Document:

Exhibit 10.1 Term Sheet

Exhibit 10.1
TERM SHEET

		
	I.
	ACCRUED CLAIMS FOR 2003 TO 2011 AND 2012 NPM ADJUSTMENT 

Accrued claims relating to the NPM Adjustment disputes for 2003 to 2011 and the 2012 NPM Adjustment would be handled as follows:
		
	A.
	The basic methodology from the August 2010 MOU would be retained, with the following adjustments:

		
	1.
	All amounts related to the 2010, 2011 and 2012 NPM Adjustments would be added to the terms of the settlement.

		
	2.
	The settlement value would be increased from 29.5% to a percentage ranging from 37.5% to 46%.  The applicable percentage within that range depends on the aggregate Allocable Share of the signatory Settling States as follows:

	
			
	Aggregate Allocable Share
	 
	Settlement Value Percentage

	80% or more
	 
	37.5%

	75-79.9%
	 
	38.5%

	70- 74.9%
	 
	39.5%

	65-69.9%
	 
	40.5%

	60-64.9%
	 
	42.5%

	55-59.9%
	 
	44.5%

	50-54.9%
	 
	46%

Appendix A sets forth the reference date for determining the aggregate Allocable Share and the increased settlement value applicable to States that sign this Term Sheet after December 14, 2012 (or, in the case of States with December hearing dates, after the start of their hearing).

		
	3.
	The amount contributed to fund the Data Clearinghouse would be reduced from $20,000,000 to $10,000,000.  

		
	B.
	The signatory Settling States would allocate the settlement amounts (either the application of the credits to the PMs or the receipt of amounts released from the DPA, or both) among themselves so as to fully compensate those signatory Settling States whose diligent enforcement for 2003 was uncontested for their share of the 2003 NPM Adjustment, plus interest.

		
	C.
	These provisions would be implemented as provided in Appendix A.

		
	II.
	TRANSITION

		
	A.
	There will be a two-year transition period covering sales years 2013-2014 during which the revised NPM Adjustment will operate as follows.

1

		
	B.
	The revised adjustment for non-SET-paid sales under Section III.C will not apply for those years.  The revised adjustment for SET-paid sales under Section III.B will apply for those years, except for the final sentence of Section III.B.2.c and the tribal tax clause of footnote 1.

		
	C.
	In addition, for each of those years, the signatory PMs will receive the amounts detailed in Section II.A.3 of the MOU, except that the percentage in (a) of that Section will be 25% and the Market Share Loss referred to in (a)-(d) of that Section will be the 2011 Market Share Loss.

		
	III.
	NPM ADJUSTMENT FOR SUBSEQUENT YEARS

		
	A.
	The terms of the MOU would be abandoned and replaced with the adjustments outlined herein.

		
	B.
	SET-Paid NPM Sales1 

		
	1.
	Adjustment.  Each year, an adjustment will be applied to a signatory Settling State's share of the OPMs' MSA Payment equal to the adjustment amount for each non-compliant NPM cigarette on which SET is paid in the state.  The adjustment amount will be three times the per-cigarette escrow deposit rate in the Model Escrow Statute for the year of the sale, including the inflation adjustment in the statute.  There will be a proportional adjustment for each signatory SPM in proportion to the size of its MSA payment for that year.

		
	2.
	Meaning of non-compliant NPM cigarettes. Non-compliant NPM cigarettes are SET-paid NPM cigarettes as to which escrow was (i) not deposited at the Escrow Statute rate or (ii) released or refunded except as provided in the Escrow Statute as amended by Allocable Share Repeal.  The term non-compliant NPM cigarettes does not include:

		
	a.
	cigarettes on which the escrow was deposited at the statutory rate by either:  (i) the NPM or any other entity liable for such payments under the laws of the individual signatory Settling State, or (ii) a person or entity in the distribution chain on behalf of such NPM or other entity liable for such payments under such laws, so long as such state did not release or refund any part of the deposit, unless released pursuant to the terms of the Escrow Statute, as amended by Allocable Share Repeal;

		
	b.
	cigarettes on which a signatory Settling State recovered at the statutory rate on an escrow bond posted pursuant to the laws of that 

________________________
 1 SET includes state cigarette excise tax or other state tax on the distribution or sale of cigarettes (other than a state or local sales tax that is applicable to consumer products generally and is not in lieu of an excise tax), and, for NPM cigarettes sold after 2014, an excise or other tax imposed by a state- or federally-recognized tribe on the distribution or sale of cigarettes.  Except if otherwise indicated, references to “NPM sales,” “NPM cigarettes” and “NPM volume” in this Term Sheet refer to NPM Cigarettes, with the term “Cigarette” having the meaning given in the MSA.

2

state, so long as such state did not release or refund any part of the deposit so recovered, unless released pursuant to the terms of the Escrow Statute, as amended by Allocable Share Repeal; 

		
	c.
	cigarettes as to which the state is barred from requiring escrow deposits from all entities liable for such payments under its individual state law, and from recovery on a remaining escrow bond, by an automatic stay or subsequent order in a federal bankruptcy proceeding or by order of a court of competent jurisdiction that requiring escrow deposits is barred by federal or state constitutional law (other than state constitutional provisions added or amended after the signature date of this document or state constitutional law as it may impact or be applied in relation to sovereign immunity or other Native American issues) or federal statutory or common law, so long as: (i) the state opposes and appeals the stay or order,2 and (ii) the NPM and brand at issue were properly on the state's approved-for-sale directory, either in accordance with the terms of Complementary Legislation or pursuant to the order of a court of competent jurisdiction barring removal of the NPM or brand from that directory, within 30 days prior to the time of sale.  This paragraph only applies to signatory Settling States that have requirements in effect that the NPM in question post a bond in at least the amount described in section 17(b) of the Appendix to the MOU and that importers are jointly and severally liable for escrow deposits due from an NPM with respect to NPM cigarettes that they import; or

		
	d.
	SET-paid NPM cigarettes sold after 2014 in a signatory Settling State on which escrow was timely deposited in an amount equal to or greater than the Escrow Statute rate, but as to which the State releases a portion of such amount not to exceed 50% of the Escrow Statute rate pursuant to a tribal compact to a federally recognized tribe (or tribe that was recognized by that State as of January 1, 2012) with a reservation in that State where each of the following is true:  (i) the release occurs no earlier than one year after the deposit is made, (ii) the cigarettes on which the escrow is released were sold in retail transactions to consumers on that tribe's reservation, (iii) the money released is provided to the tribe itself and used solely for public safety on such tribe's reservation and/or social services for tribal members (e.g., health care, education) and not for any function that could directly or indirectly promote or reduce the costs of cigarette production, marketing or sales, (iv) the money released is not used in any way for the benefit of an NPM or to facilitate NPM sales, (v) the compact makes the requirements of Section IV.L applicable to the tribe, and the tribe is in conformity with such

___________________________
 2 Subject to any limitation arising from Rule 11 or similar state ethical rules.

3

 requirements, and (vi) the State has amended its Escrow Statute to remove the NPM's right to reversion and interest as to (but only as to) the escrow to be released in conformity with the above requirements.3   Provided, however, that (i) a signatory Settling State may not release more than $1 million in escrow as described in this paragraph in any year to all tribes collectively; and (ii) in the event a court strikes down a signatory Settling State's removal of the NPMs' right to reversion and interest described in (vi) above, such State may pay to tribes the amounts authorized under the remainder of this paragraph out of its general fund (subject to all other conditions and limits set forth above).  A State that releases escrow as described in this paragraph has the responsibility of ensuring that (i)-(vi) and the terms of the preceding sentence are met.  

		
	3.
	Safe Harbor. No adjustments under this section will be applied to a signatory Settling State for any year in which the state demonstrated (a) that escrow was deposited on at least 96% of all NPM cigarettes sold in the state during that year on which SET was paid in the state, or (b) that the number of SET-paid NPM cigarettes sold in the state during that year on which escrow was not deposited did not exceed 2 million cigarettes.

  
		
	4.
	Timing.  The adjustment amount with respect to a signatory Settling State will be applied to that state's share of the signatory PMs' next annual MSA Payment.  If a stay or order, as referenced supra, is reversed or otherwise becomes no longer operative and escrow is not then deposited on the cigarettes at issue, the adjustment on those cigarettes will be applied to that state's share of the signatory PMs' next annual MSA Payment unless a further stay or order is entered.  Adjustment amounts applied to a state's share will be subject to appropriate repayments by the signatory PMs if escrow is deposited on the cigarettes at issue after application of the adjustment.

		
	5.
	Process.  The process will be as specified in Sections II.B.5 and IV.B of the MOU.  The final settlement agreement will include provisions as to communication of information to the Data Clearinghouse.

		
	C.
	Non-SET-Paid NPM Sales

		
	1.
	Non-SET-Paid NPM Sales would be handled as to the signatory Settling States per the terms of the MSA, with the following adjustments:

 
______________________________
3 This paragraph applies only with respect to cigarettes of NPMs that existed in the U.S. market as of June 1, 2012 and does not apply with respect to cigarettes of NPMs that entered the U.S. market after that date.  In addition, this paragraph does not apply where any NPM involved in the production, distribution or sale of the cigarettes at issue is one (or an affiliate or successor of one) affiliated with the tribe (or any members of the tribe) to which the escrow would be released.  For purposes of this paragraph, a tribe with reservation land located in more than one State is considered to have a reservation in, and to be eligible for release of escrow from, only the State in which the largest portion of its reservation land is located.

4

		
	a.
	The total NPM Adjustment liability (if any) of each signatory Settling State under the original formula for a year would be reduced by a percentage.  The percentage would equal the sum of (i) the percentage represented by the fraction of the total SET-paid NPM volume in the MSA States divided by nationwide FET-paid NPM volume for that year;4  plus (ii) in the case of a signatory Settling State that has, as of January 1 of the year at issue, executed documentation approving the PSS amendment, the percentage represented by the fraction of (x) the total equity-fee-paid NPM sales in those PSS that had in effect for the entire year at issue an NPM equity fee law that, by its terms, imposed a per-pack fee equal to or greater than 90% of the escrow rate for sales made that year under the Escrow Statute on all cigarette sales in such state that it has the authority under federal law to tax, divided by (y) nationwide FET-paid NPM volume.5 

		
	b.
	The liability reduction under paragraph (a) would be effectuated by each signatory Settling State that is found non-diligent and allocated a share of the NPM Adjustment amount receiving a reimbursement by the signatory PMs through the methodology detailed in Paragraph 3(a) of the Agreement Regarding Arbitration.

		
	2.
	The Diligent Enforcement standard applies to all FET-paid NPM sales that the State reasonably could have known about and on which such State has the authority under federal law to tax or collect escrow, including (i) all 

_______________________
 4 The total SET-paid NPM volume in the MSA States will be calculated as follows.  SET-paid NPM volume in a signatory Settling State will be the number of SET-paid NPM sales in that State in that year as determined through the process described in Section III.B.5.  SET-paid NPM volume in a non-signatory Settling State will be NPM sales in that State in that year on which the State's cigarette excise tax was paid (or on which another state tax on the distribution or sale of cigarettes or an excise or other tax imposed by a tribe was paid if that State in that year treated NPM sales on which such tax was paid as fully subject to the escrow requirement under that State's Escrow Statute).  For a non-signatory Settling State, such volume will be as reported by that State under the Significant Factor procedures agreement (or other agreement among the parties as to the Significant Factor issue for that year), provided that any signatory PM or signatory Settling State may challenge that reported volume in the arbitration referenced in Sections III.C.4 and IV.J.1 as an inaccurate measure of the volume described in the preceding sentence.  In the event of such a challenge, the arbitration panel's determination of the volume will be final and binding on all signatory PMs and signatory Settling States.  References to “FET” include arbitrios de cigarillos in Puerto Rico.
 5 The final settlement agreement will include provisions addressing how the information for calculating the total equity-fee-paid NPM sales in each such PSS will be obtained.  The current fee laws in MS and MN will be deemed to meet the requirements of clause (x) even though they otherwise would not so long as the per pack amount in effect under them remains at least as large as it is now.  The signatory PMs further agree to the following:  (i) the signatory OPMs agree to support the enactment in FL and TX of legislation meeting the requirements of clause (x) provided that such legislation is not in conjunction with any other legislative proposal and does not contain any provision that applies to the OPMs or their products or businesses; (ii) if the PSS amendment has become effective, the signatory SPMs agree not to oppose the enactment in FL and TX of legislation meeting the requirements of clause (x) provided that such legislation is not in conjunction with any other legislative proposal; and (iii) if a signatory PM supports the enactment in FL or TX of an equity fee law that does not meet the requirements of clause (x) and such law is enacted, the law will be deemed to meet the requirements of clause (x) as to that signatory PM (and, if enactment of the law was supported by signatory PMs with more than 60% Market Share, the law will be deemed to meet the requirements of clause (x) as to all signatory PMs).

5

such sales made via the Internet, (ii) all such tribal sales or sales on tribal lands, and (iii) all such sales that may otherwise constitute contraband.6  

		
	3.
	Factors relevant to the Diligent Enforcement determination include, but are not limited to:  (i) whether the number of NPM sales in the State that were SET-paid and addressed under Section III.B was reduced by virtue of a policy or agreement not to require/collect SET or enforce an SET stamping requirement, or an indifference to SET collection or to enforcement of an SET stamping requirement; and/or (ii) whether the actual number of SET-paid NPM sales in the State during that year was significantly greater than the number of such sales addressed under Section III.B.7 

		
	4.
	The signatory Settling States agree that diligent enforcement will be determined as to them in a single arbitration each year.  Future arbitrations under this Term Sheet would be governed by the arbitration terms outlined within the MOU, except to the extent necessary for a future merged arbitration to proceed as described in Section IV.J.1 below.

		
	5.
	The signatory Settling States and the PMs will continue to discuss in good faith on an ongoing basis whether there are other actions that they can reasonably take to prevent non-SET-paid NPM sales.

		
	IV.
	OTHER TERMS

		
	A.
	Withholding/Disputed Payment Accounts.  Except as provided in Section J below, the PMs will not withhold or pay into the DPA based on a dispute arising out of the revised NPM Adjustment, except if the dispute was noticed for arbitration by the PM over one year prior to the payment date and the arbitration has not begun despite good faith efforts by the PM.

		
	B.
	Most Favored Nations.  The MFN clause provided within the MOU would be retained.

		
	C.
	RYO.  Those terms relating to RYO in the MOU as to applying the SET-paid sales provision to RYO would be retained (i.e., it applies if tax other than SET is paid, and whether or not the state law requires that the containers be stamped).  The signatory Settling States and the signatory PMs will continue to discuss in good faith on an ongoing basis the issues of pipe tobacco being sold for use as RYO and of cigarette rolling machines being located at retail establishments and clubs.

		
	D.
	Office.  Those terms of the MOU designating an office within each signatory Settling State as a point-of-contact on tobacco-related matters would be retained.

______________________
 6 The following are exempt from the Diligent Enforcement standard:  (i) NPM cigarette sales on a federal installation in a transaction that is exempt from state taxation under federal law, and (ii) NPM cigarette sales on a tribe's reservation by an entity owned and operated by that tribe or member of that tribe to a consumer who is an adult member of that tribe in a transaction that is exempt from state taxation under federal law. 
 7 A finding referenced in (ii) will not increase the adjustment applicable to the State under Section III.B or the reduction under Section III.C.1(a)(i).

6

		
	E.
	Conditions of Settlement.  The terms of this Term Sheet are conditioned upon: (1) joinder by a critical mass of PMs and a critical mass of Settling States by December 14, 2012; and (2) approval of this Term Sheet's terms by the Arbitration Panel.  On December 17, 2012, each party that has signed this Term Sheet will determine, in each party's sole discretion, whether a critical mass of PMs and Settling States have joined such that it will proceed with the settlement, provided that the signatory PMs agree that a critical mass of Settling States will have joined if the aggregate Allocable Share of the Settling States that sign this Term Sheet by December 14, 2012 and determine to proceed with the settlement on December 17, 2012 is 50% or more and such States include the States that participated directly in the drafting of this Term Sheet (AZ, AR, CA, MI, NE, NV, TN).  If the settlement proceeds, additional Settling States and PMs may join the settlement following December 14, 2012 by signing this Term Sheet or the final settlement agreement up to the end date of the last individual State diligent enforcement hearing in the 2003 Arbitration, although they will have different payment obligations or payment rights as detailed in Appendix A.  Settling States may join the settlement after the end date of the last individual State diligent enforcement hearing in the 2003 Arbitration if the signatory PMs, in their sole discretion, agree. PMs may join the settlement after the end date of the last individual State diligent enforcement hearing in the 2003 Arbitration if the signatory Settling States, in their sole discretion, agree.

		
	F.
	Settlement Agreement.  The parties will cooperate in the drafting and execution of a comprehensive final settlement agreement incorporating the terms of this Term Sheet, as well as all other customary terms and conditions acceptable to the parties.  The documentation process will be subject to the oversight of the Arbitration Panel.  Pending the execution of the final settlement agreement, this Term Sheet is binding on all signatories provided the conditions of Section IV.E are met.

		
	G.
	Necessary legislation.  All signatory Settling States must have the Escrow Statute, Complementary Legislation and Allocable Share Repeal in full force and effect.  A signatory Settling State that does not currently have Allocable Share Repeal in full force and effect will have until the end of 2013 to put it into full force and effect.  If it does not do so, starting with NPM cigarettes sold in 2014, NPM cigarettes on which that State releases escrow that would not be released under Allocable Share Repeal will be treated as non-compliant NPM cigarettes under Section II.B.

		
	H.
	Significant Factor.  The signatory Settling States agree that the significant factor condition to the NPM Adjustment is no longer operative as to them.  Beginning for 2022, no NPM Adjustment will be applicable to the signatory Settling States for any year in which NPM Market Share is 3% or less.8 

  
		
	I.
	Profit Adjustment.  The final settlement agreement will include appropriate provisions ensuring that the OPMs will not be subject to a profit adjustment under 

______________________
8 This Section does not affect the calculation of the amount of the NPM Adjustment under the MSA or this Term Sheet applicable to the signatory Settling States for any year in which NPM Market Share is greater than 3%.

7

Section B(ii) of Exhibit E arising from payments under Sections I-II being concentrated or recognized in less than 10 years. 

		
	J.
	Relation with non-joining States.  If there are Settling States that are not signatory Settling States and the parties agree to proceed with the settlement:

		
	1.
	The parties will cooperate in merging the arbitration under Section III.C.4 for a year with the diligent enforcement arbitration under Section XI(c) of the MSA as to non-joining States for that year.

		
	2.
	The 2015 arbitration under Section III.C will not commence until the 2015 diligent enforcement arbitration begins as to non-joining States.  The provisions of Section III.B will continue to apply on the schedule described in that Section.

		
	3.
	In the interim, the signatory Settling States and the PMs will split the amounts at issue under III.C for 2015 and each subsequent year on a 50-50 basis, subject to repayment without interest by the PMs or credit without interest by the signatory Settling States after the arbitration for that year concludes.  No more than 1 year would be subject to repayment or credit in any one year.

		
	4.
	Notwithstanding the above, the PMs would have the right to commence the 2015 arbitration under Section III.C as to the signatory Settling States in advance of the above schedule if the volume of non-SET-paid NPM sales exceeds 9 billion cigarettes in each of any two years.  After the first such year, the PMs and signatory Settling States would discuss measures that could be taken to avoid such sales.  Notwithstanding the above, the signatory Settling States would have the right to commence the 2015 arbitration under Section III.C. as to the PMs in advance of the above schedule if the volume of non-SET-paid NPM sales is less than 2 billion cigarettes in each of any two years.  Any early commencement under this paragraph requires the unanimous approval of the signatory members of the side seeking early commencement. 

  
		
	K.
	Cap of MSA payment.  A signatory Settling State may not be subject to a total NPM Adjustment under this Term Sheet for a year in excess of its total MSA payment for that year.

		
	L.
	Taxes.  If a signatory Settling State has a law, regulation, systematic policy, compact or agreement with respect to taxes (applicability, amount, collection or refund) or stamping that is different for any NPM cigarettes than any PM cigarettes or a law, regulation, systematic policy, compact or agreement with respect to stamping that does not set forth specific requirements regarding when and what stamps are required, the law, regulation, systematic policy, compact or agreement 

8

will be relevant to the Diligent Enforcement determination.9 In addition, if the difference between NPM and PM cigarettes with respect to taxes or stamping is material, the reduction in liability described in Section III.C.1(a)(i) will not be applied with respect to that State (if found non-exempt from the NPM Adjustment) for a year in which the difference is in effect.

		
	M.
	Additional Legislation.  If requested by a signatory Settling State, the PMs will support the enactment of legislation, provided that such legislation is not in conjunction with any other legislative proposal and contains no deviation of substance from the model language referred to below, which:  (i) permits the release of taxpayer-confidential information to the Data Clearinghouse for the purpose of fulfilling its responsibilities under the settlement; (ii) imposes the bonding requirement described in Section III.B.2.c above, (iii) imposes the joint-and-several liability requirement described in Section III.B.2.c above, (iv) modifies the Escrow Statute in a manner consistent with Section III.C.2-3 above with respect to the subjects described in those Sections, and/or (v) permits a compact meeting the conditions described in Section III.B.2.d above and modifies the Escrow Statute in the manner described in Section III.B.2.d(vi) above.  The final settlement agreement will include model language for the above modifications (including appropriate severability language) that signatory Settling States may choose, at their option, to use, and the PMs agree that the model language (or language containing no material deviation of substance from it) will not affect the status of a signatory Settling State's Escrow Statute as a Qualifying or Model Statute or any prior agreement to that effect.  In addition, if requested by a signatory Settling State, the PMs will not oppose the Model Legislation set forth in Appendix A to the MOU.  The signatory Settling States and the signatory PMs will continue to discuss in good faith on an ongoing basis support for other appropriate legislative enactments that would enhance enforcement of and/or improve compliance with the escrow requirement and for legislation prohibiting or limiting the sale of cigarettes to any consumer who is not in the physical presence of the seller at the time of sale.

		
	N.
	Potential New Participating Manufacturers.  Subject to the condition specified in the last sentence of this section, the PMs agree to waive rights under Section XVIII(b) of the MSA as to NPMs signing the MSA and becoming a Participating Manufacturer without making back-payments for sales in prior years that would otherwise be required under Section II(jj) of the MSA and/or without making full escrow deposits on such prior sales, provided that the following conditions are met:  (i) the NPM signs the MSA within 120 days of the execution of the final settlement agreement; (ii) the NPM turns over the full amount on deposit in its existing escrow accounts to the Settling States; (iii) all other MSA terms are applicable to the NPM and the NPM waives any claim of immunity from enforcement of its MSA obligations; (iv) the NPM agrees to the other customary terms and conditions, apart from back-payments and escrow deposits, that the States have required for new

______________________
9 This does not include (i) taxes or stamping requirements that differ for reservation sales and non-reservation sales provided that the taxes and stamping requirements applicable to reservation and non-reservation sales respectively are the same for both PM and NPM sales, or (ii) requirements that NPM cigarettes bear a stamp of a different color solely for purposes of identification. 

9

Participating Manufacturers (including quarterly payments and de-listing); and (v) the NPM agrees that substantial non-compliance with its MSA obligations during the first five years after joining the MSA in the absence of a good-faith dispute would trigger the back-payment obligations that would otherwise have been required of it.  The PMs do not waive rights under Section XVIII(b) of the MSA as to a new Participating Manufacturer's performance of its MSA obligations going forward.  This section is conditioned upon the delivery to the PMs within 60 days of the execution of the final settlement agreement a binding agreement executed by all Settling States and the Foundation that NPMs that sign the MSA pursuant to this provision without making full back-payments will not be considered Participating Manufacturers for purposes of Section IX(e) of the MSA.10 

		
	O.
	Release of Escrow.  Except pursuant to the unanimous consent of the signatory PMs, signatory Settling States will not release or refund escrow deposited for the resolved years 1999-2012 or transition years 2013-2014 except to a State or as provided in the Escrow Statute as amended by Allocable Share Repeal.  Any release or refund of escrow deposited for subsequent years will be addressed as provided in Section III.B for SET-paid NPM sales and as provided in Section III.C and the Diligent Enforcement standard for non-SET-paid NPM sales.

________________________
10 This provision does not apply to any entity that had previously agreed to sign the MSA and to make any back-payments.  The PMs retain their rights under Section XVIII(b) of the MSA as to any such entity.

10

APPENDIX A:
		
	1.
	The OPMs receive a total amount equal to (a) the aggregate Allocated Settlement Percentage of the signatory Settling States multiplied by $6.52 billion; and (b) the aggregate Allocated Settlement Percentage of the signatory Settling States multiplied by the OPMs' full 2010-12 NPM Adjustments.  Each signatory Settling State's Allocated Settlement Percentage equals the product of its Allocable Share percentage and the applicable settlement value percentage under Paragraph 2.11 

		
	2.
	(A)    For Settling States that sign this Term Sheet by 6:00 P.M. PST on the initial sign-on date and determine to proceed with the settlement on December 17, 2012, the applicable settlement value percentage is that reflected in the grid below, with the aggregate Allocable Share being the aggregate Allocable Share of the Settling States that sign this Term Sheet by the Reference Date and proceed with the settlement:

	
			
	Aggregate Allocable Share
	 
	Settlement Value Percentage

	80% or more
	 
	37.5%

	75-79.9%
	 
	38.5%

	70- 74.9%
	 
	39.5%

	65- 69.9%
	 
	40.5%

	60- 64.9%
	 
	42.5%

	55- 59.9%
	 
	44.5%

	50- 54.9%
	 
	46%

Except as provided below, the initial sign-on date is December 14, 2012.  For Settling States whose individual State diligent enforcement hearing in the 2003 Arbitration is scheduled to begin in December 2012 (WA, AZ and CO), the initial sign-on date is the day preceding the beginning of its hearing unless the beginning of its hearing is deferred until after December 14, 2012.  At the present time, WA and AZ have agreed to such deferral, and their initial sign-on date will be December 14, 2012 so long as the Panel approves the deferral.
(B)    For Settling States that sign this Term Sheet (or, in the case of Settling States that do not sign this Term Sheet, the final settlement agreement) after the initial sign-on date, the applicable settlement value percentage is 59%.  The signatory PMs, in their sole discretion, may waive all or part of the increase above the applicable settlement value percentage under subparagraph (A) as to such a State without triggering the MFN clause in this Term Sheet and without any obligation to provide a similar waiver to any other State.12 
(C)    The Reference Date is December 21, 2012.  A Settling State that signs this 
_________________________________________________ 
11 References to a State's “Allocable Share” percentage in this Term Sheet are to the percentage set forth for that State as listed in Exhibit A of the MSA.  
12 Approval by signatory PMs representing at least 85% Market Share in 2011 will be sufficient for this waiver and will bind the remaining signatory PMs.   

11

Term Sheet after the initial sign-on date but by the Reference Date will be counted as part of the aggregate Allocable Share under subparagraph (A) whether or not the signatory PMs waived the increased percentage applicable to such State under subparagraph (B).

		
	3.
	(A)    The amount under Paragraph 1 will be provided by the OPMs receiving credits reflecting the total amount specified in Paragraph 1 (the “Total OPM Amount”).  Subject to Section IV.I, the credits will be applied as follows:  (i) 50% of the Total OPM Amount as a credit against the OPMs' MSA annual payment due in April 2013; and (ii) a [__]% reduction in the OPMs' MSA annual payment under Section IX(c)(1) of the MSA due in each of April 2014-2017, plus interest on the amount of each reduction (except as provided in the accompanying footnote) at the Prime Rate calculated from April 15, 2013.13     

(B)    The amount of the percentage in subparagraph (A)(ii) will be the percentage that, when applied to the OPMs' estimated MSA annual payments due in April 2014-2017 (the estimate being after the Inflation Adjustment, Volume Adjustment and Previously Settled States Reduction, but before the remaining adjustments, reductions and offsets under the MSA), yields a total reduction equal to 50% of the Total OPM Amount.  (For example, if 50% of the Total OPM Amount were $1 billion and the OPMs' estimated MSA annual payments for 2014-2017 (as adjusted as specified above) were $5 billion per year, the percentage in subparagraph (A)(ii) would be 5%.)  The percentage will be filled in with respect to the MSA annual payment due in April 2014 pursuant to these specifications as of the Reference Date (once the Total OPM Amount is known), subject to change in the event additional Settling States sign this Term Sheet or the final settlement agreement after the Reference Date.  With respect to each of the reductions to the MSA annual payments due in April 2015-2017, the percentage will be recalculated annually on October 15 of the year prior to the year the payment is due (for example, on October 15, 2014 for the MSA annual payment due in April 2015) to reflect the percentage that, when applied to an estimate of the OPMs' next annual payment based upon inflation and volume in the first 9 months of the year prior to the year the payment is due, yields a reduction equal to 12.5% of the Total OPM Amount.14  

(C)    The final settlement agreement will include provisions that will apply in the event the Total OPM Amount increases after the Auditor's Final Calculation of the MSA annual payment due on April 15, 2013 as a result of increased State 
____________________________________ 
13  Interest will only be paid on the portion of each reduction that exceeds 20% of the signatory Settling States' aggregate Allocable Share of amounts previously withheld by an OPM and paid into the DPA pursuant to Paragraph 5. 
14  The reductions to be applied in 2014-2017 do not count in calculating the NPM Adjustment or toward the cap in Section IV.K (the final settlement agreement will include provisions addressing how the OPMs will receive the funds at issue if such a State does not have a sufficient MSA payment remaining in any such year to apply the reductions due that year).  In addition, the final settlement agreement will include provisions regarding the accrual of the reductions.

12

participation after that date and that specify how the increased part of that Amount will be provided to the OPMs.  Unless the parties agree otherwise, those provisions will be consistent with the principles of this Appendix, including providing for payment of 50% of the increased part of that Amount by first-available credit and of the remaining 50% by reduction.
(D)    Each credit and reduction will be allocated among the OPMs as directed by the OPMs.  
		
	4.
	The credit and reductions under Paragraph 3 will be allocated solely among the signatory Settling States and will not be allocated to the Allocated Payment of any non-signatory Settling State.  Except as provided in Section I.B or as may be agreed upon by the parties in the final settlement agreement, the credit and each of the reductions will be allocated among the signatory Settling States in proportion to their respective Shares.  A signatory Settling State's “Share” means the percentage yielded by dividing its Allocated Settlement Percentage by the aggregate Allocated Settlement Percentages of all signatory Settling States.15  

		
	5.
	Any OPM that withheld amounts with respect to an NPM Adjustment will pay that amount into the DPA by seven days after approval of this Term Sheet's terms by the Arbitration Panel.  Each OPM that paid amounts attributed to the 2003, 2004, 2006, 2007, 2008 or 2009 NPM Adjustments into the DPA (including previously withheld amounts paid into the DPA pursuant to the preceding sentence) will, as of the date it receives confirmation from the Independent Auditor that it will apply all of the credits and reductions described in Paragraphs 1-3 and allocate them as described in Paragraphs 4 and 6, instruct the Escrow Agent and the Independent Auditor to release to the signatory Settling States from the DPA an amount equal to the total amounts attributed to such NPM Adjustments (plus the accumulated earnings thereon) multiplied by the aggregate Allocable Share percentage of the signatory Settling States, less amounts allocated to the Data Clearinghouse per Section I.A.3 above.  Individual signatory Settling States may choose to have their DPA releases spread over 2013-2017.  This would not affect any credits, adjustments or other calculations.

		
	6.
	The signatory Settling States and OPMs will jointly instruct the Escrow Agent and Independent Auditor:  (i) to apply all of the credits and reductions described in Paragraphs 1-3, and to allocate them among the OPMs as described in Paragraph 3 

______________________
15 Subject to the limits specified below, a signatory Settling State that signs this Term Sheet by the Reference Date may elect, by notice to the parties no later than the Reference Date, for its Share of the Total OPM Amount to be applied entirely as a credit against the OPMs' MSA annual payment due in April 2013.  In that event, the overall amounts of the respective credit and reductions under Paragraph 3 will not change, but the credit and reductions will be allocated among the signatory Settling States differently so that (i) each electing State is allocated a portion of the April 2013 credit equal to its Share of the Total OPM Amount and is allocated none of the 2014-2017 reductions, and (ii) each other signatory Settling State is allocated a lower portion of the April 2013 credit and a corresponding higher portion of each of the 2014-2017 reductions as necessary to fulfill the provisions of Paragraph 4.  Unless the OPMs agree otherwise, the election right will not be available if it would result in a profit adjustment under Section B(ii) of Exhibit E of the MSA or if it is not possible to apply the preceding sentence  because too many signatory Settling States have already sought to make that election.   

13

and solely among the signatory Settling States as described in Paragraph 4; and (ii) to allocate the amount released from the DPA under Paragraph 5 solely among the signatory Settling States in proportion to their respective Allocable Shares, except for those amounts allocated to the Data Clearinghouse. 
		
	7.
	There will be parallel provisions for SPMs so that each signatory SPM receives the same (i.e., no greater) relative payment amounts on the same general timetable and makes the same relative releases (including amounts paid into the DPA attributed to the 2010-11 NPM Adjustments) through an equivalent process.

		
	8.
	The remaining methodology in the August 2010 MOU would be retained, including as to SPMs that withheld funds (including in excess of their total payment amounts under this Term Sheet), SPMs that are not current on their undisputed or adjudicated MSA payment amounts or that expressly waived or assigned Adjustment claims, and late-joining Settling States or PMs.  Late-joining Settling States would be eligible to join subject to the provisions of Section IV.E, but their payment amount would be as provided in Paragraph 2.  Any late-joining OPM will be treated in the same manner as a late-joining SPM was to have been treated under the August 2010 MOU.  A PM or Settling State that signs this Term Sheet after the initial sign-on date (for PMs, 6:00 P.M. PST on December 14, 2012; for States, as provided in Paragraph 2) will be considered late-joining, provided that, in the case of a late-joining Settling State, the signatory PMs may waive all or part of the increased payment from that State as provided in Paragraph 2.

14

	
			
	JP015026:ehd
629000-605003
	December 17, 2012
	 

	 
	 
	 

VIA E-MAIL

Bradford Phelps
Chief Deputy Attorney General
State of Arkansas, Office of Attorney General
323 Center Street, Suite 200
Little Rock, AR 72201
bradford.phelps@arkansas.gov

David D. Cookson
Chief Deputy Attorney General
State of Nebraska, Office of Attorney General
2115 State Capitol
Lincoln, NE 68509
david.cookson@nebraska.gov
		
	Re:
	Term Sheet for Settlement of the NPM Adjustment Disputes

Dear Counsel:
I am authorized by the Original Participating Manufacturers to agree:  (1) pursuant to Section IV.E of the Term Sheet, that the PMs that have joined the November 14, 2012 Term Sheet to date constitute a critical mass of PMs and that the Settling States that have signed that Term Sheet to date, with an aggregate Allocable Share of approximately 42%, constitute a critical mass of Settling States; and (2) for purposes of Section I.A.2 of the Term Sheet and Appendix A, Paragraph 2(A) of the Term Sheet, joinder by those signatory Settling States with that aggregate Allocable Share qualifies as joinder by Settling States with an aggregate Allocable Share of 50% and gives rise to a Settlement Value Percentage of 46%.
Sincerely,
/s/ ELLI 
Elli Leibenstein

15Exhibit 10.1

Exhibit 10.1

AMENDED AND RESTATED SENIOR EXECUTIVE AGREEMENT
 
THIS AMENDED AND RESTATED SENIOR EXECUTIVE AGREEMENT (the “Agreement”) by and between ON ASSIGNMENT, INC., a Delaware corporation (the “Company”) and PETER T. DAMERIS (“Executive”) is entered into on December 13, 2012.  This Agreement amends and restates the Original Agreement (as defined below) and is effective as of the Amended Effective Date (as defined below).
 
Recitals
 
A.     The Company and Executive previously entered into that certain Senior Executive Agreement (the “Original Agreement”), dated November 4, 2009 and effective January 1, 2010, pursuant to which Executive currently serves as the Chief Executive Officer and President of the Company.
 
B.      The Company and Executive wish to enter into an amended and restated agreement, effective December 31, 2012 (the “Amended Effective Date”) pursuant to which Executive will continue his employment as the Chief Executive Officer and President of the Company under the terms and conditions set forth herein.  

C.    As of the Amended Effective Date, the Original Agreement shall terminate and be superseded by this Agreement.  

D.    Certain definitions are set forth in Section 4 of this Agreement.
 
Agreement
 
The parties hereto agree as follows:
 
1.             Employment.  The Company hereby engages Executive to continue to serve as the Chief Executive Officer and President of the Company, and Executive agrees to continue to serve the Company, during the Service Term (as defined in Section 1(f) hereof) in the capacities, and subject to the terms and conditions, set forth in this Agreement.
 
(a)           Services.  During the Service Term, Executive, as Chief Executive Officer and President of the Company, shall have all the duties and responsibilities customarily rendered by Chief Executive Officers and Presidents of companies of similar size and nature and as may be reasonably assigned from time to time by the Board (as defined below).  Executive will report directly to the Board.  Executive will devote his best efforts and substantially all of his business time and attention (except for vacation periods and periods of illness or other incapacity) to the business of the Company and its Affiliates (as defined below).  Notwithstanding the foregoing, and provided that such activities do not interfere with the fulfillment of Executive’s obligations hereunder, Executive may (i) serve as an officer, director or trustee of any charitable or non-profit entity; (ii) own a passive investment in any private company and own up to 5% of the outstanding voting securities of any public company; or (iii) with the prior approval of the Board, serve as a director of up to two other companies so long as such companies do not compete with the Company and Executive notifies the Board in advance of accepting any such position.  Unless the 

1

Company and Executive agree to the contrary, Executive’s place of employment shall be at the Company’s principal executive offices in Calabasas, California; provided, however, that Executive shall be permitted under the terms of this Agreement, upon conditions approved by the Board, to relocate his principal residence to Texas and to perform his duties and responsibilities under this Agreement from such location and commute from time to time to the Company’s principal executive offices so long as such relocation does not materially interfere with Executive’s satisfactory performance of his duties and responsibilities under this Agreement and, provided, further, that Executive will travel to such other locations as may be reasonably necessary in order to discharge his duties and responsibilities hereunder.  Executive shall have the right to attend all meetings of the Board and will be nominated for election as a director for each term for which he is eligible to serve during the Service Term.

(b)           Salary, Bonus and Benefits.
 
(i)            Salary and Bonus. During the Service Term, effective from and after January 1, 2013, the Company will pay Executive a base salary (the “Annual Base Salary”) as the Board may designate from time to time, at the rate of not less than $800,000 per annum, payable in accordance with the Company’s normal payroll practices; provided, however, that the Annual Base Salary shall be subject to review by the Board for upward increases (but not decreases) annually during the first quarter of each calendar year of the Service Term, with any such upward increases having retroactive effect to January 1 of the year to which such increases apply.  With respect to calendar year 2013 and each calendar year thereafter during the Service Term, Executive will be eligible to receive an annual bonus (the “Annual Bonus”), based on a target bonus opportunity equal to at least 90% of Executive’s Annual Base Salary and a maximum bonus opportunity of 180% of Executive’s Annual Base Salary, as determined by the Compensation Committee of the Board (the “Compensation Committee”) based upon the Company’s achievement of applicable performance goals to be determined by the Compensation Committee.  The Annual Bonus, if any, shall be due and payable to Executive, in cash, on or prior to March 15 of the year immediately following that in which such annual bonus is earned (for the avoidance of doubt, this deadline is intended to comply with the “short-term deferral” exemption from the application of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)).
 
(ii)           Benefits.  During the Service Term, Executive shall be entitled to participate in and shall receive all benefits under pension benefit plans provided by the Company (including without limitation participation in any Company incentive, savings and retirement plans, practices, policies and programs) to the extent applicable generally to other peer executives of the Company.  In addition, during the Service Term, Executive and/or Executive’s family shall be entitled to participate and shall receive all benefits under welfare plans provided by the Company (including without limitation medical prescriptions, dental, disability, employee life, group life, accidental life and travel accident insurance plans and plans) to the extent and on the same basis applicable generally to other peer executives of the Company.  Executive shall be reimbursed for customary travel and other expenses, subject to standard and reasonable documentation requirements.  In addition, Executive will receive a stipend of $450 per month for lease of an automobile and other related expenses during the Service Term, payable in equal monthly increments during the Service Term.  Executive shall be entitled to vacation according to the vacation policy in place for other senior executives of the Company.
 

2

(iii)         Long-Term Incentive Awards.   During the Service Term, Executive shall be eligible to receive grants of awards identified in this Section 1(b)(iii) (the “LTIP Awards”) at the times and subject to the terms and conditions set forth below.  Each LTIP Award shall be subject to the terms and conditions of the applicable incentive plan pursuant to which such LTIP Award is granted and shall be set forth in an award agreement between Executive and the Company (each such agreement, an “Award Agreement”).  

(A)          Tranche A Awards.  No later than the ninetieth day of each of calendar years 2013, 2014 and 2015, subject to Executive’s continued employment with the Company through the applicable grant date (subject to Section 1(b)(iii)(E)(3) below) and approval by the Committee, the Company shall grant to Executive performance-vesting restricted stock units (“Tranche A RSUs”) with respect to a number of shares of the Company’s common stock having a fair market value equal to $800,000, determined by dividing $800,000 by the closing price of the Company’s common stock on the first trading day of the calendar year in which the respective Tranche A RSU award is granted; provided, however, that the first Tranche A RSU awarded pursuant to this Section 1(b)(iii)(A) (the “Tranche A RSU #1”) shall be granted on December 31, 2012 with respect to a number of shares of the Company’s common stock having a fair market value equal to $800,000, determined by dividing $800,000 by the closing price of the Company’s common stock on that date.   The performance period applicable to each Tranche A RSU award shall be the calendar year during which the respective Tranche A RSU award is granted, and each Tranche A RSU award shall (1) vest in full on January 4 of the year immediately following the grant year, subject to continued employment through such date, upon the Company attaining positive Adjusted EBITDA over the calendar year during which the respective Tranche A RSU award is granted and (2) be paid within sixty (60) days after vesting; provided, however, that the performance period applicable to Tranche A RSU #1 award shall be the 2013 calendar year and such award shall vest in full on January 4, 2014, subject to continued employment through such date, upon the Company attaining positive Adjusted EBITDA over the 2013 calendar year.  Consistent with the foregoing, the terms and conditions of each award of Tranche A RSUs, including the applicable vesting and share delivery conditions, shall be set forth in a RSU Award Agreement to be entered into by the Company and Executive which shall evidence the grant of each award of Tranche A RSUs (the “Tranche A RSU Agreements”). Each award of Tranche A RSUs shall, subject to the provisions of this Section 1(b)(iii)(A), be governed in all respects by the terms of the applicable Tranche A RSU Agreement and the applicable equity incentive plan.  

(B)         Tranche B Awards.  No later than the ninetieth day of each of calendar years 2013, 2014 and 2015, and subject to Executive’s continued employment with the Company through the applicable grant date (subject to Section 1(b)(iii)(E)(3) below) and approval by the Committee, the Company shall grant to Executive performance-vest restricted stock units (“Tranche B RSUs”) with respect to a target number of shares of the Company’s common stock having a fair market value equal to $2,100,000 and a maximum number of shares of the Company’s common stock having a fair market value of $3,150,000,  determined by dividing $2,100,000 and $3,150,000, respectively, by the closing price of the Company’s common stock on the first trading day of the calendar year in which the respective Tranche B RSU award is granted.   The performance period applicable to each Tranche B RSU award shall be the calendar year during which the respective Tranche B RSU award is granted.   Each Tranche B RSU award shall vest, subject to continued employment, in substantially equal installments on January 4 of each of the year immediately following the grant year and the first and second anniversaries thereof, and shall be paid within sixty (60) days after the applicable vesting date.  Consistent with the foregoing, the terms and conditions of each award of Tranche B RSUs, including the applicable vesting and share delivery conditions, shall be set forth in a RSU Award Agreement to be entered into by the Company and 

3

Executive which shall evidence the grant of each award of Tranche B RSUs (the “Tranche B RSU Agreements”). Each award of Tranche B RSUs shall, subject to the provisions of this Section 1(b)(iii)(B), be governed in all respects by the terms of the applicable Tranche B RSU Agreement and the applicable equity incentive plan.  

(C)          Additional Performance Awards.  As contemplated in the Original Agreement, subject to Executive’s continued employment with the Company through each such grant date and further subject Section 1(b)(iii)(E)(3) below, the Company shall make the following grants of additional performance awards to Executive under an applicable Company equity incentive plan (the “Additional Grants”):
		
	•
	2013 Grants.  During the first ninety days of calendar year 2013, the Company shall grant to Executive two Additional Grants, each providing the opportunity to earn up to $500,000, payable as soon as practicable after January 2, 2014 and January 2, 2015, respectively, but in no event later than March 15, 2014 and March 15, 2015, respectively.

		
	•
	2014 Grant.  During the first ninety days of calendar year 2014, the Company shall grant to Executive an Additional Grant that provides the opportunity to earn up to $500,000, payable as soon as practicable after January 2, 2015, but in no event later than March 15, 2015.

Notwithstanding the foregoing, payment or settlement of Additional Grants, if applicable, may be accelerated as provided in Section 1(b)(iii)(D) and (E) below.  Subject to the foregoing requirements, Additional Grants shall be paid at the time of settlement, to the extent earned, in either (i) fully vested, freely transferable shares of Company common stock (subject to limitations on transfer imposed under applicable law) or (ii) if insufficient shares remain under the applicable equity incentive plan at the time of settlement to pay any earned portion of an Additional Grant in shares of Company common stock, then such portion of the Additional Grant shall instead be paid in cash.  Upon or prior to making the applicable grant, the Company and Executive shall determine by mutual agreement the performance criteria applicable to the vesting of Additional Grants (selected from performance criteria enumerated in an applicable equity incentive plan) and the Compensation Committee shall, in consultation with Executive, establish in writing performance goals applicable to each Additional Grant based on such performance criteria and determined by reference to the twelve-month performance period beginning on January 1 of the year of grant.  Each Additional Grant shall vest, subject to Sections 1(b)(iii)(D) and (E) below, on January 2 of the year immediately following the year in which such Additional Grant is made, subject to Executive’s continued employment through such date, in each case, as to (i) no portion of the award if the applicable performance goals are attained at less than 90% of target, (ii) 80% of the award if the applicable performance goals are attained at 90% of target, (iii) 100% of the award if the applicable performance goals are attained at or above 110% of target, and (iv) a linear pro ration between 80% – 100% of the award if the applicable performance goals are attained between 90% – 110% of target (for example, an Additional Grant shall vest as to 95% of the award upon attainment of 105% of the applicable target).   

(D)     Corporate Events.  Immediately prior to the earliest to occur of a Change in Control (as defined in the 2010 Plan, or any comparable definition in a new equity incentive plan approved by the Company’s stockholders and applicable to the relevant Additional Grant), or a Change of Control (as defined in the Amended and Restated Executive Change of Control Agreement between the Company and Executive, dated December 11, 2008) (together, “Corporate Events”), in any case, occurring during the Service Term, any outstanding and unvested Additional Grants shall vest fully as if all applicable performance targets were fully attained and all service requirements satisfied, and the Additional Grants shall be settled or paid, if applicable, 

4

immediately prior to, upon or within fifteen days after the occurrence of such Corporate Event, provided, that to the extent that any Additional Grants constitute “nonqualified deferred compensation” (within the meaning of Code Section 409A), such Additional Grants shall only be paid or settled in connection with the Corporate Event if the Corporate Event constitutes a “change in control event” within the meaning of Code Section 409A, and shall otherwise be paid or settled upon the earliest to occur of (i) the Date of Termination (as defined below), (ii) Executive’s death or Disability, or (iii) the date specified in Sections 1(b)(iii)(C) above, as applicable, subject to Section 1(g) below.  In addition, each Tranche A RSU award and Tranche B RSU award shall be governed by the terms and conditions set forth in the applicable award agreement.

(E)        Termination of Employment.   Each long-term incentive award granted pursuant to Section 1(b)(iii) of the Original Agreement (the “Prior Awards”) that remains outstanding as of Executive’s termination of employment shall be governed by the terms and conditions of the applicable award agreement and the Original Agreement.  The following provisions shall govern the LTIP Awards in the event of Executive’s termination of employment:

(1)     Termination Without Cause, for Good Reason or Due to Death or Disability.   If Executive’s employment with the Company terminates due to his death or Disability or due to a termination by the Company without Cause or by Executive for Good Reason (each as defined below and each, a “Qualifying Termination”), subject to Section 1(g) below, this Section 1(b)(iii)(E)(1) shall govern the Additional Grants, and each Tranche A RSU award and Tranche B RSU award shall be governed by the terms and conditions set forth in the applicable award agreement.  Additional Grants that have vested but have not been settled or paid as of the date of a Qualifying Termination shall be settled or paid as soon as practicable after the January 2 immediately following the Date of Termination, but in no event later than the March 15 immediately following such Date of Termination.  Additional Grants that have not vested as of the Date of Termination shall remain outstanding and eligible to vest upon the January 2 immediately following the Date of Termination (without the requirement of continued employment beyond such termination) and shall vest on a pro-rated basis upon and be paid as soon as practicable after such January 2 (but in no event later than the March 15 immediately following such Date of Termination), in a manner determined by multiplying amounts that would be earned under such Additional Grant based solely on attainment of the applicable performance objectives by a fraction, the numerator of which equals the number of days Executive was employed by the Company from January 1 of the applicable year of grant through the Date of Termination, and the denominator of which equals 365.

 (2)    Termination for Cause; Resignation Other Than for Good Reason.  If Executive’s employment is terminated by the Company for Cause or due to Executive’s resignation other than for Good Reason, (a) all Additional Grants that have not vested as of the Date of Termination shall terminate, (b) all Additional Grants and have vested prior to the Date of Termination, but have not been settled or paid as of the Date of Termination (if applicable), subject to Section 1(g) below, shall be settled or paid as soon as practicable after the January 2 immediately following the Date of Termination, but in no event later than the March 15 immediately following the Date of Termination and (c) each Tranche A RSU award and Tranche B RSU award shall be governed by the terms and conditions set forth in the applicable award agreement.  
(3)    Termination of Employment Prior to Grant.  If, during the first ninety days of any calendar year in which Executive is entitled to receive a LTIP Award in accordance with Section 1(c)(iii)(A)--(C) above, Executive experiences a Qualifying Termination occurring prior to the date in such calendar year on which any such LTIP Award would otherwise be granted, the LTIP Awards to which Executive is entitled for such calendar year shall instead be granted to Executive as of no later than immediately prior to such Qualifying Termination 

5

and shall be administered in accordance 1(c)(iii)(E)(1) above.  Except as expressly provided in the immediately preceding sentence, any LTIP Awards that have not been granted as of the Date of Termination shall be forfeited and Executive shall have no further rights or interests in respect of such un-granted LTIP Awards.  
 (4)    Forfeiture of Awards.  All Additional Grants that have not vested (a) in the case of a termination of Executive’s employment for Cause or due to Executive’s resignation other than for Good Reason, as of the Date of Termination, shall terminate as of the Date of Termination, (b) in the case of a Qualifying Termination in which such Additional Grants remain unvested as of the January 2 following the Date of Termination (after taking into consideration any vesting that may occur upon or following the Date of Termination as provided above or under any other agreement between Executive and Company), shall terminate as of such January 2, and, in all cases, shall be canceled without payment of consideration therefor.  Following settlement or payment of any vested Additional Grants, if applicable, such awards shall terminate and Executive shall have no further rights or interests in respect of such awards.  In addition, each Tranche A RSU award and Tranche B RSU award shall be governed by the terms and conditions set forth in the applicable award agreement. 

(F)    Employment Taxes.  Notwithstanding anything contained herein to the contrary, to the extent that any compensation payable hereunder, including without limitation, under any of the LTIP Awards, constitutes “nonqualified deferred compensation” within the meaning of Code Section 409A, the payment of any such compensation may be accelerated, as determined by the Company, to the greatest extent permitted under Treasury Regulation 1.409A-3(j)(4)(vi) to pay any taxes imposed under the Federal Insurance Contribution Act (“FICA”) on such compensation or under Code Section 3401 or corresponding withholding provisions of applicable state, local or foreign tax laws as income tax obligations arising in connection with any such acceleration, including any additional taxes attributable to pyramiding wages and taxes, provided, that the total of any such accelerated payment shall not exceed the applicable FICA and income tax obligations to which such accelerated payments relate.

(G)    Payment Dates.  With respect to any payment under an LTIP Award that may be made by its terms over a range of dates, the Company shall determine the exact date of payment in its sole discretion and the Executive shall not be able to directly or indirectly designate the calendar year of such payment.
 
(c)           Termination.
 
(i)     Events of Termination.  Executive’s employment with the Company shall cease upon:
 
		
	(A) 
	Executive’s death.

 
		
	(B) 
	Executive’s voluntary retirement.

 
(C)        Executive’s “Disability” which means Executive has become disabled within the meaning of Code Section 409A.
 
(D)        Termination by the Company by the delivery to Executive of a written notice from the Board or the CEO that Executive has been terminated (“Notice of Termination”) with or without Cause.   “Cause” shall mean:

6

 
(1)           Executive’s (aa) conviction of a felony; (bb) Executive’s commission of any other material act or omission involving dishonesty or fraud with respect to the Company or any of its Affiliates or any of the customers, vendors or suppliers of the Company or its Subsidiaries; (cc) Executive’s misappropriation of material funds or assets of the Company for personal use; or (dd) Executive’s engagement in unlawful harassment or other discrimination with respect to the employees of the Company or its Subsidiaries;
 
(2)           Executive’s continued substantial and repeated neglect of his duties, after written notice thereof from the Board, and such neglect has not been cured within thirty (30) days after Executive receives notice thereof from the Board;
 
(3)           Executive’s gross negligence or willful misconduct in the performance of his duties hereunder that is materially and demonstrably injurious to the Company;
 
(4)           Executive’s engaging in conduct constituting a breach of Sections 2  or  3  hereof that is not cured in full within fifteen (15) days, and is materially and demonstrably injurious to the Company, after  notice of default thereof, from the Company, as determined by a court of law.

In order for the termination to be effective: Executive must be notified in writing (which writing shall specify the cause in reasonable detail) of any termination of his employment for Cause.  Executive will then have the right, within ten days of receipt of such notice, to file a written request for review by the Company.  In such case, Executive will be given the opportunity to be heard, personally or by counsel, by the Board and a majority of the Directors must thereafter confirm that such termination is for Cause.  If the Directors do not provide such confirmation, the termination shall be treated as other than for Cause.  Notwithstanding anything to the contrary contained in this paragraph, Executive shall have the right after termination has occurred to appeal any determination by the Board that such termination was for “Cause” in accordance with the provisions of  Section 8(f)  hereof.
 
The delivery by the Company of notice to Executive that it does not intend to renew this Agreement as provided in  Section 1(f)  shall constitute a termination by the Company without Cause if, at the time of such notice, Executive is willing and able to renew the Agreement and continue providing services on terms and conditions substantially similar to those contained in this Agreement, provided, that in no event shall notice which fulfills the requirements of  Section 1(c)(i)(D)(1) , (2) , (3) or (4)  above constitute a termination by the Company without Cause.

(E)           Executive’s voluntary resignation by the delivery to the Company and the Board of at least thirty (30) days written notice from Executive that Executive has resigned with or without Good Reason.   “Good Reason” shall mean Executive’s resignation from employment with the Company after the occurrence of any one of the following:
 
(1)           the failure of the Company to pay an amount owing to Executive in breach of this Agreement; or
 
(2)           without Executive’s consent, a relocation of Executive’s principal work location from the Calabasas, California metropolitan area  that constitutes a material change in the geographic location at which he must perform services under this Agreement (within the meaning of Code Section 409A); 

7

provided, that Executive’s resignation shall only constitute a resignation for “Good Reason” hereunder if (I) Executive provides the Company with written notice setting forth in reasonable detail the facts or circumstances constituting Good Reason within thirty (30) days after Executive becomes reasonably aware of the existence of such facts and circumstances, (or reasonably aware that there is a controversy between the Company’s interpretation of any payment obligation or principal work location requirement of this Agreement and the Executive’s interpretation of same), (II) the Company has failed to cure such facts or circumstances within thirty (30) days after receipt of such written notice, and (III) the date of Executive’s “separation from service” (within the meaning of Code Section 409A(a)(2)(A)(i) of the Code, and Treasury Regulation Section 1.409A-1(h)) (“Separation from Service”) occurs no later than thirty-five (35) days after Executive gives notice of the event constituting Good Reason.
 
The delivery by Executive of notice to the Company that he does not intend to renew this Agreement as provided in  Section 1(f)  shall constitute a resignation by Executive without Good Reason unless such notice fulfills the requirements of  Section 1(c)(i)(E)(1) or  (2)  above.

For the avoidance of doubt, in no event shall Executive’s ceasing to serve as the President of the Company, whether voluntarily or involuntarily, constitute Good Reason.
 
(ii)           Date of Termination.  “Date of Termination” means the date on which Executive experiences a Separation from Service.
 
(iii)         Rights on Termination.
 
(A)     In the event that termination is by the Company without Cause (including by operation of the last paragraph of Section 1(c)(i)(D) above) or by Executive with Good Reason and Executive experiences a Separation from Service as a result of such termination, subject to Section 1(g) below:

(1)    The Company will pay Executive (i) an amount equal to 150% of the Annual Base Salary, payable over a period of eighteen (18) months commencing on the Date of Termination (the “Severance Period”) in substantially equal installments in accordance with Company payroll procedures applicable to senior executives of the Company, as in effect from time to time (but no less often than monthly), provided, that payment of the amounts described in this Section  shall not commence until the Company’s first payroll date occurring on or after the 30th day following the Date of Termination (the “First Payroll Date”) and any amounts that would otherwise have been paid prior to the First Payroll Date shall instead be paid on the First Payroll Date, and (ii) a lump sum cash amount, payable on the First Payroll Date, equal to the aggregate premiums that the Company would have paid for basic life insurance, accidental death and dismemberment insurance and long- and short-term disability insurance, each as in effect on the Date of Termination, had Executive remained employed by the Company during the Severance Period (together, “Insurance Benefits”).  In addition, during the Severance Period, subject to Executive’s proper election to continue healthcare coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company will pay Executive’s COBRA premiums in respect of COBRA benefits to be provided through third-party insurance maintained by the Company under the Company’s benefit plans in a manner that causes such COBRA benefits to be exempt from the application of Code Section 409A under Treasury Regulation Section 1.409A-1(a)(5), provided, that (x) if any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the period of continuation coverage to be, exempt from the application of Section 

8

409A of the Code under Treasury Regulation Section 1.409A-1(a)(5), (y) such amounts would be considered discriminatory under Section 105(h) of the Code, or (z) the Company is otherwise unable to continue to cover Executive under its group health plans (including without limitation, due to Section 2716 of the Public Health Service Act), then, in any such case, an amount equal to each remaining Company payment shall thereafter be paid to Executive in cash or by check in substantially equal monthly installments over the continuation coverage period (or the remaining portion thereof); and

(2)      All LTIP Awards shall be treated as provided in Section 1(b)(iii)(E)(1) above and all Prior Awards shall be treated as provided in Section 1(b)(iii)(E) above.

For purposes of paragraph (e) below, payments of Annual Base Salary, amounts in lieu of Insurance Benefits, COBRA premiums and any vesting of LTIP Awards and Prior Awards following the Date of Termination, in each case, as described in this Agreement, are collectively referred to as “Severance Payments.”  In addition, the Company will pay to Executive in a lump-sum the value of any accrued but unused vacation time.  No Severance Payments or benefits shall be paid or provided unless Executive has executed and not revoked a release in a form mutually acceptable to both the Company and Executive that is subject to paragraph (e) below.  In addition, the Company agrees that concurrently with Executive’s execution of such release, the Company shall execute a contingent mutual release in a form that is mutually acceptable to both the Company and Executive that is subject to paragraph (e) below.  Each payment under Section 1(c)(iii)(A) above shall be treated as a separate payment for purposes of Code Section 409A.
 
(B)         If the Company terminates Executive’s employment for Cause, or if Executive resigns without Good Reason (including by operation of the last paragraph of Section 1(c)(i)(E)), the Company’s obligations to pay any compensation or benefits under this Agreement and all vesting under all equity awards held by Executive will cease effective as of the Date of Termination,  provided, that LTIP Awards shall be treated in accordance with Section 1(b)(iii)(E)(2) above, provided, further, that any Prior Awards that remain outstanding as of Executive’s termination of employment shall be governed by the terms and conditions of the applicable award agreement and the Original Agreement.  Executive’s right to receive any other health or other benefits, if any, will be determined under the provisions of applicable plans, programs or other coverages.  
 
(C)        If Executive’s employment terminates because of  Executive’s death or Disability,  then Executive or his estate shall be entitled to any disability income or life insurance payments from any insurance policies (other than any  “key man” life insurance policy) maintained by the Company.  In addition, in the event of such a termination, for a period of twelve (12) months commencing on the Date of Termination, Executive or his estate shall be entitled to payment of an amount equal to 100% of the Annual Base Salary, payable over twelve (12) months from Executive’s death or Disability in approximately equal installments on regular salary payment dates.  LTIP Awards shall be treated in accordance with Section 1(b)(iii)(E)(1) above, and any Prior Awards that remain outstanding as of Executive’s termination of employment shall be governed by the terms and conditions of the applicable award agreement and the Original Agreement.
 
Notwithstanding the foregoing, the Company’s obligation to Executive for Severance Payments shall cease if Executive is found by a court of law to be in material violation of the provisions of  Sections 2 or 3  hereof. 
 

9

(d)           Mitigation. The Company’s obligation to continue to provide Executive with the Severance Payments pursuant to  Section 1(c)(iii)(A) above and the benefits pursuant to the second sentence of  Section 1(c)(iii)(C)  above shall cease if Executive becomes employed as a senior executive by a third party.
 
(e)           Liquidated Damages. The parties acknowledge and agree that damages which will result to Executive for termination by the Company without Cause shall be extremely difficult or impossible to establish or prove, and agree that the Severance Payments shall constitute liquidated damages for any breach of this Agreement by the Company through the Date of Termination.  Executive agrees that, except for such other payments and benefits to which Executive may be entitled as expressly provided by the terms of this Agreement or any applicable benefit plan, such liquidated damages shall be in lieu of all other claims that Executive may make by reason of termination of his employment or any such breach of this Agreement and that, as a condition to receiving the Severance Payments, Executive will execute a contingent mutual release of claims in a form reasonably satisfactory to both the Company and Executive.

(f)            Term of Employment.  Unless Executive’s employment under this Agreement is sooner terminated as a result of Executive’s termination in accordance with the provisions of Section 1(c) above, Executive’s employment under this Agreement shall be for a term (the “Service Term”) commencing on the Amended Effective Date and ending on the third (3rd) anniversary of the Amended Effective Date; provided, however, that Executive’s employment under this Agreement, and the Service Term, shall be automatically renewed for additional one-year periods commencing on December 31, 2015 and, thereafter, on each successive anniversary of such date unless either the Company or Executive notify the other party in writing within ninety (90) days prior to any such anniversary that it or he desires not to renew Executive’s employment under this Agreement.  All references herein to “Service Term” shall include any renewals thereof on or after December 31, 2015.

(g)           Potential Six-Month Delay.  Notwithstanding anything to the contrary in this Agreement,  no compensation or benefits, including without limitation any Severance Payments or payments in respect of any LTIP Awards or Prior Awards in connection with a Separation from Service, shall be paid to Executive during the six (6)-month period following his Separation from Service to the extent that the Company reasonably determines that Executive is a “specified employee” (within the meaning of Code Section 409A) at the time of such Separation from Service and that paying such amounts at the time or times indicated in this Agreement would be a prohibited distribution under Code Section 409A(a)(2)(b)(i) of the Code.  If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such six (6)-month period (or such earlier date upon which such amount can be paid under Code Section 409A without being subject to such additional taxes, including as a result of Executive’s death), the Company shall pay to Executive a lump-sum amount equal to the cumulative amount that would have otherwise been payable to Executive during such six (6)-month period, without interest thereon.
 
2.             Confidential Information; Proprietary Information, etc.
 
(a)           Obligation to Maintain Confidentiality. Executive acknowledges that any Proprietary Information disclosed or made available to Executive or obtained, observed or known by Executive as a direct or indirect consequence of his employment with or performance of services for the Company or any of its Affiliates during the course of his performance of services for, or employment with, any of the foregoing Persons (whether or not compensated for such services) and during the period in which Executive is receiving Severance Payments, are the 

10

property of the Company and its Affiliates.  Therefore, Executive agrees that he will not at any time (whether during or after Executive’s term of employment) disclose or permit to be disclosed to any Person or, directly or indirectly, utilize for his own account or permit to be utilized by any Person any Proprietary Information or Records for any reason whatsoever without the Board’s consent, unless and to the extent that (except as otherwise provided in the definition of Proprietary Information) the aforementioned matters become generally known to and available for use by the public other than as a direct or indirect result of Executive’s acts or omissions to act. Executive agrees to deliver to the Company at the termination of his employment, as a condition to receipt of the next or final payment of compensation, or at any other time the Company may request in writing (whether during or after Executive’s term of employment), all Records which he may then possess or have under his control. Executive further agrees that any property situated on the Company’s or its Affiliates’ premises and owned by the Company or its Affiliates, including disks and other storage media, filing cabinets or other work areas, is subject to inspection by Company or its Affiliates and their personnel at any time with or without notice.  Nothing in this Section 2(a) shall be construed to prevent Executive from using his general knowledge and experience in future employment so long as Executive complies with this Section 2(a) and the other restrictions contained in this Agreement.
 
(b)           Ownership of Property. Executive acknowledges that all inventions, innovations, improvements, developments, methods, processes, programs, designs, analyses, drawings, reports and all similar or related information  (whether or not patentable) that relate to the Company’s or any of its Affiliates’ actual or anticipated business, research and development, or existing or future products or services and that are conceived, developed, contributed to, made, or reduced to practice by Executive (either solely or jointly with others) while employed by the Company or any of its Affiliates (including any of the foregoing that constitutes any Proprietary Information or Records) (“Work Product”) belong to the Company or such Affiliate and Executive hereby assigns, and agrees to assign, all of the above Work Product to the Company or such Affiliate.  Any copyrightable work prepared in whole or in part by Executive in the course of his work for any of the foregoing entities shall be deemed a “work made for hire” under the copyright laws, and the Company or such Affiliate shall own all rights therein. To the extent that any such copyrightable work is not a “work made for hire,” Executive hereby assigns and agrees to assign to Company or such Affiliate all right, title and interest, including without limitation, copyright in and to such copyrightable work.  Executive shall promptly disclose such Work Product and copyrightable work to the Board and perform all actions reasonably requested by the Board (whether during or after Executive’s term of employment) to establish and confirm the Company’s or its Affiliate’s ownership (including, without limitation, execution of assignments, consents, powers of attorney and other instruments).  Notwithstanding anything contained in this Section 2(b) to the contrary, the Company’s ownership of Work Product does not apply to any invention that Executive develops entirely on his own time without using the equipment, supplies or facilities of the Company or its Affiliates or Subsidiaries or any Proprietary Information (including trade secrets), except that the Company’s ownership of Work Product does include those inventions that:  (i) relate to the business of the Company or its Affiliates or Subsidiaries or to the actual or demonstrably anticipated research or development relating to the Company’s business; or (ii) result from any work that Executive performs for the Company or its Affiliates or Subsidiaries.
 
(c)           Third Party Information. Executive understands that the Company and its Affiliates will receive from third parties confidential or proprietary information (“Third Party Information”) subject to a duty on the Company’s and its Affiliates’ part to maintain the confidentiality of such information and to use it only for certain limited purposes.  During the term of Executive’s employment and thereafter, and without in any way limiting the provisions of  Sections 2(a)  and  2(b)  above, Executive shall hold Third Party Information in the strictest 

11

confidence and shall not disclose to anyone (other than personnel of the Company or its Affiliates who need to know such information in connection with their work for the Company or its Affiliates) or use, except in connection with his work for the Company or its Affiliates, Third Party Information unless expressly authorized by a member of the Board in writing.
 
(d)           Use of Information of Prior Employers, etc. Executive will abide by any enforceable obligations contained in any agreements that Executive has entered into with his prior employers or other parties to whom Executive has an obligation of confidentiality.
 
(e)           Compelled Disclosure. If Executive is required by law or governmental regulation or by subpoena or other valid legal process to disclose any Proprietary Information or Third Party Information to any Person, Executive will immediately provide the Company with written notice of the applicable law, regulation or process so that the Company may seek a protective order or other appropriate remedy.  Executive will cooperate fully with the Company and the Company’s Representatives in any attempt by the Company to obtain any such protective order or other remedy.  If the Company elects not to seek, or is unsuccessful in obtaining, any such protective order or other remedy in connection with any requirement that Executive disclose Proprietary Information or Third Party Information, and if Executive furnishes the Company with a written opinion of reputable legal counsel acceptable to the Company confirming that the disclosure of such Proprietary Information or Third Party Information is legally required, then Executive may disclose such Proprietary Information or Third Party Information to the extent legally required;  provided, however, that Executive will use his reasonable best efforts to ensure that such Proprietary Information is treated confidentially by each Person to whom it is disclosed.
 
3.             Nonsolicitation.
 
(a)           Nonsolicitation. As long as Executive is an employee of the Company or any Affiliate thereof, and for eighteen (18) months thereafter, Executive shall not directly or indirectly through another entity: (i) induce or attempt to induce any employee of the Company or any Affiliate to leave the employ of the Company or such Affiliate, or in any way interfere with the relationship between the Company or any Affiliate and any employee thereof; (ii) hire or employ any person who was an employee of the Company or any Affiliate at any time during the nine (9)-month period immediately preceding the date of such Executive’s termination; (iii) induce or attempt to induce any customer, client, supplier, licensee or other business relation of the Company or any Affiliate to cease doing business with the Company or such Affiliate, or in any way interfere with the relationship between any such customer, client, supplier, licensee or business relation and the Company or any Affiliate; (iv) call on, solicit or service any Person who was a customer or client of the Company or any Affiliate; or (v) call on, solicit or service any Person who was Prospective Client for any purpose which directly or indirectly competes with the business of the Company.  For purposes hereof, a  “Prospective Client”  means any Person whom the Company or any of its Affiliates has entertained discussions with to become a client or customer at any time during the twelve (12)-month period immediately preceding the date of such Executive’s termination.
 
(b)           Acknowledgment. Executive acknowledges that in the course of his employment with the Company and its Affiliates, he has and will become familiar with the trade secrets and other Proprietary Information of the Company and its Affiliates. It is specifically recognized by Executive that his services to the Company and its Subsidiaries are special, unique and of extraordinary value, that the Company has a protectable interest in prohibiting Executive as provided in this Section 3, that money damages are insufficient to protect such interests, that there is adequate consideration being provided to Executive hereunder, that such prohibitions are necessary 

12

and appropriate without regard to payments being made to Executive hereunder and that the Company would not enter this Agreement with Executive without the restriction of this Section 3. Executive further acknowledges that the restrictions contained in this Section 3 do not impose an undue hardship on him and, since he has general business skills which may be used in industries other than that in which the Company and its Subsidiaries conduct their business, do not deprive Executive of his livelihood.  Executive further acknowledges that the provisions of this Section 3 are separate and independent of the other sections of this Agreement.
 
(c)           Enforcement, etc.  If, at the time of enforcement of Section 2 or 3 of this Agreement, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum duration, scope or geographical area reasonable under such circumstances as determined by the court shall be substituted for the stated period, scope or area.  Because Executive’s services are unique, because Executive has access to Proprietary Information and for the other reasons set forth herein, the parties hereto agree that money damages would be an inadequate remedy for any breach of this Agreement.  Therefore, without limiting the generality of Section 8(g), in the event of a breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce, or prevent any violations of, the provisions hereof.
 
(d)           Submission to Jurisdiction.  The parties hereby: (i) submit to the jurisdiction of any state or federal court sitting in California in any action or proceeding arising out of or relating to Section 2 and/or 3 of this Agreement; (ii) agree that all claims in respect of such action or proceeding may be heard or determined in any such court; and (iii) agree not to bring any action or proceeding arising out of or relating to Section 2 and/or 3 of this Agreement in any other court.  The parties hereby waive any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto. The parties hereby agree that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law.
 
GENERAL PROVISIONS
 
4.             Definitions.
 
“Adjusted EBITDA” means earnings before interest, taxes, depreciation and amortization, but excluding gains, losses or expenses associated with all Unusual Items.

“Affiliate” of any Person means any other Person which directly or indirectly controls, is controlled by or is under common control with such Person.
 
“Board” means the Company’s board of directors or the board of directors or similar management body of any successor of the Company.
 
“Proprietary Information” means any and all data and information concerning the business affairs of the Company or any of its Affiliates and not generally known in the industry in which the Company or any of its Affiliates is or may become engaged, and any other information concerning any matters affecting or relating to the Company’s or its Affiliates businesses, but in any event Proprietary Information shall include, any of the Company’s and its Affiliates’ past, present or prospective business opportunities, including information concerning acquisition 

13

opportunities in or reasonably related to the Company’s or its Affiliates businesses or industries, customers, customer lists, clients, client lists, the prices the Company and its Affiliates obtain or have obtained from the sale of, or at which they sell or have sold, their products, unit volume of sales to past or present customers and clients, or any other information concerning the business of the Company and its Affiliates, their manner of operation, their plans, processes, figures, sales figures, projections, estimates, tax records, personnel history, accounting procedures, promotions, supply sources, contracts, know-how, trade secrets, information relating to research, development, inventions, technology, manufacture, purchasing, engineering, marketing, merchandising or selling, or other data without regard to whether all of the foregoing matters will be deemed confidential, material or important.  Proprietary Information does not include any information which Executive has obtained from a Person other than an employee of the Company, which was disclosed to him without a breach of a duty of confidentiality.
 
“Person” means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.
 
“Records” means (i) any and all procedure manuals, books, records and accounts; (ii) all property of the Company and its Affiliates, including papers, note books, tapes and similar repositories containing Proprietary Information; (iii) all invoices and commission reports; (iv) customer lists — partial and/or complete; (v) data layouts, magnetic tape layouts, diskette layouts, etc.; (vi) samples; (vii) promotional letters, brochures and advertising materials; (viii) displays and display materials; (ix) correspondence and old or current proposals to any former, present or prospective customer of the Company and its Affiliates; (x) information concerning revenues and profitability and any other financial conditions of the Company and its Affiliates; (xi) information concerning the Company and its Affiliates which was input by Executive or at his direction, under his supervision or with his knowledge, including on any floppy disk, diskette, cassette or similar device used in, or in connection with, any computer, recording devices or typewriter; (xii) data, account information or other matters furnished by customers of the Company and its Affiliates; and (xiii) all copies of any of the foregoing data, documents or devices whether in the form of carbon copies, photo copies, copies of floppy disks, diskettes, tapes or in any other manner whatsoever.

“Unusual Items” means (i) restructurings, discontinued operations, extraordinary items or events, and other unusual or non-recurring charges as described in Accounting Principles Board Opinion No. 30 and/or management’s discussion and analysis of financial condition and results of operations appearing or incorporated by reference in the Company’s Form 10-K for the applicable year; (ii) a force majeure or other event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management; (iii) litigation (including attorneys’ fees and other litigation expenses), judgments, settlements; (iv) changes in tax laws or accounting standards required by generally accepted accounting principles or changes in other such laws or provisions affecting reported results; (v) expenses resulting from severance arrangements with terminated employees; (vi) equity-based compensation expenses; (vii) one-time gains or losses from the disposal or sale of assets; and (viii) impairments of goodwill or other intangible assets.
  
5.             Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, mailed by first class United States mail (postage prepaid, return receipt requested) or sent by reputable overnight courier service (charges prepaid) or by facsimile to the recipient at the address below indicated:
 

14

	
									
	 
	If to Executive:
	 
	 

	 

	 
	 
	Peter T. Dameris

	 
	 
	26745 Malibu Hills Road

	 
	 
	Calabasas, California 91301

	 

	 
	If to the Company:
	 
	 

	 

	 
	 
	26745 Malibu Hills Road

	 
	 
	Calabasas, California 91301

	 
	 
	Attention:
	General Counsel

	 
	 
	Fax No.:
	(818) 880-0056

	 
	 
	 
	 
	 
	 
	 
	 
	 

 
 
or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party.
 
6.             Executive’s Representations and Warranties.  Executive represents and warrants that he has full authority to enter into this Agreement and fully to perform his obligations hereunder, that he is not subject to any non-competition agreement, and that his past, present and anticipated future activities have not and will not infringe on the proprietary rights of others, including, but not limited to, proprietary information rights or interfere with any agreements he has with any prior employee.  Executive further represents and warrants that he is not obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, which would conflict with or result in a breach of this Agreement or which would in any manner interfere with the performance of his duties for the Company.
 
7.             Code Section 409A.  

(a)    General.  To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder.  Notwithstanding any provision of this Agreement to the contrary, if the Company determines that any compensation or benefits payable under this Agreement may be subject to Section 409A of the Code and related Department of Treasury guidance, the Company shall work in good faith with Executive to adopt such amendments to this Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Company determines are necessary or appropriate to avoid the imposition of taxes under Section 409A of the Code, including without limitation, actions intended to (i) exempt the compensation and benefits payable under this Agreement from Section 409A of the Code, and/or (ii) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance; provided, however, that this Section 7(a) shall not create an obligation on the part of the Company to adopt any such amendment, policy or procedure or take any such other action, nor shall the Company have any liability for failing to do so.

(b)    Certain Reimbursements.  To the extent that any payments or reimbursements provided to Executive hereunder are deemed to constitute compensation to Executive to which Section 409A of the Code would apply, such amounts shall be paid or reimbursed to Executive reasonably promptly, but in no event later than December 31st of the year following the year in which the expense was incurred.  The amount of any such payments eligible for reimbursement in one year shall not affect the payments or expenses that are eligible for payment or 

15

reimbursement in any other taxable year, and Executive’s right to such payments or reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.
     
8.          General Provisions.
 
(a)           Expenses. Each party shall bear his or its own expenses in connection with the negotiation and execution of this Agreement and the consummation of the transactions contemplated by this Agreement.
 
(b)           Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.
 
(c)           Complete Agreement. As of the Amended Effective Date, this Agreement and those documents expressly referred to herein embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way, including without limitation, the Original Agreement.  Notwithstanding the foregoing, the Original Agreement shall continue to govern the terms and conditions of all compensation and benefits paid, provided or payable thereunder, including without limitation the Prior Awards.
 
(d)           Counterparts; Facsimile Transmission. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. Each party to this Agreement agrees that it will be bound by its own telecopied signature and that it accepts the telecopied signature of each other party to this Agreement.
 
(e)           Successors and Assigns. Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by Executive, the Company and their respective successors and assigns; provided that the rights and obligations of Executive under this Agreement shall not be assignable and, provided further that, the rights and obligations of the Company may be assigned to any Affiliate of the Company.
 
(f)            Choice of Law; Jurisdiction. All questions concerning the construction, validity and interpretation of this Agreement and the exhibits hereto will be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.  The parties hereby: (i) submit to the jurisdiction of any state or federal court sitting in California in any action or proceeding arising out of or relating to Agreement; (ii) agree that all claims in respect of such action or proceeding may be heard or determined in any such court; and (iii) agree not to bring any action or proceeding arising out of or relating to this Agreement in any other court. Executive hereby waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto. The parties hereby agree that a final judgment in any action or 

16

proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law.
 
(g)           Remedies. Each of the parties to this Agreement will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including attorney’s fees) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement.
 
(h)           Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Executive.
 
(i)            Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or holiday in the state in which the Company’s chief executive office is located, the time period shall be automatically extended to the business day immediately following, such Saturday, Sunday or holiday.
 
(j)            Termination. This Agreement shall survive the termination of Executive’s employment with the Company and shall remain in full force and effect after such termination.
 
(k)           No Waiver. A waiver by any party hereto of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which such party would otherwise have on any future occasion.  No failure to exercise nor any delay in exercising on the part of any party hereto, any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights or remedies provided by law.
 
(l)            Insurance.  The Company, at its discretion, may apply for and procure in its own name for its own benefit life and/or disability insurance on Executive in any amount or amounts considered available. Executive agrees to cooperate in any medical or other examination, supply any information, and to execute and deliver any applications or other instruments in writing as may be reasonably necessary to obtain and constitute such insurance. Executive hereby represents that he has no reason to believe that his life is not insurable at rates now prevailing for healthy men of his age.
 
(m)          Offset.  Whenever the Company or any of its Subsidiaries is obligated to pay any sum to Executive or any Affiliate or related person thereof pursuant to this Agreement, any bona fide debts that Executive or such Affiliate or related person owes to the Company or any of its Subsidiaries may be deducted from that sum before payment, to the greatest extent permitted under applicable law.

(n)           Withholding.  The Company and its Subsidiaries shall be entitled to deduct or withhold from any amounts owing from the Company or any of its Subsidiaries to Executive any federal, state, provincial, local or foreign withholding taxes, excise taxes, or employment taxes imposed with respect to Executive’s compensation or other payments from the 

17

Company or any of its Subsidiaries or Executive’s ownership interest in the Company, including, but not limited to, wages, bonuses, dividends, the receipt or exercise of stock options and/or the receipt or vesting of restricted stock.
 
(o)           Insurance and Indemnification.  For the period from the date of this Agreement through at least the tenth anniversary of Executive’s termination of employment from the Company, the Company shall maintain Executive as an insured party on all directors’ and officers’ insurance maintained by the Company for the benefit of its directors and officers on at least the same basis as all other covered individuals and provide Executive with at least the same corporate indemnification as it provides to the peer executives of the Company.

(p)       Clawback.  To the extent permitted under applicable law, Executive agrees to reimburse the Company for amounts determined by final judicial process to be due to the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002.
 
 
[THIS SPACE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
 

 

18

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above.
 
	
					
	 
	ON ASSIGNMENT, INC.

	 
	 

	 
	By:
	/s/ Jeremy Jones
	 

	 
	Name:
	Jeremy Jones

	 
	Title:
	Chairman of the Board of Directors

	 
	 

	 
	 

	 
	/s/ Peter T. Dameris
	 

	 
	PETER T. DAMERIS

	 
	 
	 
	 
	 

19

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00210-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00210-of-00352.parquet"}]]