Document:

Exhibit 10.1

 

GRIDSUM HOLDING INC.

 

2014 STOCK OPTION PLAN

 

1.     Purposes of the Plan.  The purposes of this Plan are to attract and retain the best available personnel, to provide additional incentives to Employees, Directors and Consultants and to promote the success of the Company’s business.

 

2.     Definitions.  The following definitions shall apply as used herein and in the individual Share Option Agreements except as defined otherwise in an individual Share Option Agreement.  In the event a term is separately defined in an individual Share Option Agreement, such definition shall supersede the definition contained in this Section.

 

(a)         “Administrator” means the Board or any of the Committees appointed to administer the Plan.

 

(b)         “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.

 

(c)          “Applicable Laws” means the legal requirements relating to the Plan and the Options under applicable provisions of the corporate and securities laws of any jurisdiction, the Code, the rules of any applicable stock exchange or national market system, and the rules of any jurisdiction applicable to Option granted to residents therein.

 

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

 

(e)          “Change in Control” means a change in ownership or control of the Company effected through either of the following transactions:

 

(i)                                     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 Rule13d-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 Continuing Directors who are not Affiliates or Associates of the offeror do not recommend such shareholders accept, or

 

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(ii)                                  a change in the composition of the Board over a period of thirty-six (36) months or less such that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who are Continuing Directors.

 

(f)           “Code” means the Internal Revenue Code of 1986, as amended.

 

(g)          “Committee” means any committee composed of members of the Board appointed by the Board to administer the Plan.

 

(h)         “Common shares” means the voting common shares of the Company.

 

(i)             “Company” means GRIDSUM HOLDING INC., a company incorporated in Cayman Islands.

 

(j)            “Consultant” means any person (other than an Employee or a Director, solely with respect to rendering services in such person’s capacity as a Director) who is engaged by the Company or any Related Entity to render consulting or advisory services to the Company or such Related Entity.

 

(k)         “Continuing Directors” means members of the Board who either (i) have been Board members continuously for a period of at least thirty-six (36) months or (ii) have been Board members for less than thirty-six (36) months and were elected or nominated for election as Board members by at least a majority of the Board members described in clause (i) who were still in office at the time such election or nomination was approved by the Board.

 

(l)             “Continuous Service” means that the provision of services to the Company or a Related Entity in any capacity of Employee, Director or Consultant (collectively, “Service Provider”) is not interrupted or terminated.  In jurisdictions requiring notice in advance of an effective termination as an Employee, Director or Consultant, Continuous Service shall be deemed terminated upon the actual cessation of providing services to the Company or a Related Entity notwithstanding any required notice period that must be fulfilled before a termination as an Employee, Director or Consultant can be effective under Applicable Laws.  An Optionee’s Continuous Service shall be deemed to have terminated either upon an actual termination of Continuous Service or upon the entity for which the

 

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Optionee provides services ceasing to be a Related Entity.  Continuous Service shall not be considered interrupted in the case of (i) any approved leave of absence, (ii) transfers among the Company, any Related Entity, or any successor, in any capacity of Employee, Director or Consultant, or (iii) any change in status as long as the individual remains in the service of the Company or a Related Entity in any capacity of Employee, Director or Consultant (except as otherwise provided in the Option Agreement).  An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave.

 

(m)     “Corporate Transaction” means any of the following transactions, provided, however, that the Administrator shall determine under parts (iv) and (v) whether multiple transactions are related, and its determination shall be final, binding and conclusive:

 

(i)                                     a merger or consolidation 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;

 

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

 

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

 

(iv)                              any reverse merger or series of related transactions culminating in a reverse merger (including, but not limited to, a tender offer followed by a reverse merger) in which the Company is the surviving entity but (A) the Common shares outstanding immediately prior to such merger are converted or exchanged by virtue of the merger into other property, whether in the form of securities, cash or otherwise, or (B) in which securities possessing more than forty percent (40%) 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 merger or the initial transaction culminating in such merger, but excluding any such transaction or series of related transactions that the Administrator determines shall not be a Corporate Transaction; or

 

(v)                                 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

 

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voting power of the Company’s outstanding securities but excluding any such transaction or series of related transactions that the Administrator determines shall not be a Corporate Transaction.

 

(n)         “Director” means a member of the Board or the board of directors of any Related Entity.

 

(o)         “Disability” means as defined under the long-term disability policy of the Company or the Related Entity to which the Optionee provides services regardless of whether the Optionee is covered by such policy.  If the Company or the Related Entity to which the Optionee provides service does not have a long-term disability plan in place, “Disability” means that an Optionee is unable to carry out the responsibilities and functions of the position held by the Optionee by reason of any medically determinable physical or mental impairment for a period of not less than ninety (90) consecutive days.  An Optionee will not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Administrator in its discretion.

 

(p)         “Employee” means any person, including an Officer or Director, who is in the employment of the Company or any Related Entity, subject to the control and direction of the Company or any Related Entity as to both the work to be performed and the manner and method of performance.  The payment of a director’s fee by the Company or a Related Entity shall not be sufficient to constitute “employment” by the Company.

 

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

 

(r)            “Fair Market Value” means, as of any date, the value of Common shares determined as follows:

 

(i)                                     If the Common shares are listed on one or more established stock exchanges or national market systems, including without limitation the American Stock Exchange or The Nasdaq Global Market, 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 Common shares are listed (as determined by the Administrator) 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 Administrator deems reliable;

 

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(ii)                                  If the Common shares are regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities dealer, its Fair Market Value shall be the closing sales price for such shares as quoted on such system on the date of determination, but if selling prices are not reported, the Fair Market Value of the Common shares shall be the mean between the high bid and low asked prices for the Common 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 Administrator deems reliable; or

 

(iii)                               In the absence of an established market for the Common shares of the type described in (i) and (ii), above, the Fair Market Value thereof shall be determined by the Administrator in good faith.

 

(s)           “Officer” means a person who is an officer of the Company or a Related Entity within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

 

(t)            “Option” means an option to purchase Shares pursuant to an Option Agreement granted under the Plan.

 

(u)         “Option Agreement” means the written agreement evidencing the grant of an Option executed by the Company and the Optionee, including any amendments thereto.

 

(v)         “Optionee” means an Employee, Director or Consultant who receives an Option under the Plan.

 

(w)       “Plan” means this 2014 Stock Option Plan.

 

(x)         “Related Entity” means any Parent or Subsidiary of the Company and any business, corporation, partnership, limited liability company or other entity in which the Company or a Parent or a Subsidiary of the Company holds a substantial ownership interest, directly or indirectly.

 

(y)         “Replaced” means that pursuant to a Corporate Transaction the Option is replaced with a comparable share or stock Option or a cash incentive program of the Company, the successor entity (if applicable) or Parent of either of them which preserves the compensation element of such Option existing at the time of the Corporate Transaction and provides for subsequent payout in accordance with the same (or a more favorable) vesting

 

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schedule applicable to such Option.  The determination of Option comparability shall be made by the Administrator and its determination shall be final, binding and conclusive.

 

(z)          “Share” means Common shares of the Company.

 

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

 

3.     Shares Subject to the Plan.

 

(a)         Subject to the provisions of Section 10, below, the maximum aggregate number of Shares which may be issued pursuant to Option is [ 2,500,000 ] Shares.

 

(b)         Any Shares covered by an Option (or portion of an Option) which is forfeited, canceled or expires (whether voluntarily or involuntarily) shall be deemed not to have been issued for purposes of determining the maximum aggregate number of Shares which may be issued under the Plan.  Shares that actually have been issued under the Plan pursuant to an Option shall not be returned to the Plan and shall not become available for future issuance under the Plan, except that if unvested Shares are forfeited, or repurchased by the Company at the lower of their original purchase price or their Fair Market Value at the time of repurchase, such Shares shall become available for future grant under the Plan.  To the extent not prohibited by the listing requirements of the American Stock Exchange, The Nasdaq Global Market (or other established stock exchange or national market system on which the Common shares are traded) and Applicable Law, any Shares covered by an Option which are surrendered (i) in payment of the Option exercise or purchase price or (ii) in satisfaction of tax withholding obligations incident to the exercise of an Option shall be deemed not to have been issued for purposes of determining the maximum number of Shares which may be issued pursuant to all Options under the Plan, unless otherwise determined by the Administrator.

 

4.     Administration of the Plan.

 

(a)         Plan Administrator.

 

(i)                                     Administration with Respect to Directors and Officers.  With respect to grants of Options to Directors or Employees who are also Officers or Directors of the Company, the Plan shall be administered by (A) the Board or (B) a Committee

 

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designated by the Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws.  Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board.

 

(ii)                                  Administration With Respect to Consultants and Other Employees.  With respect to grants of Options to Employees or Consultants who are neither Directors nor Officers of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws.  Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board.  The Board may authorize one or more Officers to grant such Options and may limit such authority as the Board determines from time to time.

 

(iii)                               Administration Errors.  In the event an Option is granted in a manner inconsistent with the provisions of this subsection (a), such Option shall be presumptively valid as of its grant date to the extent permitted by the Applicable Laws.

 

(b)         Powers of the Administrator.  Subject to Applicable Laws and the provisions of the Plan (including any other powers given to the Administrator hereunder), and except as otherwise provided by the Board, the Administrator shall have the authority, in its discretion:

 

(i)                                     to select the Employees, Directors and Consultants to whom Options may be granted;

 

(ii)                                  to determine whether and to what extent Options are granted hereunder;

 

(iii)                               to determine the number of Shares or the amount of other consideration to be covered by each Option granted hereunder;

 

(iv)                              to approve forms of Option Agreements for use under the Plan;

 

(v)                                 to determine the terms and conditions of any Option granted hereunder;

 

(vi)                              to amend the terms of any outstanding Option granted under the Plan, provided that (A) any amendment that would adversely affect the Optionee’s rights under an outstanding Option shall not be made without the Optionee’s written

 

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consent, (B) the reduction of the exercise price of any Option Optioned under the Plan shall be subject to shareholder approval and (C) canceling an Option at a time when its exercise price exceeds the Fair Market Value of the underlying Shares, in exchange for another Option shall be subject to stockholder approval, unless the cancellation and exchange occurs in connection with a Corporate Transaction.  Notwithstanding the foregoing, canceling an Option in exchange for another Option with an exercise price, purchase price that is equal to or greater than the exercise price of the original Option shall not be subject to shareholder approval;

 

(vii)                           to construe and interpret the terms of the Plan and Options, including without limitation, any notice of Option or Option Agreement, granted pursuant to the Plan;

 

(viii)                        to take such other action, not inconsistent with the terms of the Plan, as the Administrator deems appropriate.

 

(c)          Indemnification. In addition to such other rights of indemnification as they may have as members of the Board or as Officers or Employees of the Company or a Related Entity, members of the Board and any Officers or Employees of the Company or a Related Entity to whom authority to act for the Board, the Administrator or the Company is delegated shall be defended and indemnified by the Company to the extent permitted by law on an after-tax basis against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any claim, investigation, 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 against all amounts paid by them in settlement thereof (provided such settlement is approved by the Company) or paid by them in satisfaction of a judgment in any such claim, investigation, action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such claim, investigation, action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct; provided, however, that within thirty (30) days after the institution of such claim, investigation, action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at the Company’s expense to defend the same.

 

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5.     Eligibility.  The Optionees shall be such persons as the Administrator may select from among the Employee and Consultants.

 

6.     Terms and Conditions of Options.

 

(a)         Designation of Option.  Each Option shall be designated in the Option Agreement.

 

(b)         Conditions of Option.  Subject to the terms of the Plan, the Administrator shall determine the provisions, terms, and conditions of each Option including, but not limited to, the Option vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form of payment (cash, Shares, or other consideration) upon settlement of the Option, payment contingencies.

 

(c)          Deferral of Option Payment.  The Administrator may establish one or more programs under the Plan to permit selected Optionees the opportunity to elect to defer receipt of consideration upon exercise of an Option, or other event that absent the election would entitle the Optionee to payment or receipt of Shares or other consideration under an Option.  The Administrator may establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if any, on amounts, Shares or other consideration so deferred, and such other terms, conditions, rules and procedures that the Administrator deems advisable for the administration of any such deferral program.

 

(d)         Early Exercise.  The Option Agreement may, but need not, include a provision whereby the Optionee may elect at any time while an Employee, Director or Consultant to exercise any part or all of the Option prior to full vesting of the Option.  Any unvested Shares received pursuant to such exercise may be subject to a repurchase right in favor of the Company or a Related Entity or to any other restriction the Administrator determines to be appropriate.

 

(e)          Term of Option.  The term of each Option shall be the term stated in the Option Agreement.

 

(f)           Transferability of Options Options shall be transferable (i) by will and by the laws of descent and distribution and (ii) during the lifetime of the Optionee, to the extent and in the manner authorized by the Administrator.  Notwithstanding the foregoing,

 

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the Optionee may designate one or more beneficiaries of the Optionee’s Option in the event of the Optionee’s death on a beneficiary designation form provided by the Administrator.

 

(g)          Termination of Employment Other than by Death or Disability.

 

(i)                                     If an Optionee ceases to be an Employee for any reason other than his or her death or disability, the Optionee shall have the right, subject to the provisions of this Section 6, to exercise any option held by the Optionee at any time within ninety (90) days after his or her termination of employment, but not beyond the otherwise applicable term of the Option and only to the extent that on such date of termination of employment the Optionee’s right to exercise such Option had vested.

 

(ii)                                  For purposes of this Section 6(g), the employment relationship shall be treated as continuing intact while the Optionee is an active employee of the Company or any Affiliate, or is on military leave, sick leave, or other bona fide leave of absence to be determined in the sole discretion of the Administrator.

 

(h)         Death of Optionee.

 

If an Optionee dies while an Employee, or after ceasing to be an Employee but during the period while he or she could have exercised an Option under Section 6(h), any Option granted to the Optionee may be exercised, to the extent it had vested at the time of death and subject to the Plan, at any time within twelve (12) months after the Optionee’s death, by the executors or administrators of his or her estate or by any person or persons who acquire the option by will or the laws of descent and distribution, but not beyond the otherwise applicable term of the Option.

 

(i)             Disability of Optionee.

 

If an Optionee ceases to be an Employee due to becoming totally and permanently disabled within the meaning of Section 22(e)(3) of the Code, any Option granted to the Optionee may be exercised to the extent it had vested at the time of cessation and, subject to the Plan, at any time within twelve (12) months after the Optionee’s termination of employment, but not beyond the otherwise applicable term of the option.

 

(j)            Time of Granting Options.  The date of grant of an Option shall for all purposes be on the date which the Administrator makes the determination to grant such Option, or such other date as is determined by the Administrator.

 

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7.     Option Exercise or Purchase Price, Consideration and Taxes.

 

(a)         Exercise or Purchase Price.  The Administrator shall determine the exercise or purchase price pursuant to the Security Purchase Agreement dated as of September 6, 2010 between the Company and investors.

 

(b)         Consideration.  Subject to Applicable Laws, the consideration to be paid for the Shares to be issued upon exercise or purchase of an Option including the method of payment shall be determined by the Administrator. In addition to any other types of consideration the Administrator may determine, the Administrator is authorized to accept as consideration for Shares issued under the Plan the following:

 

(i)                                     cash;

 

(ii)                                  check;

 

(iii)                               with respect to Options, payment through a broker-dealer sale and remittance procedure pursuant to which the Optionee (A) shall provide written instructions to a Company designated brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the Company sufficient funds to cover the aggregate exercise price payable for the purchased Shares and (B) shall provide written directives to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale transaction; or

 

(iv)                              any combination of the foregoing methods of payment.

 

(c)          Taxes.  No Shares shall be delivered under the Plan to any Optionee or other person until such Optionee or other person has made arrangements acceptable to the Administrator for the satisfaction of any national, provincial or local income and employment tax withholding obligations.  Upon exercise of an Option the Company shall withhold or collect from Optionee an amount sufficient to satisfy such tax obligations.

 

8.     Exercise of Option.

 

(a)         Procedure for Exercise; Rights as a Shareholder.

 

(i)                                     Any Option granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator under the terms of the Plan and specified in the Option Agreement.

 

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(ii)                                  An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option by the person entitled to exercise the Option and full payment for the Shares with respect to which the Option is exercised, including, to the extent selected, use of the broker-dealer sale and remittance procedure to pay the purchase price as provided in Section 7(b)(iii).

 

9.     Conditions Upon Issuance of Shares.

 

(a)         Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all Applicable Laws, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

 

(b)         As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any Applicable Laws.

 

10.   Adjustments Upon Changes in Capitalization.

 

Subject to any required action by the shareholders of the Company, the number of Shares covered by each outstanding Option, and the number of Shares which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan, the exercise or purchase price of each such outstanding Option, the maximum number of Shares with respect to which Options may be granted to any Optionee in any fiscal year of the Company, as well as any other terms that the Administrator determines require adjustment shall be proportionately adjusted for (i) any increase or decrease in the number of issued Shares resulting from a share split, reverse share split, share dividend, combination or reclassification of the Shares, or similar transaction affecting the Shares, (ii) any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company, or (iii) as the Administrator may determine in its discretion, any other transaction with respect to

 

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Common shares including a corporate merger, consolidation, acquisition of property or equity, separation (including a spin-off or other distribution of shares or property), reorganization, liquidation (whether partial or complete) or any similar transaction; provided, however that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.”  Such adjustment shall be made by the Administrator and its determination shall be final, binding and conclusive.  Except as the Administrator determines, 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 hereof shall be made with respect to, the number or price of Shares subject to an Option.  In the event of a Spin-off Transaction, the Administrator may in its discretion make such adjustments and take such other action as it deems appropriate with respect to outstanding Options under the Plan, including but not limited to: (i) adjustments to the number and kind of shares, the exercise or purchase price per share and the vesting periods of outstanding Options, (ii) prohibit the exercise of Options during certain periods of time prior to the consummation of the Spin-off Transaction, or (iii) the substitution, exchange or grant of Options to purchase securities of the Subsidiary; provided that the Administrator shall not be obligated to make any such adjustments or take any such action hereunder.

 

11.   Corporate Transactions and Changes in Control.

 

(a)         Termination of Option to Extent Not Assumed in Corporate Transaction. Effective upon the consummation of a Corporate Transaction, all outstanding Options under the Plan shall terminate.  However, all such Options shall not terminate to the extent they are Assumed in connection with the Corporate Transaction.

 

(b)         Acceleration of Option Upon Corporate Transaction or Change in Control.

 

(i)                                     Corporate Transaction.  The Administrator may determine, in the event of a Corporate Transaction, for the portion of each Option that is neither Assumed nor Replaced, such portion of the Option 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 (or other consideration) at the time represented by such portion of the Option, immediately prior to the specified effective

 

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date of such Corporate Transaction, provided that the Optionee’s Continuous Service has not terminated prior to such date.

 

(ii)                                  Change in Control.  The Administrator may determine, in the event of a Change in Control (other than a Change in Control which also is a Corporate Transaction), each Option which is at the time outstanding under the Plan automatically shall become fully vested and exercisable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at Fair Market Value), immediately prior to the specified effective date of such Change in Control, for all of the Shares (or other consideration) at the time represented by such Option, provided that the Optionee’s Continuous Service has not terminated prior to such date.

 

12.   Effective Date and Term of Plan.  The Plan shall become effective upon the earlier to occur of its adoption by the Board or its approval by the shareholders of the Company.  It shall continue in effect for a term of five (5) years unless sooner terminated.  Subject to Section 17, below, and Applicable Laws, Options may be granted under the Plan upon its becoming effective.

 

13.   Amendment, Suspension or Termination of the Plan.

 

(a)         The Board may at any time amend, suspend or terminate the Plan; provided, however, that no such amendment shall be made without the approval of the Company’s shareholders to the extent such approval is required by Applicable Laws, or if such amendment would change any of the provisions of Section 3(a), Section 4(b)(vi) or this Section 13(a).

 

(b)         No Option may be granted during any suspension of the Plan or after termination of the Plan.

 

(c)          No suspension or termination of the Plan (including termination of the Plan under Section 12, above) shall adversely affect any rights under Options already granted to an Optionee.

 

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14.   Reservation of Shares.

 

(a)         The Company, during the term of the Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

 

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

 

15.   No Effect on Terms of Employment/Consulting Relationship.  The Plan shall not confer upon any Optionee any right with respect to the Optionee’s Continuous Service, nor shall it interfere in any way with his or her right or the right of the Company or any Related Entity to terminate the Optionee’s Continuous Service at any time, with or without Cause, and with or without notice.  The ability of the Company or any Related Entity to terminate the employment of an Optionee who is employed at will is in no way affected by its determination that the Optionee’s Continuous Service has been terminated for Cause for the purposes of this Plan.

 

16.   No Effect on Retirement and Other Benefit Plans.  Except as specifically provided in a retirement or other benefit plan of the Company or a Related Entity, Options shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company or a Related Entity, and shall not affect any benefits under any other benefit plan of any kind or any benefit plan subsequently instituted under which the availability or amount of benefits is related to level of compensation.  The Plan is not a “Retirement Plan” or “Welfare Plan” under the Employee Retirement Income Security Act of 1974, as amended.

 

17.   Shareholder Approval.  The grant of Options under the Plan shall be subject to approval by the shareholders of the Company.  Such shareholder approval shall be obtained in the degree and manner required under Applicable Laws.  The Administrator

 

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may grant Options under the Plan prior to approval by the shareholders, but until such approval is obtained, no such Option shall be exercisable.

 

18.   Unfunded Obligation.  Optionees shall have the status of general unsecured creditors of the Company.  Any amounts payable to Optionees pursuant to the Plan shall be unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the Employee Retirement Income Security Act of 1974, as amended.  Neither the Company nor any Related Entity shall be required to segregate any monies from its general funds, or to create any trusts, or establish any special accounts with respect to such obligations.  The Company shall retain at all times beneficial ownership of any investments, including trust investments, which the Company may make to fulfill its payment obligations hereunder.  Any investments or the creation or maintenance of any trust or any Optionee account shall not create or constitute a trust or fiduciary relationship between the Administrator, the Company or any Related Entity and an Optionee, or otherwise create any vested or beneficial interest in any Optionee or the Optionee’s creditors in any assets of the Company or a Related Entity. The Optionees shall have no claim against the Company or any Related Entity for any changes in the value of any assets that may be invested or reinvested by the Company with respect to the Plan.

 

19.   Construction.  Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan.  Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular.  Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

 

20.   Information to Optionees. Each Optionee shall be provided with such information regarding the Company as the Board or the Committee from time to time deems necessary or appropriate; provided, however, that each Optionee shall at all times be provided with such information as is required to be provided from time to time pursuant to applicable regulatory requirements.

 

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17Exhibit 10.4

 

EXCLUSIVE BUSINESS COOPERATION AGREEMENT

 

This Exclusive Business Cooperation Agreement (the “Agreement”) is entered into in the People’s Republic of China (“PRC”) as of December 22, 2014 by and between the following parties:

 

(a)                                 Dissector (Beijing) Technology Co. Ltd., a limited liability company wholly owned by foreign investor, incorporated and validly existing in Beijing, PRC under PRC laws (“WFOE”), and

 

(b)                                 Gridsum Holding (Beijing) Co., Ltd., a limited liability company incorporated and validly existing in Beijing, PRC under PRC laws (“Gridsum Holdco”).

 

The above parties hereinafter shall be individually referred to as a “Party” and collectively referred to as the “Parties”.

 

Whereas:

 

(a)                                 WFOE is a wholly-foreign-owned enterprise established in PRC, and has the necessary resources to provide technical and consulting services.

 

(b)                                 Gridsum Holdco is a company with exclusively domestic capital registered in PRC and may engage in the business such as providing services with respect to search engine optimization, search engine marketing and web dissector as approved by the relevant governmental authorities in PRC (collectively, the “Principal Business”).

 

(c)                                  WFOE is willing to provide Gridsum Holdco with technical support, consulting services and other commercial services on exclusive basis in relation to the Principal Business during the term of this Agreement, utilizing its advantages in technology, human resources, and information, and Gridsum Holdco is willing to accept such services provided by WFOE or WFOE’s designee(s), each on the terms set forth herein.

 

The Parties hereby have reached the following agreement upon friendly consultations:

 

Article 1 Services Provision

 

1.1                               Gridsum Holdco hereby appoints WFOE as Gridsum Holdco’s exclusive services provider to provide Gridsum Holdco with complete technical support, business support and related consulting services during the term of this Agreement, in accordance with the terms and conditions of this Agreement, which may include all necessary services within the scope of the Principal Business as may be determined from time to time by WFOE, such as but not limited to (A) the research and design of computer hardware and software, internet technology, communication technology and the related products; (B) technology transfer, technology service and consulting service for the foregoing products; and (C) training for computer technology. The exclusive services to  be

 

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provided by WFOE shall not include any services beyond the business scope of WFOE. WFOE has no obligation to provide any services beyond the business scope of WFOE.

 

1.2                               Gridsum Holdco agrees to accept all the consultations and services provided by WFOE. Gridsum Holdco further agrees that unless with WFOE’s prior written consent, during the term of this Agreement, Gridsum Holdco shall not directly or indirectly accept the same or any similar consultations and/or services provided by any third party and shall not establish similar corporation relationship with any third party regarding the matters contemplated by this Agreement. Parties agree that WFOE may appoint other parties, who may enter into certain agreements described in Article 1.3 with Gridsum Holdco, to provide Gridsum Holdco with the consultations and/or services under this Agreement.

 

1.3                               Service Providing Methodology

 

(a)                                 The Parties agree that during the term of this Agreement, where necessary, Gridsum Holdco may enter into further technical service agreements or consulting service agreements with WFOE or any other party designated by WFOE, which shall provide the specific contents, manner, personnel, and fees for the specific technical services and consulting services.

 

(b)                                 To fulfill this Agreement, the Parties agree that WFOE can provide relevant equipments to Gridsum Holdco for Gridsum Holdco’s use for the purposes of providing services to Gridsum Holdco.

 

Article 2 Service Fees and Payment Mode

 

The Parties agree that, in consideration of the services provided by WFOE, Gridsum Holdco shall pay WFOE fees (the “Service Fees”) equal to 90% of the net income of Gridsum Holdco, which equals the balance of the gross income less the costs of Gridsum Holdco acceptable to the Parties (the “Net Income”). The Service Fees shall be due and payable on a quarterly basis. Within 30 days after the end of each quarter, Gridsum Holdco shall (i) deliver to WFOE the management accounts and operating statistics of Gridsum Holdco for such quarter, including the Net Iincome of Gridsum Holdco during such quarter (the “Quarterly Net Income”), and (ii) pay 90% of such Quarterly Net Income to WFOE (the “Quarterly Payment”). Within ninety (90) days after the end of each fiscal year, Gridsum Holdco shall (i) deliver to WFOE audited financial statements of Gridsum Holdco for such fiscal year, which shall be audited and certified by an independent certified public accountant approved by WFOE, and (ii) pay an amount to WFOE equal to the shortfall, if any, of the aggregate net income of Gridsum Holdco for such fiscal year, as shown in such audited financial statements, as compared to the aggregate amount of the Quarterly Payments paid by Gridsum Holdco to WFOE in such fiscal year. WFOE and Gridsum Holdco further agree that, according to the actual cooperation between WFOE and Gridsum Holdco and the revenue and expenditure situation of Gridsum Holdco, the Parties can reasonably adjust the calculation ratio of the Service Fees provided herein, and WFOE is entitled to determine, at its sole discretion, whether to permit Gridsum Holdco to defer the

 

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payment of part of Service Fees under certain particular circumstances.

 

Article 3 Intellectual Property Rights and Confidentiality Clauses

 

3.1                               WFOE shall have exclusive and proprietary rights and interests in all rights, ownership, interests and intellectual properties which owned by WFOE and used by WFOE during the performance of this Agreement, including but not limited to copyrights, patents, patent applications, software, technical secrets, trade secrets and others.

 

3.2                               The Parties acknowledge that the existence and the terms of this Agreement and any oral or written information exchanged between the Parties in connection with the preparation and performance this Agreement are regarded as confidential information. Each Party shall maintain confidentiality of all such confidential information, and without obtaining the written consent of the other Party, it shall not disclose any relevant confidential information to any third parties, except for the information that: (i) is in the public domain (other than through the receiving Party’s unauthorized disclosure); (ii) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stock exchange, or orders of the court or other government authorities; or (iii) is required to be disclosed by any Party to its shareholders, investors, legal counsels or financial advisors regarding the transaction contemplated hereunder, provided that such shareholders, investors, legal counsels or financial advisors shall be bound by the confidentiality obligations similar to those set forth in this Article. Disclosure of any confidential information by the staff members or agencies hired by any Party shall be deemed disclosure of such confidential information by such Party, which Party shall be held liable for breach of this Agreement. This Article shall survive the termination of this Agreement for any reason.

 

3.3                               The Parties agree that this Article shall survive changes to, and rescission or termination of, this Agreement.

 

Article 4 Representations and Warranties

 

4.1                               WFOE hereby represents and warrants as follows:

 

(a)                                 WFOE is a wholly owned foreign enterprise legally registered and validly existing in accordance with PRC laws.

 

(b)                                 WFOE has taken all necessary corporate actions, obtained all necessary authorization and the consent and approval from third parties and government agencies (if any) for the execution, delivery and performance of this Agreement. WFOE’s execution, delivery and performance of this Agreement do not violate any explicit requirements under any law or regulation binding on WFOE.

 

(c)                                  This Agreement constitutes WFOE’s legal, valid and binding obligations, enforceable in accordance with its terms.

 

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4.2                               Gridsum Holdco hereby represents and warrants as follows:

 

(a)                                 Gridsum Holdco is a company legally registered and validly existing in accordance with PRC laws and has obtained the relevant permit and license for engaging in the Principal Business in a timely manner;

 

(b)                                 Gridsum Holdco has taken all necessary corporate actions, obtained all necessary authorization and the consent and approval from third parties and government agencies (if any) for the execution, delivery and performance of this Agreement. Gridsum Holdco’s execution, delivery and performance of this Agreement do not violate any explicit requirements under any law or regulation binding on WFOE.

 

(c)                                  This Agreement constitutes Gridsum Holdco’s legal, valid and binding obligations, and shall be enforceable against it.

 

Article 5 Term of Agreement

 

5.1                               This Agreement is executed on the date first above written and shall take effect as of such date. Unless earlier terminated in accordance with the provisions of this Agreement or relevant agreements separately executed between the Parties, the term of this Agreement shall be ten (10) years. After the execution of this Agreement, the Parties shall review this Agreement every three (3) months to determine whether to amend or supplement the provisions in this Agreement based on the actual circumstances at that time.

 

5.2                               The term of this Agreement may be extended if confirmed in writing by WFOE prior to the expiration thereof. The extended term shall be determined by WFOE, and Gridsum Holdco shall accept such extended term unconditionally.

 

Article 6 Termination

 

6.1                               Unless renewed in accordance with the relevant terms of this Agreement, this Agreement shall be terminated upon the date of expiration hereof.

 

6.2                               During the term of this Agreement, unless WFOE commits gross negligence, or a fraudulent act, against Gridsum Holdco, Gridsum Holdco shall not terminate this Agreement prior to its expiration date. Nevertheless, WFOE shall have the right to terminate this Agreement upon giving 30 days’ prior written notice to Gridsum Holdco at any time.

 

6.3                               The rights and obligations of the Parties under Articles 3, 7 and 8 shall survive the termination of this Agreement.

 

Article 7 Indemnification

 

Gridsum Holdco shall indemnify and hold harmless WFOE from any losses, injuries, obligations or expenses caused by any lawsuit, claims or other arbitration against WFOE arising from or caused by the consultations and services provided by WFOE to

 

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Gridsum Holdco pursuant this Agreement, except where such losses, injuries, obligations or expenses arise from the gross negligence or willful misconduct of WFOE.

 

Article 8 Notices

 

8.1                               Any notice, request, demand and other correspondences made as required by or in accordance with this Agreement shall be made in writing and delivered to the relevant Party.

 

8.2                               The abovementioned notice or other correspondences shall be deemed to have been delivered when it is transmitted if transmitted by facsimile, or when it is delivered if received in person, or when five (5) days have elapsed after posting if posted by mail.

 

Article 9 Assignment

 

9.1                               Without WFOE’s prior written consent, Gridsum Holdco shall not assign its rights and obligations under this Agreement to any third party.

 

9.2                               Gridsum Holdco agrees that WFOE may assign its obligations and rights under this Agreement to any third party upon a prior written notice to Gridsum Holdco but without the consent of Gridsum Holdco.

 

Article 10 Miscellaneous

 

10.1                        This Agreement is written in both Chinese and English language in two (2) copies, each Party having one (1) copy with equal legal validity; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.

 

10.2                        The conclusion, validity, execution, amendment, interpretation and termination of this Agreement shall be governed by laws of the PRC.

 

10.3                        Any disputes arising from and in connection with this Agreement shall be settled through consultations among the Parties involved, and if the Parties involved fail to reach an agreement regarding such a dispute within thirty (30) days of its occurrence, such dispute shall be submitted to China International Economic and Trade Arbitration Commission for arbitration in Beijing in accordance with the arbitration rules of such commission, and the arbitration award shall be final and binding on all the Parties involved.

 

10.4                        Any rights, powers and remedies empowered to any Party by any provisions herein shall not preclude any other rights, powers and remedies enjoyed by such Party in accordance with laws and other provisions under this Agreement, and a Party’s exercise of any of its rights, powers and remedies shall not preclude its exercise of other rights, powers and remedies of it.

 

10.5                        Any failure or delay by a Party in exercising any of its rights, powers and

 

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remedies hereunder or in accordance with laws (the “Party’s Rights”) shall not lead to a waiver of such rights, and the waiver of any single or partial exercise of the Party’s Rights shall not preclude such Party from exercising such rights in any other way or exercising the remaining part of the Party’s Rights.

 

10.6                        The titles of the Articles contained herein are for reference only, and in no circumstances shall such titles be used for or affect the interpretation of the provisions hereof.

 

10.7                        Each provision contained herein shall be severable and independent from each of other provisions. If at any time any one or more articles herein become invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions herein shall not be affected thereby

 

10.8                        Upon execution, this Agreement shall replace any other previous legal documents entered into by relevant Parties on the same subject matter.

 

10.9                        Any amendments or supplements to this Agreement shall be made in writing and shall take effect only when properly signed by the Parties to this Agreement.

 

10.10                 This Agreement shall be binding on its legal successors of the Parties.

 

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IN WITNESS HEREOF, the following Parties have caused this Exclusive Business Cooperation Agreement to be executed as of the date first here above mentioned.

 

 

	
Dissector (Beijing) Technology   Co. Ltd. (Company Seal)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Signature:
    	
/s/Qi Guosheng
    	
 
    
	
Name:  Qi   Guosheng
    	
 
    
	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Gridsum Holding (Beijing) Co., Ltd. (Company Seal)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Signature:
    	
/s/Qi Guosheng
    	
 
    
	
Name:  Qi   Guosheng
    	
 
    
	
Title:

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