafter existing, as defined in Section 424(e) of the Code.

 

4

 

(cc)         “Plan” means this Amended and Restated 2015 Share Incentive Plan, as amended from time to time.

 

(dd)         “PRC” means the People’s Republic of China, which, for the purpose of this Plan, shall exclude Hong Kong Special Administrative Region of the PRC,  Macau Special Administrative Region of the PRC and Taiwan.

 

(ee)         “Purchase Price” means the amount of consideration for which one Share may be acquired pursuant to a Restricted Share Purchase Right, as specified by the Administrator in the applicable Restricted Share Purchase Agreement in accordance with Section 7(c) hereof.

 

(ff)          “Purchaser” means the holder of Shares purchased pursuant to the exercise of a Restricted Share Purchase Right.

 

(gg)         “Qualified Former Employee” means any former employee of the Company or any Parent or Subsidiary who is eligible for the grant of Awards as approved by the Board.

 

(hh)         “Restricted Share Purchase Agreement” means a written or electronic agreement between the Company and a Purchaser, the form(s) of which shall be approved from time to time by the Administrator, evidencing the terms and conditions of an individual Restricted Share Purchase Right, and includes any documents attached to or incorporated into the Restricted Share Purchase Agreement.  The Restricted Share Purchase Agreement shall be subject to the terms and conditions of the Plan.

 

(ii)           “Restricted Shares” means Shares acquired pursuant to a Restricted Share Purchase Right (if subject to rights of redemption, repurchase or forfeiture).

 

(jj)           “Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

(kk)         “Service Provider” means an Employee, Director, or Consultant.

 

(ll)           “Share” means an Ordinary Class A Share of the Company, as adjusted in accordance with Section 12 hereof.

 

(mm)      “Shareholders Agreement” means any agreement between an Awardee and the Company or members of the Company or both.

 

(nn)         “Restricted Share Purchase Right” means a right to purchase Restricted Shares pursuant to Section 7 hereof.

 

(oo)         “Subsidiary” means a “subsidiary corporation” with respect to the Company, whether now or hereafter existing, as defined in Section 424(f) of the Code.

 

(pp)         “Ten Percent Owner” means a Service Provider who owns more than 10% of the total combined voting power of all classes of outstanding securities of the Company or any Parent or Subsidiary.

 

5

 

(qq)         “United States” means the United States of America, its territories and possessions, any State of the United States, and the District of Columbia.

 

3.             Shares Subject to the Plan.

 

(a)           Basic Limitation.  Subject to the provisions of Section 12 hereof, the maximum aggregate number of Shares that may be issued under the Plan shall be 336,642,439 Class A ordinary shares, plus an annual 2.0% increase of the total number of ordinary shares outstanding on August 31 of the preceding calendar year of the Company on the first day of each the following nine fiscal years commencing on September 1, 2018.

 

(b)           Additional Shares.  If an Award expires, becomes unexercisable, or is cancelled, forfeited, or otherwise terminated without having been exercised or settled in full, as the case may be, the Shares allocable to the unexercised portion of the Award shall again become available for future grant or sale under the Plan (unless the Plan has terminated).  Shares that actually have been issued under the Plan, upon exercise of an Option or delivery under a Restricted Share Purchase Right, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that in the event that Shares issued under the Plan are reacquired by the Company pursuant to any forfeiture provision, right of repurchase or redemption, or are retained by the Company upon the exercise of or purchase of Shares under an Award in order to satisfy the Exercise Price or Purchase Price for the Award or any withholding taxes due with respect to the exercise or purchase, such Shares shall again become available for future grant under the Plan.

 

4.             Administration of the Plan.

 

(a)           Administrator.  The Plan shall be administered by the Board or a Committee appointed by the Board.  Any Committee of the Board shall be constituted to comply with Applicable Law.

 

(b)           Powers of the Administrator.  Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

 

(i)            to determine the Fair Market Value, in accordance with Section 2(s) hereof;

 

(ii)           to select the Awardees to whom Awards may from time to time be granted hereunder;

 

(iii)          to determine the number of Shares to be covered by each Award granted hereunder;

 

(iv)          to approve the form(s) of agreement for use under the Plan;

 

(v)           to determine the terms and conditions of any Award granted hereunder including, but not limited to, the Exercise Price, the Purchase Price, the time or times

 

6

 

when Options may be exercised (which may be based on performance criteria), the time or times when repurchase or redemption rights shall lapse, any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

 

(vi)          to implement a program where (A) outstanding Awards are surrendered or cancelled in exchange for Awards of the same type (which may have lower Exercise/Purchase Prices and different terms), Awards of a different type, or cash, or (B) the Exercise/Purchase Price of an outstanding Award is reduced, based in each case on terms and conditions determined by the Administrator in its sole discretion;

 

(vii)         to prescribe, amend, and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable laws of jurisdictions other than the United States;

 

(viii)        to allow Awardees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued under an Award that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld.  The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined.  All elections by Awardees to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;

 

(ix)          to modify or amend each Award (subject to Section 17 hereof and Awardee’s consent if the modification or amendment is to the Awardee’s detriment);

 

(x)           to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan; and

 

(xi)          to make any other determination and take any other action that the Administrator deems necessary or desirable for the administration of the Plan.

 

(c)           Delegation of Authority to Officers.  Subject to Applicable Law, the Administrator may delegate limited authority to specified officers of the Company to execute on behalf of the Company any instrument required to effect an Award previously granted by the Administrator.

 

(d)           Effect of Administrator’s Decision.  All decisions, determinations, and interpretations of the Administrator shall be final and binding on all Awardees.

 

5.             Eligibility.

 

(a)           General Rule.  Only Service Providers, or trusts or companies established in connection with any employee benefit plan of the Company (including the Plan) for the benefit of a Service Provider, or Qualified Former Employees, shall be eligible for the grant of Awards.  Incentive Stock Options may be granted to Employees only.

 

7

 

(b)           Members with Ten-Percent Holdings.  A Ten Percent Owner shall not be eligible for the grant of an Incentive Stock Option unless (i) the Exercise Price is at least 110% of the Fair Market Value on the Date of Grant, and (ii) the Incentive Stock Option by its terms is not exercisable after the expiration of five (5) years from the Date of Grant.  For purposes of this Section 5(b), in determining ownership of securities, the attribution rules of Section 424(d) of the Code shall apply.

 

6.             Terms and Conditions of Options.

 

(a)           Option Agreement.  Each grant of an Option under the Plan shall be evidenced by an Option Agreement between the Optionee and the Company.  Each 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 Administrator deems appropriate for inclusion in an Option Agreement.  The provisions of the various Option Agreements entered into under the Plan need not be identical.

 

(b)           Type of Option.  Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Non-statutory Stock Option.  However, notwithstanding a designation of an Option as an Incentive Stock Option, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by an Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds US$100,000, such Options shall be treated as Non-statutory Stock Options.  For purposes of this Section 6(b), Incentive Stock Options shall be taken into account in the order in which they were granted.  The Fair Market Value of the Shares shall be determined as of the Date of Grant.

 

(c)           Number of Shares.  Each Option Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 12 hereof.

 

(d)           Exercise Price.  Each Option Agreement shall specify the Exercise Price.  The Exercise Price of an Incentive Stock Option shall not be less than 100% of the Fair Market Value on the Date of Grant, and a higher percentage may be required by Section 5(b) hereof.  Subject to the preceding sentence, the Exercise Price of any Option shall be determined by the Administrator in its sole discretion.  For the avoidance of doubt, to the extent not prohibited by applicable laws or any exchange rule, a downward adjustment of the exercise prices of Options mentioned in the preceding sentence shall be effective without the approval of the Company’s shareholders or the approval of the affected Awardees.  The Exercise Price shall be payable in accordance with Section 9 hereof and the applicable Option Agreement.  Notwithstanding anything to the contrary in the foregoing or in Section 5(b), in the event of a transaction described in Section 424(a) of the Code, then, consistent with Section 424(a) of the Code, Incentive Stock Options may be issued at an Exercise Price other than as required by the foregoing and Section 5(b).

 

(e)           Term of Option.  The Option Agreement shall specify the term of the Option; provided, however, that the term shall not exceed ten (10) years from the Date of Grant,

 

8

 

and a shorter term may be required by Section 5(b) hereof.  Subject to the preceding sentence, the Administrator in its sole discretion shall determine when an Option is to expire.

 

(f)            Exercisability.  Each Option Agreement shall specify the date when all or any installment of the Option is to become exercisable.  The exercisability provisions of any Option Agreement shall be determined by the Administrator in its sole discretion.  Unless otherwise set forth in the Option Agreement or as determined by the Administrator, no Option shall become exercisable unless and until (i) such Option has been fully vested according to the vesting terms provided under the Option Agreement, (ii) the Company has consummated the initial public offering of Shares, and (iii) all applicable legal requirements with respect to the exercise of Options, including without limitation the filing requirements of the State Administration of Foreign Exchange of the PRC, shall have been fully performed and complied with by the applicable Awardee.

 

(g)           Exercise Procedure.  Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as may be determined by the Administrator and as set forth in the Option Agreement; provided, however, that an Option shall not be exercised for a fraction of a Share.

 

(i)            An Option shall be deemed exercised when the Company receives (A) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, (B) full payment for the Shares with respect to which the Option is exercised, and (C) all representations, indemnifications, and documents reasonably requested by the Administrator including, without limitation, any Shareholders Agreement.  Full payment may consist of any consideration and method of payment authorized by the Administrator in accordance with Section 9 hereof and permitted by the Option Agreement.

 

(ii)           Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse.  Subject to the provisions of Sections 8, 9, 14, and 15, the Company shall issue (or cause to be issued) certificates evidencing the issued Shares promptly after the Option is exercised.  Notwithstanding the foregoing, the Administrator in its discretion may require the Company to retain possession of any certificate evidencing Shares acquired upon the exercise of an Option, if those Shares remain subject to repurchase or redemption under the provisions of the Option Agreement, any Shareholders Agreement, or any other agreement between the Company and the Awardee, or if those Shares are collateral for a loan or obligation due to the Company.

 

(iii)          For purpose of the Plan  (in accordance with Section 3(b), exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, by the number of Shares as to which the Option is exercised.

 

(h)           Termination of Service (other than by death).

 

(i)            If an Optionee ceases to be a Service Provider for any reason other than because of death, then the Optionee’s Options shall expire on the earliest of the following occasions:

 

(A)          The expiration date determined by Section 6(e) hereof;

 

9

 

(B)          The day on which the Optionee’s relationship as a Service Provider is terminated for Cause;

 

(C)          The date of termination of the Optionee’s relationship as a Service Provider for the following reasons other than for Cause.

 

(1) The resignation of the Optionee with the consent of the Group Companies results in the termination of his/her employment contract, (2) the Optionee does not apply to renew his/her employment contract and leaves the Group Companies upon the expiration of his/her employment contract, (3) the employment contract of the Optionee is rescinded by the Group Companies for any of the following circumstances on the part of the Optionee (i.e., the circumstances stipulated in Article 40 of the Labor Contract Law of the People’s Republic of China): (x) the Optionee is sick or suffers from work-related injury and is unable to resume his/her original work or engage in other work otherwise arranged by the Group Companies upon the completion of the specified medical treatment period, (y) the Optionee is incompetent in his/her work and fails to be competent in his/her work even after training or an adjustment of post, and (z) the objective conditions based on which the employment contract was signed between the Optionee and the Group Companies have undergone material changes, which results in the impossibility to perform such employment contract, and the parties fail to reach an agreement in respect of modification to such labor contract through negotiation.

 

(ii)           Following the termination of the Optionee’s relationship as a Service Provider for reasons set forth in Section 6(h)(i), such Optionee  may (a) exercise all or part of such Optionee’s Option at any time before the expiration of the Option as set forth in Section 6(h)(i) hereof, but only to the extent that the Option was vested and exercisable as of the date of termination of such Optionee’s relationship as a Service Provider (or became vested and exercisable as a result of the termination), and subject to the provisions under Section 6(f); and (b) the balance of the Shares subject to the Option shall be forfeited on the date of termination of the Optionee’s relationship as a Service Provider, in the event such Optionee has prepaid any Exercise Price for such Optioned Shares, the Company shall or shall designate any other Group Company to repay to such Optionee such Exercise Price.

 

(iii)          For the avoidance of any doubt, Sections 6(h)(i) and 6(h)(ii) shall not apply to Qualified Former Employees.

 

(i)            Leave of Absence.  Unless otherwise determined by the Administrator, for purposes of this Section 6, the service of an Optionee as a Service Provider shall be deemed to continue while the Optionee is on a bona fide leave of absence, if such leave was approved by the Company in writing.  Unless otherwise determined by the Administrator and subject to Applicable Law, vesting of an Option shall be suspended during any unpaid leave of absence.

 

(j)            Death of Optionee.

 

(i)            If an Optionee dies or was declared dead, then the Optionee’s Option shall expire on the expiration date determined by Section 6(e) hereof

 

(ii)           If an Optionee dies or was declared dead, all or part of the Optionee’s Option may be exercised at any time before the expiration of the Option as set forth

 

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in Section 6(j)(i) hereof by the executors or administrators of the Optionee’s estate or by any person who has acquired the Option directly from the Optionee by beneficiary designation, bequest, or inheritance, but only to the extent that the Option was vested and exercisable as of the date of the Optionee’s death or had become vested and exercisable as a result of the death.  The balance of the Shares subject to the Option shall be forfeited upon the Optionee’s death.  Any Optioned Shares subject to the portion of the Option that are vested as of the Optionee’s death but that are not purchased prior to the expiration of the Option pursuant to this Section 6(j) shall be forfeited immediately following the Option’s expiration.

 

(k)           Special Adjustment

 

(i)            If the Optionee or his/her affiliate violates the non-compete obligation with the Group Companies (including that the Optionee or his/her affiliate engages in business competing with the Group Companies through the enterprise he/she invests in), then (A) the unexercised Option held by the Optionee (including the Option that has been or has not been vested) shall expire upon receipt of a written notice from the Group Companies. If the Optionee has prepaid the Exercise Price for such expired Option, the Company shall by itself or cause other Group Companies to repay such prepaid Exercise Price; (B) if the Optionee holds any Optioned Shares at the time, the Optionee shall, within ten (10) business days upon his/her receipt of the written notice from the Company, sell the Optioned shares to the Company or a third party designated by the Company at the Exercise Price of such Optioned Shares. For the purpose of this Section, “affiliate” means the spouse and lineal descendants (whether with blood relationship or adoptive relationship) of a natural person and any trust created and maintained solely for the benefits of such person, his/her spouse, parents or children. In addition, the Optionee shall pay the Group Companies or the designated person of the Group Companies liquidated damages if he/she breaches the non-compete obligation, which liquidated damages shall be calculated as follows: the compensation for non-compete already paid to such Optionee by the Group Companies × 2 + the annual income of such Optionee for the year immediately prior to his/her resignation (before tax) × 10. If the Optionee signs a separate non-compete agreement with the Group Companies, and the liquidated damages for breach of non-compete obligation agreed therein is higher than those of this clause, then the liquidated damages payable by the Optionee to the Group Companies shall be subject to those provided by such non-compete agreement.

 

(ii)           If the Optionee discloses the trade secrets of the Group Companies, or conducts related party transactions with the Group Companies and damages the benefits of the Group Companies, then (A) the unexercised Option held by the Optionee (including the Option that has been or has not been vested) shall expire upon receipt of the written notice from the Group Companies. If the Optionee has prepaid the Exercise Price for such expired Option, the Company shall by itself or cause other Group Companies to repay such prepaid Exercise Price; (B) if the Optionee holds any Optioned Shares at the time, the Optionee shall, within ten (10) business days upon his/her receipt of the written notice from the Company, sell the Optioned shares to the Company or a third party designated by the Company at the Exercise Price of such Optioned Shares. In respect of any loss caused due to the disclosure of the trade secrets of the Group Companies by the Optionee or the conduct of related party transactions by the Optionee with the Group Companies, the Optionee shall make compensation to the Group Companies.

 

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(iii)          Default.    Under any circumstance provided in Section 6(k)(i) or Section 6(k)(ii), the Optionee shall cooperate with the Company to complete the repurchase of his/her Optioned Shares in accordance with Section 6(k)(i) or Section 6(k)(ii), as the case may be, by the Company.  If the repurchase is not completed within the stipulated time limit for the reason of the Optionee, the Optionee shall be deemed in material breach and shall pay the Company or any other Group Company designated by the Company liquidated damages equivalent to 0.05% of Fair Market Value of the Optioned Shares held by such Optionee on the date of repurchase notice for each day of delay.

 

(iv)          Special Adjustment during Market Stand-Off  If any circumstance under Section 6(k)(i) or Section 6(k)(ii) happens within the Market Stand-Off Period, as a result of which the Company is unable to repurchase the Optioned Shares of such Optionee according to Applicable Laws, such Optionee may still hold such Optioned Shares, provided that the Optionee shall compensate the Group Companies at the Fair Market Value of the Optioned Shares at the date of claim made by the Group Companies against the Optionee if no objection is raised, or at the date of determination of related facts by the court or arbitral tribunal if any objection is raised. (The formula shall be as follows: the per Share Fair Market Value × the number of Optioned Shares held by the Optionee). The amount of compensation to be made by the Optionee to the Group Companies arising out of breach of  non-compete obligation or damage of the Company’s interests by the Optionee shall be calculated separately.

 

(v)           For the avoidance of any doubt, Sections 6(k)(i) to 6(k)(iv) shall not apply to Qualified Former Employees.

 

(l)            Market Stand-Off Period.    Optionee agrees that unless otherwise with a written consent of the Company, Optionee shall not directly or indirectly sell or transfer any Optioned Shares acquired under the Option Agreement during the Market Stand-Off Period.

 

(m)          Restrictions on Transfer of Shares.  Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase or redemption, rights of first refusal, and other transfer restrictions as the Administrator may determine.  The restrictions described in the preceding sentence shall be set forth in the applicable Option Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally.

 

7.             Terms and Conditions of Restricted Share Purchase Rights.

 

(a)           Restricted Share Purchase Agreement.  Each Restricted Share Purchase Right under the Plan shall be evidenced by a Restricted Share Purchase Agreement, respectively, between the Purchaser and the Company.  Each Restricted Share Purchase Right  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 Administrator deems appropriate for inclusion in a Restricted Share Purchase Agreement, including without limitation, (i) the number of Shares subject to such Restricted Share Purchase Agreement, as applicable, or a formula for determining such number, (ii) the purchase price of the Shares, if any, and the means of payment for the Shares, (iii) the performance criteria, if any, and level of achievement versus these criteria that shall determine the number of Shares granted, issued, retainable and/or vested,

 

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(iv) such terms and conditions on the grant, issuance, vesting, settlement and/or forfeiture of the Shares as may be determined from time to time by the Administrator and (v) restrictions on the transferability of the Award.  The provisions of the various Restricted Share Purchase Agreements entered into under the Plan need not be identical.

 

(b)           Duration of Offers of Restricted Share Purchase Rights.  Any Restricted Share Purchase Rights granted under the Plan shall automatically expire if not exercised by the Purchaser within such time as is specified in the Restricted Share Purchase Agreement.

 

(c)           Purchase Price.  The Purchase Price, if any, shall be determined by the Administrator in its sole discretion.  The Purchase Price, if any, shall be payable in a form described in Section 9 hereof.

 

(d)           Restrictions on Transfer of Shares.  Any Shares awarded or sold pursuant to Restricted Share Purchase Rights shall be subject to such special forfeiture conditions, rights of repurchase or redemption, rights of first refusal, market stand-offs, and other transfer restrictions as the Administrator may determine.  The restrictions described in the preceding sentence shall be set forth in the applicable Restricted Share Purchase Agreement, as applicable, and shall apply in addition to any restrictions that may apply to holders of Shares generally.  Unless otherwise determined by the Administrator and subject to Applicable Law, vesting of Shares acquired pursuant to a Restricted Share Purchase Agreement shall be suspended during any unpaid leave of absence.

 

8.             Withholding Taxes.  As a condition to the exercise of an Option or purchase of Restricted Shares, the Awardee (or in the case of the Awardee’s death or in the event of a permissible transfer of Awards hereunder, the person exercising the Option or purchasing Restricted Shares) shall make such arrangements as the Administrator may require for the satisfaction of any applicable withholding taxes arising in connection with the exercise of an Option or purchase of Restricted Shares under the laws of any applicable jurisdiction including the Cayman Islands, the PRC, the U.S., Hong Kong and any other jurisdiction.  The Awardee (or in the case of the Awardee’s death or in the event of a permissible transfer of Awards hereunder, the person exercising the Option or purchasing Restricted Shares) also shall make such arrangements as the Administrator may require for the satisfaction of any applicable British Virgin  Islands, PRC, Hong Kong, U.S., or non-Cayman Islands, non-PRC, non-Hong Kong and non-U.S. withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option or purchasing Restricted Shares.  The Company shall not be required to issue any Shares under the Plan until the foregoing obligations are satisfied.  Without limiting the generality of the foregoing, upon the exercise of the Option or delivery of Restricted Shares or Share or Award, the Company shall have the right to withhold taxes from any compensation or other amounts that the Company may owe to the Awardee, or to require the Awardee to pay to the Company the amount of any taxes that the Company may be required to withhold with respect to the Shares issued to the Awardee.  Without limiting the generality of the foregoing, the Administrator in its discretion may authorize the Awardee to satisfy all or part of any withholding tax liability by (i) having the Company withhold from the Shares that would otherwise be issued upon the exercise of an Option or purchase of Restricted Shares that number of Shares having a Fair Market Value, as of the date the withholding tax liability arises, equal to the portion of the Company’s withholding tax liability to be so satisfied or (ii) by delivering to

 

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the Company previously owned and unencumbered Shares having a Fair Market Value, as of the date the withholding tax liability arises, equal to the amount of the Company’s withholding tax liability to be so satisfied.

 

9.             Payment for Shares.  The consideration to be paid for the Shares to be issued under the Plan, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined on the Date of Grant), subject to the provisions in this Section 9.

 

(a)           General Rule.  The entire Purchase Price or Exercise Price (as the case may be) for Shares issued under the Plan shall be payable in cash or cash equivalents at the time when the Shares are purchased, except as otherwise provided in this Section 9.

 

(b)           Surrender of Shares.  To the extent that an Option Agreement or a Restricted Share Purchase Agreement so provides, all or any part of the Exercise Price or Purchase Price (as the case may be) may be paid by surrendering, or attesting to the ownership of, Shares that are already owned by the Awardee.  These Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value on the date the Option is exercised or Restricted Shares are purchased.  The Awardee shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price or Purchase Price (as the case may be) if this action would subject the Company to adverse accounting consequences and is objected by the Company, as determined by the Administrator.

 

(c)           Services Rendered.  At the discretion of the Administrator and to the extent so provided in the agreements, Shares may be awarded under the Plan in consideration of services rendered to the Company or any Parent or Subsidiary prior to the Award.

 

(d)           Exercise/Sale.  At the discretion of the Administrator and to the extent an Option Agreement so provides, and if the Shares are publicly traded, payment may be made all or in part by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes.

 

(e)           Exercise/Pledge.  At the discretion of the Administrator and to the extent an Option Agreement so provides, and if the Shares are publicly traded, payment may be made all or in part by the delivery (on a form prescribed by the Company) of an irrevocable direction to pledge Shares to a securities broker or lender approved by the Company, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes.

 

(f)            Other Forms of Consideration.  At the discretion of the Administrator and to the extent an Option Agreement or a Restricted Share Purchase Agreement so provides, all or a portion of the Exercise Price or Purchase Price may be paid by any other form of consideration and method of payment to the extent permitted by Applicable Law.

 

10.          Non-transferability of Awards. Unless otherwise determined by the Administrator and so provided in this Plan, the applicable Option Agreement or Restricted Share

 

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Purchase Agreement (or be amended to provide), no Award shall be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner (whether by operation of law or otherwise) other than (i) by inheritance or distribution by will or (except in the case of an Incentive Stock Option) pursuant to an effective civil judgment or ruling or (ii) by trusts or companies established in connection with any employee benefit plan of the Company (including the Plan) for the benefit of a Service Provider or Service Providers, in each case of (i) and (ii), subject to Applicable Law, and shall not be subject to execution, attachment, or similar process.  In the event the Administrator in its sole discretion makes an Award transferable, only a Non-statutory Stock Option, Restricted Share Purchase Right may be transferred provided such Award is transferred without payment of consideration to members of the Awardee’s immediate family (as such term is defined in Rule 16a-1(e) of the Exchange Act) or to trusts or partnerships established exclusively for the benefit of the Awardee and the members of the Awardee’s immediate family, all as permitted by Applicable Law.  Upon any attempt to pledge, assign, hypothecate, transfer, or otherwise dispose of any Award or of any right or privilege conferred by this Plan contrary to the provisions hereof, or upon the sale, levy or attachment or similar process upon the rights and privileges conferred by this Plan, such Award shall thereupon terminate and become null and void.  Incentive Stock Options may be exercised during the lifetime of the Awardee only by the Awardee.

 

11.          Rights as a Member.  Before the consummation of the initial public offering of the Shares of the Company, Shares issued pursuant to the exercise of Options or Restricted Shares issued under the Restricted Share Purchase Agreements shall not carry any voting right. Until the Shares actually are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to receive dividends or any other rights as a member shall exist with respect to the Shares, notwithstanding the exercise of the Award.  No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 12 of the Plan.

 

12.          Adjustment of Shares.

 

(a)           Changes in Capitalization.  Subject to any required action by the members of the Company in accordance with Applicable Law, the class(es) and number and type of Shares that have been authorized for issuance under the Plan but as to which no Awards have yet been granted or that have been returned to the Plan upon cancellation or expiration of an Award, and the class(es), number, and type of Shares covered by each outstanding Award, as well as the price per Share covered by each outstanding Award, shall be proportionately adjusted for any increase, decrease, or change in the number or type of outstanding Shares or other securities of the Company or exchange of outstanding Shares or other securities of the Company into or for a different number or type of shares or other securities of the Company or successor entity, or for other property (including, without limitation, cash) or other change to the Shares resulting from a share split, reverse share split, share dividend, dividend in property other than cash, combination of shares, exchange of shares, consolidation, recapitalization, reincorporation, reorganization, change in corporate structure, reclassification, or other distribution of the Shares effected without receipt of consideration by the Company; provided, however, that the conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.”  The adjustment contemplated in this Section 12(a) shall be made by the

 

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Board, whose determination shall be final, binding and conclusive.  Except as expressly provided herein, no issuance by the Company of equity securities of the Company of any class, or securities convertible into equity securities of the Company of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number, type, or price of Shares subject to an Award.  Where an adjustment under this Section 12(a) is made to an Incentive Stock Option, the adjustment shall be made in a manner that will not be considered a “modification” under the provisions of Section 424(h)(3) of the Code.

 

(b)           Dissolution or Liquidation.  In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Awardee as soon as practicable prior to the effective date of such proposed transaction.  The Administrator in its discretion may provide for an Optionee to have the right to exercise his or her Option until fifteen (15) days prior to the proposed dissolution or liquidation as to all of the Optioned Shares covered thereby, including Shares as to which the Option would not otherwise be exercisable.  In addition, the Administrator may provide that any Company repurchase or redemption option applicable to any Shares purchased upon exercise of an Option or Restricted Shares purchased under a Restricted Share Purchase Right shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated.  To the extent an Option has not been previously exercised and all Restricted Shares covered by a Restricted Share Purchase Right have not been purchased, the Award will terminate immediately prior to the consummation of such proposed action.

 

(c)           Change in Control.  Except as may otherwise be provided in any Option Agreement or Restricted Share Purchase Agreement or any other written agreement entered into by and between the Company and an Awardee, if the Administrator anticipates the occurrence, or upon the occurrence, of a Change of Control transaction, the Administrator may, in its sole discretion, provide for (i) any and all Awards outstanding hereunder to terminate at a specific time in the future and shall give each Awardee the right to exercise the vested portion of such Awards during a period of time as the Administrator shall determine, or (ii) the purchase of any Award for an amount of cash equal to the amount that could have been attained upon the exercise of such Award (and, for the avoidance of doubt, if as of such date the Committee determines in good faith that no amount would have been attained upon the exercise of such Award, then such Award may be terminated by the Company without payment), or (iii) the replacement of such Award with other rights or property selected by the Administrator in its sole discretion or the assumption of or substitution of such Award by the successor or surviving corporation, or a Parent or Subsidiary thereof, with appropriate adjustments as to the number and kind of Shares and prices, or (iv) payment of such Award in cash based on the value of Shares on the date of the Change of Control transaction plus reasonable interest on the Award through the date as determined by the Administratr when such Award would otherwise be vested or have been paid in accordance with its original terms, if necessary to comply with Section 409A of the Code.

 

(d)           Reservation of Rights.  Except as provided in this Section 12 and in the applicable Option Agreement or Restricted Share Purchase Agreement, an Awardee shall have no rights by reason of (i) any subdivision or consolidation of Shares or other securities of any class, (ii) the payment of any dividend, or (iii) any other increase or decrease in the number of Shares or other securities of any class.  Any issuance by the Company of equity securities of any

 

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class, or securities convertible into equity securities of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Optioned Shares.  The grant of an Option, Restricted Share Purchase Right shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell, or transfer all or any part of its business or assets.

 

13.          Date of Grant.  The Date of Grant of an Award shall, for all purposes, be the date on which the applicable Option Agreement or Restricted Share Purchase Agreement is duly executed and delivered by the Company and the applicable Awardee, or such other later date as is determined by the Administrator; provided, however, that the Date of Grant of an Incentive Stock Option shall be no earlier than the date on which the Service Provider becomes an Employee.

 

14.          Securities Law Requirements.

 

(a)           Legal Compliance.  Notwithstanding any other provision of the Plan or any agreement entered into by the Company pursuant to the Plan, the Company shall not be obligated, and nor shall it have any liability for failure to deliver any Shares under the Plan unless the issuance and delivery of Shares comply with (or are exempt from) all Applicable Law, including, without limitation, the applicable securities laws in the PRC, Hong Kong and the Cayman Islands, Securities Act, U.S. state securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

 

(b)           Investment Representations.  Shares delivered under the Plan shall be subject to transfer restrictions, and the person acquiring the Shares shall, as a condition to the exercise of an Option or the purchase or acquisition of Restricted Shares if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with Applicable Law, including, without limitation, the representation and warranty at the time of acquisition of Shares that the Shares are being acquired only for investment purposes and without any present intention to sell, transfer, or distribute the Shares.

 

15.          Inability to Obtain Authority.  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

16.          Approval by Board.  The Plan shall be subject to approval by the Board.  Such Board’s approval shall be obtained in the degree and manner required under Applicable Law.

 

17

 

17.          Duration and Amendment.

 

(a)           Term of Plan.  The Plan shall become effective upon approval by the Board as described in Section 16 hereof.  Unless sooner terminated under Section 17(b) hereof, the Plan shall continue in effect for a term of ten (10) years.

 

(b)           Amendment and Termination.  The Board may at any time amend, alter, suspend, or terminate the Plan.

 

(c)           Approval by Members.  The Board shall obtain approval of the members of this Plan or any Plan amendment to the extent necessary and desirable to comply with Applicable Law.

 

(d)           Effect of Amendment or Termination.  No amendment, alteration, suspension, or termination of the Plan shall materially and adversely impair the rights of any Awardee with respect to an outstanding Award, unless mutually agreed otherwise between the Awardee and the Administrator, which agreement must be in writing and signed by the Awardee and the Company.  Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.  No Shares shall be issued or sold under the Plan after the termination thereof, except upon exercise of an Award granted prior to the termination of the Plan.

 

18.          Legending Share Certificates.  In order to enforce any restrictions imposed upon Shares issued upon the exercise of Options or the acquisition of Restricted Shares, including, without limitations, the restrictions described in Sections 6(l), 6(m), 7(d), and 14(b) hereof, the Administrator may cause a legend or legends to be placed on any share certificates representing the Shares, which legend or legends shall make appropriate reference to the restrictions, including, without limitation, a restriction against sale of the Shares for any period as may be required by Applicable Law.

 

19.          No Retention Rights.  Neither the Plan nor any Award shall confer upon any Awardee any right to continue his or her relationship as a Service Provider with the Company for any period of specific duration or interfere in any way with his or her right or the right of the Company (or any Parent or Subsidiary employing or retaining the Awardee), which rights are hereby expressly reserved by each, to terminate this relationship at any time, with or without cause, and with or without notice.

 

20.          No Registration Rights.  The Company may, but shall not be obligated to, register or qualify the sale of Shares under the Securities Act or any other Applicable Law.  The Company shall not be obligated to take any affirmative action in order to cause the sale of Shares under this Plan to comply with any law.

 

21.          No Trust or Fund Created.  Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Parent or Subsidiary and an Awardee or any other person.  To the extent that any Awardee acquires a right to receive payments from the Company or any Parent or Subsidiary pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company, a Parent, or any Subsidiary.

 

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22.          No Rights to Awards.  No Awardee, eligible Service Provider, or other person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of a Service Provider, Awardee, or holders or beneficiaries of Awards under the Plan.  The terms and conditions of Awards need not be the same with respect to any Awardee or with respect to different Awardees.

 

23.          Language. This document is prepared in English. The Chinese language translation is provided for reference only.  In the event there is any discrepancy between the two versions, the English version shall prevail.

 

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