Document:

ex10-4.htm

Exhibit 10.4

 

THIRD AMENDMENT TO AMENDED AND

 

RESTATED PROMOTIONAL AGREEMENT

 

BETWEEN MARRIOTT REWARDS, LLC

 

AND SKYMALL VENTURES, INC.

 

This Amendment ("Amendment") is entered into as of this 9th day of December, 2011 by and between MARRIOTT REWARDS, LLC ("Marriott Rewards") and SKYMALL VENTURES, INC. "SkyMall").

 

RECITALS

 

	
1.  

	
Marriott Rewards and SkyMall have entered into that certain. Amended and Restated Promotional Agreement effective as of January 1st, 2007 as amended by that certain First Amendment, dated as of April 3rd, 2008 and the Second Amendment, dated as of December, 2010 (the Amended and Restated Promotional Agreement as amended by the First Amendment and the Second Amendment, is herein referred to as the "Promotional Agreement").

 

	
2.  

	
Marriott Rewards and SkyMall desire to extend the terms of the Promotional Agreement and make other amendments thereto as set forth in this Amendment.

 

AGREEMENT

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

	
1.  

	
Definitions. Unless otherwise defined herein, all capitalized terms in this Amendment will have the meaning given to them in the Promotional Agreement.

 

	
2.  

	
Amendments to Promotional Agreement. The Promotional Agreement is hereby amended as set forth below:

 

a. Section 1. REPRESENTATIONS AND WARRANTIES will be amended by inserting the following paragraph at the end of such Section:

 

"Without limiting the foregoing representations and warranties, SkyMall represents, warrants and covenants that its activities pursuant to the Agreement as amended including without limitation its activities related to compilation of lists, solicitation and handling of opt-ins, and opt-outs, and sending of email messages, comply with all applicable law, including, without limitation, the CAN-SPAM Act of 2003. In the event SkyMall has or will obtain an email list(s) from any third party, SkyMall represents, warrants and covenants that it has or will have at the time of its receipt of such email list the legal right to provide such email list(s) to Marriott hereunder and has obtained or will obtain at the time of its receipt of such email list(s) a warranty from the third party that the email list complies with applicable law."

 

	
b.  

	
Section 3 ACCESS TO MARRIOTT /REWARDS DATA will be amended by inserting immediately before Section 3.G. Virus, the following new Section F-1:

 

"F-1 Promotional Emails and Opt in/Opt Out Rights for Marriott Rewards Members.

  

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i. SkyMall will provide capabilities on the SkyMall/Marriott Rewards website (https://www.skymall.com/mr/dept.htm) to enable Marriott Rewards members to opt-in or opt-out of receiving SkyMall email and offers. These capabilities will include the following:

 

	
·

	
An opt-in form on the https://www.skymall.com/mr/dept.htm home page. A design will be created to match the design style of the Marriott Rewards site.

 

	
·

	
An opt-in form on the passenger preferences page of the SkyMall/Marriott Rewards site (2 clicks after a Merchandise search).

 

	
·

	
An opt-in form on the passenger information page (the second to last step of an online purchase of Merchandise)

 

	
·

	
SkyMall may implement sign:-up forms on other. pages and placements to improve visibility to visitors on https://skymall.come/mr/dept.htm subject to first receiving express written permission from Marriott Rewards. https://www.skymall.com/mr/dept.htm

 

	
·

	
Subscribers choosing to unsubscribe to SkyMall emails through the link provided in the co-branded and non co-branded emails will be removed from SkyMall's email list within one (1) business day of opting out.

 

	
ii.  

	
SkyMall will be limited to sending six (6) co-branded emails annually to Marriott Rewards members who opt in to receive emails from SkyMall. Such solicitations must be reviewed and approved in writing by Marriott Rewards in each instance. Marriott Rewards will be given a minimum of five (5) business days for review. SkyMall will be required to provide Marriott Rewards with a list of email addresses exactly three (3) business days prior to the email campaign deployment date. Marriott Rewards will scrub the list against Marriott Rewards' opt-out and suppression files, store it in Marriott Rewards' contact history and provide SkyMall with a clean list reflecting mailing addresses. SkyMall will have three (3) business days to use the clean mailing file to launch the campaign or will be required to submit a new list to be scrubbed. SkyMall will also include a Marriott Rewards and SkyMall "unsubscribe" link in all co-branded emails.

 

	
iii.  

	
All information regarding Marriott Rewards members gathered by SkyMall under the above-referenced opt-in and opt-out process will be considered Marriott Rewards Data and is considered Marriott Rewards Confidential Information under the terms of the Agreement. SkyMall shall not sell or disseminate a list compiled specifically targeting Marriott Rewards members for any products or services, or specifically target Marriott Rewards members for any products or services, except as the parties may mutually agree in writing.

 

	
iv.  

	
Marriott Rewards may withdraw its consent to the email program described in this Section and direct SkyMall to cease such program (including without limitation requesting opt-ins/opt-outs and sending quarterly co-branded and weekly non cobranded emails) by providing sixty (60) days written notice to SkyMall. SkyMall shall cease the email program described in this Section within sixty (60) days after receipt of such written notice from Marriott Rewards members.

 

c. Section 4. Term and Termination is hereby amended as follows:

 

The date "December 31, 2011" in the first sentence of Section 4 is hereby changed to "March 31, 2015."

 

d. Section 6. A. SkyMall's Indemnification of Marriott Rewards  is hereby amended as following:

  

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Clause (i): is hereby changed by deleting such clause and inserting the following in lieu thereof:

 

	
  

	
"(i) SkyMall's performance or non-performance under the terms of this Agreement including , without limitation, any failure of SkyMall to pay all Sales Tax under Section 10 hereof, whether such performance or non-performance is by SkyMall or by or through any contractor, agent, third party used by SkyMall;"

 

e. Section 7. RELATIONSHIP OF THE PARTIES. is hereby amended as follow:

 

	
i)  

	
The second sentence of the Section will be deleted in its entirety and the following inserted in lieu thereof:

 

"Marriott Rewards may forward at its option, inquiries from third parties that wish to offer non-Marriott-branded Merchandise for Marriott-Rewards point redemption to SkyMall, if Marriott Rewards is interested in offering such Merchandise."

 

	
ii)  

	
In the last sentence of Section 7, clause (iii) is amended by deleting such text in its entirety and inserting the following in lieu thereof:

 

"(iii) to establish other merchandise redemption programs with other partners or vendors,"

 

f. Section 10. COOPERATION/SALES TAX. is amended by inserting the following at the end of Section 10:

 

Notwithstanding the foregoing, commencing on October 20, 2011, the previous provisions of Section 10 will not apply and SkyMall will assume responsibility for filing forms and remitting sales taxes in the 50 United States and Puerto Rico, where applicable based on all transactions with Marriott Rewards, regardless of either party's nexus status. SkyMall agrees that it may thereafter be filing in states where SkyMall does not have substantial, nexus or a direct obligation to remit taxes. SkyMall agrees that Marriott Rewards will cease its self-assessment of use tax and related tax form filing on SkyMall transactions in Maryland and Utah on October 20, 2011.

 

g. Section C of EXHIBIT A, Pricing and Invoicing will be amended by inserting the following text immediately after the fourth paragraph:

 

"On October 20, 2011, The pricing of all items on the Marriott Rewards site will change from the current model to a new pricing model wherein the price will be equal to the [**] on such product for the 50 United States plus Puerto Rico plus the [**] United States plus Puerto rounded up to the nearest [**] price point times [**] points. Such calculation to be restated as follows: [**] + [**] for all 50 United States plus Puerto Rico + [**] to all 50 United States plus Puerto Rico = X price, then X price will be rounded up to the nearest [**] dollar price point and multiplied by [**] points. Example: Item is [**]= [**] to [**].

 

Notwithstanding the above pricing calculation, SkyMall will be responsible for calculating and remitting the proper amount of tax due in all 50 United States and Puerto Rico, where applicable, which may be different from the average tax amount included in the pricing model. The average tax rate is to be agreed-upon by both parties and revisited on each anniversary of the Effective Date."

  

[**]Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

  

-3-

  

 

h. Section E of EXHIBIT A, THE PARTIES' OBLIGATIONS is hereby amended as followed:

 

	
i)  

	
The title of Section E is hereby amended by renaming the title of Section E: "Processing of Orders, Replacement, Returns and Guaranties."

 

	
ii)  

	
The following two new paragraphs will be inserted immediately before the final paragraph of Section E:

 

"In arranging for any replacement of Purchased Merchandise, SkyMall will ship replacement items without waiting to receive the replaced Purchased Merchandise from the customer.

 

In addition to any other guaranty provided by SkyMall or any of its vendors, all Marriott Rewards customers will receive a [**] Marriott Rewards customer to enjoy that all Merchandise and services offered will be [**] by a [**] where a customer may arrange for the [**] or [**] of any Merchandise within [**] of the customer's receipt of such Merchandise."

 

i. Section K of EXHIBIT A, Redemption, Promotions and Communications, is hereby amended to add the following sentence at the end of K.12. "For so long as SkyMall has a catalog in development and for six months from the mailing date of such catalog, Marriott agrees that it will not offer online or catalogue Merchandise (as defined in the second Whereas clause hereof as merchandise and tickets offered through the SkyMall website and catalogues) to Marriott Rewards customers located in the United States or Puerto Rico, except through websites and phone numbers relating to such SkyMall catalog."

 

j. Section L of EXHIBIT A, Earnings is hereby amended by amending the chart in such section by deleting it in its entirety and inserting the following in lieu thereof:

 

	
[**] Rewards Points

	
January 1 — December 31, 2008

	
[**] Rewards Points

	
January 1 — December 31, 2009

	
[**] Rewards Points

	
January 1 — December 31, 2010

	
[**] Rewards Points*

	
January 1, 2011 — Termination of agreement

 

*Commencing on October 20, 2011, Rewards Points purchased by SkyMall for non-promotional activities utilized to ameliorate customer service issues based on approval from Marriott Rewards, will be sold by Marriott Rewards to SkyMall for [**] Rewards Points. However, such lower Service Mitigation Price may be increased by Marriott upon 30 days prior written notice."

 

k. Immediately after Section K-A of Exhibit A, insert the following Section K-B:

 

"K-B. Additional Services and Building out of Platform:

 

Commencing on October 20, 2011, SkyMall will effect the following changes to the program:

 

	
A.  

	
The price of each product will include the standardized and [**] for [**] across the continental US, Hawaii, Alaska, and Puerto Rico.

 

	
B.  

	
SkyMall will include in the cost of each product the [**] based on the taxes required to be paid on Merchandise purchases by SkyMall and Marriott Rewards and SkyMall will pay the states for all taxes collected.

  

[**]Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

  

-4-

  

 

	
C.  

	
In lieu of the financial provisions of Section K.12, SkyMall will support all costs associated with a minimum of [**] catalogs annually to Marriott Rewards members that will target [**] of our highest valued members for each mailing (a total of [**] catalogs mailed per year).

 

Commencing on October 20, 2011 with a target completion between July and November 2012, SkyMall will promptly create the following Website and related solutions:

 

	
A.  

	
SkyMall will create a website that permits Marriott Rewards members in the U.S. to purchase Merchandise for cash and points

	
 

B.  

	
 

SkyMall will implement Single Sign on to their current web site from Marketing Systems within Marriott Rewards IR.

 

	
C.  

	
SkyMall will have the option to offer Merchandise to Marriott Rewards members by email subject to the opt-in/opt out policy set forth in Section 3 Al hereof

 

	
D.  

	
SkyMall will offer Merchandise for a combination cash and Rewards points, offering a wide variety of products for purchase including electronics, cameras, house wares, sports related items, luggage, jewelry, watches, music CDs, DVDs, books, and downloads of music singles, albums and collections.

 

	
E.  

	
SkyMall must implement a cash and points calculator that will allow Marriott Rewards members to adjust the amount of points versus cash they are spending for all the Merchandise purchased in a single transaction (i.e. all products that are purchased).

 

	
F.  

	
SkyMall merchandising plan will be reflected on at least a bimonthly update of the SkyMall website with SkyMall's new, unique and most current specials and offerings.

 

Commencing on October 20, 2011 with a target completion between July and November 2012, SkyMall at its own cost and expense will develop and build an experiential portal ("Once In A Lifetime Portal") that will include offering 'Once in a Lifetime' experiences, adventure tours, world-wide tours, as well as concert and sporting event tickets.

 

	
A.  

	
Solution must have interfaces with Concert ticket vendors, display all mutually agreed upon sport and concert facilities in the US .and offer tickets for such events for combinations of Marriott Rewards points and cash.

 

	
B.  

	
Solution must have interfaces with Adventure and City Tour aggregators to provide tours for cash and points.

 

	
C.  

	
Solution should provide members with the ability to support both Green and Charitable Giving programs.

 

	
D.  

	
Solution must have a capability to support online auctions.

 

	
E.  

	
Solution must have a capability to support 'lottery' type functions where members will be allowed to enter a lottery to determine who will win the 'Once in a Lifetime' opportunity.

 

	
F.  

	
The lottery solution needs to ensure the process is meeting all legal guidelines governing such a sweepstakes/lottery solution. The lottery and auction capability will include the ability to process cash and points.

 

	
G.  

	
The auction capability will include the ability to process points received, convert to cash, and allow the member to donate to charitable causes.

 

	
H.  

	
Solution should be integrated with real time points status, reflecting recent debits and credits and require a single sign on.

 

	
I.  

	
Solution should be able to support credits via a nightly batch process.

 

	
J.  

	
Solution must be able to integrate with our internal Brandwork system via web services to pass information on offers and content to the vendor's environment.

 

	
K.  

	
The visual design for the experiential portal may be developed internally by Marriott Rewards' eCommerce group.

 

	
L.  

	
The internal design will be set up with size constraints for placement of content items on the site such that art and content can be developed externally from the vendor and submitted for inclusion on the site.

[**]Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

  

-5-

  

	
M.  

	
Solution must also be able to support content creation for 'Once in a Lifetime' opportunities that are sourced from the vendors rather than from Marriott Rewards.

 

	
N.  

	
Additionally, the vendor must have the capability to support receiving content from external agencies. Manual solutions like email will be acceptable since we will use external agencies less frequently than other sources for 'Once in a Lifetime' Opportunities.

 

	
O.  

	
Website will contain a feed of comments from Marriott Reward members via integration with Marriott Reward's insiders Social Media Blog channel. The integration could leverage the Brandworks or use other communication methods like RSS.

 

	
P.  

	
On Marriott Rewards prior written consent, SkyMall will have the option to have portions of the experiential offering to be built and supported by third parties based on written agreement between such vendor and SkyMall."

 

l. In Exhibit A, Section S [**] will be amended by renaming the section [**] and inserting the following at the end of such section:

 

"The foregoing program for [**] will be modified effective October 20, 2011 and net earnings for the sales period January 1, 2011 through October 19, 2011 using the calculations set forth above will be paid out on or before January 30, 2012.

 

Commencing on October 20, 2011, SkyMall will process Marriott Rewards amounts on the dates set forth in sections x through y below:

 

x) Commencing on October 20, 2011, Marriott Rewards receive from SkyMall a [**] on all [**] of Merchandise and all [**] except for [**] cards) to be allocated as provided in y) below.

 

y) Marriott Rewards [**] will be modified to occur twice yearly as reflected in the chart below:

 

	
Sales Period

	
[**]  Date

	
October 20, 2011- March 31, 2012

	
April 30, 3012

	
April 30, 2012-September 30, 2012

	
October 31, 2012

	
October 1, of 2012 and October 1 of all subsequent years through March 31st of the following year.

	
The end of the month immediately following the month after the Total Sales Period, i.e. April 30.

	
April 1, 2013 and April 1 of all subsequent years through September 30 of such year.

	
The end of the month immediately following the Sales period, i.e. October 31 of such year.

[**]Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

  

  

-6-

  

 

The [**] will be used in part to [**] of SkyMall's Resources used for the operational support of Marriott Rewards' new Once in A Lifetime Portal and Experiential website and [**] for the 'Once in a Lifetime' events that will be offered from time to time to Marriott Rewards members. As used in the preceding sentence, SkyMall Resources shall include (i) all [**]  relating to the operation and support of the Once in a Lifetime Portal and Experiential website, such as [**] to third parties, and (ii) all SkyMall [**] in providing such operational support, including [**] of SkyMall staff, provided that the items in (i) and (ii) are mutually agreed upon in advance by the parties from time to time, and will not include the [**] develop and build the Once in a Lifetime Portal and Experiential website. The parties agree to establish an estimated project to [**] based on expected [**] for the Once in a Lifetime Portal and Experiential website and will endeavor in good faith to manage within such budget. If total [**] amounts exceed the [**] incurred by Marriott Rewards and SkyMall in the development of the Once in A Lifetime Portal and Experiential website, then [**] will be paid by SkyMall to Marriott Rewards as a [**]. SkyMall will deduct the [**] for the SkyMall Resources set forth above and any other amounts only as may be mutually agreed by the parties from time to time (including those for marketing programs other than the Once in a Lifetime Portal and Experiential website such as charity redemptions, ratings and reviews for products and similar items) from the [**] and immediately forward the [**] to Marriott Rewards and will provide Marriott Rewards with [**] and upon Marriott Rewards' request, quarterly accounting for the foregoing. In the event this Agreement is terminated for any reason prior to the end of the then current Term, SkyMall agrees to pay to Marriott Rewards the [**] accruing up to the date of termination within [**] after such termination."

 

	
3.  

	
Full Force and Effect. Except as expressly amended hereby, all terms, conditions and provisions of the Promotional Agreement will be unaffected by this Amendment and will remain in full force and effect, and, the Promotional Agreement as modified by this Amendment, is hereby acknowledged, ratified and confirmed in all respects by the Parties.

 

	
4.  

	
Effective Date of this Amendment.  Although this Agreement is dated as of December 9, 2011, the Parties agree that this Agreement and the amendments contained herein are intended to be and have been in full force and effect as of October 20, 2011.

 

	
5.  

	
Miscellaneous. This Amendment will be governed by the substantive laws of the State of Maryland, without regard to its conflict of law principles.

  

[**]Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

  

-7-

  

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above.

 

	
SKYMALL VENTURES, INC.

 

By:  /s/ Marie Foster

Name:  Marie Foster

Title:  General Manager

	
MARRIOTT REWARDS, LLC

 

By:  /s/ E.R. French

Name:  E.R. French

Title:  SVP, Marriott Rewardsumewf_ex101.htm

EXHIBIT 10.1

 

UMEWORLD LIMITED

2013 SHARE INCENTIVE PLAN

(Adopted by the board of directors on July 1, 2013)

 

ARTICLE 1

 

PURPOSE

 

The purpose of the UMeWorld Limited Share Incentive Plan (the "Plan") is to promote the success and enhance the value of UMeWorld Limited an exempted company formed under the laws of the British Virgin Islands (the "Company") by linking the personal interests of the members of the Board, Employees and Consultants to those of the Company's shareholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to the Company's shareholders. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of members of the Board, Employees and Consultants upon whose judgment, interest, and special effort the successful conduct of the Company's operation is largely dependent.

 

ARTICLE 2

 

DEFINITIONS AND CONSTRUCTION

 

Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise. The singular pronoun shall include the plural where the context so indicates, and vice versa.

 

2.1 "Applicable Laws" means the legal requirements relating to the Plan and the Awards under applicable provisions of the corporate, securities, tax and other laws, rules, regulations and government orders, and the rules of any applicable stock exchange or national market system, of any jurisdiction applicable to Awards.

 

2.2 "Award" means an Option, Restricted Share or Restricted Share Units award granted to a Participant pursuant to the Plan.

 

2.3 "Award Agreement" means any written agreement, contract, or other instrument or document evidencing an Award, including through electronic medium.

 

2.4 "Board" means the board of directors of the Company.

2.5 "Change of Control" means a change in ownership or control of the Company after the Registration Date effected through either of the following transactions:

 

(a) the direct or indirect acquisition by any person or related group of persons (other than an acquisition from or by the Company or by a Company-sponsored employee benefit plan or by a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's shareholders which a majority of the Incumbent Board (as defined below) who are not affiliates or associates of the offeror under Rule 12b-2 promulgated under the Exchange Act do not recommend such shareholders accept; or

 

 

1

 

 

(b) the individuals who, as of the Effective Date, are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least fifty percent (50%) of the Board; provided that if the election, or nomination for election by the Company's shareholders, of any new member of the Board is approved by a vote of at least fifty percent (50%) of the Incumbent Board, such new member of the Board shall be considered as a member of the Incumbent Board.

 

2.6 "Code" means the Internal Revenue Code of 1986 of the United States, as amended.

 

2.7 "Committee" means the committee of the Board described in Article 9.

 

2.8 "Consultant" means any consultant or adviser if: (a) the consultant or adviser renders bona fide services to a Service Recipient; (b) the services rendered by the consultant or adviser are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company's securities; and (c) the consultant or adviser is a natural person who has contracted directly with the Service Recipient to render such services.

 

2.9 "Corporate Transaction" means any of the following transactions, provided, however, that the Committee shall determine under (d) and (e) whether multiple transactions are related, and its determination shall be final, binding and conclusive:

 

(a) an amalgamation, arrangement or consolidation or scheme of arrangement in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the jurisdiction in which the Company is incorporated;

 

(b) the sale, transfer or other disposition of all or substantially all of the assets of the Company;

 

(c) the complete liquidation or dissolution of the Company;

 

(d) any reverse takeover or series of related transactions culminating in a reverse takeover (including, but not limited to, a tender offer followed by a reverse takeover) in which the Company is the surviving entity but (A) the equity securities of the Company outstanding immediately prior to such takeover are converted or exchanged by virtue of the takeover into other property, whether in the form of securities, cash or otherwise, or (B) in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such takeover or the initial transaction culminating in such takeover, but excluding any such transaction or series of related transactions that the Committee determines shall not be a Corporate Transaction; or

(e) acquisition in a single or series of related transactions by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities but excluding any such transaction or series of related transactions that the Committee determines shall not be a Corporate Transaction.

 

 

2

 

 

2.10 "Disability" means that the Participant qualifies to receive long-term disability payments under the Service Recipient's long-term disability insurance program, as it may be amended from time to time, to which the Participant provides services regardless of whether the Participant is covered by such policy. If the Service Recipient to which the Participant provides service does not have a long-term disability plan in place, "Disability" means that a Participant is unable to carry out the responsibilities and functions of the position held by the Participant by reason of any medically determinable physical or mental impairment for a period of not less than ninety (90) consecutive days. A Participant will not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Committee in its discretion.

 

2.11 "Effective Date" shall have the meaning set forth in Section 10.1.

 

2.12 "Employee" means any person, including an officer or member of the Board of the Company or any Parent or Subsidiary of the Company, who is in the employment of a Service Recipient, subject to the control and direction of the Service Recipient as to both the work to be performed and the manner and method of performance. The payment of a director's fee by a Service Recipient shall not be sufficient to constitute "employment" by the Service Recipient.

 

2.13 "Exchange Act" means the Securities Exchange Act of 1934 of the United States, as amended.

 

2.14 "Fair Market Value" means, as of any date, the value of Shares determined as follows:

 

(a) If the Shares are listed on one or more established stock exchanges or national market systems, including without limitation, The New York Stock Exchange, its Fair Market Value shall be the closing sales price for such shares (or the closing bid, if no sales were reported) as quoted on the principal exchange or system on which the Shares are listed (as determined by the Committee) on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported in The Wall Street Journal or such other source as the Committee deems reliable;

 

(b) If the Shares are regularly quoted on an automated quotation system (including the OTC Markets) or by a recognized securities dealer, its Fair Market Value shall be the closing sales price for such shares as quoted on such system or by such securities dealer on the date of determination, but if selling prices are not reported, the Fair Market Value of a Share shall be the mean between the high bid and low asked prices for the Shares on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such other source as the Committee deems reliable; or

(c) In the absence of an established market for the Shares of the type described in (a) and (b), above, the Fair Market Value thereof shall be determined by the Committee in good faith and in its discretion by reference to (i) the placing price of the latest private placement of the Shares and the development of the Company's business operations and the general economic and market conditions since such latest private placement, (ii) other third party transactions involving the Shares and the development of the Company's business operation and the general economic and market conditions since such sale, (iii) an independent valuation of the Shares, or (iv) such other methodologies or information as the Committee determines to be indicative of Fair Market Value and relevant.

 

2.15 "Incentive Share Option" means an Option that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto.

 

 

3

 

 

2.16 "Independent Director" means (i) before the Shares or other securities representing the Shares are listed on a stock exchange, a member of the Board who is not an Employee of the Company; and (ii) after the Shares or other securities representing the Shares are listed on a stock exchange, a member of the Board who meets the independence standards under the applicable corporate governance rules of such stock exchange.

 

2.17 "Non-Qualified Share Option" means an Option that is not intended to be an Incentive Share Option.

 

2.18 "Option" means a right granted to a Participant pursuant to Article 5 of the Plan to purchase a specified number of Shares at a specified price during specified time periods. An Option may be either an Incentive Share Option or a Non-Qualified Share Option.

 

2.19 "Participant" means a person who, as a member of the Board, Consultant or Employee, has been granted an Award pursuant to the Plan.

 

2.20 "Parent" means a parent corporation under Section 424(e) of the Code.

 

2.21 "Plan" means this UMeWorld Limited 2013 Share Incentive Plan, as it may be amended from time to time.

 

2.22 "Related Entity" means any business, corporation, partnership, limited liability company or other entity in which the Company or a Parent or Subsidiary of the Company holds a substantial ownership interest, directly or indirectly, but which is not a Subsidiary and which the Board designates as a Related Entity for purposes of the Plan.

 

2.23 "Restricted Share" means a Share awarded to a Participant pursuant to Article 6 that is subject to certain restrictions and may be subject to risk of forfeiture.

 

2.24 "Restricted Share Unit" means the right granted to a Participant pursuant to Article 6 to receive a Share at a future date.

 

2.25 "Securities Act" means the Securities Act of 1933 of the United States, as amended.

2.26 "Service Recipient" means the Company, any Parent or Subsidiary of the Company and any Related Entity to which a Participant provides services as an Employee, a Consultant or a Director.

 

2.27 "Share" means the Ordinary Shares of the Company, par value $0.001 per share, and such other securities of the Company that may be substituted for Shares pursuant to Article 8.

 

2.28 "Subsidiary" means any corporation or other entity of which a majority of the outstanding voting shares or voting power is beneficially owned directly or indirectly by the Company. For purposes of this Plan, Subsidiary shall also include any consolidated variable interest entities and subsidiaries of the consolidated variable interest entities of the Company.

 

2.29 "Trading Date" means the closing of the first sale to the general public of the Shares pursuant to an effective registration statement under applicable laws, which results in the Shares being publicly traded on one or more established stock exchanges or national market systems.

 

 

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ARTICLE 3

SHARES SUBJECT TO THE PLAN

 

3.1 Number of Shares.

 

(a) Subject to the provisions of Article 8 and Section 3.1(b), the maximum aggregate number of Shares which may be issued pursuant to all Awards (including Incentive Share Options) is 17,000,000 Shares.

 

(b) To the extent that an Award terminates, expires, or lapses for any reason, any Shares subject to the Award shall again be available for the grant of an Award pursuant to the Plan. To the extent permitted by Applicable Laws, Shares issued in assumption of, or in substitution for, any outstanding awards of any entity acquired in any form or combination by the Company or any Parent or Subsidiary of the Company shall not be counted against Shares available for grant pursuant to the Plan. Shares delivered by the Participant or withheld by the Company upon the exercise of any Award under the Plan, in payment of the exercise price thereof or tax withholding thereon, may again be optioned, granted or awarded hereunder, subject to the limitations of Section 3.1(a). Notwithstanding the provisions of this Section 3.1(b), no Shares may again be optioned, granted or awarded if such action would cause an Incentive Share Option to fail to qualify as an incentive share option under Section 422 of the Code.

 

3.2 Shares Distributed. Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares, treasury shares (if permitted by Applicable Laws after the date hereof) or Shares purchased on the open market. Additionally, in the discretion of the Committee, American Depository Shares in an amount equal to the number of Shares which otherwise would be distributed pursuant to an Award may be distributed in lieu of Shares in settlement of any Award. If the number of Shares represented by an American Depository Share is other than on a one-to-one basis, the limitations of Section 3.1 shall be adjusted to reflect the distribution of American Depository Shares in lieu of Shares.

ARTICLE 4

 

ELIGIBILITY AND PARTICIPATION

 

4.1 Eligibility. Persons eligible to participate in this Plan include Employees, Consultants, and all members of the Board, as determined by the Committee.

 

4.2 Participation. Subject to the provisions of the Plan, the Committee may, from time to time, select from among all eligible individuals, those to whom Awards shall be granted and shall determine the nature and amount of each Award. No individual shall have any automatic right to be granted an Award pursuant to this Plan.

 

4.3 Jurisdictions. In order to assure the viability of Awards granted to Participants employed in various jurisdictions, the Committee may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy, or custom applicable in the jurisdiction in which the Participant resides or is employed. Moreover, the Committee may approve such supplements to, or amendments, restatements, or alternative versions of, the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any other purpose; provided, however, that no such supplements, amendments, restatements, or alternative versions shall increase the share limitations contained in Section 3.1 of the Plan. Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate any Applicable Laws.

 

 

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ARTICLE 5

 

OPTIONS

 

5.1 General. Subject to Article 9, the Committee is authorized to grant Options to Participants on the following terms and conditions:

 

(a) Exercise Price. The exercise price per Share subject to an Option shall be determined by the Committee and set forth in the Award Agreement and may be a fixed or variable price related to the Fair Market Value of the Shares. The exercise price per Share subject to an Option may be amended or adjusted in the absolute discretion of the Committee, the determination of which shall be final, binding and conclusive, provided that such price shall not be lower than the par value of the Shares. For the avoidance of doubt, to the extent not prohibited by Applicable Laws, 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 Participants.

 

(b) Time and Conditions of Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or in part, including exercise prior to vesting; provided that the term of any Option granted under the Plan shall not exceed ten years, except as provided in Section 11.1. The Committee shall also determine the conditions, if any, that must be satisfied before all or part of an Option may be exercised.

(c) Payment. The Committee shall determine the methods by which the exercise price of an Option may be paid, the form of payment, including, without limitation (i) cash or check denominated in U.S. Dollars, (ii) to the extent permissible under the Applicable Laws, cash or check in Chinese Renminbi, (iii) cash or check denominated in any other local currency as approved by the Committee, (iv) Shares held for such period of time as may be required by the Committee in order to avoid adverse financial accounting consequences and having a Fair Market Value on the date of delivery equal to the aggregate exercise price of the Option or exercised portion thereof, (v) after the Trading Date the delivery of a notice that the Participant has placed a market sell order with a broker with respect to Shares then issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the Option exercise price; provided that payment of such proceeds is then made to the Company upon settlement of such sale, (vi) other property acceptable to the Committee with a Fair Market Value equal to the exercise price, (vii) cashless exercise; or (viii) any combination of the foregoing. Notwithstanding any other provision of the Plan to the contrary, no Participant who is a member of the Board or an "executive officer" of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to pay the exercise price of an Option in any method which would violate Section 13(k) of the Exchange Act.

 

(d) Evidence of Grant. All Options shall be evidenced by an Award Agreement between the Company and the Participant. The Award Agreement shall include such additional provisions as may be specified by the Committee.

 

5.2 Incentive Share Options. Incentive Share Options may be granted to Employees of the Company or of a Parent or Subsidiary of the Company. Incentive Share Options may not be granted to Employees of a Related Entity or to Independent Directors or Consultants. The terms of any Incentive Share Options granted pursuant to the Plan, in addition to the requirements of Section 5.1, must comply with the following additional provisions of this Section 5.2:

 

 

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(a) Expiration of Option. An Incentive Share Option may not be exercised to any extent by anyone after the first to occur of the following events:

 

(i) Ten years from the date it is granted, unless an earlier time is set in the Award Agreement;

 

(ii) Three months after the Participant's termination of employment as an Employee; and

 

(iii) Upon the Participant's Disability or death, subject to Sections 7.2 and 7.3.

 

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

 

(c) Ten Percent Owners. An Incentive Share Option shall be granted to any individual who, at the date of grant, owns Shares possessing more than ten percent of the total combined voting power of all classes of shares of the Company only if such Option is granted at a price that is not less than 110% of Fair Market Value on the date of grant and the Option is exercisable for no more than five years from the date of grant.

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

 

(e) Expiration of Incentive Share Options. No Award of an Incentive Share Option may be made pursuant to this Plan after the tenth anniversary of the Effective Date.

 

(f) Right to Exercise. During a Participant's lifetime, an Incentive Share Option may be exercised only by the Participant.

 

 

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ARTICLE 6

 

RESTRICTED SHARES

 

6.1 Grant of Restricted Shares. Subject to Article 9, the Committee is authorized to make Awards of Restricted Shares to any Participant selected by the Committee in such amounts and subject to such terms and conditions as determined by the Committee. All Awards of Restricted Shares shall be evidenced by an Award Agreement.

 

6.2 Issuance and Restrictions. Restricted Shares shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, without limitation, limitations on the right to vote Restricted Shares or the right to receive dividends on the Restricted Share). These restrictions may lapse separately or in combination at such times, pursuant to such circumstances, in such installments, or otherwise, as the Committee determines at the time of the grant of the Award or thereafter.

 

6.3 Forfeiture/Repurchase. Except as otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon termination of employment or service during the applicable restriction period, Restricted Shares that are at that time subject to restrictions shall be forfeited or repurchased in accordance with the Award Agreement; provided, however, the Committee may (a) provide in any Restricted Share Award Agreement that restrictions or forfeiture and repurchase conditions relating to Restricted Shares will be waived in whole or in part in the event of terminations resulting from specified causes, and (b) in other cases waive in whole or in part restrictions or forfeiture and repurchase conditions relating to Restricted Shares.

 

6.4 Certificates for Restricted Shares. Restricted Shares granted pursuant to the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing Restricted Shares are registered in the name of the Participant, certificates must bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Shares, and the Company may, at its discretion, retain physical possession of the certificate until such time as all applicable restrictions lapse.

 

6.5 Restricted Share Units. The Committee is authorized to make Awards of Restricted Share Units to any Participant selected by the Committee in such amounts and subject to such terms and conditions as determined by the Committee. At the time of grant, the Committee shall specify the date or dates on which the Restricted Share Units shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it deems appropriate. At the time of grant, the Committee shall specify the maturity date applicable to each grant of Restricted Share Units which shall be no earlier than the vesting date or dates of the Award and may be determined at the election of the grantee. On the maturity date, the Company shall, subject to Sections 7.4 and 7.5, transfer to the Participant one unrestricted, fully transferable Share for each Restricted Share Unit scheduled to be paid out on such date and not previously forfeited.

 

 

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ARTICLE 7

 

PROVISIONS APPLICABLE TO AWARDS

 

7.1 Award Agreement. Awards under the Plan shall be evidenced by Award Agreements that set forth the terms, conditions and limitations for each Award which may include the term of an Award, the provisions applicable in the event the Participant's employment or service terminates, and the Company's authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an Award.

 

7.2 Limits on Transfer. No right or interest of a Participant in any Award may be pledged, encumbered, or hypothecated to or in favor of any party other than the Company or a Subsidiary, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Company or a Subsidiary. Except as otherwise provided by the Committee, no Award shall be assigned, transferred, or otherwise disposed of by a Participant other than by will or the laws of descent and distribution. The Committee by express provision in the Award or an amendment thereto may permit an Award (other than an Incentive Share Option) to be transferred to, exercised by and paid to certain persons or entities related to the Participant, including but not limited to members of the Participant's family, charitable institutions, or trusts or other entities whose beneficiaries or beneficial owners are members of the Participant's family and/or charitable institutions, or to such other persons or entities as may be expressly approved by the Committee, pursuant to such conditions and procedures as the Committee may establish. Any permitted transfer shall be subject to the following conditions: that (a) the Committee receive evidence satisfactory to it that the transfer is being made for asset protection, estate and/or tax planning purposes (or to a "blind trust" in connection with the Participant's termination of employment or service with the Company or a Subsidiary to assume a position with a governmental, charitable, educational or similar non-profit institution) and on a basis consistent with the Company's lawful issue of securities, and (b) after the transfer, the Participant and the transferee comply with all of the original agreements and covenants granted by the Participant in favor of the Company.

 

7.3 Beneficiaries. If the Committee so determines, then notwithstanding Sections 5.2(a) and 7.2, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant's death. A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee. If the Participant is married and resides in a community property state, a designation of a person other than the Participant's spouse as his or her beneficiary with respect to more than 50% of the Participant's interest in the Award shall not be effective without the prior written consent of the Participant's spouse. If no beneficiary has been designated or survives the Participant, payment shall be made to the person entitled thereto pursuant to the Participant's will or the laws of descent and distribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is filed with the Committee.

7.4 Share Certificates. Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing the Share pursuant to the exercise of any Award, unless and until the Committee has determined, with advice of counsel, that the issuance and delivery of such certificates is in compliance with all Applicable Laws, including, if applicable, the requirements of any exchange on which the Shares or securities representing the Shares are listed, quoted or traded. All Share certificates delivered pursuant to the Plan are subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with all Applicable Laws, including, if applicable, the rules of any national securities exchange or automated quotation system on which the Shares or securities representing the Shares are listed, quoted, or traded. The Committee may place legends on any Share certificate to reference restrictions applicable to the Shares. In addition to the terms and conditions provided herein, the Committee may require that a Participant make such reasonable covenants, agreements, and representations as the Committee, in its discretion, deems advisable in order to comply with any such laws, regulations, or requirements. The Committee shall have the right to require any Participant to comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including a window-period limitation, as may be imposed in the discretion of the Committee.

 

 

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7.5 Paperless Administration. Subject to Applicable Laws, the Committee may make Awards, provide applicable disclosure and procedures for exercise of Awards by an internet website or interactive voice response system for the paperless administration of Awards.

 

7.6 Foreign Currency. A Participant may be required to provide evidence that any currency used to pay the exercise price of any Award were acquired and taken out of the jurisdiction in which the Participant resides in accordance with Applicable Laws, including foreign exchange control laws and regulations. In the event the exercise price for an Award is paid in Chinese Renminbi or other foreign currency, as permitted by the Committee, the amount payable will be determined by conversion from U.S. dollars at the official rate promulgated by the People's Bank of China for Chinese Renminbi, or for jurisdictions other than the Peoples Republic of China, the exchange rate as selected by the Committee on the date of exercise.

 

ARTICLE 8

 

CHANGES IN CAPITAL STRUCTURE

 

8.1 Adjustments. In the event of any share dividend, share split, combination or exchange of Shares, amalgamation, arrangement or consolidation, spin-off, recapitalization or other distribution (other than normal cash dividends) of Company assets to its shareholders, or any other change affecting the Shares or the price of a Share, the Committee shall make such proportionate adjustments, if any, as the Committee in its discretion may deem appropriate to reflect such change with respect to (a) the aggregate number and type of shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Section 3.1); (b) the terms and conditions of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); and (c) the grant or exercise price per share for any outstanding Awards under the Plan.

8.2 Acceleration upon a Change of Control. Except as may otherwise be provided in any Award Agreement or any other written agreement entered into by and between the Company and a Participant, if a Change of Control occurs and a Participant's Awards are not converted, assumed, or replaced by a successor, such Awards shall become fully exercisable and all forfeiture restrictions on such Awards shall lapse. Upon, or in anticipation of, a Change of Control, the Committee 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 Participant the right to exercise such Awards during a period of time as the Committee shall determine, (ii) either 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 or realization of the Participant's rights had such Award been currently exercisable or payable or fully vested (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 or realization of the Participant' s rights, then such Award may be terminated by the Company without payment), (iii) the replacement of such Award with other rights or property selected by the Committee 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 Awards in cash based on the value of Shares on the date of the Change of Control plus reasonable interest on the Award through the date 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.

 

8.3 Outstanding Awards – Corporate Transactions. In the event of a Corporate Transaction, each Award will terminate upon the consummation of the Corporate Transaction, unless the Award is assumed by the successor entity or Parent thereof in connection with the Corporate Transaction. Except as provided otherwise in an individual Award Agreement, in the event of a Corporate Transaction and:

 

 

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(a) the Award either is (x) assumed by the successor entity or Parent thereof or replaced with a comparable Award (as determined by the Committee) with respect to shares of the capital stock of the successor entity or Parent thereof or (y) replaced with a cash incentive program of the successor entity which preserves the compensation element of such Award existing at the time of the Corporate Transaction and provides for subsequent payout in accordance with the same vesting schedule applicable to such Award, then such Award (if assumed), the replacement Award (if replaced), or the cash incentive program automatically shall become fully vested, exercisable and payable and be released from any restrictions on transfer (other than transfer restrictions applicable to Options) and repurchase or forfeiture rights, immediately upon termination of the Participant's employment or service with all Service Recipient within twelve (12) months of the Corporate Transaction without cause; and

 

(b) For each Award that is neither assumed nor replaced, such portion of the Award shall automatically become fully vested and exercisable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at Fair Market Value) for all of the Shares at the time represented by such portion of the Award, immediately prior to the specified effective date of such Corporate Transaction, provided that the Participant remains an Employee, Consultant or Director on the effective date of the Corporate Transaction.

8.4 Outstanding Awards – Other Changes. In the event of any other change in the capitalization of the Company or corporate change other than those specifically referred to in this Article 8, the Committee may, in its absolute discretion, make such adjustments in the number and class of shares subject to Awards outstanding on the date on which such change occurs and in the per share grant or exercise price of each Award as the Committee may consider appropriate to prevent dilution or enlargement of rights.

 

8.5 No Other Rights. Except as expressly provided in the Plan, no Participant shall have any rights by reason of any subdivision or consolidation of Shares of any class, the payment of any dividend, any increase or decrease in the number of shares of any class or any dissolution, liquidation, merger, or consolidation of the Company or any other corporation. Except as expressly provided in the Plan or pursuant to action of the Committee under the Plan, no issuance by the Company of shares of any class, or securities convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of shares subject to an Award or the grant or exercise price of any Award.

 

ARTICLE 9

 

ADMINISTRATION

 

9.1 Committee. The Plan shall be administered by the Board or the Compensation Committee of the Board; provided, however that the Board or the Compensation Committee may delegate to a committee of one or more members of the Board the authority to grant or amend Awards to Participants other than senior executives of the Company. The Committee shall consist of at least two individuals, each of whom qualifies as an Independent Director. Reference to the Committee shall refer to the Board if the Compensation Committee has not been established or ceases to exist and the Board does not appoint a successor Committee. Notwithstanding the foregoing, the full Board, acting by majority of its members in office, shall conduct the general administration of the Plan if required by Applicable Laws, and with respect to Awards granted to Independent Directors and for purposes of such Awards the term "Committee" as used in the Plan shall be deemed to refer to the Board.

 

 

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9.2 Action by the Committee. A majority of the Committee shall constitute a quorum. The acts of a majority of the members present at any meeting at which a quorum is present, and acts approved in writing by a majority of the Committee in lieu of a meeting, shall be deemed the acts of the Committee. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Subsidiary, the Company's independent certified public accountants, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan.

 

9.3 Authority of the Committee. Subject to any specific designation in the Plan, the Committee has the exclusive power, authority and discretion to:

 

(a) Designate Participants to receive Awards;

 

(b) Determine the type or types of Awards to be granted to each Participant;

 

(c) Determine the number of Awards to be granted and the number of Shares to which an Award will relate;

(d) Determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the exercise price, grant price, or purchase price, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, any provisions related to non-competition and recapture of gain on an Award, based in each case on such considerations as the Committee in its sole discretion determines;

 

(e) Determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise price of an Award may be paid in, cash, Shares, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;

 

(f) Prescribe the form of each Award Agreement, which need not be identical for each Participant;

 

(g) Decide all other matters that must be determined in connection with an Award;

 

(h) Establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan;

 

(i) Interpret the terms of, and any matter arising pursuant to, the Plan or any Award Agreement; and

 

(j) Make all other decisions and determinations that may be required pursuant to the Plan or as the Committee deems necessary or advisable to administer the Plan.

 

9.4 Decisions Binding. The Committee's interpretation of the Plan, any Awards granted pursuant to the Plan, any Award Agreement and all decisions and determinations by the Committee with respect to the Plan are final, binding, and conclusive on all parties.

 

 

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ARTICLE 10

 

EFFECTIVE AND EXPIRATION DATE

 

10.1 Effective Date. The Plan is effective as of the date the Plan is approved by the Company's shareholders in accordance with the applicable provisions of the Company's Memorandum of Association and Articles of Association (the "Effective Date").

 

10.2 Expiration Date. The Plan will expire on, and no Award may be granted pursuant to the Plan after, the tenth anniversary of the Effective Date. Any Awards that are outstanding on the tenth anniversary of the Effective Date shall remain in force according to the terms of the Plan and the applicable Award Agreement.

ARTICLE 11

 

AMENDMENT, MODIFICATION, AND TERMINATION

 

11.1 Amendment, Modification, And Termination. With the approval of the Board, at any time and from time to time, the Committee may terminate, amend or modify the Plan; provided, however, that (a) to the extent necessary and desirable to comply with Applicable Laws, the Company shall obtain shareholder approval of any Plan amendment in such a manner and to such a degree as required, unless the Company decides to follow home country practice as permitted under applicable stock exchange rules, and (b) unless the Company decides to follow home country practice as permitted under applicable stock exchange rules, shareholder approval is required for any amendment to the Plan that (i) increases the number of Shares available under the Plan (other than any adjustment as provided by Article 8), (ii) permits the Committee to extend the term of the Plan or the exercise period for an Option beyond ten years from the date of grant, or (iii) results in a material increase in benefits or a change in eligibility requirements.

 

11.2 Awards Previously Granted. Except with respect to amendments made pursuant to Section 11.1, no termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted pursuant to the Plan without the prior written consent of the Participant.

 

ARTICLE 12

 

GENERAL PROVISIONS

 

12.1 No Rights to Awards. No Participant, employee, or other person shall have any claim to be granted any Award pursuant to the Plan, and neither the Company nor the Committee is obligated to treat Participants, employees, and other persons uniformly.

 

12.2 No Shareholders Rights. No Award gives the Participant any of the rights of a Shareholder of the Company unless and until Shares are in fact issued to such person in connection with such Award.

 

 

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12.3 Taxes. No Shares shall be delivered under the Plan to any Participant until such Participant has made arrangements acceptable to the Committee for the satisfaction of any income and employment tax withholding obligations under Applicable Laws. The Company or any Subsidiary shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy all applicable taxes (including the Participant's payroll tax obligations) required or permitted by law to be withheld with respect to any taxable event concerning a Participant arising as a result of this Plan. The Committee may in its discretion and in satisfaction of the foregoing requirement allow a Participant to elect to have the Company withhold Shares otherwise issuable under an Award (or allow the return of Shares) having a Fair Market Value equal to the sums required to be withheld. Notwithstanding any other provision of the Plan, the number of Shares which may be withheld with respect to the issuance, vesting, exercise or payment of any Award (or which may be repurchased from the Participant of such Award after such Shares were acquired by the Participant from the Company) in order to satisfy the Participant's income and payroll tax liabilities with respect to the issuance, vesting, exercise or payment of the Award shall, unless specifically approved by the Committee, be limited to the number of Shares which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates for income tax and payroll tax purposes that are applicable to such supplemental taxable income.

 

12.4 No Right to Employment or Services. Nothing in the Plan or any Award Agreement shall interfere with or limit in any way the right of the Service Recipient to terminate any Participant's employment or services at any time, nor confer upon any Participant any right to continue in the employment or service of any Service Recipient.

12.5 Unfunded Status of Awards. The Plan is intended to be an "unfunded" plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general creditor of the Company or any Subsidiary.

 

12.6 Indemnification. To the extent allowable pursuant to Applicable Laws, each member of the Committee or of the Board shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided that he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Company's Memorandum of Association and Articles of Association, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

 

12.7 Relationship to other Benefits. No payment pursuant to the Plan shall be taken into account in determining any benefits pursuant to any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.

 

12.8 Expenses. The expenses of administering the Plan shall be borne by the Company and its Subsidiaries.

 

12.9 Titles and Headings. The titles and headings of the Sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.

 

12.10 Fractional Shares. No fractional shares of a Share shall be issued and the Committee shall determine, in its discretion, whether cash shall be given in lieu of fractional shares or whether such fractional shares shall be eliminated by rounding up or down as appropriate.

 

 

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12.11 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan, the Plan, and any Award granted or awarded to any Participant who is then subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by Applicable Laws, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

12.12 Government and Other Regulations. The obligation of the Company to make payment of awards in Shares or otherwise shall be subject to all Applicable Laws and to such approvals by government agencies as may be required. The Company shall be under no obligation to register any of the Shares paid pursuant to the Plan under the Securities Act or any other similar law in any applicable jurisdiction. If the Shares paid pursuant to the Plan may in certain circumstances be exempt from registration pursuant to the Securities Act or other Applicable Laws, the Company may restrict the transfer of such shares in such manner as it deems advisable to ensure the availability of any such exemption.

 

12.13 Governing Law; Dispute Resolution. The Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the British Virgin Islands. Any dispute, controversy or claim arising out of or relating to the Plan and all Award Agreements, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the UNCITRAL Arbitration Rules as at present in force and as may be amended by the rest of this Section 12.13. The appointing authority shall be Hong Kong International Arbitration Centre. The place of arbitration shall be in Hong Kong at Hong Kong International Arbitration Centre. There shall be only one arbitrator. The language to be used in the arbitral proceedings shall be English.

 

12.14 Section 409A of the Code. To the extent that the Committee determines that any Award granted under the Plan is or may become subject to Section 409A of the Code, the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A of the Code. To the extent applicable, the Plan and the Award Agreements shall be interpreted in accordance with Section 409A of the Code and the U.S. Department of Treasury regulations and other interpretative guidance issued thereunder, including without limitation any such regulation or other guidance that may be issued after the Effective Date. Notwithstanding any provision of the Plan to the contrary, in the event that following the Effective Date the Committee determines that any Award may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the Effective Date), the Committee may adopt such amendments to the Plan and the applicable Award agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (a) exempt the Award from Section 409A of the Code and /or preserve the intended tax treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Section 409A of the Code and related U.S. Department of Treasury guidance.

 

12.15 Appendices. The Committee may approve such supplements, amendments or appendices to the Plan as it may consider necessary or appropriate for purposes of compliance with Applicable Laws or otherwise and such supplements, amendments or appendices shall be considered a part of the Plan; provided, however, that no such supplements shall increase the share limitations contained in Section 3.1 of the Plan.

 

I hereby certify that the foregoing Plan was duly approved and adopted by the Board on July 1, 2013.

 

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	 	Chief Executive Officer	 
	 	 	 

  

15

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