Document:

Exhibit 10.4

 

Execution Version

 

	
 
    	
Deutsche Bank 

 

Deutsche Bank AG, London Branch

Winchester   house

1   Great Winchester St,

London   EC2N 2DB

Telephone:    44 20 7545 8000

 

c/o Deutsche Bank Securities Inc.

60   Wall Street

New   York, NY 10005

Telephone:   (212) 250-2500
    

 

	
DATE:
    	
July 26,   2011
    
	
 
    	
 
    
	
TO:
    	
Affiliated   Managers Group, Inc.
    
	
 
    	
600   Hale Street
    
	
 
    	
Prides   Crossing, MA 01965
    
	
ATTENTION:
    	
Jay   C. Horgen
    
	
FACSIMILE:
    	
(617) 747-3380
    
	
 
    	
 
    
	
FROM:
    	
Deutsche Bank AG, London   Branch
    
	
TELEPHONE:
    	
44   20 7545 0556
    
	
FACSIMILE:
    	
44   11 3336 2009
    
	
 
    	
 
    
	
SUBJECT:
    	
Registered   Forward Transaction
    
	
 
    	
 
    
	
REFERENCE   NUMBER(S):
    	
445971
    

 

The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the transaction entered into between Deutsche Bank AG, London Branch (“Dealer”) and Affiliated Managers Group, Inc. (“Counterparty”) on the Trade Date specified below (the “Transaction”).  This Confirmation constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.  This Confirmation constitutes the entire agreement and understanding of the parties with respect to the subject matter and terms of the Transaction and supersedes all prior or contemporaneous written and oral communications with respect thereto.

 

DEALER IS NOT REGISTERED AS A BROKER OR DEALER UNDER THE U.S. SECURITIES EXCHANGE ACT OF 1934.  DEUTSCHE BANK SECURITIES INC. (“DBSI”) HAS ACTED SOLELY AS AGENT IN CONNECTION WITH THE TRANSACTION AND HAS NO OBLIGATION, BY WAY OF ISSUANCE, ENDORSEMENT, GUARANTEE OR OTHERWISE WITH RESPECT TO THE PERFORMANCE OF EITHER PARTY UNDER THE TRANSACTION.  AS SUCH, ALL DELIVERY OF FUNDS, ASSETS, NOTICES, DEMANDS

 

NOTICE: This communication may contain information which is confidential and/or legally privileged and is intended only for the addressee named above. If you are not the named addressee, the communication has been sent to you in error and you are asked not to read, use or disclose it. We should be grateful if you would contact us immediately so that we can arrange for its return. Thank you.

 

Chairman of the Supervisory Board: Clemens Börsig Management Board: Josef Ackermann (Chairman), Hugo Bänziger, Jürgen Fitschen, Anshuman Jain, Stefan Krause, Hermann-Josef Lamberti, Rainer Neske Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin — Federal Financial Supervising Authority) and regulated by the Financial Services Authority for the conduct of UK business; a member of the London Stock Exchange. Deutsche Bank AG is a joint stock corporation with limited liability incorporated in the Federal Republic of Germany HRB No. 30 000 District Court of Frankfurt am Main; Branch Registration in England and Wales BR000005; Registered address: Winchester House, 1 Great Winchester Street, London EC2N 2DB. Deutsche Bank Group online: http://www.deutsche-bank.com

 

 

AND COMMUNICATIONS OF ANY KIND RELATING TO THIS TRANSACTION BETWEEN DEALER AND COUNTERPARTY SHALL BE TRANSMITTED EXCLUSIVELY THROUGH DEUTSCHE BANK SECURITIES INC.  DEALER IS NOT A MEMBER OF THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC).

 

The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Confirmation.  In the event of any inconsistency between the Equity Definitions and this Confirmation, this Confirmation shall govern.

 

Each party is hereby advised, and each such party acknowledges, that the other party has engaged in, or refrained from engaging in, substantial financial transactions and has taken other material actions in reliance upon the parties’ entry into the Transaction to which this Confirmation relates on the terms and conditions set forth below.

 

This Confirmation and the pricing supplement delivered hereunder evidence a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates.  This Confirmation, together with all other Confirmations of Equity Contracts (as defined in “Netting and Set-off” below), shall supplement, form a part of, and be subject to an agreement in the form of the ISDA 2002 Master Agreement (the “Agreement”) as if Dealer and Counterparty had executed an agreement in such form (without any Schedule except for the election of United States dollars (“USD”) as the Termination Currency and such other elections set forth in this Confirmation).  In the event of any inconsistency between the provisions of the Agreement and this Confirmation, this Confirmation will prevail for the purpose of the Transaction to which this Confirmation relates.  The parties hereby agree that, other than the Transaction to which this Confirmation relates and any other Equity Contract, no other Transaction shall be governed by the Agreement.

 

The terms of the particular Transaction to which this Confirmation relates are as follows:

 

General Terms:

 

	
Trade   Date:
    	
 
    	
July 26,   2011
    
	
 
    	
 
    	
 
    
	
Effective   Date:
    	
 
    	
The   first day occurring on or after the Trade Date on which Shares are sold   pursuant to the Distribution Agency Agreement dated as of July 26, 2011   between Counterparty and DBSI (the “Distribution Agreement”)
    
	
 
    	
 
    	
 
    
	
Seller:
    	
 
    	
Counterparty
    
	
 
    	
 
    	
 
    
	
Buyer:
    	
 
    	
Dealer
    
	
 
    	
 
    	
 
    
	
Shares:
    	
 
    	
The   common stock of Counterparty, par value USD 0.01 per share (Ticker Symbol:   “AMG”)
    
	
 
    	
 
    	
 
    
	
Number   of Shares:
    	
 
    	
The   aggregate number of Shares sold pursuant to the Distribution Agreement during   the period from and including the Trade Date through and including the Hedge   Completion Date; provided, however, that on each Settlement Date, the Number of   Shares shall be reduced by the number of Settlement Shares to be settled on   such date.
    
	
 
    	
 
    	
 
    
	
Hedge   Completion Date:
    	
 
    	
The   earliest of (i) the date specified in writing as the Hedge Completion   Date by the Counterparty, (ii) any Settlement Date, and   (iii) September 30, 2011; provided that   Counterparty shall be obligated to specify as the Hedge Completion Date the   first date after the Effective Date on which Shares are sold pursuant to the   Additional Distribution Agency Agreement (as defined in the Distribution   Agreement). Promptly after the Hedge Completion Date, Dealer will furnish   Counterparty with a pricing supplement (the “Pricing   Supplement”) substantially in the form of Annex A hereto   specifying the Number of Shares as of the Hedge Completion Date (the “Initial Number of Shares”), the Initial Forward Price and   the Final Date, all determined in 
    

 

2

 

	
 
    	
 
    	
accordance   with the terms hereof.
    
	
 
    	
 
    	
 
    
	
Initial   Forward Price:
    	
 
    	
98.40%   of the volume weighted average price at which the Shares are sold pursuant to   the Distribution Agreement during the period from and including the Trade   Date through and including the Hedge Completion Date.
    
	
 
    	
 
    	
 
    
	
Forward   Price:
    	
 
    	
(a)       On the Hedge Completion Date, the Initial Forward   Price; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(b)      on each calendar day thereafter, (i) the   Forward Price as of the immediately preceding calendar day multiplied by (ii) the sum of 1 and   the Daily Rate for such day.
    
	
 
    	
 
    	
 
    
	
Daily   Rate:
    	
 
    	
For   any day, (i) (a) USD-Federal Funds Rate for such day minus (b) the Spread divided by (ii) 365.
    
	
 
    	
 
    	
 
    
	
USD-Federal   Funds Rate:
    	
 
    	
For   any day, the rate set forth for such day opposite the caption “Federal   funds”, as such rate is displayed on the page “FedsOpen   <Index><GO>“ on the BLOOMBERG Professional Service, or any   successor page; provided that if no rate   appears for a particular day on such page, the rate for the immediately   preceding day for which a rate does so appear shall be used for such day.
    
	
 
    	
 
    	
 
    
	
Spread:
    	
 
    	
1.20%,   subject to adjustment from time to time by Dealer in its commercially   reasonable discretion; provided   that no such adjustment may reduce the Spread below 1.20% or increase the   Spread above 1.50%.
    
	
 
    	
 
    	
 
    
	
Prepayment:
    	
 
    	
Not   Applicable
    
	
 
    	
 
    	
 
    
	
Variable   Obligation:
    	
 
    	
Not   Applicable
    
	
 
    	
 
    	
 
    
	
Exchange:
    	
 
    	
The   New York Stock Exchange
    
	
 
    	
 
    	
 
    
	
Related   Exchange(s):
    	
 
    	
All   Exchanges
    
	
 
    	
 
    	
 
    
	
Clearance   System:
    	
 
    	
The   Depository Trust Company
    
	
 
    	
 
    	
 
    
	
Market   Disruption Event:
    	
 
    	
Section 6.3(a) of   the Equity Definitions is hereby amended by deleting the words “during the   one hour period that ends at the relevant Valuation Time, Latest Exercise   Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may   be,” in clause (ii) thereof.
    
	
 
    	
 
    	
 
    
	
Early   Closure:
    	
 
    	
Section 6.3(d) of   the Equity Definitions is hereby amended by deleting the remainder of the   provision following the term “Scheduled Closing Time” in the fourth line   thereof.
    
	
 
    	
 
    	
 
    
	
Settlement:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Settlement   Currency:
    	
 
    	
USD   (all amounts shall be converted to the Settlement Currency in good faith and   in a commercially reasonable manner by the Calculation Agent)
    
	
 
    	
 
    	
 
    
	
Settlement   Date:
    	
 
    	
Any   Scheduled Trading Day following the first day occurring on or after the Trade   Date on which Shares are sold pursuant to the Distribution Agreement and up   to and including the Final Date that is either:

 

(a)       designated by Counterparty as a “Settlement Date” by a written notice 
    

 

3

 

	
 
    	
 
    	
(a   “Settlement Notice”) delivered   to Dealer no less than (i) one Scheduled Trading Day prior to such   Settlement Date and five Scheduled Trading Days prior to the Final Date, if   Physical Settlement applies, and (ii) five Scheduled Trading Days prior   to such Settlement Date, which may be the Final Date, if Cash Settlement or   Net Stock Settlement applies; provided that   if Cash Settlement or Net Stock Settlement applies, any Settlement Date,   including a Settlement Date on the scheduled Final Date, shall be deferred   until the date on which Dealer is able to completely unwind its hedge with   respect to the portion of the Number of Shares to be settled if Dealer is   unable to completely unwind its hedge with respect to the portion of the   Number of Shares to be settled during the Unwind Period due to the   restrictions of Rule 10b-18 (“Rule 10b-18”)   under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) agreed to hereunder, the existence of any   Suspension Day or Disrupted Day or the lack of sufficient liquidity in the   Shares during the Unwind Period (as determined by the Calculation Agent); provided further that if Dealer shall fully unwind its   hedge with respect to the portion of the Number of Shares to be settled   during an Unwind Period by a date that is more than three Scheduled Trading   Days prior to a Settlement Date specified above, Dealer may, by written notice   to Counterparty, specify any Scheduled Trading Day prior to such original   Settlement Date as the Settlement Date; or

 

(b)      designated by Dealer as a Settlement Date pursuant   to the “Acceleration Events” provisions below;

 

provided that the   Final Date will be a Settlement Date if on such date the Number of Shares for   which a Settlement Date has not already been designated is greater than zero;   provided further that if any   Settlement Date specified above is not an Exchange Business Day, the   Settlement Date shall instead be the next Exchange Business Day; and provided further that, following the   occurrence of at least three consecutive Suspension Days during an Unwind   Period and while such Suspension Days are continuing, Dealer may designate   any subsequent Exchange Business Day as the Settlement Date with respect to   the portion of the Settlement Shares, if any, for which Dealer has determined   an Unwind Purchase Price during such Unwind Period, it being understood that   the Unwind Period with respect to the remainder of such Settlement Shares   shall recommence on the next succeeding Exchange Business Day that is not a   Suspension Day.
    
	
 
    	
 
    	
 
    
	
Final   Date:
    	
 
    	
The   first anniversary of the Hedge Completion Date (or if such day is not a   Scheduled Trading Day, the next following Scheduled Trading Day)
    
	
 
    	
 
    	
 
    
	
Early   Settlement Fee:
    	
 
    	
If   a Settlement Date occurs on or prior to the Early Settlement Fee Date (an “Early Unwind Date”), Counterparty shall   pay to Dealer the Early Settlement Fee for such Early Unwind Date; provided that no Early Settlement Fee shall be payable if   (i) the USD-Federal Funds Rate is less than the Spread on such Early   Unwind Date or (ii) such Early Unwind Date occurs as a result of the   designation by Dealer of a Settlement Date resulting from an event or events   outside Counterparty’s control. “Early   Settlement Fee” means, for any Early Unwind Date, an amount of   cash equal to (a) the number of Settlement Shares for such Settlement   Date multiplied by (b) the   Initial Forward Price multiplied by   (c) 0.50% multiplied by   (d) the number of calendar days in the period from but excluding such   Early Unwind Date to and including the Early Settlement Fee Date divided by (e) 365; “Early
    

 

4

 

	
 
    	
 
    	
Settlement Fee Date” means the date that is   two months after the Hedge Completion Date.
    
	
 
    	
 
    	
 
    
	
Settlement   Shares:
    	
 
    	
(a)       With respect to any Settlement Date other than the   Final Date, the number of Shares designated as such by Counterparty in the   relevant Settlement Notice or designated pursuant to the “Acceleration   Events” provisions below, as applicable; provided that   the Settlement Shares so designated shall (i) not exceed the Number of   Shares at that time and (ii) be at least equal to the lesser of 100,000   and the Number of Shares at that time; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(b)      with respect to the Settlement Date on the Final   Date, a number of Shares equal to the Number of Shares at that time;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
in   each case with the Number of Shares determined taking into account pending   Settlement Shares.
    
	
 
    	
 
    	
 
    
	
Settlement   Method Election:
    	
 
    	
Physical   Settlement, Cash Settlement, or Net Stock Settlement, at the election of   Counterparty, in its sole discretion, as set forth in a Settlement Notice; provided that if Counterparty elects Cash Settlement or   Net Stock Settlement, it shall be deemed to have repeated the representations   contained under “Securities Laws Representations and Agreements” below; provided  further that   if no election is made by Counterparty, Physical Settlement shall apply. The   parties hereto acknowledge that Counterparty cannot be obligated to settle   this Transaction by cash payment unless Counterparty elects Cash Settlement; provided, however, that   the foregoing shall not apply to the payment of an Early Settlement Fee if   the Early Unwind Date occurs as the result of the designation by   Counterparty of a Settlement Date.
    
	
 
    	
 
    	
 
    
	
Physical   Settlement:
    	
 
    	
If   Physical Settlement is applicable, then Counterparty shall deliver to Dealer   through the Clearance System a number of Shares equal to the Settlement   Shares for such Settlement Date, and Dealer shall pay to Counterparty, by   wire transfer of immediately available funds to an account designated by   Counterparty, an amount equal to the Physical Settlement Amount for such   Settlement Date.
    
	
 
    	
 
    	
 
    
	
Physical   Settlement Amount:
    	
 
    	
For   any Settlement Date for which Physical Settlement is applicable, an amount   equal to the product of (a) the Forward Price in effect on the relevant   Settlement Date multiplied by   (b) the Settlement Shares for such Settlement Date.
    
	
 
    	
 
    	
 
    
	
Cash   Settlement:
    	
 
    	
On   any Settlement Date in respect of which Cash Settlement applies, if the Cash   Settlement Amount is a positive number, Dealer will pay the Cash Settlement   Amount to Counterparty. If the Cash Settlement Amount is a negative number,   Counterparty will pay the absolute value of the Cash Settlement Amount to   Dealer. Such amounts shall be paid on such Settlement Date.
    
	
 
    	
 
    	
 
    
	
Cash   Settlement Amount:
    	
 
    	
An   amount determined by the Calculation Agent equal to: (i)(A) the Forward   Price as of the first day of the applicable Unwind Period minus (B) the weighted average price (the “Unwind Purchase Price”) at which Dealer purchases Shares   during the Unwind Period to unwind its hedge with respect to the portion of   the Number of Shares to be settled during the Unwind Period (including, for   the avoidance of doubt, purchases on any Suspension Day or Disrupted Day in   part), taking into account Shares anticipated to be delivered or received if   Net Stock Settlement applies, and the restrictions of Rule 10b-
    

 

5

 

	
 
    	
 
    	
18   under the Exchange Act agreed to hereunder, plus   USD 0.02, multiplied by   (ii) the Settlement Shares.
    
	
 
    	
 
    	
 
    
	
Net   Stock Settlement:
    	
 
    	
On   any Settlement Date in respect of which Net Stock Settlement applies, if the   Cash Settlement Amount is a (i) positive number, Dealer shall deliver a   number of Shares to Counterparty equal to the Net Stock Settlement Shares, or   (ii) negative number, Counterparty shall deliver a number of Shares to   Dealer equal to the Net Stock Settlement Shares; provided   that if Dealer determines in its good faith judgment that it would be   required to deliver Net Stock Settlement Shares to Counterparty, Dealer may   elect to deliver a portion of such Net Stock Settlement Shares on one or more   dates prior to the applicable Settlement Date.
    
	
 
    	
 
    	
 
    
	
Net   Stock Settlement Shares:
    	
 
    	
With   respect to a Settlement Date, the absolute value of the Cash Settlement   Amount divided by the Unwind   Purchase Price, with the number of Shares rounded up in the event such   calculation results in a fractional number.
    
	
 
    	
 
    	
 
    
	
Unwind   Period:
    	
 
    	
The   period from and including the first Exchange Business Day following the date   Counterparty elects Cash Settlement or Net Stock Settlement in respect of a   Settlement Date through the third Scheduled Trading Day preceding such   Settlement Date (as such date may be changed by Dealer as described in the   first proviso in clause (a) of the definition of Settlement Date above   and provided that Dealer may   truncate any Unwind Period pending (and reduce the Settlement Shares for such   Unwind Period to the portion thereof, if any, for which Dealer has determined   an Unwind Purchase Price) at the time Dealer designates a Settlement Date   pursuant to the “Acceleration Events” provisions below, effective upon such   designation).
    
	
 
    	
 
    	
 
    
	
Failure   to Deliver:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Suspension   Day:
    	
 
    	
Any   day on which Dealer determines based on the advice of outside counsel of   national standing that Cash Settlement or Net Stock Settlement may violate   applicable securities laws or cause Dealer to not be in compliance with   applicable legal, regulatory or self-regulatory requirements, or with related   policies and procedures applicable to Dealer. Dealer shall promptly notify   Counterparty if it receives such advice from its counsel.
    
	
 
    	
 
    	
 
    
	
Share   Cap:
    	
 
    	
Except   as provided under “Private Placement and Registration Procedures” below, in   no event will Counterparty be required to deliver to Dealer on any Settlement   Date, whether pursuant to Physical Settlement, Net Stock Settlement, any   Private Placement Settlement or any Registration Settlement, a number of   Shares in excess of (i) the Initial Number of Shares minus (ii) the aggregate number of   Shares delivered by Counterparty to Dealer hereunder prior to such Settlement   Date.
    
	
 
    	
 
    	
 
    
	
Adjustments:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Method   of Adjustment:
    	
 
    	
Calculation   Agent Adjustment
    
	
 
    	
 
    	
 
    
	
Extraordinary Events:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
New   Shares:
    	
 
    	
In   the definition of New Shares in Section 12.1(i) of the Equity   Definitions, the text in (i) shall be deleted in its entirety and   replaced with “publicly quoted, traded or listed on any of the New York Stock   Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or   their
    

 

6

 

	
 
    	
 
    	
respective   successors)”.
    
	
 
    	
 
    	
 
    
	
Consequences   of Merger Events:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(a)   Share-for-Share:
    	
 
    	
Cancellation   and Payment
    
	
 
    	
 
    	
 
    
	
(b)   Share-for-Other:
    	
 
    	
Cancellation   and Payment
    
	
 
    	
 
    	
 
    
	
(c)   Share-for-Combined:
    	
 
    	
Cancellation   and Payment
    
	
 
    	
 
    	
 
    
	
Tender   Offer:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Consequences   of Tender Offers:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(a)   Share-for-Share:
    	
 
    	
Cancellation   and Payment
    
	
 
    	
 
    	
 
    
	
(b)   Share-for-Other:
    	
 
    	
Cancellation   and Payment
    
	
 
    	
 
    	
 
    
	
(c)   Share-for-Combined:
    	
 
    	
Cancellation   and Payment
    
	
 
    	
 
    	
 
    
	
Composition   of Combined Consideration:
    	
 
    	
Not   Applicable
    
	
 
    	
 
    	
 
    
	
Nationalization, Insolvency   or Delisting:
    	
 
    	
Cancellation   and Payment
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
In   addition to the provisions of Section 12.6(a)(iii) of the Equity   Definitions, it will also constitute a Delisting if the Exchange is located   in the United States and the Shares are not immediately re-listed, re-traded   or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select   Market or The NASDAQ Global Market (or their respective successors); if the   Shares are immediately re-listed, re-traded or re-quoted on any such exchange   or quotation system, such exchange or quotation system shall be deemed to be   the Exchange.
    
	
 
    	
 
    	
 
    
	
Determining   Party:
    	
 
    	
For   all applicable Extraordinary Events, Dealer; provided,   however, that all calculations,   adjustments, specifications, choices and determinations by the Determining   Party shall be made in good faith and in a commercially reasonable manner.   The parties agree that they will work reasonably to resolve any disputes.
    
	
 
    	
 
    	
 
    
	
Additional Disruption Events:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Change   in Law:
    	
 
    	
Applicable;   provided that   Section 12.9(a)(ii) of the Equity Definitions is hereby amended by   (i) replacing the phrase “the interpretation” in the third line thereof   with the phrase “or public announcement of the formal or informal   interpretation” and (ii) immediately following the word “Transaction” in   clause (X) thereof, adding the phrase “in the manner contemplated by the   Hedging Party on the Trade Date.” For the avoidance of doubt, “a materially   increased cost in performing its obligations under such Transaction” includes   any materially increased cost to acquire, establish, re-establish,   substitute, maintain, unwind or dispose of any Hedge Positions.
    
	
 
    	
 
    	
 
    
	
Insolvency   Filing:
    	
 
    	
Notwithstanding   anything to the contrary herein, in the Agreement or in the Equity   Definitions, upon any Insolvency Filing or other proceeding under the U.S. Bankruptcy   Code in respect of the Issuer, the Transaction shall automatically terminate   on the date thereof without further liability of either
    

 

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party   to this Confirmation to the other party (except for any liability in respect   of any breach of representation or covenant by a party under this   Confirmation prior to the date of such Insolvency Filing or other   proceeding), it being understood that this Transaction is a contract for the   issuance of Shares by the Issuer.
    
	
 
    	
 
    	
 
    
	
Determining   Party:
    	
 
    	
For   all applicable Additional Disruption Events, Dealer; provided,   however, that all calculations,   adjustments, specifications, choices and determinations by the Determining   Party shall be made in good faith and in a commercially reasonable manner.   The parties agree that they will work reasonably to resolve any disputes.
    
	
 
    	
 
    	
 
    
	
Acknowledgments:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Non-Reliance:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Agreements   and Acknowledgments Regarding Hedging Activities:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Additional   Acknowledgments:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Transfer:
    	
 
    	
Notwithstanding   anything to the contrary herein or in the Agreement, Dealer may assign,   transfer and set over all rights, title and interest, powers, privileges and   remedies of Dealer under this Transaction, in whole or in part, to an   affiliate of Dealer, or any entity sponsored or organized by, or on behalf of   or for the benefit of, Dealer without the consent of Counterparty; provided that either (A) any such assignment,   transfer or set over does not affect Dealer’s obligations hereunder, or   (B) (i) the long-term, unsecured and unsubordinated credit rating   (“Credit Rating”) of the transferee or   assignee (or any guarantor of its obligations under the Transaction) is equal   to or greater than the Credit Rating of Dealer, as specified by either   Standard & Poor’s Ratings Services or Moody’s Investors   Service, Inc. (or their respective successors), at the time of such   assignment, transfer or set over, and (ii) such assignment, transfer or   set over is made in connection with the transfer of all or substantially all   similar transactions to which Dealer is a party resulting from the enactment   of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and   rules and regulations thereunder. No later than promptly following any   such assignment, transfer or set over, Dealer shall notify Counterparty as to   whether the transfer, assignment or set over is pursuant to subclause   (A) or subclause (B) above. In the event of any transfer or   assignment of any rights, title and interest, powers, privileges and remedies   of Dealer under this Transaction, the transferee or assignee shall assume and   enter into all of the transferor’s covenants and representations under   Sections 3(e), 3(f), 4(a)(i) and 4(a)(iii) of the Agreement or enter   into new covenants and representations that are agreed by the other party   under the Agreement, and the identity of the transferee or assignee shall be   entered on the books and records maintained by each party or its respective   agents.
    
	
 
    	
 
    	
 
    
	
Calculation Agent:
    	
 
    	
Dealer.   All calculations and determinations by the Calculation Agent shall be made in   good faith and in a commercially reasonable manner. The parties agree that   they will work reasonably to resolve any disputes.
    
	
 
    	
 
    	
 
    
	
Account Details:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(a)   Account for delivery of Shares to 
    	
 
    	
To   be furnished
    

 

8

 

	
Dealer:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(b)   Account for payments to   Counterparty:
    	
 
    	
To   be furnished
    
	
 
    	
 
    	
 
    
	
(c)   Account for payments to   Dealer:
    	
 
    	
Bank   of New York
   ABA 021-000-018
   Deutsche Bank Securities, Inc.
   A/C 8900327634
   FFC: To be provided by Dealer
    

 

Offices:

 

	
The   Office of Counterparty for the Transaction is:
    	
Inapplicable,   Counterparty is not a Multibranch Party.
    
	
 
    	
 
    
	
The   Office of Dealer for the Transaction is:
    	
Deutsche Bank AG, London Branch
    
	
 
    	
1   Great Winchester Street
    
	
 
    	
Winchester   House
    
	
 
    	
London   EC2N 2DB
    

 

Notices:  For purposes of this Confirmation:

 

(a)   Address for notices or communications to Counterparty:

 

Affiliated Managers Group, Inc.

600 Hale Street

Prides Crossing, MA  01965

	
Telephone:
    	
(617)   747-3300
    
	
Facsimile:
    	
(617)   747-3380
    
	
Attention:
    	
Jay   C. Horgen
    

 

(b)   Address for notices or communications to Dealer:

 

Deutsche Bank AG, London Branch

c/o Deutsche Bank Securities Inc.

60 Wall Street

New York, NY  10005

	
Attention:
    	
Paul   Stowell
    
	
 
    	
Peter   Barna
    
	
 
    	
Andrew   Yaeger
    
	
 
    	
 
    
	
Telephone:
    	
(212)   250-6270
    
	
 
    	
(212)   250-1689
    
	
 
    	
(212)   250-2717
    
	
 
    	
 
    
	
Email:
    	
paul.stowell@db.com
    
	
 
    	
peter.barna@db.com
    
	
 
    	
andrew.yaeger@db.com
    

 

9

 

with a copy to:

 

Deutsche Bank AG, London Branch

c/o Deutsche Bank Securities Inc.

60 Wall Street

New York, NY  10005

Attention:              Lars Kestner

 

Telephone:            (212) 250-6043

 

Email:                      lars.kestner@db.com

 

Effectiveness; Distribution Agreement; Interpretive Letter.

 

Conditions to Effectiveness.  This Transaction shall be effective if and only if Shares are sold on or after the Trade Date pursuant to the Distribution Agreement.  If the Distribution Agreement is terminated prior to any such sale of Shares thereunder, the parties shall have no further obligations in connection with this Transaction, other than in respect of breaches of representations or covenants on or prior to such date.

 

Distribution Agreement Representations, Warranties and Covenants.  On the Trade Date and on each date on which Dealer or its affiliates delivers a prospectus in connection with a sale to hedge this Transaction, Counterparty repeats and reaffirms as of such date all of the representations and warranties contained in the Distribution Agreement.  Counterparty hereby agrees to comply with its covenants contained in the Distribution Agreement as if such covenants were made in favor of Dealer.

 

Interpretive Letter.  Counterparty agrees and acknowledges that this Transaction is being entered into in accordance with the October 9, 2003 interpretive letter from the staff of the Securities and Exchange Commission to Goldman, Sachs & Co. (the “Interpretive Letter”) and agrees to take all actions, and to omit to take any actions, reasonably requested by Dealer for this Transaction to comply with the Interpretive Letter.  Without limiting the foregoing, Counterparty agrees that neither it nor any “affiliated purchaser” (as defined in Regulation M (“Regulation M”) promulgated under the Exchange Act) will, directly or indirectly, bid for, purchase or attempt to induce any person to bid for or purchase, the Shares or securities that are convertible into, or exchangeable or exercisable for, Shares during any “restricted period” as such term is defined in Regulation M.  In addition, Counterparty represents that it is eligible to conduct a primary offering of Shares on Form S-3, the offering contemplated by the Distribution Agreement complies with Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), and the Shares are “actively traded” as defined in Rule 101(c)(1) of Regulation M.

 

Agreements and Acknowledgments Regarding Shares:

 

(i)            Counterparty agrees and acknowledges that, in respect of any Shares delivered to Dealer hereunder, such Shares shall be newly issued (unless mutually agreed otherwise by the parties) and upon such delivery, duly and validly authorized, issued and outstanding, fully paid and nonassessable, free of any lien, charge, claim or other encumbrance and not subject to any preemptive or similar rights and shall, upon such issuance, be accepted for listing or quotation on the Exchange.

 

(ii)           Counterparty agrees and acknowledges that Dealer will hedge its exposure to this Transaction by selling Shares borrowed from third party securities lenders or other Shares pursuant to a registration statement, and that, pursuant to the terms of the Interpretive Letter, the Shares (up to the Initial Number of Shares) delivered, pledged or loaned by Counterparty to Dealer in connection with this Transaction may be used by Dealer to return to securities lenders without further registration under the Securities Act.  Accordingly, Counterparty agrees that the Shares that it delivers, pledges or loans to Dealer on or prior to the final Settlement Date will not bear a restrictive legend and that such Shares will be deposited in, and the delivery thereof shall be effected through the facilities of, the Clearance System.

 

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(iii)                             Counterparty has reserved and will keep available at all times, free from preemptive or similar rights and free from any lien, charge, claim or other encumbrance, authorized but unissued Shares at least equal to the Number of Shares, solely for the purpose of settlement under this Transaction.

 

(iv)                              Unless the provisions set forth below under “Private Placement and Registration Procedures” are applicable, Dealer agrees to use any Shares delivered by Counterparty hereunder on any Settlement Date to return to securities lenders to close out open securities loans with respect to the Shares.

 

(v)                                 In connection with bids and purchases of Shares in connection with any Cash Settlement or Net Stock Settlement of this Transaction, Dealer shall use its good faith efforts to comply, or cause compliance, with the provisions of Rule 10b-18 under the Exchange Act, taking into account any purchases under other Equity Contracts, as if such provisions were applicable to such purchases.

 

Securities Laws Representations and Agreements:

 

(i)                                   Counterparty represents to Dealer on the Trade Date and on any date that Counterparty notifies Dealer that Cash Settlement, Net Stock Settlement or Alternative Settlement under “Accounting Standards Codification (‘ASC’) 815-40; Alternative Settlement” below applies to this Transaction, that (a) each of its filings under the Securities Act, the Exchange Act or other applicable securities laws that are required to be filed have been filed and that, as of the respective dates thereof and as of the date of this representation, there is no misstatement of material fact contained therein or omission of a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading; and (b) it has not and will not directly or indirectly violate any applicable law (including, without limitation, the Securities Act and the Exchange Act) in connection with this Transaction.  In addition to any other requirement set forth herein, Counterparty agrees not to designate any Settlement Date or elect Alternative Settlement under “Accounting Standards Codification (‘ASC’) 815-40; Alternative Settlement” below if settlement in respect of such date would result in a violation of any applicable federal or state law or regulation, including the U.S. federal securities laws.

 

(ii)                                  It is the intent of Dealer and Counterparty that following any election of Cash Settlement or Net Stock Settlement by Counterparty, the purchase of Shares by Dealer during any Unwind Period comply with the requirements of Rule 10b5-l(c)(l)(i)(B) of the Exchange Act and that this Confirmation shall be interpreted to comply with the requirements of Rule 10b5-l(c).

 

Counterparty acknowledges that (a) during any Unwind Period Counterparty shall not have, and shall not attempt to exercise, any influence over how, when or whether to effect purchases of Shares by Dealer (or its agent or affiliate) in connection with this Confirmation and (b) Counterparty is entering into the Agreement and this Confirmation in good faith and not as part of a plan or scheme to evade compliance with federal securities laws including, without limitation, Rule 10b-5 promulgated under the Exchange Act.

 

Counterparty hereby agrees with Dealer that during any Unwind Period Counterparty shall not communicate, directly or indirectly, any Material Non-Public Information (as defined herein) to any Equity Derivatives Group Personnel (as defined below).  For purposes of this Transaction, “Material Non-Public Information” means information relating to Counterparty or the Shares that (x) has not been widely disseminated by wire service, in one or more newspapers of general circulation, by communication from Counterparty to its shareholders or in a press release, or contained in a public filing made by Counterparty with the Securities and Exchange Commission and (y) a reasonable investor might consider to be of importance in making an investment decision to buy, sell or hold Shares.  For the avoidance of doubt and solely by way of illustration, information should be presumed “material” if it relates to such matters as dividend increases or decreases, earnings estimates, changes in previously released earnings estimates, significant expansion or curtailment of operations, a significant increase or decline of orders, significant merger or acquisition proposals or agreements, significant new products or discoveries, extraordinary borrowing, major litigation, liquidity problems, extraordinary management developments, purchase or sale of substantial assets, or other similar information For purposes of this Transaction, “Equity Derivatives Group Personnel” means any employee of Dealer or its affiliates who effects purchases or sales of Shares in connection with this Agreement.

 

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(iii)                             Counterparty shall, at least one day prior to the first day of any Unwind Period, notify Dealer of the total number of Shares purchased in Rule 10b-18 purchases of blocks pursuant to the once-a-week block exception contained in Rule 10b-18(b)(4) by or for Counterparty or any of its affiliated purchasers during each of the four calendar weeks preceding the first day of the Unwind Period and during the calendar week in which the first day of the Unwind Period occurs (“Rule 10b-18 purchase”, “blocks” and “affiliated purchaser” each being used as defined in Rule 10b-18).

 

(iv)                            During any Unwind Period, Counterparty shall (a) notify Dealer prior to the opening of trading in the Shares on any day on which Counterparty makes, or expects to be made, any public announcement (as defined in Rule 165(f) under the Securities Act) of any merger, acquisition, or similar transaction involving a recapitalization relating to Counterparty (other than any such transaction in which the consideration consists solely of cash and there is no valuation period), (b) promptly notify Dealer following any such announcement that such announcement has been made, and (c) promptly deliver to Dealer following the making of any such announcement information indicating (1) Counterparty’s average daily Rule 10b-18 purchases (as defined in Rule 10b-18) during the three full calendar months preceding the date of the announcement of such transaction and (2) Counterparty’s block purchases (as defined in Rule 10b-18) effected pursuant to paragraph (b)(4) of Rule 10b-18 during the three full calendar months preceding the date of the announcement of such transaction.  In addition, Counterparty shall promptly notify Dealer of the earlier to occur of the completion of such transaction and the completion of the vote by target shareholders.

 

(v)                               Neither Counterparty nor any of its affiliates shall take or refrain from taking any action (including, without limitation, any direct purchases by Counterparty or any of its affiliates, or any purchases by a party to a derivative transaction with Counterparty or any of its affiliates), either under this Confirmation, under an agreement with another party or otherwise, that might cause any purchases of Shares by Dealer or any of its affiliates in connection with any Cash Settlement or Net Stock Settlement of this Transaction not to meet the requirements of the safe harbor provided by Rule 10b-18 determined as if all such foregoing purchases were made by Counterparty.

 

(vi)                            Counterparty will not engage in any “distribution” (as defined in Regulation M) that would cause a “restricted period” (as defined in Regulation M) to occur during any Unwind Period.

 

Miscellaneous:

 

Acceleration Events.

 

(i)                                   Stock Borrow Event.  If in Dealer’s reasonable judgment, (a) Dealer is not able hedge its exposure under this Transaction because insufficient Shares are made available for borrowing by securities lenders or (b) Dealer would incur a cost to borrow (or to maintain a borrow of) sufficient Shares to hedge its exposure under this Transaction that is equal to or greater than 100 basis points per annum per any Share (each of (a) and (b), a “Stock Borrow Event”), then Dealer shall be entitled to designate any Scheduled Trading Day prior to the date the Number of Shares is first reduced to zero to be a Settlement Date, by providing Counterparty at least two Scheduled Trading Days’ notice prior to the relevant Settlement Date, and to designate the number of Settlement Shares for the relevant Settlement Date, which shall not exceed the number of Shares as to which the relevant Stock Borrow Event relates.

 

(ii)                                Dividends.  If on any day after the Trade Date, Counterparty declares a distribution, issue or dividend to existing holders of the Shares of (a) any cash dividends in excess of USD 0.00 per Share or (b) share capital or other securities of another issuer acquired or owned (directly or indirectly) by Counterparty as a result of a spin-off or similar transaction or (c) any other type of securities (other than Shares), rights or warrants or other assets, in any case for payment (cash or other consideration) at less than the prevailing market price, as determined by Dealer, then Dealer shall be entitled to designate any Scheduled Trading Day prior to the date the Number of Shares is first reduced to zero to be a Settlement Date, by providing Counterparty at least three Scheduled Trading Days’ notice prior to the relevant Settlement Date, and to designate the number of Settlement Shares for the relevant Settlement Date.

 

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(iii)                             Stock Price Event.  If at any time after the Trade Date the traded price per Share on the Exchange is less than or equal to 35% of the Initial Forward Price, then Dealer shall be entitled at any time thereafter to designate one or more Scheduled Trading Days prior to the date the Number of Shares is first reduced to zero to be a Settlement Date, by providing Counterparty at least ten Scheduled Trading Days’ notice prior to the relevant Settlement Date, and to designate the number of Settlement Shares for the relevant Settlement Date.

 

(iv)                            Board Approval of Merger Event.  If on any day after the Trade Date, the board of directors of Counterparty votes to approve any action that, if consummated, would constitute a Merger Event, then Counterparty shall notify Dealer of such occurrence within one Scheduled Trading Day after such occurrence and Dealer shall be entitled to designate any Scheduled Trading Day prior to the date the Number of Shares is first reduced to zero to be a Settlement Date, by providing Counterparty at least twenty Scheduled Trading Days’ notice prior to the relevant Settlement Date, and to designate the number of Settlement Shares for the relevant Settlement Date.

 

(v)                               ISDA Termination.  In lieu of (a) designating an Early Termination Date as the result of an Event of Default or Termination Event, (b) terminating this Transaction and determining a Cancellation Amount as the result of an Additional Disruption Event, or (c) terminating this Transaction and determining an amount payable in connection with an Extraordinary Event to which Cancellation and Payment would otherwise be applicable, Dealer shall be entitled to designate any Scheduled Trading Day prior to the date the Number of Shares is first reduced to zero to be a Settlement Date with respect to the Number of Shares as the Settlement Shares.

 

(vi)                            Termination Settlement.  Notwithstanding anything to the contrary herein, in the Agreement or in the Equity Definitions, if a Settlement Date is designated by Dealer as the result of one of the foregoing sub-paragraphs (i) through (v), Physical Settlement shall apply to the relevant Settlement Shares.

 

Private Placement and Registration Procedures.  If Counterparty notifies Dealer that it is unable to comply with the provisions of sub-paragraph (ii) of “Agreements and Acknowledgments Regarding Shares” above because of a change in law or a change in the policy of the Securities and Exchange Commission or its staff, or Dealer notifies Counterparty that in its reasonable opinion any Shares to be delivered to Dealer by Counterparty may not be freely returned by Dealer to securities lenders as described under such sub-paragraph (ii), or otherwise constitute “restricted securities” as defined in Rule 144 under the Securities Act (the date such notification is effective being the “Determination Date”), then Counterparty may elect to effect the delivery of any such Shares (the “Restricted Shares”) pursuant to either clause (i) or (ii) below, unless waived by Dealer, on the later of (A)(1) if Private Placement Settlement is applicable, the tenth Scheduled Trading Day following the Determination Date or (2) if Registration Settlement is applicable, the thirtieth calendar day following the Determination Date (or if such day is not a Clearance System Business Day, the next Clearance System Business Day), (B) the date such delivery would otherwise be due pursuant to the terms of this Confirmation and (C) the Clearance System Business Day following notice by Dealer to Counterparty of the number of Shares to be delivered pursuant to these “Private Placement and Registration Procedures”; provided that if Counterparty does not so elect within three Scheduled Trading Days of the Determination Date, Counterparty shall be deemed to have elected clause (i) below.

 

(i)                                     If Counterparty is obligated to settle the Transaction with Restricted Shares (a “Private Placement Settlement”), then delivery of Restricted Shares by Counterparty shall be effected in customary private placement procedures with respect to such Restricted Shares reasonably acceptable to Dealer; provided that Counterparty may not elect a Private Placement Settlement if, on the date of its election, it has taken, or caused to be taken, any action that would make unavailable either the exemption pursuant to Section 4(2) of the Securities Act for the sale by Counterparty to Dealer (or any affiliate designated by Dealer) of the Restricted Shares or the exemption pursuant to Section 4(1) or Section 4(3) of the Securities Act for resales of the Restricted Shares by Dealer (or any such affiliate of Dealer).  The Private Placement Settlement of such Restricted Shares shall include customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Dealer, due diligence rights (for Dealer or any designated buyer of the Restricted Shares by Dealer), opinions and certificates, and such other documentation as is customary for private placement agreements, all reasonably acceptable to Dealer.  In the case of a Private Placement Settlement, Dealer shall, in its good faith discretion, adjust the amount of Restricted Shares to be delivered to Dealer hereunder in a commercially reasonable manner to reflect the fact that (A) such Restricted Shares may

 

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not be freely returned to securities lenders by Dealer and may only be saleable by Dealer at a discount to reflect the lack of liquidity in Restricted Shares and (B) Dealer will incur carrying costs and other costs in connection with its hedge unwind activity relating to such Private Placement Settlement; provided that in no event will Counterparty be required to deliver to Dealer a number of Restricted Shares in excess of (i) the Initial Number of Shares multiplied by two, minus (ii) the aggregate number of Shares delivered by Counterparty to Dealer hereunder prior to the date of such delivery (the “Maximum Delivery Amount”).  If Dealer adjusts the amount of Restricted Shares, it shall provide Counterparty with a statement indicating in reasonable detail how such share adjustment was determined.

 

If Counterparty delivers any Restricted Shares in respect of this Transaction, Counterparty agrees that (A) such Shares may be transferred by and among Dealer and its affiliates and (B) after the “holding period” specified in Rule 144(d)(ii) under the Securities Act has elapsed, Counterparty shall promptly remove, or cause the transfer agent for the Shares to remove, any legends referring to any transfer restrictions from such Shares upon delivery by Dealer (or such affiliate of Dealer) to Counterparty or such transfer agent of any seller’s and broker’s representation letters customarily delivered by Dealer or its affiliates in connection with resales of restricted securities pursuant to Rule 144 under the Securities Act, each without any further requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer).

 

(ii)                                  If Counterparty elects to settle the Transaction pursuant to this clause (ii) (a “Registration Settlement”), then Counterparty shall promptly (but in any event no later than the Scheduled Trading Day immediately prior to the date delivery of the Shares is due pursuant to the terms of these “Private Placement and Registration Procedures”) file and use its reasonable efforts to make effective under the Securities Act a registration statement or supplement or amend an outstanding registration statement in form and substance reasonably satisfactory to Dealer, to cover the resale of Restricted Shares (the “Registered Shares”) in accordance with customary resale registration procedures, including covenants, conditions, representations, underwriting discounts, commissions, indemnities, due diligence rights, opinions and certificates, and such other documentation as is customary for equity resale underwriting agreements, all reasonably acceptable to Dealer.  If Dealer, in its reasonable discretion, is not satisfied with such procedures and documentation or if a Settlement Date is designated by Dealer pursuant to the “Acceleration Events” provisions above, Private Placement Settlement shall apply and Counterparty shall effect delivery of Restricted Shares by the tenth Scheduled Trading Day following notification from Dealer.  In the case of a Registration Settlement, Dealer shall, in its good faith discretion, adjust the amount of Registered Shares to be delivered to Dealer hereunder in a commercially reasonable manner to reflect the fact that Dealer will incur carrying costs and other costs in connection with its hedge unwind activity relating to such Registered Settlement; provided that in no event will Counterparty be required to deliver to Dealer a number of Registered Shares in excess of the Maximum Delivery Amount.  If Dealer adjusts the amount of Registered Shares, it shall provide Counterparty with a statement indicating in reasonable detail how such share adjustment was determined.

 

Indemnity.  Counterparty agrees to indemnify Dealer and its affiliates and their respective directors, officers, employees, agents and controlling persons (Dealer and each such affiliate or person being an “Indemnified Party”) from and against any and all losses, claims, damages and liabilities, joint and several, incurred by or asserted against such Indemnified Party arising out of, in connection with, or relating to, the execution or delivery of this Confirmation, the performance by the parties hereto of their respective obligations under the Transaction, any breach of any covenant or representation made by Counterparty in this Confirmation or the Agreement or the consummation of the transactions contemplated hereby and will reimburse any Indemnified Party for all reasonable expenses (including reasonable legal fees and expenses) as they are incurred in connection with the investigation of, preparation for, or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto, except to the extent resulting from Dealer’s gross negligence or willful misconduct.

 

Waiver of Trial by Jury.  EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF DEALER OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

 

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Governing Law/Jurisdiction.  This Confirmation shall be governed by the laws of the State of New York without reference to the conflict of laws provisions thereof.  The parties hereto irrevocably submit to the exclusive jurisdiction of the courts of the State of New York and the United States Court for the Southern District of New York in connection with all matters relating hereto and waive any objection to the laying of venue in, and any claim of inconvenient forum with respect to, these courts.

 

Method of Delivery.  Whenever delivery of funds or other assets is required hereunder by or to Counterparty, such delivery shall be effected through DBSI.  In addition, all notices, demands and communications of any kind relating to the Transaction between Dealer and Counterparty shall be transmitted exclusively through DBSI.

 

Accounting Standards Codification (‘ASC’) 815-40; Alternative Settlement.  The parties hereby agree that all documentation with respect to this Transaction is intended to qualify this Transaction as an equity instrument for purposes of Accounting Standards Codification (‘ASC’) 815-40.  If, subject to “Netting and Set-off” below, Counterparty owes Dealer any amount in connection with this Transaction pursuant to Section 12.7 or 12.9 of the Equity Definitions (except in the case of an Extraordinary Event in which the consideration or proceeds to be paid to holders of Shares as a result of such event consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement (except in the case of an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party, other than (x) an Event of Default of the type described in Section 5(a)(iii), (v), (vi) or (vii) of the Agreement or (y) a Termination Event of the type described in Section 5(b)(i), (ii), (iii), (iv), or (v) of the Agreement that in the case of either (x) or (y) resulted from an event or events outside Counterparty’s control) (a “Payment Obligation”), Counterparty shall have the right, in its sole discretion, to satisfy any such Payment Obligation by delivery of Termination Delivery Units (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, between the hours of 9:00 a.m. and 4:00 p.m. New York time on the Closing Date, Early Termination Date or other date of termination or cancellation, as applicable (“Notice of Termination Delivery”).  Upon Notice of Termination Delivery, Counterparty shall deliver to Dealer a number of Termination Delivery Units having a cash value equal to the amount of such Payment Obligation (such number of Termination Delivery Units to be delivered to be determined by the Calculation Agent acting in a commercially reasonable manner, taking into account whether the Termination Delivery Units so delivered are freely tradable).  Settlement relating to any delivery of Termination Delivery Units pursuant to this provision shall occur within three Scheduled Trading Days.  “Termination Delivery Unit” means (A) in the case of a Termination Event, an Event of Default or an Extraordinary Event (other than an Insolvency, Nationalization, Merger Event or Tender Offer), one Share or (B) in the case of an Insolvency, Nationalization, Merger Event or Tender Offer, a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization, Merger Event or Tender Offer; provided that if such Insolvency, Nationalization, Merger Event or Tender Offer involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.

 

Disclosure. Effective from the date of commencement of discussions concerning the Transaction, each of Dealer and Counterparty and each of their employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) relating to such tax treatment and tax structure.

 

Right to Extend.  Dealer may postpone any Settlement Date or any other date of valuation or delivery, with respect to some or all of the relevant Settlement Shares, if Dealer determines, in its discretion, that such extension is reasonably necessary or appropriate to enable Dealer to effect purchases of Shares in connection with its hedging activity hereunder or under any other Equity Contract in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable legal and regulatory requirements, as determined by Dealer based upon the advice of outside counsel of national standing.

 

Counterparty Share Repurchases.  Counterparty agrees not to repurchase any Shares if, immediately following such purchase, the Number of Shares under this Confirmation and all other Equity Contracts (as defined in “Netting and Set-off” below) would be equal to or greater than 8.0% of the number of then-outstanding Shares or such lower number of Shares as Dealer notifies Counterparty would, in the reasonable judgment of outside counsel of national standing for Dealer, present legal or regulatory issues for Dealer.

 

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Limit on Beneficial Ownership.  Notwithstanding any other provisions hereof, Dealer shall not be entitled to receive Shares hereunder (whether in connection with the purchase of Shares on any Settlement Date or otherwise) to the extent (but only to the extent) that such receipt would result in Dealer and its affiliates (i) directly or indirectly beneficially owning (as such term is defined for purposes of Section 13(d) of the Exchange Act or, if it would result in a higher percentage of beneficial ownership, the equivalent calculation for purposes of determining a ten percent beneficial owner under Section 16 of the Exchange Act) at any time in excess of 4.9% of the outstanding Shares or (ii) having direct or indirect ownership or control (for purposes of the Bank Holding Company Act of 1956, as amended) at any time in excess of 4.9% of the outstanding Shares.  Any purported delivery hereunder shall be void and have no effect to the extent (but only to the extent) that such delivery would result in Dealer and its affiliates directly or indirectly so beneficially owning or so owning or controlling in excess of 4.9% of the outstanding Shares.  If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of this provision, Counterparty’s obligation to make such delivery shall not be extinguished and Counterparty shall make such delivery as promptly as practicable after, but in no event later than one Exchange Business Day after, Dealer gives notice to Counterparty that such delivery would not result in Dealer and its affiliates directly or indirectly so beneficially owning or so owning or controlling in excess of 4.9% of the outstanding Shares.

 

Commodity Exchange Act.  Each of Dealer and Counterparty agrees and represents that it is an “eligible contract participant” as defined in the U.S. Commodity Exchange Act, as amended (the “CEA”), the Agreement and this Transaction are subject to individual negotiation by the parties and have not been executed or traded on a “trading facility” as defined in the CEA.

 

Securities Act.  Each of Dealer and Counterparty agrees and represents that it is a “qualified institutional buyer” as defined in Rule 144A under the Securities Act, or an “accredited investor” as defined under the Securities Act.

 

ERISA.  Each of Dealer and Counterparty agrees and represents that the assets used in the Transaction (a) are not assets of any “plan” (as such term is defined in Section 4975 of the U.S. Internal Revenue Code (the “Code”)) subject to Section 4975 of the Code or any “employee benefit plan” (as such term is defined in Section 3(3) of the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) subject to Title I of ERISA, and (b) do not constitute “plan assets” (as such term is defined in Section 3(42) of ERISA).

 

Bankruptcy Status.  Dealer acknowledges and agrees that this Confirmation is not intended to convey to Dealer rights with respect to the transactions contemplated hereby that are senior to the claims of Counterparty’s common stockholders in any U.S. bankruptcy proceedings of Counterparty; provided, however, that nothing herein shall be deemed to limit Dealer’s right to pursue remedies in the event of a breach by Counterparty of its obligations and agreements with respect to this Confirmation and the Agreement; and provided, further, that nothing herein shall limit or shall be deemed to limit Dealer’s rights in respect of any transaction other than this Transaction.

 

No Collateral.  The parties acknowledge that this Transaction is not secured by any collateral that would otherwise secure the obligations of Counterparty herein under or pursuant to the Agreement.  Without limiting the generality of the foregoing, this Transaction will not be considered to create obligations covered by any collateral credit support annex to the Agreement and will be disregarded for the purposes of calculating any exposures pursuant to any such annex.

 

Netting and Set-off.  Dealer agrees not to set-off or net amounts due from Counterparty with respect to this Transaction against amounts due from Dealer to Counterparty under obligations other than Equity Contracts.  Section 2(c) of the Agreement as it applies to payments due with respect to this Transaction shall remain in effect and is not subject to the first sentence of this provision.  The parties agree that Section 6(f) of the Agreement is amended and restated to read as follows:

 

“(f)                              Upon the occurrence of an Event of Default or Termination Event with respect to Counterparty as the Defaulting Party or the Affected Party (“X”), Dealer (“Y”) will have the right (but not be obliged) without prior notice to X or any other person to set-off or apply any obligation of X under an Equity Contract owed to Y (or any Affiliate of Y) (whether or not matured or contingent and whether or not arising under this Agreement, and regardless of the currency, place of payment or booking office of the obligation) against any obligation of Y (or any Affiliate of Y) under an Equity Contract owed to X (whether or not matured or contingent and whether or not arising under this Agreement, and regardless of

 

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the currency, place of payment or booking office of the obligation).  Y will give notice to the other party of any set-off effected under this Section 6(f).

 

“Equity Contract” shall mean for purposes of this Section 6(f) any Transaction relating to Shares sold pursuant to the Distribution Agreement.

 

If any obligation is unascertained, Y may in good faith estimate that obligation and set-off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained.

 

Nothing in this Section 6(f) shall be effective to create a charge or other security interest.  This Section 6(f) shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise).”

 

Tax Representations.

 

(i)                                     For the purpose of Section 3(e) of the Agreement, each party makes the following representation:

 

(A)                              It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 9(h) of the Agreement and any other payments of interest and penalty charges for late payment) to be made by it to the other party under the Agreement.

 

(B)                                In making this representation, a party may rely on (i) the accuracy of any representations made by the other party pursuant to Section 3(f) of this Agreement, (ii) the satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of the Agreement, and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of the Agreement, and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of the Agreement, provided that it shall not be a breach of this representation where reliance is placed on clause (ii) above and the other party does not deliver a form or document under Section 4(a)(iii) by reason of material prejudice to its legal or commercial position.

 

(ii)                                  For the purpose of Section 3(f) of the Agreement:

 

(A)                              Dealer makes the following representation(s):

 

(1)                                It is a “foreign person” within the meaning of the applicable U.S. Treasury Regulations concerning information reporting and backup withholding tax.

 

(2)                                Each payment received or to be received by it under this Transaction will be effectively connected with its conduct of a trade or business in the United States.

 

(B)                              Counterparty represents that it is a “U.S. person” (as that term is used in section 1.1441-4(a)(3)(ii) of United States Treasury Regulations) for United States federal income tax purposes.

 

(iii)                               For the purpose of Section 4(a)(i) of the Agreement, promptly upon execution of this Confirmation, Counterparty shall provide to Dealer a valid and duly executed IRS Form W-9 and any required attachments thereto.

 

(iv)                              For the purpose of Section 4(a)(i) of the Agreement, Dealer shall provide to Counterparty a valid and duly executed IRS Form W-8ECI and any required attachments thereto (A) promptly upon execution of this Confirmation, (B) promptly upon reasonable demand by Counterparty and (C) promptly upon learning that any Form previously provided by Dealer has become obsolete or incorrect.

 

17

 

Change of Account.  Section 2(b) of the Agreement is hereby amended by the addition after the word “delivery” in the first line thereof of the phrase “to another account in the same legal and tax jurisdiction”.

 

18

 

Please check this Confirmation and confirm that the foregoing correctly sets forth the terms of our agreement by signing in the space provided below and returning to Dealer a facsimile of the fully-executed Confirmation.  Originals shall be provided for your execution upon your request.  Dealer will make the time of execution of the Transaction available upon request.

 

Dealer is regulated by the Financial Services Authority.

 

Very truly yours,

 

DEUTSCHE BANK AG, LONDON BRANCH

 

 

	
By:
    	
/s/   Lars Kestner
    	
 
    
	
 
    	
Name: Lars   Kestner
    	
 
    
	
 
    	
Title: Managing   Director
    	
 
    

 

 

	
By:
    	
/s/   Michael Sanderson
    	
 
    
	
 
    	
Name: Michael   Sanderson
    	
 
    
	
 
    	
Title: Managing   Director
    	
 
    

 

 

DEUTSCHE BANK SECURITIES INC.,

acting solely as agent in connection with this Transaction

 

 

	
By:
    	
/s/   Lars Kestner
    	
 
    
	
 
    	
Name: Lars   Kestner
    	
 
    
	
 
    	
Title: Managing   Director
    	
 
    

 

 

	
By:
    	
/s/   Michael Sanderson
    	
 
    
	
 
    	
Name: Michael   Sanderson
    	
 
    
	
 
    	
Title: Managing   Director
    	
 
    

 

 

Counterparty hereby agrees to, accepts and confirms the terms of the foregoing as of the Trade Date.

 

AFFILIATED MANAGERS GROUP, INC.

 

 

	
By:
    	
/s/   John Kingston, III
    	
 
    
	
 
    	
Name: John   Kingston, III
    	
 
    
	
 
    	
Title: Vice   Chairman, General Counsel, and Secretary
    	
 
    

 

 

Signature page to Registered Forward 

Transaction Confirmation

 

 

ANNEX A

 

	
 
    	
Deutsche Bank 
    
	
 
    	
 
    
	
 
    	
Deutsche Bank AG, London Branch
    
	
 
    	
Winchester   house
    
	
 
    	
1   Great Winchester St,
    
	
 
    	
London   EC2N 2DB
    
	
 
    	
Telephone: 44 20 7545 8000
    
	
 
    	
 
    
	
 
    	
c/o Deutsche Bank Securities Inc.
    
	
 
    	
60   Wall Street
    
	
 
    	
New   York, NY 10005
    
	
 
    	
Telephone:   (212) 250-2500
    

 

PRICING SUPPLEMENT

 

	
DATE:
    	
 
    	
[               ]
    
	
 
    	
 
    	
 
    
	
TO:
    	
 
    	
Affiliated   Managers Group, Inc.
    
	
 
    	
 
    	
600   Hale Street
    
	
 
    	
 
    	
Prides   Crossing, MA 01965
    
	
ATTENTION:
    	
 
    	
Jay   C. Horgen
    
	
FACSIMILE:
    	
 
    	
(617) 747-3380
    
	
 
    	
 
    	
 
    
	
FROM:
    	
 
    	
Deutsche Bank AG, London Branch
    
	
TELEPHONE:
    	
 
    	
44   20 7545 0556
    
	
FACSIMILE:
    	
 
    	
44   11 3336 2009
    

 

Ladies and Gentlemen:

 

This Pricing Supplement is the Pricing Supplement contemplated by the Registered Forward Transaction dated as of July 26, 2011 (the “Confirmation”) between Affiliated Managers Group, Inc. (“Counterparty”) and Deutsche Bank AG, London Branch (“Dealer”).

 

DEALER IS NOT REGISTERED AS A BROKER OR DEALER UNDER THE U.S. SECURITIES EXCHANGE ACT OF 1934.  DEUTSCHE BANK SECURITIES INC. (“DBSI”) HAS ACTED SOLELY AS AGENT IN CONNECTION WITH THE TRANSACTION AND HAS NO OBLIGATION, BY WAY OF ISSUANCE, ENDORSEMENT, GUARANTEE OR OTHERWISE WITH RESPECT TO THE PERFORMANCE OF EITHER PARTY UNDER THE TRANSACTION.  AS SUCH, ALL DELIVERY OF FUNDS, ASSETS, NOTICES, DEMANDS AND COMMUNICATIONS OF ANY KIND RELATING TO THIS TRANSACTION BETWEEN DEALER AND

 

NOTICE: This communication may contain information which is confidential and/or legally privileged and is intended only for the addressee named above. If you are not the named addressee, the communication has been sent to you in error and you are asked not to read, use or disclose it. We should be grateful if you would contact us immediately so that we can arrange for its return. Thank you.

 

Chairman of the Supervisory Board: Clemens Börsig Management Board: Josef Ackermann (Chairman), Hugo Bänziger, Jürgen Fitschen, Anshuman Jain, Stefan Krause, Hermann-Josef Lamberti, Rainer Neske Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin — Federal Financial Supervising Authority) and regulated by the Financial Services Authority for the conduct of UK business; a member of the London Stock Exchange. Deutsche Bank AG is a joint stock corporation with limited liability incorporated in the Federal Republic of Germany HRB No. 30 000 District Court of Frankfurt am Main; Branch Registration in England and Wales BR000005; Registered address: Winchester House, 1 Great Winchester Street, London EC2N 2DB. Deutsche Bank Group online: http://www.deutsche-bank.com

 

A-1

 

COUNTERPARTY SHALL BE TRANSMITTED EXCLUSIVELY THROUGH DEUTSCHE BANK SECURITIES INC.  DEALER IS NOT A MEMBER OF THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC).

 

For all purposes under the Confirmation:

 

(a)                                  the Hedge Completion Date is [                    ];

 

(b)                                 the Number of Shares shall be [                    ], subject to further adjustment in accordance with the terms of the Confirmation;

 

(c)                                  the Initial Forward Price shall be USD [                    ]; and

 

(d)                                the Final Date is [                    ].

 

A-2

 

Please check this Pricing Supplement and confirm that the foregoing correctly sets forth the terms of our agreement by signing in the space provided below and returning to Dealer a facsimile of the fully-executed Pricing Supplement.  Originals shall be provided for your execution upon your request.

 

Dealer is regulated by the Financial Services Authority.

 

Very truly yours,

 

DEUTSCHE BANK AG, LONDON BRANCH

 

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

DEUTSCHE BANK SECURITIES INC.,

acting solely as agent in connection with this Transaction

 

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

Confirmed as of the date first above written:

 

AFFILIATED MANAGERS GROUP, INC.

 

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

Signature page to Pricing Supplement to

Registered Forward Transaction Confirmationex101.htm

 

EXHIBIT 10.1

ECO VENTURES GROUP, INC.

2011 INCENTIVE STOCK OPTION PLAN

 

1.     Purpose.     The purpose of the 2011 Incentive Stock Option Plan of  Eco Ventures Group, Inc. is to further align the interests of employees, directors and non-employee Consultants with those of the stockholders by providing incentive compensation opportunities tied to the performance of the Common Stock and by promoting increased ownership of the Common Stock by such individuals.  The Plan is also intended to advance the interests of the Company and its stockholders by attracting, retaining and motivating key personnel upon whose judgment, initiative and effort the successful conduct of the Company’s business is largely dependent.

 

2.     Definitions.     Wherever the following capitalized terms are used in the Plan, they shall have the meanings specified below:

 

“Affiliate” means (i) any entity that would be treated as an “affiliate” of the Company for purposes of Rule 12b-2 under the Exchange Act and (ii) any joint venture or other entity in which the Company has a direct or indirect beneficial ownership interest representing at least one-third (1/3) of the aggregate voting power of the equity interests of such entity or one-third (1/3) of the aggregate fair market value of the equity interests of such entity, as determined by the Committee.

 

“Award” means an award of a Stock Option, Stock Award, or Restricted Stock Award granted under the Plan.

 

“Award Agreement” means a written or electronic agreement entered into between the Company and a Participant setting forth the terms and conditions of an Award granted to a Participant.

 

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

 

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

 

“Common Stock” means the Company’s common stock, $0.001 par value per share.

 

“Committee” means the Compensation Committee of the Board, or such other committee of the Board appointed by the Board to administer the Plan, or if no such committee exists, the Board.

 

“Company” means Eco Ventures Group, Inc., a Nevada corporation.

 “Consultant” means any person which is a consultant or advisor to the Company and which is a natural person and who provides bona fide services to the Company which are not in connection with the offer or sale of securities in a capital-raising transaction for the Company, and do not directly or indirectly promote or maintain a market for the Company’s securities.

“Date of Grant” means the date on which an Award under the Plan is made by the Committee, or such later date as the Committee may specify to be the effective date of an Award.

 

“Disability” means a Participant being considered “disabled” within the meaning of Section 409A(a)(2)(C) of the Code, unless otherwise provided in an Award Agreement.

  

1

  

 

“Eligible Person” means any person who is an employee of the Company or any Affiliate or any person to whom an offer of employment with the Company or any Affiliate is extended, as determined by the Committee, or any person who is a Non-Employee Director, or any person who is Consultant to the Company.

 

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

  

“Fair Market Value” means the mean between the highest and lowest reported sales prices of the Common Stock on the New York Stock Exchange Composite Tape or, if not listed on such exchange, on any other national securities exchange on which the Company’s common stock is listed or on The Nasdaq Stock Market, or, if not so listed on any other national securities exchange or The Nasdaq Stock Market, then the average of the bid price of the Company’s common stock during the last five trading days on the OTC Bulletin Board or OTC Markets immediately preceding the last trading day prior to the date with respect to which the Fair Market Value is to be determined.   If the Company’s common stock is not then publicly traded, then the Fair Market Value of the Common Stock shall be the book value of the Company per share as determined on the last day of March, June, September, or December in any year closest to the date when the determination is to be made.   For the purpose of determining book value hereunder, book value shall be determined by adding as of the applicable date called for herein the capital, surplus, and undivided profits of the Company, and after having deducted any reserves theretofore established; the sum of these items shall be divided by the number of shares of the Company’s common stock outstanding as of said date, and the quotient thus obtained shall represent the book value of each share of the Company’s common stock.

 

“Incentive Stock Option” means a Stock Option granted under Section 6 hereof that is intended to meet the requirements of Section 422 of the Code and the regulations thereunder.

 

“Non-Employee Director” means any member of the Board who is not an employee of the Company.

 

“Nonqualified Stock Option” means a Stock Option granted under Section 6 hereof that is not an Incentive Stock Option.

 

“Participant” means any Eligible Person who holds an outstanding Award under the Plan.

 

“Plan” means the 2008 Incentive Compensation Plan of the Company as set forth herein, as amended from time to time.

“Restricted Stock Award” means a grant of shares of Common Stock to an Eligible Person under Section 8 hereof that are issued subject to such vesting and transfer restrictions as the Committee shall determine and set forth in an Award Agreement.

 

“Service” means a Participant’s employment with the Company or any Affiliate or a Participant’s service as a Non-Employee Director with the Company, as applicable.

 

  

2

  

“Stock Award” means a grant of shares of Common Stock to an Eligible Person under Section 7 hereof that are issued free of transfer restrictions and forfeiture conditions.

 

“Stock Option” means a contractual right granted to an Eligible Person under Section 6 hereof to purchase shares of Common Stock at such time and price, and subject to such conditions, as are set forth in the Plan and the applicable Award Agreement.

 

3.     Administration.

 

3.1    Committee Members.     The Plan shall be administered by a Committee comprised of one or more members of the Board, or if no such committee exists, the Board.

 

3.2    Committee Authority.     The Committee shall have such powers and authority as may be necessary or appropriate for the Committee to carry out its functions as described in the Plan.  Subject to the express limitations of the Plan, the Committee shall have authority in its discretion to determine the Eligible Persons to whom, and the time or times at which, Awards may be granted, the number of shares, units or other rights subject to each Award, the exercise, base or purchase price of an Award (if any), the time or times at which an Award will become vested, exercisable or payable, the performance goals and other conditions of an Award, the duration of the Award, and all other terms of the Award.  Subject to the terms of the Plan, the Committee shall have the authority to amend the terms of an Award in any manner that is not inconsistent with the Plan, provided that no such action shall adversely affect the rights of a Participant with respect to an outstanding Award without the Participant’s consent.   The Committee shall also have discretionary authority to interpret the Plan, to make factual determinations under the Plan, and to make all other determinations necessary or advisable for Plan administration, including, without limitation, to correct any defect, to supply any omission or to reconcile any inconsistency in the Plan or any Award Agreement hereunder.   The Committee may prescribe, amend, and rescind rules and regulations relating to the Plan.  The Committee’s determinations under the Plan need not be uniform and may be made by the Committee selectively among Participants and Eligible Persons, whether or not such persons are similarly situated.  The Committee shall, in its discretion, consider such factors as it deems relevant in making its interpretations, determinations and actions under the Plan including, without limitation, the recommendations or advice of any officer or employee of the Company or such attorneys, consultants, accountants or other advisors as it may select.   All interpretations, determinations and actions by the Committee shall be final, conclusive, and binding upon all parties.

 

3.3    Delegation of Authority.     The Committee shall have the right, from time to time, to delegate to one or more officers of the Company the authority of the Committee to grant and determine the terms and conditions of Awards granted under the Plan, subject to the requirements of state law and such other limitations as the Committee shall determine.  In no event shall any such delegation of authority be permitted with respect to Awards to any members of the Board or to any Eligible Person who is subject to Rule 16b-3 under the Exchange Act or Section 162(m) of the Code.  The Committee shall also be permitted to delegate, to any appropriate officer or employee of the Company, responsibility for performing certain ministerial functions under the Plan.  In the event that the Committee’s authority is delegated to officers or employees in accordance with the foregoing, all provisions of the Plan relating to the Committee shall be interpreted in a manner consistent with the foregoing by treating any such reference as a reference to such officer or employee for such purpose.  Any action undertaken in accordance with the Committee’s delegation of authority hereunder shall have the same force and effect as if such action was undertaken directly by the Committee and shall be deemed for all purposes of the Plan to have been taken by the Committee.

  

3

  

 

4.     Shares Subject to the Plan.

 

4.1    Maximum Share Limitations.     Subject to Section 4.3 hereof, the maximum aggregate number of shares of Common Stock that may be issued and sold under all Awards granted under the Plan shall be TEN MILLION (10,000,000) shares.  Shares of Common Stock issued and sold under the Plan may be either authorized but unissued shares or shares held in the Company’s treasury.   To the extent that any Award involving the issuance of shares of Common Stock is forfeited, cancelled, returned to the Company for failure to satisfy vesting requirements or other conditions of the Award, or otherwise terminates without an issuance of shares of Common Stock being made thereunder, the shares of Common Stock covered thereby will no longer be counted against the foregoing maximum share limitations and may again be made subject to Awards under the Plan pursuant to such limitations.  Any Awards or portions thereof that are settled in cash and not in shares of Common Stock shall not be counted against the foregoing maximum share limitations.

 

4.2    Adjustments.     If there shall occur any change with respect to the outstanding shares of Common Stock by reason of any recapitalization, reclassification, stock dividend, extraordinary dividend, stock split, reverse stock split or other distribution with respect to the shares of Common Stock, or any merger, reorganization, consolidation, combination, spin-off or other similar corporate change, or any other change affecting the Common Stock, the Committee may, in the manner and to the extent that it deems appropriate and equitable to the Participants and consistent with the terms of the Plan, cause an adjustment to be made in (i) the maximum number and kind of shares provided in Section 4.1 hereof, (ii) the number and kind of shares of Common Stock, or other rights subject to then outstanding Awards, (iii) the exercise or base price for each share or other right subject to then outstanding Awards, and (iv) any other terms of an Award that are affected by the event.   Notwithstanding the foregoing, in the case of Incentive Stock Options, any such adjustments shall, to the extent practicable, be made in a manner consistent with the requirements of Section 424(a) of the Code.

 

4.3    Anti-Dilution.     Notwithstanding anything contained in the Plan to cover the contrary, including any adjustments discussed in this Section 4, the maximum aggregate number of shares of Common Stock that may be issued and sold under all Awards granted under the Plan shall be anti-dilutive in the event of a reverse stock split by the Company and shall not result in any reduction in the number of shares available and authorized under the Plan at the effective time of such reverse stock split(s).

5.     Participation and Awards.

 

5.1    Designations of Participants.     All Eligible Persons are eligible to be designated by the Committee to receive Awards and become Participants under the Plan.  The Committee has the authority, in its discretion, to determine and designate from time to time those Eligible Persons who are to be granted Awards, the types of Awards to be granted and the number of shares of Common Stock or units subject to Awards granted under the Plan.  In selecting Eligible Persons to be Participants and in determining the type and amount of Awards to be granted under the Plan, the Committee shall consider any and all factors that it deems relevant or appropriate.

  

4

  

 

5.2    Determination of Awards.     The Committee shall determine the terms and conditions of all Awards granted to Participants in accordance with its authority under Section 3.2 hereof.  An Award may consist of one type of right or benefit hereunder or of two or more such rights or benefits granted in tandem or in the alternative.  In the case of any fractional share or unit resulting from the grant, vesting, payment or crediting of dividends or dividend equivalents under an Award, the Committee shall have the discretionary authority to (i) disregard such fractional share or unit, (ii) round such fractional share or unit to the nearest lower or higher whole share or unit, or (iii) convert such fractional share or unit into a right to receive a cash payment.   To the extent deemed necessary by the Committee, an Award shall be evidenced by an Award Agreement as described in Section 11.1 hereof.

 

6.     Stock Options.

 

6.1    Grant of Stock Options.     A Stock Option may be granted to any Eligible Person selected by the Committee.  Subject to the provisions of Section 6.8 hereof and Section 422 of the Code, each Stock Option shall be designated, in the discretion of the Committee, as an Incentive Stock Option or as a Nonqualified Stock Option.

 

6.2    Exercise Price.     The exercise price per share of a Stock Option shall not be less than 85 percent of the Fair Market Value of the shares of Common Stock on the Date of Grant, provided that the Committee may in its discretion specify for any Stock Option an exercise price per share that is higher than the Fair Market Value on the Date of Grant, except that the price shall not be less than 110 percent of the Fair Market Value in the case of any person who owns securities possessing more than 10 percent of the total combined voting power of all classes of securities of the Company.

 

6.3    Vesting of Stock Options.     The Committee shall in its discretion prescribe the time or times at which, or the conditions upon which, a Stock Option or portion thereof shall become vested and/or exercisable, and may accelerate the vesting or exercisability of any Stock Option at any time, provided, however, that any Stock Option shall vest at the rate of at least twenty percent (20%) per year over five (5) years from the date the Stock Option is granted, subject to reasonable conditions as may be provided for in the Award Agreement.   However, in the case of a Stock Option granted to officers, Non-employee Directors, managers or Consultants of the Company, the Stock Option may become fully exercisable, subject to reasonable conditions, at anytime or during any period established by the Company.   The requirements for vesting and exercisability of a Stock Option may be based on the continued Service of the Participant with the Company or its Affiliates for a specified time period (or periods) or on the attainment of specified performance goals established by the Committee in its discretion.

  

6.4    Term of Stock Options.     The Committee shall in its discretion prescribe in an Award Agreement the period during which a vested Stock Option may be exercised, provided that the maximum term of a Stock Option shall be ten years from the Date of Grant.   Except as otherwise provided in this Section 6 or as otherwise may be provided by the Committee, no Stock Option issued to an employee or a Non-Employee Director of the Company may be exercised at any time during the term thereof unless the employee or a Non-Employee Director Participant is then in the Service of the Company or one of its Affiliates.

  

5

  

 

6.5    Termination of Service.     Subject to Section 6.8 hereof with respect to Incentive Stock Options, the Stock Option of any Participant whose Service with the Company or one of its Affiliates is terminated for any reason shall terminate on the earlier of (A) the date that the Stock Option expires in accordance with its terms or (B) unless otherwise provided in an Award Agreement, and except for termination for cause (as described in Section 10.2 hereof), the expiration of the applicable time period following termination of Service, in accordance with the following: (1) twelve months if Service ceased due to Disability, (2) eighteen months if Service ceased at a time when the Participant is eligible to elect immediate commencement of retirement benefits at a specified retirement age under a pension plan to which the Company or any of its Affiliates had made contributions, (3) eighteen months if the Participant died while in the Service of the Company or any of its Affiliates, or (iv) three months if Service ceased for any other reason.  During the foregoing applicable period, except as otherwise specified in the Award Agreement or in the event Service was terminated by the death of the Participant, the Stock Option may be exercised by such Participant in respect of the same number of shares of Common Stock, in the same manner, and to the same extent as if he or she had remained in the continued Service of the Company or any Affiliate during the first three months of such period; provided that no additional rights shall vest after such three months.  The Committee shall have authority to determine in each case whether an authorized leave of absence shall be deemed a termination of Service for purposes hereof, as well as the effect of a leave of absence on the vesting and exercisability of a Stock Option.  Unless otherwise provided by the Committee, if an entity ceases to be an Affiliate of the Company or otherwise ceases to be qualified under the Plan or if all or substantially all of the assets of an Affiliate of the Company are conveyed (other than by encumbrance), such cessation or action, as the case may be, shall be deemed for purposes hereof to be a termination of the Service.

 

6.6    Stock Option Exercise; Tax Withholding.     Subject to such terms and conditions as shall be specified in an Award Agreement, a Stock Option may be exercised in whole or in part at any time during the term thereof by notice in the form required by the Company, together with payment of the aggregate exercise price therefor and applicable withholding tax.  Payment of the exercise price shall be made in the manner set forth in the Award Agreement, unless otherwise provided by the Committee: (i) in cash or by cash equivalent acceptable to the Committee, (ii) by payment in shares of Common Stock that have been held by the Participant for at least six months (or such period as the Committee may deem appropriate, for accounting purposes or otherwise) valued at the Fair Market Value of such shares on the date of exercise, (iii) through an open-market, broker-assisted sales transaction pursuant to which the Company is promptly delivered the amount of proceeds necessary to satisfy the exercise price, (iv) by a combination of the methods described above or (v) by such other method as may be approved by the Committee and set forth in the Award Agreement.  In addition to and at the time of payment of the exercise price, the Participant shall pay to the Company the full amount of any and all applicable income tax, employment tax and other amounts required to be withheld in connection with such exercise, payable under such of the methods described above for the payment of the exercise price as may be approved by the Committee and set forth in the Award Agreement.

  

6

  

 

6.7    Limited Transferability of Nonqualified Stock Options.     All Stock Options shall be nontransferable except (i) upon the Participant’s death, in accordance with Section 11.2 hereof or (ii) in the case of Nonqualified Stock Options only, for the transfer of all or part of the Stock Option to a Participant’s “family member” (as defined for purposes of the Form S-8 registration statement under the Securities Act of 1933), as may be approved by the Committee in its discretion at the time of proposed transfer.  The transfer of a Nonqualified Stock Option may be subject to such terms and conditions as the Committee may in its discretion impose from time to time.  Subsequent transfers of a Nonqualified Stock Option shall be prohibited other than in accordance with Section 11.2 hereof.

  

6.8    Additional Rules for Incentive Stock Options.

 

(a)    Eligibility.     An Incentive Stock Option may only be granted to an Eligible Person who is considered an employee for purposes of Treasury Regulation §1.421-7(h) with respect to the Company or any Affiliate that qualifies as a “subsidiary corporation” with respect to the Company for purposes of Section 424(f) of the Code.

 

(b)     Termination of Employment.     An Award of an Incentive Stock Option may provide that such Stock Option may be exercised not later than 3 months following termination of employment of the Participant with the Company and all Subsidiaries, or not later than one year following a permanent and total disability within the meaning of Section 22(e)(3) of the Code, as and to the extent determined by the Committee to comply with the requirements of Section 422 of the Code.

 

(c)    Other Terms and Conditions; Nontransferability.     Any Incentive Stock Option granted hereunder shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as are deemed necessary or desirable by the Committee, which terms, together with the terms of the Plan, shall be intended and interpreted to cause such Incentive Stock Option to qualify as an “incentive stock option” under Section 422 of the Code.  An Award Agreement for an Incentive Stock Option may provide that such Stock Option shall be treated as a Nonqualified Stock Option to the extent that certain requirements applicable to “incentive stock options” under the Code shall not be satisfied.  An Incentive Stock Option shall by its terms be nontransferable other than by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of a Participant only by such Participant.

 

(d)    Disqualifying Dispositions.     If shares of Common Stock acquired by exercise of an Incentive Stock Option are disposed of within two years following the Date of Grant or one year following the transfer of such shares to the Participant upon exercise, the Participant shall, promptly following such disposition, notify the Company in writing of the date and terms of such disposition and provide such other information regarding the disposition as the Company may reasonably require.

  

6.9    Repricing Prohibited.     Subject to the adjustment provisions contained in Section 4.2 hereof, without the prior approval of the Company’s stockholders, evidenced by a majority of votes cast, neither the Committee nor the Board shall cause the cancellation, substitution or amendment of a Stock Option that would have the effect of reducing the exercise price of such a Stock Option previously granted under the Plan, or otherwise approve any modification to such a Stock Option that would be treated as a “repricing” under the then applicable rules, regulations or listing requirements.

  

7

  

  

7.     Stock Awards.

 

7.1    Grant of Stock Awards.     A Stock Award may be granted to any Eligible Person selected by the Committee.  A Stock Award may be granted for past services, in lieu of bonus or other cash compensation, as directors’ compensation or for any other valid purpose as determined by the Committee.   A Stock Award granted to an Eligible Person represents shares of Common Stock that are issued without restrictions on transfer and other incidents of ownership and free of forfeiture conditions, except as otherwise provided in the Plan and the Award Agreement.  The deemed issuance price of shares of Common  Stock subject to each Stock Award shall not be less than 85 percent of the Fair Market Value of the Common Stock on the date of the grant.  In the case of any person who owns securities possessing more than ten percent of the combined voting power of all classes of securities of the issuer or its parent or subsidiaries possessing voting power, the deemed issuance price of shares of Common Stock subject to each Stock Award shall be at least 100 percent of the Fair Market Value of the Common Stock on the date of the grant.  The Committee may, in connection with any Stock Award, require the payment of a specified purchase price.

  

7.2    Rights as Stockholder.     Subject to the foregoing provisions of this Section 7 and the applicable Award Agreement, upon the issuance of the Common Stock under a Stock Award the Participant shall have all rights of a stockholder with respect to the shares of Common Stock, including the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto.

8.    Restricted Stock Awards.

 

8.1    Grant of Restricted Stock Awards.    A Restricted Stock Award may be granted to any Eligible Person selected by the Committee. The deemed issuance price of shares of Common  Stock subject to each Restricted Stock Award shall not be less than 85 percent of the Fair Market Value of the Common Stock on the date of the grant.  In the case of any person who owns securities possessing more than ten percent of the combined voting power of all classes of securities of the issuer or its parent or subsidiaries possessing voting power, the deemed issuance price of shares of Common Stock subject to each Restricted Stock Award shall be at least 100 percent of the Fair Market Value of the Common Stock on the date of the grant.  The Committee may require the payment by the Participant of a specified purchase price in connection with any Restricted Stock Award.

 

8.2    Vesting Requirements.    The restrictions imposed on shares granted under a Restricted Stock Award shall lapse in accordance with the vesting requirements specified by the Committee in the Award Agreement, provided that the Committee may accelerate the vesting of a Restricted Stock Award at any time. Such vesting requirements may be based on the continued Service of the Participant with the Company or its Affiliates for a specified time period (or periods) or on the attainment of specified performance goals established by the Committee in its discretion. If the vesting requirements of a Restricted Stock Award shall not be satisfied, the Award shall be forfeited and the shares of Common Stock subject to the Award shall be returned to the Company.

  

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8.3    Restrictions.    Shares granted under any Restricted Stock Award may not be transferred, assigned or subject to any encumbrance, pledge, or charge until all applicable restrictions are removed or have expired, unless otherwise allowed by the Committee. Failure to satisfy any applicable restrictions shall result in the subject shares of the Restricted Stock Award being forfeited and returned to the Company. The Committee may require in an Award Agreement that certificates representing the shares granted under a Restricted Stock Award bear a legend making appropriate reference to the restrictions imposed, and that certificates representing the shares granted or sold under a Restricted Stock Award will remain in the physical custody of an escrow holder until all restrictions are removed or have expired.

 

8.4    Rights as Stockholder.    Subject to the foregoing provisions of this Section 8 and the applicable Award Agreement, the Participant shall have all rights of a stockholder with respect to the shares granted to the Participant under a Restricted Stock Award, including the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto. The Committee may provide in an Award Agreement for the payment of dividends and distributions to the Participant at such times as paid to stockholders generally or at the times of vesting or other payment of the Restricted Stock Award.

 

         8.5    Section 83(b) Election.    If a Participant makes an election pursuant to Section 83(b) of the Code with respect to a Restricted Stock Award, the Participant shall file, within 30 days following the Date of Grant, a copy of such election with the Company and with the Internal Revenue Service, in accordance with the regulations under Section 83 of the Code. The Committee may provide in an Award Agreement that the Restricted Stock Award is conditioned upon the Participant’s making or refraining from making an election with respect to the Award under Section 83(b) of the Code.

 

9.     Change in Control.

 

9.1    Effect of Change in Control.     Except to the extent an Award Agreement provides for a different result (in which case the Award Agreement will govern and this Section 9 of the Plan shall not be applicable), notwithstanding anything elsewhere in the Plan or any rules adopted by the Committee pursuant to the Plan to the contrary, if a Triggering Event shall occur within the 12-month period beginning with a Change in Control of the Company, then, effective immediately prior to such Triggering Event, each outstanding Stock Option, to the extent that it shall not otherwise have become vested and exercisable, shall automatically become fully and immediately vested and exercisable, without regard to any otherwise applicable vesting requirement.

 

9.2    Definitions

 

(a)    Cause.     For purposes of this Section 9, the term “Cause” shall mean a determination by the Committee that a Participant (i) has been convicted of, or entered a plea of nolo contendere to, a crime that constitutes a felony under Federal or state law, (ii) has engaged in willful gross misconduct in the performance of the Participant’s duties to the Company or an Affiliate or (iii) has committed a material breach of any written agreement with the Company or any Affiliate with respect to confidentiality, noncompetition, nonsolicitation or similar restrictive covenant.  Subject to the first sentence of Section 9.1 hereof, in the event that a Participant is a party to an employment agreement with the Company or any Affiliate that defines a termination on account of “Cause” (or a term having similar meaning), such definition shall apply as the definition of a termination on account of “Cause” for purposes hereof, but only to the extent that such definition provides the Participant with greater rights.  A termination on account of Cause shall be communicated by written notice to the Participant, and shall be deemed to occur on the date such notice is delivered to the Participant.

  

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(b)    Change in Control.     For purposes of this Section 9, a “Change in Control” shall be deemed to have occurred upon:

 

(i) the occurrence of an 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 a percentage of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Company Voting Securities”) (but excluding (1) any acquisition directly from the Company (other than an acquisition by virtue of the exercise of a conversion privilege of a security that was not acquired directly from the Company), (2) any acquisition by the Company or an Affiliate and (3) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliate) (an “Acquisition”) that is thirty percent (30%) or more of the Company Voting Securities;

 

(ii) at any time during a period of two (2) consecutive years or less, individuals who at the beginning of such period constitute the Board (and any new directors whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was so approved) cease for any reason (except for death, Disability or voluntary retirement) to constitute a majority thereof;

  

(iii) an Acquisition that is fifty percent (50%) or more of the Company Voting Securities;

 

(iv) the consummation of a merger, consolidation, reorganization or similar corporate transaction, whether or not the Company is the surviving company in such transaction, other than a merger, consolidation, or reorganization that would result in the Persons who are beneficial owners of the Company Voting Securities outstanding immediately prior thereto continuing to beneficially own, directly or indirectly, in substantially the same proportions, at least fifty percent (50%) of the combined voting power of the Company Voting Securities (or the voting securities of the surviving entity) outstanding immediately after such merger, consolidation or reorganization;

 

(v) the sale or other disposition of all or substantially all of the assets of the Company;

  

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(vi) the approval by the stockholders of the Company of a complete liquidation or dissolution of the Company; or

 

(vii) the occurrence of any transaction or event, or series of transactions or events, designated by the Board in a duly adopted resolution as representing a change in the effective control of the business and affairs of the Company, effective as of the date specified in any such resolution.

 

(c)    Constructive Termination.     For purposes of this Section 9, a “Constructive Termination” shall mean a termination of employment by a Participant within sixty (60) days following the occurrence of any one or more of the following events without the Participant’s written consent (i) any reduction in position, title (for Vice Presidents or above), overall responsibilities, level of authority, level of reporting (for Vice Presidents or above), base compensation, annual incentive compensation opportunity, aggregate employee benefits or (ii) a request that the Participant’s location of employment be relocated by more than fifty (50) miles.  Subject to the first sentence of Section 9.1 hereof, in the event that a Participant is a party to an employment agreement with the Company or any Affiliate (or a successor entity) that defines a termination on account of “Constructive Termination,” “Good Reason” or “Breach of Agreement” (or a term having a similar meaning), such definition shall apply as the definition of “Constructive Termination” for purposes hereof in lieu of the foregoing, but only to the extent that such definition provides the Participant with greater rights.  A Constructive Termination shall be communicated by written notice to the Committee, and shall be deemed to occur on the date such notice is delivered to the Committee, unless the circumstances giving rise to the Constructive Termination are cured within five (5) days of such notice.

 

(d)    Triggering Event.     For purposes of this Section 9, a “Triggering Event” shall mean (i) the termination of Service of a Participant by the Company or an Affiliate (or any successor thereof) other than on account of death, Disability or Cause, (ii) the occurrence of a Constructive Termination or (iii) any failure by the Company (or a successor entity) to assume, replace, convert or otherwise continue any Award in connection with the Change in Control (or another corporate transaction or other change effecting the Common Stock) on the same terms and conditions as applied immediately prior to such transaction, except for equitable adjustments to reflect changes in the Common Stock pursuant to Section 4.2 hereof.

 

9.3    Excise Tax Limit.     In the event that the vesting of Awards together with all other payments and the value of any benefit received or to be received by a Participant would result in all or a portion of such payment being subject to the excise tax under Section 4999 of the Code, then the Participant’s payment shall be either (i) the full payment or (ii) such lesser amount that would result in no portion of the payment being subject to excise tax under Section 4999 of the Code (the “Excise Tax”), whichever of the foregoing amounts, taking into account the applicable Federal, state, and local employment taxes, income taxes, and the Excise Tax, results in the receipt by the Participant, on an after-tax basis, of the greatest amount of the payment notwithstanding that all or some portion of the payment may be taxable under Section 4999 of the Code.  All determinations required to be made under this Section 9 shall be made by Walden Certified Public Accountants or any other accounting firm which is the Company’s outside auditor immediately prior to the event triggering the payments that are subject to the Excise Tax (the “Accounting Firm”).  The Company shall cause the Accounting Firm to provide detailed supporting calculations of its determinations to the Company and the Participant.  All fees and expenses of the Accounting Firm shall be borne solely by the Company.  The Accounting Firm’s determinations must be made with substantial authority (within the meaning of Section 6662 of the Code).  For the purposes of all calculations under Section 280G of the Code and the application of this Section 9.3, all determinations as to present value shall be made using 120 percent of the applicable Federal rate (determined under Section 1274(d) of the Code) compounded semiannually, as in effect on December 30, 2004.

  

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10.     Forfeiture Events.

 

10.1    General.     The Committee may specify in an Award Agreement at the time of the Award that the Participant’s rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award.  Such events shall include, but shall not be limited to, termination of Service for cause, violation of material Company policies, breach of noncompetition, confidentiality or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company.

 

10.2    Termination for Cause.     Unless otherwise provided by the Committee and set forth in an Award Agreement, if a Participant’s employment with the Company or any Affiliate shall be terminated for cause, the Company may, in its sole discretion, immediately terminate such Participant’s right to any further payments, vesting or exercisability with respect to any Award in its entirety.  In the event a Participant is party to an employment (or similar) agreement with the Company or any Affiliate that defines the term “cause,” such definition shall apply for purposes of the Plan.  The Company shall have the power to determine whether the Participant has been terminated for cause and the date upon which such termination for cause occurs.  Any such determination shall be final, conclusive and binding upon the Participant.  In addition, if the Company shall reasonably determine that a Participant has committed or may have committed any act which could constitute the basis for a termination of such Participant’s employment for cause, the Company may suspend the Participant’s rights to exercise any option, receive any payment or vest in any right with respect to any Award pending a determination by the Company of whether an act has been committed which could constitute the basis for a termination for “cause” as provided in this Section 10.2.

 

11.     General Provisions.

 

11.1    Award Agreement.     To the extent deemed necessary by the Committee, an Award under the Plan shall be evidenced by an Award Agreement in a written or electronic form approved by the Committee setting forth the number of shares of Common Stock or units subject to the Award, the exercise price, base price, or purchase price of the Award, the time or times at which an Award will become vested, exercisable or payable and the term of the Award.  The Award Agreement may also set forth the effect on an Award of termination of Service under certain circumstances.  The Award Agreement shall be subject to and incorporate, by reference or otherwise, all of the applicable terms and conditions of the Plan, and may also set forth other terms and conditions applicable to the Award as determined by the Committee consistent with the limitations of the Plan.  Award Agreements evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 422 of the Code.  The grant of an Award under the Plan shall not confer any rights upon the Participant holding such Award other than such terms, and subject to such conditions, as are specified in the Plan as being applicable to such type of Award (or to all Awards) or as are expressly set forth in the Award Agreement.  The Committee need not require the execution of an Award Agreement by a Participant, in which case, acceptance of the Award by the Participant shall constitute agreement by the Participant to the terms, conditions, restrictions and limitations set forth in the Plan and the Award Agreement as well as the administrative guidelines of the Company in effect from time to time.

  

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11.2    No Assignment or Transfer; Beneficiaries.     Except as provided in Section 6.7 hereof, Awards under the Plan shall not be assignable or transferable by the Participant, except by will or by the laws of descent and distribution, and shall not be subject in any manner to assignment, alienation, pledge, encumbrance or charge.  Notwithstanding the foregoing, the Committee may provide in the terms of an Award Agreement that the Participant shall have the right to designate a beneficiary or beneficiaries who shall be entitled to any rights, payments or other benefits specified under an Award following the Participant’s death.  During the lifetime of a Participant, an Award shall be exercised only by such Participant or such Participant’s guardian or legal representative.  In the event of a Participant’s death, an Award may to the extent permitted by the Award Agreement be exercised by the Participant’s beneficiary as designated by the Participant in the manner prescribed by the Committee or, in the absence of an authorized beneficiary designation, by the legatee of such Award under the Participant’s will or by the Participant’s estate in accordance with the Participant’s will or the laws of descent and distribution, in each case in the same manner and to the same extent that such Award was exercisable by the Participant on the date of the Participant’s death.

    

11.3    Deferrals of Payment.     The Committee may in its discretion permit a Participant to defer the receipt of payment of cash or delivery of shares of Common Stock that would otherwise be due to the Participant by virtue of the exercise of a right or the satisfaction of vesting or other conditions with respect to an Award.  If any such deferral is to be permitted by the Committee, the Committee shall establish rules and procedures relating to such deferral in a manner intended to comply with the requirements of Section 409A of the Code, including, without limitation, the time when an election to defer may be made, the time period of the deferral and the events that would result in payment of the deferred amount, the interest or other earnings attributable to the deferral and the method of funding, if any, attributable to the deferred amount. 

 

11.4    Rights as Stockholder.     A Participant shall have no rights as a holder of shares of Common Stock with respect to any unissued securities covered by an Award until the date the Participant becomes the holder of record of such securities.  Except as provided in Section 4.2 hereof, no adjustment or other provision shall be made for dividends or other stockholder rights, except to the extent that the Award Agreement provides for dividend payments or dividend equivalent rights.

 

11.5    Employment or Service.     Nothing in the Plan, in the grant of any Award or in any Award Agreement shall confer upon any Eligible Person any right to continue in the Service of the Company or any of its Affiliates, or interfere in any way with the right of the Company or any of its Affiliates to terminate the Participant’s employment or other service relationship for any reason at any time.

  

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11.6    Securities Laws.     No shares of Common Stock will be issued or transferred pursuant to an Award unless and until all then applicable requirements imposed by Federal and state securities and other laws, rules and regulations and by any regulatory agencies having jurisdiction, and by any exchanges upon which the shares of Common Stock may be listed, have been fully met.  As a condition precedent to the issuance of shares pursuant to the grant or exercise of an Award, the Company may require the Participant to take any reasonable action to meet such requirements.  The Committee may impose such conditions on any shares of Common Stock issuable under the Plan as it may deem advisable, including, without limitation, restrictions under the Securities Act of 1933, as amended, under the requirements of any exchange upon which such shares of the same class are then listed, and under any blue sky or other securities laws applicable to such shares.  The Committee may also require the Participant to represent and warrant at the time of issuance or transfer that the shares of Common Stock are being acquired only for investment purposes and without any current intention to sell or distribute such shares.

 

11.7    Tax Withholding.     The Participant shall be responsible for payment of any taxes or similar charges required by law to be withheld from an Award or an amount paid in satisfaction of an Award, which shall be paid by the Participant on or prior to the payment or other event that results in taxable income in respect of an Award.  The Award Agreement may specify the manner in which the withholding obligation shall be satisfied with respect to the particular type of Award.

 

11.8    Unfunded Plan.     The adoption of the Plan and any reservation of shares of Common Stock or cash amounts by the Company to discharge its obligations hereunder shall not be deemed to create a trust or other funded arrangement.  Except upon the issuance of Common Stock pursuant to an Award, any rights of a Participant under the Plan shall be those of a general unsecured creditor of the Company, and neither a Participant nor the Participant’s permitted transferees or estate shall have any other interest in any assets of the Company by virtue of the Plan.  Notwithstanding the foregoing, the Company shall have the right to implement or set aside funds in a grantor trust, subject to the claims of the Company’s creditors or otherwise, to discharge its obligations under the Plan.

 

11.9    Other Compensation and Benefit Plans.     The adoption of the Plan shall not affect any other share incentive or other compensation plans in effect for the Company or any Affiliate, nor shall the Plan preclude the Company from establishing any other forms of share incentive or other compensation or benefit program for employees of the Company or any Affiliate.  The amount of any compensation deemed to be received by a Participant pursuant to an Award shall not constitute includable compensation for purposes of determining the amount of benefits to which a Participant is entitled under any other compensation or benefit plan or program of the Company or an Affiliate, including, without limitation, under any pension or severance benefits plan, except to the extent specifically provided by the terms of any such plan.

 

11.10    Plan Binding on Transferees.     The Plan shall be binding upon the Company, its transferees and assigns, and the Participant, the Participant’s executor, administrator and permitted transferees and beneficiaries.

  

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11.11    Severability.     If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction.

 

11.12    Foreign Jurisdictions.     The Committee may adopt, amend and terminate such arrangements and grant such Awards, not inconsistent with the intent of the Plan, as it may deem necessary or desirable to comply with any tax, securities, regulatory or other laws of other jurisdictions with respect to Awards that may be subject to such laws.  The terms and conditions of such Awards may vary from the terms and conditions that would otherwise be required by the Plan solely to the extent the Committee deems necessary for such purpose.  Moreover, the Board may approve such supplements to or amendments, restatements or alternative versions of the Plan, not inconsistent with the intent of the Plan, as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of the Plan as in effect for any other purpose.

 

11.13    Substitute Awards in Corporate Transactions.     Nothing contained in the Plan shall be construed to limit the right of the Committee to grant Awards under the Plan in connection with the acquisition, whether by purchase, merger, consolidation or other corporate transaction, of the business or assets of any corporation or other entity.  Without limiting the foregoing, the Committee may grant Awards under the Plan to an employee or director of another corporation who becomes an Eligible Person by reason of any such corporate transaction in substitution for awards previously granted by such corporation or entity to such person.  The terms and conditions of the substitute Awards may vary from the terms and conditions that would otherwise be required by the Plan solely to the extent the Committee deems necessary for such purpose.

 

11.14    Governing Law.     The Plan and all rights hereunder shall be subject to and interpreted in accordance with the laws of the State of Delaware, without reference to the principles of conflicts of laws, and to applicable Federal securities laws.

11.15    Financial Statements.     All Participants shall receive the financial statements of the Company at least annually.  

11.16    Performance Based Awards.    For purposes of Stock Awards and Restricted Stock Awards granted under the Plan that are intended to qualify as “performance-based” compensation under Section 162(m) of the Code, such Awards shall be granted to the extent necessary to satisfy the requirements of Section 162(m) of the Code.

11.17    Stockholder Approval.     The Plan must be approved by the stockholders by a majority of all shares entitled to vote within twelve (12) months after the date the Plan was adopted by the Board.  Any Incentive Stock Options granted before stockholder approval is obtained shall be converted into Nonqualified Stock Options if stockholder approval is not obtained within twelve (12) months before or after the Plan was adopted.

 

12.     Effective Date; Amendment and Termination.

 

  

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12.1    Effective Date.     The Plan shall become effective following its adoption by the Board.  The term of the Plan shall be ten (10) years from the date of adoption by the Board, subject to Section 12.3 hereof.

 

12.2    Amendment.      The Board may at any time and from time to time and in any respect, amend or modify the Plan.  The Board may seek the approval of any amendment or modification by the Company’s stockholders to the extent it deems necessary or advisable in its discretion for purposes of compliance with Section 162(m) or Section 422 of the Code, or exchange or securities market or for any other purpose.  No amendment or modification of the Plan shall adversely affect any Award theretofore granted without the consent of the Participant or the permitted transferee of the Award.

 

12.3    Termination.     The Plan shall terminate on the tenth anniversary of the date of its adoption by the Board.  The Board may, in its discretion and at any earlier date, terminate the Plan.  Notwithstanding the foregoing, no termination of the Plan shall adversely affect any Award theretofore granted without the consent of the Participant or the permitted transferee of the Award.

 

 

 

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