Document:

Exhibit 10.4

AMENDED AND RESTATED 2004 STOCK INCENTIVE
PLAN

 

1.              Purpose

 

The purpose of
this Amended and Restated 2004 Stock Incentive Plan (the “Plan”) of Staples, Inc.,
a Delaware corporation (the “Company”), is to advance the interests of the
Company’s stockholders by enhancing the Company’s ability to attract, retain
and motivate persons who make (or are expected to make) important contributions
to the Company by providing such persons with equity ownership opportunities
and performance-based incentives and thereby better aligning the interests of
such persons with those of the Company’s stockholders. Except where the context
otherwise requires, the term “Company” shall include any of the Company’s
present or future parent or subsidiary corporations as defined in
Sections 424(e) or (f) of the Internal Revenue Code of 1986, as
amended, and any regulations promulgated thereunder (the “Code”), and any other
business venture (including, without limitation, joint venture or limited
liability company) in which the Company has a controlling interest, as
determined by the Board of Directors of the Company (the “Board”).

 

2.              Eligibility

 

All of the
Company’s employees, officers, directors, consultants, advisors, and other
service providers (including persons who have entered into an agreement with
the Company under which they will be employed by the Company in the future) are
eligible to be granted options, restricted stock, restricted stock units, stock
appreciation rights or other stock-based awards (each, an “Award”) under the
Plan. Each person who has been granted an Award under the Plan shall be deemed
a “Participant”.

 

3.              Administration and
Delegation

 

(a)          Administration
by Board of Directors. The Plan will be administered by the Board. The
Board shall have authority to grant Awards and to adopt, amend and repeal such
administrative rules, guidelines and practices relating to the Plan as it shall
deem advisable. The Board may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Award in the manner and to the
extent it shall deem expedient to carry the Plan into effect and it shall be
the sole and final judge of such expediency. All decisions by the Board shall
be made in the Board’s sole discretion and shall be final and binding on all
persons having or claiming any interest in the Plan or in any Award. No
director or person acting pursuant to the authority delegated by the Board
shall be liable for any action or determination relating to or under the Plan
made in good faith.

 

(b)         Appointment
of Committees. To the extent permitted by applicable law, the Board may
delegate any or all of its powers under the Plan to one or more committees or
subcommittees of the Board (a “Committee”). Unless otherwise determined by the
Board, if a Committee is authorized to grant Awards to a Covered Employee (as
defined in Section 162(m) of the Code), such Committee shall be
comprised solely of two or more “outside directors” within the meaning of Section 162(m) of
the Code. All references in the Plan to the “Board” shall mean the Board or a
Committee of the Board or the officers referred to in Section 3(c) to
the extent that the Board’s powers or authority under the Plan have been
delegated to such Committee or officers.

 

(c)          Delegation
to Officers. To the extent permitted by applicable law, the Board may
delegate to one or more officers of the Company the power to grant Awards to
employees or officers of the Company or any of its present or future subsidiary
corporations and to exercise such other powers under the Plan as the Board may
determine, provided that the Board shall fix the terms of the Awards to be
granted by such officers (including the exercise price of such Awards, which
may include a formula by which the exercise price will be determined) and the
maximum number of shares subject to Awards that the officers may grant;
provided further, however, that no officer shall be authorized to grant Awards
to himself or herself or to any “executive officer” of the Company (as defined
by Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) or to any “officer” of the Company (as defined by Rule 16a-1 under
the Exchange Act).

 

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4.              Available for Awards

 

(a)          Number
of Shares. Subject to adjustment under Section 9, Awards may be made
under the Plan for up to 77,430,000 shares of common stock, $.0006 par value
per share, of the Company (the “Common Stock”). For purposes of counting the
number of shares available for the grant of Awards under the Plan, (i) shares
of Common Stock covered by independent SARs shall be counted against the number
of shares available for the grant of Awards under the Plan; (ii) if any
Award (A) expires or is terminated, surrendered or canceled without having
been fully exercised or is forfeited in whole or in part (including as the
result of shares of Common Stock subject to such Award being repurchased by the
Company at the original issuance price pursuant to a contractual repurchase
right) or (B) results in any Common Stock not being issued because the
Award (other than a SAR) is settled for cash, the unused Common Stock covered
by such Award (other than a SAR) shall again be available for the grant of
Awards under the Plan; provided, however, in the case of Incentive Stock
Options (as hereinafter defined), the foregoing shall be subject to any
limitations under the Code; and (iii) shares of Common Stock tendered to
the Company by a Participant to (A) purchase shares of Common Stock upon
the exercise of an Award or (B) satisfy tax withholding obligations
(including shares retained from the Award creating the tax obligation) shall
not be added back to the number of shares available for the future grant of
Awards under the Plan.

 

In addition, if any option or restricted stock award granted under the
1992 Plan expires, is terminated, surrendered or canceled without having been
fully exercised, is forfeited in whole or in part (including as the result of
shares of Common Stock subject to such restricted stock award being repurchased
by the Company at the original issuance price pursuant to a contractual
repurchase right), then in each such case the unused Common Stock covered by
such option or restricted stock award shall be available for the grant of Awards
under the Plan, subject, however, in the case of Incentive Stock Options, to
any limitations under the Code; and further provided that shares of Common
Stock tendered to the Company to (A) purchase shares of Common Stock upon
the exercise of any such option or (B) satisfy tax withholding obligations
(including shares retained from the option or restricted stock award creating
the tax obligation) shall not be added back to the number of shares available
for the future grant of Awards under the Plan and that the aggregate number of
shares of Common Stock available for grant of Awards pursuant to this sentence
shall not exceed 51,000,000. Shares issued under the Plan may consist in whole
or in part of authorized but unissued shares or treasury shares.

 

(b)         Sub-limits.
Subject to adjustment under Section 9, the following sub-limits on the
number of shares of Common Stock subject to Awards shall apply:

 

(1)          Section 162(m) Per-Participant
Limit. The maximum number of shares of Common Stock with respect to which Awards
may be granted to any Participant under the Plan in any calendar year shall be
3,450,000. The per-Participant limit described in this Section 4(b)(1) shall
be construed and applied consistently with Section 162(m) of the Code
(“Section 162(m)”).

 

(2)          Limit
on Awards other than Options and SARs. The maximum number of shares with
respect to which Awards other than Options and SARs may be granted shall be
one-half of the total number of shares of Common Stock covered by the Plan
(including any shares that may become available under this Plan pursuant to Section 4(a)(2) hereof).

 

(3)          Limits
on Awards to Directors. The maximum number of shares with respect to which
Awards may be granted during the term of the Plan to directors who are not
employees of the Company shall be 2,000,000 and the maximum number of shares of
Common stock with respect to which Awards may be granted in any calendar year
to any director who is not an employee of the Company shall be 150,000.

 

5.              Stock Options

 

(a)          General.
The Board may grant options to purchase Common Stock (each, an “Option”) and
determine the number of shares of Common Stock to be covered by each Option,
the exercise price of each Option and the conditions and limitations applicable
to the exercise of each Option, including conditions relating to applicable
federal or state securities laws, as it considers necessary or advisable. An
Option which is not intended to be an Incentive Stock Option (as hereinafter
defined) shall be designated a “Nonstatutory Stock Option”.

 

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(b)         Incentive
Stock Options. An Option that the Board intends to be an “incentive stock
option” as defined in Section 422 of the Code (an “Incentive Stock Option”)
shall only be granted to employees of Staples, Inc., any of Staples, Inc.’s
present or future parent or subsidiary corporations as defined in
Sections 424(e) or (f) of the Code, and any other entities the
employees of which are eligible to receive Incentive Stock Options under the
Code, and shall be subject to and shall be construed consistently with the
requirements of Section 422 of the Code. The Company shall have no
liability to a Participant, or any other party, if an Option (or any part
thereof) that is intended to be an Incentive Stock Option is not an Incentive
Stock Option.

 

(c)          Exercise
Price. The Board shall establish the exercise price at the time each Option
is granted and specify it in the applicable option agreement; provided,
however, that the exercise price shall be not less than 100% of the fair market
value (the “Fair Market Value”) of the Common Stock, as determined by the
Board, at the time the Option is granted.

 

(d)         No
Reload Rights. Options granted under this Plan shall not contain any
provision entitling the optionee to the automatic grant of additional Options
in connection with any exercise of the original Option.

 

(e)          No
Repricing. Unless such action is approved by the Company’s stockholders: (i) no
outstanding Option granted under the Plan may be amended to provide an exercise
price per share that is lower than the then-current exercise price per share of
such outstanding Option (other than adjustments pursuant to Section 9),
and (ii) the Board may not cancel any outstanding Option and grant in
substitution therefor new Options under the Plan covering the same or a
different number of shares of Common Stock and having an exercise price per
share lower than the then-current exercise price per share of the cancelled
Option.

 

(f)            Duration
of Options. Each Option shall be exercisable at such times and subject to
such terms and conditions as the Board may specify in the applicable option
agreement provided, however, that no Option will be granted for a term in
excess of 10 years.

 

(g)         Exercise
of Option. Options may be exercised by delivery to the Company of a written
notice of exercise signed by the proper person or by any other form of notice
(including electronic notice) approved by the Company, together with payment in
full as specified in Section 5(h) for the number of shares for which
the Option is exercised. Shares of Common Stock subject to the Option will be
delivered by the Company following exercise either as soon as practicable or,
to the extent permitted by the Company in its sole discretion, on a deferred
basis in compliance with Section 409A of the Code (with the Company’s
obligation to be evidenced by an instrument providing for future delivery of
the deferred shares at the time or times specified by the Board).

 

(h)         Payment
Upon Exercise. Common Stock purchased upon the exercise of an Option
granted under the Plan shall be paid for as follows:

 

(1)          in
cash or by check, payable to the order of the Company;

 

(2)          except
as the Board may, in its sole discretion, otherwise provide in an option
agreement, by (i) delivery of an irrevocable and unconditional undertaking
by a creditworthy broker to deliver promptly to the Company sufficient funds to
pay the exercise price and any required tax withholding or (ii) delivery
by the Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to promptly pay to the Company the
exercise price and any required tax withholding;

 

(3)          if
provided for in the option agreement or approved by the Company, in its sole
discretion, by delivery (either by actual delivery or attestation) of shares of
Common Stock owned by the Participant valued at their Fair Market Value,
provided (i) such method of payment is then permitted under applicable
law, (ii) such Common Stock, if acquired directly from the Company was
owned by the Participant for such minimum period of time, if any, as may be
established by the Board in its discretion, and (iii) such Common Stock is
not subject to any repurchase, forfeiture, unfulfilled vesting or other similar
requirements;

 

(4)          if
provided for in the option agreement or approved by the Company, in its sole
discretion, by payment of such other lawful consideration as the Board may
determine, but in no event may such consideration include delivery of a
promissory note of the Participant to the Company; or

 

(5)          by
any combination of the above permitted forms of payment.

 

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(i)             Substitute
Options. In connection with a merger or consolidation of an entity with the
Company or the acquisition by the Company of property or stock of an entity,
the Board may grant Options in substitution for any options or other stock or
stock-based awards granted by such entity or an affiliate thereof. Substitute
Options may be granted pursuant to this Section 5(i) on such terms as
the Board deems appropriate in the circumstances, notwithstanding any
limitations on Options contained in the other sections of this Section 5
or in Section 2, so long as (a) the excess of the aggregate fair
market value of the shares subject to each substituted option immediately after
the issuance of such substituted option over the aggregate exercise price of
such option does not exceed the excess of the aggregate fair market value of
all shares subject to the original option immediately before the issuance of
such substituted option over the aggregate exercise price of the original
option and (b) the ratio of the option exercise price to the fair market
value of the stock for the substitute option is not greater than the ratio of
the option exercise price to the fair market value of the original option
immediately before such substitution.

 

(j)             Amendment
of Options. Subject to the provisions of Section 10(f), the Board may
amend an Option to convert it into a Stock Appreciation Right.

 

6.              Stock Appreciation
Rights

 

(a)          Nature
of Stock Appreciation Rights. A Stock Appreciation Right, or SAR, is an
Award entitling the holder on exercise to receive an amount in cash or Common
Stock or a combination thereof (such form to be determined by the Board)
determined solely by reference to appreciation, from and after the date of
grant, in the fair market value of a share of Common Stock. The date as of
which such appreciation or other measure is determined shall be the exercise
date unless another date is specified by the Board.

 

(b)         Grant
of Stock Appreciation Rights. Stock Appreciation Rights may be granted in
tandem with, or independently of, Options granted under the Plan.

 

(1)          Rules Applicable
to Tandem Awards. When Stock Appreciation Rights are granted in tandem with
Options, (a) the Stock Appreciation Right will be exercisable only at such
time or times, and to the extent, that the related Option is exercisable
(except to the extent designated by the Board in connection with an Acquisition
Event or a Change in Control Event) and will be exercisable in accordance with
the procedure required for exercise of the related Option; (b) the Stock
Appreciation Right will terminate and no longer be exercisable upon the
termination or exercise of the related Option, except to the extent designated
by the Board in connection with an Acquisition Event or a Change in Control
Event and except that a Stock Appreciation Right granted with respect to less
than the full number of shares covered by an Option will not be reduced until
the number of shares as to which the related Option has been exercised or has
terminated exceeds the number of shares not covered by the Stock Appreciation
Right; (c) the Option will terminate and no longer be exercisable upon the
exercise of the related Stock Appreciation Right; and (d) the Stock
Appreciation Right will be transferable only with the related Option.

 

(2)          Exercise
of Independent Stock Appreciation Rights. A Stock Appreciation Right not
granted in tandem with an Option will become exercisable at such time or times,
and on such conditions, as the Board may specify. The Board may at any time
accelerate the time at which all or any part of the Right may be exercised.

 

(c)          Exercise
of Stock Appreciation Rights. Stock Appreciation Rights may be exercised by
delivery to the Company of a written notice of exercise signed by the proper
person or by any other form of notice (including electronic notice) approved by
the Company.

 

7.              Restricted Stock;
Restricted Stock Units

 

(a)          Grants.
The Board may grant Awards entitling recipients to acquire shares of Common
Stock (“Restricted Stock”), subject to the right of the Company to repurchase
all or part of such shares at their issue price or other stated or formula
price (or to require forfeiture of such shares if issued at no cost) from the
recipient in the event that conditions specified by the Board in the applicable
Award are not satisfied prior to the end of the applicable restriction period
or periods established by the Board for such Award. Instead of granting 

 

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Awards for
Restricted Stock, the Board may grant Awards entitling the recipient to receive
shares of Common Stock to be delivered in the future (“Restricted Stock Units”)
subject to such terms and conditions on the delivery of the shares of Common
Stock as the Board shall determine (each Award for Restricted Stock or
Restricted Stock Units, a “Restricted Stock Award”).

 

(b)         Terms
and Conditions. The Board shall determine the terms and conditions of any
such Restricted Stock Award, including the conditions for repurchase (or
forfeiture) and the issue price, if any.

 

(c)          Limitations
on Vesting. Restricted Stock Awards that vest based on the passage of time
alone shall be zero percent vested prior to the first anniversary of the date
of grant, no more than 331/3%
vested after the said first anniversary of the date of grant and before the
second anniversary of the date of grant, and no more than 662/3% vested after the second anniversary
of the date of grant and before the third anniversary of the date of grant.
Restricted Stock Awards that vest based on performance alone shall not vest
earlier than the first anniversary of the date of grant. Restricted Stock
Awards that vest upon the passage of time and provide for accelerated vesting
based on performance shall not vest earlier than the first anniversary of the
date of grant. Notwithstanding the preceding provisions of this Section 7(c)(1),
the Board may grant Restricted Stock Awards that are not subject to any
limitations on vesting with respect to up to 5% of the total number of shares
of Common Stock covered by the Plan (excluding any shares that may become
available under this Plan pursuant to Section 

4(a)(2) hereof).

 

Notwithstanding
any other provision of this Plan, the Board may, in its discretion, either at
the time a Restricted Stock Award is made or at any time thereafter, waive its
right to repurchase shares of Common Stock (or waive the forfeiture thereof) or
remove or modify any part or all of the restrictions applicable to the
Restricted Stock Award, provided that the Board may only exercise such rights
in extraordinary circumstances which shall include, without limitation, death
or disability of the Participant; estate planning needs of the Participant; a
merger, consolidation, sale, reorganization, recapitalization, or change in
control of the Company; or any other nonrecurring significant event affecting
the Company, a Participant or the Plan.

 

8.              Other Stock-Based
Awards

 

Other Awards
of shares of Common Stock and other Awards that are valued in whole or in part
by reference to, or are otherwise based on, shares of Common Stock or other
property, including without limitation rights to purchase shares of Common Stock
(“Other Stock Unit Awards”), may be granted hereunder to Participants. Such
Other Stock Unit Awards shall also be available as a form of payment in the
settlement of other Awards granted under the Plan or as payment in lieu of
compensation to which a Participant is otherwise entitled. Other Stock Unit
Awards may be paid in shares of Common Stock or cash, as the Board shall
determine. Subject to the provisions of the Plan, the Board shall determine the
conditions of each Other Stock Unit Awards, including any purchase price
applicable thereto; provided, however, that the limitations on vesting and
exceptions thereto contained in Section 7(c)(1) of the Plan shall
also apply to all Other Stock Unit Awards.

 

9.              Adjustments for
Changes in Common Stock and Certain Other Events

 

(a)          Changes
in Capitalization. In the event of any stock split, reverse stock split,
stock dividend, recapitalization, combination of shares, reclassification of
shares, spin-off or other similar change in capitalization or event, or any
distribution to holders of Common Stock other than an ordinary cash dividend, (i) the
number and class of securities available under this Plan, (ii) the
sub-limits set forth in Section 4(b), (iii) the number and class of
securities and exercise price per share subject to each outstanding Option, (iv) the
repurchase price per share subject to each outstanding Restricted Stock Award
and (v) the terms of each other outstanding stock-based Award shall be
adjusted by the Company in the same proportion (or substituted Awards may be
made, if applicable). If this Section 9(a) applies and Section 9(c) also
applies to any event, Section 9(c) shall be applicable to such event,
and this Section 9(a) shall not be applicable.

 

(b)         Liquidation
or Dissolution. In the event of a proposed liquidation or dissolution of
the Company, the Board shall upon written notice to the Participants provide
that all then unexercised Options will (i) become exercisable in full as
of a specified time at least 10 business days prior to the effective date of
such liquidation or dissolution and (ii) terminate effective upon such
liquidation or dissolution, except to the extent exercised before 

 

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such effective
date. The Board may specify the effect of a liquidation or dissolution on any
Restricted Stock Award granted under the Plan at the time of the grant.

 

(c)          Reorganization Events.

 

(1)          Definition.
A “Reorganization Event” shall mean: (a) any merger or consolidation of
the Company with or into another entity as a result of which all of the
outstanding shares of Common Stock are converted into or exchanged for the
right to receive cash, securities or other property or (b) any exchange of
all of the Common Stock for cash, securities or other property pursuant to a
share exchange transaction.

 

(2)          Consequences
of a Reorganization Event on Awards. In connection with a Reorganization
Event, the Board shall take any one or more of the following actions as to all
or any outstanding Awards on such terms as the Board determines: (i) provide
that Awards shall be assumed, or substantially equivalent Awards shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), (ii) upon written notice to a Participant, provide that the Participant’s
unexercised Options or other unexercised Awards shall become exercisable in
full and will terminate immediately prior to the consummation of such
Reorganization Event unless exercised by the Participant within a specified
period following the date of such notice, (iii) in the event of a
Reorganization Event under the terms of which holders of Common Stock will
receive upon consummation thereof a cash payment for each share surrendered in
the Reorganization Event (the “Acquisition Price”), make or provide for a cash
payment to a Participant equal to (A) the Acquisition Price times the
number of shares of Common Stock subject to the Participant’s Options or other
Awards (to the extent the exercise price does not exceed the Acquisition Price)
minus (B) the aggregate exercise price of all such outstanding Options or
other Awards, in exchange for the termination of such Options or other Awards, (iv) provide
that outstanding Awards shall become exercisable or realizable, or restrictions
applicable to a Restricted Stock Award or other Award shall lapse, in whole or
in part, prior to or upon such Reorganization Event, (v) provide that, in
connection with a liquidation or dissolution of the Company, Awards shall
convert into the right to receive liquidation proceeds (if applicable, net of
the exercise price thereof) and (vi) any combination of the foregoing. To
the extent all or any portion of an Award becomes exercisable solely as a
result of clause (ii) above, the Board may provide that upon exercise
of such Award the Participant shall receive shares subject to a right of
repurchase by the Company or its successor at the Award exercise price; such
repurchase right (A) shall lapse at the same rate as the Award would have
become exercisable under its terms and (B) shall not apply to any shares
subject to the Award that were exercisable under its terms without regard to
clause (ii) above.

 

10.       General Provisions
Applicable to Awards

 

(a)          Transferability
of Awards. Awards shall not be sold, assigned, transferred, pledged or
otherwise encumbered by the person to whom they are granted, either voluntarily
or by operation of law, except by will or the laws of descent and distribution
or, other than in the case of an Incentive Stock Option, pursuant to a
qualified domestic relations order, and, during the life of the Participant,
shall be exercisable only by the Participant; provided, however, that the Board
may permit or provide in an Award for the gratuitous transfer of the Award by
the Participant to or for the benefit of any immediate family member, family
trust or family partnership established solely for the benefit of the
Participant and/or an immediate family member thereof if, with respect to such
proposed transferee, the Company would be eligible to use a Form S-8 for
the registration of the sale of the Common Stock subject to such Award under
the Securities Act of 1933, as amended; provided, further, that the Company
shall not be required to recognize any such transfer until such time as the
Participant and such permitted transferee shall, as a condition to such
transfer, deliver to the Company a written instrument in form and substance
satisfactory to the Company confirming that such transferee shall be bound by
all of the terms and conditions of the Award. References to a Participant, to
the extent relevant in the context, shall include references to authorized
transferees.

 

(b)         Documentation.
Each Award shall be evidenced in such form (written, electronic or otherwise)
as the Board shall determine. Each Award may contain terms and conditions in
addition to those set forth in the Plan.

 

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(c)          Board
Discretion. Except as otherwise provided by the Plan, each Award may be
made alone or in addition or in relation to any other Award. The terms of each
Award need not be identical, and the Board need not treat Participants
uniformly.

 

(d)         Termination
of Status. The Board shall determine the effect on an Award of the
disability, death, retirement, authorized leave of absence or other change in
the employment or other status of a Participant and the extent to which, and
the period during which, the Participant, the Participant’s legal
representative, conservator or guardian may exercise rights under the Award.

 

(e)          Withholding.
The Company may require each Participant to pay to the Company, or make
provision satisfactory to the Company for payment of, an amount sufficient to
pay any taxes, social security contributions, or other similar amounts required
by law to be withheld in connection with an Award to such Participant. If
provided for in an Award or approved by the Company, in its sole discretion, a
Participant may satisfy such tax obligations in whole or in part by delivery of
shares of Common Stock, including shares retained from the Award creating the
tax obligation, valued at their Fair Market Value; provided, however, that
except as otherwise provided by the Board, the total tax withholding where
stock is being used to satisfy such tax obligations cannot exceed the Company’s
minimum statutory withholding obligations (based on minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes,
that are applicable to such supplemental taxable income). Shares surrendered to
satisfy tax withholding requirements cannot be subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements. The Company may,
to the extent permitted by law, deduct any such tax obligations from any
payment of any kind otherwise due to a Participant.

 

(f)            Amendment
of Award. Except as prohibited by Section 5(e), the Board may amend,
modify or terminate any outstanding Award, including but not limited to,
substituting therefor another Award of the same or a different type, changing
the date of exercise or realization, converting an Incentive Stock Option to a
Nonstatutory Stock Option and converting an Option into a SAR, provided that,
in each such case, the Participant’s consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.

 

(g)         Conditions
on Delivery of Stock. The Company will not be obligated to deliver any
shares of Common Stock pursuant to the Plan or to remove restrictions from
shares previously delivered under the Plan until (i) all conditions of the
Award have been met or removed to the satisfaction of the Company, (ii) in
the opinion of the Company’s counsel, all other legal matters in connection
with the issuance and delivery of such shares have been satisfied, including
any applicable securities laws and any applicable stock exchange or stock
market rules and regulations, and (iii) the Participant has executed
and delivered to the Company such representations or agreements as the Company
may consider appropriate to satisfy the requirements of any applicable laws, rules or
regulations.

 

(h)         Acceleration.
The Board may at any time provide that any Award shall become immediately
exercisable in full or in part, free of some or all restrictions or conditions,
or otherwise realizable in full or in part, as the case may be; provided,
however, that this sentence shall apply to a Restricted Stock Award only to the
extent consistent with Sections 7(c)(2) and 10(j).

 

(i)             Deferral.
The Board may provide in an Award or in an amendment to an Award that the
Participant may elect to defer the delivery of shares of Common Stock that
would otherwise be delivered pursuant to such Award. The Board may establish
such conditions on the Participant’s election as it deems appropriate,
including provisions to obtain compliance with Section 409A of the Code.

 

(j)             Performance
Conditions. Notwithstanding any other provision of the Plan, if the
Committee determines at the time a Restricted Stock Award or an Other Stock
Unit Award is granted to a Participant who is then an officer, that such
Participant is, or is likely to be as of the end of the tax year in which the
Company would claim a tax deduction in connection with such Award, a Covered Employee
(as defined in Section 162(m) of the Code), then the Committee may
provide that this Section 10(j) is applicable to such Award.

 

If a
Restricted Stock Award or an Other Stock Unit Award is subject to this Section 10(j),
then the lapsing of restrictions thereon and the distribution of Shares
pursuant thereto, as applicable, shall be subject to the achievement of one or
more objective performance goals established by the Committee, which shall be
based on one or more of the 

 

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following measures: sales,
earnings per share, return on net assets, return on equity, and customer
service levels. The Committee may determine that special one-time or
extraordinary gains and/or losses and/or other one-time or extraordinary events
should or should not be included or considered in the calculation of such
measures. In addition, customer service target levels will be based on
predetermined tests of customer service levels such as scores on blind test (“mystery”)
shopping, customer comment card statistics, customer relations statistics
(e.g., number of customer complaints), and delivery response levels. The
Committee believes that disclosure of further detail concerning the performance
criteria may be confidential commercial or business information, the disclosure
of which would adversely affect the Company. Such performance goals may vary by
Participant and may be different for different Awards. Such performance goals
shall be set by the Committee within the time period prescribed by, and shall
otherwise comply with the requirements of, Section 162(m) of the
Code, or any successor provision thereto, and the regulations thereunder.

 

The Committee
shall have the power to impose such other restrictions on Awards subject to this
Section 10(j) as it may deem necessary or appropriate to ensure that
such Awards satisfy all requirements for “performance-based compensation”
within the meaning of Section 162(m)(4)(C) of the Code, or any
successor provision thereto.

 

11.       Miscellaneous

 

(a)          No
Right To Employment or Other Status. No person shall have any claim or
right to be granted an Award, and the grant of an Award shall not be construed
as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.

 

(b)         No
Rights As Stockholder. Subject to the provisions of the applicable Award,
no Participant shall have any rights as a stockholder with respect to any
shares of Common Stock to be distributed with respect to an Award until
becoming the record holder of such shares. Notwithstanding the foregoing, in
the event the Company effects a split of the Common Stock by means of a stock
dividend and the exercise price of and the number of shares subject to such
Option are adjusted as of the date of the distribution of the dividend (rather
than as of the record date for such dividend), then an optionee who exercises
an Option between the record date and the distribution date for such stock
dividend shall be entitled to receive, on the distribution date, the stock
dividend with respect to the shares of Common Stock acquired upon such Option
exercise, notwithstanding the fact that such shares were not outstanding as of
the close of business on the record date for such stock dividend.

 

(c)          Effective
Date and Term of Plan. The Plan shall become effective on the date on which
it is approved by stockholders of the Company and shall remain in full force
and effect until terminated by the Board. No Awards shall be granted under the
Plan after the completion of ten years from the date on which the Plan is
adopted or was approved by the Company’s stockholders, whichever is earlier,
but Awards previously granted may extend beyond that date.

 

(d)         Amendment
of Plan. The Board may amend, suspend or terminate the Plan or any portion
thereof at any time, provided that no amendment requiring the approval of the
Company’s stockholders under any applicable tax requirement, including without
limitation Sections 162(m) and 422 of the Code, shall become
effective until such approval of the Company’s stockholders is obtained and
provided further that without approval of the Company’s stockholders, no
amendment may (i) increase the number of shares authorized under the Plan
(other than pursuant to Section 9), (ii) materially increase the
benefits provided under the Plan, (iii) materially expand the class of
participants eligible to participate in the Plan, (iv) expand the types of
Awards provided under the Plan or (v) make any other changes which require
stockholder approval under the rules of the Nasdaq National Market, Inc.
No Award shall be made that is conditioned on the approval of the Company’s
stockholders of any amendment to the Plan.

 

(e)          Provisions
for Foreign Participants. The Board may modify the terms and conditions of
Awards granted to Participants who are foreign nationals or employed outside
the United States, establish subplans under the Plan, or adopt such
modifications or procedures as the Board may determine to be necessary or
advisable to recognize differences in laws, rules, regulations or customs of
such foreign jurisdictions with respect to tax, securities, currency, employee
benefit, accounting or other matters.

 

8

 

(f)            Compliance
With Code Section 409A. No Award shall provide for deferral of compensation
that does not comply with Section 409A of the Code, unless the Board, at
the time of grant, specifically provides that the Award is not intended to
comply with Section 409A of the Code.

 

(g)         Governing
Law. The provisions of the Plan and all Awards made hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Delaware, without regard to any applicable conflicts of law.

 

9Exhibit 4.1

 

SUPPLEMENT NO. 4 TO BASE INDENTURE

 

SUPPLEMENT NO.
4, dated as of June 9, 2008 (this “Supplement”), to the Base Indenture, dated as of March 16,
2007 (as supplemented by Supplement No. 1 thereto, dated as of November 28,
2007, and Supplement No. 2 thereto, dated as of January 17, 2008, and
Supplement No. 3 thereto, dated as of April 25, 2008, and as
otherwise heretofore amended, the “Existing Base
Indenture” and as amended by this
Supplement, and as the same may be further supplemented, amended or otherwise
modified and in effect from time to time, the “Base Indenture”), by and among IHOP FRANCHISING, LLC, a Delaware
limited liability company, as the issuer (the “Issuer”), IHOP IP, LLC, a Delaware limited liability
company, as the co-issuer (the “Co-Issuer” and, together with the Issuer, the “Co-Issuers”), and WELLS
FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as the
indenture trustee (in such capacity, the “Indenture Trustee”).

 

R  E  C  I  T  A
L  S

 

WHEREAS, the
parties hereto desire to amend and supplement the Existing Base Indenture in
the manner provided herein; and

 

WHEREAS, Section 8.2
of the Existing Base Indenture permits the Co-Issuers and the Indenture Trustee
to enter into a supplement to the Existing Base Indenture with respect to
certain matters without the consent of the Noteholders (other than with respect
to certain matters set forth therein) subject to (i) the written consent
of each Series Controlling Party and (ii) written confirmation by
each Rating Agency that such action will not have an adverse effect on the
ratings of any Notes (without giving effect to any Insurance Policy).

 

WHEREAS, the Series Controlling
Party in respect of the Series 2007-3 Notes has delivered its written
consent to this Supplement pursuant to a side letter delivered to the
Co-Issuers, the Series Insurer in respect of the Series 2007-1 Notes
and Series 2007-2 Notes and the Indenture Trustee as of the date hereof.

 

NOW, THEREFORE, in consideration of the foregoing, other good and
valuable consideration, and the mutual terms contained herein, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto hereby agree as follows:

 

ARTICLE
I

DEFINITIONS

 

Section 1.1       Definitions.  The
capitalized terms used herein (including the preamble and the recitals hereto)
and not otherwise defined herein shall have the meanings assigned thereto or
incorporated by reference pursuant to Section 1.1 of the Existing
Base Indenture.

 

ARTICLE II

AMENDMENTS

 

Section 2.1       Amendment
to Section 5.1(a) of the Existing Base Indenture.

 

 

(a)   Section 5.1(a)(xiii)
of the Existing Base Indenture is hereby deleted in its entirety and replaced
with the following:

 

“[RESERVED];”

 

(b)   Section 5.1(a)(xvi) of the Existing Base Indenture is
hereby deleted in its entirety and replaced with the following provision:

 

“(A) any Transaction
Document (other than an Insurance Policy) shall cease to be in full force and
effect or enforceable in accordance with its terms (other than in accordance with
the express termination provisions thereof), or any of IHOP Inc., IHOP
Holdings, the Servicer or any Securitization Entity asserts as such in writing
or (B) any Insurance Policy relating to a Series of Notes shall cease
to be in full force and effect or enforceable in accordance with its terms
other than as a result of a final non-appealable judgment or regulatory order
delivered in connection with an insolvency of the applicable Insurer.”

 

ARTICLE III

MISCELLANEOUS

 

Section 3.1       Effectiveness
of Supplement.  This Supplement shall
become effective upon the satisfaction of the following conditions:

 

(a)       the
execution and delivery of this Supplement by each of the Co-Issuers and the
Indenture Trustee;

 

(b)       the
consent to the execution and delivery of this Supplement (by acknowledgment of
the signature pages hereto or otherwise) by (1) Financial Guaranty
Insurance Company, as the Series Insurer with respect to the Series 2007-1
Notes and the Series 2007-2 Notes and (2) the Series Controlling
Party in respect of the Series 2007-3 Notes; and

 

(c)       the Series Insurer’s
receipt of written confirmation from each Rating Agency to the effect that the
amendments contemplated by this Supplement will not have an adverse effect on
the ratings assigned by such Rating Agency to any Series of Notes
Outstanding (without giving effect to any Insurance Policy).

 

(d)       no
Default, Event of Default, Mandatory Redemption Event, Servicer Termination
Event or Trigger Reserve Event (or event that with the giving of notice or
lapse of time or both would be a Default, an Event of Default, a Mandatory
Redemption Event, a Servicer Termination Event or a Trigger Reserve Event)
shall occur and be continuing immediately after giving effect to this
Supplement; and

 

(e)       all
representations and warranties of the Co-Issuers set forth in Section 7.12
of the Indenture shall be true and correct in all material respects immediately
after giving effect to this Supplement.

 

Section 3.2       Effect
of Supplement.  The Existing Base
Indenture as modified by this Supplement and all rights and remedies of the
parties thereunder are and shall continue to be in full force and effect in
accordance with the terms thereof, and the Existing Base Indenture as 

 

 

modified by this Supplement is hereby ratified and confirmed
in all such respects by the parties hereto.

 

Section 3.3       Effect
of Section Headings.  The
section headings in this Supplement are for convenience only and shall not
affect the construction of this Supplement.

 

Section 3.4       Separability.  In case any provision of this Supplement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

 

Section 3.5       Governing
Law.  THIS SUPPLEMENT SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CHOICE
OF LAW RULES (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).

 

Section 3.6       Counterparts.  This Supplement may be executed in any number
of counterparts (including by facsimile or other electronic means of
transmission), each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same
instrument.

 

[Remainder of Page Intentionally Blank]

 

 

IN WITNESS WHEREOF,
the parties hereto have caused this Supplement to the Existing Base Indenture
to be duly executed as of the date and year first above written.

 

	
   

  	
  IHOP FRANCHISING, LLC,

  
	
   

  	
  as the Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Tom Conforti

  
	
   

  	
   

  	
  Name: Tom Conforti

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  IHOP IP, LLC, as the Co-Issuer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Mark
  Weisberger

  
	
   

  	
   

  	
  Name: Mark Weisberger

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WELLS FARGO BANK, NATIONAL

  ASSOCIATION, not in its individual capacity but

  solely as the Indenture Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Chad Schafer

  
	
   

  	
   

  	
  Name: Chad Schafer

  
	
   

  	
   

  	
  Title: Corporate Trust Officer

  

 

1

 

Consented to for purposes of Section 8.2(a)

of the Existing Base Indenture and Section 6.01
of the Insurance Agreement

relating to the Series 2007-1 Notes and Series 2007-2
Notes:

 

FINANCIAL GUARANTY INSURANCE

COMPANY, as Series Insurer in respect of

the Series 2007-1 and Series 2007-2
Notes

 

 

	
  By:

  	
    /s/ Kenneth L.
  Degen

  	
   

  
	
   

  	
  Name: Kenneth L. Degen

  	
   

  
	
   

  	
  Title: Senior Managing
  Director

  	
   

  

 

2

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