Stock Incentive Plan - China Finance Online Co. Ltd.
CHINA FINANCE ONLINE CO. LIMITED
2004 STOCK INCENTIVE PLAN
1. PURPOSE OF PLAN
The purpose of the China Finance Online Co. Limited Stock Incentive Plan
(this "PLAN") is to promote the success of the Corporation and to increase
shareholder value by providing an additional means through the grant of
awards to attract, motivate, retain and reward selected employees and other
eligible persons of the Group. As used herein, "CORPORATION" means China
Finance Online Co. Limited, a company incorporated in the Hong Kong Special
Administrative Region, People's Republic of China; "SUBSIDIARY" means any
corporation or other entity a majority of whose outstanding voting stock or
voting power is beneficially owned directly or indirectly by the
Corporation, or in which the Corporation has a variable interest; "GROUP"
means the Corporation and its Subsidiaries, collectively; and "BOARD" means
the Board of Directors of the Corporation.
2. ELIGIBILITY
The Administrator (as such term is defined in Section 3.1) may grant awards
under this Plan only to those persons that the Administrator determines to
be Eligible Persons. An "ELIGIBLE PERSON" is any person who is either: (a)
an officer (whether or not a director) or employee of the Group; (b) a
director of any member of the Group; or (c) an individual consultant or
advisor who renders or has rendered bona fide services (other than services
in connection with the offering or sale of securities of the Company in a
capital-raising transaction or as a market maker or promoter of the
Company's securities) to the Company and who is selected to participate in
this Plan by the Administrator. Notwithstanding the foregoing, a person who
is otherwise an Eligible Person under clause (c) above may participate in
this Plan only if such participation would not compromise the Corporation's
ability to rely on Rule 701 to exempt from registration under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), or use Form S-8
to register under the Securities Act, the offering and sale of securities
issuable under this Plan by the Corporation or the Corporation's compliance
with any other applicable laws. An Eligible Person who has been granted an
award (a "PARTICIPANT") may, if otherwise eligible, be granted additional
awards if the Administrator shall so determine.
3. PLAN ADMINISTRATION
3.1 THE ADMINISTRATOR. This Plan shall be administered by and all awards
under this Plan shall be authorized by the Administrator. The
"ADMINISTRATOR" means the Board or one or more committees appointed by
the Board or another committee (within its delegated authority) to
administer all or certain aspects of this Plan. Any such committee
shall be comprised solely of one or more directors or such number of
directors as may be required under applicable law. A committee may
delegate some or all of its authority to another committee so
constituted. Unless otherwise provided in the Memorandum and Articles
of Association of the Corporation or the applicable charter of any
Administrator: (a) a majority of the members of the acting
Administrator shall constitute a quorum, and (b) the vote of a
majority of the members present assuming the presence of a quorum or
the
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unanimous written consent of the members of the Administrator shall
constitute action by the acting Administrator.
With respect to awards intended to satisfy the requirements for
performance-based compensation under Section 162(m) of the United
States Internal Revenue Code of 1986, as amended (the "CODE"), this
Plan shall be administered by a committee consisting solely of two or
more outside directors (as this requirement is applied under Section
162(m) of the Code); provided, however, that the failure to satisfy
such requirement shall not affect the validity of the action of any
committee otherwise duly authorized and acting in the matter. To the
extent required by any applicable listing agency, this Plan shall be
administered by a committee composed entirely of independent directors
(within the meaning of the applicable listing agency).
3.2 POWERS OF THE ADMINISTRATOR. Subject to the express provisions of this
Plan, the Administrator is authorized and empowered to do all things
necessary or desirable in connection with the authorization of awards
and the administration of this Plan (in the case of a committee,
within the authority delegated to that committee or person(s)),
including, without limitation, the authority to:
(a) determine eligibility and, from among those persons determined to
be eligible, the particular Eligible Persons who will receive an
award under this Plan;
(b) grant awards to Eligible Persons, determine the price at which
securities will be offered or awarded and the number of
securities to be offered or awarded to any of such persons,
determine the other specific terms and conditions of such awards
consistent with the express limits of this Plan, establish the
installments (if any) in which such awards shall become
exercisable or shall vest (which may include, without limitation,
performance and/or time-based schedules), or determine that no
delayed exercisability or vesting is required, establish any
applicable performance targets, and establish the events of
termination or reversion of such awards;
(c) approve the forms of award agreements (which need not be
identical either as to type of award or among participants);
(d) construe and interpret this Plan and any agreements defining the
rights and obligations of the Corporation and participants under
this Plan, further define the terms used in this Plan, and
prescribe, amend and rescind rules and regulations relating to
the administration of this Plan or the awards granted under this
Plan;
(e) cancel, modify, or waive the Corporation's rights with respect
to, or modify, discontinue, suspend, or terminate any or all
outstanding awards, subject to any required consent under Section
8.6.5;
(f) accelerate or extend the vesting or exercisability or extend the
term of any or all such outstanding awards (in the case of
options or stock appreciation
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rights, within the maximum ten-year term of such awards) in such
circumstances as the Administrator may deem appropriate
(including, without limitation, in connection with a termination
of employment or services or other events of a personal nature)
subject to any required consent under Section 8.6.5;
(g) adjust the number of shares subject to any award, adjust the
price of any or all outstanding awards or otherwise change
previously imposed terms and conditions, in such circumstances as
the Administrator may deem appropriate, in each case subject to
Sections 4 and 8.6, and provided that in no case (except due to
an adjustment contemplated by Section 7 or any repricing that may
be approved by shareholders) shall such an adjustment constitute
a repricing (by amendment, cancellation and regrant, exchange or
other means) of the per share exercise or base price of any
option or stock appreciation right to a price that is less than
the fair market value of a share (as adjusted pursuant to Section
7) on the date of the grant of the initial award;
(h) determine the date of grant of an award, which may be a
designated date after but not before the date of the
Administrator's action (unless otherwise designated by the
Administrator, the date of grant of an award shall be the date
upon which the Administrator took the action granting an award);
(i) determine whether, and the extent to which, adjustments are
required pursuant to Section 7 hereof and authorize the
termination, conversion, substitution or succession of awards
upon the occurrence of an event of the type described in
Section 7;
(j) acquire or settle (subject to Sections 7 and 8.6) rights under
awards in cash, stock of equivalent value, or other
consideration; and
(k) determine the fair market value of the shares or awards under
this Plan from time to time and/or the manner in which such value
will be determined.
3.3 BINDING DETERMINATIONS. Any action taken by, or inaction of, the
Corporation, any Subsidiary, or the Administrator relating or pursuant
to this Plan and within its authority hereunder or under applicable
law shall be within the absolute discretion of that entity or body and
shall be conclusive and binding upon all persons. Neither the Board
nor any Board committee, nor any member thereof or person acting at
the direction thereof, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in
connection with this Plan (or any award made under this Plan), and all
such persons shall be entitled to indemnification and reimbursement by
the Corporation in respect of any claim, loss, damage or expense
(including, without limitation, attorneys' fees) arising or resulting
therefrom to the fullest extent permitted by law and/or under any
directors and officers liability insurance coverage that may be in
effect from time to time.
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3.4 RELIANCE ON EXPERTS. In making any determination or in taking or not
taking any action under this Plan, the Board or a committee, as the
case may be, may obtain and may rely upon the advice of experts,
including employees and professional advisors to the Corporation. No
director, officer or agent of any member of the Group shall be liable
for any such action or determination taken or made or omitted in good
faith.
3.5 DELEGATION. The Administrator may delegate ministerial,
non-discretionary functions to individuals who are officers or
employees of any member of the Group or to third parties.
4. ORDINARY SHARES SUBJECT TO THE PLAN; SHARE LIMITS
4.1 SHARES AVAILABLE. Subject to the provisions of Section 7.1, the
capital stock that may be delivered under this Plan shall be shares of
the Corporation's authorized but unissued ordinary shares ("ORDINARY
SHARES"). For purposes of this Plan, "PLAN SHARES" shall mean the
Ordinary Shares of the Corporation and such other securities or
property as may become the subject of awards under this Plan, or may
become subject to such awards, pursuant to an adjustment made under
Section 7.1.
4.2 SHARE LIMITS. The maximum number of Ordinary Shares that may be
delivered pursuant to awards granted to Eligible Persons under this
Plan (the "SHARE LIMIT") is equal to 10,688,488 Ordinary Shares. The
following limits also apply with respect to awards granted under this
Plan:
(a) The maximum number of Ordinary Shares that may be delivered
pursuant to options qualified as incentive stock options granted
under this Plan is 3,000,000 Ordinary Shares.
(b) The maximum number of Ordinary Shares subject to those options
and stock appreciation rights that are granted during any
calendar year to any individual under this Plan is 2,000,000
Ordinary Shares.
(c) The maximum number of Ordinary Shares subject to all awards that
are granted during any calendar year to any individual under this
Plan is 2,000,000 Ordinary Shares. This limit does not apply,
however, to shares delivered in respect of compensation earned
but deferred.
(d) The maximum number of shares of Ordinary Shares that may be
delivered pursuant to awards granted under this Plan, other than
pursuant to stock option and stock appreciation right grants, is
3,000,000 Ordinary Shares. This limit does not apply, however, to
shares delivered in respect of compensation earned but deferred.
(e) Additional limits with respect to Performance-Based Awards are
set forth in Section 5.2.3.
Each of the foregoing numerical limits is subject to adjustment as
contemplated by Section 4.3, Section 7.1, and Section 8.10.
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4.3 AWARDS SETTLED IN CASH, REISSUE OF AWARDS AND SHARES. To the extent
that an award is settled in cash or a form other than Plan Shares, the
Plan Shares that would have been delivered had there been no such cash
or other settlement shall not be counted against the Ordinary Shares
available for issuance under this Plan. In the event that Plan Shares
are delivered in respect of a dividend equivalent, stock appreciation
right, or other award, only the actual number of Plan Shares delivered
with respect to the award shall be counted against the share limits of
this Plan. Plan Shares that are subject to or underlie awards which
expire or for any reason are cancelled or terminated, are forfeited,
fail to vest, or for any other reason are not paid or delivered under
this Plan shall again be available for subsequent awards under this
Plan. Plan Shares that are exchanged by a participant or withheld by
the Corporation as full or partial payment in connection with any
award under this Plan, as well as any Plan Shares exchanged by a
participant or withheld by the Group to satisfy the tax withholding
obligations related to any award under this Plan, shall be available
for subsequent awards under this Plan. Refer to Section 8.10 for
application of the foregoing share limits with respect to assumed
awards. The foregoing adjustments to the share limits of this Plan are
subject to any applicable limitations under Section 162(m) of the Code
with respect to awards intended as performance-based compensation
thereunder.
4.4 RESERVATION OF SHARES; NO FRACTIONAL SHARES; MINIMUM ISSUE. The
Corporation shall at all times reserve a number of Ordinary Shares
sufficient to cover the Corporation's obligations and contingent
obligations to deliver Plan Shares with respect to awards then
outstanding under this Plan (exclusive of any dividend equivalent
obligations to the extent the Corporation has the right to settle such
rights in cash). No fractional Plan Shares shall be delivered under
this Plan. The Administrator may pay cash in lieu of any fractional
Plan Shares in settlements of awards under this Plan. No fewer than
1,000 Ordinary Shares may be purchased on exercise of any award (or,
in the case of stock appreciation or purchase rights, no fewer than
1,000 rights may be exercised at any one time) unless the total number
purchased or exercised is the total number at the time available for
purchase or exercise under the award.
5. AWARDS
5.1 TYPE AND FORM OF AWARDS. The Administrator shall determine the type or
types of award(s) to be made to each selected Eligible Person. Awards
may be granted singly, in combination or in tandem. Awards also may be
made in combination or in tandem with, in replacement of, as
alternatives to, or as the payment form for grants or rights under any
other employee or compensation plan of the Group. The types of awards
that may be granted under this Plan are:
5.1.1 STOCK OPTIONS. A stock option is the grant of a right to
purchase a specified number of Plan Shares during a specified period
as determined by the Administrator. An option may be intended as an
incentive stock option within the meaning of Section 422 of the Code
(an "ISO") or a nonqualified stock option (an
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option not intended to be an ISO). The award agreement for an option
will indicate if the option is intended as an ISO, otherwise it will
be deemed to be a nonqualified stock option. The maximum term of each
option (ISO or nonqualified) shall be ten (10) years. The per share
exercise price for each option shall be not less than 100% of the fair
market value of a Plan Share on the date of grant of the option,
except as follows: (a) in the case of a stock option granted
retroactively in tandem with or as a substitution for another award,
the per share exercise price may be no lower than the fair market
value of a Plan Share on the date such other award was granted (to the
extent consistent with Sections 422 and 424 of the Code in the case of
options intended as incentive stock options); and (b) in any other
circumstances, a nonqualified stock option may be granted with a per
share exercise price that is less than the fair market value of a Plan
Share on the date of grant, provided that such exercise price shall
not be less than the per share purchase price of the preference shares
of the Corporation; and provided further that any Plan Shares
delivered in respect of such option shall be charged against the limit
of Section 4.2(d) (the limit on full-value awards) as well as any
other applicable limit under Section 4.2. When an option is exercised,
the exercise price for the Plan Shares to be purchased shall be paid
in full in cash or such other method permitted by the Administrator
consistent with Section 5.5.
5.1.2 ADDITIONAL RULES APPLICABLE TO ISOS. To the extent that the
aggregate fair market value (determined at the time of grant of the
applicable option) of stock with respect to which ISOs first become
exercisable by a participant in any calendar year exceeds $100,000,
taking into account both Plan Shares subject to ISOs under this Plan
and stock subject to ISOs under all other plans of the Group (or any
parent or predecessor corporation to the extent required by and within
the meaning of Section 422 of the Code and the regulations promulgated
thereunder), such options shall be treated as nonqualified stock
options. In reducing the number of options treated as ISOs to meet the
$100,000 limit, the most recently granted options shall be reduced
first. To the extent a reduction of simultaneously granted options is
necessary to meet the $100,000 limit, the Administrator may, in the
manner and to the extent permitted by law, designate which Plan Shares
are to be treated as shares acquired pursuant to the exercise of an
ISO. ISOs may only be granted to employees of the Corporation or one
of its subsidiaries (for this purpose, the term "subsidiary" is used
as defined in Section 424(f) of the Code, which generally requires an
unbroken chain of ownership of at least 50% of the total combined
voting power of all classes of stock of each subsidiary in the chain
beginning with the Corporation and ending with the subsidiary in
question). There shall be imposed in any award agreement relating to
ISOs such other terms and conditions as from time to time are required
in order that the option be an "incentive stock option" as that term
is defined in Section 422 of the Code.
5.1.3 STOCK APPRECIATION RIGHTS. A stock appreciation right is a right
to receive a payment, in cash and/or Plan Shares, equal to the excess
of the fair market value of a specified number of Plan Shares on the
date the stock appreciation right is exercised over the fair market
value of a Plan Share on the date the stock appreciation right was
granted (the "base price") as set forth in the applicable award
agreement, except as follows: (a) in the case of a stock appreciation
right granted retroactively in tandem with or as a substitution for
another award, the
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base price may be no lower than the fair market value of a Plan Share
on the date such other award was granted; and (b) in any other
circumstances, a stock appreciation right may be granted with a base
price that is less than the fair market value of a Plan Share on the
date of grant, provided that any shares delivered in respect of such
award shall be charged against the limit of Section 4.2(d) (the limit
on full-value awards) as well as any other applicable limit under
Section 4.2. The maximum term of a stock appreciation right shall be
ten (10) years. The Administrator may grant limited stock appreciation
rights which are exercisable only upon a change in control or other
specified event and may be payable based on the spread between the
base price of the stock appreciation right and the fair market value
of a Plan Share during a specified period or at a specified time
within a specified period before, after or including the date of such
event.
5.1.4 OTHER AWARDS. The other types of awards that may be granted
under this Plan include: (a) stock bonuses, restricted stock,
performance stock, stock units, phantom stock, dividend equivalents,
or similar rights to purchase or acquire shares, whether at a fixed or
variable price or ratio related to the Plan Shares, upon the passage
of time, the occurrence of one or more events, or the satisfaction of
performance criteria or other conditions, or any combination thereof;
(b) any similar securities with a value derived from the value of or
related to the Plan Shares and/or returns thereon; or (c) cash awards
granted consistent with Section 5.2 below.
5.2 SECTION 162(M) PERFORMANCE-BASED AWARDS. Without limiting the
generality of the foregoing, any of the types of awards listed in
Section 5.1.4 above may be, and options and stock appreciation rights
granted with an exercise or base price not less than the fair market
value of a Plan Share at the date of grant ("QUALIFYING OPTIONS" and
"QUALIFYING STOCK APPRECIATION RIGHTS," respectively) typically will
be, granted as awards intended to satisfy the requirements for
"performance-based compensation" within the meaning of Section 162(m)
of the Code ("PERFORMANCE-BASED AWARDS"). The grant, vesting,
exercisability or payment of Performance-Based Awards may depend (or,
in the case of Qualifying Options or Qualifying Stock Appreciation
Rights, may also depend) on the degree of achievement of one or more
performance goals relative to a pre-established targeted level or
level using one or more of the Business Criteria set forth below (on
an absolute or relative basis) for the Corporation on a consolidated
basis or for one or more of the Corporation's subsidiaries, segments,
divisions or business units, or any combination of the foregoing. Any
Qualifying Option or Qualifying Stock Appreciation Right shall be
subject only to the requirements of Section 5.2.1 and 5.2.3 in order
for such award to satisfy the requirements for "performance-based
compensation" under Section 162(m) of the Award. Any other
Performance-Based Award shall be subject to all of the following
provisions of this Section 5.2.
5.2.1 CLASS; ADMINISTRATOR. The eligible class of persons for
Performance-Based Awards under this Section 5.2 shall be officers and
employees of any member of the Group. The Administrator approving
Performance-Based Awards or making any certification required pursuant
to Section 5.2.4 must be constituted
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as provided in Section 3.1 for awards that are intended as
performance-based compensation under Section 162(m) of the Code.
5.2.2 PERFORMANCE GOALS. The specific performance goals for
Performance-Based Awards (other than Qualifying Options and Qualifying
Stock Appreciation Rights) shall be, on an absolute or relative basis,
established based on one or more of the following business criteria
("BUSINESS CRITERIA") as selected by the Administrator in its sole
discretion: earnings per share, cash flow (which means cash and cash
equivalents derived from either net cash flow from operations or net
cash flow from operations, financing and investing activities), total
shareholder return, gross revenue, revenue growth, operating income
(before or after taxes), net earnings (before or after interest,
taxes, depreciation and/or amortization), return on equity or on
assets or on net investment, cost containment or reduction, or any
combination thereof. These terms are used as applied under generally
accepted accounting principles or in the Group's financial reporting.
To qualify awards as performance-based under Section 162(m), the
applicable Business Criterion (or Business Criteria, as the case may
be) and specific performance goal or goals ("targets") must be
established and approved by the Administrator during the first 90 days
of the performance period (and, in the case of performance periods of
less than one year, in no event more than 25% of the performance
period has elapsed) and while performance relating to such target(s)
remains substantially uncertain within the meaning of Section 162(m)
of the Code. Performance targets shall be adjusted to mitigate the
unbudgeted impact of material, unusual or nonrecurring gains and
losses, accounting changes or other extraordinary events not foreseen
at the time the targets were set unless the Administrator provides
otherwise at the time of establishing the targets. The applicable
performance measurement period may not be less than three months nor
more than 10 years.
5.2.3 FORM OF PAYMENT; MAXIMUM PERFORMANCE-BASED AWARD. Grants or
awards under this Section 5.2 may be paid in cash or Plan Shares or
any combination thereof. Grants of Qualifying Options and Qualifying
Stock Appreciation Rights to any one participant in any one calendar
year shall be subject to the limit set forth in Section 4.2(b). The
maximum number of Ordinary Shares which may be delivered pursuant to
Performance-Based Awards (other than Qualifying Options and Qualifying
Stock Appreciation Rights, and other than cash awards covered by the
following sentence) that are granted to any one participant in any one
calendar year shall not exceed 2,000,000 shares, either individually
or in the aggregate, subject to adjustment as provided in Section 7.1.
In addition, the aggregate amount of compensation to be paid to any
one participant in respect of all Performance-Based Awards payable
only in cash and not related to Ordinary Shares and granted to that
participant in any one calendar year shall not exceed $5,000,000.
Awards that are cancelled during the year shall be counted against
these limits to the extent permitted by Section 162(m) of the Code.
5.2.4 CERTIFICATION OF PAYMENT. Before any Performance-Based Award
under this Section 5.2 (other than Qualifying Options and Qualifying
Stock Appreciation Rights) is paid and to the extent required to
qualify the award as
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performance-based compensation within the meaning of Section 162(m) of
the Code, the Administrator must certify in writing that the
performance target(s) and any other material terms of the
Performance-Based Award were in fact timely satisfied.
5.2.5 RESERVATION OF DISCRETION. The Administrator will have the
discretion to determine the restrictions or other limitations of the
individual awards granted under this Section 5.2 including the
authority to reduce awards, payouts or vesting or to pay no awards, in
its sole discretion, if the Administrator preserves such authority at
the time of grant by language to this effect in its authorizing
resolutions or otherwise.
5.2.6 EXPIRATION OF GRANT AUTHORITY. As required pursuant to Section
162(m) of the Code and the regulations promulgated thereunder, the
Administrator's authority to grant new awards that are intended to
qualify as performance-based compensation within the meaning of
Section 162(m) of the Code (other than Qualifying Options and
Qualifying Stock Appreciation Rights) shall terminate upon the first
meeting of the Corporation's shareholders that occurs in the fifth
year following the year in which the Corporation's shareholders first
approve this Plan.
5.3 AWARD AGREEMENTS. Each award shall be evidenced by a written award
agreement in the form approved by the Administrator and executed on
behalf of the Corporation and, if required by the Administrator,
executed by the recipient of the award. The Administrator may
authorize any officer of the Corporation (other than the particular
award recipient) to execute any or all award agreements on behalf of
the Corporation. The award agreement shall set forth the material
terms and conditions of the award as established by the Administrator
consistent with the express limitations of this Plan.
5.4 DEFERRALS AND SETTLEMENTS. Payment of awards may be in the form of
cash, Plan Shares, other awards or combinations thereof as the
Administrator shall determine, and with such restrictions as it may
impose. The Administrator may also require or permit participants to
elect to defer the issuance of shares or the settlement of awards in
cash under such rules and procedures as it may establish under this
Plan. The Administrator may also provide that deferred settlements
include the payment or crediting of interest or other earnings on the
deferral amounts, or the payment or crediting of dividend equivalents
where the deferred amounts are denominated in shares.
5.5 CONSIDERATION FOR PLAN SHARES OR AWARDS. The purchase price for any
award granted under this Plan or the Plan Shares to be delivered
pursuant to an award, as applicable, may be paid by means of any
lawful consideration as determined by the Administrator, including,
without limitation, one or a combination of the following methods:
o services rendered by the recipient of such award;
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o cash, check payable to the order of the Corporation, or
electronic funds transfer;
o notice and third party payment in such manner as may be
authorized by the Administrator;
o the delivery of previously owned Plan Shares;
o by a reduction in the number of Plan Shares otherwise deliverable
pursuant to the award; or
o subject to such procedures as the Administrator may adopt,
pursuant to a "cashless exercise" with a third party who provides
financing for the purposes of (or who otherwise facilitates) the
purchase or exercise of awards.
In no event shall any shares newly-issued by the Corporation be issued
for less than the minimum lawful consideration for such shares or for
consideration other than consideration permitted by applicable law. In
the event that the Administrator allows a participant to exercise an
award by delivering Plan Shares previously owned by such participant
and unless otherwise expressly provided by the Administrator, any
shares delivered which were initially acquired by the participant from
the Corporation (upon exercise of a stock option or otherwise) must
have been owned by the participant at least six months as of the date
of delivery. Plan Shares used to satisfy the exercise price of an
option shall be valued at their fair market value on the date of
exercise. The Corporation will not be obligated to deliver any Plan
Shares unless and until it receives full payment of the exercise or
purchase price therefor and any related withholding obligations under
Section 8.5 and any other conditions to exercise or purchase have been
satisfied. Unless otherwise expressly provided in the applicable award
agreement, the Administrator may at any time eliminate or limit a
participant's ability to pay the purchase or exercise price of any
award or shares by any method other than cash payment to the
Corporation.
5.6 DEFINITION OF FAIR MARKET VALUE. For purposes of this Plan, "fair
market value" with shall mean, until such time that the Plan Shares
are listed or admitted to trade on a national securities exchange,
reported on the National Market Reporting System, or bid and asked
prices for the Plan Shares are furnished by the NASD or a similar
organization, the value as established by the Administrator at such
time for purposes of this Plan. Thereafter, unless otherwise
determined or provided by the Administrator in the circumstances, the
last price for a Plan Share, respectively, as furnished by the
National Association of Securities Dealers, Inc. ("NASD") through the
NASDAQ National Market Reporting System for the date in question or,
if there were no sales of Plan Shares reported by the NASD on that
date, the last price for a Plan Share as reported by the NASD through
the NASDAQ National Market Reporting System for the next preceding day
on which sales of Plan Shares were reported by the NASD. The
Administrator may, however, provide with respect to one or more awards
(1) if the last price for the date in question is not yet known as of
the time of the determination, that the fair market value shall equal
the last price of a share of Plan Share as of the
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immediately preceding trading day, or (2) that the fair market value
shall equal the average of the high and low sales prices for a Plan
Share for the date in question or the most recent trading day. The
Administrator also may adopt a different methodology for determining
fair market value with respect to one or more awards if a different
methodology is necessary or advisable to secure any intended favorable
tax, legal or other treatment for the particular award(s) (for
example, and without limitation, the Administrator may provide that
fair market value for purposes of one or more awards will be based on
an average of closing prices (or the average of high and low daily
trading prices) for a specified period preceding the relevant date).
Notwithstanding the foregoing, the fair market value of Plan Shares
for purposes of grants of ISOs shall be determined in compliance with
applicable provisions of the Code.
5.7 TRANSFER RESTRICTIONS.
5.7.1 LIMITATIONS ON EXERCISE AND TRANSFER. Unless otherwise expressly
provided in (or pursuant to) this Section 5.7, by applicable law and
by the award agreement, as the same may be amended, (a) all awards are
non-transferable and shall not be subject in any manner to sale,
transfer, anticipation, alienation, assignment, pledge, encumbrance or
charge; (b) awards shall be exercised only by the participant; and (c)
amounts payable or shares issuable pursuant to any award shall be
delivered only to (or for the account of) the participant.
5.7.2 EXCEPTIONS. The Administrator may permit awards to be exercised
by and paid to certain persons or entities related to the participant,
including but not limited to members of the participant's immediate
family, trusts or other entities controlled by or whose beneficiaries
or beneficial owners are the participant and/or members of the
participant's immediate family, pursuant to such conditions and
procedures, including limitations on subsequent transfers, as the
Administrator may establish. Consistent with Section 8.1, any
permitted transfer shall be subject to the condition that the
Administrator receive evidence satisfactory to it that the transfer
(a) is being made for essentially donative, estate and/or tax planning
purposes on a gratuitous or donative basis and without consideration
(other than nominal consideration or in exchange for an interest in a
qualified transferee), and (b) will not compromise the Corporation's
ability to rely on Rule 701, or register Plan Shares issuable under
this Plan on Form S-8, under the Securities Act. Notwithstanding the
foregoing or anything in Section 5.7.3, ISOs and restricted stock
awards shall be subject to any and all additional transfer
restrictions under the Code to the extent necessary to maintain the
intended tax consequences of such awards.
5.7.3 FURTHER EXCEPTIONS TO LIMITS ON TRANSFER. The exercise and
transfer restrictions in Section 5.7.1 shall not apply to:
(a) transfers to the Corporation,
(b) the designation of a beneficiary to receive benefits in the event
of the participant's death or, if the participant has died,
transfers to or exercise by
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the participant's beneficiary, or, in the absence of a validly
designated beneficiary, transfers by will or the laws of descent
and distribution,
(c) subject to any applicable limitations on ISOs, transfers to a
family member (or former family member) pursuant to a domestic
relations order if approved or ratified by the Administrator,
(d) if the participant has suffered a disability, permitted transfers
or exercises on behalf of the participant by his or her legal
representative, or
(e) the authorization by the Administrator of "cashless exercise"
procedures with third parties who provide financing for the
purpose of (or who otherwise facilitate) the exercise of awards
consistent with applicable laws and the express authorization of
the Administrator.
5.8 INTERNATIONAL AWARDS. One or more awards may be granted to Eligible
Persons who provide services to the Group outside of the United
States. If necessary, awards granted to such persons may be granted
pursuant to the terms and conditions of any applicable sub-plans, if
any, appended to this Plan and approved by the Administrator.
6. EFFECT OF TERMINATION OF SERVICE ON AWARDS
6.1 GENERAL. The Administrator shall establish the effect of a termination
of employment or service on the rights and benefits under each award
under this Plan and in so doing may make distinctions based upon,
inter alia, the cause of termination and type of award.
Notwithstanding the foregoing, unless the Board expressly otherwise
provides, if the participant is not an employee of any member of the
Group and provides other services to the Group, the Administrator
shall be the sole judge for purposes of this Plan (unless a contract
or the award otherwise provides) of whether the participant continues
to render services to the Group and the date, if any, upon which such
services shall be deemed to have terminated. Unless the Board
otherwise expressly provides, (1) to the extent an outstanding option
granted under this Plan has not become vested and exercisable on the
date the participant's employment by or service to the Group
terminates, the option to the extent unvested and unexercisable shall
terminate, and (2) any shares subject to a restricted stock award that
remain subject to restrictions at the time the participant's
employment by or service to the Group terminates shall not vest and
the Corporation shall have the right to reacquire any such unvested
shares subject to such award in such manner and on such terms as the
Administrator provides, which terms shall include return or repayment
of the lower of the Fair Market Value or the original purchase price
of the restricted shares, without interest, to the participant to the
extent not prohibited by law.
6.2 EVENTS NOT DEEMED TERMINATIONS OF SERVICE. Unless Group policy or the
Administrator otherwise provides, the employment relationship shall
not be considered terminated in the case of (a) sick leave, (b)
military leave, or (c) any other leave of absence authorized by the
Group or the Administrator; provided that unless reemployment upon the
expiration of such leave is guaranteed by
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contract or law, such leave is for a period of not more than 90 days.
In the case of any employee of any member of the Group on an approved
leave of absence, continued vesting of the award while on leave from
the employ of such member of the Group may be suspended until the
employee returns to service, unless the Administrator otherwise
provides or applicable law otherwise requires. In no event shall an
award be exercised after the expiration of the term set forth in the
award agreement.
6.3 EFFECT OF CHANGE OF SUBSIDIARY STATUS. For purposes of this Plan and
any award, if an entity ceases to be a Subsidiary of the Corporation a
termination of employment or service shall be deemed to have occurred
with respect to each Eligible Person in respect of such Subsidiary who
does not continue as an Eligible Person in respect of another member
of the Group after giving effect to the Subsidiary's change in status.
7. ADJUSTMENTS; ACCELERATION
7.1 ADJUSTMENTS. Upon or in contemplation of: any reclassification,
recapitalization, stock split (including a stock split in the form of
a stock dividend) or reverse stock split ("stock split"); any merger,
combination, consolidation, or other reorganization; any spin-off,
split-up, or similar extraordinary dividend distribution in respect of
the Plan Shares (whether in the form of securities or property); any
exchange of Plan Shares or other securities of the Corporation, or any
similar, unusual or extraordinary corporate transaction in respect of
the Plan Shares; or a sale of all or substantially all the business or
assets of the Corporation as an entirety; then the Administrator
shall, in such manner, to such extent (if any) and at such time as it
deems appropriate and equitable in the circumstances:
(a) proportionately adjust any or all of (1) the number and type of
Plan Shares (or other securities) that thereafter may be made the
subject of awards (including the specific share limits, maximums
and numbers of shares set forth elsewhere in this Plan), (2) the
number, amount and type of Plan Shares (or other securities or
property) subject to any or all outstanding awards, (3) the
grant, purchase, or exercise price (which term includes the base
price of any stock appreciation right or similar right) of any or
all outstanding awards, (4) the securities, cash or other
property deliverable upon exercise or payment of any outstanding
awards, or (5) (subject to Sections 7.7 and 8.8.3(a)) the
performance standards applicable to any outstanding awards, or
(b) make provision for a cash payment or for the assumption,
substitution or exchange of any or all outstanding share-based
awards or the cash, securities or property deliverable to the
holder of any or all outstanding share-based awards, based upon
the distribution or consideration payable to holders of the Plan
Shares upon or in respect of such event.
The Administrator may adopt such valuation methodologies for
outstanding awards as it deems reasonable in the event of a cash or
property settlement and, in the case of options, stock appreciation
rights or similar rights, but without
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limitation on other methodologies, may base such settlement solely
upon the excess if any of the per share amount payable upon or in
respect of such event over the exercise or base price of the award.
With respect to any award of an ISO, the Administrator may make such
an adjustment that causes the option to cease to qualify as an ISO
without the consent of the affected participant.
In any of such events, the Administrator may take such action prior to
such event to the extent that the Administrator deems the action
necessary to permit the participant to realize the benefits intended
to be conveyed with respect to the underlying shares in the same
manner as is or will be available to shareholders generally. In the
case of any stock split or reverse stock split, if no action is taken
by the Administrator, the proportionate adjustments contemplated by
clause (a) above shall nevertheless be made.
7.2 AUTOMATIC ACCELERATION OF AWARDS. Upon a dissolution of the
Corporation or other event described in Section 7.1 that the
Corporation does not survive (or does not survive as a public company
in respect of its Ordinary Shares), then each then outstanding option
and stock appreciation right shall become fully vested, all shares of
restricted stock then outstanding shall fully vest free of
restrictions, and each other award granted under this Plan that is
then outstanding shall become payable to the holder of such award;
provided that such acceleration provision shall not apply, unless
otherwise expressly provided by the Administrator, with respect to any
award to the extent that the Administrator has made a provision for
the substitution, assumption, exchange or other continuation or
settlement of the award, or the award would otherwise continue in
accordance with its terms, in the circumstances.
7.3 POSSIBLE ACCELERATION OF AWARDS. Without limiting Section 7.2, in the
event of a Change in Control Event (as defined below), the
Administrator may, in its discretion, provide that any outstanding
option or stock appreciation right shall become fully vested, that any
share of restricted stock then outstanding shall fully vest free of
restrictions, and that any other award granted under this Plan that is
then outstanding shall be payable to the holder of such award. The
Administrator may take such action with respect to all awards then
outstanding or only with respect to certain specific awards identified
by the Administrator in the circumstances. For purposes of this Plan,
"CHANGE IN CONTROL EVENT" means any of the following:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a
"PERSON")) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (1) the then-outstanding Ordinary Shares of the
Corporation (the "OUTSTANDING ORDINARY SHARES") or (2) the
combined voting power of the then-outstanding voting securities
of the Corporation entitled to vote generally in the election of
directors (the "OUTSTANDING VOTING SECURITIES"); provided,
however, that, for purposes of this definition, the following
acquisitions shall not constitute a Change in Control Event; (A)
any acquisition directly from the Corporation, (B) any
acquisition by the Corporation, (C) any
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acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or any affiliate of
the Corporation or a successor, or (D) any acquisition by any
entity pursuant to a transaction that complies with Sections
(c)(1), (2) and (3) below;
(b) Individuals who, as of the Effective Date, constitute the Board
(the "INCUMBENT BOARD") cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the Effective Date
whose election, or nomination for election by the Corporation's
shareholders, was approved by a vote of at least two-thirds of
the directors then comprising the Incumbent Board (including for
these purposes, the new members whose election or nomination was
so approved, without counting the member and his predecessor
twice) shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as
a result of an actual or threatened election contest with respect
to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board;
(c) Consummation of a reorganization, merger, statutory share
exchange or consolidation or similar corporate transaction
involving the Corporation or any of its Subsidiaries, a sale or
other disposition of all or substantially all of the assets of
the Corporation, or the acquisition of assets or stock of another
entity by the Corporation or any of its Subsidiaries (each, a
"BUSINESS COMBINATION"), in each case unless, following such
Business Combination, (1) all or substantially all of the
individuals and entities that were the beneficial owners of the
Outstanding Ordinary Shares and the Outstanding Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the then-outstanding
ordinary shares and the combined voting power of the
then-outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the entity
resulting from such Business Combination (including, without
limitation, an entity that, as a result of such transaction, owns
the Corporation or all or substantially all of the Corporation's
assets directly or through one or more subsidiaries (a "PARENT"))
in substantially the same proportions as their ownership
immediately prior to such Business Combination of the Outstanding
Ordinary Shares and the Outstanding Voting Securities, as the
case may be, (2) no Person (excluding any entity resulting from
such Business Combination or a Parent or any employee benefit
plan (or related trust) of the Corporation or such entity
resulting from such Business Combination or Parent) beneficially
owns, directly or indirectly, 20% or more of, respectively, the
then-outstanding ordinary shares of the entity resulting from
such Business Combination or the combined voting power of the
then-outstanding voting securities of such entity, except to the
extent that the ownership in excess of 20% existed prior to the
Business Combination, and (3) at least a majority of the members
of the board of directors or trustees of the entity resulting
from such Business Combination or a
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Parent were members of the Incumbent Board at the time of the
execution of the initial agreement or of the action of the Board
providing for such Business Combination; or
(d) Approval by the shareholders of the Corporation of a complete
liquidation or dissolution of the Corporation other than in the
context of a transaction that does not constitute a Change in
Control Event under clause (c) above.
7.4 EARLY TERMINATION OF AWARDS. Any award that has been accelerated as
required or contemplated by Section 7.2 or 7.3 (or would have been so
accelerated but for Section 7.5, 7.6 or 7.7) shall terminate upon the
related event referred to in Section 7.2 or 7.3, as applicable,
subject to any provision that has been expressly made by the
Administrator, through a plan of reorganization or otherwise, for the
survival, substitution, assumption, exchange or other continuation or
settlement of such award and provided that, in the case of options and
stock appreciation rights that will not survive, be substituted for,
assumed, exchanged, or otherwise continued or settled in the
transaction, the holder of such award shall be given reasonable
advance notice of the impending termination and a reasonable
opportunity to exercise his or her outstanding options and stock
appreciation rights in accordance with their terms before the
termination of such awards (except that in no case shall more than ten
days' notice of accelerated vesting and the impending termination be
required and any acceleration may be made contingent upon the actual
occurrence of the event).
7.5 OTHER ACCELERATION RULES. Any acceleration of awards pursuant to this
Section 7 shall comply with applicable legal requirements and, if
necessary to accomplish the purposes of the acceleration or if the
circumstances require, may be deemed by the Administrator to occur a
limited period of time not greater than 30 days before the event.
Without limiting the generality of the foregoing, the Administrator
may deem an acceleration to occur immediately prior to the applicable
event and/or reinstate the original terms of an award if an event
giving rise to an acceleration does not occur. The Administrator may
override the provisions of Section 7.2, 7.3, 7.4 and/or 7.6 by express
provision in the award agreement and may accord any Eligible Person a
right to refuse any acceleration, whether pursuant to the award
agreement or otherwise, in such circumstances as the Administrator may
approve. The portion of any ISO accelerated in connection with a
Change in Control Event or any other action permitted hereunder shall
remain exercisable as an ISO only to the extent the applicable
$100,000 limitation on ISOs is not exceeded. To the extent exceeded,
the accelerated portion of the option shall be exercisable as a
nonqualified stock option under the Code.
7.6 POSSIBLE RESCISSION OF ACCELERATION. If the vesting of an award has
been accelerated expressly in anticipation of an event or upon
shareholder approval of an event and the Administrator later
determines that the event will not occur, the Administrator may
rescind the effect of the acceleration as to any then outstanding and
unexercised or otherwise unvested awards.
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7.7 GOLDEN PARACHUTE LIMITATION. Notwithstanding anything else contained
in this Section 7 to the contrary, in no event shall an award be
accelerated under this Plan to an extent or in a manner which would
not be fully deductible by the Group for federal income tax purposes
because of Section 280G of the Code, nor shall any payment hereunder
be accelerated to the extent any portion of such accelerated payment
would not be deductible by the Group because of Section 280G of the
Code. If a participant would be entitled to benefits or payments
hereunder and under any other plan or program that would constitute
"parachute payments" as defined in Section 280G of the Code, then the
participant may by written notice to the Corporation designate the
order in which such parachute payments will be reduced or modified so
that the Group is not denied federal income tax deductions for any
"parachute payments" because of Section 280G of the Code.
Notwithstanding the foregoing, an employment or other agreement with
the participant may expressly provide for benefits in excess of
amounts determined by applying the foregoing Section 280G limitations.
7.8 SECTION 162(M) LIMITATIONS. To the extent limited by Section 162(m) of
the Code in the case of an award intended as performance-based
compensation thereunder and necessary to assure the deductibility of
the compensation payable under the award, the Administrator shall have
no discretion under this Plan (a) to increase the amount of
compensation or the number of shares that would otherwise be due upon
the attainment of the applicable performance target or the exercise of
the option or SAR, or (b) to waive the achievement of any applicable
performance goal as a condition to receiving a benefit or right under
the award.
8. OTHER PROVISIONS
8.1 COMPLIANCE WITH LAWS. This Plan, the granting and vesting of awards
under this Plan, the offer, issuance and delivery of Plan Shares, the
acceptance of promissory notes and/or the payment of money under this
Plan or under awards are subject to compliance with all applicable
national, federal and state laws, rules and regulations (including but
not limited to state and federal securities law, federal margin
requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the
Group, be necessary or advisable in connection therewith. The person
acquiring any securities under this Plan will, if requested by the
Corporation, provide such assurances and representations to the
Corporation as the Administrator may deem necessary or desirable to
assure compliance with all applicable legal and accounting
requirements.
8.2 EMPLOYMENT STATUS. No person shall have any claim or rights to be
granted an award (or additional awards, as the case may be) under this
Plan, subject to any express contractual rights (set forth in a
document other than this Plan) to the contrary.
8.3 NO EMPLOYMENT/SERVICE CONTRACT. Nothing contained in this Plan (or in
any other documents under this Plan or in any award) shall confer upon
any Eligible Person or other participant any right to continue in the
employ or other service of any member of the Group, constitute any
contract or agreement of employment or
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other service or affect an employee's status as an employee at will,
nor shall interfere in any way with the right of such member of the
Group to change a person's compensation or other benefits, or to
terminate his or her employment or other service, with or without
cause. Nothing in this Section 8.3, however, is intended to adversely
affect any express independent right of such person under a separate
employment or service contract other than an award agreement.
8.4 PLAN NOT FUNDED. Awards payable under this Plan shall be payable in
Plan Shares or from the general assets of the Corporation, and no
special or separate reserve, fund or deposit shall be made to assure
payment of such awards. No participant, beneficiary or other person
shall have any right, title or interest in any fund or in any specific
asset (including Plan Shares, except as expressly otherwise provided)
of any member of the Group by reason of any award hereunder. Neither
the provisions of this Plan (or of any related documents), nor the
creation or adoption of this Plan, nor any action taken pursuant to
the provisions of this Plan shall create, or be construed to create, a
trust of any kind or a fiduciary relationship between any member of
the Group and any participant, beneficiary or other person. To the
extent that a participant, beneficiary or other person acquires a
right to receive payment pursuant to any award hereunder, such right
shall be no greater than the right of any unsecured general creditor
of the Group.
8.5 TAX WITHHOLDING. Upon any exercise, vesting, or payment of any award
or upon the disposition of Plan Shares acquired pursuant to the
exercise of an ISO prior to satisfaction of the holding period
requirements of Section 422 of the Code, the Group shall have the
right at its option to:
(a) require the participant (or the participant's personal
representative or beneficiary, as the case may be) to pay or
provide for payment of at least the minimum amount of any taxes
which the Group may be required to withhold with respect to such
award event or payment; or
(b) deduct from any amount otherwise payable in cash to the
participant (or the participant's personal representative or
beneficiary, as the case may be) the minimum amount of any taxes
which the Group may be required to withhold with respect to such
cash payment.
In any case where a tax is required to be withheld in connection with
the delivery of Plan Shares under this Plan, the Administrator may in
its sole discretion (subject to Section 8.1) grant (either at the time
of the award or thereafter) to the participant the right to elect,
pursuant to such rules and subject to such conditions as the
Administrator may establish, to have the Corporation reduce the number
of Plan Shares to be delivered by (or otherwise reacquire) the
appropriate number of Plan Shares, valued in a consistent manner at
their fair market value or at the sales price in accordance with
authorized procedures for cashless exercises, necessary to satisfy the
minimum applicable withholding obligation on exercise, vesting or
payment. In no event shall the Plan Shares withheld exceed the minimum
whole number of shares required for tax withholding under applicable
law. The Corporation may, with the Administrator's approval, accept
one or more promissory notes from any Eligible Person in connection
with taxes required to be
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withheld upon the exercise, vesting or payment of any award under this
Plan; provided that any such note shall be subject to terms and
conditions established by the Administrator and the requirements of
applicable law.
8.6 EFFECTIVE DATE, TERMINATION AND SUSPENSION, AMENDMENTS.
8.6.1 EFFECTIVE DATE. This Plan is effective as of January 3, 2004,
the date of its approval by the Board (the "EFFECTIVE DATE"). This
Plan shall be submitted for and subject to shareholder approval no
later than twelve months after the Effective Date. Unless earlier
terminated by the Board, this Plan shall terminate at the close of
business on the day before the tenth anniversary of the Effective
Date. After the termination of this Plan either upon such stated
expiration date or its earlier termination by the Board, no additional
awards may be granted under this Plan, but previously granted awards
(and the authority of the Administrator with respect thereto,
including the authority to amend such awards) shall remain outstanding
in accordance with their applicable terms and conditions and the terms
and conditions of this Plan.
8.6.2 BOARD AUTHORIZATION. The Board may, at any time, terminate or,
from time to time, amend, modify or suspend this Plan, in whole or in
part. No awards may be granted during any period that the Board
suspends this Plan.
8.6.3 SHAREHOLDER APPROVAL. To the extent then required by applicable
law or any applicable listing agency or required under Sections 162,
422 or 424 of the Code to preserve the intended tax consequences of
this Plan, or deemed necessary or advisable by the Board, any
amendment to this Plan shall be subject to shareholder approval.
8.6.4 AMENDMENTS TO AWARDS. Without limiting any other express
authority of the Administrator under (but subject to) the express
limits of this Plan, the Administrator by agreement or resolution may
waive conditions of or limitations on awards to participants that the
Administrator in the prior exercise of its discretion has imposed,
without the consent of a participant, and (subject to the requirements
of Sections 3.2 and 8.6.5) may make other changes to the terms and
conditions of awards. Any amendment or other action that would
constitute a repricing of an award is subject to the limitations set
forth in Section 3.2(g).
8.6.5 LIMITATIONS ON AMENDMENTS TO PLAN AND AWARDS. No amendment,
suspension or termination of this Plan or change of or affecting any
outstanding award shall, without written consent of the participant,
affect in any manner materially adverse to the participant any rights
or benefits of the participant or obligations of the Group under any
award granted under this Plan prior to the effective date of such
change. Changes, settlements and other actions contemplated by Section
7 shall not be deemed to constitute changes or amendments for purposes
of this Section 8.6.
8.7 PRIVILEGES OF SHARE OWNERSHIP. Except as otherwise expressly
authorized by the Administrator or this Plan, a participant shall not
be entitled to any privilege of share ownership as to any Plan Shares
not actually delivered to and held of record
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by the participant. No adjustment will be made for dividends or other
rights as a shareholder for which a record date is prior to such date
of delivery.
8.8 GOVERNING LAW; CONSTRUCTION; SEVERABILITY.
8.8.1 CHOICE OF LAW. This Plan, the awards, all documents evidencing
awards and all other related documents shall be governed by, and
construed in accordance with the laws of the Hong Kong Special
Administrative Region, People's Republic of China.
8.8.2 SEVERABILITY. If a court of competent jurisdiction holds any
provision invalid and unenforceable, the remaining provisions of this
Plan shall continue in effect.
8.8.3 PLAN CONSTRUCTION. Awards under Section 5.1.4 to persons
described in Section 5.2 that are either granted or become vested,
exercisable or payable based on attainment of one or more performance
goals related to the Business Criteria, as well as Qualifying Options
and Qualifying Stock Appreciation Rights granted to persons described
in Section 5.2, that are approved by a committee composed solely of
two or more outside directors (as this requirement is applied under
Section 162(m) of the Code) shall be deemed to be intended as
performance-based compensation within the meaning of Section 162(m) of
the Code unless such committee provides otherwise at the time of grant
of the award. It is the further intent of the Group that (to the
extent the Group or awards under this Plan may be or become subject to
limitations on deductibility under Section 162(m) of the Code) any
such awards and any other Performance-Based Awards under Section 5.2
that are granted to or held by a person subject to Section 162(m) will
qualify as performance-based compensation or otherwise be exempt from
deductibility limitations under Section 162(m).
8.9 CAPTIONS. Captions and headings are given to the sections and
subsections of this Plan solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of this Plan or any
provision thereof.
8.10 STOCK-BASED AWARDS IN SUBSTITUTION FOR STOCK OPTIONS OR AWARDS GRANTED
BY OTHER CORPORATION. Awards may be granted to Eligible Persons under
this Plan in substitution for or in connection with an assumption of
employee stock options, stock appreciation rights, restricted stock or
other stock-based awards granted by other entities to persons who are
or who will become Eligible Persons in respect of the Group, in
connection with a distribution, merger or other reorganization by or
with the granting entity or an affiliated entity, or the acquisition
by the Group, directly or indirectly, of all or a substantial part of
the stock or assets of the employing entity. The awards so granted
need not comply with other specific terms of this Plan, provided the
awards reflect only adjustments giving effect to the assumption or
substitution consistent with the conversion applicable to the Plan
Shares in the transaction and any change in the issuer of the
security. Any shares that are delivered and any awards that are
granted by, or become obligations of, the Corporation, as a result of
the assumption by the Corporation
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of, or in substitution for, outstanding awards previously granted by
an acquired company (or previously granted by a predecessor employer
(or direct or indirect parent thereof) in the case of persons that
become employed by any member of the Group in connection with a
business or asset acquisition or similar transaction) shall not be
counted against the Share Limit or other limits on the number of Plan
Shares available for issuance under this Plan.
8.11 NON-EXCLUSIVITY OF PLAN. Nothing in this Plan shall limit or be deemed
to limit the authority of the Board or the Administrator to grant
awards or authorize any other compensation, with or without reference
to the Plan Shares, under any other plan or authority.
8.12 NO CORPORATE ACTION RESTRICTION. The existence of this Plan, the award
agreements and the awards granted hereunder shall not limit, affect or
restrict in any way the right or power of the Board or the
shareholders of the Corporation to make or authorize: (a) any
adjustment, recapitalization, reorganization or other change in the
capital structure or business of the Corporation or any subsidiary,
(b) any merger, amalgamation, consolidation or change in the ownership
of the Corporation or any subsidiary, (c) any issue of bonds,
debentures, capital, preferred or prior preference stock ahead of or
affecting the capital stock (or the rights thereof) of the Corporation
or any subsidiary, (d) any dissolution or liquidation of the
Corporation or any subsidiary, (e) any sale or transfer of all or any
part of the assets or business of the Corporation or any subsidiary,
or (f) any other corporate act or proceeding by the Corporation or any
subsidiary. No participant, beneficiary or any other person shall have
any claim under any award or award agreement against any member of the
Board or the Administrator, or the Corporation or any employees,
officers or agents of the Corporation or any subsidiary, as a result
of any such action.
8.13 OTHER BENEFIT AND COMPENSATION PROGRAMS. Payments and other benefits
received by a participant under an award made pursuant to this Plan
shall not be deemed a part of a participant's compensation for
purposes of the determination of benefits under any other employee
welfare or benefit plans or arrangements, if any, provided by the
Corporation or any subsidiary, except where the Administrator
expressly otherwise provides or authorizes in writing. Awards under
this Plan may be made in addition to, in combination with, as
alternatives to or in payment of grants, awards or commitments under
any other plans or arrangements of the Corporation or its
subsidiaries.
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CHINA FINANCE ONLINE CO., LTD.
2004 STOCK INCENTIVE PLAN
FORM OF [EMPLOYEE] STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "OPTION AGREEMENT") dated
_____________________ by and between CHINA FINANCE ONLINE CO., LTD., a company
formed under the laws of Hong Kong Special Administration Region, P.R. China
(the "CORPORATION"), and ___________________________ (the "GRANTEE") evidences
the nonqualified stock option (the "OPTION") granted by the Corporation to the
Grantee as to the number of the Corporation's Ordinary Shares first set forth
below.
--------------------------------------------------------------------------------
NUMBER OF ORDINARY SHARES:(FN 1) _______ AWARD DATE: ________________
EXERCISE PRICE PER SHARE:(FN 1) $________ EXPIRATION DATE:(FN 1),(FN 2) ____
VESTING(FN 1),(FN 2) The Option shall become vested as to [ ]% of the total
number of Ordinary Shares subject to the Option on each of the first, second,
third and fourth anniversaries of the Award Date.
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The Option is granted under the CHINA FINANCE ONLINE CO., LTD. 2004 Stock
Incentive Plan (the "PLAN") and subject to the Terms and Conditions of Stock
Option (the "TERMS") attached to this Option Agreement (incorporated herein by
this reference) and to the Plan. The Option has been granted to the Grantee in
addition to, and not in lieu of, any other form of compensation otherwise
payable or to be paid to the Grantee. Capitalized terms are defined in the Plan
if not defined herein. The parties agree to the terms of the Option set forth
herein. The Grantee acknowledges receipt of a copy of the Terms, the Plan and
the Prospectus for the Plan.
"GRANTEE" CHINA FINANCE ONLINE CO., LTD.
___________________________________ By:________________________________
Signature
Print Name:________________________
___________________________________ Title:_____________________________
Print Name
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1 Subject to adjustment under Section 7.1 of the Plan.
2 Subject to early termination under Section 4 of the Terms and Section 7.4
of the Plan.
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TERMS AND CONDITIONS OF STOCK OPTION
1. VESTING; LIMITS ON EXERCISE.
The Option shall vest and become exercisable in percentage installments of
the aggregate number of shares subject to the Option as set forth on the cover
page of this Option Agreement. The Option may be exercised only to the extent
the Option is vested and exercisable.
o Cumulative Exercisability. To the extent that the Option is vested and
exercisable, the Grantee has the right to exercise the Option (to the
extent not previously exercised), and such right shall continue, until
the expiration or earlier termination of the Option.
o No Fractional Shares. Fractional share interests shall be disregarded,
but may be cumulated.
o Minimum Exercise. No fewer than [ ](FN 1) Ordinary Shares may be
purchased at any one time, unless the number purchased is the total
number at the time exercisable under the Option.
o Nonqualified Stock Option. The Option is a nonqualified stock option
and is not, and shall not be, an incentive stock option within the
meaning of Section 422 of the Code.
2. CONTINUANCE OF EMPLOYMENT/SERVICE REQUIRED; NO EMPLOYMENT/SERVICE
COMMITMENT.
The vesting schedule requires continued employment or service through each
applicable vesting date as a condition to the vesting of the applicable
installment of the Option and the rights and benefits under this Option
Agreement. Employment or service for only a portion of the vesting period, even
if a substantial portion, will not entitle the Grantee to any proportionate
vesting or avoid or mitigate a termination of rights and benefits upon or
following a termination of employment or services as provided in Section 4 below
or under the Plan.
Nothing contained in this Option Agreement or the Plan constitutes a
continued employment or service commitment by the Corporation or any of its
Subsidiaries, affects the Grantee's status, if he or she is an employee, as an
employee at will who is subject to termination without cause, confers upon the
Grantee any right to remain employed by or in service to the Corporation or any
Subsidiary, interferes in any way with the right of the Corporation or any
Subsidiary at any time to terminate such employment or service, or affects the
right of the Corporation or any Subsidiary to increase or decrease the Grantee's
other compensation.
3. METHOD OF EXERCISE OF OPTION.
The Option shall be exercisable by the delivery to the Secretary of the
Corporation (or such other person as the Committee may require pursuant to such
administrative exercise procedures as the Committee may implement from time to
time) of:
o a written notice, in the form approved by the Company, stating the
number of Ordinary Shares to be purchased pursuant to the Option or by
the completion of such other administrative exercise procedures as the
Committee may require from time to time,
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o payment in full for the Exercise Price of the shares to be purchased
in cash, check or by electronic funds transfer to the Corporation, or
(subject to compliance with all applicable laws, rules, regulations
and listing requirements and further subject to such rules as the
Administrator may adopt as to any non-cash payment) by notice and
third party payment in such manner as may be authorized by the
Administrator or in Ordinary Shares already owned by the Grantee,
valued at their Fair Market Value on the exercise date, provided,
however, that any shares initially acquired upon exercise of a stock
option or otherwise from the Corporation must have been owned by the
Grantee for at least six (6) months before the date of such exercise;
o any written statements or agreements required pursuant to Section 8.1
of the Plan; and
o satisfaction of the tax withholding provisions of Section 8.5 of the
Plan.
4. EARLY TERMINATION OF OPTION.
4.1 POSSIBLE TERMINATION OF OPTION UPON CHANGE IN CONTROL. The Option is
subject to termination in connection with a Change in Control Event or certain
similar reorganization events as provided in Section 7.4 of the Plan.
4.2 TERMINATION OF OPTION UPON A TERMINATION OF GRANTEE'S EMPLOYMENT OR
SERVICES. Subject to earlier termination on the Expiration Date of the Option or
pursuant to Section 4.1 above, if the Grantee ceases to be employed by or ceases
to provide services to the Corporation or a Subsidiary, the following rules
shall apply (the last day that the Grantee is employed by or provides services
to the Corporation or a Subsidiary is referred to as the Grantee's "SEVERANCE
DATE"):
o other than as expressly provided below in this Section 4.2, the
Grantee will have until the date that is [ ] days after his or her
Severance Date to exercise the Option (or portion thereof) to the
extent that it was vested on the Severance Date, (b) the Option, to
the extent not vested on the Severance Date, shall terminate on the
Severance Date, and (c) the Option, to the extent exercisable for the
[ ]-day period following the Severance Date and not exercised during
such period, shall terminate at the close of business on the last day
of the [ ]-day period;
o if the termination of the Grantee's employment or service is the
result of the Grantee's voluntary Retirement (as defined below and
other than a termination by the Corporation or a Subsidiary for cause
as provided below), then the Grantee will have until the date that is
[ ] years after his or her Severance Date to exercise the Option (or
portion thereof) to the extent that it was vested on the Severance
Date, (b) the Option, to the extent not vested on the Severance Date,
shall terminate on the Severance Date, and (c) the Option, to the
extent exercisable for the [ ]-year period following the Severance
Date and not exercised during such period, shall terminate at the
close of business on the last day of the [ ]-year period;
o if the termination of the Grantee's employment or service is the
result of the Grantee's death or Disability (as defined below), then
the Grantee (or his beneficiary or personal representative, as the
case may be) will have until the date that is [ ] years after the
Grantee's Severance Date to exercise the Option, (b) the Option, to
the extent not vested on the Severance Date, shall terminate on the
Severance Date, and (c) the Option, to the extent exercisable for the
[ ]-year period following the
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Severance Date and not exercised during such period, shall terminate
at the close of business on the last day of the [ ]-year period;
o if the termination of the Grantee's employment or service is the
result of a termination by the Corporation or a Subsidiary for Cause
(as defined below), the Option (whether vested or not) shall terminate
on the Severance Date.
For purposes of the Option, "Disability" means a permanent disability
(within the meaning of Section 22(e)(3) of the Code or as otherwise determined
by the Administrator). For purposes of the Option, "Retirement" means a
termination of employment or service by the Grantee that occurs upon or after
the Grantee's attainment of age 65 and in accordance with the retirement
policies of the Corporation (or the Subsidiary that employs the Grantee) then in
effect. For purposes of the Option, "Cause" means that the Grantee: (a) has been
repeatedly negligent in the discharge of his or her duties to the Corporation or
a Subsidiary or has refused to perform stated or assigned duties (other than by
reason of a disability or analogous condition); (b) has been dishonest or
committed or engaged in an act of theft, embezzlement or fraud, a breach of
confidentiality, an unauthorized disclosure or use of inside information,
customer lists, trade secrets or other confidential information; (c) has
breached a fiduciary duty, or violated any other duty, law, rule, regulation or
policy of the company or an affiliate; (d) has been convicted of, or plead
guilty or nolo contendere to, a felony or misdemeanor (other than minor traffic
violations or similar offenses); (e) has materially breached any of the
provisions of any agreement with the Corporation or a Subsidiary; (f) has
engaged in unfair competition with, or otherwise acted intentionally in a manner
injurious to the reputation, business or assets of, the Corporation or a
Subsidiary; or has improperly induced a vendor or customer to break or terminate
any contract with the Corporation or a Subsidiary or induced a principal for
whom the Corporation or a Subsidiary acts as agent to terminate such agency
relationship.
In all events the Option is subject to earlier termination on the
Expiration Date of the Option or as contemplated by Section 4.1. The
Administrator shall be the sole judge of whether the Grantee continues to render
employment or services for purposes of this Option Agreement.
5. NON-TRANSFERABILITY.
The Option and any other rights of the Grantee under this Option Agreement
or the Plan are nontransferable and exercisable only by the Grantee, except as
set forth in Section 5.7 of the Plan. Any Ordinary Shares issued on exercise of
the Option are subject to substantial restrictions on transfer, and are subject
to other rights in favor of the Corporation as set forth herein.
6. SECURITIES LAW COMPLIANCE.
The Grantee acknowledges that the Option and Ordinary Shares are not being
registered under the Securities Act, based, in part, in reliance upon an
exemption from registration under Securities and Exchange Commission Rule 701
promulgated under the Securities Act of 1933, and a comparable exemption from
qualification under applicable state securities laws, as each may be amended
from time to time. The Grantee, by executing this Option Agreement, hereby makes
the following representations to the Corporation and acknowledges that the
Corporation's reliance on federal and state securities law exemptions from
registration and qualification is predicated, in substantial part, upon the
accuracy of these representations:
o The Grantee is acquiring the Option and, if and when he/she exercises
the Option, will acquire Ordinary Shares solely for the Grantee's own
account, for investment purposes only, and not with a view to or an
intent to sell, or to offer for resale in connection with
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any unregistered distribution, all or any portion of the shares within
the meaning of the Securities Act, or other applicable state
securities laws.
o The Grantee has had an opportunity to ask questions and receive
answers from the Corporation regarding the terms and conditions of the
Option and the restrictions imposed on any Ordinary Shares purchased
upon exercise of the Option. The Grantee has been furnished with,
and/or has access to, such information as he or she considers
necessary or appropriate for deciding whether to exercise the Option
and purchase Ordinary Shares. However, in evaluating the merits and
risks of an investment in the Ordinary Shares, the Grantee has and
will rely upon the advice of his/her own legal counsel, tax advisors,
and/or investment advisors.
o The Grantee is aware that the Option may be of no practical value,
that any value it may have depends on its vesting and exercisability
as well as an increase in the Fair Market Value of the underlying
Ordinary Shares to an amount in excess of the Exercise Price, and that
any investment in common shares of a closely held corporation such as
the Corporation is non-marketable, non-transferable and could require
capital to be invested for an indefinite period of time, possibly
without return, and at substantial risk of loss.
o The Grantee understands that any Ordinary Shares acquired on exercise
of the Option will be characterized as "restricted securities" under
the federal securities laws, and that, under such laws and applicable
regulations, such securities may be resold without registration under
the Securities Act only in certain limited circumstances, including in
accordance with the conditions of Rule 144 promulgated under the
Securities Act, as presently in effect, with which the Grantee is
familiar.
o The Grantee has read and understands the restrictions and limitations
set forth in the Plan, this Option Agreement (including these Terms),
which are imposed on the Option and any Ordinary Shares which may be
acquired upon exercise of the Option.
o At no time was an oral representation made to the Grantee relating to
the Option or the purchase of Ordinary Shares and the Grantee was not
presented with or solicited by any promotional meeting or material
relating to the Option or the Ordinary Shares.
7. LOCK-UP AGREEMENT.
Neither the Grantee (nor any permitted transferee) may, directly or
indirectly, offer, sell or transfer or dispose of any of the Ordinary Shares
acquired upon exercise of the Option (the "SHARES") or any interest therein (or
agree to do any thereof) (collectively, a "TRANSFER") during the period
commencing as of [ ] days prior to and ending one year, or such lesser period of
time as the relevant underwriters may permit, after the effective date of a
registration statement covering any public offering of the Corporation's
securities of which the Grantee has notice. (The term "Grantee" includes, where
the context so requires, any permitted direct or indirect transferee of the
Grantee.) The Grantee shall agree and consent to the entry of stop transfer
instructions with the Corporation's transfer agent against the Transfer of the
Corporation's securities beneficially owned by the Grantee and shall conform the
limitations hereunder by agreement with and for the benefit of the relevant
underwriters by a lock-up agreement or other agreement in customary form.
Notwithstanding anything else herein to the contrary, this Section 7 shall not
be construed so as to prohibit the Grantee from participating in a registration
or a public offering of the Ordinary Shares with respect to any shares which he
or she may hold at that time, provided, however, that such participation shall
be at the sole discretion of the Board.
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8. NOTICES.
Any notice to be given under the terms of this Option Agreement shall be in
writing and addressed to the Corporation at its principal office to the
attention of the Secretary, and to the Grantee at the address last reflected on
the Corporation's payroll records, or at such other address as either party may
hereafter designate in writing to the other. Any such notice shall be given only
when received, but if the Grantee is no longer employed by the Corporation or a
Subsidiary, shall be deemed to have been duly given five business days after the
date mailed in accordance with the foregoing provisions of this Section 6.
9. PLAN.
The Option and all rights of the Grantee under this Option Agreement are
subject to, and the Grantee agrees to be bound by, all of the terms and
conditions of the Plan, incorporated herein by this reference. In the event of a
conflict or inconsistency between the terms and conditions of this Option
Agreement and of the Plan, the terms and conditions of the Plan shall govern.
The Grantee agrees to be bound by the terms of the Plan and this Option
Agreement (including these Terms). The Grantee acknowledges having read and
understanding the Plan and this Option Agreement. Unless otherwise expressly
provided in other sections of this Option Agreement, provisions of the Plan that
confer discretionary authority on the Board or the Administrator do not and
shall not be deemed to create any rights in the Grantee unless such rights are
expressly set forth herein or are otherwise in the sole discretion of the Board
or the Administrator so conferred by appropriate action of the Board or the
Administrator under the Plan after the date hereof.
10. ENTIRE AGREEMENT.
This Option Agreement (including these Terms) and the Plan together
constitute the entire agreement and supersede all prior understandings and
agreements, written or oral, of the parties hereto with respect to the subject
matter hereof. The Plan and this Option Agreement may be amended pursuant to
Section 8.6 of the Plan. Such amendment must be in writing and signed by the
Corporation. The Corporation may, however, unilaterally waive any provision
hereof in writing to the extent such waiver does not adversely affect the
interests of the Grantee hereunder, but no such waiver shall operate as or be
construed to be a subsequent waiver of the same provision or a waiver of any
other provision hereof.
11. GOVERNING LAW.
This Option Agreement shall be governed by and construed and enforced in
accordance with the laws of Hong Kong without regard to conflict of law
principles thereunder.
12. EFFECT OF THIS AGREEMENT.
Subject to the Corporation's right to terminate the Option pursuant to
Section 7.4 of the Plan, this Option Agreement shall be assumed by, be binding
upon and inure to the benefit of any successor or successors to the Corporation.
The Option does not place any limit on the corporate authority of the
Corporation as set forth in Section 8.12 of the Plan.
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13. COUNTERPARTS.
This Option Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
14. SECTION HEADINGS.
The section headings of this Option Agreement are for convenience of
reference only and shall not be deemed to alter or affect any provision hereof.
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