Document:

U.K. Savings Incentive Plan

 Exhibit 10.18 
  

 SARA LEE CORPORATION 
  
 and 
  
 SARA LEE COURTAULDS LEGWARE 
  

and 
  
 DOW EGBERTS COFFEE SYSTEMS LIMITED 
  
 and 
  
 DOW EGBERTS UK
LIMITED 
  
 and 
  
 SARA LEE HOUSEHOLD & BODY CARE UK 
  
 and 
  
 PLAYTEX LIMITED 
  
 and 
  
 COURTAULDS LIMITED 
  
 and 
  
 CAPITA IRG
TRUSTEES LIMITED 
  

  
 TRUST DEED AND RULES 
  
 of the 
 SARA LEE UK 

SHARE INCENTIVE PLAN 
  
 August 2002—Final Version 
  

  
 Approved under Inland Revenue Reference
A1597 
 (As amended by board resolution dated 12 June 2003) 

 THE SARA LEE UK 
 SHARE INCENTIVE PLAN 
  

	 1.
	  	 PURPOSE

	 2.
	  	 STATUS

	 3.
	  	 DECLARATION OF TRUST

	 4.
	  	 NUMBER OF TRUSTEES

	 5.
	  	 INFORMATION

	 6.
	  	 RESIDENCE OF TRUSTEES

	 7.
	  	 CHANGE OF TRUSTEES

	 8.
	  	 INVESTMENT AND DEALING WITH TRUST ASSETS

	 9.
	  	 LOANS TO TRUSTEES

	 10.
	  	 SHARES FROM QUALIFYING SHARE OWNERSHIP TRUSTS

	 11.
	  	 TRUSTEES’ OBLIGATIONS UNDER THE PLAN

	 12.
	  	 POWER OF TRUSTEES TO RAISE FUNDS TO SUBSCRIBE FOR A RIGHTS ISSUE

	 13.
	  	 POWER TO AGREE MARKET VALUE OF SHARES

	 14.
	  	 PERSONAL INTEREST OF TRUSTEES

	 15.
	  	 TRUSTEES’ MEETINGS

	 16.
	  	 SUBSIDIARY COMPANIES

	 17.
	  	 EXPENSES OF PLAN

	 18.
	  	 TRUSTEES’ LIABILITY, INDEMNITY AND FEES

	 19.
	  	 COVENANT BY THE PARTICIPATING COMPANIES

	 20.
	  	 ACCEPTANCE OF GIFTS

	 21.
	  	 TRUSTEES’ LIEN

	 22.
	  	 AMENDMENTS TO THE PLAN

	 23.
	  	 TERMINATION OF THE PLAN

	 24.
	  	 NOTICES

	 25.
	  	 PROPER LAW

 THIS DEED made on August 2002 
  
 BETWEEN 
  
 SARA LEE CORPORATION whose registered office is situated at Three First National Plaza, Chicago, IL 60602-4260, USA (“the Company”) 
  
 and 
  

SARA LEE COURTAULDS LEGWARE, whose registered office is situated at Unwin Road, Sutton in Ashfield, Nottinghamshire NG17 4JJ and DOW EGBERTS COFFEE SYSTEMS
LIMITED whose registered office is situated at Dow Egberts House, Manor Way, Borehamwood, Herts WD6 1QQ and DOW EGBERTS UK LIMITED and SARA LEE HOUSEHOLD & BODY CARE UK and PLAYTEX LIMITED and COURTAULDS TEXTILES
(HOLDINGS) LIMITED whose registered offices are situated at 225 Bath Road, Slough, Berks SL1 4AU (together with the Company called “the Participating Companies”) 
  
 and 
  
 CAPITA IRG TRUSTEES LIMITED whose registered office is situated at Bourne House, 34 Beckenham Road, Beckenham, Kent BR3 4TU(“the Trustees”). 

 

	1.	 	PURPOSE 

  
 The purpose of this Deed is to establish a trust for an employee share ownership plan which satisfies Schedule 8 to the Finance Act 2000. 
  

	2.	 	STATUS 

  
 The Plan consists of this Deed, the Rules and the Appendix. The definitions in the Rules apply to this Deed. The Committee shall from time to time
determine which of parts A to C of the Rules shall have effect. 
  

	3.	 	DECLARATION OF TRUST 

  

	3.1	 	The Participating Companies and the Trustees have agreed that all the Shares and other assets which are issued to or transferred to the Trustees are to be held on the trusts
declared by this Deed, and subject to the terms of the Rules. When Shares or assets are transferred to the Trustees by the Participating Companies with the intention of being held as part of the Plan they shall be held upon the trusts and provisions
of this Deed and the Rules. 

  

	3.2	 	The Trustees shall hold the Trust Fund upon the following trusts namely: 

  

	 	(a)	 	as to Shares which have not been awarded to Participants (“Unawarded Shares”) upon trust during the Trust Period to allocate those Shares in accordance with the terms of
this Deed and the Rules; 

  

	 	(b)	 	as to Shares which have been awarded to a Participant (“Plan Shares”) upon trust for the benefit of that Participant on the terms and conditions set out in the Rules;

  

	 	(c)	 	as to Partnership Share Money upon trust to purchase Shares for the benefit of the contributing Qualifying Employee in accordance with the Rules; and 

  

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	 	(d)	 	as to other assets (“Surplus Assets”) upon trust to use them to purchase further Shares to be held on the trusts declared in (a) above, at such time during the Trust
Period and on such terms as the Trustees in their absolute discretion think fit. 

  

	3.3	 	The income of Unawarded Shares and Surplus Assets shall be accumulated by the Trustees and added to, and held upon the trusts applying to, Surplus Assets. 

 

	3.4	 	The income of Plan Shares and Partnership Share Money shall be dealt with in accordance with the Rules. 

  

	3.5	 	The perpetuity period and the Trust Period in respect of the trusts and powers declared by this Deed and the Rules shall be the period of 80 years from the date of this Deed.

  

	4.	 	NUMBER OF TRUSTEES 

  
 Unless a corporate Trustee is appointed, there shall always be at least two Trustees. Where there is no corporate Trustee, and the number of Trustees
falls below two, the continuing Trustee has the power to act only to achieve the appointment of a new Trustee. 
  

	5.	 	INFORMATION 

  

	5.1	 	The Trustees shall be entitled to rely without further enquiry on all information supplied to them by the Participating Companies with regard to their duties as Trustees and in
particular, but without prejudice to the generality of the foregoing, any notice given by a Participating Company to the Trustees in respect of the eligibility of any person to become or remain a Participant shall be conclusive in favour of the
Trustees. 

  

	5.2	 	Except as otherwise provided, the Trustees may in their discretion agree with the Committee, the Company or any of the Participating Companies matters relating to the operation and
administration of the Trust as they may consider advisable in the interest of the Trust and so that no person claiming an interest under this Trust shall be entitled to question the legality or correctness of any arrangement or agreement made
between the Committee, the Company or any of the Participating Companies and the Trustees in relation to such operation or administration. 

  

	5.3	 	The decision of the Committee in any dispute affecting Participants or Participating Companies shall be final and conclusive. 

  

	5.4	 	The Trustees may employ on such terms as the Committee may agree as to remuneration, any agent or agents to transact all or any business of whatsoever nature required to be done in
the proper administration of the Trust. 

  

	6.	 	RESIDENCE OF TRUSTEES 

  
 Every Trustee shall be resident in the United Kingdom. The Committee shall immediately remove any Trustee who ceases to be so resident and, if necessary,
appoint a replacement. 
  

	7.	 	CHANGE OF TRUSTEES 

  
 The Company has the power to appoint or remove any Trustee for any reason. The change of Trustee shall be effected by deed and shall take effect from the
date that written notice of such removal is delivered to the Trustees, or such later date as the Committee and the Trustees shall agree. Any Trustee may resign on three months notice given in writing to the Company, provided that there will be at
least two Trustees or a corporate Trustee immediately after the retirement. 
  

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	8.	 	INVESTMENT AND DEALING WITH TRUST ASSETS 

  

	8.1	 	Save as otherwise provided for by the Plan the Trustees shall not sell or otherwise dispose of Plan Shares. 

  

	8.2	 	The Trustees shall obey any directions given by a Participant in accordance with the Rules in relation to his Plan Shares and any rights and income relating to those Shares. In the
absence of any such direction, or provision by the Plan, the Trustees shall take no action. If no directions are received from Participants in relation to the action they wish the Trustees to take in voting their Plan Shares, those Shares will not
be voted. 

  

	8.3	 	The Participating Companies shall, as soon as practicable after deduction from Salary, pass the Partnership Share Money to the Trustees who will put the money into an account with:

  

	 	(a)	 	an institution authorised under the Banking Act 1987; 

  

	 	(b)	 	a building society; or 

  

	 	(c)	 	a relevant European institution, 

  
 until it is either used to acquire Partnership Shares on the Acquisition Date, or, in accordance with the Plan, returned to the individual from whose
Salary the Partnership Share Money has been deducted. The Trustees shall pass on any interest arising on this invested money to the individual from whose Salary the Partnership Share Money has been deducted at least once in each calendar year. The
Trustees are, however, not obliged to keep monies in an interest bearing account. 
  

	8.4	 	The Trustees may either retain or sell Unawarded Shares at their absolute discretion. The proceeds of any sale of Unawarded Shares shall form part of Surplus Assets.

  

	8.5	 	The Trustees shall have all the powers of investment of a beneficial owner in relation to Surplus Assets. 

  

	8.6	 	The Trustees shall not be under any liability to the Participating Companies or to current or former Qualifying Employees by reason of a failure to diversify investments, which
results from the retention of Plan Shares or Unawarded Shares. 

  

	8.7	 	The Trustees are not required to interfere in the management or conduct of the business of the Company regardless of the size of the Trustees’ holding of Shares, and will not
be obliged to seek information about the affairs of the Company and may leave the conduct of the Company’s business wholly to the directors or management of the Company. 

  

	8.8	 	The Trustees may delegate powers, duties or discretions to any persons and on any terms. No delegation made under this Clause shall divest the Trustees of their responsibilities
under this Deed or under the Schedule. 

  

	8.9	 	The Trustees may allow any Shares to be registered in the name of an appointed nominee or custodian provided that such Shares shall be registered in a designated account. Such
registration shall not divest the Trustees of their responsibilities under this Deed or the Schedule. 

  

	8.10	 	The Trustees may at any time, and shall if the Committee so decides, revoke any delegation made under this Clause or require any Plan assets held by another person to be returned to
the Trustees, or both. 

  

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	9.	 	LOANS TO TRUSTEES 

  
 The Trustees shall have the power to borrow money, with the written consent of the Company, for the purpose of: 
  

	 	(a)	 	acquiring Shares; and 

  

	 	(b)	 	paying any other expenses properly incurred by the Trustees in administering the Plan. 

  
 Where a loan is to be provided by the Company or an Associated Company then it shall be made pursuant to a written loan
agreement. 
  

	10.	 	SHARES FROM QUALIFYING SHARE OWNERSHIP TRUSTS 

  
 Where Shares are transferred to the Trustees in accordance with paragraph 76 of the Schedule, they shall award such Shares only as Matching Shares, and in
priority to other available Shares. 
  

	11.	 	TRUSTEES’ OBLIGATIONS UNDER THE PLAN 

  
 Notice of Award of Matching Shares 
  

	11.1	 	As soon as practicable after Matching Shares have been awarded to a Participant, the Trustees shall give the Participant a notice stating: 

  

	 	(a)	 	the number and description of those Shares; 

  

	 	(b)	 	their Initial Market Value on the date of Award; and 

  

	 	(c)	 	the Holding Period applicable to them. 

  
 Notice of Award of Partnership Shares 
  

	11.2	 	As soon as practicable after any Partnership Shares have been acquired for a Participant and at least once in every six months, the Trustees shall give the Participant a notice
stating: 

  

	 	(a)	 	the number and description of those Shares; 

  

	 	(b)	 	the amount of money applied by the Trustees in acquiring those Shares on behalf of the Participant; and 

  

	 	(c)	 	the Market Value at the Acquisition Date. 

  
 Notice of acquisition of Dividend Shares 
  

	11.3	 	As soon as practicable after Dividend Shares have been acquired on behalf of a Participant, the Trustees shall give the Participant a notice stating: 

  

	 	(a)	 	the number and description of those Shares; 

  

	 	(b)	 	their Market Value on the Acquisition Date; 

  

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	 	(c)	 	the Holding Period applicable to them; and 

  

	 	(d)	 	any amount not reinvested and carried forward for acquisition of further Dividend Shares. 

  
 Notice of any foreign tax deducted before dividend paid 
  

	11.4	 	Where any foreign cash dividend is received in respect of Plan Shares held on behalf of a Participant, the Trustees shall give the Participant notice of the amount of any foreign
tax deducted from the dividend before it was paid. 

  
 Restrictions during the Holding Period 
  

	11.5	 	During the Holding Period the Trustees shall not dispose of any Matching Shares or Dividend Shares (whether by transfer to the employee or otherwise) except as allowed by the
following paragraphs of the Schedule: 

  

	 	(a)	 	paragraph 32 (power of Trustees to accept general offers); 

  

	 	(b)	 	paragraph 72 (power of Trustees to raise funds to subscribe for rights issue); 

  

	 	(c)	 	paragraph 73 (meeting PAYE obligations); and 

  

	 	(d)	 	paragraph 121(5) (termination of plan: early removal of shares with Participant’s consent). 

  
 PAYE and other tax liabilities 
  

	11.6	 	The Trustees may dispose of a Participant’s Shares or accept a sum from the Participant in order to meet any PAYE liability in the circumstances provided in paragraph 95 of the
Schedule (PAYE: shares ceasing to be subject to the plan) and any employee’s NICs liability. 

  

	11.7	 	Where the Trustees receive a sum of money which constitutes a Capital Receipt in respect of which a Participant is chargeable to income tax under Schedule E, the Trustees shall pay
to the employer a sum equal to that on which income tax is so payable. 

  

	11.8	 	The Trustees shall maintain the records necessary to enable them to carry out their PAYE and NICs obligations, and the PAYE and employee’s NICs obligations of the employer
company so far as they relate to the Plan. 

  

	11.9	 	Where the Participant becomes liable to income tax under Schedule E, Case V of Schedule D, or Schedule F, the Trustees shall inform the Participant of any facts which are relevant
to determining that liability. 

  
 Money’s worth received by
Trustees 
  

	11.10	 	The Trustees shall pay over to the Participant as soon as is practicable, any money or money’s worth received by them in respect of or by reference to any shares, other than
new shares within paragraph 115 of the Schedule (company reconstructions). 

  

	 	This	 	is subject to: 

  

	 	(a)	 	the provisions of Part VII of the Schedule (dividend reinvestment); 

  

 5 

	 	(b)	 	the Trustees obligations under paragraphs 95 and 96 of the Schedule (PAYE: obligations to make payments to employer); and 

  

	 	(c)	 	the Trustees’ PAYE obligations. 

  
 General offers 
  

	11.11	 	If any offer, compromise, arrangement or scheme is made which affects the Matching Shares the Trustees shall notify Participants. Each Participant may direct how the Trustees shall
act in relation to that Participant’s Plan Shares. In the absence of any direction, the Trustees shall take no action. 

  

	12.	 	POWER OF TRUSTEES TO RAISE FUNDS TO SUBSCRIBE FOR A RIGHTS ISSUE 

  
 If instructed by a Participant in respect of his Plan Shares the Trustees may dispose of some of the rights under a rights issue arising from those Shares
to obtain enough funds to exercise the remaining rights. The rights referred to are the rights to buy additional shares or rights in the same company. 
  

	13.	 	POWER TO AGREE MARKET VALUE OF SHARES 

  
 Where the Market Value of Shares is to be determined for the purposes of the Schedule, the Trustees may agree with the Inland Revenue that it shall be
determined by reference to such date or dates, or to an average of the values on a number of dates, as specified in the agreement. 
  

	14.	 	PERSONAL INTEREST OF TRUSTEES 

  
 Trustees, and directors, officers or employees of a corporate Trustee, shall not be liable to account for any benefit accruing to them by virtue of their:

  

	 	(a)	 	participation in the Plan as a Qualifying Employee; 

  

	 	(b)	 	ownership, in a beneficial or fiduciary capacity, of any shares or other securities in any Participating Company; 

  

	 	(c)	 	being a director or employee of any Participating Company, being a creditor, or being in any other contractual relationship with any such company. 

  

	15.	 	TRUSTEES’ MEETINGS 

  
 If and so long as there is more than one Trustee, the Trustees shall hold meetings as often as is necessary for the administration of the Plan. There
shall be at least two Trustees present at a meeting and the Trustees shall give due notice to all the Trustees of such a meeting. Decisions made at such a meeting by a majority of the Trustees present shall be binding on all the Trustees. A written
resolution signed by all the Trustees shall have the same effect as a resolution passed at a meeting. 
  

	16.	 	SUBSIDIARY COMPANIES 

  

	16.1	 	Any Subsidiary in addition to those Subsidiaries which are parties to this Deed may with the agreement of the Committee become a party to this Deed and the Plan by executing a deed
of adherence agreeing to be bound by the Deed and Rules. 

  

 6 

	16.2	 	A Participating Company that ceases to be a Subsidiary shall cease to be a Participating Company. 

  

	17.	 	EXPENSES OF PLAN 

  
 The Participating Companies shall meet the costs of the preparation and administration of this Plan. 
  

	18.	 	TRUSTEES’ LIABILITY, INDEMNITY AND FEES 

  

	18.1	 	The Participating Companies shall jointly and severally indemnify each of the Trustees, and the directors, officers and employees of a corporate Trustee, against any expenses and
liabilities which are incurred through acting as a Trustee of the Plan and which cannot be recovered from the Trust Fund and in respect of indemnities conferred upon the Trustees by law and the Trustee Act 1925. This does not apply to expenses and
liabilities which are incurred through fraud, wilful wrongdoing or negligence or are covered by insurance under Clause 18.3. 

  

	18.2	 	No Trustee shall be personally liable for any breach of trust (other than through fraud, wilful wrongdoing or negligence) over and above the extent to which the Trustee, and the
directors, officers and employees of a corporate Trustee, are indemnified by the Participating Companies in accordance with Clause 18.1 above. 

  

	18.3	 	A non-remunerated Trustee may insure the Plan against any loss caused by him or any of his employees, officers, agents or delegates. A non-remunerated Trustee may also insure
himself and any of these persons against liability for breach of trust not involving fraud or wilful wrongdoing or negligence of the Trustee or the person concerned. 

  

	18.4	 	A Trustee who carries on a profession or business may charge for services rendered on a basis agreed with the Participating Companies. A firm or company in which a Trustee is
interested or by which he is employed may also charge for services rendered on this basis and may, unless otherwise agreed, act in accordance with its general terms and conditions from time to time in force. 

  

	19.	 	COVENANT BY THE PARTICIPATING COMPANIES 

  
 The Participating Companies hereby jointly and severally covenant with the Trustees that they shall pay to the Trustees all sums which they are required
to pay under the Rules and shall at all times comply with the Rules. 
  

	20.	 	ACCEPTANCE OF GIFTS 

  
 The Trustees may accept gifts of Shares and other assets which shall be held upon the trusts declared by Clause 3.1 or 3.2 as the case may be. 

 

	21.	 	TRUSTEES’ LIEN 

  
 The Trustees’ lien over the Trust Fund in respect of liabilities incurred by them in the performance of their duties (including the repayment of
borrowed money and tax liabilities) shall be enforceable subject to the following restrictions: 
  

	 	(a)	 	the Trustees shall not be entitled to resort to Partnership Share Money for the satisfaction of any of their liabilities; and 

  

 7 

	 	(b)	 	the Trustees shall not be entitled to resort to Plan Shares for the satisfaction of their liabilities except to the extent that this is permitted by the Plan.

  

	22.	 	AMENDMENTS TO THE PLAN 

  
 The Committee may, with the Trustees’ written consent, from time to time amend the Plan provided that: 
  

	 	(a)	 	no amendment which would adversely prejudice to a material extent the rights attaching to any Plan Shares awarded to or acquired by Participants may be made nor may any alteration
be made giving to Participating Companies a beneficial interest in Plan Shares; and 

  

	 	(b)	 	if the Plan is approved by the Inland Revenue at the time of an amendment or addition, any amendment or addition to a “key feature” (as defined in paragraph 118(3)(a) of
the Schedule) of the Plan shall not have effect unless and until the written approval of the Inland Revenue has been obtained in accordance with paragraph 4 of the Schedule; and 

  

	 	(c)	 	any amendment to the Deed shall be made by supplemental deed; and 

  

	 	(d)	 	any amendment to the Rules may be made by supplemental deed or resolution of the Committee. 

  

	23.	 	TERMINATION OF THE PLAN 

  

	23.1	 	The Plan shall terminate: 

  

	 	(a)	 	in accordance with a Plan Termination Notice issued by the Committee acting on behalf of the Company to the Trustees under paragraph 120 of the Schedule; or

  

	 	(b)	 	if earlier, on the expiry of the Trust Period. 

  

	23.2	 	The Committee shall immediately upon executing a Plan Termination Notice provide a copy of the notice to the Trustees, the Inland Revenue and each individual for whom the Trustees
hold Plan Shares or who has entered into a Partnership Share Agreement which was in force immediately before the Plan Termination Notice was issued. 

  

	23.3	 	Upon the issue of a Plan Termination Notice or upon the expiry of the Trust Period paragraph 121 of the Schedule shall have effect. 

  

	23.4	 	Any Shares or other assets which remain undisposed of after the requirements of paragraph 121 of the Schedule have been complied with shall be held by the Trustees upon trust to pay
or apply them to or for the benefit of the Participating Companies as at the termination date in such proportion, having regard to their respective contributions, as the Trustees shall in their absolute discretion think appropriate.

  

	24.	 	NOTICES 

  
 Each advice, request, or other communication to be given or made under the Plan shall be in writing and delivered or sent to the relevant party at its
address as notified to the other party. To the extent agreed by the Company and the Trustees, communications between the parties to this Deed and to Participants may also be by electronic means. 
  

	25.	 	PROPER LAW 

  
 This Deed and the Rules of the Plan shall be governed by and construed in accordance with the laws of England and Wales. 
  

 8 

 IN WITNESS whereof this deed has been executed and delivered the day and year first above written. 
  

	 Executed as a Deed on behalf of

	SARA LEE CORPORATION
	 by:

	 Director .../s/ {signature}

	
	 Director/Secretary ....../s/ {signature}

	
	 Executed as a Deed on behalf of

	SARA LEE COURTAULDS LEGWARE
	 by:

	
	 Director ...../s/ {signature}

	
	 Director/Secretary ....../s/ {signature}

	
	 Executed as a Deed on behalf of

	DOW EGBERTS COFFEE SYSTEMS LIMITED
	 by:

	
	 Director ....../s/ {signature}

	
	 Director/Secretary ....../s/ {signature}

	
	 Executed as a Deed on behalf of

	DOW EGBERTS UK LIMITED
	 by:

	
	 Director ....../s/ {signature}

	
	 Director/Secretary ....../s/ {signature}

	
	 Executed as a Deed on behalf of

	SARA LEE HOUSEHOLD & BODY CARE UK
	 by:

	
	 Director ........./s/ {signature}

	
	 Director/Secretary ....../s/ {signature}

  

 9 

	 Executed as a Deed on behalf of

	PLAYTEX LIMITED
	 by:

	
	 Director ........./s/ {signature}

	
	 Director/Secretary ....../s/ {signature}

	
	 Executed as a Deed on behalf of

	COURTAULDS TEXTILES (HOLDINGS) LIMITED
	 by:

	
	 Director ........./s/ {signature}

	
	 Director/Secretary ....../s/ {signature}

	
	 Executed as a Deed on behalf of

	CAPITA IRG TRUSTEES LIMITED
	 by:

	
	 Authorised Signatory ....../s/ {signature}

	
	 Authorised Signatory ....../s/ {signature}

  

 10 

 RULES of the SARA LEE UK SHARE INCENTIVE PLAN 
  

	1.	 	DEFINITIONS 

  

	2.	 	PURPOSE OF THE PLAN 

  

	3.	 	ELIGIBILITY OF INDIVIDUALS 

  

	4.	 	PARTICIPATION ON SAME TERMS 

  

	5.	 	PARTNERSHIP SHARES (PART A) 

  

	6.	 	MATCHING SHARES (PART B) 

  

	7.	 	DIVIDEND SHARES (PART C) 

  

	8.	 	ACQUISITION OF SHARES 

  

	9.	 	COMPANY RECONSTRUCTIONS 

  

	10.	 	RIGHTS ISSUES 

  

	11.	 	LEAVERS 

 RULES of the SARA LEE UK SHARE INCENTIVE PLAN 
  

	1.	 	DEFINITIONS 

  
 1.1 The following words and expressions have the following meanings: 
  

		
	 “Accumulation Period”
	  	in relation to Partnership Shares, the period during which the Trustees accumulate a Qualifying Employee’s Partnership Share Money before acquiring Partnership Shares or
repaying it to the employee
		
	 “Acquisition Date”
	  	(a) in relation to Partnership Shares, where there is no Accumulation Period, the meaning given by paragraph 40(2) of the Schedule;
		
	 	  	(b) in relation to Partnership Shares, where there is an Accumulation Period, the meaning given by paragraph 42(3) of the Schedule; and
		
	 	  	(c) in relation to Dividend Shares, the meaning given by paragraph 56(3) of the Schedule
		
	 “Associated Company”
	  	the meaning given by paragraph 126 of the Schedule
		
	 “Award Date”
	  	in relation to Matching Shares, the date on which such Shares are awarded
		
	 “Award”
	  	(a) in relation to Matching Shares, the appropriation of Matching Shares in accordance with the Plan; and
		
	 	  	(b) in relation to Partnership Shares, the acquisition of Partnership Shares on behalf of Qualifying Employees in accordance with the Plan
		
	 “Capital Receipt”
	  	the same meaning as in paragraph 79 of the Schedule
		
	 “Close Company”
	  	the same meaning as in section 414 of ICTA 1988
		
	 “Committee”
	  	the compensation committee appointed and authorised by the board of directors of the Company to operate the Plan
		
	 “Company”
	  	Sara Lee Corporation
		
	 “Connected Company”
	  	the same meaning as in paragraph 16(4) of the Schedule
		
	 “Control”
	  	the same meaning as in section 840 of ICTA 1988
		
	 “Dealing Day”
	  	a day on which the Stock Exchange is open for the transaction of business
		
	 “Deed”
	  	the trust deed constituting the Plan with any subsequent amendment thereto

  

 2 

		
	 “Dividend Shares”
	  	Shares acquired on behalf of a Participant from reinvestment of dividends under Part C of the Plan and which are subject to the Plan
		
	 “Exchange Rate”
	  	For Partnership Shares, unless otherwise agreed with the UK Inland Revenue, the United States dollar exchange rate for pounds sterling for the purposes of calculating the Market
Value shall be the 10:00 AM Fixing Rate published by the US Federal Reserve Bank on the Acquisition Date. For Dividend Shares, unless otherwise agreed with the Inland Revenue, the market exchange rate in effect at the time the Trustees do the deal
to acquire the Dividend Shares.
		
	 “Group Plan”
	  	the Plan as established by the Company and extending to its Subsidiaries which are Participating Companies
		
	 “Holding Period”
	  	(a in relation to Matching Shares, the period specified by the Committee as mentioned in Rule 6.5; and
		
	 	  	(b in relation to Dividend Shares, the period of 3 years from the Acquisition Date
		
	 “ICTA 1988”
	  	the Income and Corporation Taxes Act 1988
		
	 “Initial Market Value”
	  	the Market Value of a Share on an Award Date. Where the Share is subject to a restriction or risk of forfeiture, the Market Value shall be determined without reference to that
restriction or risk
		
	 “Market Value”
	  	(a) where the Shares are listed on the Stock Exchange
		
	 	  	(i) if, and only if, all the newly issued Shares for Award on an Acquisition Date or an Award Date are awarded to all Participants on the same day;
	 	  	or
		
	 	  	(ii) if Awards are to be allocated at the Share price determined at the beginning of an Accumulation Period
		
	 	  	the sterling equivalent (at the Exchange Rate) of the average between the highest and lowest quoted prices at which bargains were recorded in the Shares for the relevant date on
the New York Stock Exchange Composite Transactions Tape (“Composite Tape”)
		
	 	  	(b) on any day where (a) above does not apply, the market value of a Share determined in accordance with the provisions of Part VIII of the Taxation of Chargeable Gains Act 1992
and agreed for the purposes of the Plan with Inland Revenue Shares Valuation on or before that day or, if later, before the Award is made
		
	 “Matching Shares”
	  	Shares awarded under Part B of the Plan and which are subject to the Plan

  

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	 “Material Interest”
	  	the same meaning as in paragraph 15 of the Schedule
		
	 “NICs”
	  	National Insurance Contributions
		
	 “Participant”
	  	an individual who has received under the Plan an Award of Matching Shares or Partnership Shares, or on whose behalf Dividend Shares have been acquired
		
	 “Participating Company”
	  	the Company and such of its Subsidiaries as are parties to this Deed or have executed deeds of adherence to the Plan under Clause 16 of the Trust Deed
		
	 “Partnership Share Agreement”
	  	an agreement in the terms set out in the Appendix
(or in such other form as is acceptable to the Inland Revenue)
		
	 “Partnership Shares”
	  	Shares awarded under Part A of the Plan and which are subject to the Plan
		
	 “Partnership Share Money”
	  	money deducted from a Qualifying Employee’s Salary pursuant to a Partnership Share Agreement and held by the Trustees to acquire Partnership Shares or to be returned to such
a person
		
	 “Plan”
	  	this plan, being the Sara Lee UK Share Incentive Plan
		
	 “Plan Shares”
	  	(a) Matching Shares or Partnership Shares awarded to Participants;
		
	 	  	(b) Dividend Shares acquired on behalf of Participants; and
		
	 	  	(c) shares in relation to which paragraph 115(5) (company reconstructions: new shares) of the Schedule applies
		
	 	  	that remain subject to the Plan
		
	 “Plan Termination Notice”
	  	a notice issued under paragraph 120 of the Schedule
		
	 “Profit Sharing Scheme”
	  	a profit sharing scheme approved by the Board of Inland Revenue under Schedule 9 of ICTA 1988
		
	 “Qualifying Company”
	  	the same meaning as in paragraph 14 of the Schedule
		
	 “Qualifying Corporate Bond”
	  	the same meaning as in section 117 of the Taxation of Chargeable Gains Act 1992
		
	 “Qualifying Employee”
	  	an employee who must be invited to participate in an award in accordance with Rule 3.5 and any employee who the Committee has invited in accordance with Rule 3.6
		
	 “Qualifying Period”
	  	a period as the Committee shall in their absolute discretion so decide being:
		
	 	  	(a) in the case of Partnership Shares and Matching Shares where there is an Accumulation Period a period not

  

 4 

	 	  	exceeding six months before the start of the Accumulation Period; and
		
	 	  	(b) in the case of Partnership Shares and Matching Shares where there is no Accumulation Period a period not exceeding 18 months before the deduction of Partnership Share Money
relating to the Award
		
	 “Redundancy”
	  	the same meaning as in the Employment Rights Act 1996
		
	 “Relevant Employment”
	  	employment by the Company or any Associated Company
		
	 “Retirement Age”
	  	for the purposes of this Plan, age 50
		
	 “Rules”
	  	these Rules together with any amendments thereto effected in accordance with Clause 22 of the Deed
		
	 “Salary”
	  	the same meaning as in paragraph 48 of the Schedule
		
	 “Schedule”
	  	Schedule 8 to the Finance Act 2000
		
	 “Shares”
	  	shares of common stock in the capital of the Company which comply with the conditions set out in paragraph 59 of the Schedule
		
	 “Stock Exchange”
	  	the New York Stock Exchange (or such successor organisation)
		
	 “Subsidiary”
	  	any company which is for the time being under the Control of the Company
		
	 “Tax Year”
	  	a year beginning on 6 April and ending on the following 5 April
		
	 “Trustees”
	  	the trustees or trustee for the time being of the Plan or any subsequent trustee or trustees as provided for in accordance with Clause 7 of the Deed
		
	 “Trust Fund”
	  	all assets transferred to the Trustees to be held on the terms of the Deed and the assets from time to time representing such assets, including any accumulations of
income
		
	 “Trust Period”
	  	the period of 80 years beginning with the date of the Deed

  

	1.2	 	References to any Act, or Part, Chapter, or section (including ICTA 1988) shall include any statutory modification, amendment or re-enactment of that Act, for the time being in
force. 

  

	1.3	 	Words of the feminine gender shall include the masculine and vice versa and words in the singular shall include the plural and vice versa unless, in either case, the context
otherwise requires or it is otherwise stated. 

  

 5 

	2.	 	PURPOSE OF THE PLAN 

  
 The purpose of the Plan is to enable employees of Participating Companies to acquire Shares in the Company which give them a continuing stake in the Company. 
  

	3.	 	ELIGIBILITY OF INDIVIDUALS 

  

	3.1	 	Subject to Rule 3.3, individuals are eligible to participate in an Award only if: 

  

	 	(a)	 	they are employees of a Participating Company; 

  

	 	(b)	 	they have been employees of a Qualifying Company at all times during any Qualifying Period; 

  

	 	(c)	 	they are eligible on the date(s) set out in paragraph 13(1) of the Schedule; and 

  

	 	(d)	 	they do not fail to be eligible under either or both Rule 3.2 or Rule 3.3 

  

	3.2	 	Individuals are not eligible to participate in an Award of Shares if they have, or within the preceding twelve months have had, a Material Interest in: 

  

	 	(a)	 	a Close Company whose Shares may be appropriated or acquired under the Plan; or 

  

	 	(b)	 	a company which has Control of such a company or is a member of a consortium which owns such a company. 

  

	3.3	 	Individuals are not eligible to participate in an Award of Partnership Shares or Matching Shares in any Tax Year if in that Tax Year they have received (or are to receive at the
same time) an award under another plan established by the Company or a Connected Company (as defined in paragraph 16(4) of the Schedule) and approved under the Schedule, or if they would have received such an award but for their failure to meet a
performance target. 

  

	3.4	 	Notwithstanding any provision of any other of these Rules whatsoever: 

  

	 	(a)	 	the Plan shall not form part of any contract of employment between the Company, a Subsidiary or any Associated Company and any Participant and it shall not confer on any Participant
any legal or equitable rights (other than those constituted by the grant of Awards themselves) whatsoever against the Company, a Subsidiary or an Associated Company directly or indirectly or give rise to any cause of action at law or in equity
against the Company, a Subsidiary or any Associated Company; 

  

	 	(b)	 	participation in an Award is a matter entirely separate from any pension right or entitlement a Participant may have and from his terms or conditions of employment and participation
in the Plan shall in no respect whatever affect his pension rights or entitlements or terms or conditions of employment and in particular (but without limiting the generality of the foregoing) any Participant who ceases to be an employee of any
Company, Subsidiary or Associated Company shall not be entitled to any compensation for any loss of any right or benefit or prospective right or benefit under the Plan which he might otherwise have enjoyed whether such compensation is claimed by way
of damages for wrongful dismissal or other breach of contract or by way of compensation for loss of office or otherwise howsoever and notwithstanding that he may have been dismissed wrongfully or unfairly (within the meaning of the Employment Rights
Act 1996). 

  

 6 

 Employees who must be invited to participate in Awards 
  

	3.5	 	Individuals shall be eligible to participate in an Awardunder the Plan if they meet the requirements in Rule 3.1 and are chargeable to income tax in respect of their employment
under Case I of Schedule E. In this case they shall be invited to participate in any Awards of Partnership Shares or Matching Shares, and acquisitions of Dividend Shares, as are set out in the Plan. 

  
 Employees who may be invited to participate in Awards 
  

	3.6	 	The Committee may also invite, at their discretion, any employee who meets the requirements in Rule 3.1 to participate in any Award of Partnership Shares or Matching Shares, and
acquisitions of Dividend Shares, as are set out in the Plan. The Committee shall notify the Trustees of employees who participate under this Rule. 

  

	4.	 	PARTICIPATION ON SAME TERMS 

  

	4.1	 	Every Qualifying Employee shall be invited to participate in an Award on the same terms. All who do participate in an Award shall do so on the same terms. 

 

	4.2	 	Matching Share awards shall be satisfied by new Shares which the Company shall issue to the Trustees on an Award Date. 

  
 PART A 
  

	5.	 	PARTNERSHIP SHARES 

  

	5.1	 	The Committee may at any time invite every Qualifying Employee to enter into a Partnership Share Agreement, should the Committee decide to offer Partnership Shares, in accordance
with this Part of the Rules. The Committee shall determine whether there is to be an Accumulation Period. An Accumulation Period may be up to 12 months and shall apply equally to all Qualifying Employees in the Plan. 

  

	5.2	 	Partnership Shares shall not be subject to any provision under which they may be forfeit. 

  
 Maximum amount of deductions 
  

	5.3	 	The amount of Partnership Share Money deducted from an employee’s Salary shall not exceed £125 in any month (or such other amount as may from time to time be permitted
under paragraph 36(1) of the Schedule and approved by the Committee). If the Salary is not paid monthly, the applicable limit shall be calculated proportionately. 

  

	5.4	 	The amount of Partnership Share Money deducted from an employee’s Salary over an Accumulation Period shall not exceed 10% (or such other percentage as may from time to time be
permitted under paragraph 36(2) of the Schedule and approved by the Committee) of the total of the payments of Salary made to such employee over that Accumulation Period or if there is no Accumulation Period, 10% (or such other percentage as may be
permitted under paragraph 36(2) of the Schedule) of the Salary payment from which the deduction is made. 

  

	5.5	 	Any amount deducted in excess of that allowed by Rule 5.3 or Rule 5.4 shall be paid over to the employee, subject to both deduction of income tax under PAYE and NICs, as soon as
practicable. 

  

 7 

 Minimum amount of deductions 
  

	5.6	 	The minimum amount to be deducted under the Partnership Share Agreement in any month shall be the same in relation to all Partnership Share Agreements entered into in response to
invitations issued on the same occasion. It shall not be greater than £10. 

  
 Notice of possible effect of deductions on benefit entitlement 
  

	5.7	 	Every Partnership Share Agreement shall contain a notice under paragraph 38 of the Schedule. 

  
 Restriction imposed on number of Shares awarded 
  

	5.8	 	The Committee may specify the maximum number of Shares to be included in an Award of Partnership Shares. 

  

	5.9	 	The Partnership Share Agreement shall contain an undertaking by the Company to notify each Qualifying Employee of any restriction on the number of Shares to be included in an Award.

  

	5.10	 	The notification in Rule 5.9 above shall be given: 

  

	 	(a)	 	if there is no Accumulation Period, before the deduction of the Partnership Share Money relating to the Award; and 

  

	 	(b)	 	if there is an Accumulation Period, before the beginning of the Accumulation Period relating to the Award. 

  
 Plan with no Accumulation Period 
  

	5.11	 	The Trustees shall acquire Shares on behalf of the Qualifying Employee using the Partnership Share Money. They shall acquire the Shares on the Acquisition Date. The number of Shares
awarded to each employee shall be determined in accordance with the Market Value of the Shares on that date. 

  
 Plan with Accumulation Period 
  

	5.12	 	If there is an Accumulation Period, the Trustees shall acquire Shares on behalf of the Qualifying Employee, on the Acquisition Date, using the Partnership Share Money.

  

	5.13	 	The number of Shares acquired on behalf of each Participant shall be determined by reference to the lower of: 

  

	 	(a)	 	the Market Value of the Shares at the beginning of the Accumulation Period; and 

  

	 	(b)	 	the Market Value of the Shares on the Acquisition Date. 

  

	5.14	 	If a transaction occurs during an Accumulation Period which results in a new holding of shares being equated for the purposes of capital gains tax with any of the shares to be
acquired under the Partnership Share Agreement, the employee may agree that the Partnership Share Agreement shall have effect after the time of that transaction as if it were an agreement for the purchase of shares comprised in the new holding.

  

 8 

 Surplus Partnership Share Money 
  

	5.15	 	Any surplus Partnership Share Money remaining after the acquisition of Shares by the Trustees: 

  

	 	(a)	 	may, with the agreement of the Participant, be carried forward to the next Accumulation Period or the next deduction date; and 

  

	 	(b)	 	in any other case, shall be paid over to the Participant, subject to both deduction of income tax under PAYE and NICs, as soon as practicable. 

  
 Scaling down 
  

	5.16	 	If the Company receives applications for Partnership Shares exceeding the Award maximum determined in accordance with Rule 5.8 then the following steps shall be taken in sequence
until the excess is eliminated. 

  

	 	Step	 	1. the excess of the monthly deduction chosen by each applicant over £10 shall be reduced pro rata; 

  

	 	Step	 	2. all monthly deductions shall be reduced to £10; 

  

	 	Step	 	3. applications shall be selected by lot, each based on a monthly deduction of £10. 

  
 Each application shall be deemed to have been modified or withdrawn in accordance with the foregoing provisions, and each
employee who has applied for Partnership Shares shall be notified of the change. 
  
 Stopping and re-starting deductions 
  

	5.17	 	An employee may stop and re-start deductions under a Partnership Share Agreement at any time by notice in writing to their employing company. Unless a later date is specified in the
notice, such notice shall take effect as soon as practicable but in any event no later than 30 days after their employing company receives it. 

  
 Withdrawal from Partnership Share Agreement 
  

	5.18(a)	 	An employee may withdraw from a Partnership Share Agreement at any time by notice in writing to their employing company. Unless a later date is specified in the notice, such a
notice shall take effect 30 days after their employing company receives it. Any Partnership Share Money then held on behalf of an employee shall be paid over to that employee as soon as practicable. This payment shall be subject to income tax under
PAYE and NICs. 

  

	 	(b)	 	Where the Plan is being run with an Accumulation Period, the employee can only rejoin the Plan or re-start his contributions at the beginning of the next Accumulation Period.

  
 Repayment of Partnership Share Money on withdrawal of
approval or Termination 
  

	5.19	 	If approval to the Plan is withdrawn or a Plan Termination Notice is issued in respect of the Plan, any Partnership Share Money held on behalf of employees shall be repaid to them
as soon as practicable, subject to deduction of income tax under PAYE, and NICs. 

  

 9 

 PART B 
  

	6.	 	MATCHING SHARES 

  

	6.1	 	The Partnership Share Agreement sets out the basis on which a Participant is entitled to Matching Shares, should the Committee decide to offer Matching Shares, in accordance with
this Part of the Rules. 

  
 General requirements for Matching
Shares 
  

	6.2	 	Matching Shares shall: 

  

	 	(a)	 	be Shares of the same class and carrying the same rights as the Partnership Shares to which they relate; 

  

	 	(b)	 	subject to Rule 6.4, be awarded on the same day as the Partnership Shares to which they relate are acquired on behalf of the Participant; and 

  

	 	(c)	 	be awarded to all Participants on exactly the same basis. 

  
 Ratio of Matching Shares to Partnership Shares 
  

	6.3	 	The Partnership Share Agreement shall specify the ratio of Matching Shares to Partnership Shares for the time being offered by the Company and that ratio shall not exceed 1:6. The
Committee may vary the ratio before Partnership Shares are acquired. Employees shall be notified of the terms of any such variation before the Partnership Shares are awarded under the Partnership Share Agreement. 

  

	6.4	 	If the Partnership Shares acquired on the day referred to in Rule 6.2(b) above are not sufficient to produce a Matching Share, the match shall be made with a fractional share
entitlement which will be treated for the purposes of the Plan in the same way as Matching Shares. 

  
 Holding Period for Matching Shares 
  

	6.5	 	The Committee shall, in relation to each Award Date, specify a Holding Period throughout which a Participant shall be bound by the terms of the Partnership Share Agreement.

  

	6.6	 	The Holding Period shall, in relation to each Award, be a specified period of not less than 3 years nor more than 5 years (or such other periods as may be from time to time be
specified under paragraph 52 of the Schedule and approved by the Committee), beginning with the Award Date and shall be the same for all Participants who receive an Award at the same time. The Holding Period shall not be increased in respect of
Matching Shares awarded under the Plan. 

  

	6.7	 	A Participant may during the Holding Period direct the Trustees: 

  

	 	(a)	 	to accept an offer for any of their Matching Shares if the acceptance or agreement shall result in a new holding being equated with those original Shares for the purposes of capital
gains tax; or 

  

	 	(b)	 	to accept an offer of a Qualifying Corporate Bond (whether alone or with other assets or cash or both) for their Matching Shares if the offer forms part of such a general offer as
is mentioned in paragraph (c) below; or 

  

 10 

	 	(c)	 	to accept an offer of cash, with or without other assets, for their Matching Shares if the offer forms part of a general offer which is made to holders of shares of the same class
as their Shares or to the holders of shares in the same company, and which is made in the first instance on a condition such that if it is satisfied the person making the offer shall have control of that company, within the meaning of section 416 of
ICTA 1988; or 

  

	 	(d)	 	to agree to a transaction affecting their Matching Shares or such of them as are of a particular class, if the transaction would be entered into pursuant to a compromise,
arrangement or scheme applicable to or affecting; 

  

	 	(i)	 	all of the ordinary share capital of the Company or, as the case may be, all the shares of the class in question; or 

  

	 	(ii)	 	all the shares, or all the shares of the class in question, which are held by a class of shareholders identified otherwise than by reference to their employment or their
participation in a plan approved under the Schedule. 

  
 PART C 
  

	7.	 	DIVIDEND SHARES 

  
 Reinvestment of cash dividends 
  

	7.1	 	The Partnership Share Agreement, as appropriate, shall set out the rights and obligations of Participants receiving Dividend Shares under the Plan. 

  

	7.2	 	The Committee may decide to direct the Trustees to: 

  

	 	(a)	 	apply all Participants’ dividends, up to the limit specified in Rule 7.5, to acquire Dividend Shares; 

  

	 	(b)	 	to pay all dividends in cash to all Participants; or 

  

	 	(c)	 	to offer Participants the choice of either paragraph (a) or (b) above. 

  

	7.3	 	Dividend Shares shall be Shares: 

  

	 	(a)	 	of the same class and carrying the same rights as the Shares in respect of which the dividend is paid; and 

  

	 	(b)	 	which are not subject to any provision for forfeiture. 

  

	7.4	 	The Committee may revoke any direction for reinvestment of cash dividends. 

  

	7.5	 	The amount applied by the Trustees in acquiring Dividend Shares shall not exceed £1,500 (or such other amount as may be permitted under paragraph 54(1) of the Schedule) in
each Tax Year in respect of any Participant. For the purposes of this Rule, the Dividend Shares are those acquired under this Plan and those acquired under any other plan approved under the Schedule. In exercising their powers in relation to the
acquisition of Dividend Shares the Trustees must treat Participants fairly and equally. 

  

	7.6	 	If the amounts received by the Trustees exceed the limit in Rule 7.5, the balance shall be paid to the participant as soon as practicable. 

  

 11 

	7.7	 	If dividends are to be reinvested, the Trustees shall apply all the cash dividend to acquire Shares on behalf of the Participant on the Acquisition Date. The number of Dividend
Shares acquired on behalf of each Participant shall be determined by the Market Value of the Shares on the Acquisition Date. 

  
 Certain amounts not reinvested to be carried forward 
  

	7.8	 	Subject to Rule 7.6, any amount that is not reinvested: 

  

	 	(a)	 	because the amount of the cash dividend is insufficient to acquire a Share; or 

  

	 	(b)	 	because there is an amount remaining after acquiring the Dividend Shares; 

  
 may be used by the Trustees to allocate a fractional share entitlement which will be treated for the purposes of the Plan in the same way as Dividend
Shares. 
  

	7.9	 	If, during the period of 3 years (or such other period as may from time to time be specified under paragraph 57 of the Schedule) beginning with the date on which the dividend was
paid: 

  

	 	(a)	 	it is not reinvested; or 

  

	 	(b)	 	the Participant ceases to be in Relevant Employment; or 

  

	 	(c)	 	a Plan Termination Notice is issued 

  
 the amount shall be repaid to the Participant as soon as practicable. On making such a payment, the Participant shall be provided with the information
specified in paragraph 90 of the Schedule. 
  
 Holding Period for Dividend
Shares 
  

	7.10	 	The Holding Period shall be a period of 3 years (or such other period as may from time to time be specified under paragraph 57 of the Schedule), beginning with the Acquisition Date.

  

	7.11	 	A Participant may during the Holding Period direct the Trustees: 

  

	 	(a)	 	to accept an offer for any of their Dividend Shares if the acceptance or agreement shall result in a new holding being equated with those Shares for the purposes of capital gains
tax; or 

  

	 	(b)	 	to accept an offer of a Qualifying Corporate Bond (whether alone or with other assets or cash or both) for their Dividend Shares if the offer forms part of such a general offer as
is mentioned in paragraph (c) below; or 

  

	 	(c)	 	to accept an offer of cash, with or without other assets, for their Dividend Shares if the offer forms part of a general offer which is made to holders of shares of the same class
as their Shares or to holders of shares in the same company, and which is made in the first instance on a condition such that if it is satisfied the person making the offer shall have control of that company, within the meaning of section 416 of
ICTA 1988; or 

  

	 	(d)	 	to agree to a transaction affecting their Dividend Shares or such of them as are of a particular class, if the transaction would be entered into pursuant to a compromise,
arrangement or scheme applicable to or affecting: 

  

 12 

	 	(i)	 	all of the ordinary share capital of the Company or, as the case may be, all the shares of the class in question; or 

  

	 	(ii)	 	all the shares, or all the shares of the class in question, which are held by a class of shareholders identified otherwise than by reference to their employment or their
participation in a plan approved under the Schedule. 

  

	7.12	 	Where a Participant is charged to tax in the event of their Dividend Shares ceasing to be subject to the Plan, they shall be provided with the information specified in paragraph
93(4) of the Schedule. 

  

	8.	 	ACQUISITION OF SHARES 

  
 All Awards made under the Plan will be satisfied by the issue of new Shares by the Company. Dividend Share awards may be satisfied by using either newly issued Shares or
existing market purchase Shares. 
  

	9.	 	COMPANY RECONSTRUCTIONS 

  

	9.1	 	The following provisions of this Rule apply if there occurs in relation to any of a Participant’s Plan Shares (referred to in this Rule as “the Original Holding”):

  

	 	(a)	 	a transaction which results in a new holding (referred to in this Rule as “the New Holding”) being equated with the Original Holding for the purposes of capital gains tax;
or 

  

	 	(b)	 	a transaction which would have that result but for the fact that what would be the new holding consists of or includes a Qualifying Corporate Bond. 

  

	9.2	 	If an issue of shares of any of the following description (in respect of which a charge to income tax arises) is made as part of a company reconstruction, those shares shall be
treated for the purposes of this Rule as not forming part of the New Holding: 

  

	 	(a)	 	redeemable shares or securities issued as mentioned in section 209(2)(c) of ICTA 1988; 

  

	 	(b)	 	share capital issued in circumstances such that section 210(1) of ICTA 1988 applies; or 

  

	 	(c)	 	share capital to which section 249 of ICTA 1988 applies. 

  

	9.3	 	In this Rule: 

  
 “Corresponding Shares” in relation to any New Shares, means the Shares in respect of which the New Shares are issued or which the New Shares
otherwise represent; 
  
 “New Shares” means shares
comprised in the New Holding which were issued in respect of, or otherwise represent, shares comprised in the Original Holding. 
  

	9.4	 	Subject to the following provisions of this Rule, references in this Plan to a Participant’s Plan Shares shall be respectively construed, after the time of the company
reconstruction, as being or, as the case may be, as including references to any New Shares. 

  

	9.5	 	For the purposes of the Plan: 

  

 13 

	 	(a)	 	a company reconstruction shall be treated as not involving a disposal of Shares comprised in the Original Holding; and 

  

	 	(b)	 	the date on which any New Shares are to be treated as having been appropriated to or acquired on behalf of the Participant shall be that on which Corresponding Shares were so
appropriated or acquired. 

  

	9.6	 	In the context of a New Holding, any reference in this Rule to shares includes securities and rights of any description which form part of the New Holding for the purposes of
Chapter II of Part IV of the Taxation of Chargeable Gains Act 1992. 

  

	10.	 	RIGHTS ISSUES 

  

	10.1	 	Any shares or securities allotted under Clause 12 of the Deed shall be treated as Plan Shares identical to the shares in respect of which the rights were conferred. They shall be
treated as if they were awarded to or acquired on behalf of the Participant under the Plan in the same way and at the same time as those Plan Shares in respect of which they are allotted. 

  

	10.2	 	Rule 10.1 does not apply: 

  

	 	(a)	 	to shares and securities allotted as the result of taking up a rights issue where the funds to exercise those rights were obtained otherwise than by virtue of the Trustees disposing
of rights in accordance with this Rule; or 

  

	 	(b)	 	where the rights to a share issue attributed to Plan Shares are different from the rights attributed to other ordinary shares of the Company. 

  

	11.	 	LEAVERS 

  
 A Participant who ceases to be in Relevant Employment must remove his Shares from the trust. Unless the Participant provides the requisite funds to the Company or the Trustees to cover any income tax and
employee’s NICs liability that may arise due to his Shares ceasing to be subject to the Plan, the Trustees shall have the discretion to dispose of sufficient of the Participant’s Shares to meet such liabilities on behalf of the
Participant. 
  

 14Underwriting Agreement

 Exhibit 10.1 
  
 SONIC SOLUTIONS 
 920,000 Shares 
 Common Stock 
 (no par value) 
  

  
 Underwriting Agreement 
  
 September 17, 2003 
  
 Adams, Harkness & Hill, Inc. 
 60 State Street 
 Boston, Massachusetts 02109 
  
 Ladies and Gentlemen: 
  
 Sonic Solutions, a California corporation (the “Company”), proposes, subject to the terms and conditions stated herein, to issue and sell to you
(the “Underwriters”) an aggregate of 920,000 shares (the “Shares”) of common stock of the Company, no par value (“Common Stock”). 
  

1. Representations and Warranties of the Company. The Company represents and warrants to, and agrees with, each of the Underwriters that as of
the date hereof, and as of the Time of Delivery (as hereinafter defined): 
  
 (a) The Company has filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3 (No. 333-103624), for the registration of the Shares and certain other securities
described therein under the Securities Act of 1933, as amended (the “Act”), and the offering thereof from time to time in accordance with Rule 415 of the rules and regulations of the Commission under the Act (the “Act
Regulations”). Such registration statement has been declared effective by the Commission. Such registration statement, in the form in which it became effective, is referred to herein as the “Registration Statement”; and the final
prospectus and the final prospectus supplement relating to the offering of the Shares, in the form first furnished to the Underwriters by the Company for use in connection with the offering of the Shares, are collectively referred to herein as the
“Prospectus”; provided, however, that all references to the “Registration Statement” and the “Prospectus” shall also be deemed to include all documents incorporated therein by reference pursuant to the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), prior to the time the applicable final prospectus and the final prospectus supplement were first furnished to the Underwriters by the Company; provided, further, that if the Company
files a registration statement with the Commission pursuant to Rule 462(b) of the Act Regulations (the “Rule 462(b) Registration Statement”), then, after such filing, all references to “Registration Statement” shall also be
deemed to include the Rule 462(b) Registration Statement. For purposes of this Agreement, all references to the Registration Statement, Prospectus or to any amendment or supplement to any of the foregoing shall be deemed to include any copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”). 
  
 (b) No order preventing or suspending the effectiveness of the Registration Statement, any post-effective amendment thereto, or the Rule 462(b)
Registration Statement, if any, has been issued and no proceeding for that purpose has been initiated or, to the Company’s knowledge, threatened by the Commission. 

 (c) The Company has timely filed all reports required of it under the Exchange Act and the Company meets
the requirements for use of Form S-3 under the Act; 
  
 (d) The
documents incorporated by reference in the Prospectus, when they were filed with the Commission, conformed in all material respects to the requirements of the Exchange Act, and the rules and regulations of the Commission thereunder, and none of such
documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; 
  
 (e) The Registration Statement conforms, and the Prospectus and any further amendments or supplements to the Registration
Statement or the Prospectus will conform, in all material respects to the requirements of the Act and the Act Regulations and do not and will not, as of the applicable effective date as to the Registration Statement and any amendment thereto and as
of the applicable filing date and the applicable Time of Delivery as to the Prospectus and any amendment or supplement thereto contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or, in the
case of the Registration Statement or any amendment thereto, necessary to make the statements therein not misleading and, in the case of the Prospectus or any supplement thereto, necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the
Company by an Underwriter through you expressly for use therein; 
  
 (f) There are no contracts or other documents required to be described in the Registration Statement or to be filed as exhibits to the Registration Statement by the Act or by the Act Regulations which have not been described or filed or
incorporated by reference in the Registration Statement, as required; the contracts so described in the Prospectus to which the Company or any of its subsidiaries is a party have been duly authorized, executed and delivered by the Company or its
subsidiaries, constitute valid and binding agreements of the Company or its subsidiaries and are enforceable against and by the Company or its subsidiaries, as applicable, in accordance with their respective terms, except as such enforceability may
be limited by (i) applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or similar laws in effect which affect the enforcement of creditors’ rights generally, (ii) general principles of equity, whether considered
in a proceeding at law or in equity and (iii) state or federal securities laws or policies relating to the non-enforceability of the indemnification provisions contained therein, and are in full force and effect on the date hereof; and neither the
Company nor, to the Company’s knowledge, any other party thereto, is in breach of or default under any of such contracts, except for such breaches or defaults that will not result in a material adverse change in the business, assets,
management, financial position or results of operations of the Company (hereinafter, a “Material Adverse Change”); 
  
 (g) Except as stated in the Prospectus, neither the Company nor any of its subsidiaries has since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus (i) sustained any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental
action, order or decree, that is in each case material to the Company and its subsidiaries taken as a whole, otherwise than as set forth or contemplated in the Prospectus; (ii) had any change in the capital stock (other than issuances of Common
Stock pursuant to Company stock option plans described in the Registration Statement and Prospectus); (iii) entered into any material contracts; or (iv) sustained any Material Adverse Change, or any development that is reasonably likely to result in
a Material Adverse Change, otherwise than as set forth or contemplated in the Prospectus; 

 (h) Neither the Company nor any subsidiary owns any real property. The Company and its subsidiaries have
good and marketable title to all personal property and assets described in the Prospectus as owned by it and which are material to the business of the Company, in each case free and clear of all liens, charges, encumbrances or restrictions, except
such as (i) are described in the Prospectus or (ii) would not, singly or in the aggregate, result in a Material Adverse Change; any real property and buildings held under lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as would not, singly or in the aggregate, result in a Material Adverse Change and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its
subsidiaries; the Company and its subsidiaries own or lease all such properties as are necessary to its operations as now conducted or as proposed to be conducted, except where the failure to so own or lease would not result in a Material Adverse
Change; 
  
 (i) Each of the Company and its subsidiaries has been
duly incorporated and is validly existing as a corporation in good standing under the laws of its respective jurisdiction of incorporation, each with full corporate power and authority to own its properties and conduct its business as described in
the Prospectus, and each has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to
require such qualification, except where failure to be so qualified or in good standing would result in a Material Adverse Change; 
  
 (j) The Company has an authorized capitalization as set forth in the Prospectus (other than for issuances after the dates thereof, if any, pursuant to
employee benefit plans described in any Prospectus or upon exercise of outstanding options or warrants described in any Prospectus), and all the issued shares of capital stock of the Company, in all material respects, (i) have been duly and validly
authorized and issued, (ii) are fully paid and non-assessable and (iii) conform to the description of the Common Stock contained or incorporated by reference in the Prospectus; all of the issued shares of capital stock of each subsidiary of the
Company (i) have been duly and validly authorized and issued, are fully paid and non-assessable and (ii) except as disclosed in the Prospectus, are owned directly by the Company, free and clear of all liens, encumbrances, equities or claims; except
as disclosed in or contemplated by the Prospectus and the consolidated financial statements of the Company, and the related notes thereto, included in the Prospectus, neither the Company nor any subsidiary has outstanding any options to purchase, or
any preemptive rights or other rights to subscribe for or to purchase any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any such options, rights, convertible securities
or obligations (other than stock and options granted pursuant to the Company’s stock option plans in the ordinary course of business consistent with past practice); and the description of the Company’s stock option plans and the options or
other rights granted and exercised thereunder set forth in the Prospectus accurately and fairly presents in all material respects the information required to be shown with respect to such plans, options and rights; 
  
 (k) The unissued Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued and fully paid and non-assessable and will conform to the description of the
Common Stock contained or incorporated by reference in the Prospectus; no preemptive rights or other rights to subscribe for or purchase exist with respect to the issuance and sale of the Shares by the Company pursuant to this Agreement; no
stockholder of the Company has any right, which has not been waived, to require the Company to register the sale of any shares of capital stock owned by such stockholder under the Act in the public offering contemplated by this Agreement; and no
further approval or authority of the stockholders or the Board of Directors of the Company will be required for the issuance and sale of the Shares to be sold by the Company as contemplated herein; 

 (l) The Company has full corporate power and authority to enter into this Agreement; and this Agreement
has been duly authorized, executed and delivered by the Company, constitutes a valid and binding obligation of the Company and is enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or similar laws in effect which affect the enforcement of creditors’ rights generally, (ii) general principles of equity, whether considered in a proceeding at
law or in equity and (iii) state or federal securities laws or policies relating to the non-enforceability of the indemnification provisions contained herein; 
  

(m) The issue and sale of the Shares by the Company and the compliance by the Company with all of the provisions of this Agreement and the consummation
of the transactions herein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, except such breaches or
violations that would not result in a Material Adverse Change, nor will such action result in any violation of the provisions of the Certificate of Incorporation or By-laws of the Company, as currently in effect, or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties; and no consent, approval, authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issue and sale of the Shares or the consummation by the Company of the transactions contemplated by this Agreement, except the registration under the Act of the Shares and such consents,
approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws or the bylaws and rules of the National Association of Securities Dealers, Inc. (“NASD”) in connection with the purchase
and distribution of the Shares by the Underwriters; 
  
 (n) There
are no legal or governmental actions, suits or proceedings pending or, to the best of the Company’s knowledge, threatened to which the Company or any of its subsidiaries is or may be a party or of which property owned or leased by the Company
or any of its subsidiaries is or may be the subject, which actions, suits or proceedings, would reasonably be expected, individually or in the aggregate, to prevent or adversely affect the transactions contemplated by this Agreement or result in a
Material Adverse Change; no labor disturbance by the employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company, is imminent that would reasonably be expected to result in a Material Adverse Change; and neither
the Company nor any of its subsidiaries is a party or subject to the provisions of any injunction, judgment, decree or order of any court, regulatory body, administrative agency or other governmental body, that would reasonably be expected to result
in a Material Adverse Change; 
  
 (o) To the best knowledge of the
Company, the Company and its subsidiaries possess all licenses, certificates, authorizations or permits issued by the appropriate governmental or regulatory agencies or authorities that are necessary to enable them to own, lease and operate their
respective properties and to carry on their respective businesses as presently conducted except, where the failure to possess such licenses, certificates, authorization or permits would not reasonably be expected to result in a Material Adverse
Change, and neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such license, certificate, authority or permit which, singly or in the aggregate, would reasonably
be expected to result in a Material Adverse Change; 
  
 (p) The
Company and its subsidiaries (i) are in compliance in all material respects with any and all applicable foreign, federal, state and local laws and regulations relating to the protection 

 of human health and safety, including, without limitation, those relating to occupational safety and health, the
environment or hazardous or toxic substances or wastes, pollutants or contaminants, including, without limitation, those relating to the storage, handling or transportation of hazardous or toxic materials (collectively, “Environmental
Laws”) and (ii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, reasonably be expected to result in a Material Adverse Change. The Company, in its reasonable judgment, has concluded that any costs
or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to third parties) would not, singly or in the aggregate, reasonably be expected to result in a Material Adverse Change; 
  
 (q) KPMG LLP, who has audited certain financial statements of the Company,
are independent certified public accountants as required by the Act and the Act Regulations; 
  
 (r) The consolidated financial statements and schedules of the Company, and the related notes thereto, included or incorporated by reference in the Registration Statement and the Prospectus present fairly in all
material respects the financial position of the Company as of the respective dates of such financial statements and schedules, and the results of operations and cash flows of the Company for the respective periods covered thereby, subject to the
normal year-end adjustments which are not expected to be material in amount; such statements, schedules and related notes have been prepared in accordance with generally accepted accounting principles in the United States of America, as applicable,
applied on a consistent basis, except as may be expressly stated in the related notes thereto, as certified by the independent public accountants named in paragraph (q) above; no other financial statements or schedules are required to be included in
the Registration Statement by the Act and the Act Regulations; and the selected financial data set forth in the Prospectus under the captions “Capitalization” and “Selected Consolidated Financial Information” fairly present in
all material respects the information set forth therein on the basis stated in the Registration Statement; 
  
 (s) Except as disclosed in the Registration Statement and Prospectus, (i) the Company owns, possesses or has the right to use all trademarks, service
marks, trade names, patent rights, copyrights, licenses, trade secrets and proprietary rights necessary to conduct its business as now conducted, (ii) the Company has not received notice of any infringement by the Company of any trademark, service
mark, trade name, patent, copyright, license, trade secret, proprietary or other similar rights of others, and (iii) to the Company’s knowledge, there is no claim of infringement being made against the Company regarding any trademark, service
mark, trade name, patent, copyright, license, trade secret, proprietary or other similar rights which if adversely decided, would reasonably be expected to result in a Material Adverse Change. Except as disclosed in the Registration Statement and
Prospectus, (w) none of the technology employed by the Company has been obtained or is being used by the Company in violation of any contractual obligation binding on the Company or, to the Company’s knowledge, any of its officers, directors,
employees or consultants or otherwise in violation of the rights of any person, except for such violations that would not reasonably be expected to result in a Material Adverse Change; (x) the Company has not received, and to the Company’s
knowledge, none of its employees has received, any written or oral communications alleging that the Company has violated or, by conducting its business as proposed, would violate any of the intellectual property or proprietary rights of any other
person or entity; (y) the operation of the business of the Company as currently operated will not, to the Company’s knowledge, result in a material breach or violation of the terms, conditions or provisions of, or constitute a default under,
any material contract, covenant or instrument under which any of such employees is now obligated; and (z) the Company has taken reasonable measures to prevent the 

 unauthorized dissemination or publication of its confidential information or the confidential information of third
parties in its possession. Each current employee of the Company who in the course of their duties has possession of material confidential or proprietary information of the Company, has executed an agreement with the Company regarding confidential
information and the assignment of proprietary information to the Company; 
  
 (t) The Company and each of its subsidiaries have filed all necessary federal, state and foreign income and franchise tax returns, except to the extent that the failure to file such tax returns would not have a
Material Adverse Change, each of which has been true and correct in all material respects, and have paid all taxes shown as due thereon; and the Company has no knowledge of any tax deficiency which has been or might reasonably be asserted or
threatened against the Company or any of its subsidiaries which could reasonably be expected to result in a Material Adverse Change; 
  
 (u) The Company is not an “investment company” or an “affiliated person” of, or “promoter” or “principal
underwriter” for, an “investment company”, as such terms are defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”); 
  
 (v) Each of the Company and its subsidiaries maintains insurance of the types and in the amounts which it deems adequate for
its business, including, but not limited to, insurance covering real and personal property owned or leased by the Company and its subsidiaries against theft, damage, destruction, acts of vandalism and all other risks customarily insured against, all
of which insurance is in full force and effect; 
  
 (w) To the
best knowledge of the Company, neither the Company nor any of its subsidiaries has at any time during the last five years (i) made any unlawful contribution to any candidate for foreign office, or failed to disclose fully any contribution in
violation of law, or (ii) made any payment to any foreign, federal or state governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United
States or any jurisdiction thereof; 
  
 (x) Other than exempted
activity under Regulation M, the Company has not taken and will not take, directly or indirectly through any of its directors, officers or controlling persons, any action which is designed to or which has constituted or which might reasonably be
expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares; 
  
 (y) The Common Stock of the Company has been registered pursuant to Section 12(g) of the Exchange Act and the Company is not required to take any further
action for the inclusion of the Shares on the Nasdaq National Market; and 
  
 (z) Each of the Company and the subsidiaries (i) makes and keeps accurate books and records and (ii) maintains a system of accounting controls sufficient to provide reasonable assurances that: (A) transactions are
executed in accordance with management’s general or specific authorization; (B) transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principals in the United
States of America, the Act and the Exchange Act; (C) access to assets is permitted only in accordance with management’s general or specific authorization; and (D) the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any differences. 
  
 2. Shares Subject to Sale. On the basis of the representations, warranties and agreements of the Company contained herein, and subject to the terms and conditions of this Agreement, (i) the 

 Company agrees to issue and sell the Shares to the several Underwriters and (ii) each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at a purchase price per share of $14.25, the respective number of Shares set forth opposite the name of such Underwriter in Schedule I hereto. 
  
 3. Offering. Upon the authorization by you of the release of the
Shares, the several Underwriters propose to offer the Shares for sale upon the terms and conditions set forth in the Prospectus. 
  
 4. Closing. Certificates in definitive form for the Shares to be purchased by each Underwriter hereunder, and in such denominations and registered
in such names as Adams, Harkness & Hill, Inc. may request upon at least forty-eight hours’ prior notice to the Company, shall be delivered by or on behalf of the Company to you for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor by wire transfer of same day federal funds, all at the office of Adams, Harkness & Hill, Inc., 60 State Street, Boston, Massachusetts 02109. The time and date of such delivery and
payment shall be, with respect to the Firm Shares, 9:30 a.m., Boston time, on September 22, 2003 or such other time and date as you and the Company may agree upon in writing. Such time and date for delivery of the Shares is herein called the
“Time of Delivery.” Such certificates will be made available for checking and packaging at least twenty-four hours prior to the Time of Delivery at such location as you may specify. If the Underwriters so elect, delivery of the Shares may
be made by credit through full fast transfer to the accounts at the Depository Trust Company designated by Adams, Harkness & Hill, Inc. 
  
 5. Covenants of the Company. The Company hereby covenants to the Underwriters as follows: 
  
 (a) To prepare the Prospectus in a form approved by you and to file such
Prospectus pursuant to Rule 424(b) under the Act not later than Commission’s close of business on the second business day following the execution and delivery of this Agreement, and to make no further amendment or any supplement to the
Registration Statement or Prospectus which shall be reasonably disapproved by you promptly giving reasonable notice thereof; to advise you, promptly after it receives notice thereof, of the time when the Registration Statement, or any amendment
thereto, has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and to furnish you copies thereof; to advise you, promptly after it receives notice thereof, of the issuance by the Commission
of any stop order or of any order preventing or suspending the use of any preliminary Prospectus or Prospectus, of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of any preliminary Prospectus or Prospectus or suspending any such qualification, to use promptly its best efforts to obtain its withdrawal; 
  
 (b) Promptly, from time to time, to take such action as you may reasonably request to qualify the Shares for offering and
sale under the securities laws of such jurisdictions as you may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of
the Shares, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction; 
  
 (c) To furnish the Underwriters with copies of the Prospectus in such
quantities as you may from time to time reasonably request, and, if the delivery of a prospectus is required at any time prior to the expiration of nine months after the time of issuance of the Prospectus in connection with the 

 offering or sale of the Shares and if at such time any events shall have occurred as a result of which the Prospectus as
then amended or supplemented would, in the judgment of the Company or in the reasonable opinion of the Underwriters or counsel for the Underwriters, include an untrue statement of a material fact or omit to state any material fact necessary in order
to make the statements therein, in light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the
Prospectus in order to comply with the Act, to notify you and upon your request to prepare and furnish without charge to each Underwriter and to any dealer in securities as many copies as you may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance, and in case any Underwriter is required by law to deliver a prospectus in connection with sales of any of the Shares at any time
nine months or more after the time of issue of the Prospectus, upon your request but at the expense of such Underwriter, to prepare and deliver to such Underwriter as many copies as you may request of an amended or supplemented Prospectus complying
with Section 10(a)(3) of the Act; 
  
 (d) To make generally
available to its security holders as soon as practicable, but in any event not later than the forty-fifth (45th) day following the end of the full fiscal quarter first occurring after the first anniversary of the effective date of the Registration
Statement (as defined in Rule 158(c)), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option
of the Company, Rule 158); 
  
 (e) To furnish to its stockholders
as soon as practicable after the end of each fiscal year an annual report (including a balance sheet and statements of income, stockholders’ equity and cash flow of the Company and its consolidated subsidiaries certified by independent public
accountants) and to make available (within the meaning of Rule 158(b) under the Act) as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the effective date of
the Registration Statement), consolidated summary financial information of the Company and its subsidiaries for such quarter in reasonable detail; 
  
 (f) During a period of five years from the effective date of the Registration Statement, to furnish to you upon your request copies of all reports or
other communications (financial or other) furnished to stockholders generally, and deliver to you as soon as they are available, copies of any publicly available reports and financial statements furnished to or filed with the Commission, the Nasdaq
National Market or any national securities exchange on which any class of securities of the Company is listed (such financial statements to be on a combined or consolidated basis to the extent the accounts of the Company and its subsidiaries are
combined or consolidated in reports furnished to its stockholders generally or to the Commission); 
  
 (g) To, during the period when the Prospectus is required to be delivered under the Act or the Exchange Act, file all documents required to be filed with
the Commission pursuant to the Exchange Act within the time periods required by the Exchange Act and the regulations promulgated thereunder; and 
  
 (h) To use the net proceeds acquired by it from the sale of the Shares in the manner specified in the Prospectus under the caption “Use of
Proceeds” and in a manner such that the Company will not become an “investment company” as that term is defined in the Investment Company Act. 
  
 6. Expenses. The Company covenants and agrees with the several Underwriters that the Company will pay or cause to be paid the following: (i) the
fees, disbursements and expenses of the Company’s counsel and accountants in connection with the registration of the Shares under the Act and 

 all other expenses in connection with the preparation, printing, filing or delivery of the Registration Statement, any
preliminary Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of reproducing and delivering any Agreement among Underwriters, this
Agreement, the Blue Sky Memorandum and any other documents in connection with the offering, purchase, sale and delivery of the Shares; (iii) all expenses and filing fees in connection with the qualification of the Shares for offering and sale under
state securities laws as provided in Section 5(b) hereof and securing any required review by the NASD of the terms of the sale of the Shares, including the fees and disbursements of counsel for the Underwriters in connection with such qualification
and review and in connection with the Blue Sky survey subject to a maximum of $5,000; (iv) the cost of preparing stock certificates; (v) the cost and charges of any transfer agent or registrar; and (vi) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Section, Section 8 and Section 11 hereof, the Underwriters will pay all of their
own costs and expenses, including the fees of their counsel, stock transfer taxes on resale of any of the Shares by them, and any advertising expenses connected with any offers they may make. 
  
 7. Conditions of Underwriters’ Obligations. The obligations of
the Underwriters hereunder, as to the Shares to be delivered at the Time of Delivery, shall be subject, in their discretion, to the condition that all representations and warranties and other statements of the Company herein are, at and as of such
Time of Delivery, true and correct, the condition that the Company shall have performed all of its respective obligations hereunder theretofore to be performed, and the following additional conditions: 
  
 (a) The Prospectus shall have been filed with the Commission pursuant to Rule
424(b) within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a) hereof, no stop order suspending the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with to your reasonable
satisfaction; 
  
 (b) Goodwin Procter LLP, counsel to the
Underwriters, shall have furnished to you such opinion or opinions, dated such Time of Delivery, with respect to this Agreement, the Registration Statement, the Prospectus, and other related matters as you may reasonably request; 
  
 (c) Heller Ehrman White & McAuliffe LLP counsel to the Company, shall
have furnished to you their written opinion, dated such Time of Delivery, in form and substance reasonably satisfactory to you, with respect to the matters set forth in Annex I hereto; 
  
 (d) On the date hereof and also at the Time of Delivery, KPMG LLP, shall have furnished to you a letter or letters, dated
the respective date of delivery thereof, in form and substance reasonably satisfactory to you, to the effect set forth in Annex II hereto; 
  
 (e) (i) Neither the Company nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree,
that is in each case material to the Company and its subsidiaries taken as a whole, otherwise than as set forth or contemplated in the Prospectus or as would not result in a Material Adverse Change, and (ii) since the respective dates as of which
information is given in the Prospectus, there shall not have been any change in the capital stock (other than issuances of Common Stock pursuant to Company stock option plans described in the Registration Statement and Prospectus) or long-term debt
of the Company or any change, or any development that is reasonably likely to result in a Material Adverse Change, otherwise than as set 

 forth or contemplated in the Prospectus, the effect of which, in any such case described in clause (i) or (ii), is in
your good faith judgment so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares being delivered at such Time of Delivery on the terms and in the manner contemplated in the
Prospectus; 
  
 (f) On or after the date hereof there shall not
have occurred any of the following: (i) additional material governmental restrictions, not in force and effect on the date hereof, shall have been imposed upon trading in securities generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or on the American Stock Exchange or in the over the counter market by the NASD, or trading in securities generally shall have been suspended on either such Exchange or in the over the counter market by the
NASD, or a general banking moratorium shall have been established by federal or New York authorities, (ii) an outbreak of major hostilities or other national or international calamity or any substantial change in political, financial or economic
conditions shall have occurred or shall have accelerated or escalated to such an extent, as, in the good faith judgment of the Underwriters, to affect materially and adversely the marketability of the Shares, or (iii) there shall be any action, suit
or proceeding pending or threatened, or there shall have been any development involving particularly the business or properties or securities of the Company or any of its subsidiaries or the transactions contemplated by this Agreement, which, in the
good faith judgment of the Underwriters, has materially and adversely affected the Company’s business or earnings and makes it impracticable or inadvisable to offer or sell the Shares; 
  
 (g) The Shares to be sold by the Company at such Time of Delivery shall have
been accepted for quotation, subject to notice of issuance, on the Nasdaq National Market System; and 
  
 (h) The Company shall have furnished or caused to be furnished to you at such Time of Delivery certificates of officers of the Company, in their
capacities as such, satisfactory to you, as to the accuracy of the representations and warranties of the Company, herein at and as of such Time of Delivery, as to the performance by the Company, of all of its obligations hereunder to be performed at
or prior to such Time of Delivery, and as to such other matters as you may reasonably request and the Company shall have furnished or caused to be furnished certificates as to the matters set forth in subsections (a) and (e) of this Section, and as
to such other matters as you may reasonably request. 
  
 8.
Indemnification and Contribution. 
  
 (a) The Company will
indemnify and hold harmless each Underwriter and each person, if any, who controls such Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter or controlling person may become subject, under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or, in the case of the Registration Statement or any amendment
thereto, necessary to make the statements therein not misleading and, in the case of the Prospectus or any supplement thereto, necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are reasonably incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by any Underwriter through you expressly for use therein. 

 (b) Each Underwriter will indemnify and hold harmless the Company against any losses, claims, damages or
liabilities to which the Company may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement or the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or,
in the case of the Registration Statement or any amendment thereto, necessary to make the statements therein not misleading and, in the case of the Prospectus or any supplement thereto, necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Underwriter through you expressly for use therein; and will reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are reasonably incurred. 
  
 (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it
from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent that it shall elect, jointly with any other indemnifying party similarly notified, by written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel
or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the prior written consent of the
indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not
the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and
(ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party. No indemnifying party shall be liable for any settlement of any action or claim effected without its prior
written consent, which consent shall not be unreasonably withheld. 
  
 (d) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion
as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other from the offering of the Shares. If, however, the allocation provided by the immediately preceding sentence is not permitted
by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate
to reflect not only such relative 

 benefits but also the relative fault of the Company on the one hand and the Underwriters on the other in connection with
the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company, bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Underwriters on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations in this subsection (d) to contribute are
several in proportion to their respective underwriting obligations and not joint. 
  
 (e) The obligations of the Company under this Section 8 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations of the Underwriter under this Section 8 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if any, who controls the Company within the meaning of the Act. 
  
 9. Termination. 
  
 (a) If any Underwriter shall default in its obligation to purchase the Shares which it has agreed to purchase hereunder at the Time of Delivery, you may
in your discretion arrange for you or another party or other parties to purchase such Shares on the terms contained herein. If within thirty-six (36) hours after such default by any Underwriter you do not arrange for the purchase of such Shares,
then the Company shall be entitled to a further period of thirty-six (36) hours within which to procure another party or other parties satisfactory to you to purchase such Shares on such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the purchase of such Shares, or the Company notifies you that it has so arranged for the purchase of such Shares, you or the Company shall have the right to postpone such Time of Delivery
for a period of not more than seven (7) days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus, or in any other documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion may thereby be made necessary. The term “Underwriter” as used in this Agreement shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such Shares. 

 (b) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting
Underwriter or Underwriters by you and the Company as provided in subsection (a) above, the aggregate number of such Shares which remains unpurchased does not exceed one-tenth of the aggregate number of all the Shares to be purchased at such Time of
Delivery, then the Company shall have the right to require each non-defaulting Underwriter to purchase the number of Shares which such Underwriter agreed to purchase hereunder at such Time of Delivery and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of Shares which such Underwriter agreed to purchase hereunder) of the Shares of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing
herein shall relieve a defaulting Underwriter from liability for its default. 
  
 (c) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by you and the Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased exceeds one-tenth of the aggregate number of all the Shares to be purchased at such Time of Delivery, or if the Company shall not exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement shall thereupon terminate, without liability on the part of any non-defaulting Underwriter or the Company, except for the expenses to be borne by the
Company and the Underwriters as provided in Section 6 hereof and the indemnity and contribution agreements in Section 8 hereof, but nothing herein shall relieve a defaulting Underwriter from liability for its default. 
  
 10. Survival. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, or the Company, or any officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Shares; and the execution of this Agreement and the consummation of the transactions contemplated herein shall not constitute a waiver of any rights and remedies contained herein. A successor to any Underwriter, or to
the Company, its directors or officers or any person controlling the Company, shall be entitled to the benefits of the indemnity, contribution and reimbursement agreements in Section 8. 
  
 11. Expenses of Termination. If this Agreement shall be terminated pursuant to Section 9 hereof, the Company shall
then have no liability to any Underwriter except as provided in Section 6 and Section 8 hereof; but, if for any other reason this Agreement is terminated, the Company will reimburse the Underwriters for all out-of-pocket expenses approved in writing
by you, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of the Shares not so delivered, but the Company shall have no further liability to any
Underwriter in respect of the Shares not so delivered except as provided in Section 6 and Section 8 hereof. 
  
 12. Notice. In all dealings hereunder, you shall act on behalf of each of the Underwriters, and the parties hereto shall be entitled to act and
rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by you jointly or by Adams, Harkness & Hill, Inc. on behalf of you as the Underwriters. 
  
 All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail or facsimile transmission to you as the Underwriters in care of Adams, Harkness & Hill, Inc., 60 State Street, Boston, MA 02109, Attention: Andrew Pojani; if to the Company
shall be delivered or sent by mail or facsimile transmission to the address of the Company 

 set forth in the Registration Statement, Attention: President; provided, however, that any notice to an Underwriter
pursuant to Section 8(c) hereof shall be delivered or sent by mail or facsimile transmission to such Underwriter at its address set forth in its Underwriter’s Questionnaire, which address will be supplied to the Company by you on request. Any
such statements, requests, notices or agreements shall take effect upon receipt thereof. 
  
 13. Miscellaneous. 
  
 (a)
This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters and the Company and, to the extent provided in Sections 8 and 10 hereof, the officers and directors of the Company and each person who controls the Company or
any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Shares from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase. 
  
 (b) Time shall be of the essence of this Agreement. As used herein, the term “business day” shall mean any day when the Commission’s office in Washington, D.C. is open for business. 
  
 (c) This Agreement shall be governed by and construed in accordance with the
laws of The Commonwealth of Massachusetts. 
  
 (d) This Agreement
may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. 

 If the foregoing is in accordance with your understanding, please sign and return to us six counterparts
hereof, and upon the acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof shall constitute a binding agreement among each of the Underwriters and the Company. It is understood that your acceptance
of this letter on behalf of each of the Underwriters is pursuant to the authority set forth in a form of Agreement among Underwriters, the form of which shall be submitted to the Company for examination, upon request, but without warranty on your
part as to the authority of the signors thereof. 
  

	 Very truly yours,

	
	 SONIC SOLUTIONS

		
	 By:
	 	 /s/    ROBERT J.
DORIS        

	 Name:
	 	Robert J. Doris
	 Title:
	 	President
	
	 Accepted as of the date hereof at Boston, Massachusetts
  
 ADAMS, HARKNESS & HILL,
INC.,

		
	 By:
	 	 /s/    JOSEPH W.
HAMMER        

	 	 	 (Adams, Harkness & Hill, Inc. on
 behalf of the Underwriters)

	 Name:
	 	Joseph W. Hammer
	 Title:
	 	Managing Director

 SCHEDULE I 
  

	 	  	Total Number
of Shares
to be Purchased

	 Adams, Harkness & Hill, Inc.
	  	920,000
	 TOTAL
	  	920,000

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