Document:

Exhibit 4.5

 

FINAL VERSION

 

CERTIFICATE OF THE DESIGNATIONS, PREFERENCES AND RELATIVE

 

PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS AND QUALIFICATIONS,

 

LIMITATIONS OR RESTRICTIONS OF

 

SERIES A CONVERTIBLE PREFERRED SHARES,

 

PAR VALUE US$0.0001, OF

 

AUTONAVI HOLDINGS LIMITED

 

AUTONAVI HOLDINGS LIMITED (the “Company”), a company limited by shares organized and existing under the Companies Law (2009 Revision) of the Cayman Islands (the “Companies Law”), DOES HEREBY CERTIFY:

 

That, pursuant to the authority conferred upon the Board of Directors (the “Board”) of AUTONAVI HOLDINGS LIMITED by Article SEVENTH of the Amended and Restated Articles of Association of the Company (the “Articles”), the Board, on May 10, 2013, adopted the following resolution designating a new series of preferred shares as Series A Preferred Shares:

 

RESOLVED, that, pursuant to the authority vested in the Board in accordance with the provisions of Article SEVENTH of the Articles, a series of preferred shares of the Company is hereby authorized, and the designation and number of shares thereof, and the preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, shall be as follows:

 

SECTION 1                               Designation and Number of Shares. The shares of such series shall be designated as “Series A Convertible Preferred Shares” (the “Series A Shares”). The number of authorized shares constituting the Series A Shares shall be [50,409,444]. That number from time to time may be decreased (but not below the number of Series A Shares then outstanding) by further resolution duly adopted by the Board, or any duly authorized committee thereof, and, if applicable, by the filing of a certificate pursuant to the provisions of the Companies Law stating that such reduction has been so authorized. The Company shall not have the authority to issue fractional shares of Series A Shares.

 

SECTION 2                               Definitions. As used herein with respect to Series A Shares:

 

“Affiliate” means any “affiliate” within the meaning of Rule 405 under the U.S. Securities Act of 1933, as amended.

 

“Articles” has the meaning set forth in the recitals above.

 

“Audit Committee” has the meaning set forth in SECTION 9(c).

 

“Board” has the meaning set forth in the recitals above.

 

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“Business Day” means any weekday that is not a day on which banking institutions in the Cayman Islands, the Hong Kong Special Administrative Region, New York or the PRC are authorized or required by law, regulation or executive order to be closed.

 

“Capital Share” means each and every share, interest, right to purchase, warrant, option, participation or other equivalent of or interest in (however designated) a share issued by the Company.

 

“Certificate of Designations” means this Certificate of the Designations, Preferences and Relative Participating, Optional and Other Special Rights and Qualifications, Limitations or Restrictions of Series A Convertible Preferred Shares, par value US$0.0001, of AutoNavi Holdings Limited, as amended from time to time.

 

“Change of Control” means:

 

(i)                                     any Person becoming the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended, except that the Person will be deemed to have “beneficial ownership” of all shares that the Person has the direct or indirect right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of fifty percent (50%) or more of the total voting power of the Ordinary Shares and/or other shares having the power to vote in the election of directors of the Company (or any successor thereof), whether such ownership is acquired through merger, consolidation, amalgamation, tender or exchange offer, open market purchases, privately negotiated purchases, or otherwise;

 

(ii)                                  any Person directly or indirectly acquiring (in one or more transactions) all or substantially all of the assets of the Group (or any successor thereof);

 

(iii)                               the merger, consolidation, or amalgamation of any Person with or into the Company (or any successor thereof) as a result of which the holders of the voting shares of the Company (or any successor thereof) immediately prior to such transaction own, directly or indirectly, less than a majority of the voting shares of the Company or the applicable surviving entity or any direct or indirect parent company thereof immediately after such transaction; or

 

(iv)                              a replacement at one time or over any period of three years or less of more than one-half of the members of the Board which is not approved by a majority of those individuals who are members of the Board on the date of the Closing, including the affirmative consent of the Purchaser Directors (or by those individuals who are serving as members of the Board on any date whose nomination to the Board was approved by a majority of the members of the Board who are members on the date of the Closing, including the affirmative consent of the Purchaser Directors).

 

“Change of Control Effective Date” has the meaning set forth in Section 7(a).

 

“Closing” shall have the meaning ascribed to such term in the Investment Agreement.

 

“Company” has the meaning set forth in the recitals above.

 

“Companies Law” has the meaning set forth in the recitals above.

 

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“Compensation Committee” has the meaning set forth in SECTION 9(d).

 

“Dividend Rights” has the meaning set forth in Section 3.

 

“Excluded Portions” has the meaning set forth in SECTION 9(c).

 

“Exempt Securities” has the meaning set forth in Section 10(a).

 

“Exercise Notice” has the meaning set forth in Section 11.

 

“Founder” has the meaning set forth in the Investor’s Rights Agreement.

 

“Group Company” means each of the Company and its direct and indirect Subsidiaries and “Group” refers to all of the Group Companies collectively.

 

“Holder” means a Person in whose name the Series A Shares are registered, which Person may be treated by the Company as the absolute owner of Series A Shares for the purpose of making payment and settling conversions and for all other purposes.

 

“Initial Purchaser Director” has the meaning set forth in Section 9(a).

 

“Investment Agreement” means that certain agreement by and between the Company and the Purchaser dated as of May 10, 2013, with respect to the purchase and sale of the Series A Shares, as amended from time to time in accordance with the terms thereof.

 

“Investor’s Rights Agreement” means the Investor’s Rights Agreement, dated May 10, 2013, by and among the Company, the Purchaser and the other parties thereto, as amended from time to time.

 

“Issue Date” means, with respect to any Series A Shares, the date of initial issuance of such Series A Shares.

 

“Issue Notice” has the meaning set forth in Section 10(a).

 

“Junior Shares” means the Ordinary Shares, and any other class or series of Capital Share now existing or hereafter authorized other than the Series A Shares.

 

“Liquidation Event” means (i) the voluntary or involuntary liquidation, dissolution or winding up of the affairs of any Material Group Company; or (ii) a Change in Control of any Material Group Company; provided that, a Change of Control of any Material Group Company that occurs on or after the first anniversary of the Closing shall not be deemed to be a Liquidation Event.

 

“Liquidation Preference Amount” has the meaning set forth in Section 4(a).

 

“Material Group Company” means the Company and (i) any Group Company that is a “significant subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X under the U.S. Securities Act of 1933, as amended, (ii) a Group Company identified on Schedule I hereto, and/or (iii) any Group Company that holds material Permit(s) (including, without limitation, value-added telecommunication services license) legally required or necessary (as reasonably determined by the Purchaser upon consultation with counsel) to conduct any portion of the Group’s business. For the avoidance of doubt, Beijing Yadao Media & Culture Development Co., Ltd., which is currently in the process of being dissolved, shall not be considered as a Material Group Company.

 

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“Memorandum” means the Amended and Restated Memorandum of Association of the Company, as amended.

 

“New Securities” has the meaning set forth in Section 10(a).

 

“Nominating and Corporate Governance Committee” has the meaning set forth in SECTION 9(e).

 

“Notice” has the meaning set forth in SECTION 9(c).

 

“Optional Redemption Right” has the meaning set forth in Section 7(a).

 

“Ordinary Shares” means the ordinary shares of the Company, par value US$0.0001 per share.

 

“Permits” means all permits, licenses, authorizations, orders and approvals of any Group Companies.

 

“Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint-share company, limited liability company, trust or other entity.

 

“PRC” means the People’s Republic of China, but solely for the purposes hereof excludes the Hong Kong Special Administrative Region, Macau Special Administrative Region and the islands of Taiwan.

 

“Proposal Notice” has the meaning set forth in Section 11.

 

“Prospective Largest Shareholder” has the meaning set forth in Section 10(b)(i).

 

“Purchaser” means Ali ET Investment Holding Limited, an exempted company organized under the laws of the Cayman Islands.

 

“Purchaser Director” has the meaning set forth in SECTION 9(a).

 

“Section” means a section of this Certificate of Designations.

 

“Series A Conversion Price” has the meaning set forth in Section 5(b).

 

“Series A Conversion Rate” has the meaning set forth in Section 5(b).

 

“Series A Shares” has the meaning set forth in Section 1.

 

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“Series A Investment Price” means US$3.75 per Series A Share, as appropriately adjusted for share splits, reverse share splits, share dividends, share consolidations, recapitalizations and the like.

 

“Shareholder” has the meaning set forth in the Investor’s Rights Agreement.

 

“Specified Transaction” has the meaning set forth in Section 11.

 

“Subsequent Purchaser Director” has the meaning set forth in Section 9(b).

 

“Subsidiary” means each entity (including any variable interest entity) that is or will become a direct or indirect subsidiary (whether wholly or partially owned) or controlled Affiliate of the Company.

 

“U.S.” shall mean the United States of America.

 

SECTION 3                               Dividends. Holders shall be entitled to receive, if, as and when declared by the Board, or any duly authorized committee thereof, but only out of assets legally available therefor, dividends, whether in cash, in property, in any options, convertible securities or rights to purchase stock, warrants, securities or in other property (the “Dividend Rights”), on the same basis as holders of Junior Shares, including Ordinary Shares, as if the Series A Shares have been converted to Junior Shares (as appropriately adjusted for share splits, reverse share splits, share dividends, share consolidation, recapitalization and the like) immediately before the date on which a record is taken to determine holders of Junior Shares for the grant of the Dividend Rights, pari passu with holders of Junior Shares. The Company will not, and will cause its Subsidiaries not to, declare or pay any Dividend Rights on, or make any distributions relating to Junior Shares or redeem, purchase, acquire (either directly or through any Subsidiary) or make a liquidation payment relating to any Junior Shares unless the holders of Series A Shares shall acquire (on an as-converted basis) such Dividend Rights or payment on the same basis as and pari passu with holders of Junior Shares.

 

SECTION 4                               Liquidation Rights.

 

(a)                                 Liquidation. In the event of any Liquidation Event, Holders shall be entitled, out of assets legally available therefor, before any distribution or payment out of the assets of the Company may be made to or set aside for the holders of any Junior Shares, to receive in full a liquidating distribution in the amount per Series A Share equal to the sum of (i) the Series A Investment Price, (ii) all accrued but unpaid dividends thereon, and (iii) an amount per annum equal to fifteen percent (15%) of the sum of (i) and (ii) outstanding, which amount shall accrue daily and shall be compounded on an annual basis (the sum of clauses (i), (ii) and (iii), the “Liquidation Preference Amount”).

 

(b)                                 Partial Payment. If the assets of the Company are not sufficient to pay in full the aggregate Liquidation Preference Amount pursuant to Section 4(a) to all Holders, the amounts distributed to the Holders shall be paid pro rata in accordance with the respective aggregate Liquidation Preference Amount to which they would otherwise be entitled.

 

(c)                                  Value of Assets. In the event the Company proposes to distribute assets other than cash in connection with any Liquidation Event, the value of the assets to be distributed to the holder of Series A Shares shall be the fair market value, as determined in good faith by the liquidator (or, in the case of any proposed distribution in connection with a transaction which is a Change of Control hereunder, by the Board, which decision shall include the affirmative vote or consent of the Purchaser Director). Any securities not subject to a private placement investment letter or similar restrictions on free marketability shall be valued as follows:

 

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(i)                                     If traded on a securities exchange or market, the value shall be deemed to be the volume weighted average of the security’s closing prices on such exchange or market over the forty (40) trading day period ending one (1) day prior to the distribution;

 

(ii)                                  If actively traded over-the-counter, the value shall be deemed to be the volume weighted average of the closing bid prices over the forty (40) trading day period ending three (3) days prior to the distribution; and

 

(iii)                               If there is no active public market, the value shall be the fair market value thereof as determined in good faith by the liquidator (or, in the case of any proposed distribution in connection with a transaction which is a Change of Control hereunder, by the Board, which decision shall include the affirmative vote or consent of the Purchaser Director).

 

The method of valuation of securities subject to restrictions on free marketability shall be adjusted to make an appropriate discount from the market value determined as above in paragraphs (i), (ii) or (iii) to reflect the fair market value thereof as determined in good faith by the liquidator (or, in the case of any proposed distribution in connection with a transaction which is a Change of Control hereunder, by the Board, which decision shall include the affirmative vote or consent of the Purchaser Director).

 

(d)                                 Appraisal. The Holders holding more than fifty percent (50%) of the then outstanding Series A Shares issued at the Closing, voting together as a single class on an as converted basis, shall have the right to challenge any determination by the Board of fair market value pursuant to this Section 4, in which case the determination of fair market value shall be made by an independent appraiser selected jointly by the Board and the challenging parties, the cost of such appraisal to be borne equally by the Company and the challenging parties.

 

SECTION 5                               Right of the Holders to Convert.

 

(a)                                 Each Holder shall have the right, at such Holder’s option, to convert all or any portion of such Holder’s Series A Shares at any time into Ordinary Shares at the then applicable Series A Conversion Rate and to receive share certificates therefor, by giving written notice to the Company at the office of the Company and surrender the original certificate or certificates evidencing the Series A Shares to be converted to the Company’s transfer agent (or an officer’s certificate notifying the Company or its transfer agent that such certificate(s) has been lost, stolen or destroyed). The Company shall within five Business Days of receipt of the notice, cause its transfer agent to issue and deliver to such Holder (i) a certificate or certificates for the number of Ordinary Shares to which he shall be entitled as aforesaid and (ii) a certificate for any remaining Series A Shares. The conversion shall be deemed to have been made immediately prior to the close of business on the date of the issuance of the certificates referred to in (i) and (ii) above, and the Person or Persons entitled to receive the Ordinary Shares issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Ordinary Shares on such date.

 

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(b)                                 The conversion rate for the Series A Shares (the “Series A Conversion Rate”) shall be determined by dividing (x) the Series A Investment Price for each of the Series A Shares by (y) the Series A Conversion Price, as adjusted in accordance with the provisions hereof. The conversion price for each of the Series A Shares, subject to adjustments from time to time in accordance with the provisions hereof, is referred hereinafter as “Series A Conversion Price.” The initial Series A Conversion Price for each of the Series A Shares shall be equal to its Series A Investment Price, and in each case shall be adjusted from time to time as provided below in Section (6)(a).

 

(c)                                  No Fractional Shares. No fractional shares, scrip representing fractional shares shall be issued upon the conversion of the Series A Shares. Any fraction of a share which the Holder would otherwise be entitled to receive on conversion shall be automatically cancelled without any action on the party of the Company.

 

(d)                                 Status of Converted or Reacquired Shares. The Company may effect the conversion of the Series A Shares in any manner available under applicable law, including redeeming or repurchasing the relevant Series A Shares and applying the proceeds thereof towards payment for the Ordinary Shares issued upon conversion of Series A Shares. Any Ordinary Shares issued upon conversion of Series A Shares shall be (i) duly authorized, validly issued and fully paid and non-assessable and (ii) shall rank pari passu with the other Ordinary Shares outstanding from time to time. Series A Shares converted in accordance with this Certificate of Designations, or otherwise acquired by the Company in any manner whatsoever, shall be cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation and any filing required by the Companies Law, if applicable, become authorized but unissued preferred shares (in accordance with the Articles, including section 6 and section 7 thereof), without designation as to series until such shares are once more designated as part of a particular series by the Board pursuant to the provisions of the Articles and an applicable certificate of designations.

 

(e)                                  Authorized Shares. The Company shall at all times reserve and keep available out of its authorized and unissued Ordinary Shares, solely for issuance upon the conversion of the Series A Shares, such number of Ordinary Shares as shall from time to time be issuable upon the conversion of all the Series A Shares then outstanding. The Company shall take all such reasonable action as may be necessary to assure that (i) such Ordinary Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any stock exchange upon which the Company’s Ordinary Shares (or American Depository Shares representing such Ordinary Shares) may be listed and (ii) such Ordinary Shares shall be accepted by the Company’s American Depositary Share program. If at any time the number of authorized but unissued Ordinary Shares shall not be sufficient to effect the conversion of all then outstanding Series A Shares, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued Ordinary Shares to such number of shares as shall be sufficient for such purpose.

 

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SECTION 6                               Certain Adjustments.

 

(a)                                 The Series A Conversion Price shall be subject to adjustments under the following circumstances:

 

(i)                                     Adjustments for Share Dividends, Subdivisions, Combinations or Consolidations of Ordinary Shares. In the event the outstanding Ordinary Shares shall be subdivided (by share dividend, share split, or otherwise), into a greater number of Ordinary Shares, the Series A Conversion Price then in effect shall, concurrently with the effectiveness of such subdivision, be proportionately decreased. In the event the outstanding Ordinary Shares shall be combined or consolidated (by reclassification or otherwise), into a lesser number of Ordinary Shares, the Series A Conversion Price then in effect shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased.

 

(ii)                                  Adjustments for Other Distributions. In the event the Company at any time or from time to time makes, or files a record date for the determination of holders of Ordinary Shares entitled to receive, any distribution payable in securities or assets of the Company other than Ordinary Shares, then and in each such event provision shall be made so that the Holders shall receive upon conversion thereof, in addition to the number of Ordinary Shares receivable thereupon, the amount of securities or assets of the Company which they would have received had their Series A Shares been converted into Ordinary Shares on the date of such event and had they thereafter, during the period from the date of such event to and including the date of conversion, retained such securities or assets receivable by them as aforesaid during such period, subject to all other adjustments called for during such period under this Section 6(a) with respect to the rights of the Holders.

 

(iii)                               Adjustments for Reclassification, Exchange and Substitution. If the Ordinary Shares issuable upon conversion of the Series A Shares shall be changed into the same or a different number of shares of any other class or classes of shares, whether by merger, capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares provided for above), then and in each such event any Holder shall have the right thereafter to convert such share into the kind and amount of shares and other securities and property receivable upon such merger, reorganization, reclassification or other change by holders of the number of Ordinary Shares that would have been subject to receipt by the Holders upon conversion of the Series A Shares immediately before that change, all subject to further adjustment as provided herein. If holders of Ordinary Shares are given any choice as to the securities, cash or property to be received in any such change, then the Holder shall be given the same choice as to the consideration it receives upon any conversion of the Series A Shares following such change.

 

(iv)                              Other Dilutive Events. In case the Company, at any time or from time to time, shall take any action that would have an effect similar to any of the actions described in Sections 6(a)(i), 6(a)(2) or 6(a)(3) (but not including any action described in any such Section) and it would be equitable under the circumstances to adjust the Series A Conversion Price as a result of such action, then, and in each such case, the Series A Conversion Price shall be adjusted in such manner and at such time as a majority of the Board and the Holder, in good faith, determine would be equitable and consistent with the principles established in this Section 6(a) under the circumstances.

 

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(b)                                 As far as may be permissible by law, the Company will not, through any reorganization, transfer of assets, consolidation, merger, dissolution, issuance or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company but will at all times in good faith assist in the carrying out of all the provisions of this Section 6.

 

(c)                                  All calculations under this Section 6 shall be made to the nearest one hundredth ( 1/100) of a cent or to the nearest one hundredth ( 1/100) of a share, as the case may be, unless otherwise set forth herein. No adjustment in the Series A Conversion Price need be made if such adjustment would result in a change in such Series A Conversion Price of less than US$0.01. Any adjustment of less than US$0.01 which is not made shall be carried forward and shall be made at the time of and together with any subsequent adjustment which, on a cumulative basis, amounts to an adjustment of US$0.01 or more in such Series A Conversion Price.

 

(d)                                 Notices to the Holders.

 

(i)                                     Certificate of Adjustment. Upon the occurrence of each adjustment or readjustment of the Series A Conversion Price pursuant to this Section 6, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request at any time of any Holder, furnish or cause to be furnished to such Holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Series A Conversion Price then in effect, and (iii) the number of Ordinary Shares and the amount, if any, of other property which at the time would be received upon the conversion of Series A Shares.

 

(ii)                                  Notice to Allow Conversion by Holder. If (1) the Company shall declare a dividend (or any other distribution in whatever form) on the Ordinary Shares, (2) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Ordinary Shares, (3) the Company shall authorize the granting to all holders of the Ordinary Shares rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (4) the approval of shareholders of the Company shall be required in connection with any reclassification of the Ordinary Shares, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Series A Shares or Ordinary Shares are converted into other securities, cash or property, or (5) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered to the Holder, at least fifteen (15) Business Days prior to the applicable effective date specified below, a notice describing the nature and terms of the transaction and stating: (A) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Ordinary Shares of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined; or (B) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Series A Shares or Ordinary Shares of record shall be entitled to exchange their shares for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange.

 

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(iii)                               Disputes over adjustment calculation. In the event that the Holder believes that the adjustment calculation contained in any notice is incorrect or that a notice otherwise fails to comply with the terms of this Section, it will notify the Company and the parties will promptly negotiate to resolve such issues in good faith. If the parties are not able to promptly reach agreement, either party may submit the matter to arbitration in accordance with the terms of Section 9(c) of the Investment Agreement.

 

SECTION 7                               Optional Redemption Right.

 

(a)                                 General. At any time prior to the first (1st) anniversary of the Closing, in the event of a Change of Control, each Holder of outstanding Series A Shares shall have the option, during the period beginning on the effective date of the Change of Control (the “Change of Control Effective Date”) and ending on the date that is twenty (20) Business Days after the Change of Control Effective Date, to require the Company to purchase, out of funds legally available therefor, any or all of its Series A Shares at a purchase price per share, payable in cash, equal to 120% of the then current Liquidation Preference Amount (the “Optional Redemption Right”).

 

(b)                                 Initial Change of Control Notice. On or before the twentieth (20th) Business Day prior to the date on which the Company anticipates consummating the Change of Control, a written notice shall be sent by or on behalf of the Company, in accordance with Section 14 to the Holders as they appear in the records of the Company. Such notice shall contain:

 

(i)                                     the date on which the Change of Control is anticipated to be effected (or, if applicable, the date on which a Schedule TO or other schedule, form or report disclosing a Change of Control was filed);

 

(ii)                                  the date, which shall be twenty (20) Business Days after the anticipated Change of Control Effective Date, by which the Optional Redemption Right must be exercised;

 

(iii)                               a summary of the material terms of such Change of Control.

 

(c)                                  Final Change of Control Notice. On the Change of Control Effective Date, a final written notice shall be sent by or on behalf of the Company, in accordance with Section 14 to the Holders as they appear in the records of the Company. Such notice shall contain:

 

(i)                                     the date, which shall be no less than twenty (20) Business Days after the Change of Control Effective Date, by which the Optional Redemption Right must be exercised;

 

(ii)                                  the amount of cash payable per share of Series A Shares and the purchase date for such shares, which shall be no less than ten (10) and no greater than twenty (20) Business Days from the date by which the Optional Redemption Right must be exercised; and

 

(iii)                               the instructions a Holder must follow to exercise its Optional Redemption Right in connection with such Change of Control.

 

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(d)                                 Optional Redemption Procedure. To exercise the Optional Redemption Right, a Holder must, no later than 5:00 p.m., Beijing time, on the date by which such right must be exercised, deliver written notice to the Company indicating that it is exercising its Optional Redemption Right and the details of the account to which the purchase price for the redemption shall be wired. Upon exercise of the Optional Redemption Right by a Holder, the Company shall, within five (5) Business Days, deliver or cause to be delivered to the Holder by wire transfer the purchase price payable upon the purchase by the Company of such Holder’s Series A Shares. Upon receipt of the wire initiation confirmation from the Company pursuant to the foregoing, the Holder shall surrender to the Company the certificates representing the redeemed Series A Shares and a duly executed instrument of transfer transferring the redeemed Series A Shares to the Company.

 

(e)                                  Unsold Shares Remain Outstanding. If a Holder does not elect to exercise the Optional Redemption Right pursuant to this Section 7 with respect to all of its Series A Shares, the Series A Shares held by it and not surrendered for settlement will remain outstanding until otherwise subsequently converted, redeemed, reclassified or canceled.

 

(f)                                   Partial Exercise of Optional Redemption Right. In the event that the Optional Redemption Right is exercised with respect to Series A Shares representing less than all the Series A Shares held by a Holder, upon exercising such Optional Redemption Right the Company shall execute and deliver to such Holder, at the expense of the Company, a certificate evidencing the Series A Shares held by the Holder as to which the Optional Redemption Right was not exercised, together with an updated, certified register of members evidencing the same.

 

SECTION 8                               Voting Rights.

 

(a)                                 Each Series A Share shall carry a number of votes equal to the number of Ordinary Shares then issuable upon its conversion into Ordinary Shares at the record date for determination of the shareholders entitled to vote on such matters, or, if no such record date is established, at the date such vote is taken or any written consent of shareholders is solicited. Except as provided in and subject to Section 8(b) hereof, the Series A Shares shall generally vote together with the Ordinary Shares and not as a separate class. Each Holder of Series A Shares will have one vote per share on any matter on which Holders of Series A Shares are entitled to vote separately as a class, whether at a meeting or by written consent.

 

(b)                                 For so long as the Purchaser beneficially owns a number of Series A Shares and/or Ordinary Shares issued upon conversion of the Series A Shares equal to at least fifty percent (50%) of the Series A Shares issued at the Closing (in each case, as appropriately adjusted for stock splits, reverse stock splits, stock dividends, stock consolidations, recapitalizations and the like), in addition to any other vote or consent of the Company’s shareholders required by law or by the Memorandum and Articles, the Company shall not, and shall cause each of its controlled Subsidiaries and Beijing Golden Tom Information Technology Co., Ltd. not to, as applicable, without the affirmative vote or written consent of the Purchaser who is the record holder of the Series A Shares at such time (which consent, except as expressly provided below, may be given or withheld, or made subject to such conditions as are determined by the Purchaser, in its sole discretion):

 

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(i)                                     amend, alter or repeal the Memorandum and Articles or any provision thereof, including this Certificate of Designations or any other instrument establishing or designating the Series A Shares, or otherwise amend the terms of the Series A Shares;

 

(ii)                                  authorize, designate or issue any other security convertible into or exercisable for any equity security having rights, privileges or preferences senior to or on parity with the Series A Shares;

 

(iii)                               declare or pay any dividend on, or make any distributions relating to, any Junior Shares (including pursuant to clause (iv) of this Section 8(b)) or redeem, purchase or acquire for value any (x) Junior Shares, or (y) any options, warrants or other rights to acquire such Junior Shares, other than purchases, redemptions or other acquisitions of such Junior Shares in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants and other than as permitted under Section 5(e) of the Investment Agreement;

 

(iv)                              distribute (by way of dividend, share distribution, exchange, redemption, recapitalization or similar transaction) securities of any entity holding a significant portion of the assets and business of any member of the Group, including by way of spin-off, split-off or other distribution transaction;

 

(v)                                 enter into, or permit any Subsidiary to enter into, any agreement, or any modification or amendment to an existing agreement, which, in the absence of a default under such agreement, would by its terms prevent the Company from fully performing its obligations with respect to the Series A Shares;

 

(vi)                              incur any material indebtedness, except as permitted under the terms of any credit facility then in place, renewing existing credit facilities in similar terms, or as provided in the Group’s annual business plan; or

 

(vii)                           agree or undertake to do any of the foregoing.

 

SECTION 9                               Appointment and Removal of Directors.

 

(a)                                 Board Representation. For so long as the Purchaser beneficially owns a number of Series A Shares and/or Ordinary Shares issued upon conversion of Series A Shares equal to at least seventy five percent (75%) of the Series A Shares issued at the Closing (in each case, as appropriately adjusted for share splits, reverse share splits, share dividends, share consolidations, recapitalizations and the like), (i) the number of the Directors of the Board shall be not fewer than five (5) and not more than nine (9), and (ii) the Purchaser shall have the exclusive right to appoint and elect two (2) directors of the Board (the “Purchaser Directors,” and each, a “Purchaser Director”).

 

For so long as the Purchaser beneficially owns a number of Series A Shares and/or Ordinary Shares issued upon conversion of Series A Shares equal to at least fifty percent (50%) of the Series A Shares issued at the Closing, but less than seventy five percent (75%) of the Series A Shares issued at the Closing (in each case, as appropriately adjusted for share splits, reverse share splits, share dividends, share consolidations, recapitalizations and the like), (i) the number of the Directors of the Board shall be not fewer than five (5) and not more than nine (9), and (ii) the Purchaser shall have the exclusive right to appoint and elect one (1) Purchaser Director to the Board.

 

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(b)                                 [Reserved].

 

(c)                                  Audit Committee Observer. For so long as the Purchaser is entitled to designate at least one (1) Purchaser Director, the Company shall procure, in whatever manner as shall be necessary to ensure, that a Purchaser Director selected by the Purchaser is appointed to be a non-voting observer on the Audit Committee of the Board (the “Audit Committee”) and such non-voting observer shall be entitled to receive identical written notice (the “Notice”) as voting Audit Committee members of, and to attend, all Audit Committee meetings, and to receive all materials provided to voting members of the Audit Committee in connection therewith; provided, however, that the voting members of the Audit Committee may, by unanimous vote and acting in good faith for reasons determined to be necessary to ensure good corporate governance, exclude such non-voting observer from attending certain portions or all (the “Excluded Portions”) of a particular Audit Committee meeting or receiving materials provided to the voting members of the Audit Committee relating to the Excluded Portions of such meeting, regardless of whether such meeting is relating to the Purchaser or its Affiliates; provided further that, together with the Notice, the Purchaser shall receive a written confirmation that the basis for exclusion of the Excluded Portions is for good corporate governance reason. For the avoidance of doubt, Purchaser’s non-voting observer shall still be entitled to receive Notice of any meeting of the Audit Committee with Excluded Portions (even if such observer is to be excluded from the entire meeting), but any provisions of the Notice specifically referring to Excluded Portions may be redacted.

 

(d)                                 Compensation Committee Observer. For so long as the Purchaser is entitled to designate at least one (1) Purchaser Director, the Company shall procure, in whatever manner as shall be necessary to ensure, that a Purchaser Director selected by the Purchaser is appointed to be a non-voting observer on the Compensation Committee of the Board (the “Compensation Committee”), and such non-voting observer shall be entitled to receive the Notice as voting Compensation Committee members of, and to attend, all Compensation Committee meetings, and to receive all materials provided to members of the Compensation Committee in connection therewith; provided, however, that the voting members of the Compensation Committee may, by unanimous vote and acting in good faith for reasons determined to be necessary to ensure good corporate governance, exclude such non-voting observer from attending the Excluded Portions of a particular Compensation Committee meeting or receiving materials provided to the voting members of the Compensation Committee relating to the Excluded Portions of such meeting, regardless of whether such meeting is relating to the Purchaser or its Affiliates; provided further that, together with the Notice, the Purchaser shall receive a written confirmation that the basis for exclusion of the Excluded Portions is for good corporate governance reasons. For the avoidance of doubt, Purchaser’s non-voting observer shall still be entitled to receive Notice of any meeting of the Compensation Committee with Excluded Portions (even if such observer is to be excluded from the entire meeting), but any provisions of the Notice specifically referring to Excluded Portions may be redacted.

 

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(e)                                  Nominating and Corporate Governance Committee Observer. For so long as the Purchaser is entitled to designate at least one (1) Purchaser Director, the Company shall procure, in whatever manner as shall be necessary to ensure, that a Purchaser Director selected by the Purchaser is appointed to be a non-voting observer on the Nominating and Corporate Governance Committee of the Board (the “Nominating and Corporate Governance Committee”), and such non-voting observer shall be entitled to receive the Notice as voting Nominating and Corporate Governance Committee members of, and to attend, all Compensation Committee meetings, and to receive all materials provided to voting members of the Compensation Committee in connection therewith; provided, however, that the voting members of the Nominating and Corporate Governance Committee may, by unanimous vote and acting in good faith for reasons determined to be necessary to ensure good corporate governance, exclude such non-voting observer from attending the Excluded Portions of a particular Nominating and Corporate Governance Committee meeting or receiving materials provided to the voting members of the Nominating and Corporate Governance Committee relating to the Excluded Portions of such meeting, regardless of whether such meeting is relating to the Purchaser or its Affiliates; provided further that, together with the Notice, the Purchaser shall receive a written confirmation that the basis for exclusion of the Excluded Portions is for good corporate governance reasons. For the avoidance of doubt, Purchaser’s non-voting observer shall still be entitled to receive Notice of any meeting of the Nominating and Corporate Governance Committee with Excluded Portions (even if such observer is to be excluded from the entire meeting), but any provisions of the Notice specifically referring to Excluded Portions may be redacted.

 

(f)                                   Term. Each Purchaser Director shall serve until the next annual meeting of the shareholders of the Company and until his or her successor is elected and qualified in accordance with Section 9(a) and the Articles of the Company, unless such Purchaser Director is earlier removed in accordance with the Articles of the Company, resigns or is otherwise unable to serve; provided, however, that (i) no director appointed and elected pursuant to this Section 9 may be removed from office, unless (A) such removal is directed or approved by the Purchaser in writing, or (B) the Purchaser is no longer so entitled to designate or approve such director; and (ii) any vacancies created by the resignation, removal or death of a director elected pursuant to this Section 9 shall be filled pursuant to the provisions of this Section 9.

 

SECTION 10                                                Preemptive Rights.

 

(a)                                 For so long as the Purchaser beneficially owns any Series A Shares, at any time the Company proposes to issue any shares of capital stock or transfer any shares of capital stock that have been repurchased from the open market and held under the Company’s brokerage account or otherwise held under the Company’s name, including the Ordinary Shares, or any securities convertible into or exercisable or exchangeable into shares of capital stock or other equity interests in the Company (the “New Securities”) other than: (i) pursuant to any present or future employee, director or consultant benefit plan or program of the Company that has been duly approved by the shareholders of the Company and the issuance of any Ordinary Shares issuable upon exercise of such equity awards under any such plan, (ii) the issuance of Ordinary Shares upon conversion of the Series A Shares or as a dividend or distribution on the Series A Shares, or (iii) the issuance of Ordinary Shares upon a stock split, stock dividend or any subdivision of the Ordinary Shares (subject to customary adjustment under the terms of the Series A Shares) (all New Securities identified in the foregoing clauses (i), (ii) and (iii), collectively, the “Exempt Securities”), the Company shall notify Purchaser in writing of such proposal (an “Issue Notice”). The Issue Notice shall specify the number and type of New Securities to be offered by the Company and the material terms of the proposed offer (including the proposed price (or range of prices) per New Security to be paid by the proposed third party purchaser(s) and other conditions), as well as which of the following pre-emptive rights are available to the Purchaser.

 

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(b)                                 The Purchaser shall have the right to purchase, or to purchase through an Affiliate, a number of New Securities so as to enable the Purchaser to beneficially hold, after the issue of the New Securities which are the subject to the Issue Notice, either (in its sole discretion):

 

(i)                                     in the case of New Securities (including, for this purpose, Exempt Securities) that would result, after the issuance thereof, in an investor and its Affiliates (other than an underwriter that is placing on behalf of the Company the New Securities in a bona fide capital markets transaction) (collectively, the “Prospective Largest Shareholder”) beneficially owning more than the Purchaser (and its Affiliates) in the aggregate, one share more than the number of shares in the Company proposed to be beneficially owned by such Prospective Largest Shareholder, unless at least two-thirds (2/3) of the members of the Board acting in good faith resolve in writing that the implementation of this Section 10(b)(i) is not in the best interests of the Company and its shareholders as a whole; provided that the right under this clause (i) may only be exercised if the Purchaser beneficially owns a number of Series A Shares and/or Ordinary Shares issued upon conversion of the Series A Shares equal to at least fifty percent (50%) of the Series A Shares issued at the Closing (in each case, as appropriately adjusted for stock splits, reverse stock splits, stock dividends, stock consolidation, recapitalization and the like); or

 

(ii)                                  a pro rata portion of the New Securities equal to the percentage of the issued share capital of the Company (on an as-converted, fully-diluted basis) then beneficially owned by the Purchaser (together with its Affiliates) prior to the issuance of the New Securities (for the avoidance of the doubt, the preemptive right as set forth in this Section 10(b)(ii) shall be exercisable by the Purchaser for so long as it beneficially owns any Series A Shares), 

 

in each case upon the same terms and conditions set forth in the Issue Notice, by giving written notice to the Company of the exercise of this right within fifteen (15) Business Days of Purchaser’s receipt of the Issue Notice. If such notice is not given by the Purchaser within such fifteen (15) Business Days thereof, the Purchaser shall be deemed to have elected not to exercise its rights under this Section 10(b) with respect to the issuance described in that specific Issue Notice (it being understood that if the Purchaser is not permitted to exercise its rights under Section 10(b)(i) because the Board takes action to prohibit such exercise in the manner provided by Section 10(b)(i), the Purchaser shall be entitled to exercise its rights under Section 10(b)(ii) for an additional ten (10) Business Days after receiving written notice of the Board’s action).

 

(c)                                  If the Purchaser (or its Affiliate) exercises its rights provided in this Section 10, the closing of the purchase of the New Securities with respect to which such right has been exercised shall take place within twenty (20) Business Days after the giving of notice of such exercise, which period of time shall be extended for a maximum of sixty (60) Business Days in order to comply with applicable laws and regulations (including receipt of any applicable regulatory or shareholder approvals). The Company and the Purchaser (or its Affiliate) exercising its rights under Section 10 will use commercially reasonable efforts to secure any regulatory or shareholder approvals or other consents, and to comply with any law or regulation necessary in connection with the offer, sale and purchase of, such New Securities.

 

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(d)                                 In the event that Purchaser fails to exercise its right provided in this Section 10 within such fifteen (15) Business Day period, or in the event that the Purchaser fails to consummate its transaction within such twenty (20) Business Day period after its giving of notice of exercise or the sixty (60) Business Day extension thereof, the Company shall thereafter be entitled to issue and sell within ninety (90) Business Days the New Securities not elected to be purchased pursuant to this Section 10 by the Purchaser at a price no less than that offered to the Purchaser, and otherwise upon terms and conditions no more favorable to the third-party purchasers of such securities than were specified in the Issue Notice. In the event the Company has not issued and sold the New Securities within such ninety (90) Business Day period, the Company shall not thereafter offer, issue or sell such New Securities without first offering such securities to the Purchaser in the manner provided in this Section 10.

 

(e)                                  In the case of the offering of New Securities for a consideration in whole or in part other than cash, including securities acquired in exchange therefor (other than securities by their terms so exchangeable), the consideration other than cash shall be deemed to be the fair value thereof as determined in good faith by the Board; provided, however, that such fair value as determined by the Board shall not exceed the aggregate market price of the securities being offered as of the date the Board authorizes the offering of such securities.

 

SECTION 11 Right of First Refusal. For so long as the Purchaser beneficially owns a number of Series A Shares and/or Ordinary Shares issued upon conversion of the Series A Shares equal to at least seventy-five percent (75%) of the Series A Shares issued at the Closing (in each case, as appropriately adjusted for stock splits, reverse stock splits, stock dividends, stock consolidation, recapitalization and the like), in the event that any Material Group Company receives a proposal, or that the Board authorizes the Company to initiate or pursue a proposal (or the Company otherwise undertakes in writing to pursue the same), which could reasonably be expected to lead to a Specified Transaction (as defined below), the Company shall, within two (2) Business Days, provide the Purchaser with a written notice of the proposal and a summary of the material terms (including the name of counterparty and any controlling Person thereof) of the proposal (the “Proposal Notice”). The Purchaser shall have a right of first refusal, exercisable by written notice to the Company (the “Exercise Notice”) within twenty (20) Business Days of receiving the Proposal Notice, to use its reasonable best efforts to consummate the Specified Transaction as soon as practicable after delivery of the Exercise Notice at substantially the same terms, prices and conditions as set forth in the Proposal Notice. If the Purchaser does not elect to exercise its right of first refusal within the twenty (20) Business Day period, or if the Purchaser fails to consummate the transaction using its reasonable best efforts after delivery of the Exercise Notice, the Company may proceed with the Specified Transaction upon terms and conditions no more favorable to the counter parties in the Specified Transaction than those specified in the Proposal Notice, subject to necessary Board and shareholder approval.

 

For purposes of this Section 11, “Specified Transaction” means a transaction or a series of transactions that (i) sell, transfer, lease or license material technology of, or otherwise dispose of, any Material Group Company, or substantially all of the assets, including without limitation, intellectual property assets of any Material Group Company, to one or more Persons that are not a Group Company; (ii) merge, amalgamate, or consolidate any Material Group Company with any other Person or entity; (iii) effect a statutory exchange of securities of the Company with another Person or entity; or (iv) effect a Change of Control.

 

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SECTION 12 Replacement Certificates. If physical share certificates are issued, the Company shall replace any mutilated certificate at the Company’s expense upon surrender of that certificate to the Company. The Company shall replace share certificates that become destroyed, stolen or lost at the Company’s expense upon delivery to the Company of evidence that the certificate has been destroyed, stolen or lost.

 

SECTION 13 Taxes.

 

(a)          Transfer Taxes. The Company shall pay any and all share transfer, documentary, stamp and similar taxes that may be payable in respect of any issuance or delivery of Series A Shares or Ordinary Shares or other securities issued on account of Series A Shares pursuant hereto or certificates representing such shares or securities.

 

(b)          Withholding. All payments and distributions (or deemed distributions) on the Series A Shares (and on the Ordinary Shares received upon their conversion) shall be subject to withholding and backup withholding of tax to the extent required by law, subject to applicable exemptions, and amounts withheld, if any, shall be treated as received by Holders.

 

SECTION 14 Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of or in connection with this Certificate of Designations must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); (iii) one Business Day after deposit with an internationally recognized overnight courier service, or (iv) when sent by confirmed electronic mail if sent during normal business hours of the recipient, and if not, then on the next Business Day, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

 

If to the Company:

 

AutoNavi Holdings Limited

	
Address:
    	
16/F, Section A, Focus Square
    
	
 
    	
No. 6, Futong East Avenue, Wangjing
    
	
 
    	
Chaoyang District, Beijing 100102
    
	
 
    	
the People’s Republic of China
    
	
Telephone:
    	
86 10 8410-7000
    
	
Email:
    	
catherine.zhang@autonavi.com
    
	
Facsimile:
    	
86 10 8410-7777
    
	
Attention:
    	
Ms. Catherine Qin Zhang
    

 

with a copy (for informational purposes only) to:

 

	
Skadden, Arps, Slate,   Meagher & Flom
    
	
Address:
    	
42/F, Edinburgh Tower, The Landmark
    
	
 
    	
15 Queen’s Road Central
    
	
 
    	
Hong Kong
    
	
Telephone:
    	
(852) 3740-4700
    
	
Email:
    	
Julie.gao@skadden.com
    
	
Attention:
    	
Z. Julie Gao, Esq.
    

 

17

 

If to the Purchaser:

 

Ali ET Investment Holding Limited

 

	
Address:
    	
26/F, Tower One, Times Square
    
	
 
    	
1 Matheson Street, Causeway Bay
    
	
 
    	
Hong Kong
    
	
Telephone:
    	
(852) 2215 5100
    
	
Email:
    	
joe@hk.alibaba-inc.com / tim.steinert@hk.alibaba-inc.com
    
	
Facsimile:
    	
(852) 2215 5200
    
	
Attention:
    	
Mr. Joseph Tsai / Mr. Tim Steinert
    

 

with a copy (for informational purposes only) to:

 

Sheppard Mullin Richter & Hampton LLP

	
Address:
    	
26th Floor, Wheelock Square
    
	
 
    	
1717 Nanjing Road West
    
	
 
    	
Jing An District
    
	
 
    	
Shanghai 200040, China
    
	
Telephone:
    	
+8621 2321 6000
    
	
Email:
    	
dwilliams@sheppardmullin.com /
    
	
 
    	
jmercer@sheppardmullin.com
    
	
Facsimile:
    	
+8621 2321 6001
    
	
Attention:
    	
Don Williams, Esq. / Jamie Mercer, Esq.
    

 

SECTION 15 Facts Ascertainable. When the terms of this Certificate of Designations refer to a specific agreement or other document to determine the meaning or operation of a provision hereof, the secretary of the Company shall maintain a copy of such agreement or document at the principal executive offices of the Company and a copy thereof shall be provided free of charge to any shareholder who makes a request therefor. The secretary of the Company shall also maintain a written record of the Issue Date, the number of Series A Shares issued to a Holder and the date of each such issuance, and shall furnish such written record free of charge to any shareholder who makes a request therefor.

 

SECTION 16 Waiver. Notwithstanding any provision in this Certificate of Designations to the contrary, any provision contained herein and any right of the Holders of Series A Shares granted hereunder may be waived as to all Series A Shares (and the holders thereof) upon the written consent of the Holders of a majority of the Series A Shares then outstanding; provided that, any right of the Purchaser granted hereunder may be waived only upon the written consent of the Purchaser.

 

18

 

SECTION 17 Severability. If any term of the Series A Shares set forth herein is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other terms set forth herein which can be given effect without the invalid, unlawful or unenforceable term will, nevertheless, remain in full force and effect, and no term herein set forth will be deemed dependent upon any other such term unless so expressed herein.

 

SECTION 18 No Impairment. Except and to the extent as waived or consented to by the Holders, the Company shall not by any action, including, without limitation, amending its Memorandum, Articles or this Certificate of Designations, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Series A Shares, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Certificate of Designations against impairment.

 

SECTION 19 Aggregation of Shares. All Series A Shares or Ordinary Shares held or acquired by Purchaser and/or its Affiliates shall be aggregated together for the purpose of determining the availability of any Purchaser rights under this Certificate of Designations.

 

SECTION 20 Interpretation. The headings contained in this Certificate of Designations are for reference purposes only and shall not affect in any way the meaning or interpretation of this Certificate of Designations. Whenever the words “include”, “includes” or “including” are used in this Certificate of Designations, they shall be deemed to be followed by the words “without limitation”. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Certificate of Designations shall refer to this Certificate of Designations as a whole and not to any particular provision of this Certificate of Designations. The word “or” shall not be exclusive. All references to “$” mean the lawful currency of the U.S.. The definitions contained in this Certificate of Designations are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. Except as specifically stated herein, any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. Except as otherwise specified herein, references to a Person are also to its permitted successors and assigns.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Company has caused this Certificate of Designations to be duly executed in its corporate name on this 16th day of May, 2013.

 

	
 
    	
AUTONAVI HOLDINGS LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
by: 
    	
/s/ Congwu Cheng
    
	
 
    	
 
    	
Name: 
    	
Congwu Cheng
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Title: 
    	
Chief Executive Officer
    

 

Signature Page to Certificate of DesignationExhibit 10.3

 

AUTONAVI HOLDINGS LIMITED

 

2013 SHARE INCENTIVE PLAN

 

ARTICLE 1

 

PURPOSE

 

The purpose of the AutoNavi Holdings Limited 2013 Share Incentive Plan (the “Plan”) is to promote the success and enhance the value of AutoNavi Holdings Limited, a company incorporated under the laws of the Cayman Islands (the “Company”) by linking the personal interests of the members of the Board, Employees and Consultants to those of the Company’s shareholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to the Company’s shareholders.  The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract and retain the services of members of the Board, Employees, and Consultants upon whose judgment, interest and special effort the successful conduct of the Company’s operation is largely dependent.

 

ARTICLE 2

 

DEFINITIONS AND CONSTRUCTION

 

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

 

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

 

2.2             “Award” means an Option, Restricted Share, Restricted Share Unit or any other type of award granted to a Participant pursuant to the Plan.

 

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

 

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

 

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

 

2.6            “Committee” means a committee of the Board described in Article 11.

 

2.7             “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.

 

 

2.8             “Corporate Transaction,” unless otherwise defined in an Award Agreement, means any of the following transactions, provided, however, that the Committee shall determine, at its sole discretion, 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;

 

(d)                                 any reverse takeover or series of related transactions culminating in a reverse takeover (including, without limitation, 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, at its sole discretion, shall not be a Corporate Transaction;

 

(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, at its sole discretion, shall not be a Corporate Transaction; or

 

(f)                                   the individuals who, as of the Effective Date, are members of the Board (the “Incumbent Board”), cease for any reason to constitute at least fifty percent (50%) of the Board; provided that if the election, or nomination for election by the Company’s shareholders, of any new member of the Board is approved by the Incumbent Board pursuant to the then-effective Articles of Association of the Company, such new member of the Board shall be considered as a member of the Incumbent Board.

 

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2.9             “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.

 

2.10      “Effective Date” shall have the meaning set forth in Section 12.1.

 

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

 

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

 

2.13      “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 and 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 in The Wall Street Journal or such other source as the Committee deems reliable;

 

(b)                                 If the Shares are regularly quoted on an automated quotation system (including the OTC 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

 

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(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 sole discretion by reference to (i) the placing price of the latest private placement of the Shares and the development of the Company’s business operations and the general economic and market conditions since such latest private placement, (ii) other third party transactions involving the Shares and the development of the Company’s business operation and the general economic and market conditions since such sale, (iii) an independent valuation of the Shares, or (iv) such other methodologies or information as the Committee determines to be indicative of Fair Market Value and relevant.

 

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

 

2.15      “Independent Director” means a member of the Board who meets the independence standards under the applicable corporate governance rules of the stock exchange.

 

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

 

2.17      “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.

 

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

 

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

 

2.20      “Plan” means this AutoNavi Holdings Limited 2013 Share Incentive Plan, as it may be amended from time to time.

 

2.21      “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, but which is not a Subsidiary and which the Board designates as a Related Entity for purposes of the Plan.

 

2.22      “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.

 

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

 

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

 

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

 

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2.26     “Share” means ordinary shares, par value US$0.0001 per share, of the Company, and such other securities of the Company that may be substituted for Shares pursuant to Article 10. When referenced in the context of listings on a stock exchange or quotations on an automated quotation system, “Shares” may also refer to American Depositary Shares or other securities representing the ordinary shares, as the case may be.

 

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

 

2.28      “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 10 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”), initially shall be equal to 13,830,000 Shares, provided that, the Shares reserved in the Award Pool shall be increased automatically if and whenever the Shares reserved in the Award Pool (which, for the avoidance of doubt, means the number of Shares that remain in the Award Pool after excluding the total number of Shares underlying the options or other awards granted previously that remain outstanding) account for less than one percent (1%) of the total then-issued and outstanding Shares on an as-converted basis, as a result of which increase the Shares reserved in the Award Pool immediately after each such increase shall equal five percent (5%) of the then-issued and outstanding Shares on an as-converted basis.

 

(b)                                 To the extent that an Award terminates, expires, lapses, or is forfeited for any reason, any Shares subject to the Award shall again be available for the grant of an Award pursuant to the Plan.  To the extent permitted by Applicable Laws, Shares issued in assumption of, or in substitution for, any outstanding awards of any entity acquired in any form or combination by the Company or any Parent or Subsidiary of the Company shall not be counted against Shares available for grant pursuant to the Plan.  Shares delivered by the Participant or withheld by the Company upon the exercise of any Award under the Plan, in payment of the exercise price thereof or tax withholding thereon, may again be optioned, granted or awarded hereunder, subject to the limitations of Section 3.1(a).  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 Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or Shares purchased on the open market.  Additionally, in the sole discretion of the Committee, American Depository Shares in an amount equal to the number of Shares that otherwise would be distributed pursuant to an Award may be distributed in lieu of Shares in settlement of any Award.  If the number of Shares represented by an American Depository Share is other than on a one-to-one basis, the limitations of Section 3.1 shall be adjusted to reflect the distribution of American Depository Shares in lieu of Shares.

 

ARTICLE 4

 

ELIGIBILITY AND PARTICIPATION

 

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

 

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

 

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

 

ARTICLE 5

 

OPTIONS

 

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

 

(a)                                 Exercise Price.  The exercise price per Share subject to an Option shall be determined by the Committee and set forth in the Award Agreement, which may be a fixed or variable price, in each case 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.

 

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(b)                                 Time and Conditions of Exercise.  The Committee shall determine, in its sole discretion, 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 13.1.  The Committee shall also determine 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, and 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 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.  The Award Agreement shall include such additional provisions as may be specified by the Committee.

 

(e)                                  Forfeiture.  Except as otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon termination of employment or service, Options that have not vested, at that time, shall be forfeited in accordance with the Award Agreement; provided, however, the Committee may (a) provide in any Option Award Agreement that forfeiture conditions relating to Options will be waived in whole or in part in the event of terminations resulting from specified causes, and (b) in other cases at its discretion, waive in whole or in part forfeiture conditions relating to Options.

 

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

 

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

 

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(i)                                     Ten (10) years from the date it is granted, unless an earlier time is set in the Award Agreement;

 

(ii)                                  Ninety (90) days after the Participant’s termination of employment as an Employee; and

 

(iii)                               One (1) year after the date of the Participant’s termination of employment or service on account of Disability or death.  Upon the Participant’s Disability or death, any Incentive Share Options exercisable at the Participant’s Disability or death may be exercised by the Participant’s legal representative or representatives, by the person or persons entitled to do so pursuant to the Participant’s last will and testament, or, if the Participant fails to make testamentary disposition of such Incentive Share Option or dies intestate, by the person or persons entitled to receive the Incentive Share Option pursuant to the applicable laws of descent and distribution.

 

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

 

(c)                                  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, on the date of grant, owns Shares possessing more than ten percent (10%) of the total combined voting power of all classes of shares 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.

 

(d)                                 Transfer Restriction.  The Participant shall give the Company prompt notice of any disposition of Shares acquired by exercise of an Incentive Share Option within (i) two (2) years from the date of grant of such Incentive Share Option, or (ii) one (1) year after the transfer of such Shares to the Participant.

 

(e)                                  Expiration of Incentive Share Options.  No Award of an Incentive Share Option may be made pursuant to this Plan after the tenth (10th) anniversary of the Effective Date.

 

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

 

ARTICLE 6

 

RESTRICTED SHARES

 

6.1       Grant of Restricted Shares.  The Committee, at any time and from time to time, may grant or sell 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 or sold to each Participant.

 

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6.2       Restricted Shares Award Agreement.  Each Award of Restricted Shares shall be evidenced by an Award Agreement, which shall specify the period of restriction, the number of Restricted Shares granted or sold, grant or purchase price, 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 Share).  These restrictions may lapse separately or in combination at such times, pursuant to such circumstances, in such installments, or otherwise, as the Committee determines, in its sole discretion, 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.

 

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 sole 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 sole 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.

 

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7.2       Restricted Share Units Award Agreement.  Each Award of Restricted Share Units shall be evidenced by an Award Agreement, which 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       Performance Objectives and Other Terms.  The Committee, in its sole discretion, may set performance objectives or other vesting criteria which, depending on the extent to which they are met, will determine the number or value of Restricted Share Units that will be paid out to the Participants.

 

7.4       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, in Shares or in a combination thereof.

 

7.5       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

 

OTHER TYPES OF AWARDS

 

8.1       Grant of Other Types of Awards.  The Committee, at any time and from time to time, may grant other types of Awards to Participants as the Committee, in its sole discretion, shall determine, including, without limitation, share appreciation rights, dividend equivalents, share payments and deferred shares.

 

ARTICLE 9

 

PROVISIONS APPLICABLE TO AWARDS

 

9.1       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.

 

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9.2       Limits on Transfer.  No right or interest of a Participant in any Award may be pledged, encumbered, or hypothecated to or in favor of any party other than the Company or a Subsidiary, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Company or a Subsidiary.  Except as otherwise provided by the Committee, no Award shall be assigned, transferred or otherwise disposed of by a Participant other than by will or the laws of descent and distribution.  The Committee by express provision in the Award or an amendment thereto may permit an Award (other than an Incentive Share Option) to be transferred to, exercised by and paid to certain persons or entities related to the Participant, including, without limitation, members of the Participant’s family, charitable institutions, or trusts or other entities whose beneficiaries or beneficial owners are members of the Participant’s family and/or charitable institutions, or to such other persons or entities as may be expressly approved by the Committee, pursuant to such conditions and procedures as the Committee may establish.  Any permitted transfer shall be subject to the condition that the Committee receive evidence satisfactory to it that the transfer is being made for estate and/or tax planning purposes (or to a “blind trust” in connection with the Participant’s termination of employment or service with the Company or a Subsidiary to assume a position with a governmental, charitable, educational or similar non-profit institution) and on a basis consistent with the Company’s lawful issue of securities.

 

9.3       Beneficiaries.  Notwithstanding Section 9.2, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant’s death.  A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee.  If the Participant is married and resides in a community property state, a designation of a person other than the Participant’s spouse as his or her beneficiary with respect to more than 50% of the Participant’s interest in the Award shall not be effective without the prior written consent of the Participant’s spouse.  If no beneficiary has been designated or survives the Participant, payment shall be made to the person entitled thereto pursuant to the Participant’s will or the laws of descent and distribution.  Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is filed with the Committee.

 

9.4       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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9.5       Paperless Administration.  Subject to Applicable Laws, the Committee may, in its sole discretion, make Awards, provide applicable disclosure and procedures for exercise of Awards by an internet website or interactive voice response system for the paperless administration of Awards.

 

9.6       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 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 middle rate promulgated by the People’s Bank of China for Renminbi on the date of exercise, 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 10

 

CHANGES IN CAPITAL STRUCTURE

 

10.1                         Adjustments.  In the event of any share dividend, share split, combination or exchange of Shares, amalgamation, arrangement or consolidation, spin-off, recapitalization or other distribution (other than normal cash dividends) of Company assets to its shareholders, or any other change affecting the Shares or the price of a Share, the Committee shall make such proportionate adjustments, if any, as the Committee in its sole 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, without limitation, 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.

 

10.2                         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 the following measures: (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 by the Participant 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 by the Participant 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 the 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 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.

 

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10.3                         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 10, 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.

 

10.4                         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, 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 11

 

ADMINISTRATION

 

11.1                         Committee.  The Plan shall be administered by the Board or the Compensation Committee of the Board (or a similar body) formed in accordance with applicable exchange rules, and the term “Committee” shall refer to the Board or such Compensation Committee, as applicable. The Committee may delegate to a committee of one or more members of the Board the authority to grant or amend Awards to Participants other than Independent Directors and executive officers of the Company. Any grant or amendment of Awards to any Committee member shall require approval by the Board in accordance with the Company’s Articles of Association.

 

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

 

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

 

(a)                                 Designate Participants to receive Awards;

 

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

 

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

 

(d)                                 Determine the terms and conditions of any Award granted pursuant to the Plan, including, without limitation, the exercise price, grant price or purchase price, any restrictions or limitations on the Award, the vesting schedule or performance criteria for the exercisability of an Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, any provisions related to non-competition and recapture of gain on an Award, based in each case on such considerations as the Committee in its sole discretion determines;

 

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

 

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

 

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

 

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

 

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

 

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

 

11.4                              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.

 

ARTICLE 12

 

EFFECTIVE AND EXPIRATION DATE

 

12.1                              Effective Date.  The Plan is effective as of the date it is adopted and approved by the Board (the “Effective Date”).  The Plan shall be ratified by the shareholders of the Company by written resolutions or at a meeting duly held in accordance with the applicable provisions of the Company’s Articles of Association within twelve (12) months of the Effective Date.  No Shares shall be issued pursuant to Awards granted under the Plan prior to such ratification of the Plan by the shareholders of the Company.  In the event that the Plan is not ratified by the shareholders of the Company, all Awards granted shall be null and void.

 

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12.2                              Expiration Date.  The Plan will expire on, and no Award may be granted pursuant to the Plan after, the tenth (10th) anniversary of the Effective Date.  Any Awards that are outstanding on the tenth (10th) anniversary of the Effective Date shall remain in force according to the terms of the Plan and the applicable Award Agreement.

 

ARTICLE 13

 

AMENDMENT, MODIFICATION, AND TERMINATION

 

13.1                              Amendment, Modification and Termination.  With the approval of the Board, at any time and from time to time, the Committee may terminate, amend or modify the Plan; provided, however, that (a) to the extent necessary and desirable to comply with Applicable Laws, the Company shall obtain shareholder approval of any Plan amendment in such a manner and to such a degree as required, unless the Company decides to follow home country practice, 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 10), or (ii) permits the Committee to extend the term of the Plan or the exercise period for an Option beyond ten (10) years from the date of grant.

 

13.2                              Awards Previously Granted.  Except with respect to amendments made pursuant to Section 14.15, 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.

 

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ARTICLE 14

 

GENERAL PROVISIONS

 

14.1                              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.

 

14.2                              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.

 

14.3                              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.

 

14.4                              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.

 

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

 

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14.6                              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.

 

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

 

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

 

14.9                              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.

 

14.10                       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.

 

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

 

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

 

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

 

14.14                       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.

 

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

 

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