Document:

bjri-ex101_10.htm

Exhibit 10.1

 

BJ’S RESTAURANTS, INC.
AMENDED AND RESTATED EQUITY INCENTIVE PLAN

 

(As amended by the Board on June 14, 2022)

PART I.
PURPOSE, ADMINISTRATION AND RESERVATION OF SHARES

SECTION 1.PURPOSE OF THE PLAN.  The purposes of this Plan are (a) to promote the growth and success of the Company’s business, and (b) to attract and retain the most talented Employees, Officers, Directors and Consultants available, (i) by aligning the long-term interests of Employees, Officers, Directors and Consultants with those of the shareholders by providing an opportunity to acquire an equity interest in the Company and (ii) by providing both rewards for exceptional performance and long term incentives for future contributions to the success of the Company and its Subsidiaries.  

The Plan permits the grant of Incentive Stock Options, Nonqualified Stock Options, Restricted Stock, Restricted Stock Units, SARs, and Performance Compensation Awards (Shares and Units) at the discretion of the Committee and as reflected in the terms of the Award Agreement.  Each Award will be subject to conditions specified in the Plan, such as continued employment or satisfaction of performance criteria.

The Committee may elect to establish sub-plans or procedures governing the grants to Employees, Officers Directors and Consultants and this Plan will serve as the framework for any such sub-plans.  

	
SECTION 2.
	
DEFINITIONS.  As used herein, the following definitions shall apply:

(a) “ACTIVE STATUS” shall mean (i) for Employees, the absence of any interruption or termination of service as an Employee; provided, that the Board or Committee, in its sole discretion, may determine that Active Status may continue if an Employee becomes a Consultant immediately following termination of or interruption of service as an Employee, in which case Active Status shall thereafter be determined in accordance with clause (iii) below, (ii) for Non-Employee Directors, the termination of his or her service as a member of the Board (other than in cases of removal from the Board following a Board determination of Misconduct by such Director where the Director is reelected by the shareholders at the immediately succeeding election of Directors), and (iii) for Consultants, the absence of any interruption, expiration, or termination of such person’s consulting or advisory relationship with the Company or any Subsidiary or the occurrence of any termination event as set forth in such person’s Award Agreement.  Active Status shall not be considered interrupted (A) for an Employee in the case of sick leave, maternity leave, infant care leave, medical emergency leave, military leave, or any other leave of absence properly taken in accordance with the policies of the Company or any applicable Subsidiary as may be in effect from time to time, and (B) for a Consultant, in the case of any temporary interruption in such person’s availability to provide services to the Company or any Subsidiary which has been granted in writing by an authorized Officer of the Company.  Whenever a mandatory severance period applies under applicable law with respect to a termination of service as an Employee, Active Status shall be considered terminated upon such Employee’s receipt of notice of termination in whatever form prescribed by applicable law.

(b)“Automatic Exercise Date” shall mean, with respect to an Option or SAR, the last business day of the term of an Option or SAR that was initially established by the Administrator for such Option or SAR.

(c) “AWARD” shall mean any award or benefits granted under the Plan, including Options, Restricted Stock, Restricted Stock Units, SARs, Performance Shares and Performance Units.

(d) “AWARD AGREEMENT” shall mean a written or electronic agreement between the Company and the Participant setting forth the terms of the Award.

(e) “BENEFICIAL OWNERSHIP” shall have the meaning set forth in Rule 13d-3 promulgated under the Exchange Act.

(f) “BOARD” shall mean the Board of Directors of the Company.

(g) “CHANGE OF CONTROL” shall mean the first day that any one or more of the following conditions shall have been satisfied:

(i)the sale, liquidation or other disposition of all or substantially all of the Company’s assets in one or a series of related transactions;

 (ii)  an acquisition (other than directly from the Company) of any outstanding voting securities by any person, after which such person (as the term is used for purposes of Section 13(d) or 14(d) of the Exchange Act) has Beneficial Ownership of fifty percent (50%) or more of the then outstanding voting securities of the Company, other than a Board-approved transaction;

 

 (iii) during any 36-consecutive month period, the individuals who, at the beginning of such period, constitute the Board (“Incumbent Directors”) cease for any reason other than death to constitute at least a majority of the members of the Board; provided however that except as set forth in this Section 2(g)(iii), an individual who becomes a member of the Board subsequent to the beginning of the 36-month period, shall be deemed to have satisfied such 36-month requirement and shall be deemed an Incumbent Director if such Director was elected by or on the recommendation of or with the approval of at least two-thirds of the Directors who then qualified as Incumbent Directors either actually (because they were Directors at the beginning of such period) or by operation of the provisions of this section; if any such individual initially assumes office as a result of or in connection with either an actual or threatened solicitation with respect to the election of Directors (as such terms are used in Rule 14a-12(c) of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitations of proxies or consents by or on behalf of a person other than the Board, then such individual shall not be considered an Incumbent Director; or 

 (iv) a merger, consolidation or reorganization of the Company, as a result of which the shareholders of the Company immediately prior to such merger, consolidation or reorganization own directly or indirectly immediately following such merger, consolidation or reorganization less than fifty percent (50%) of the combined voting power of the outstanding voting securities of the entity resulting from such merger, consolidation or reorganization. 

(h) “CODE” shall mean the Internal Revenue Code of 1986, as amended.

(i) “COMMITTEE” shall mean the Compensation Committee appointed by the Board.

(j) “COMMON STOCK” shall mean the common stock of the Company, no par value per share.

(k) “COMPANY” shall mean BJ’s Restaurants, Inc., a California corporation, and any successor thereto.

(l) “CONSULTANT” shall mean any person, except an Employee, engaged by the Company or any Subsidiary of the Company, to render personal services to such entity, including as an advisor, pursuant to the terms of a written agreement.

(m) “DIRECTOR” shall mean a member of the Board.

(n) “DISABILITY” shall mean (i) in the case of a Participant whose employment with the Company or a Subsidiary is subject to the terms of an employment or consulting agreement that includes a definition of “Disability” as used in this Plan shall have the meaning set forth in such employment or consulting agreement during the period that such employment or consulting agreement remains in effect; and (ii) in all other cases, the term “Disability” as used in this Plan shall have the same meaning as set forth under the Company’s long-term disability plan applicable to the Participant as may be amended from time to time, and in the event the Company does not maintain any such plan with respect to a Participant, a physical or mental condition resulting from bodily injury, disease or mental disorder which renders the Participant incapable of continuing his or her usual and customary employment with the Company or a Subsidiary, as the case may be, for a period of not less than 120 days or such other period as may be required by applicable law.

(o) “EMPLOYEE” shall mean any person, including an Executive Officer or Officer, who is a common law employee of, receives remuneration for personal services to, is reflected on the official human resources database as an employee of, and is on the payroll of the Company or any Subsidiary of the Company.  A person is on the payroll if he or she is paid from or at the direction of the payroll department of the Company, or any Subsidiary of the Company.  Persons providing services to the Company, or to any Subsidiary of the Company, pursuant to an agreement with a staff leasing organization, temporary workers engaged through or employed by temporary or leasing agencies, and workers who hold themselves out to the Company, or a Subsidiary to which they are providing services as being independent contractors, or as being employed by or engaged through another company while providing the services, and persons covered by a collective bargaining agreement (unless the collective bargaining agreement applicable to the person specifically provides for participation in this Plan) are not Employees for purposes of this Plan and do not and cannot participate in this Plan, whether or not such persons are, or may be reclassified by the courts, the Internal Revenue Service, the U.S. 

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Department of Labor, or other person or entity as, common law employees of the Company, or any Subsidiary, either solely or jointly with another person or entity.

(p) “EXCHANGE ACT” shall mean the Securities Exchange Act of 1934, as amended.

(q) “EXECUTIVE OFFICERS” shall mean the officers of the Company as such term is defined in Rule 16a-1 under the Exchange Act.

(r) “FAIR MARKET VALUE” shall mean the closing price per share of the Common Stock on Nasdaq as to the date specified (or the previous trading day if the date specified is a day on which no trading occurred), or if Nasdaq shall cease to be the principal exchange or quotation system upon which the shares of Common Stock are listed or quoted, then such exchange or quotation system as the Company elects to list or quote its shares of Common Stock and that the Committee designates as the Company’s principal exchange or quotation system, or at the discretion of the Committee in the case that the Company ceases to be publicly traded.

(s)“INCENTIVE STOCK OPTION” shall mean any Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

(t) “INDEPENDENT DIRECTOR” shall mean a Director who: (1) meets the independence requirements of Nasdaq, or if Nasdaq shall cease to be the principal exchange or quotation system upon which the shares of Common Stock are listed or quoted, then such exchange or quotation system as the Company elects to list or quote its shares of Common Stock and that the Committee designates as the Company’s principal exchange or quotation system; (2) qualifies as a “non-employee director” under Rule 16b-3 promulgated under the Exchange Act; and (3) satisfies independence criteria under any other applicable laws or regulations relating to the issuance of Shares to Employees.

(u) “MAXIMUM ANNUAL PARTICIPANT AWARD” shall have the meaning set forth in Section 6(b).

(v) “MISCONDUCT” shall mean any of the following; provided, however, that with respect to Non-Employee Directors “Misconduct” shall mean subsection (viii) only: 

(i)any material breach of an agreement between the Participant and the Company or any Subsidiary;

(ii)willful unauthorized use or disclosure of confidential information or trade secrets of the Company or any Subsidiary by the Participant;

(iii)the Participant’s continued willful and intentional failure to satisfactorily perform Participant’s essential responsibilities;

(iv)material failure of the Participant to comply with rules, policies or procedures of the Company or any Subsidiary as they may be amended from time to time, including, without limitation, failure to comply with (1) the Company’s Code of Ethics and Code of Conduct, (2) policies and procedures of the Company relating to use and maintenance of facilities and equipment, or (3) policies and procedures of the Company relating to the occurrence, reporting or investigation of any harassment or discrimination allegations or complaints;

(v)Participant’s dishonesty, fraud or gross negligence related to the business or property of the Company or any Subsidiary;

(vi)personal conduct that is materially detrimental to the business of the Company or any Subsidiary;

(vii)conviction of or plea of nolo contendere to a felony;  

(viii)in the case of Non-Employee Directors, (1) the removal from the Board for cause in accordance with the provisions of Section 302 of the California Corporations Code, (2) the removal from the Board as a result of a shareholder suit in accordance with the provisions of Section 304 of the California Corporations Code, (3) the determination by at least a majority of the disinterested members of the Board that such Non-Employee Director has materially breached his or her fiduciary duties or duties of loyalty to the Company or has grossly abused such Non-Employee Director's authority with respect to the Company, (4) the determination by at least a majority of the disinterested members of the Board that such Non-Employee Director has committed 

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fraudulent or dishonest acts which have or could reasonably be expected to have a material adverse effect on the Company, or (5) the determination by at least a majority of the disinterested members of the Board that such Non-Employee Director has materially failed to comply with rules, policies or procedures of the Company applicable to Non-Employee Directors, as they may be amended from time to time; 

(ix)intentional or negligent acts or omissions that cause the Company or any Subsidiary to be subject to a fine, citation, shut down, or other disciplinary action by any federal, state or local governmental agency, including, without limitation, any agency regulating health, occupational safety, alcoholic beverage control or immigration;

(x)Participant’s inducing any customer or supplier to break or terminate any contract with the Company or any Subsidiary;

(xi)Participant’s inducing any principal for whom the Company or any Subsidiary acts as an agent to terminate such agency relationship; 

(xii)causes a fire, explosion or other catastrophic event involving the facilities or equipment of the Company or any Subsidiary that could have been reasonably avoided by following the established policies of the Company or any Subsidiary; 

(xiii)Participant’s solicitation of any of the Company’s agents or employees to provide services to any other business or entity; or

(xiv)with respect to any Participant whose employment with the Company or a Subsidiary is subject to the terms of an effective employment or consulting agreement that includes a definition of “Cause,” conduct by Participant that constitutes “Cause.” 

(w)  “NASDAQ” shall mean the Nasdaq Global Select Market.

(x)“NON-EMPLOYEE DIRECTOR” shall mean a Director who is not an Employee.

(y)“NONQUALIFIED STOCK OPTION” shall mean an Option that does not qualify or is not intended to qualify as an Incentive Stock Option. 

(z)“OFFICER” shall mean any Executive Officer of the Company as well as any president, vice president, secretary or treasurer duly appointed by the Board, or any other person designated as an officer by the Board or by the Bylaws of the Company.

(aa)“OPTION” shall mean a stock option granted pursuant to Section 10 of the Plan, including a Nonqualified Stock Option and an Incentive Stock Option.

(bb)“OPTIONEE” shall mean a Participant who has been granted an Option.

(cc)“PARENT” shall mean a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(dd)“PARTICIPANT” shall mean an Employee, Officer, Director or Consultant granted an Award. 

(ee)“PERFORMANCE COMPENSATION AWARD” means any Awards designated by the Committee as a Performance Compensation Award pursuant to Section 13 of the Plan, including Performance Shares and Performance Units. 

(ff)“PERFORMANCE CRITERIA” shall mean one or more of the following (as selected by the Committee) criterion or criteria that the Committee shall select for purposes of establishing the Performance Goal(s) for a Performance Period with respect to any Award under the Plan: (i) cash flow; (ii) earnings per share, including as adjusted (A) to exclude the impact of any (1) significant acquisitions or dispositions of businesses by the Company, (2) one-time, non-operating charges, or (3) accounting changes (including the early adoption of any accounting change mandated by any governing body, organization or authority); and (B) for any stock split, stock dividend or other recapitalization; (iii) earnings before interest, taxes, and amortization; (iv) return on equity; (v) total shareholder return; (vi) share price performance; (vii) return on capital; (viii) return on assets or net assets; (ix) revenue; (x) income; (xi) operating income; (xii) operating profit; (xiii) profit margin; (xiv) return on operating revenue; (xv) return on invested capital; (xvi) market price; (xvii) brand recognition/acceptance; (xviii) customer satisfaction; (xix) productivity; or (xx) sales growth 

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and volume.  With respect to Performance Compensation Awards initially granted following December 31, 2017, the Performance Criteria may consist of such other Company-wide, divisional, or individual goals, or any other basis determined by the Committee in its discretion. 

(gg)“PERFORMANCE FORMULA” means, for a Performance Period, one or more objective formulas or standards established by the Committee for purposes of determining whether or the extent to which a Performance Compensation Award has been earned based on the level of performance attained or to be attained with respect to one or more Performance Goals.  Performance Formulae may vary from Performance Period to Performance Period and from Participant to Participant and may be established on a stand-alone basis, in tandem or in the alternative.  

(hh)“PERFORMANCE GOAL” means, for a Performance Period, the one or more goals established by the Committee for the Performance Period based on the Performance Criteria.  Performance Goals may be established based on Performance Criteria with respect to the Company or any of its Subsidiaries, divisions or operational units, or any composition thereof.

(ii)“PERFORMANCE PERIOD” means one or more periods of time as the Committee may designate, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s rights in respect of a Performance Compensation Award.  

(jj) “PERFORMANCE SHARE” means a Performance Compensation Award granted pursuant to Section 13 of the Plan that is denominated in a specified number of Shares, which Shares or their future cash equivalent (or a combination of both) may be paid to the Participant upon achievement of applicable Performance Goals during the relevant Performance Period as the Committee shall establish.  

(kk)“PERFORMANCE UNIT” means a Performance Compensation Award granted pursuant to Section 13 of the Plan that has a dollar value set by the Committee (or that is determined by reference to a Performance Formula), which value may be paid to the Participant in cash, in Shares, or such combination of cash and Shares as the Committee may determine in its sole discretion, upon achievement of applicable Performance Goals during the relevant Performance Period as the Committee shall establish.

(ll)“PLAN” shall mean this Amended and Restated BJ’s Restaurants, Inc. Equity Incentive Plan, including any amendments thereto.

(mm)“REPRICE” shall mean (i) the adjustment or amendment of the exercise price of Options or SARs previously awarded whether through amendment, cancellation, replacement of grants or any other means, or (ii) the repurchase of outstanding Options for cash at a time when the exercise price of the repurchased Options is above the Fair Market Value of the underlying Common Stock.

(nn)“RESIGNATION (OR RESIGN) FOR GOOD REASON” shall mean (i) in the case of a Participant whose employment with the Company or a Subsidiary is subject to the terms of an employment or consulting agreement that includes a definition of “Resignation for Good Reason” (or similar terms) as used in this Plan shall have the meaning set forth in such employment or consulting agreement during the period that such employment or consulting agreement remains in effect, or (ii) in all other cases, any voluntary termination by written resignation of the Active Status of any Officer or Employee of the Company after a Change of Control because of: (1) a material reduction in the Officer’s  or Employee’s authority, responsibilities or scope of employment; (2) an assignment of duties to the Officer or Employee inconsistent with the Officer’s or Employee’s role at the Company (including its Subsidiaries) prior to the Change of Control, (3) a reduction in the Officer’s base salary; (4) solely with respect to an Officer, a material adverse change in such Officer’s reporting relationship, (5) a material reduction in the Officer’s or Employee’s benefits unless such reduction applies to all Officers or Employees of comparable rank; or (6) the relocation of the Officer’s or Employee’s primary work location more than fifty (50) miles from the Officer’s primary work location prior to the Change of Control; provided that the Officer’s or Employee’s written notice of voluntary resignation must be tendered within one (1) year after the Change of Control, and shall specify which of the events described in (1) through (6) resulted in the resignation.  

(oo)“RESTRICTED STOCK” shall mean a grant of Shares pursuant to Section 11 of the Plan.

(pp)“RESTRICTED STOCK UNITS” shall mean a grant of the right to receive Shares in the future or their cash equivalent (or both) pursuant to Section 11 of the Plan. 

(qq)“RETIREMENT” shall mean, (1) with respect to any Non-Employee Director, ceasing to be a Director pursuant to election by the Company’s shareholders or by voluntary resignation with the approval of the Board’s Chairman (or a majority of the 

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disinterested members of the Board) after having served continuously on the Board for at least six years, or (2) with respect to any Employee, a voluntary resignation (other than at a time during which the Board or the Committee determines cause for termination due to Misconduct existed) or termination other than for Misconduct after having reached 60 years of age and having served as an Employee continuously for at least ten years.

(rr)“SAR” shall mean a stock appreciation right awarded pursuant to Section 12 of the Plan.

(ss)“SEC” shall mean the Securities and Exchange Commission.

(tt)“SHARE” shall mean one share of Common Stock, as adjusted in accordance with Section 5 of the Plan.

(uu)“STAND-ALONE SARS” shall have the meaning set forth in Section 12(b) of the Plan.

(vv)“SUBCOMMITTEE” shall have the meaning set forth in Section 3(d).

(ww)“SUBSIDIARY” shall mean (1) in the case of an Incentive Stock Option a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code, and (2) in the case of a Nonqualified Stock Option, Restricted Stock, a Restricted Stock Unit, SAR, Performance Shares, or Performance Units, in addition to a subsidiary corporation as defined in (1), (A) a limited liability company, partnership or other entity in which the Company controls fifty percent (50%) or more of the voting power or equity interests, or (B) an entity with respect to which the Company possesses the power, directly or indirectly, to direct or cause the direction of the management and policies of that entity, whether through the Company’s ownership of voting securities, by contract or otherwise.

	
SECTION 3.
	
ADMINISTRATION OF THE PLAN. 

(a)AUTHORITY.  The Plan shall be administered by the Committee.  The Committee shall have full and exclusive power to administer the Plan on behalf of the Board, subject to such terms and conditions as the Committee may prescribe.  Notwithstanding anything herein to the contrary, the Committee’s power to administer the Plan, and actions the Committee takes under the Plan, shall be limited by the provisions set forth in the Committee’s charter, as such charter may be amended from time to time, and the further limitation that certain actions may be subject to review and approval by either the full Board or a panel consisting of all of the Independent Directors of the Company

(b)POWERS OF THE COMMITTEE.  Subject to the other provisions of this Plan, the Committee shall have the authority, in its discretion:

(i)to grant Incentive Stock Options, Nonqualified Stock Options, Restricted Stock, Restricted Stock Units, SARs, Performance Shares, Performance Units and any other Awards authorized under this Plan to Participants and to determine the terms and conditions of such Awards, including the determination of the Fair Market Value of the Shares and the exercise price and unit price, and to modify or amend each Award, with the consent of the Participant when required;

(ii)to determine the Participants, to whom Awards, if any, will be granted hereunder, the timing, vesting and exercisability of such Awards, and the number of Shares to be represented by each Award;

(iii)to construe and interpret the Plan and the Awards granted hereunder;

(iv)to prescribe, amend, and rescind rules and regulations relating to the Plan, including the form of Award Agreement, and manner of acceptance of an Award, such as correcting a defect or supplying any omission, or reconciling any inconsistency so that the Plan or any Award Agreement complies with applicable law, regulations and listing requirements and to avoid unanticipated consequences deemed by the Committee to be inconsistent with the purposes of the Plan or any Award Agreement;

(v)to establish performance criteria for Awards made pursuant to the Plan in accordance with a methodology established by the Committee, and to determine whether performance goals have been attained;

(vi)to accelerate or defer (with the consent of the Participant) the exercise or vested date of any Award;

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(vii)to authorize any person to execute on behalf of the Company any instrument required to effectuate the grant of an Award previously granted by the Committee;

(viii)to establish sub-plans, procedures or guidelines for the grant of Awards to Employees, Executive Officers, Officers, Directors, Non-Employee Directors and Consultants; and 

(ix)to make all other determinations deemed necessary or advisable for the administration of the Plan;

Provided that, no consent of a Participant is necessary under clauses (i) or (vi) if a modification, amendment, acceleration, or deferral, in the reasonable judgment of the Committee confers a benefit on the Participant or is made pursuant to an adjustment in accordance with Section 5.

(c) EFFECT OF COMMITTEE’S DECISION.  All decisions, determinations, and interpretations of the Committee shall be final and binding on all Participants, the Company (including its Subsidiaries), any shareholder and all other persons.

(d) DELEGATION.  Consistent with the Committee’s charter, as such charter may be amended from time to time, the Committee may delegate (i) to one or more separate committees consisting of members of the Committee or other Directors who are Independent Directors (any such committee a “Subcommittee”), or (ii) to an Executive Officer of the Company, the ability to grant Awards and take the other actions described in Section 3(b) with respect to Participants who are not Executive Officers, and such actions shall be treated for all purposes as if taken by the Committee; provided that the grant of Awards shall be made in accordance with parameters established by the Committee.  Any action by any such Subcommittee or Executive Officer within the scope of such delegation shall be deemed for all purposes to have been taken by the Committee.

(e) ADMINISTRATION.  The Committee may delegate the administration of the Plan to an Officer or Officers of the Company, and such administrator(s) may have the authority to directly, or under their supervision, execute and distribute agreements or other documents evidencing or relating to Awards granted by the Committee under this Plan, to maintain records relating to the grant, vesting, exercise, forfeiture or expiration of Awards, to process or oversee the issuance of Shares upon the exercise, vesting and/or settlement of an Award, to interpret the terms of Awards and to take such other actions as the Committee may specify.  Any action by any such administrator within the scope of its delegation shall be deemed for all purposes to have been taken by the Committee and references in this Plan to the Committee shall include any such administrator, provided that the actions and interpretations of any such administrator shall be subject to review and approval, disapproval or modification by the Committee.

 (f)   INDEMNIFICATION.  In addition to such other rights of indemnification as they may have as Directors or members of the Committee, and to the extent allowed by applicable law, any person(s) acting as administrator(s) and each of the administrator’s consultants shall be indemnified by the Company against the reasonable expenses, including attorney’s fees, actually incurred in connection with any action, suit or proceeding or in connection with any appeal therein, to which the administrator(s) or any of such administrator’s consultants may be party by reason of any action taken or failure to act under or in connection with the Plan or any Award granted under the Plan, and against all amounts paid by the administrator(s) or any of such administrator’s consultants in settlement thereof (provided that the settlement has been approved by the Company, which approval shall not be unreasonably withheld) or paid by the administrator(s) or any of such administrator’s consultants in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such administrator(s) or any of such administrator’s consultants did not act in good faith and in a manner which such person reasonably believed to be in the best interests of the Company, and in the case of a criminal proceeding, had no reason to believe that the conduct complained of was unlawful; provided, however, that within sixty (60) days after institution of any such action, suit or proceeding, such administrator(s) or any of such administrator’s consultants shall, in writing, offer the Company the opportunity at its own expense to handle and defend such action, suit or proceeding.

	
SECTION 4.
	
SHARES SUBJECT TO THE PLAN.

(a) RESERVATION OF SHARES.  The shares of Common Stock reserved under this Plan will be Nine Million Three Hundred Seventy Three Thousand Four Hundred Twenty-Eight (9,373,428) Shares (adjusted, proportionately, in the event of any stock split or stock dividend with respect to the Shares) consisting of (i) Seven Million Five Hundred Thirty Three Thousand Four Hundred Twenty Eight (7,533,428) shares reserved as of March 31, 2021, plus (ii) One Million Eight Hundred Forty Thousand (1,840,000) additional Shares authorized by the Board and subject to approval of this Amended and Restated Equity Incentive Plan by the shareholders at the Company’s 2021 Annual Meeting of Shareholders.  All of reserved shares under the Plan may be granted as Incentive Stock Options under the Plan.  The aggregate number of Shares available for issuance under the Plan will be reduced by one Share for each Share delivered in settlement of an Option or SARs and by one and one-half (1.5) Shares for each Share delivered in 

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settlement of any Award of Restricted Stock, Restricted Stock Units, or Performance Shares or Performance Units unless a greater reduction is specified by the Committee with respect to a specific Award grant.  The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. The Shares may be authorized but unissued, or reacquired shares of Common Stock.  

(b)AVAILABILITY OF SHARES FOR FUTURE AWARDS.  If an Award expires, is forfeited or becomes unexercisable for any reason, the undelivered Shares which were subject thereto shall, unless the Plan shall have been terminated, become available for future Awards under the Plan.  Notwithstanding anything to the contrary set forth in this Section 4(b), with respect to Option or SAR Awards, any Shares tendered or withheld as payment of an exercise price and any Shares withheld to satisfy withholding tax obligations, shall not be available for subsequent issuance under the Plan.  

(c) TIME OF GRANTING AWARDS.  The date of grant of an Award shall, for all purposes, be the date on which the Company completes the corporate action relating to the grant of such Award and all conditions to the grant have been satisfied, provided that conditions to the exercise of an Award shall not defer the date of grant.  Notice of a grant shall be given to each Participant to whom an Award is so granted within a reasonable time after the determination has been made.

(d) SECURITIES LAW COMPLIANCE.  Shares shall not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated under either such Act, and the requirements of any stock exchange or quotation system upon which the Shares may then be listed or quoted, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

(e) SUBSTITUTIONS AND ASSUMPTIONS.  The Board or the Committee shall have the right to substitute or assume Awards in connection with mergers, reorganizations, separations, or other transactions to which Section 424(a) of the Code applies, provided such substitutions and assumptions are permitted by Section 424 of the Code and the regulations promulgated thereunder.  The number of Shares reserved pursuant to Section 4(a) may be increased by the corresponding number of Awards assumed and, in the case of a substitution, by the net increase in the number of Shares subject to Awards before and after the substitution.

SECTION 5.ADJUSTMENTS TO SHARES SUBJECT TO THE PLAN.  If any change is made to the Shares by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Shares as a class without the Company’s receipt of consideration, appropriate adjustments shall be made to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the number and/or class of securities and/or the price per Share covered by outstanding Awards under the Plan and (iii) the Maximum Annual Participant Award.  The Committee may also make adjustments described in (i)-(iii) of the previous sentence in the event of any distribution of assets to shareholders other than a normal cash dividend, if any.  In determining adjustments to be made under this Section 5, the Committee may take into account such factors as it deems appropriate, including the restrictions of applicable law and the potential tax consequences of an adjustment, and in light of such factors may make adjustments that are not uniform or proportionate among outstanding Awards.  Adjustments, if any, and any determinations or interpretations, including any determination of whether a distribution is other than a normal cash dividend, made by the Committee shall be final, binding and conclusive.  For purposes of this Section 5, conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.”

Except as expressly provided herein, no issuance by the Company of shares of any class, or securities convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to an Award.

PART II.
TERMS APPLICABLE TO ALL AWARDS 

	
SECTION 6.
	
GENERAL ELIGIBILITY; AWARD LIMITATIONS.

(a) AWARDS.  Awards may be granted to Participants who are Employees, Directors or Consultants; provided however that Incentive Stock Options may only be granted to Employees.

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(b) MAXIMUM ANNUAL PARTICIPANT AWARD.  The aggregate number of Shares with respect to which an Award or Awards may be granted to any one Participant in any one taxable year of the Company (the “Maximum Annual Participant Award”) shall not exceed 500,000 shares of Common Stock (increased, proportionately, in the event of any stock split or stock dividend with respect to the Shares).  In addition, no Non-Employee Director shall be granted one or more Awards within any fiscal year of the Company, solely with respect to service as a Director, that in the aggregate exceed five hundred thousand dollars ($500,000) in aggregate value of cash-based and other Awards, with such value determined by the Committee as of the date of grant of the Awards.  For purposes of clarification regarding the foregoing limit, Awards granted in previous fiscal years will not count against the Award limits in subsequent fiscal years even if the Awards from previous fiscal years are earned or otherwise settled in fiscal years following the fiscal year in which they are granted.  

(c) NO EMPLOYMENT/SERVICE RIGHTS.  Nothing in the Plan shall confer upon any Participant the right to an Award or to continue in service as an Employee or Consultant for any period of specific duration, or interfere with or otherwise restrict in any way the rights of the Company (or any Subsidiary employing or retaining such person), or of any Participant, which rights are hereby expressly reserved by each, to terminate such person’s services at any time for any reason, with or without cause. ).  

(d) AWARDS TO NON-EMPLOYEE DIRECTORS.  Subject to the limitations set forth in this Plan, Non-Employee Directors shall receive periodic Awards under the Plan with the exact amount and nature of such Awards being approved from time to time by the Committee and/or the Board. 

(e) CLAWBACK/RECOVERY.  All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the listing standards of Nasdaq or any other national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law.  In addition, the Committee may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Committee determines necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired shares of Common Stock or other cash or property upon the occurrence of cause as determined by the Committee.

 

(f) MINIMUM VESTING PERIOD.  Notwithstanding anything to the contrary contained in this Plan, no Award granted under this Plan may have a vesting period of less than one year (other than as a result of a Participant’s death or Disability or as a result of a Change of Control in accordance with Section 9(a) of this Plan); provided, however, the Board or Committee may authorize the grant of Awards with no minimum vesting periods or vesting periods of less than one year so long as the total number of Shares issued or issuable with respect to such Awards does not exceed five percent (5%) of the total number of Shares authorized under the Plan.  

 

(g)COMPLIANCE WITH SECTION 409A.  It is the intention of this Plan that any Awards granted hereunder shall satisfy the additional conditions applicable to nonqualified deferred compensation under Section 409A of the Code.  No Award shall provide for deferral of compensation that does not comply with Section 409A of the Code, unless the Board or Committee, at the time of grant, specifically provides that the Award is not intended to comply with Section 409A of the Code. In the event that an Award is determined to constitute “nonqualified deferred compensation” that would be subject to the additional tax under Section 409A(a)(1)(B) of the Code (or any successor provisions), the Committee shall have the authority to impose such additional conditions as it deems necessary to avoid the imposition of the additional tax.  Notwithstanding anything to the contrary set forth in this Plan, the Company shall have no liability to any Participant or any other person (i) if an Award does not satisfy the additional conditions applicable to nonqualified deferred compensation under Section 409A of the Code or (ii) for any other unexpected tax consequence affecting any Participant or other person due to the receipt or settlement of any Award granted hereunder.

 

	
SECTION 7.
	
PROCEDURE FOR EXERCISE OF AWARDS; RIGHTS AS A SHAREHOLDER.

(a) PROCEDURE.  An Award shall be exercised when written, electronic or verbal notice of exercise has been given to the Company, or the brokerage firm or firms approved by the Company to facilitate exercises and sales under this Plan, in accordance with the terms of the Award by the person entitled to exercise the Award and full payment for the Shares with respect to which the Award is exercised has been received by the Company or the brokerage firm or firms, as applicable.  The notification to the brokerage firm shall be made in accordance with procedures of such brokerage firm approved by the Company.  Full payment may, as authorized by the Committee, consist of any consideration and method of payment allowable under Section 7(b) of the Plan.  The Company shall issue (or cause to be issued) such share certificate promptly upon exercise of the Award.  In the event that the exercise of an Award is treated in part as the exercise of an Incentive Stock Option and in part as the exercise of a Nonqualified Stock Option pursuant to Section 10(a), the Company shall issue a share certificate evidencing the Shares treated as acquired upon the exercise of an Incentive Stock Option and a separate share certificate evidencing the Shares treated as acquired upon the exercise of a Nonqualified Stock 

A-9

 

Option, and shall identify each such certificate accordingly in its share transfer records.  No adjustment will be made for a dividend or other right for which the record date is prior to the date the share certificate is issued, except as provided in Section 5 of the Plan.

(b) METHOD OF PAYMENT.  The consideration to be paid for any Shares to be issued upon exercise or other required settlement of an Award, including the method of payment, shall be determined by the Committee at the time of settlement and which forms may include: (i) with respect to an Option and subject to any restrictions or limitations imposed under applicable law, a request that the Company or the designated brokerage firm conduct a cashless exercise of the Option; (ii) cash; and (iii) tender of shares of Common Stock owned by the Participant in accordance with rules established by the Committee from time to time.  Shares used to pay the exercise price shall be valued at their Fair Market Value on the exercise date.  Payment of the aggregate exercise price by means of tendering previously-owned shares of Common Stock shall not be permitted when the same may, in the reasonable opinion of the Company, cause the Company to record a loss or expense as a result thereof.

(c) WITHHOLDING OBLIGATIONS.  To the extent required by applicable federal, state, local or foreign law, the Committee may and/or a Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise with respect to any Incentive Stock Option, Nonqualified Stock Option, SAR, Restricted Stock or Restricted Stock Units, Performance Shares, Performance Units or any sale of Shares.  The Company shall not be required to issue Shares or to recognize the disposition of such Shares until such obligations are satisfied.  These obligations may be satisfied by having the Company withhold a portion of the Shares that otherwise would be issued to a Participant under such Award or by tendering Shares previously acquired by the Participant in accordance with rules established by the Committee from time to time.

(d) SHAREHOLDER RIGHTS; DIVIDENDS.  Except as otherwise provided in this Plan, until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the share certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares subject to the Award, notwithstanding the exercise of the Award.  Notwithstanding anything to the contrary contained in this Plan, Awards of Restricted Stock, Restricted Stock Units, and Performance Compensation Awards may, in the Committee’s discretion, include dividend equivalent rights so long as payment of any such dividends or dividend equivalents shall be subject to the same vesting requirements as the underlying Award.  

(e) NON-TRANSFERABILITY OF AWARDS.  An Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in exchange for consideration, except that an Award may be transferred by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant; unless the Committee permits further transferability, on a general or specific basis, in which case the Committee may impose conditions and limitations on any permitted transferability.

(f)Automatic Exercise of In-The-Money Options and SARs.  The Committee, in its sole discretion, may provide in an Award Agreement or otherwise that any Option or SAR outstanding on the Automatic Exercise Date with an exercise price per Share that is less than the Fair Market Value per Share as of such date shall, automatically and without further action by the Participant (or, in the event of Participant’s death, Participant’s personal representative or estate) or the Company, be exercised on the Automatic Exercise Date if the Committee, in its sole discretion, determines that such exercise would provide economic benefit to the Participant after payment of the exercise price, applicable taxes and any expenses to effect the exercise. In the sole discretion of the Committee, payment of the exercise price of any such Option or SAR may be made pursuant to Section 7(b), and the Company may deduct or withhold an amount sufficient to satisfy all taxes associated with such exercise in accordance with Section 7(c). Unless otherwise determined by the Committee, this Section 7(f) shall not apply to an Option or SAR if the Participant incurs a termination of Active Status on or before the Automatic Exercise Date.

	
SECTION 8.
	
EXPIRATION OF AWARDS.

(a) EXPIRATION, TERMINATION OR FORFEITURE OF AWARDS.  Unless otherwise provided in the applicable Award Agreement or any severance agreement, vested Option or SAR Awards granted under this Plan shall expire, terminate, or otherwise be forfeited as follows:

(i)three (3) months after the effective date of termination of Active Status for a Participant other than a Non-Employee Director, other than in circumstances covered by (ii), (iii), (iv) or (v) below; or six (6) months after the date a Non-Employee Director ceases to be a Director or Consultant other than in circumstances covered by (ii), (iv) and (v) below;

(ii)immediately upon termination of a Participant’s Active Status for Misconduct;

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(iii)twelve (12) months after the date on which a Participant other than a Non-Employee Director ceased performing services as a result of his or her total and permanent Disability; 

(iv)twelve (12) months after the date of the death of a Participant whose Active Status terminated as a result of his or her death; and

(v)in the case of a Participant’s Retirement, the date on which the Option or SAR would have expired if no termination of the Participant’s Active Status had occurred; provided, however that this clause (v) shall not apply to Options designated as Incentive Stock Options.

(b) EXTENSION OF TERM.  Notwithstanding subsection (a) above, the Committee shall have the authority to extend the expiration date of any outstanding Option, other than an Incentive Stock Option, or SAR in circumstances in which it deems such action to be appropriate (provided that no such extension shall extend the term of an Option or SAR beyond the date on which the Option or SAR would have expired if no termination of the Employee’s Active Status had occurred).

SECTION 9.EFFECT OF CHANGE OF CONTROL.  Notwithstanding any other provision in the Plan to the contrary, the following provisions shall apply unless otherwise provided in the most recently executed agreement between the Participant and the Company, or specifically prohibited under applicable laws, or by the rules and regulations of any applicable governmental agencies or national securities exchanges or quotation systems. 

(a) ACCELERATION.  Awards of a Participant shall be Accelerated (as defined in Section 9(b) below) as follows:

(i)With respect to Non-Employee Directors, upon the occurrence of a Change of Control described in Section 2(g);

(ii)With respect to any Employee, upon the occurrence of a Change of Control described in Section 2(g)(i);

(iii)With respect to any Employee who Resigns for Good Reason or whose Active Status is terminated for reasons other than Misconduct, so long as such resignation or termination occurs within one year after a Change of Control described in Section 2(g)(ii), (iii) or (iv); and

(iv)With respect to any Employee, upon the occurrence of a Change of Control described in Section 2(g)(iv) in connection with which each Award is not assumed or an equivalent award substituted by such successor entity or a parent or subsidiary of such successor entity. 

(b) DEFINITION.  For purposes of this Section 9, Awards of a Participant being “Accelerated” means, with respect to such Participant:

(i)any and all Options and SARs shall become fully vested and immediately exercisable, and shall remain exercisable for the greater of (1) the time period specified in the original Award (but subject to termination upon termination of Active Status in accordance with the terms of the original Award) or, (2) one year following the date of such acceleration;

(ii)any restriction periods and restrictions imposed on Restricted Stock or Restricted Stock Units that are not performance-based shall lapse;

(iii)any restriction periods and restrictions imposed on Restricted Stock, Restricted Stock Units, and Performance Compensation Awards that are performance-based shall lapse, unless such performance-based Awards remain outstanding after the Change of Control (or are assumed by any successor entity) and the applicable Performance Criteria can be accurately tracked following the Change of Control; and

(iv)the restrictions and deferral limitations and other conditions applicable to any other Awards shall lapse, and such other Awards shall become free of all restrictions, limitations or conditions and become fully vested and transferable to the full extent of the original grant.

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PART III.
SPECIFIC TERMS APPLICABLE TO OPTIONS, STOCK AWARDS AND SARS

	
SECTION 10.
	
GRANT, TERMS AND CONDITIONS OF OPTIONS.

(a) DESIGNATION.  Each Option shall be designated in an Award Agreement as either an Incentive Stock Option or a Nonqualified Stock Option.  However, notwithstanding such designations, to the extent that the aggregate Fair Market Value of the Shares with respect to which Options designated as Incentive Stock Options are exercisable for the first time by any Employee during any calendar year (under all plans of the Company) exceeds $100,000, such excess Options shall be treated as Nonqualified Stock Options.  Options shall be taken into account in the order in which they were granted.

(b) TERMS OF OPTIONS.  The term of each Option shall be no more than ten (10) years from the date of grant.  However, in the case of an Incentive Stock Option granted to a Participant who, at the time the Option is granted, owns Shares representing more than ten percent (10%) of the voting power of all classes of shares of the Company or any Parent or Subsidiary, the term of the Option shall be no more than five (5) years from the date of grant.  

(c) OPTION EXERCISE PRICES.

(i)The per Share exercise price under an Incentive Stock Option shall be as follows:

(A) If granted to an Employee who, at the time of the grant of such Incentive Stock Option, owns shares representing more than ten percent (10%) of the voting power of all classes of shares of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

(B) If granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

(ii)The per Share exercise price under a Nonqualified Stock Option or SAR shall be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

(iii)In no event shall the Board or the Committee be permitted to Reprice an Option after the date of grant without shareholder approval. 

(d) VESTING.  Unless otherwise provided in the applicable Award Agreement, to the extent Options vest and become exercisable in increments, such Options shall cease vesting as of the date of the Optionee’s Disability or termination of such Optionee’s Active Status for reasons other than Retirement or death of a Non-Employee Director, in which cases such Options shall immediately vest in full.

(e) EXERCISE.  Any Option granted hereunder shall be exercisable at such times and under such conditions as determined by the Committee at the time of grant, and as are permissible under the terms of the Plan.  An Option may not be exercised for a fraction of a Share.

	
SECTION 11.
	
GRANT, TERMS AND CONDITIONS OF STOCK AWARDS.

(a) DESIGNATION.  Restricted Stock or Restricted Stock Units may be granted either alone, in addition to, or in tandem with other Awards granted under the Plan.  Restricted Stock or Restricted Stock Units may include a dividend equivalent right, as permitted by Section 5 or Section 7.  After the Committee determines that it will offer Restricted Stock or Restricted Stock Units, it will advise the Participant in writing or electronically, by means of an Award Agreement, of the terms, conditions and restrictions, including vesting, if any, related to the offer, including the number of Shares that the Participant shall be entitled to receive or purchase, the price to be paid, if any, and, if applicable, the time within which the Participant must accept the offer.  The offer shall be accepted by execution of an Award Agreement or as otherwise directed by the Committee.  Restricted Stock Units may be paid as permitted by Section 7(b).  The term of each award of Restricted Stock or Restricted Stock Units shall be at the discretion of the Committee. 

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(b) PERFORMANCE BASED STOCK AWARDS.  The Committee may elect to grant Restricted Stock and/or Restricted Stock Units that are subject to the attainment of Performance Goals relating to Performance Criteria selected by the Committee and specified at the time such Restricted Stock and/or Restricted Stock Units are granted.  

(c) VESTING.  Subject to the provisions of Section 9 of this Plan, unless the  Board or Committee determines otherwise, the Award Agreement shall provide for the forfeiture of the non-vested Shares underlying Restricted Stock or Restricted Stock Units upon the termination of a Participant’s Active Status for reasons other than Retirement or death of a Non-Employee Director, in which case such Awards shall immediately vest in full.  

	
SECTION 12.
	
GRANT, TERMS AND CONDITIONS OF SARS.

(a) GRANTS.  The Committee shall have the full power and authority, exercisable in its sole discretion, to grant SARs to selected Participants.  The terms of SARs shall be at the discretion of the Committee; provided, however, that in no case shall the term of any SAR be in excess of ten (10) years following the grant date.  In no event shall the Board or the Committee be permitted to Reprice a SAR after the date of grant without shareholder approval.

(b) STAND-ALONE SARS.

(i)A Participant may be granted stand-alone stock appreciation rights (“Stand-Alone SARs”) that are not tied to any underlying Option under Section 10 of the Plan.  The Stand-Alone SAR shall cover a specified number of Shares and shall be exercisable upon such terms and conditions as the Committee shall establish.  Upon exercise of the Stand-Alone SAR, the holder shall be entitled to receive a distribution from the Company in an amount equal to the excess of (A) the aggregate Fair Market Value (on the exercise date) of the Shares underlying the exercised right over (B) the aggregate base price in effect for those Shares.

 (ii) The number of Shares underlying each Stand-Alone SAR and the base price in effect for those Shares shall be determined by the Committee at the time the Stand-Alone SAR is granted.  In no event, however, may the base price per Share be less than the Fair Market Value per underlying Share on the grant date.

 (iii) The distribution with respect to an exercised Stand-Alone SAR may be made in Shares valued at Fair Market Value on the exercise date, in cash, or partly in Shares and partly in cash, as the Committee shall deem appropriate.

	
SECTION 13.
	
GRANT, TERMS AND CONDITIONS OF PERFORMANCE COMPENSATION AWARDS.  

(a) GRANTS.  The Committee shall have the full power and authority, exercisable in its sole discretion, to grant Performance Compensation Awards in the form of Performance Units or Performance Shares to Employees (including Officers) and shall evidence such grant in an Award Agreement that is delivered to the Participant setting forth the terms and conditions of the Award.   

(b) ELIGIBILITY. The Committee shall, in its sole discretion, designate within the first 90 days of a Performance Period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code) which Participants will be eligible to receive Performance Compensation Awards in respect of such Performance Period; provided, however, that such 90 day restriction shall not apply to Performance Compensation Awards initially granted subsequent to December 31, 2017.  However, designation of a Participant eligible to receive an Award hereunder for a Performance Period shall not in any manner entitle the Participant to receive payment in respect of any Performance Compensation Award for such Performance Period. The determination as to whether or not such Participant becomes entitled to payment in respect of any Performance Compensation Award shall be decided solely in accordance with the provisions of this Section 13.  Moreover, designation of a Participant eligible to receive a Performance Compensation Award hereunder for a particular Performance Period shall not require designation of such Participant eligible to receive a Performance Compensation Award hereunder in any subsequent Performance Period and designation of one person as a Participant eligible to receive a Performance Compensation Award hereunder shall not require designation of any other person as a Participant eligible to receive a Performance Compensation Award hereunder in such period or in any other period. 

(c) DISCRETION OF COMMITTEE WITH RESPECT TO PERFORMANCE COMPENSATION AWARDS.  With regard to a particular Performance Period, the Committee shall have full discretion to select the length of such Performance Period, the type(s) of Performance Compensation Awards to be issued, the Performance Criteria that will be used to establish the Performance Goal(s), the kind(s) and/or level(s) of the Performance Goals(s) that is (are) to apply, or any combination of the foregoing, and the Performance Formula. Within the first 90 days of a Performance Period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code), the Committee shall, with regard to the Performance Compensation Awards to be issued for such 

A-13

 

Performance Period, exercise its discretion with respect to each of the matters enumerated in the immediately preceding sentence and record the same in writing; provided, however, that such 90 day restriction shall not apply to Performance Compensation Awards initially granted subsequent to December 31, 2017.

(d) MODIFICATION OF PERFORMANCE GOALS.  The Committee is authorized at any time during the first ninety (90) days of a Performance Period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code), or any time thereafter (but only to the extent the exercise of such authority after such 90-day period (or such shorter period, if applicable) would not cause the Performance Compensation Awards granted to any participant for the Performance Period to fail to qualify as “qualified performance-based compensation” under Section 162(m) of the Code), in its sole discretion, to adjust or modify the calculation of a Performance Goal for such Performance Period to the extent permitted under Section 162(m) of the Code (i) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or development affecting the Company (to the extent applicable to such Performance Goal) or (ii) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company (to the extent applicable to such Performance Goal), or the financial statements of the Company (to the extent applicable to such Performance Goal), or of changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, accounting principles, law or business conditions.  Notwithstanding anything to the contrary contained in this Section 13(d), the foregoing ninety (90) day restriction shall not apply to Performance Compensation Awards initially granted subsequent to December 31, 2017.

(e) PAYMENT OF PERFORMANCE COMPENSATION AWARDS.  

 (i)  A Participant must be employed by the Company on the last day of a Performance Period to be eligible for payment in respect of a Performance Compensation Award for such Performance Period.  Notwithstanding the foregoing, in the discretion of the Committee, Performance Compensation Awards may be paid to a Participant whose Active Status as an employee has terminated after the beginning of the Performance Period for which a Performance Compensation Award is made, or to the designee or estate of a Participant who died prior to the last day of a Performance Period.

 

(ii) A Participant shall be eligible to receive payments in respect of a Performance Compensation Award only to the extent that (1) the Performance Goal(s) for such period are achieved and certified by the Committee in accordance with Section 13(e)(iii) and (2) the Performance Formula as applied against such Performance Goal(s) determines that all or some portion of such Participant’s Performance Compensation Award has been earned for the Performance Period.

 

(iii)  Following the completion of a Performance Period, the Committee shall meet to review and certify in writing whether, and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, to calculate and certify in writing that amount of the Performance Compensation Awards earned for the period based upon the Performance Formula.  The Committee shall then determine the actual size of each Participant’s Performance Compensation Award for the Performance Period.

 

(iv) [Intentionally omitted] 

 

(v)  The Performance Compensation Awards granted for a Performance Period shall be paid to Participants as soon as administratively possible following completion of the certifications required by Section 13(e)(iii), unless the Committee shall determine that any Performance Compensation Award shall be deferred.

 

(vi)  In no event shall any discretionary authority granted to the Committee by the Plan be used to (1) grant or provide payment in respect of Performance Compensation Awards for a Performance Period if the Performance Goals for such Performance Period have not been attained, or (2) increase a Performance Compensation Award for any Participant at any time after the first 90 days of the Performance Period (or, if shorter, the maximum period allowed under Section 162(m)); provided, however, that such 90 day restriction shall not apply to Performance Compensation Awards initially granted subsequent to December 31, 2017. 

 

(vii)With respect to Performance Compensation Awards initially granted subsequent to December 31, 2017, the Committee may, in its discretion, either at the time it grants a Performance Compensation Award or at any time thereafter, provide for the positive or negative adjustment of the Performance Goals applicable to a Performance Compensation Award granted to any Participant to reflect such Participant’s individual performance in his or her position with the Company or such other factors as the Committee may determine.  If permitted under a Participant’s Award Agreement, the Committee shall have the discretion, on the basis of such criteria as may be established by the Committee, to reduce some or all of the value of the Performance Compensation Award that would otherwise be paid to the Participant upon its settlement notwithstanding the attainment of any Performance Goal and the resulting value of the Performance Compensation Award determined in accordance with the Performance Formula.

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PART IV.
TERM OF PLAN AND SHAREHOLDER APPROVAL

SECTION 14.TERM OF PLAN.  The Plan shall continue in effect until (i) midnight on June 30, 2030, or (ii) until terminated under Section 15 of the Plan or extended by an amendment approved by the shareholders of the Company pursuant to Section 15(a).

	
SECTION 15.
	
AMENDMENT AND TERMINATION OF THE PLAN.

(a) AMENDMENT AND TERMINATION.  The Board or the Committee may amend or terminate the Plan from time to time in such respects as the Board may deem advisable (including, but not limited to amendments which the Board deems appropriate to enhance the Company’s ability to claim deductions related to stock option exercises); provided that to the extent required by the Code or the rules of Nasdaq (or if Nasdaq shall cease to be the principal exchange or quotation system upon which the shares of Common Stock are listed or quoted, then the rules of such exchange or quotation system as the Company elects to list or quote its shares of Common Stock) or the SEC, shareholder approval shall be required for any amendment of the Plan.  Subject to the foregoing, it is specifically intended that the Board or Committee may amend the Plan without shareholder approval to comply with legal, regulatory and listing requirements and to avoid unanticipated consequences deemed by the Committee to be inconsistent with the purpose of the Plan or any Award Agreement.

(b) PARTICIPANTS IN FOREIGN COUNTRIES.  The Committee shall have the authority to adopt such modifications, procedures, and sub-plans as may be necessary or desirable to comply with provisions of the laws of foreign countries in which the Company or its Subsidiaries may operate to assure the viability of the benefits from Awards granted to Participants performing services in such countries and to meet the objectives of the Plan.

(c) EFFECT OF AMENDMENT OR TERMINATION.  Any amendment or termination of the Plan shall not affect Awards already granted and such Awards shall remain in full force and effect as if this Plan had not been amended or terminated, unless mutually agreed otherwise between the Participant and the Committee, which agreement must be in writing and signed by the Participant and the Company.

SECTION 16.SHAREHOLDER APPROVAL.  The effectiveness of the Plan, or any amendment thereof requiring approval of the shareholders of the Company, is subject to approval by the shareholders of the Company in accordance with applicable Nasdaq rules (or if Nasdaq shall cease to be the principal exchange or quotation system upon which the shares of Common Stock are listed or quoted, then the rules of such exchange or quotation system as the Company elects to list or quote its shares of Common Stock).

 

A-15Exhibit 10.74

		
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			Exhibit 10.74
		

		
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			DISTRIBUTION AND FULFILLMENT AGREEMENT 
		

		
			THIS DISTRIBUTION AND FULFILLMENT AGREEMENT (“Agreement”) is entered into as of June 17, 2022 (the “Effective Date”), by and between Monro, Inc., a New York corporation (“Monro”), and American Tire Distributors, Inc., a Delaware corporation (“ATD”).  Monro and ATD are each referred to herein as a “Party” and collectively as the “Parties.”
		

		
			WHEREAS, ATD is engaged in the business of selling and/or distributing tires, wheels and related products, including certain ATD proprietary branded products and third-party products made available by or through ATD, and providing transfer services through secondary supply with respect to third party tires, wheels and related products not purchased directly by or through ATD; 
		

		
			WHEREAS, as of the date hereof, ATD is purchasing certain assets comprising the wholesale and tire distribution operations of Monro, including the Existing Monro Inventory, pursuant to the terms and conditions of that certain Asset Purchase Agreement, dated as of May 13, 2022, by and between ATD, Monro and Monro Service Corporation (the “Purchase Agreement”); and  
		

		
			WHEREAS, Monro desires to purchase Direct Products directly from ATD and engage ATD to transfer the Indirect Products to Monro, and ATD desires to sell Direct Products to Monro and transfer the Indirect Products to Monro, each on the terms and conditions of this Agreement.  
		

		
			NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
		

		
			1.Definitions.  The terms defined in this Section have the following meanings whenever used in this Agreement.  Capitalized terms used in this Agreement but not defined in this Section shall have the meanings ascribed to such terms in this Agreement or in the Purchase Agreement.
		

		
			1.1“Affiliate” means with respect to a Person, any other Person at any time during the Term controlling, controlled by, or under common control with, such Person.  For purposes of the Agreement, “control” means possessing, directly or indirectly, the power to direct or cause the direction of the management, policies or operations of a Person, whether through ownership of voting securities, by contract or otherwise.  For the avoidance of doubt, with respect to Monro the term “Affiliate” shall not include any existing or future franchisees of Monro or franchisees of any Affiliate of Monro.
		

		
			1.2“Claim” means any demand, or any civil, criminal, administrative or investigative claim, action or proceeding (including arbitration) asserted, commenced or threatened against a Person by an unaffiliated third party.  For purposes of this definition, an employee of either Party is considered an unaffiliated third party.
		

		
			1.3“Direct Products” means Tires, wheels and related products made available by or through ATD from time to time, including Proprietary Branded Products and Third Party Products, and ordered by Monro directly from ATD.  Unless otherwise stated, all Purchased Monro Inventory, to the extent purchased by Monro from ATD pursuant to this Agreement, shall be Direct Products. 
		

		
			1.4“Indirect Products” means tires, wheels and related products which are available for distribution, fulfillment, logistics, secondary supply, 3PL, 4PL or otherwise by or through ATD or one or more of its Affiliates from time to time but ordered by Monro (or by ATD on Monro’s behalf) directly from the manufacturer or supplier other than ATD (as applicable, the “Indirect Product Supplier”).  
		

		
			1.5“Law” means any and all (a) federal, territorial, state, local and foreign laws, treaties, conventions, directives, regulations and ordinances, (b) codes, standards, rules, requirements, directives, orders and criteria issued 
		

		 

 

		under any federal, territorial, state, local or foreign laws, ordinances or regulations, (c) rules of a self- regulatory organization (including the rules of any national securities exchange or foreign equivalent) and (d) judgments, orders, writs, directives, authorizations, rulings, decisions, injunctions, decrees, assessments, settlement agreements, or awards of any Governmental Authority (as defined below).
		

		
			1.6“Person” means a natural person or any partnership (whether general or limited), limited liability company, trust, estate, association, corporation, custodian, nominee or any other individual or entity in its own or any representative capacity or any other entity, in each case, whether domestic or foreign.
		

		
			1.7“Products” means Direct Products and Indirect Products.
		

		
			1.8“Proprietary Branded Products” means the ATD proprietary branded HERCULES® and IRONMAN® Tires and any additional proprietary branded Tires made available by ATD from time to time.  
		

		
			1.9“Proprietary Branded Products Warranty” means any express, limited warranty with respect to a Proprietary Branded  Product offered by ATD from time to time with respect to a Proprietary Branded Product, a copy of which as of the Effective Date is set forth on Exhibit D attached hereto.
		

		
			1.10“Purchase Order” means a purchase order issued by Monro to ATD for the purchase of Direct Products.   
		

		
			1.11“Purchased Monro Inventory” means the inventory of Tires purchased by ATD from Monro pursuant to the Purchase Agreement that, prior to the Closing Date, was to be distributed to Monro Retail Locations (as defined herein).  For the avoidance of doubt, the Purchased Monro Inventory shall not include the inventory purchased by ATD from Monro which is related to the Wholesale Tire Operations.   
		

		
			1.12“Representatives” with respect to any Person, means such Person’s Affiliates and such Person’s and its Affiliates’ respective directors, officers, members, managers, employees, contractors, subcontractors, agents, consultants, advisors or other representatives.
		

		
			1.13“Retail Locations” means all retail locations that are directly or indirectly during the Term of this Agreement owned or operated by Monro or one of its Affiliates, including, without limitation, retail locations that are newly established, retail locations acquired by Monro or one of its Affiliates, retail locations of any Person that is acquired by or is owned in whole or part by Monro or one of its Affiliates.  Retail Locations as of the Effective Date shall include, without limitation, those operating under the brands set forth on Exhibit A attached hereto and shall exclude any retail locations expressly excluded on Exhibit A attached hereto. 
		

		
			1.14“Third Party Products” means any tires, wheels and related products made available by or through ATD from time to time other than Proprietary Branded Products.
		

		
			1.15“Tires” means passenger car tires, light truck replacement tires and medium truck tires.
		

		
			1.16“Transfer Order” means an order issued by Monro to purchase any Indirect Product to be delivered by ATD.  
		

		
			2.Purchase Requirement and Product Availability.
		

		
			2.1Purchase Requirement.  Subject to the terms and conditions of this Agreement, following the full satisfaction by ATD of the Earnout Amount (as defined in the Purchase Agreement and with such period during which Earnout Payments are made by ATD and ending on the full satisfaction of the Earnout Amount, being referred to herein as the “Earnout Period”), all of the Retail Locations must purchase during each calendar quarter of the Term at least the percentage set forth on Exhibit B (the “Applicable Percentage”) of each of their bona fide, good faith requirements for Tires, less the Exceptions (“Requirements”), by or through ATD as (a) Direct Products to be sold and supplied directly by ATD, and/or (b) Indirect Products to be distributed directly by ATD (the “Purchase Requirement”).  References herein to “by or through” ATD shall refer to the Purchase Requirement under subsection (a) and/or (b) in the preceding sentence.  For the avoidance of doubt, the Applicable Percentage 
		
		
 

 

		shall be calculated as a percentage of qualifying purchases of the Requirements.  Monro agrees to use best efforts to encourage its franchisees to purchase Tires from ATD.  Where Monro orders Indirect Products from an Indirect Product Supplier, Monro shall designate ATD as the distribution and fulfillment partner of such Indirect Products and use commercially reasonable efforts to cause the Indirect Product Supplier to utilize ATD as Monro’s distribution and fulfillment partner.  If an Indirect Product Supplier does not use ATD as the distribution or fulfillment partner, then such Indirect Product purchases by Monro shall constitute Exceptions. 

		
		
			2.2Exceptions.  The Requirements shall not include (a) tire purchases made by Monro other than by or through ATD following ATD’s refusal or inability to supply the Direct Products or the Indirect Products in accordance with the applicable service level agreements (“SLAs”) set forth herein and on Exhibit C attached hereto, (b) tire purchases made by Monro other than by or through ATD following ATD’s rejection of a Purchase Order or Transfer Order or (c) Direct Products or Indirect Products which are not Available (as defined below) (each, an “Exception”).  Notwithstanding the foregoing, provided that ATD is able to fulfill an order for Proprietary Branded Products or Monro Purchased Inventory in accordance with the applicable SLAs and is not in breach of any obligations related to pricing of such Products as described herein, Monro’s purchase of LCRs other than by or through ATD shall not be an Exception and shall impact Monro’s compliance with the Purchase Requirement.  The order of a Direct Product or an Indirect Product shall qualify toward Monro meeting the Purchase Requirement notwithstanding whether ATD meets the applicable SLAs.   
		

		
			2.3Monthly Business Review.  Within ten (10) business days following the end of each calendar month commencing on the Effective Date or at such other times mutually agreed by the Parties, the Parties shall conduct a monthly business review (each, a “MBR”) to be conducted in-person or by video conference.  Each MBR shall be attended by, at a minimum, one (1) employee of each Party at Vice President level or above.  
		

		
			2.4Forecasting; Measurement and Reporting and Restocking SLAs.  Commencing on the Effective Date and at the beginning of each month thereafter, Monro shall issue to ATD a rolling forecast of its Requirements for Tires for the three-month period commencing after the month in which such forecast is issued.  Such forecast shall include a breakdown of the Tires which Monro intends to purchase from ATD as Direct Products and through ATD as Indirect Products, including all specific Tire SKUs.  At each MBR, the Parties will meet to discuss such forecast, including the availability of Direct Products and Indirect Products, and make any appropriate adjustments to such forecast as mutually agreed in good faith by the Parties during which ATD will confirm in writing to Monro the availability of Direct Products and the availability to provide distribution of Indirect Products subject to such adjusted forecast (the “Confirmed Forecast”).  The Parties will use commercially reasonable efforts to (i) collaborate on establishing the product offering and assortment offered by ATD as Direct Products and Indirect Products and modifying such to ensure the product screen of the Retail Locations is competitive in their market places from a quality, cost and availability perspective, and (ii) review publicly-available or non-confidential information related to comparable market places, benchmarks and product screens; provided that ATD shall not be obligated to share any confidential or proprietary information with Monro in connection therewith.  Failure of ATD to achieve availability of the Availability Percentage (as defined on Exhibit B) of the Confirmed Forecast shall be a breach of SLA (“Initial Availability SLA”).  At the end of the month during which the forecast is issued, and following such MBR, any adjustments thereto and the confirmation of availability by ATD, the Confirmed Forecast shall become binding on Monro for the third month of the forecasted period and constitute a blanket order for such Products against which Purchase Orders or Transfer Orders shall be issued by Monro for the Products subject thereto and such Confirmed Forecast shall be binding on ATD for purposes of Availability and related SLAs.  Any adjustment by ATD which results in a decrease from the Initial Availability SLA figure shall be a breach of SLA (“Availability Confirmation SLA”).   Monro shall also grant ATD access to the data and reports generated by Monro or its service providers, including Torqata Data and Analytics LLC (“Torqata”), reporting the total number of Tires purchased by the Retail Locations during such three-month period by or through ATD or by or through any third party.  Such forecast from Torqata is delivered at least 30 days prior to the issuance of each forecast by Monro to ATD.
		

		
			For example, on December 1st, Monro receives from Torqata a forecast for the three-month period of February, March and April.  On January 1st, Monro receives from Torqata a revised forecast for the three-month period of February, March and April, and an initial forecast for May.  Also on January 1st, Monro issues a forecast to ATD for the three-month period of February, March and April.  The Parties discuss the forecast during the January MBR, during which ATD confirms availability and any mutually agreed adjustments to such forecast are made and 
		

		 

 

		compliance with the Initial Availability SLA will be measured for April.  On February 1st, the adjusted January forecast becomes a binding firm order for the month of April (e.g., 60 days prior) and compliance with the Availability Confirmation SLA shall be measured for April.  Likewise, on February 1st, Monro receives from Torqata a revised forecast for March, April, May and an initial forecast for June, and Monro issues a forecast to ATD for the three-month period of March, April and May.  The Parties discuss the forecast during the February MBR, during which ATD confirms availability and any mutually agreed adjustments to such forecast are made and compliance with the Initial Availability SLA shall be measured for May.  On March 1st, the adjusted February forecast becomes a binding firm order for the month of May and the Availability Confirmation SLA shall be measured for May.  This process continues unless and until mutually agreed by the Parties.  The Parties will measure, calculate and remedy compliance with the Purchase Requirement in the manner set forth in Exhibit B.      
		

		
			2.5a. Product Sourcing Efforts.  ATD and Monro each agree to use commercially reasonable efforts to (a) transition Monro’s demand for LCRs to ATD’s Proprietary Branded Products, (b) agree to source any brands and styles from the Indirect Products; and (c) agree to jointly approach any manufacturer that is not in ATD’s brand portfolio but that is within Monro’s brand portfolio for the purpose of establishing a direct relationship between such manufacturer and ATD.  
		

		
			2.6Availability.   For purposes hereof, “Availability” means (a) with respect to Direct Products or Indirect Products subject to Monro’s forecast pursuant to Section 2.4 above, ATD confirms Direct Products are available from ATD or confirms it can provide the distribution services with respect to its fulfillment of such Indirect Products, as applicable, as part of the Confirmed Forecast or (b) with respect to purchases by Monro of Direct Products or Indirect Products not subject to a forecast and made on a real-time basis, such Direct Products are shown and confirmed as available in ATD’s inventory management system or ATD otherwise confirms it can provide the distribution services for Indirect Products.   
		

		
			3.Purchase Orders.  
		

		
			3.1Purchase Orders.  Acceptance of a Purchase Order is expressly limited to the terms of the Agreement.  No purported acceptance of any Purchase Order on terms and conditions which modify, supersede, supplement or otherwise alter this Agreement, shall be binding upon Monro or ATD, and such alternative terms are expressly rejected and replaced by this Agreement, unless the alternative terms or conditions are agreed in writing by the Parties.  For the avoidance of doubt, unless agreed in writing, any additional terms that accompany a Purchase Order, shall be rejected in full. 
		

		
			3.2Offer and Acceptance.  Monro’s issuance of a Purchase Order and a Transfer Order to ATD constitutes an offer by Monro to purchase Direct Products and to transfer Indirect Products, respectively.  By accepting the Purchase Order or a Transfer Order, ATD agrees that it is willing and able to supply the Direct Products or Indirect Products referenced in such Purchase Order or Transfer Order, as applicable, in accordance with the applicable Delivery SLAs (defined below).  For Direct Products or Indirect Products ordered on a real-time basis (and not subject to a Confirmed Forecast) pursuant to subsection 2.7(b), if ATD does not reject such Purchase Order or Transfer Order in writing (which may occur electronically) within 60 minutes of the issuance of such Order, such Purchase Order or Transfer Order shall be deemed accepted.  ATD will have the right to reject any Purchase Order or Transfer Order, or portion of such Purchase Order or Transfer order, if ATD cannot deliver the Tires in compliance with the applicable Delivery SLAs and/or if the Purchase Order or Transfer Order exceeds the Confirmed Forecast.  If ATD rejects a Purchase Order or a Transfer Order in whole or in part subject to a Confirmed Forecast, then the amount of Direct Products or Indirect Products subject to such rejected order shall constitute an Exception and shall not impact Monro’s compliance with the Purchase Requirement.  Further if ATD rejects a Purchase Order or a Transfer Order, in whole or in part, which is confirmed by ATD to be Available, such rejection shall constitute a breach of SLA (“Fulfillment SLA”). 
		

		
			4.Delivery; Acceptance; Returns.
		

		
			4.1Delivery.  Monro will specify in each Purchase Order and Transfer Order the location or locations for the delivery of ordered Products (the “Delivery Site(s)”).  Specific details for individual Delivery Site(s) are described in Exhibit A attached hereto.   ATD shall deliver the Direct Products and Indirect Products pursuant to ATD’s local delivery schedule as further described in Exhibit C.  Upon delivery, Monro will be provided a delivery receipt 
		

		 

 

		containing at a minimum, a listing of the Direct Product(s) being delivered, the unit prices, quantities, and corresponding Purchase Order number upon each delivery to Monro of any Direct Products.  Title and risk of loss of the Product shall pass to Monro upon the physical delivery of the Product to Monro at the Delivery Site(s) designated in a Purchase Order. 
		

		
			4.2Acceptance, Inspection and Rejection. Monro has the right to inspect the Products within three (3) business days after the delivery date.  Monro, at its sole option, may inspect all or a sample of the Products, and may reject all or any portion of the Products if the Products are (i) nonconforming; (ii) damaged;  (iii) shipped or performed contrary  to the terms of this Agreement or any applicable  Purchase Order or Transfer Order;  (iv) shipped in quantities in excess of any applicable Purchase Order or Transfer Order; or (v) not shipped or performed in accordance with this Agreement or any applicable Purchase Order or Transfer Order.  If Products are rejected, Monro shall provide ATD notice of rejection of Products within such time period including its justification therefor and evidence of the alleged nonconformity.  If Monro has not given proper notice within such time period, the Products shall be deemed accepted by Monro as of the end of the third (3rd) business day.  Upon receipt of Monro’s proper notice of rejection of Products, ATD shall either, in ATD’s sole discretion (i) issue a credit to Monro in the amount of the payment made by Monro to ATD for such nonconforming Direct Product or Indirect Product provided that if such credit is not used within ninety (90) days of issuance, it may be converted into a refund to be provided to Monro upon Monro’s request; or (ii) ship a replacement Direct Product or Indirect Product to Monro, as applicable, within seventy-two (72) hours of notification.  ATD shall retain the right to confirm any nonconformity alleged by Monro. ATD shall have no liability for any nonconformities with respect to Indirect Products, except to the extent caused by ATD’s gross negligence or willful misconduct. 
		

		
			4.3Returns. Product returns (both new product returns and warranty returns) require pre-authorization from Distributor via a returned material authorization (“RMA”). Once the Products are returned to the appropriate location, the Products will be reviewed to determine their eligibility for credit as described in Section 3.1 above (e.g., confirmation that new Products are still new and unused, confirmation that the Product meets the manufacturers adjustment policy for credit, and the amount of the credit and any other applicable requirements are met). New Product returns may be subject to ATD’s applicable restocking fee(s).
		

		
			5.Pricing and Payment Terms.
		

		
			5.1Prices.  The prices (“Prices”) for Products shall be as set forth on and subject to Exhibit A.  
		

		
			5.2Invoices. ATD shall issue invoices to Monro for Prices for Direct Products and Invoices will reference the Purchase Order number.  ATD agrees that all invoices due hereunder will be processed and paid using Monro’s existing EDI invoice processing system, and Monro agrees that all payments to ATD hereunder shall be made in immediately available funds via ACH transfer, wire transfer or otherwise as agreed by ATD.  
		

		
			5.3Payment Terms.  All payments are due net number of days set forth on Exhibit A from the date of ATD’s invoice, except for any amounts disputed by Monro in good faith; provided, that the Parties hereby agree to mutually evaluate and discuss in good faith such payment terms from time to time based on changes in market and credit conditions.  The Parties shall seek to resolve any invoice disputes expeditiously and in good faith. Unless subject to a good faith dispute, in the event that Monro fails to remit payment when due, monthly interest in the lesser amount of one and one half percent (1.5%) or the greatest amount permitted by law shall accrue on the overdue amount. Unless subject to a good faith dispute, Monro shall be responsible for all reasonable costs and expenses associated with collection costs on overdue payments incurred by ATD, including reasonable attorney’s fees and court costs.
		

		
			5.4Taxes.  Unless prohibited by Law or stated in the Agreement, ATD shall pay all federal, state or local tax, transportation tax, or other tax, including customs duties and tariffs, which is required to be imposed upon the Direct Products, or by reason of their sale or delivery directly from ATD to Monro.  All Prices shall be deemed to have included all such taxes.  Notwithstanding the foregoing, ATD is not responsible for any taxes, duties or tariffs associated with or levied on, Monro, Monro’s purchase of Indirect Products and/or any Monro customer’s purchase of the Products. If ATD is required by Law to pay or collect from Monro any taxes or charges, ATD will provide a separate invoice to Purchase for such taxes or charges.
		

		 

 

		
			6.Warranties and Disclaimers.
		

		
			6.1Mutual Warranties.  Each Party represents and warrants to the other Party that (a) it is duly qualified to do business and is in good standing in every jurisdiction in which such qualification is required for purposes of this Agreement, (b) it has the authority and ability to enter into, perform the obligations under and agree to the covenants contained in the Agreement, (c) it will perform its obligations hereunder in a professional and workmanlike manner, and (d) it will comply with all applicable Laws related to its performance in connection with this Agreement. 
		

		
			6.2Products Warranties and Disclaimers.  Monro acknowledges and agrees that, except for any Proprietary Brand Product Warranty, the only warranty for any Direct Products sold by ATD under this Agreement is the warranty offered by the applicable manufacturer of the Direct Products to the end user consumer of such Direct Products.  In the event of any claim not covered by the manufacturer for any Products purchased from Monro by ATD prior to being sold by ATD to Monro, Monro shall indemnify and hold ATD harmless from any claims or losses resulting or arising therefrom. ATD shall not be responsible for any losses or indemnification obligation arising out of or resulting from any defect or alleged defect in the design, manufacture, instructions, warnings or labeling of any Products, nor liable for any type of alleged product liability claims.  ATD DOES NOT MAKE ANY WARRANTY WITH RESPECT TO ANY PRODUCTS SOLD OR DISTRIBUTED HEREUNDER, WHETHER EXPRESS OR IMPLIED AND, ATD SPECIFICALLY DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, USAGE OF TRADE, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT, WHETHER ARISING BY LAW, COURSE OF DEALING, COURSE OF PERFORMANCE, USAGE OF TRADE, OR OTHERWISE. MONRO ACKNOWLEDGES THAT IT HAS NOT RELIED UPON ANY REPRESENTATION OR WARRANTY MADE BY ATD, OR ANY OTHER PERSON ON ATD’S BEHALF, EXCEPT AS SPECIFICALLY PROVIDED IN THIS CONTRACT. Some states do not allow limitations on how long an implied warranty lasts, so the above limitation may not apply to Monro.
		

		
			6.3Compliance Warranties.  Each Party represents and warrants to the other Party that:
		

		
			6.3.1it is not debarred, suspended, excluded, or disqualified from doing business with the United States Government, or listed as the Excluded Parties List System maintained by the General Services Administration of the United States Government (found at  www.epls.gov);
		

		
			6.3.2(i) it is not under investigation by any Governmental Authority for, nor has it been charged with, or convicted of, money laundering, drug trafficking, terrorist-related activities, any crimes which in the United States would be predicate crimes to money laundering, or any violation of any anti-money laundering Laws, (ii) has not been assessed civil or criminal penalties under any anti-money laundering laws, and (iii) it has not had any of its funds seized or forfeited in any action under any anti-money laundering Laws;
		

		
			6.3.3it in compliance with all applicable domestic or foreign anti-corruption Laws, including those prohibiting the bribery of Government Officials, and will remain in compliance with all applicable Laws; that it will not authorize, offer or make payments directly or indirectly to any Government Official; and that no part of the payments received by it (whether compensation or otherwise) will be used for any purpose that could constitute a violation of any applicable Law;
		

		
			6.3.4it is not the subject of any sanctions administered or enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the United Nations Security Council (UNSC), the European Union (EU), Her Majesty’s Treasury (HMT), or other relevant sanctions authority (collectively, “Sanctions”), nor is ATD located, organized or resident in a country or territory that is the subject of Sanctions; it  has violated any Sanctions; and it will not fund or engage in any activities with any Person or in any country or territory, that, at the time of such funding or activity, is the subject of Sanctions, or in any other manner that will result in a violation by any Person of any Sanctions. 
		

		
			6.3.5Each Party shall promptly notify the other in writing in the event it breaches or has reason to believe that it will breach (through its or a third party’s act or omission, including receipt of notice by or on behalf of any Governmental Authority), any representation or warranty set forth in this Section 6.3.
		

		 

 

		
			6.3.6As used herein, “Governmental Authority” means any nation or government, any state or other political subdivision thereof, and any supra-national, governmental, federal, state, provincial, local governmental or municipal entity or authority and any self-regulatory organization (including, in each case, any branch, department or official thereof); and “Governmental Official” means (i) an executive, official, employee or agent of a Governmental Authority, (ii) a director, officer, employee or agent of a wholly or partially government-owned or -controlled company or business, (iii) a political party or official thereof, or candidate for political office, or (iv) an executive, official, employee or agent of a public international organization.
		

		
			7.Confidentiality.
		

		
			The Confidentiality Agreement entered into between the Parties dated as of [●] (the “Confidentiality Agreement”), shall govern the exchange of any Confidential Information (as such term is defined in the Confidentiality Agreement) for purposes of carrying out the intent of this Agreement and shall be considered a part of this Agreement as if set forth herein.  The confidentiality obligations of the Parties expire upon the later of the (a) term of the Confidentiality Agreement as set forth therein, and (b) two years from the end of the Term.
		

		
			8.Insurance.   
		

		
			8.1During the Term of this Agreement, each Party shall procure and maintain the insurance listed below covering liability arising out of its performance pursuant to the Agreement.  
		

		
			8.1.1Comprehensive general liability, including contractual liability coverage and products liability/completed operations coverages, with a combined single limit of $1,000,000 per occurrence and $2,000,000 aggregate;
		

		
			8.1.2Commercial auto liability insurance, covering liability arising out of owned, non-owned and hired vehicles, in the amount of at least $1,000,000 per accident; 
		

		
			8.1.3Workers’ compensation, with statutory limits as prescribed by the state(s) in which the services will take place, and Employers’ Liability coverage with limits of $1,000,000/$1,000,000/$1,000,000; and
		

		
			8.1.4Excess liability insurance, in the amount of at least $2,000,000 per occurrence over primary liability coverages required above.  Each Party agrees to produce a certificate of insurance evidencing its insurance coverage, when and as requested by the other Party.
		

		
			9.Term and Termination. 
		

		
			9.1Term.  Subject to earlier termination as provided in this Section 9 below or as otherwise mutually agreed upon in writing by the Parties, the term of the Agreement will expire five (5) years from the completion of the Earnout Period (the “Initial Term”) and will automatically renew for a twelve (12) month period and continue to renew for twelve (12) month periods thereafter (“Renewed Term” and collectively with the Initial Term, “Term”), unless either Party delivers written notice of its election to not renew this Agreement at least sixty (60) days prior to the end of the Initial Term or the respective Renewed Term.
		

		
			9.2Termination by Either Party.  Either Party may terminate this Agreement, on written notice to the other Party, upon the occurrence of an Event of Default on the part of the other Party.  For these purposes, an “Event of Default” by the other Party means either:  (i) a failure by the other Party to perform any of its material obligations under this Agreement, where such failure continues uncured for more than thirty (30) calendar days after receipt by such Party of written notice of such default (which notice will detail the circumstances of such failure); or (ii) the other Party dissolves, or becomes insolvent, makes an assignment for the benefit of creditors, files a bankruptcy petition, has an involuntary bankruptcy petition filed against it, a receiver or similar officer is appointed to take charge of all or part of the Party’s assets, or that Party discontinues all of its business for any reason.
		

		
			9.3ATD Termination.  ATD may terminate this Agreement immediately and upon written notice if: (i) Monro fails to pay any amount (other than amounts disputed by Monro in good faith, as provided in Section 5.4) 
		

		 

 

		when due under this Agreement and such failure continues for twenty (20) days after Monro’s receipt of written notice of nonpayment; (ii) Monro sells, leases or exchanges a material portion of Monro’s assets that material reduces the Purchase Requirement following such transaction, and/or (iii) Monro merges or consolidates with or into another entity, in a transaction where Monro is not the surviving entity or such other transaction occurs which materially reduces the Purchase Requirement without ATD’s prior written consent. 
		

		
			9.4Effect of Termination.  In the event of termination of this Agreement, all outstanding and undisputed payment obligations through the date of termination will continue to apply and be paid in accordance with the terms of the Agreement.  Monro shall remain liable for all amounts due for any open or unfulfilled Purchase Orders remaining upon termination of this Agreement and ATD shall use its commercially reasonable efforts to promptly fulfill any such remaining Purchase Orders. With respect to any Indirect Products, so long as Monro has not cancelled the Indirect Product Purchase Order with the respective Indirect Product Supplier, ATD will fulfill any such Indirect Products made through the date of such termination. If ATD is unable to fulfill any Purchase Orders within a reasonable time following termination of this Agreement, ATD shall promptly notify Monro in writing and the Parties shall terminate the respective Purchase Order without liability, at which point Monro shall no longer be responsible for any amounts due thereunder.  If this Agreement is terminated due to Monro’s default during the Earnout Period, the Parties will execute a Purchase Order whereby ATD shall permit Monro to purchase the remaining Products to meet the requirements with respect to the Earnout Period, pursuant to the terms of the Purchase Agreement, at which point, ATD shall pay Monro the remaining unpaid balance of the Earnout Amount.  
		

		
			10.Intellectual Property.
		

		
			All intellectual property, and rights, title and interests within the Proprietary Branded Products are solely owned by ATD and with respect to all other Products, owned solely by the applicable third party manufacturer.  Monro agrees not to reverse engineer or attempt to discover such intellectual property in any Products. Any designs, manufacturing drawings or other information submitted to Monro remain the exclusive property of ATD or the respective third party manufacturer. Monro shall not, without ATD’s prior written consent, copy such information or disclose such information to a third party. Monro understands and agrees that the sale of Products under this Agreement does not transfer to Monro, and ATD or the applicable third party manufacturer respectively, will retain, any and all intellectual property rights in any Products sold hereunder.
		

		
			11.Indemnification.
		

		
			11.1ATD shall indemnify and hold harmless Monro, its Affiliates and its and their respective directors, officers, and employees (collectively, “Monro Indemnitees”) from and against all liability, demands, claims, losses, costs, actions, judgments, fines, penalties, damages and expenses, including expert and attorneys’ fees, (collectively, “Liabilities”) incurred by Monro or its Affiliates arising out of any Claim against Monro Indemnitees, that arises from or  relates to: (a) ATD’s noncompliance or breach of any representation, warranty or obligation under the Agreement, (b) ATD’s violation of any Law with respect to ATD’s performance hereunder; (c) any breach of any Proprietary Brand Warranty issued by ATD to a customer or end user of any of Proprietary Brand Product;  or (d) any gross negligence or willful misconduct of ATD Indemnitees.  This indemnification obligation shall apply regardless of whether the Claim arises in tort, negligence, contract, warranty, strict liability or otherwise.
		

		
			11.2Monro shall indemnify and hold harmless ATD, its Affiliates and its and their respective directors, officers, and employees (collectively, “ATD Indemnitees”) from and against all Liabilities, incurred by ATD or its Affiliates arising out of any Claim against any ATD Indemnitees, that arises from or relates to: (a) Monro’s noncompliance or breach of any representation, warranty or obligation under the Agreement; (b) any breach of an express Product warranty issued by Monro to a customer or end user of any of the Products (other than any Proprietary Branded Product Warranty); (c) any gross negligence or willful misconduct of Monro Indemnitees; or (d) the resale of the Products by the Retail Locations.
		

		
			11.3The indemnitee shall give the indemnitor prompt written notice of any Claim for which indemnification is sought under this Section 11.  Failure to give notice will not diminish the indemnitor’s obligation under this Section 11.  When provided notice of any actual or potential Liabilities, indemnitor, at indemnitee’s option and at indemnitor’s expense, will undertake defense of such actual or potential Liabilities through counsel approved by indemnitee.  Indemnitor may select legal counsel to represent the Indemnitees or ATD Indemnitees (said counsel to 
		

		 

 

		be reasonably satisfactory to indemnitee) and otherwise control the defense of such Claim; provided, however, that indemnitor shall first obtain authorization from indemnitor before settlement is made of the actual or potential Liabilities if the terms of such settlement (a) require any action or inaction by indemnitee or any Affiliate thereof or (b) could materially adversely affect indemnitee, including any terms which admit the existence of a defect in Products or a failure of indemnitee  to fully and faithfully perform its obligations.  
		

		
			12.Limitation of Liability. 
		

		
			TO THE FULLEST EXTENT PERMITTED BY LAW AND EXCEPT FOR BREACHES OF CONFIDENTIALITY, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR THIRD PARTY INDEMNIFICATION CLAIMS UNDER SECTION 11 ABOVE: (A) EACH PARTY’S AND ITS AFFILIATES’ LIABILITY TO THE OTHER PARTY, IF ANY, FOR ANY LOSS OR DAMAGES IN ANY WAY ARISING OUT OF, RESULTING FROM OR IN ANY WAY CONNECTED WITH THIS CONTRACT SHALL NOT EXCEED THE PRICE ALLOCABLE TO THE PARTICULAR PRODUCTS UPON WHICH LIABILITY IS BASED, REGARDLESS OF WHETHER SUCH LIABILITY ARISES IN CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE OR STRICT LIABILITY) OR OTHERWISE, AND (B) IN NO EVENT SHALL A PARTY OR ITS AFFILIATES BE LIABLE FOR LOSS OF PROFITS OR REVENUE OR FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES. 
		

		
			13.Miscellaneous. 
		

		
			13.1Force Majeure.  Any delay or failure of either Party to perform its obligations shall be excused if it is caused by an extraordinary and unforeseeable event beyond the control of the nonperforming Party and without the nonperforming Party’s fault or negligence, such as acts of God, fires, floods, fuel shortages and/or changes in allocation of fuel, windstorms, explosions, riots, natural disasters, pandemics, epidemics, supply restrictions, wars and sabotage (each a “Force Majeure Event”).  Written notice of such Force Majeure Event, including the anticipated duration of the delay, must be promptly given by the nonperforming Party to the other Party.  During the period of any delay or failure to perform by ATD due to a Force Majeure Event, Monro, at its option, may purchase Products from other sources and reduce its schedules to ATD by such quantities, without liability to Monro, to the extent Monro is directly impacted by such Force Majeure Event.  If any Force Majeure Event does arise, occur, or result, the Party subject thereto shall use commercially reasonable efforts to minimize the consequences of such event and to overcome such event as soon as reasonably possible.  If either Party is unable to substantially perform its obligations under this Agreement as a result of a Force Majeure Event for more than 30 days, the other Party, at its option, may terminate this Agreement upon written notice to the other.
		

		
			13.2No Waiver.  A  waiver  by  either Party  of  any  right  or  remedy  shall  not  affect  any  rights  or  remedies subsequently arising under the same or similar clauses.  The failure of a Party to insist upon the performance of any term or condition of the Agreement, or to exercise any right hereunder shall not be construed as a waiver of the future performance of any such term or condition or the exercise in the future of any such right.
		

		
			13.3Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement.  The counterparts of this Agreement may be executed and delivered by electronic means by any of the Parties to any other Party and the receiving Party may rely on the receipt of such document so executed and delivered by electronic means as if the original had been received.
		

		
			13.4Relationship of Parties. ATD and Monro are independent contracting parties and nothing in this Agreement shall make either Party the agent or legal representative of the other for any purpose whatsoever, nor does it grant either Party any authority to assume or to create any obligation on behalf of or in the name of the other Party.
		

		
			13.5Assignment. Neither Party shall assign or transfer this Agreement or any of its rights, or delegate any of its duties or obligations, under this Agreement, whether voluntarily, by merger or operation of law, or otherwise, except with the prior consent of the other Party, except that this Agreement may be assigned by ATD, without the consent of Monro, to (i) any Affiliate of ATD, (ii) any entity with which or into which ATD may 
		

		 

 

		consolidate or merge, or (iii) any entity acquiring all or substantially all of the assets of ATD relating to this Agreement.  
		

		
			13.6Severability.  If any term(s) of this Agreement is invalid or unenforceable under any statute, regulation, ordinance, executive order or other Law, such term(s) shall be deemed reformed or deleted, as the case may be, but only to the extent necessary to comply with such statute, regulation, ordinance, order or rule, and the remaining provisions of this Agreement shall remain in full force and effect.
		

		
			13.7Notices. All notices, claims and other communications required or permitted under the Agreement shall be made in writing and sent by certified or registered mail, return receipt requested and proper postage prepaid to the following address (or such other address as is provided by the Parties) and shall be effective only upon receipt by the other Party in the form set forth in this Section:
		

		
			If to Monro:
		

		
			Attn: General Counsel
		

		
			Monro, Inc.
		

		
			200 Holleder Parkway 
		

		
			Rochester, NY 14615
		

		
			If to ATD:  
		

		
			Attn: Keith Calcagno
		

		
			American Tire Distributors, Inc.
		

		
			12200 Herbert Wayne Court
		

		
			Huntersville, NC 28078
		

		
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			With a Copy to: 
		

		
			Attn: Christian Chad Warpula P.C.
		

		
			Troutman Pepper Hamilton Sanders LLP
		

		
			301 S. College Street, Suite 3400
		

		
			Charlotte, NC 28202
		

		
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			A Parties failure to provide any notice, claim or other communication to the other Party in the manner and within the time periods specified in this Agreement shall constitute a waiver of any and all rights and remedies that otherwise would have been available to the Party upon making such notice, claim or other communication.
		

		
			13.8Governing Law; Consent to Jurisdiction.  The construction, interpretation and performance of the Agreement and all transactions thereunder shall be governed by the Laws of the State of Delaware, without regard to principles of conflicts of Law.  The Parties consent to the exclusive jurisdiction of the appropriate state or federal; court located in the State of Delaware, for any legal or equitable action or proceeding arising out of, or in connection with, this Agreement.  The Parties specifically waive the right to a jury and any and all objections to venue in such courts.  
		

		
			13.9Waiver of Jury Trial. Each Party acknowledges and agrees that any controversy that may arise under this Agreement, including any exhibits, schedules, attachments, and appendices attached to this Agreement, is likely to involve complicated and difficult issues and, therefore, each such Party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement. 
		

		
			13.10Review by Counsel. The Parties to this Agreement acknowledge and agree that: (i) each Party and the Party’s counsel has reviewed and negotiated, or has had the opportunity to review and negotiate, the terms and provisions of this Agreement and has contributed to its review and revision; (ii) any rule of construction to the effect that any ambiguities are resolved against the drafting Party shall not be used to interpret this Agreement; and (iii) the 
		

		 

 

		terms and provisions of this Agreement shall be construed fairly as to all Parties to this Agreement and not in favor of or against any Party, regardless of which Party was generally responsible for the preparation of this Agreement.
		

		
			13.11No Public Announcements. Neither Party shall make any statement (whether oral or in writing) in any press release, external advertising, marketing or promotion materials regarding the other Party or its business unless: (a) it has received the express written consent of the other Party; or (b) it is required to do so by Law or under the rules of any stock exchange to which it is subject.
		

		
			13.12No Third-Party Beneficiaries. Unless otherwise expressly provided for herein, no provisions of the Agreement are intended or shall be construed to confer upon or give to any Person other than the ATD and Monro any rights, remedies or other benefits under or by reason thereof; provided, that the Indemnitees and ATD Indemnitees shall be third party beneficiaries with rights of enforcement hereunder. 
		

		
			13.13Fulfillment by ATD Affiliates.  Monro acknowledges that ATD, through its Affiliates offers expanded manufacturing capability, and ATD may in its sole discretion manufacture, supply or deliver from any location or source, including any of its Affiliates, any Products.  
		

		
			13.14Survival. The obligations, representations, warranties, and covenants of the Parties under this Agreement that by their nature are intended or reasonably expected to survive the expiration or termination of this Agreement, including the obligations, representations, warranties, and covenants of the Parties as set forth in Sections 6 (Warranties), 7 (Confidentiality), 10 (Intellectual Property), 11 (Indemnification), 12 (Limitation of Liability) and this Section 13 shall survive the expiration or termination of the Agreement created hereunder.
		

		
			13.15Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior oral or written representations or agreements by the Parties with respect to the subject matter hereof.  No subsequent terms, conditions, understandings, or agreements purporting to modify this Agreement will be binding unless in writing and signed by both Parties.  In the event of a conflict of terms related to the subject matter hereunder, this Agreement shall prevail over all other agreements, including terms and conditions accompanying a Purchase Order issued by Monro; provided, that the terms of the Exhibits hereto shall prevail over the terms of this Agreement, and with respect to all matters relating to the Earnout Payments, the terms of the Purchase Agreement shall control. 
		

		
			13.16Interpretation.  The words “include,” “includes” and “including” shall not be limiting and shall be deemed to be followed by the words “without limitation,” the word “or” is not exclusive, and the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole unless the context requires otherwise.  Unless the context otherwise requires, references herein: (i) to Sections shall mean the Sections of this Agreement; (ii) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (iii) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder.  Section headings are for are included for convenience of reference only and shall be ignored in the construction or interpretation hereof.  The Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted.
		

		
			[SIGNATURE PAGE FOLLOWS]
		

		

		

		 

 

		IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the Effective Date.  
		

		
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			AMERICAN TIRE DISTRIBUTORS, INC.
		

		
			/s/ Bill Williams    
		

		
			Bill Williams
		

		
			Chief Financial Officer
		

		
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			﻿
		

		
			MONRO INC.
		

		
			/s/ Jack Heisman
		

		
			Jack Heisman
		

		
			Vice President – Business Development and Real Estate

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