Document:

Exhibit 10.1

 

20 August 2018

 

KE HOLDINGS INC.

 

(incorporated in the Cayman Islands with limited liability)

 

 

SHARE OPTION SCHEME

 

 

 

KE HOLDINGS INC.

(incorporated in the Cayman Islands with limited liability)

 

PRE-IPO SHARE OPTION SCHEME

 

1.                                      DEFINITIONS

 

1.1                               In this Scheme, the following expressions have the following meanings unless context requires otherwise:-

 

	
“Administrator”
    	
 
    	
the meaning given to that term in section 3.3;
    
	
 
    	
 
    	
 
    
	
“Adoption Date”
    	
 
    	
means [20 August] 2018, the date on which this   Scheme takes effect;
    
	
 
    	
 
    	
 
    
	
“Auditors”
    	
 
    	
the auditors for the time being of the Company;
    
	
 
    	
 
    	
 
    
	
“Board”
    	
 
    	
the board of directors of the Company or a committee   thereof duly appointed for the purpose of administering this Scheme;
    
	
 
    	
 
    	
 
    
	
“business day”
    	
 
    	
a day on which banks in the PRC are generally open   to the public for normal banking business and which is not a Saturday, Sunday   or public holiday in the PRC;
    
	
 
    	
 
    	
 
    
	
“Cause”
    	
 
    	
with respect to any Participant, means such   Participant’s:

 

(i) dishonesty or serious misconduct, whether or not   in connection with his/her Continuous Service; willful disobedience or   non-compliance with the terms of his/her employment, agency or consultancy   contract with any member of the Group or any lawful orders or instructions   given by any member of the Group or any policy(ies) of any member of the   Group;

 

(ii) incompetence or negligence in the performance   of his/her duties; or

 

(iii) doing anything in the conclusive opinion of   any Director that adversely affects his/her ability to perform his/her duties   properly or bring the Company or the Group into disrepute; or

 

(iv) breach of any laws or regulations, whether or   not in connection with his/her Continuous Service;
    

 

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“Companies Law”
    	
 
    	
the Companies Law of the Cayman Islands as amended   from time to time;
    
	
 
    	
 
    	
 
    
	
“Company”
    	
 
    	
KE Holdings Inc., an exempted company with limited   liability incorporated in the Cayman Islands on July 6, 2018;
    
	
 
    	
 
    	
 
    
	
“Continuous Service”
    	
 
    	
the provision of services to any member of the Group   in the capacity of an Employee, a Director and/or Consultant is not   interrupted or has not ceased. For the purposes of this Scheme, (i) in   jurisdictions requiring advance notice to terminate the provision of services   of an Employee, Director or Consultant, Continuous Service shall be deemed to   have ceased upon the actual cessation of the provision of services to the   Group notwithstanding any required notice period that must be fulfilled   before the termination can be effective under applicable laws; and   (ii) a Grantee’s Continuous Service shall be deemed to have ceased   either upon actual cessation of the provision of services or upon the entity   for which the Grantee provides services ceases to be a member of the Group,   whichever is earlier. For the avoidance of doubt, Continuous Service shall   not be considered to have been interrupted in the case of (i) any   approved leave of absence, which shall include sick leave, military leave, or   any other approved personal leave, (ii) transfers among members of the   Group, or any of their successors, in the capacity of an Employee, Director   or Consultant, or (iii) any change in title provided that the Grantee   remains in the service of the Group in the capacity of an Employee, Director   or Consultant;
    
	
 
    	
 
    	
 
    
	
“Consultant”
    	
 
    	
any person who is engaged by the Company or any   other member of the Group to render consulting or advisory services to any   member(s) of the Group (other than an Employee or a Director who renders   such services in such person’s capacity as an Employee or a Director);
    
	
 
    	
 
    	
 
    
	
“Control”
    	
 
    	
with respect to a corporation or other entity, means   the power or authority, whether exercised or not, to direct the business,   management and policies of such corporation or entity, directly or   indirectly, whether through the ownership of voting securities, by contract   or otherwise, provided that such power or authority shall conclusively be   presumed to exist upon either the possession of beneficial ownership or power   to direct the vote of more than fifty percent (50%) of the votes entitled to   be cast at a meeting of the shareholders of such corporation or entity, or   the power to control the composition of a majority of the board of directors   of such corporation or entity;
    

 

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“Date of Grant”
    	
 
    	
in respect of an Option, the date on which the Board   resolves to make an Offer of that Option to or deem an Offer of that Option   to be made to the Participant, which date must be a business day;
    
	
 
    	
 
    	
 
    
	
“Director”
    	
 
    	
a member of the Board or the board of directors of   any member of the Group;
    
	
 
    	
 
    	
 
    
	
“Disability”
    	
 
    	
with respect to any Participant, means the Participant   is unable to engage in any substantial gainful activity by reason of any   medically determinable physical or mental impairment which can be expected to   result in death or which has lasted, or can be expected to last, for a   continuous period of not less than 12 months. The existence of any such   Disability will be certified by a physician acceptable to the Company;
    
	
 
    	
 
    	
 
    
	
“Employee”
    	
 
    	
any person who is in the employment of a member of   the Group, subject to the control and direction of the member of the Group as   to the work to be performed as well as the manner and method of performance.   The payment of Director’s fee by a member of the Group shall not itself   constitute “employment” by the member of the Group;
    
	
 
    	
 
    	
 
    
	
“Grantee”
    	
 
    	
any Participant who accepts an Offer in accordance   with the terms of this Scheme, or (where the context so permits) any person   who is entitled in accordance with applicable laws of succession to any such   Option in consequence of the death of the original Grantee, or the legal   personal representative of such person;
    
	
 
    	
 
    	
 
    
	
“Group”
    	
 
    	
the Company and its subsidiaries, together with   Beijing Lianjia Real Estate Agency Co., Ltd.# (北京链家房地产经纪有限公司)   (“Beijing Lianjia”) and the companies   controlled by, Beijing Lianjia and the Company;
    
	
 
    	
 
    	
 
    
	
“Memorandum and Articles”
    	
 
    	
the memorandum and articles of association of the   Company as amended and restated from time to time;
    
	
 
    	
 
    	
 
    
	
“Offer”
    	
 
    	
the offer of the grant of an Option made in   accordance with section 4.1;
    
	
 
    	
 
    	
 
    
	
“Option”
    	
 
    	
a right granted to subscribe for Shares pursuant to   this Scheme;
    

 

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“Option Period”
    	
 
    	
a period within which an Option may be exercised,   which is to be determined and notified by the Board to each Grantee at the   time of making an Offer, and shall not expire later than 10 years from the   Date of Grant;
    
	
 
    	
 
    	
 
    
	
“Participants”
    	
 
    	
any Employees, Directors and Consultants of any   member of the Group who the Board considers, in its sole discretion, have   contributed or will contribute to the Group;
    
	
 
    	
 
    	
 
    
	
“PRC”
    	
 
    	
the People’s Republic of China and for the purposes   of this document only, excludes the Hong Kong Special Administrative Region   of the People’s Republic of China, the Macau Special Administrative Region of   the People’s Republic of China and Taiwan;
    
	
 
    	
 
    	
 
    
	
“PRC Grantee Conditions”
    	
 
    	
the meaning given to that term in section 2.2;
    
	
 
    	
 
    	
 
    
	
“Retirement”
    	
 
    	
the Participant’s retirement following reaching the   retirement age as established by the legislation in force in the jurisdiction   of the Participant’s principal place of employment or as otherwise determined   under Company policy;
    
	
 
    	
 
    	
 
    
	
“RMB”
    	
 
    	
Renminbi, the lawful currency of the People’s   Republic of China;
    
	
 
    	
 
    	
 
    
	
“Scheme”
    	
 
    	
this share option scheme in its present form or as amended   from time to time in accordance with the provisions hereof;
    
	
 
    	
 
    	
 
    
	
“Scheme Limit”
    	
 
    	
the meaning given to that term in section 8.1;
    
	
 
    	
 
    	
 
    
	
“Scheme Period”
    	
 
    	
the period commencing on the Adoption Date and   ending on the tenth anniversary of the Adoption Date;
    
	
 
    	
 
    	
 
    
	
“Share(s)”
    	
 
    	
ordinary share(s) of nominal value of US$0.0001   each in the share capital of the Company or, if there has been a subsequent   sub-division, reduction, consolidation, reclassification or reconstruction of   the share capital of the Company, the shares in the ordinary share capital of   the Company resulting from such sub-division, reduction, consolidation,   reclassification or reconstruction;
    
	
 
    	
 
    	
 
    
	
“Shareholder(s)”
    	
 
    	
holder(s) of the share(s) of the Company   from time to time;
    
	
 
    	
 
    	
 
    
	
“Subscription Price”
    	
 
    	
the price per Share at which a Grantee may subscribe   for Shares on the exercise of an Option as described in section 5;
    

 

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“subsidiary or subsidiaries”
    	
 
    	
with respect to a company, means any corporation or   other entity of which a majority of the voting shares or voting power is   beneficially owned directly or indirectly by the company;
    
	
 
    	
 
    	
 
    
	
“Summary Termination Ground(s)”
    	
 
    	
the meaning given to that term in section 7.1(c);   and
    
	
 
    	
 
    	
 
    
	
“US$”
    	
 
    	
United States dollars, the lawful currency of the   United States of America.
    

 

1.2                               In this Scheme, save where the context otherwise requires:

 

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

 

(b)                                 references to sections are references to sections of this Scheme;

 

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

 

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

 

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

 

(f)                                   references to persons shall include bodies corporate, corporations, partnerships, sole proprietorships, organisations, associations, enterprises, branches and entities of any other kind whether or not having separate legal identity; and

 

(g)                                  references to any statutory body shall include the successor thereof and anybody established to replace or assume the functions of the same.

 

2.                                      APPROVAL CONDITIONS

 

2.1                               The validity of any Option granted pursuant to this Scheme is conditional upon:

 

(a)                     the passing of a resolution by the Board to approve the adoption of this Scheme; and

 

(b)                     the passing of a resolution by the shareholders of the Company to approve the adoption of this Scheme.

 

2.2                               Notwithstanding the conditions in section 2.1 and subject to section 2.3, if the Grantee is a PRC resident, he or she shall not be entitled to exercise any Option until: (i) to the extent applicable, any restriction or condition imposed by the relevant PRC laws, regulations and notices in relation to the subscription of or dealing in shares of overseas listed companies by PRC residents or any law, regulation or notice with similar effects have been abolished or removed or ceased to be applicable to the Grantee or the Grantee has obtained approval, exemption or waiver from the relevant PRC regulatory authorities for the subscription of and dealing in the Shares; or (ii) he or she has given a representation to the Company to the effect that he or she has satisfied all the relevant laws, regulations and notices in exercising the Options (the “PRC Grantee Conditions”).

 

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2.3                               A Grantee who is a PRC resident shall be entitled to exercise any Option despite not having fulfilled all of the PRC Grantee Conditions, provided that the Board considers, in its absolute and sole discretion, that such Grantee be entitled to do so pursuant to the terms and conditions upon which such Option(s) is/are granted.

 

3.                                      PURPOSE, DURATION AND ADMINISTRATION

 

3.1                               The purpose of this Scheme is to provide Participants with the opportunity to acquire proprietary interests in the Company and to encourage Participants to work towards enhancing the value of the Company and its Shares for the benefit of the Company and its Shareholders as a whole. The Scheme will provide the Company with a flexible means of retaining, incentivising, rewarding, remunerating, compensating and/or providing benefits to Participants.

 

3.2                               Subject to the fulfilment of the conditions in sections 2 and 12, this Scheme shall be valid and effective for the Scheme Period. After the expiry of the Scheme Period, no further Options shall be offered or granted, but in all other respects the provisions of this Scheme shall remain in full force and effect to the extent necessary to give effect to the exercise of any Options granted prior thereto or otherwise as may be required in accordance with the provisions of this Scheme.

 

3.3                               The Scheme shall be administered by any person(s) designated by the Board from time to time (the “Administrator”).

 

3.4                               A decision of the Administrator shall be final and binding on all parties.

 

3.5                               Subject to compliance with the provisions of this Scheme and any applicable laws or regulations, the Administrator shall have the right to (i) interpret and construe the provisions of this Scheme, (ii) determine the terms and conditions of any award granted herein, including the persons who will be offered Options under this Scheme, the number of Shares and the Subscription Price, subject to section 5, in relation to such Options, (iii) approve the earlier exercise or acceleration of awards hereunder; (iv) subject to sections 9 and 11, make such appropriate and adjustments to the terms of the Options granted under this Scheme as it deems necessary, (v) approve the form of any documents in connection with this Scheme, and (vi) make such other decisions or determinations as it shall deem appropriate in the administration of this Scheme.

 

3.6                               The Administrator shall not be personally liable by reason of any contract or other instrument executed by such member or on his behalf in his capacity as an administrator of this Scheme or for any mistake of judgment made in good faith for the purposes of this Scheme, and the Company shall indemnify and hold harmless each employee, officer or director of the Company to whom any duty or power relating to the administration or interpretation of this Scheme may be allocated or delegated, against any cost or expense (including legal fees) or liability (including any sum paid in settlement of a claim with the approval of the Board) arising out of any act or omission to act in connection with this Scheme unless arising out of such person’s own willful default, fraud or bad faith.

 

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4.                                      GRANT OF OPTION

 

4.1                               On and subject to the terms of this Scheme, the Administrator shall be entitled (but shall not be bound) at any time within the Scheme Period to make an Offer to any Participant, as the Administrator may in its absolute discretion select, to take up an Option pursuant to which such Participant may, during the Option Period, subscribe for such number of Shares as the Administrator may determine at the Subscription Price, in consideration of the Participant’s mutual undertakings and promises under this Scheme and the terms and conditions upon which an Option is granted. The Offer shall specify the terms on which the Option is to be granted. Such terms may include, but are not limited to, any minimum period(s) for which an Option must be held and/or any minimum performance target(s) that must be achieved, before the Option can be exercised in whole or in part, and may include at the discretion of the Board such other terms either on a case by case basis or generally.

 

4.2                               An Offer shall be made to a Participant by a letter in duplicate, in such form as the Administrator may from time to time determine, requiring the Participant to undertake to hold the Option on the terms on which it is to be granted and to be bound by the provisions of this Scheme. Each Offer shall remain open for acceptance by the Participant to whom the Offer is made for a period of ten (10) business days from the date on which the letter containing the Offer is delivered to that Participant, provided that no such Offer shall be open for acceptance after the expiry of the Scheme Period or after this Scheme has been terminated in accordance with the provisions hereof, whichever is the earlier.

 

4.3                               An Offer shall be deemed to have been accepted and the Option to which the Offer relates shall be deemed to have been granted and to have taken effect when the duplicate of the offer letter comprising acceptance of the Offer duly signed by the Grantee with the number of Shares in respect of which the Offer is accepted clearly stated therein, is received by the Company within the period as stipulated in section 4.2.

 

4.4                               To the extent that the Offer is not accepted within ten (10) business days from the date on which the letter containing the Offer is delivered to that Participant in the manner indicated in section 4.2, it shall be deemed to have been irrevocably declined.

 

5.                                      SUBSCRIPTION PRICE

 

The Subscription Price in relation to each Option shall be such price as may be determined by the Board provided that it shall not be below the nominal or par value of a Share.

 

6.                                      EXERCISE OF OPTIONS

 

6.1                               On and subject to the terms and conditions upon which an Option is granted, an Option shall be personal to the Grantee and shall not be transferable or assignable and no Grantee shall in any way sell, transfer, charge, mortgage, encumber or otherwise dispose of or create any interest in favor of or enter into any agreement with any other person over or in relation to any Option, unless otherwise approved by the Board in writing or except for the transmission of an Option on the death of the Grantee to his personal representative(s) on the terms of this Scheme. Any breach of the foregoing shall entitle the Company to cancel any outstanding Option or part thereof granted to such Grantee without incurring any liability on the part of the Company.

 

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6.2                               An Option may, subject to section 6.3, be exercised in whole or in part in accordance with the terms and conditions upon which such Option is granted.

 

6.3                               Subject always to the terms and conditions upon which such Option was granted, an Option may be exercised by the Grantee at any time during the Option Period, provided that:

 

(a)                                 in the event of the Grantee ceasing to provide Continuous Service as a result of the Grantee’s death before his/her exercise of his/her vested Options and not on one or more of the grounds specified in section 7.1(c), the personal representative(s) of the Grantee shall be entitled to exercise the Option up to the entitlement of such Grantee as at the date of death (to the extent not already exercised) within the period of 12 months following the date of such cessation of provision of Continuous Service, which date shall be his/her last actual day of provision of Continuous Service with the Company or any other members of the Group, whether salary is paid in lieu of notice or not;

 

(b)                                 in the event of the Grantee ceasing to provide Continuous Service for any reason other than (i) his/her death or (ii) one or more of the grounds specified in section 7.1(c) or (iii) his/her Disability or (iv) his/her Retirement, subject to section 6.3(j), the Grantee shall have the right to exercise the Option up to the entitlement of such Grantee as at the date of cessation of the provision of Continuous Service (to the extent not already exercised) within the period of 3 months following the date of such cessation, which date shall be his/her last actual day of provision of Continuous Service with the Company or any other members of the Group, whether salary is paid in lieu of notice or not, unless the Administrator otherwise determines;

 

(c)                                  in the event of the Grantee ceasing to provide Continuous Service as a result of Disability, subject to section 6.3(j), the Grantee shall have the right to exercise the Option up to the entitlement of such Grantee as at the date of cessation of the provision of Continuous Service (to the extent not already exercised) within the period of 12 months following the date of such cessation, which date shall be his/her last actual day of provision of Continuous Service with the Company or any other members of the Group, whether salary is paid in lieu of notice or not;

 

(d)                                 in the event of the Grantee, who is an Employee, a Director or a Consultant, ceasing to provide Continuous Service as a result of Retirement, subject to section 6.3(j), the Grantee shall have the right to exercise the Option up to the entitlement of such Grantee as at the date of cessation of the provision of Continuous Service (to the extent not already exercised) within the period of 3 months following the date of such cessation, which date shall be his/her last actual day of provision of Continuous Service with the Company or any other members of the Group, whether salary is paid in lieu of notice or not;

 

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(e)                                  in the event of the Grantee ceasing to provide Continuous Service as a result of one or more of the Summary Termination Grounds, with prior written approval of the Administrator and subject to section 6.3(j), the Grantee shall have the right to exercise the Option up to the entitlement of such Grantee as at the date of cessation of the provision of Continuous Service (to the extent not already exercised) within the period that the Grantee is entitled to exercise his/her vested Options;

 

(f)                                   if a general offer by way of takeover or otherwise (other than by way of scheme of arrangement pursuant to section 6.3(g)) is made to all the Shareholders (other than the offeror and/or any person controlled by the offeror and/or any person acting in concert with the offeror) and such offer becomes or is declared unconditional prior to the expiry date of the relevant Option, the Company shall forthwith give notice thereof to the Grantee and the Grantee shall be entitled to exercise the Option to its full extent or, if the Company shall give the relevant notification, to the extent notified by the Company, at any time within such period as shall be notified by the Company;

 

(g)                                  if a general offer for Shares by way of scheme of arrangement is made to all the Shareholders and has been approved by the necessary number of Shareholders at the requisite meetings, the Company shall forthwith give notice thereof to the Grantee and the Grantee may at any time thereafter (but before such time as shall be notified by the Company) exercise the Option to its full extent or, if the Company shall give the relevant notification, to the extent notified by the Company;

 

(h)                                 in the event a notice is given by the Company to its Shareholders to convene a general meeting for the purpose of considering and, if thought fit, approving a resolution to voluntarily wind-up the Company, the Company shall forthwith give notice thereof to the Grantee and the Grantee (or in the case of the death of the Grantee, his or her personal representatives(s)) may at any time within such period as shall be notified by the Company, subject to the provisions of all applicable laws, exercise the Option to its full extent or, if the Company shall give the relevant notification, to the extent notified by the Company, and the Company shall as soon as possible and in any event no later than three (3) days prior to the date of the proposed general meeting, allot, issue and register in the name of the Grantee such number of fully paid Shares which fall to be issued on exercise of such Option;

 

(i)                                     in the event of a compromise or arrangement, other than a scheme of arrangement contemplated in section 6.3(g), between the Company and its members and/or creditors being proposed in connection with a scheme for the reconstruction of the Company or its amalgamation with any other companies pursuant to the laws of the jurisdiction in which the Company was incorporated, the Company shall give notice thereof to all Grantees on the same day as it first gives notice of the meeting to its members and/or creditors summoning the meeting to consider such a scheme or arrangement and the Grantee may at any time thereafter (but before such time as shall be notified by the Company) exercise the Option to its full extent or, if the Company shall give the relevant notification, to the extent notified by the Company, and the Company shall as soon as possible and in any event no later than three (3) days prior to the date of the proposed meeting, allot, issue and register in the name of the Grantee such number of fully paid Shares which fall to be issued on exercise of such Option; and

 

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(j)                                    in the event of the Grantee ceasing to provide Continuous Service and has the right to exercise the Option in accordance with sections  6.3(b), 6.3(c), 6.3(d), 6.3(e), unless otherwise approved by the Administrator in writing and without limiting other legal remedies available to any member of the Group, the Option (to the extent not already exercised) shall lapse automatically on the date the Company becomes aware of the Grantee in breach of any non-competition, non-compliance, non-solicitation and/or non-disclosure obligation(s) between the Grantee and any member of the Group

 

6.4                               Upon the occurrence of any of the events referred to in sections 6.3(f), 6.3(g), 6.3(h) and 6.3(i), the Company may in its discretion and notwithstanding the terms of the relevant Option also give notice to a Grantee that his or her Option may be exercised at any time within such period as shall be notified by the Company and/or to the extent (not being more than the extent to which it could then be exercised in accordance with its terms) notified by the Company. If the Company gives such notice that any Option shall be exercised in part only, the balance of the Option shall lapse.

 

6.5                               The Shares to be allotted and issued upon the exercise of an Option shall be identical to the then existing issued shares of the Company and subject to all the provisions of the Memorandum and Articles for the time being in force and will rank pari passu with the other fully paid Shares in issue on the date the name of the Grantee is registered on the register of members of the Company or if that date falls on a day when the register of members of the Company is closed, the first day of the re-opening of the register of members, save that the Grantee shall not have any voting rights, or rights to participate in any dividends or distributions (including those arising on a liquidation of the Company) declared or recommended or resolved to be paid to the Shareholders on the register on a date prior to such registration.

 

6.6                               Any Options granted but not exercised may be cancelled if the relevant Grantee so agrees in writing. Issuance of new Options to the same Grantee may only be made if there are unissued Options available under the Scheme (excluding the cancelled Options) and in compliance with the terms of this Scheme.

 

7.                                      LAPSE OF OPTION

 

7.1                               Subject always to the terms and conditions upon which such Option was granted, an Option shall lapse automatically (to the extent not already exercised) on the earliest of:

 

(a)                                 the expiry of the Option Period;

 

(b)                                 the date or the expiry of any of the periods for exercising the Option as referred to in sections 6.3(a) to 6.3(i);

 

(c)                                  unless the Administrator provides prior written approval described in section 6.3(e), the date on which:

 

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(i)                                 where the Grantee is an Employee, the Grantee ceases to be an Employee by reason of Cause or by reason of the summary termination of his/her employment on any one or more of the grounds that he has been guilty of misconduct, or has been convicted of any criminal offence involving his integrity or honesty or (if so determined by the Administrator) on any other ground on which an employer would be entitled to summarily terminate his employment at common law or pursuant to any applicable laws or under the Grantee’s employment agreement with any member of the Group; or

 

(ii)                              where the Grantee is any other individual who provides services to any member of the Group, and is under any contract with the Company or any other member of the Group, such contract is terminated by reason of breach of contract on the part of such individual; or

 

(iii)                           where the Grantee is any other individual who provides services to any member of the Group, the Grantee appears either to be unable to pay or have no reasonable prospect to be able to pay debts, or has become insolvent, or has made any arrangement (including a voluntary arrangement) or composition with his/her creditors generally, or ceases or threatens to cease to carry on his/her business, or is bankrupted, or has been convicted of any criminal offence involving integrity or honesty,

 

(collectively, the “Summary Termination Grounds”, and each a “Summary Termination Ground”);

 

(d)                                 the date on which the Grantee joins a company which the Board believes in its sole and reasonable opinion to be a competitor of the Company;

 

(e)                                  the date on which the Grantee (being a corporation) appears either to be unable to pay or to have no reasonable prospect of being able to pay its debts or has become insolvent or has made any arrangement or composition with its creditors generally;

 

(f)                                   unless the Administrator otherwise determines, and other than in the circumstances referred to in sections 6.3(a), 6.3(b), 6.3(c) or 6.3(d), the date the Grantee ceases to be a Participant (as determined by the Administrator) for any other reason;

 

(g)                                  the date on which the Board determines at its sole discretion that allowing the relevant Grantee to exercise the Option is not in the best interests of the Company; and

 

(h)                                 the date on which the Grantee commits a breach of section 6.1.

 

7.2                               The Administrator shall have the power to decide whether an Option shall lapse and its decision shall be binding and conclusive on all parties. The Board or the Company shall not owe any liability to any Grantee for the lapse of any Option under section 7.1.

 

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8.                                      MAXIMUM NUMBER OF SHARES AVAILABLE FOR SUBSCRIPTION UNDER THE SCHEME

 

8.1                               The overall limit on the number of Shares which may be issued upon exercise of all outstanding Options granted and yet to be exercised under this Scheme and any other share option schemes of the Company at any time must not exceed 500,000,000 (the “Scheme Limit”). No Options may be granted under any schemes of the Company (or its subsidiaries) if this will result in the Scheme Limit being exceeded.

 

8.2                               The maximum number of Shares referred to in section 8.1 shall be adjusted, in such manner as the Auditors or the financial advisor of the Company retained for such purpose shall certify to be appropriate, fair and reasonable in the event of any alteration in the capital structure of the Company in accordance with section 9 by way of capitalisation of profits or reserves, rights issue, subdivision or consolidation of Shares, or reduction of the share capital of the Company in accordance with the provisions in the Memorandum and Articles and the Companies Law .

 

9.                                      REORGANISATION OF CAPITAL STRUCTURE

 

9.1                               In the event of an alteration in the capital structure of the Company whilst any Option remains exercisable by way of capitalisation of profits or reserves, rights issue, subdivision or consolidation of shares, or reduction of the share capital of the Company in accordance with legal requirements (other than any alteration in the capital structure of the Company as a result of an issue of Shares as consideration in a transaction to which the Company is a party), such corresponding alterations (if any) shall be made to:

 

(a)                                 the number or nominal amount of Shares comprised in each Option so far as unexercised; and/or

 

(b)                                 the Subscription Price; and/or

 

(c)                                  the method of exercise of the Option,

 

or any combination thereof, as the Auditors or a financial advisor engaged by the Company for such purpose shall, at the request of the Company, certify in writing, either generally or as regards any particular Grantee, to be in their opinion fair and reasonable, provided always that any such adjustments should give each Grantee the same proportion of the equity capital of the Company as (or as nearly as possible but not greater than the same proportion of the equity capital of the Company) that to which that Grantee was previously entitled prior to such adjustments, and no adjustments shall be made which will enable a Share to be issued at less than its nominal value. The capacity of the Auditors or financial advisor (as the case may be) in this section is that of experts and not of arbitrators and their certification shall, in the absence of manifest error, be final and binding on the Company and the Grantees. The costs of the Auditors or financial advisor (as the case may be) shall be borne by the Company.

 

9.2                               If there has been any alteration in the capital structure of the Company as referred to in section 9.1, the Company shall, upon receipt of a notice to exercise the Option from a Grantee in accordance with terms and conditions upon which the Option was granted, inform the Grantee of such alteration and shall either inform the Grantee of the adjustment to be made in accordance with the certificate of the Auditors or the financial advisor obtained by the Company for such purpose or, if no such certificate has yet been obtained, inform the Grantee of such fact and instruct the Auditors or the financial advisor as soon as practicable thereafter to issue a certificate in that regard in accordance with section 9.1.

 

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10.                               SHARE CAPITAL

 

The exercise of any Option shall be subject to the Shareholders in general meeting in accordance with the provisions in the Memorandum and Articles approving any necessary increase in the authorised share capital of the Company. Subject thereto, the Board shall make available sufficient authorised but unissued share capital of the Company to meet subsisting requirements on the exercise of Options.

 

11.                               ALTERATION OF THIS SCHEME

 

11.1                        Subject to section 11.2 and the Memorandum and Articles, the Board may amend or vary any of the provisions of this Scheme (including without limitation amendments in order to comply with changes in legal or regulatory requirements and amendments in order to waive any restrictions, imposed by the provisions of this Scheme), which may or may not affect adversely any rights which have accrued to any Grantee at that date. Any such amendment or variation of provisions by the Board shall not require any prior consent by or notice to any other party.

 

11.2                        The provisions of this Scheme cannot be altered to the advantage of Participants, and no changes to the authority of the administrator of this Scheme in relation to any alteration of the terms of this Scheme shall be made without the prior approval of the Shareholders in general meeting. Any alterations to the terms and conditions of this Scheme which are of a material nature, or any change to the terms and conditions of Options granted, must also, to be effective, be approved by the Shareholders in general meeting and (if the shares of the Company are listed) any stock exchange on which the shares of the Company are listed, except where the alterations take effect automatically under the existing terms of this Scheme. Any change to the authority of the directors of the Company or scheme administrators in relation to any alternation to the terms of this Scheme must be approved by the Shareholders in general meeting.

 

11.3                        Notwithstanding any provisions to the contrary in this Scheme, if on the relevant date of exercise there are restrictions or conditions imposed by the relevant laws and regulations to which the Grantee is subject and the Grantee has not obtained approval, exemption or waiver from the relevant regulatory authorities for the subscription of and dealing in the Shares, the Grantee may sell the Options to such transferee, subject to the approval by the Board, which shall not unreasonably withhold or delayed.

 

12.                               TERMINATION

 

12.1                        The Company by ordinary resolution in general meeting or the Board may at any time resolve to terminate the operation of this Scheme prior to the expiry of the Scheme Period and in such event no further Options will be offered or granted but the provisions of this Scheme shall remain in full force to the extent necessary to give effect to the exercise of any Options granted prior thereto or otherwise as may be required in accordance with the provisions of this Scheme.

 

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12.2                        Details of the Options granted, including Options exercised or outstanding, under this Scheme shall be disclosed in any offering documents or other publications of the Company in compliance with the applicable regulations of any stock exchange on which the shares of the Company are listed in force from time to time.

 

13.                               MISCELLANEOUS

 

13.1                        This Scheme shall not form part of any contract between the Company or any subsidiary and any Grantee, and the rights and obligations of any such Grantee under the terms of his or her office or employment shall not be affected by his or her participation in this Scheme and this Scheme shall afford such Grantee no additional rights to compensation or damages in consequence of the termination of such office or employment for any reason.

 

13.2                        This Scheme shall not confer on any person any legal or equitable right (other than those rights constituting the Options themselves) against the Company directly or indirectly or give rise to any cause of action at law or in equity against the Company. No person shall, under any circumstances, hold the Board and/or the Company liable for any costs, losses, expenses and/or damages whatsoever arising from or in connection with this Scheme or the administration thereof.

 

13.3                        The Company shall bear the costs of establishing and administering this Scheme (including the costs of the Auditors or the financial advisor, as the case may be, in relation to the preparation of any certificate or the provision of any other services in relation to this Scheme).

 

13.4                        Any notice or other communication between the Company and a Grantee may be given by sending the same by prepaid post or by personal delivery to, in the case of the Company, its principal place of business in the PRC or such other address as notified to the Grantee from time to time and, in the case of the Grantee, his or her address in the PRC as notified to the Company from time to time.

 

13.5                        Any notice or other communication served by post:

 

(a)                                 by the Company shall be deemed to have been served 24 hours after the same was put in the post; and

 

(b)                                 by the Grantee shall not be deemed to have been received until the same shall have been received by the Company.

 

Any notice or other communication if sent by the Grantee shall be irrevocable and shall not be effective until actually received by the Company. Any notice or other communication served by personal delivery shall be deemed to have been received when delivered.

 

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13.6                        All allotments and issues of Shares will be subject to all necessary consents under any relevant legislation for the time being in force in the Cayman Islands, and a Grantee shall be responsible for obtaining any governmental or other official consent or approval that may be required by any country or jurisdiction in order to permit the grant, holding or exercise of the Option. By accepting an offer of the grant of an Option or exercising his or her Option, the Grantee thereof is deemed to have represented to the Company that he has obtained all such consents. Compliance with this section shall be a condition precedent to an acceptance of an offer of the grant of an Option by a Grantee and an exercise by a Grantee of his or her Options. A Grantee shall indemnify the Company fully against all claims, demands, liabilities, actions, proceedings, fees, costs and expenses which the Company may suffer or incur (whether alone or jointly with other party or parties) for or in respect of any failure on the part of the Grantee to obtain any necessary consent or to pay tax or other liabilities referred therein. The Company shall not be responsible for any failure by a Grantee to obtain any such consent or approval or for any tax or other liability to which a Grantee may become subject as a result of his or her participation in this Scheme.

 

13.7                        Each Grantee shall pay all taxes and discharge all other liabilities to which he or she may become subject as a result of his or her participation in this Scheme or the exercise of any Option.

 

13.8                        The Board shall have the power from time to time to make or vary regulations for the administration and operation of this Scheme, provided that the same are not inconsistent with the provisions of this Scheme. The Board shall also have the power to delegate its powers to grant Options and to determine the Subscription Price to the Company’s chief executive officer or other members of senior management from time to time.

 

13.9                        A Grantee shall be entitled to receive copies of all notices and other documents sent by the Company to Shareholders generally.

 

13.10                 The Company shall maintain all necessary books of accounts and records relating to this Scheme.

 

13.11                 Any dispute arising in connection with this Scheme (whether as to the number of underlying Shares of an Option, the amount of the Subscription Price or any other matters) shall be referred to the decision of the auditors of the Company who shall act as experts and not as arbitrators. The Board shall have the final right to adjudicate any disputes in connection with this Scheme and whose decision shall be final and binding on the parties of the dispute.

 

13.12                 This Scheme and all Options granted hereunder shall be governed by and construed in accordance with the laws of the Cayman Islands.

 

- End of Scheme -

 

16Exhibit 10.2

 

KE HOLDINGS INC.

 

2020 GLOBAL SHARE INCENTIVE PLAN

 

ARTICLE 1

 

PURPOSE

 

The purpose of this 2020 Global Share Incentive Plan is to promote the success and enhance the value of KE Holdings Inc., an exempted company formed under the laws of the Cayman Islands (the “Company”), by linking the personal interests of the Directors, Employees, and Consultants to those of the Company’s shareholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to the Company’s shareholders.

 

ARTICLE 2

 

DEFINITIONS AND CONSTRUCTION

 

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

 

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

 

2.2                               “Award” means an Option, Restricted Share, Restricted Share Units or other types of award approved by the Committee granted to a Participant pursuant to the Plan.

 

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

 

2.4                               “Board” means the Board of Directors of the Company.

 

2.5                               “Cause” means (unless otherwise expressly provided in the applicable Award Agreement, or another applicable contract with the Participant that defines such term for purposes of determining the effect that a “for cause” termination has on the Participant’s Awards), based upon a finding by the Service Recipient acting in good faith and based on its reasonable belief at the time:

 

(a)                                 with respect to any Participant, such Participant’s: (i) dishonesty or serious misconduct, whether or not in connection with his/her employment or service; willful disobedience or non-compliance with the terms of his/her employment, agency or consultancy contract with the Service Recipient or any lawful orders or instructions given by the Service Recipient or any policy of the Service Recipient, (ii) incompetence or negligence in the performance of his/her duties, (iii) in the conclusive opinion of the Committee, demonstrating a consistent behavior pattern that adversely affects his/her ability to perform his/her duties properly or assets, business, reputation or branding of the Company or any Subsidiary of the Company or brings the Company or any Subsidiary of the Company into dispute; (iv) breach of confidentiality, an unauthorized disclosure or use of inside information, customer lists, trade secrets or other confidential information, breach of non-solicitation and /or non-competition obligations, or unfair competition with, or otherwise acted intentionally in a manner injurious to the reputation, business or assets of, the Service Recipient; or (v) breach of any laws or regulations, whether or not in connection with his/her employment or service;

 

 

(b)                                 where the Participant is an Employee, also means that the Participant has been guilty of misconduct, or has been convicted of any criminal offence involving his integrity or honesty or (if so determined by the Committee) on any other ground on which an employer would be entitled to summarily terminate his employment at common law or pursuant to any applicable laws or under the Participant’s employment agreement with the Service Recipient;

 

(c)                                  where the Participant is a Director or Consultant, also means breach of contract with the Company or any of its Subsidiaries on the part of such Director or Consultant, or the Participant appears either to be unable to pay or have no reasonable prospect to be able to pay debts, or has become insolvent, or has made any arrangement (including a voluntary arrangement) or composition with his/her creditors generally, or ceases or threatens to cease to carry on his/her business, or is bankrupted, or has been convicted of any criminal offence involving integrity or honesty.

 

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

 

2.7                               “Committee” means a committee of the Board described in Article 10.

 

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

 

2.9                               “Corporate Transaction”, unless otherwise defined in an Award Agreement, means any of the following transactions, provided, however, that the Committee shall determine under (d) and (e) whether multiple transactions are related, and its determination shall be final, binding and conclusive:

 

(a)                                 an amalgamation, arrangement or consolidation or scheme of arrangement (i) 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 or (ii) following which the holders of the voting securities of the Company do not continue to hold more than 50% of the combined voting power of the voting securities of the surviving entity;

 

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

 

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

 

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

 

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

 

2.10                        “Director”, means a member of the Board or a member of the board of directors of any Subsidiary of the Company.

 

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

 

2.12                        “Effective Date” shall have the meaning set forth in Section 11.1.

 

2.13                        “Employee” means any person, including an officer or a Director, who is in the employment of a Service Recipient, subject to the control and direction of the Service Recipient as to both the work to be performed and the manner and method of performance. The payment of a director’s fee by a Service Recipient shall not be sufficient to constitute “employment” by the Service Recipient.

 

2.14                        “Exchange Act” means the Securities Exchange Act of 1934 of the United States, as amended.

 

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

 

(a)                                 If the Shares are listed on one or more established stock exchanges or national market systems, including without limitation, the New York Stock Exchange or the Nasdaq Stock 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 Shares are listed (as determined by the Committee) on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported on the website maintained by such exchange or market system or such other source as the Committee deems reliable;

 

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(b)                                 If the 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 or by such securities dealer on the date of determination, but if selling prices are not reported, the Fair Market Value of a Share shall be the mean between the high bid and low asked prices for the Shares on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such other source as the Committee deems reliable; or

 

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

 

2.16                        “Group Entity” means any of the Company and Subsidiaries of the Company.

 

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

 

2.18                        “Independent Director” means (i) if the Shares or other securities representing the Shares are not listed on a stock exchange, a Director of the Company who is a Non-Employee Director; and (ii) if the Shares or other securities representing the Shares are listed on one or more stock exchange, a Director of the Company who meets the independence standards under the applicable corporate governance rules of the stock exchange(s).

 

2.19                        “Non-Employee Director” means a member of the Board who qualifies as a “Non-Employee Director” as defined in Rule 16b-3(b)(3) of the Exchange Act, or any successor definition adopted by the Board.

 

2.20                        “Non-Qualified Share Option” means an Option that is not intended to be an Incentive Share Option.

 

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

 

2.22                        “Participant” means a person who, as a Director, Consultant or Employee, has been granted an Award pursuant to the Plan.

 

2.23                        “Parent” means a parent corporation under Section 424(e) of the Code.

 

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2.24                        “Plan” means this 2020 Global Share Incentive Plan of KE Holdings Inc., as amended and/or restated from time to time.

 

2.25                        “Related Entity” means any business, corporation, partnership, limited liability company or other entity in which the Company, a Parent or Subsidiary of the Company holds a substantial ownership interest, directly or indirectly, or controls through contractual arrangements and consolidates the financial results according to applicable accounting standards, but which is not a Subsidiary and which the Board designates as a Related Entity for purposes of the Plan.

 

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

 

2.27                        “Restricted Share Unit” means the right granted to a Participant pursuant to Article 7 to receive a Share at a future date.

 

2.28                        “Securities Act” means the Securities Act of 1933 of the United States, as amended.

 

2.29                        “Service Recipient” means the Company or Subsidiary of the Company to which a Participant provides services as an Employee, a Consultant or a Director.

 

2.30                        “Share” means the Class A ordinary shares of the Company, par value US$0.0001 per share, and such other securities of the Company that may be substituted for Shares pursuant to Article 9.

 

2.31                        “Subsidiary” means any corporation or other entity of which a majority of the outstanding voting shares or voting power is beneficially owned directly or indirectly by the Company.

 

2.32                        “Trading Date” means the closing of the first sale to the general public of the Shares pursuant to a registration statement filed with and declared effective by the U.S. Securities and Exchange Commission under the Securities Act.

 

ARTICLE 3

 

SHARES SUBJECT TO THE PLAN

 

3.1                               Number of Shares.

 

(a)                                 Subject to the provisions of Article 9 and Section 3.1(b), the maximum aggregate number of Shares which may be issued pursuant to all Awards (including Incentive Share Options) (the “Award Pool”) shall initially be 16,000,000,  plus commencing with the fiscal year beginning January 1, 2021, an annual increase on the first day of each fiscal year of the Company during the term of this Plan, by an amount equal to 1% of the total number of Shares issued and outstanding on an as-converted fully diluted basis on the last day of the immediately preceding fiscal year; or such lesser number of Shares as determined by the Board

 

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

 

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

 

ARTICLE 4

 

ELIGIBILITY AND PARTICIPATION

 

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

 

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

 

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

 

ARTICLE 5

 

OPTIONS

 

5.1                               General.  The Committee is authorized to grant Options to Participants on the following terms and conditions:

 

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(a)                                 Exercise Price.  The exercise price per Share subject to an Option shall be determined by the Committee and set forth in the Award Agreement which may be a fixed price or a variable price related to the Fair Market Value of the Shares.  The exercise price per Share subject to an Option may be amended or adjusted in the absolute discretion of the Committee, the determination of which shall be final, binding and conclusive.  For the avoidance of doubt, to the extent not prohibited by Applicable Laws or any exchange rule, a downward adjustment of the exercise prices of Options mentioned in the preceding sentence shall be effective without the approval of the Company’s shareholders or the approval of the affected Participants.

 

(b)                                 Time and Conditions of Exercise.  The Committee shall determine the time or times at which an Option may be exercised in whole or in part, including exercise prior to vesting; provided that the term of any Option granted under the Plan shall not exceed ten years, except as provided in Section 12.1.  The Committee shall also determine any conditions, if any, that must be satisfied before all or part of an Option may be exercised.

 

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

 

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

 

(e)                                  Effects of Termination of Employment or Service on Options.  Termination of employment or service shall have the following effects on Options granted to the Participants:

 

(i)                                     Dismissal for Cause. Unless otherwise provided in the Award Agreement or with prior written approval from the Committee, if a Participant’s employment by or service to the Service Recipient is terminated by the Service Recipient for Cause, the Participant’s Options will terminate upon such termination, whether or not the Option is then vested and/or exercisable;

 

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(ii)                                  Death or Disability. Unless otherwise provided in the Award Agreement, if a Participant’s employment by or service to the Service Recipient terminates as a result of the Participant’s death or Disability:

 

(a)                                 the Participant (or his or her legal representative or beneficiary, in the case of the Participant’s Disability or death, respectively), will have until the date that is 12 months after the Participant’s termination of Employment or service to exercise the Participant’s Options (or portion thereof) to the extent that such Options were vested and exercisable on the date of the Participant’s termination of Employment or service on account of death or Disability;

 

(b)                                 the Options, to the extent not vested on the date of the Participant’s termination of Employment or service, shall terminate upon the Participant’s termination of Employment or service on account of death or Disability; and

 

(c)                                  the Options, to the extent exercisable for the 12-month period following the Participant’s termination of Employment or service and not exercised during such period, shall terminate at the close of business on the last business day of the 12-month period.

 

(iii)                               Other Terminations of Employment or Service. Unless otherwise provided in the Award Agreement, if a Participant’s employment by or service to the Service Recipient terminates for any reason other than a termination by the Service Recipient for Cause or because of the Participant’s death or Disability:

 

(a)                                 the Participant will have until the date that is 90 days after the Participant’s termination of Employment or service to exercise his or her Options (or portion thereof) to the extent that such Options were vested and exercisable on the date of the Participant’s termination of Employment or service;

 

(b)                                 the Options, to the extent not vested on the date of the Participant’s termination of Employment or service, shall terminate upon the Participant’s termination of Employment or service; and

 

(c)                                  the Options, to the extent exercisable for the 90-day period following the Participant’s termination of Employment or service and not exercised during such period, shall terminate at the close of business on the last business day of the 90-day period.

 

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

 

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

 

(b)                                 Exercise Price.  The exercise price of an Incentive Share Option shall be equal to the Fair Market Value on the date of grant.  However, the exercise price of any Incentive Share Option granted to any individual who, at the date of grant, owns Shares possessing more than ten percent of the total combined voting power of all classes of shares of the Company or any Parent or Subsidiary of the Company may not be less than 110% of Fair Market Value on the date of grant and such Option may not be exercisable for more than five years from the date of grant.

 

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

 

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

 

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

 

ARTICLE 6

 

RESTRICTED SHARES

 

6.1                               Grant of Restricted Shares.  The Committee, at any time and from time to time, may grant Restricted Shares to Participants as the Committee, in its sole discretion, shall determine.  The Committee, in its sole discretion, shall determine the number of Restricted Shares to be granted to each Participant.

 

6.2                               Restricted Shares Award Agreement.  Each Award of Restricted Shares shall be evidenced by an Award Agreement that shall specify the period of restriction, the number of Restricted Shares granted, and such other terms and conditions as the Committee, in its sole discretion, shall determine.  Unless the Committee determines otherwise, Restricted Shares shall be held by the Company as escrow agent until the restrictions on such Restricted Shares have lapsed.

 

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

 

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

 

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

 

6.6                               Removal of Restrictions.  Except as otherwise provided in this Article 6, Restricted Shares granted under the Plan shall be released from escrow as soon as practicable after the last day of the period of restriction.  The Committee, in its discretion, may accelerate the time at which any restrictions shall lapse or be removed.  After the restrictions have lapsed, the Participant shall be entitled to have any legend or legends under Section 6.5 removed from his or her Share certificate, and the Shares shall be freely transferable by the Participant, subject to applicable legal restrictions.  The Committee (in its discretion) may establish procedures regarding the release of Shares from escrow and the removal of legends, as necessary or appropriate to minimize administrative burdens on the Company.

 

ARTICLE 7

 

RESTRICTED SHARE UNITS

 

7.1                               Grant of Restricted Share Units.  The Committee, at any time and from time to time, may grant Restricted Share Units to Participants as the Committee, in its sole discretion, shall determine.  The Committee, in its sole discretion, shall determine the number of Restricted Share Units to be granted to each Participant.

 

7.2                               Restricted Share Units Award Agreement.  Each Award of Restricted Share Units shall be evidenced by an Award Agreement that shall specify any vesting conditions, the number of Restricted Share Units granted, and such other terms and conditions as the Committee, in its sole discretion, shall determine.

 

7.3                               Form and Timing of Payment of Restricted Share Units.  At the time of grant, the Committee shall specify the date or dates on which the Restricted Share Units shall become fully vested and nonforfeitable.  Upon vesting, the Committee, in its sole discretion, may pay Restricted Share Units in the form of cash, Shares or a combination thereof.

 

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

 

ARTICLE 8

 

PROVISIONS APPLICABLE TO AWARDS

 

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

 

8.2                               No Transferability; Limited Exception to Transfer Restrictions.

 

8.2.1       Limits on Transfer. Unless otherwise expressly provided in (or pursuant to) this Section 8.2, by applicable law and by the Award Agreement, as the same may be amended:

 

(a)           all Awards are non-transferable and will not be subject in any manner to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance or charge;

 

(b)           Awards will be exercised only by the Participant; and

 

(c)           amounts payable or shares issuable pursuant to an Award will be delivered only to (or for the account of), and, in the case of Shares, registered in the name of, the Participant.

 

In addition, the shares shall be subject to the restrictions set forth in the applicable Award Agreement.

 

8.2.2       Further Exceptions to Limits on Transfer. The exercise and transfer restrictions in Section 8.2.1 will not apply to:

 

(a)           transfers to the Company or a Subsidiary;

 

(b)           transfers by gift to “immediate family” as that term is defined in SEC Rule 16a-1(e) promulgated under the Exchange Act;

 

(c)           the designation of a beneficiary to receive benefits if the Participant dies or, if the Participant has died, transfers to or exercises by the Participant’s beneficiary, or, in the absence of a validly designated beneficiary, transfers by will or the laws of descent and distribution; or

 

(d)           if the Participant has suffered a disability, permitted transfers or exercises on behalf of the Participant by the Participant’s duly authorized legal representative; or

 

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(e)           subject to the prior approval of the Committee or an executive officer or director of the Company authorized by the Committee, transfer to one or more natural persons who are the Participant’s family members or entities owned and controlled by the Participant and/or the Participant’s family members, including but not limited to trusts or other entities whose beneficiaries or beneficial owners are the Participant and/or the Participant’s family members, or to such other persons or entities as may be expressly approved by the Committee, pursuant to such conditions and procedures as the Committee or may establish. Any permitted transfer shall be subject to the condition that the Committee receives evidence satisfactory to it that the transfer is being made for estate and/or tax planning purposes and on a basis consistent with the Company’s lawful issue of securities.

 

Notwithstanding anything else in this Section 8.2.2 to the contrary, but subject to compliance with all Applicable Laws, Incentive Share Options, Restricted Shares and Restricted Share Units will be subject to any and all transfer restrictions under the Code applicable to such Awards or necessary to maintain the intended tax consequences of such Awards.  Notwithstanding clause (b) above but subject to compliance with all Applicable Laws, any contemplated transfer by gift to “immediate family” as referenced in clause (b) above is subject to the condition precedent that the transfer be approved by the Committee in order for it to be effective.

 

8.3                               Beneficiaries.  Notwithstanding Section 8.2, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant’s death.  A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee.  If the Participant is married and resides in a community property state and there is a designation of a person other than the Participant’s spouse as his or her beneficiary with respect to more than 50% of the Participant’s interest in the Award, the designation of such portion of the Participant’s interest exceeding 50% shall not be effective without the prior written consent of the Participant’s spouse, while the designation of such portion of the Participant’s interest of up to 50% shall remain effective.  If no beneficiary has been designated or survives the Participant, payment shall be made to the person entitled thereto pursuant to the Participant’s will or the laws of descent and distribution.  Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is filed with the Committee.

 

8.4                               Performance Objectives and Other Terms. The Committee, in its discretion, shall set performance objectives or other vesting criteria which, depending on the extent to which they are met, will determine the number or value of the Awards that will be granted or paid out to the Participants.

 

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

 

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

 

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

 

ARTICLE 9

 

CHANGES IN CAPITAL STRUCTURE

 

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

 

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

 

9.3                               Outstanding Awards — Other Changes.  In the event of any other change in the capitalization of the Company or corporate change other than those specifically referred to in this Article 9, the Committee may, in its absolute discretion, make such adjustments in the number and class of shares subject to Awards outstanding on the date on which such change occurs and in the per share grant or exercise price of each Award as the Committee may consider appropriate to prevent dilution or enlargement of rights.

 

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

 

ARTICLE 10

 

ADMINISTRATION

 

10.1                        Committee.  The Plan shall be administered by the Board or Compensation Committee (the “Committee”) to whom the Board shall delegate the authority to grant or amend Awards to Participants other than any of the Committee members, Independent Directors and executive officers of the Company. Reference to the Committee shall refer to the Board in absence of the Committee. Notwithstanding the foregoing, the full Board, acting by majority of its members in office, shall conduct the general administration of the Plan if required by Applicable Laws, and with respect to Awards granted to the Committee members, Independent Directors and executive officers of the Company and for purposes of such Awards the term “Committee” as used in the Plan shall be deemed to refer to the Board.

 

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

 

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

 

(a)           designate Participants to receive Awards;

 

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

 

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

 

(d)           designate an administrator to administer the Awards to Participants other than Committee members, independent directors or executive officers of the Company, including designating Participants to receive Awards, determining the type or types of Awards to be granted to each Participant, and determining the number of Awards to be granted and the number of Shares to which an Award will relate;

 

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

 

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

 

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

 

(h)           decide all other matters that must be determined in connection with an Award;

 

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

 

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

 

(k)           amend terms and conditions of Award Agreements; and

 

(l)            make all other decisions and determinations that may be required pursuant to the Plan or as the Committee deems necessary or advisable to administer the Plan, including design and adopt from time to time new types of Awards that are in compliance with Applicable Laws.

 

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

 

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ARTICLE 11

 

EFFECTIVE AND EXPIRATION DATE

 

11.1                        Effective Date.  The Plan shall become effective as of the date on which the Board adopts the Plan or as otherwise specified by the Board when adopting the Plan (the “Effective Date”).

 

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

 

ARTICLE 12

 

AMENDMENT, MODIFICATION, AND TERMINATION

 

12.1                        Amendment, Modification, and Termination.  At any time and from time to time, the Board may terminate, amend or modify the Plan; provided, however, that (a) to the extent necessary and desirable to comply with Applicable Laws or stock exchange rules, the Company shall obtain shareholder approval of any Plan amendment in such a manner and to such a degree as required, unless the Company decides to follow home country practice, and (b) unless the Company decides to follow home country practice, shareholder approval is required for any amendment to the Plan that (i) increases the number of Shares available under the Plan (other than any adjustment as provided by Article 9 or Section 3.1(a)), or (ii) permits the Committee to extend the term of the Plan or the exercise period for an Option beyond ten years from the date of grant.

 

12.2                        Awards Previously Granted.  Except with respect to amendments made pursuant to Section 12.1, no termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted pursuant to the Plan without the prior written consent of the Participant.

 

ARTICLE 13

 

GENERAL PROVISIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13.8                        Expenses.  The expenses of administering the Plan shall be borne by the Group Entities.

 

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

 

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

 

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

 

13.12                 Governing Law.  The Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the Cayman Islands.

 

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

 

13.14                 Appendices.  Subject to Section 12.1, the Committee may approve such supplements, amendments or appendices to the Plan as it may consider necessary or appropriate for purposes of compliance with Applicable Laws or otherwise and such supplements, amendments or appendices shall be considered a part of the Plan; provided, however, that no such supplements shall increase the share limitation contained in Section 3.1 of the Plan without the approval of the Board.

 

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