Document:

Exhibit 4.23

 

 

Deposit Pledge Agreement

 

 

CITIC Bank International (China) Co., Ltd.

Execution Date: August 13, 2012

 

 

Table of Contents

 

	
Clause
    	
 
    	
Title
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1.
    	
 
    	
DEFINITIONS AND INTERPRETATION
    	
 
    	
2
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.
    	
 
    	
PLEDGE
    	
 
    	
3
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
3.
    	
 
    	
DELIVERY OF DEPOSIT, NOTICE, APPROVAL, AND   REGISTRATION
    	
 
    	
3
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
4.
    	
 
    	
REPRESENTATIONS AND WARRANTIES
    	
 
    	
4
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
5.
    	
 
    	
COVENANTS
    	
 
    	
4
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
6.
    	
 
    	
EUNFORCEMENT OF THE PLEDGE
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
7.
    	
 
    	
AUTHORIZATION
    	
 
    	
6
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
8.
    	
 
    	
FEES AND EXPENSES
    	
 
    	
6
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
9.
    	
 
    	
INDEPENDENCE OF THE PLEDGE
    	
 
    	
6
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
10.
    	
 
    	
RELEASE OF THE PLEDGE
    	
 
    	
7
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
11.
    	
 
    	
TRANSFER
    	
 
    	
7
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
12.
    	
 
    	
CHANGED CIRCUMSTANCES
    	
 
    	
8
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
13.
    	
 
    	
NOTICE
    	
 
    	
8
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
14.
    	
 
    	
GOVERNING LAW AND LEGAL JURISDICTION
    	
 
    	
8
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
15.
    	
 
    	
EFFECTIVENESS
    	
 
    	
9
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
16.
    	
 
    	
MISCELLANEOUS
    	
 
    	
9
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Signature Page
    	
 
    	
10
    
	
 
    	
 
    	
 
    
	
Schedule 1: Notices and   confirmation letter format
    	
 
    	
11
    

 

1

 

This Agreement is entered into on August 13th, 2012 by and between:

 

	
(1)
    	
Pledgor:
    	
Bona   Film Group Co., Ltd
    
	
 
    	
 
    	
 
    
	
 
    	
Register   No.:
    	
110105005884880
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    	
Suite 1863/65,   Poly Plaza, No.14 Dongzhimen South Street, Dongcheng District, Beijing, PRC
    
	
 
    	
 
    	
 
    
	
(2)
    	
Pledgee:
    	
CITIC   Bank International (China) Co., Ltd.
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    	
Units   1101-1103, China Resources Building, 5001 Shennan East Road, Luohu District,   Shenzhen, PRC
    

 

WHEREAS:

 

1.              The Pledgee agreed to provide to the Pledgor (as the applicant under a standby letter of credit issuing agreement, also the “Borrower”) a banking facility in an aggregate principal amount of up to one hundred million Renminbi (RMB 100,000,000) (the “Facility”), and concluded an opening standby letter of credit issuing agreement (the “Master Agreement”) numbered CBI2012/W015L;

 

2.              As a precondition for the Facility, the Pledgor shall enter into this Agreement to pledge the Secured Property as defined in this Agreement to the Pledgee in order to secure the Facility.

 

IT IS AGREED as follows:

 

1.              DEFINITIONS AND INTERPRETATION

 

1.1       In this Agreement, terms defined in the Master Agreement shall, unless to the extent that the context requires otherwise in this Agreement, have the same meanings when used in this Agreement or be interpreted in the same ways.

 

In this Agreement, the meaning of following terms is as follows:

 

“Pledged Deposit” means the deposit opened at the Beijing branch of CITIC Bank International (China) Co., Ltd. by the Pledgor, and the deposit opened from time to time by Pledgor pursuant to the Master Agreement at the request of the Pledgee, which shall be pledged to the Pledgee as the security for the Facility (see Schedule 1);

 

2

 

“Secured Property” means the funds that the Pledgor owns or will own under the Pledged Deposit, including the principal, interest, and any rights and interests related to the Pledged Deposit;

 

“Secured Obligations” means all the funds that the Borrower and the Pledgor should pay to the Pledgee under this Agreement and the Master Agreement (including any revision and/or supplement thereto in the future), including but not limited to the principal, interest, default penalty, liquidated damages, damages and the expenses to realize the creditor rights (including but not limited to attorney fees and court costs).

 

1.2       In this Agreement, except to the extent that the context requires otherwise, (1) any term referring to laws or regulations, shall be interpreted as referring to the provisions as from time to time replaced, revised, modified or reenacted; (2) the singular includes the plural, and vice versa; one of the speeches of a word includes all kinds of speeches; (3) any term referring to agreements or any other documents, shall be interpreted as referring to the agreements and documents as from time to time revised, supplemented, amended or updated; (4) Unless indicated otherwise, any term referring to terms and schedules, shall be interpreted as referring to the terms and schedules under this Agreement, and any term referring to this Agreement shall be interpreted as involving the schedules.

 

2.              PLEDGE

 

2.1       The Pledgor hereby agrees to pledge the Pledged Property to the Pledgee as security for the timely performance of the Secured Obligations and other obligations and responsibilities under the Master Agreement and this Agreement. The Pledgor shall open new deposit from time to time pursuant to the Master Agreement and upon the request of the Pledgee, these newly opened deposits shall also become Secured Property.

 

2.2       The pledge under this Agreement is a continuing security, and will be fully effective until the Secured Obligations have been paid in full.

 

2.3       The Pledgee shall not, in derogation of the pledge under this Agreement, undertake any obligations or liabilities in respect of the Pledged Deposit in any circumstances,.

 

3.              DELIVERY OF DEPOSIT, NOTICE, APPROVAL, AND REGISTRATION

 

3.1       After the execution of this Agreement, the Pledgor shall deliver the original Pledged Deposit to the Pledgee.

 

3.2       After the execution of this Agreement, whenever opening a deposit, the Pledgor

 

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shall send a written pledge confirmation in the form as listed in Schedule 1 to the opening bank, and provide a written pledge confirmation letter in the form as set forth in Schedule 1 which shall be executed by the opening bank to confirm for the Pledgee that the opening bank agrees with the pledge under this Agreement and will abide by the notice.

 

4.     REPRESENTATIONS AND WARRANTIES

 

The Pledgor makes the representations and warranties to the Pledgor, from the execution date of this Agreement to the date when the Secured Obligations have been paid in full:

 

(1)         The Pledgor is duly incorporated in accordance with the laws of the PRC and validly existing with independent legal person status that is capable of suing or being sued in its own name, and has full rights to own its property and conduct its business;

 

(2)         The Pledgor is the legitimate and sole owner of the Secured Property, has the full legal rights and authority to execute, deliver and perform this Agreement, and has obtained all necessary consents, approvals and authorization required to sign and execute this Agreement, including but not limited to  shareholders’ meeting resolutions or board resolutions;

 

(3)         The execution, performance and enforcement of this Agreement do not violate any laws, regulations and government approval, license, or any legal documents binding on the Pledgor in the PRC;

 

(4)         The Pledged Deposit is completely true and valid;

 

(5)         Except for the pledge under this Agreement, the Secured Property is free and clear of any security interest, mortgage, pledge, lien or encumbrance, and the Secured Property has not been forfeited, transferred, donated or disposed of in other ways by the Pledgor;

 

(6)         The Secured Property is free from any sealing up, freezing, enforcement, forfeiture, or other similar coercive measures, and there are no litigation, arbitration or administrative proceedings currently pending or threatened against the Secured Property.

 

5.     COVENANTS

 

The Pledgor covenants to the Pledgee that, before the Secured Obligations are fully paid, the Pledgor shall

 

4

 

(1)         deliver the Pledged Deposit on time in accordance with the requirements of article 3, and ensure the pledge under this Agreement is completely legal and valid;

 

(2)         strictly abide by any requirements hereunder in relation to the Pledged Deposit, and without the Pledgee’s prior written consent not cancel or change the Pledged Deposit, nor withdraw or spend any funds from the Pledged Deposit;

 

(3)         without written consent of the Pledgee, not waive, transfer, re-pledge, donate, offset, abandon, or in any other manner dispose of the Secured Property, nor take, or cause, or agree to take any action that may in any way damage or jeopardize the Secured Property and/or the rights and interests of Pledgee under this Agreement.

 

(4)         in accordance with requirements of the Pledgee from time to time, execute any documents that are necessary: to fulfill the obligations and responsibilities of the Pledgor under this Agreement; to maintain the validity and enforceability of the pledge under this Agreement; for the Pledgee to enjoy or perform the powers or rights under this Agreement; to extend the term of this Agreement, or necessary to supplement and revise this Agreement; or for the performance of this Agreement;

 

(5)         The Pledgor shall notify the Pledgee in writing within two business days after becoming aware of the following:

 

1)             the Secured Property being frozen, sealed up, seized, enforced or expropriated by any judicial or administrative authority, or being involved in any lawsuit or administrative penalty; or

 

2)             the Pledgor having received any notice, order or other document issued by any government agency that might damage or jeopardize the Secured Property and/or rights and interests of Pledgee under this Agreement. In such event, the Pledgor shall take all necessary measures for the interests of the Pledgee to comply with the notice, order or other document, and bear the resulting costs and expenses.

 

If the Pledgor fails to comply with the above covenants, the Pledgor shall compensate the Pledgee for all resulting damages caused to Pledgee. If the Pledgee requires the Pledgor to provide further security for the Secured Obligations, the Pledgor shall provide such security in accordance with those requirements, and execute the relevant security documents and ensure the security documents are valid, binding and enforceable under the laws of the People’s Republic of China.

 

5

 

6.     ENFORCEMENT OF THE PLEDGE

 

If the Borrower and/or Pledgor fail to fully and timely perform any of the Secured Obligations, or violate the Master Agreement and/or any representations, declaration, covenants or warranties under this Agreement, or any event of default occurs, the Pledge under this Agreement will immediately become enforceable. And the Pledgee shall be entitled to, without consent of the Pledgor, apply the whole or any part of the Secured Property to pay the outstanding Secured Obligations.

 

7.     AUTHORIZATION

 

7.1       The Pledgor irrevocably authorize the Pledgee on its behalf to execute all documents necessary: to fulfill the obligations and responsibilities of the Pledgor under this Agreement; to maintain the validity and enforceability of the pledge under this Agreement; for the Pledgee to enjoy or perform the powers or rights under this Agreement; to extend the term of this Agreement; to supplement and revise this Agreement; or for the performance of this Agreement.

 

7.2       The Pledgor hereby recognizes and accepts any documents executed by the Pledgee and any action conducted by the Pledgee in accordance with the above authorization.

 

8.     FEES AND EXPENSES

 

8.1       The Pledgor hereby covenants to the Pledgee that the Pledgor shall on demand pay and/or compensate the Pledgee for all costs, fees and expenses (including attorney fees and all taxes) for negotiating, drafting, executing and making this Agreement (including its supplements and revisions), for exercising, preserving, protecting or enforcing the rights and powers of the Pledgee under this Agreement, or for resolving any dispute regarding this Agreement (including court costs, attorney fees and all taxes).

 

8.2       The Pledgor shall pay in full all amounts payable according to this Agreement without any deduction, offset, counterclaim or any restrictions or conditions. If the Pledgee is required by law to make any deduction, withholding, or to pay any taxes, such deduction, withholding or taxes shall be fully paid by the Pledgor instead of the Pledgee.

 

9.     INDEPENDENCE OF THE PLEDGE

 

9.1       The rights of the Pledgee under this Agreement are independent of other existing or future security for the Secured Obligations, and the Pledgee may exercise the Pledge directly without exercising the other security first.

 

6

 

9.2       The right of pledge over the Secured Property and the validity or enforceability of the Pledge under this Agreement, shall not be damaged, affected or released in any way due to the following circumstances:

 

(1)         Pledgor’s or any others’ bankruptcy, liquidation or dissolution, or Pledgor or any others’ loss of whole or part of its capacity for action, Pledgor or any others being subject to any restrictions, or any change in the organizational structure or status of the Pledgor or any others;

 

(2)         Any modification, change or supplement of the Master Agreement or any other security agreement relating to the Security Obligations or any other documents, such documents being invalid, partially invalid or unenforceable, or the Pledgee failing to exercise, or delaying to exercise, or waiving any other security rights;

 

(3)         Any grace period, compromise, settlement, debt restructuring, or payment extension, exemption, etc. granted by the Pledgee to the Pledgor or any other parties;

 

(4)         Sale, re-pledge, transfer, inheritance, gift, abandon, etc. of the Secured Property by the Pledgor;

 

(5)         The Secured Property being frozen, sealed up, seized, enforced or expropriated by any judicial or administrative authority, or being involved in any lawsuit or arbitration, or administrative proceeding.

 

10.       RELEASE OF THE PLEDGE

 

After the Secured Obligations are performed in full, the Pledgee shall release the pledge under this Agreement, and return the certificate of fixed term deposit to the Pledgor.

 

11.       TRANSFER

 

11.1 The Pledgor shall not transfer any of its rights and/or obligations under this Agreement.

 

11.2 The Pledgor hereby agrees that the Pledgee is entitled to transfer its rights and obligations under the Agreement in whole or in part to third parties at any time under this Agreement, without the consent of the Pledgor. If the Pledgee requests, the Pledgor shall assist in handling the transfer procedures.

 

7

 

12.  CHANGED CIRCUMSTANCES

 

If the validity or enforceability of the Agreement or any part of it is affected or restricted due to any amendment to existing laws and regulations, or the occurrence of a new effective interpretation, or the promulgation of new laws or regulations, the Pledgor shall take all legal remedies in accordance with the requirements of the Pledgee to maintain complete legality, validity and enforceability of the pledge under this Agreement, including but not limited to executing a new pledge agreement, or re-applying and properly handling relevant pledge procedures, provided that that such remedies will not affect the validity or enforceability of the Master Agreement and this Agreement,.

 

13.  NOTICE

 

13.1 Any notice, request or other communication issued or made under this Agreement shall be delivered or mailed to the party concerned in writing. The Pledgor can be reached at following address or fax number (or other address or fax number provided to the Pledgee by the Pledgor by written notice up to five (5) business days in advance) by delivery or mailing of the notice, request or other communication:

 

To the Pledgor: Bona Film Group Co., Ltd

 

Address: 11/F, Hong Cheng Xin Tai Building, 105 Yao Jia Yuan Road, Chao Yang District, Beijing, China

 

Tel: 010-5928 3663-237

 

Fax: 010-5928 3663-235

 

Contact: Yang Liu

 

The notice, request or other communication delivered or mailed to the Pledgor according to the foresaid address or fax number shall be regarded as being successfully delivered as follows: (1) at the time when it actually reaches the above address if delivered in person; (2) at the fifth (5th) business day after posted if by prepaid mail; (3) at the time when fax has been issued and certain fax report has been received if delivering by fax, and if the date of issue is not a business day of the Pledgor, the delivery time should be the next business day 9:00 AM local time. All notices, requests or other communications which are sent to the Pledgee by the Pledgor are deemed to have been served on the actual receipt of the Pledgee.

 

13.2 Under this Agreement, all notices, requests or other communications, and any other documents required to be delivered, shall be written in Chinese.

 

8

 

14.  GOVERNING LAW AND LEGAL JURISDICTION

 

14.1 This Agreement is governed by and shall be construed in accordance with the laws of the People’s Republic of China.

 

14.2 Any dispute under this Agreement should be resolved through friendly consultations between the parties; In case no settlement is reached, any party may file a lawsuit to the People’s Court at the location of the Pledgee.

 

14.3 During the period to resolve the disputes under this Agreement, in addition to the matters in dispute, the parties shall continue to perform other terms of this Agreement.

 

15.  EFFECTIVENESS

 

This Agreement shall become effective upon execution by the authorized representative of both parties with corporate seals affixed. The pledge is established when the Pledged Deposit is delivered to the Pledgee.

 

16.  MISCELLANEOUS

 

16.1 This Agreement is written in Chinese in two copies with equal validity.

 

16.2 Any amendment or release of any of the provisions of this Agreement shall be made in writing, and executed by all parties to this Agreement.

 

16.3 In the event that one or several of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any aspect in accordance with any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected or compromised in any respect.

 

16.4 That any of the parties suspending the exercise of any rights under this Agreement shall not be deemed a waiver of their rights.

 

16.5 The Pledgor confirms that it has fully read and understands this Agreement and the Master Agreement. The Pledgee has taken reasonable measures to remind the Pledgor of the terms waiving or limiting the liabilities of the Pledgee under this Agreement, and in accordance with the requirement of the Pledgor, and has adequately illustrated the relevant terms upon the request of the Pledgor; and there is no dissent between the parties about the understanding of provisions of the Agreement.

 

9

 

- REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK-

 

Signature Page

 

(No text on this page, and the following is the Signature Page of Deposit Pledge Agreement No.CBI2012/W015G-1)

 

IN WITNESS WHEREOF, the parties executed this Agreement as of the date first above written.

 

 

	
The Pledgor
    	
 
    
	
 
    	
 
    
	
Bona   Film Group Co., Ltd (seal)
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Authorized   Representative signature:
    	
/s/ Dong Yu
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
The Pledgee
    	
 
    
	
 
    	
 
    
	
CITIC   Bank International (China) Co., Ltd. (seal)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Authorized   Representative signature:
    	
/s/ Authorized signatory
    	
 
    

 

IN WITNESS WHEREOF the parties executed this Agreement on August 13th, 2012 in front of me.

 

	
Witness   (signature):
    	
/s/ Witness
    	
 
    
	
 
    	
 
    
	
Date:   August 13th, 2012
    	
 
    

 

10

 

Schedule 1: Notice and confirmation letter format (Note: Applicable when the Opening Bank is not the Pledgee)

 

Pledge Notice

 

	
 
    	
Date:   [              ]
    

 

To: CITIC Bank International (China) Co., Ltd.

 

Cc: Beijing Branch of CITIC Bank International (China) Co., Ltd.

 

To whom that may concern

 

Re: No.[  ] Bank fixed deposit

 

Pursuant to the Standby Letter of Credit Issuance Agreement (No.CBI2012/W015L, the “Master Agreement”), and the Deposit Pledge Agreement (No.CBI2012W015G-1, the “Pledge Agreement”) dated [      ], we have pledged the deposit (“Pledged Deposit”) and all the funds and rights under it to CITIC Bank International (China) Co., Ltd. (the “Pledgee”), as security for the Facility under the Master Agreement. together with this notice, we attach the Pledge Agreement.

 

In accordance with the Pledge Agreement, we hereby notify and instruct you: without the prior written content of the Pledgee,  we are not entitled to withdraw any funds from the Pledged Deposit or make any changes to the content of the Pledged Deposit, nor do we have the right to revoke or report the loss of the Pledged Deposit.

 

We hereby authorize and instruct you, after receiving the written instruction of the Pledgee, immediately:

 

a)             in accordance with the instruction of the Pledgee, to pay any or all of the funds under the Pledged Deposit to the account designated by the Pledgee;

 

11

 

b)             in accordance with the request of the Pledgee, to disclose any information relating to the Pledged Deposit to the Pledgee at any time.

 

We agree and acknowledge that you will not assume any liability to us for implementing any aforementioned instruction of the Pledgee, and when implementing any aforementioned instruction of the Pledgee, you don’t need to verify or check whether the Pledgee has the right to withdraw funds from the Pledged Deposit, the right is properly and reasonably exercised, or there is a notice to the contrary, nor do you have the obligation to find out how the funds will be used by the Pledgee.

 

Without the prior written consent of the Pledgee, we shall not revoke or change the foresaid instructions.

 

Please execute the Confirmation Letter which is attached to this Notice in accordance with the instructions and return it to the Pledgee thereafter to confirm that you have received and agree to be bound by this Notice.

 

Details of the Pledged Deposit

 

	
No.:
    	
 
    	
Type of Deposit:
    
	
Account name:
    	
 
    	
Account Name:
    
	
Opening   institution:
    	
 
    	
Amount:
    
	
Term:
    	
 
    	
Interest rate:
    

 

	
Best regards,
    	
 
    
	
 
    	
 
    
	
Bona Film Group   Co., Ltd (seal)
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Authorized   Representative signature:
    	
 
    	
 
    

 

12

 

Confirmation Letter

 

	
 
    	
Date:   [           ]
    

 

To: CITIC Bank International (China) Co., Ltd. (the “Pledgee”)

 

Cc: Bona Film Group Co., Ltd (the “Pledgor”)

 

We acknowledge receipt of the notice of the Pledgor regarding the bank fixed deposit No. [     ], and confirm that we agree to be bound by the Notice (including that without the prior written consent of the Pledgee, the Pledgor shall not revoke or change the instructions in the Notice).

 

We agree to abide by the provisions of the Notice and follow your instructions.

 

We agree and acknowledge that, without the prior written consent of the Pledgee (which the Pledgee may refuse to give in its own discretion), we shall not dispose of (including but not limited to using any funds under the Pledged Deposit to offset any possible claim or debt that occurs in any ways against the Pledgor by us) the Pledged Deposit or any funds under it in any ways that could cause any damages or losses of the Pledgee.

 

Best regards,

 

Beijing Branch of CITIC Bank International (China) Co., Ltd. (seal)

 

 

	
Authorized   Representative signature:
    	
 
    	
 
    

 

13Exhibit 4.2

 

Luxottica Group S.p.A. 2001 Stock Option Plan

 

Luxottica Group S.p.A., an Italian corporation (the “Company”), has adopted the Luxottica Group S.p.A. 2001 Stock Option Plan (the “Plan”).

 

1.             Purpose.  The purpose of the Plan is to enable the Company and its direct and indirect subsidiaries throughout the world to attract, retain, and reward key employees (“Key Employees”) by offering them an opportunity to have a greater proprietary interest in, and closer identity with, the Company and its Subsidiaries (as defined below), and with their financial success, by granting them an option (“Option”) to purchase the Company’s Ordinary Shares (“Ordinary Shares”).  Proceeds received by the Company from the sale of Ordinary Shares pursuant to Options shall be used for general corporate purposes.  The term “Subsidiary” shall mean any entity more than 50 percent of the ownership of which is controlled directly or indirectly by the Company.

 

2.             Administration.  The Plan shall be administered by the Board of Directors (“Board”) of the Company, in accordance with and subject to the express provisions of the Plan and the guidelines, if any, approved by the Company’s shareholders, as in effect from time to time (“Shareholder Action”).  Subject to the foregoing, the Board may interpret the Plan, prescribe, amend and rescind rules and regulations relating to it, determine Option grants and the terms and provisions of Participants’ Option Agreements (which need not be identical), and make such other determinations as it deems necessary or advisable for the administration of the Plan.  The Board may delegate decisions with respect to Options to such elected officer or officers of the Company as the Board determines.  The decisions of the Board and its delegate(s) under the Plan shall be conclusive and binding.  No member of the Board or any of its delegate(s) shall be liable for any action taken or determination made in good faith.  The exercise of any Options shall be subject to the completion of all requisite corporate actions and the obtaining of all necessary governmental approvals to authorize the issuance of the Ordinary Shares issuable upon such exercise in accordance with applicable law.

 

3.             Eligibility.  The Board shall determine, within the limits of the express provisions of the Plan and any Shareholder Action, those Key Employees to whom, and the time or times at which, Options shall be granted.  Each Key Employee who has been selected by the Board to receive Options shall become a “Participant” in the Plan.  Subject to the provisions of the Plan, all Shareholder Action and local law, the Board also shall determine the number of Ordinary Shares to be subject to each such Option, the duration of each Option, the exercise price under each Option, the time or times within which (during the term of the Option) all or portions of each Option may be exercised, and any other terms and conditions of such Options.  In making such determinations, the Board may take into account the nature of the services rendered by the Key Employee, his present and potential contributions to the success of the Company and its  Subsidiaries, and such other factors as the Board, in its sole discretion, deems relevant.

 

4.             Ordinary Shares.  No more than 11,000,000 Ordinary Shares may be subject to Options under the Plan.  Such total number of shares shall be adjusted in accordance with the provisions of Section 10 hereof.  Such shares may be either authorized but unissued shares or reacquired shares.  In the event that any Option granted under the Plan expires unexercised, or is terminated, surrendered or canceled without being exercised, in whole or in part, for any reason, then the number of Ordinary Shares theretofore subject to such Option, or the unexercised, terminated, surrendered, forfeited, canceled or reacquired portion thereof, shall be added to the remaining number of Ordinary Shares that may be made subject to Options under the Plan.

 

 

5.             Options.  The following provisions shall apply to each Option granted under the Plan:

 

(a)           Option Agreement.  Each Option shall be evidenced by a written agreement (the “Option Agreement”) specifying the Option exercise price, the terms for payment of the exercise price, the duration of the Option, and the number of Ordinary Shares to which the Option pertains.  An Option Agreement also may contain such other restrictions, conditions and terms as the Board shall determine in its sole discretion, subject to the terms and conditions of the Plan and any Shareholder Action.  Option Agreements need not be identical.

 

(b)           Exercise Price.  The per share exercise price of each Option shall be specified in the applicable Option Agreement, provided that the exercise price shall not be less than the greater of:  (i) 100% of the fair market value thereof on the date the Options are granted (the “Grant Date”), determined by referring to the closing market price on the New York Stock Exchange on the first business day immediately preceding the Grant Date of the Company’s American Depositary Shares (“ADSs”) representing an equal amount of the Company’s Ordinary Shares (such closing market price for any given date is referred to herein as the “Market Price”); or (ii) the average of the Market Price for each business day during the thirty-day period ending on the Grant Date.  An Option shall be deemed to be granted as of, and the Grant Date shall be deemed to be, the date the grant of a specified number of Options to a specified Participant is approved by the Board.

 

(c)           Incentive Stock Options Permitted.  Options may, but need not, be “Incentive Stock Options” under Section 422 of the United States Internal Revenue Code of 1986, as amended (including any replacement or successor thereto, the “Code”); provided, however, that (i) the exercise price of each Incentive Stock Option shall be at least 100% of the fair market value of the Ordinary Shares subject to such Incentive Stock Option on the date of grant; (ii) Incentive Stock Options will be exercisable not later than nine years after the date of grant, and (iii) in the case of an Incentive Stock Option granted to a Participant who, at the time of grant, owns (as defined in Section 425(d) of the Code) stock of the Company or its  Subsidiaries possessing more than 10% of the total combined voting power of all classes of stock of any such corporation, the exercise price shall be at least 110% of the fair market value of the Ordinary Shares subject to the Incentive Stock Option at the time it is granted, and the Incentive Stock Option, by its terms, shall not be exercisable after the expiration of five (5) years from the date of its grant.  The aggregate fair market value (determined with respect to each Incentive Stock Option as of the time such Incentive Stock Option is granted) of the Ordinary Shares with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year (under all Incentive Stock Option plans of the Company and its Subsidiaries) shall not exceed U.S. $100,000. The fair market value of any Ordinary Shares subject to Incentive Stock Options shall be determined by referring to the market price on the New York Stock Exchange on the relevant date of the Company’s ADSs representing an equal amount of the Ordinary Shares.

 

(d)           The Board may prescribe such other terms and conditions applicable to Options granted to a Participant under the Plan that are neither inconsistent with nor prohibited by the Plan or any Shareholder Action.

 

 

6.             Vesting of Option Rights. Except as provided below, the right to exercise the Option shall vest according to the terms of the applicable Option Agreement. The term “Vested Option Rights” shall mean a Participant’s rights to exercise the Option that have vested pursuant to this Section 6 and the applicable Option Agreement.

 

(a)         Acceleration of Vesting.  The Board, in its discretion, shall have the power to accelerate the dates for exercise of any or all Options, or any part thereof.

 

(b)         Change in Control.  An Option will become exercisable as of the date of a Change in Control of the Company. For purposes of the Plan, a “Change in Control” of the Company shall be deemed to occur only if, as a result of any transaction involving the sale of all of the assets of the Company or the sale of any stock of the Company or of any entity that directly or indirectly holds any stock of the Company, neither Leonardo Del Vecchio, nor any member of his family, nor any trust or other entity for the benefit of such person, nor any combination of such persons or entities, shall hold, directly or indirectly, the right to elect a majority of the members of the Board of the Company, or, if another corporation or entity then holds the assets of the Company, the right to elect a majority of the directors of such corporation or the power to direct the management of such other entity. Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred upon or by virtue of the making or consummation of any public offering of any debt or equity securities of the Company or of any entity that directly or indirectly holds any beneficial interest in any stock of the Company.

 

7.             Effective Date of Plan; Maximum Term; and Cancellation of Unexercised Options.  The Plan shall be effective as of the date approved by the shareholders.   No Option shall be granted for a term of more than 9 years from the date of grant, and no Option shall be granted for a term that expires after March 31, 2017.  Failure to exercise the Option within the prescribed term will result in expiration of the Option.  Except as specifically provided in the applicable Option Agreement, if the Participant’s employment is terminated for any reason, the Option, including, without limitation, Vested Option Rights, shall terminate immediately upon the effective date of such termination.

 

8.             Method of Exercise of Options.  Any Vested Option Rights under the Plan may be exercised by a Participant, by a legatee or legatees of such Vested Option Rights under the Participant’s last will, by his executors, personal representatives or distributees, as provided in Section 11 below, by delivering to the Secretary of the Board or such executives of the Company or its Subsidiaries (or any agent thereof) as the Board or the Secretary may designate from time to time, written notice of the number of Ordinary Shares with respect to which the Option is being exercised, accompanied at the latest by the date the exercise is effective (if it has been postponed according to the terms of such notice) by full payment to the Company of the exercise price of the shares being purchased under the Option, and by satisfying all other conditions provided for in the Plan, the applicable Option Agreement and any and all rules, guidelines and forms prescribed by the shareholders, the Board, or their respective designees. Such payment may also be made, in the name of the Participant,  by the intermediary appointed by the Company to implement the Plan.  A Participant (or his legatees, executors, personal representatives or distributees) may exercise a portion of his Vested Option Rights under the Plan, provided, however, that the Board or its designees may specify a minimum increment for any partial exercise of Vested Option Rights.

 

 

The Company shall record the issuance of Ordinary Shares issuable pursuant to the exercise of any option in the central deposit system in which the Company participates.  The Company will, at the request of the Participant, arrange for the deposit of such Participant’s interest in such Ordinary Shares pursuant to the Deposit Agreement (as defined below) in exchange for ADSs representing an equal amount of such Ordinary Shares, as soon as reasonably practicable after such exercise.  The ADSs shall be registered in the name or for the account of, and delivered to or for the account of, the Participant (or, if applicable, the legatee(s), executor(s), personal representative(s), or distributee(s) of a deceased Participant).  “Deposit Agreement” means that certain amended and restated deposit agreement dated as of July 16, 2001, among the Company, The Bank of New York as Depositary, and all holders from time to time of the ADSs, as the same has been and may be further amended, modified, restated, replaced, and/or supplemented from time to time.

 

9.             Terms and Conditions of Options.

 

(a)           Each Participant, and each other person described in Section 11, shall agree to such restrictions and conditions and other terms in connection with the exercise of an Option, including restrictions and conditions on the disposition of the ADSs acquired upon the exercise thereof, as the Board may deem appropriate and as are set forth in the applicable Option Agreement or in the Plan.  The ADSs delivered to a Participant, or any other person described in Section 11, upon exercise of an Option may bear a legend referring to the restrictions and conditions and other terms contained in the applicable Option Agreement and the Plan, and the Company may place a stop transfer order with its transfer agent against the transfer of such ADSs.

 

(b)           The obligation of the Company to sell and deliver Ordinary Shares and ADSs under the Plan shall be subject to all applicable laws, regulations, rules and approvals, including, but not by way of limitation, the effectiveness of a registration statement under the United States Securities Act of 1933, if deemed necessary or appropriate by the Board, covering the Ordinary Shares, ADSs or Options, reserved for issuance or that may be offered under the Plan.  Neither a Participant, nor any other person described in Section 11, shall have any rights as a shareholder with respect to any Ordinary Shares or ADSs covered by an Option granted to, or exercised by, him until the date of delivery of the ADSs to him.  No adjustment, other than pursuant to Section 10 below, shall be made for dividends or other rights for which the record date is prior to the date such ADSs are delivered.

 

10.          Adjustments.  Appropriate adjustment in the maximum number of Ordinary Shares subject to Options under the Plan and the Exercise Price with respect to Options shall be made to give effect to any increase or decrease in the number of issued Ordinary Shares resulting from a subdivision or consolidation of shares whether through reorganization, recapitalization, stock split, reverse stock split, spin-off, split-off, spin-out, or other distribution of assets to stockholders, stock distributions or combination of shares, assumption and conversion of outstanding Options due to an acquisition by the Company of the stock or assets of any other corporation, payment of stock dividends, other increase or decrease in the number of such shares outstanding effected without receipt of consideration by the Company, or any other occurrence for which the Board determines an adjustment is appropriate.  On the basis of information known to the Company, the Board shall make all determinations relating to the applicability and interpretation of this Section 10, and all such determinations shall be conclusive and binding.

 

11.          Nontransferability.  Unless the Company otherwise consents in writing in its sole and absolute discretion, Options granted under the Plan, and any rights and privileges pertaining thereto, may not be transferred, assigned, pledged or hypothecated in any manner, by operation of law or

 

 

otherwise, other than by will or by the laws of descent and distribution, and shall not be subject to execution, attachment or similar process.  The granting of an Option shall impose no obligation upon the applicable Participant or any other person to exercise such Option.

 

12.          Indemnification of the Board and Its Delegates.  In addition to such other rights of indemnification as they may have as members of the Board, as employees of the Company, or as its delegates, the members of the Board and its delegates shall be indemnified by the Company against (a) the reasonable expenses (as such expenses are incurred), including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding (or in connection with any appeal therein), to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any Option granted hereunder; and (b) against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Board member or delegate is liable for gross negligence or misconduct in the performance of his duties.  The Company may elect, at its own expense, to handle and defend such action, suit or proceeding.

 

13.          No Contract of Employment.  Neither the adoption of the Plan nor the grant of any Option shall be deemed to obligate the Company or any Subsidiary to continue the employment of any Participant for any particular period, nor shall the granting of an Option constitute a request or consent to postpone the retirement date of any Participant.

 

14.          Termination and Amendment of Plan.  The Board may at any time terminate, suspend or modify the Plan, without the authorization of shareholders to the extent allowed by law.  No termination, suspension or modification of the Plan shall adversely affect any right acquired by any Participant, or any other person designated in Section 11, under an Option granted before the effective date of such termination, suspension or modification, unless such Participant or other person shall consent; but it shall be conclusively presumed that any adjustment for changes in capitalization as provided for in Section 10 do not adversely affect any such right.

 

15.          Withholding Taxes. The Company shall have the right to require the Participant or other person to remit to the Company or one or more of its Subsidiaries, or any agent thereof, an amount sufficient to satisfy all federal, state, provincial, local, and any other withholding or other applicable tax requirements at, or after, the time such tax obligation arises and to withhold from any amounts payable to the Participant or other person, as compensation or otherwise, as necessary and at any time.

 

16.          Governing Law; Conflicts.  The Plan shall be construed in accordance with and governed by the laws of the Republic of Italy, except where superseded by the laws of the United States or the laws of the jurisdiction where the Participant performs services for the Company or one of its Subsidiaries.  In the event of any conflict or inconsistency between the terms of the Plan and any Shareholder Action, the Shareholder Action shall govern.

 

17.          Successors.  In the event of a sale of substantially all of the assets of the Company, or a merger, consolidation or share exchange involving the Company, all obligations of the Company under the Plan with respect to Options granted hereunder shall be binding on the successor to the transaction.  Employment of a Participant with such successor shall be considered employment of the Participant with the Company for purposes of the Plan.

 

 

18.          Fractional Shares.  If at any time the exercise of the Option would, except for this provision, require the issue or transfer of fractional shares, the number of Ordinary Shares or ADSs shall be rounded down to the next whole number.

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