Document:

Exhibit 4.10

 

SPIRENT
plc

 

 

 

THIRD
AMENDMENT, CONSENT AND

 

WAIVER
AGREEMENT

 

 

 

DATED
MARCH 1, 2005

 

 

US$10,000,000

AMENDED AND RESTATED SERIES A SENIOR NOTES DUE NOVEMBER 23, 2006

 

US$63,406,000

AMENDED AND RESTATED SERIES B SENIOR NOTES DUE NOVEMBER 23, 2009

 

US$115,000,000

AMENDED AND RESTATED SERIES C SENIOR NOTES DUE NOVEMBER 23, 2009

 

US$29,594,000

AMENDED AND RESTATED SERIES D SENIOR NOTES DUE NOVEMBER 23, 2009

 

 

BINGHAM
MCCUTCHEN LLP

LONDON

 

 

SPIRENT
plc

 

 

THIRD
AMENDMENT, CONSENT AND

 

WAIVER
AGREEMENT

 

 

US$10,000,000

AMENDED AND RESTATED SERIES A SENIOR NOTES DUE NOVEMBER 23, 2006

 

US$63,406,000

AMENDED AND RESTATED SERIES B SENIOR NOTES DUE NOVEMBER 23, 2009

 

US$115,000,000

AMENDED AND RESTATED SERIES C SENIOR NOTES DUE NOVEMBER 23, 2009

 

US$29,594,000

AMENDED AND RESTATED SERIES D SENIOR NOTES DUE NOVEMBER 23, 2009

 

 

Dated March 1, 2005

 

To each of the Current Noteholders

Named in Annex 1 hereto:

 

Ladies and Gentlemen:

 

SPIRENT plc,
a limited company organized and existing under the laws of England and Wales
with registered number 470893 (together with its successors and assigns, the “Company”), hereby
agrees with you as follows:

 

1.            PRIOR
ISSUANCE OF NOTES, ETC.

 

Pursuant to the separate Note Purchase
Agreements, dated November 23, 1999, among the Company (formerly known as
Bowthorpe plc) and, respectively, the purchasers named in Schedule A
thereto (as amended and restated pursuant to the Amended and Restated Note
Purchase Agreement dated March 11, 2003 and as further amended pursuant to
the Amendment and Consent Agreement dated December 31, 2003 and the Second
Amendment and Consent Agreement dated August 13, 2004, and as in effect
immediately prior to giving effect to the Amendments (defined below) provided
for by this Agreement, collectively, the “Existing Note Purchase Agreement”, and as
may be amended pursuant to the Amendments or further amended, restated or
otherwise modified from time to time, collectively, the “Note Purchase Agreement”),
the Company issued and sold (a) US$10,000,000 aggregate original principal
amount of its Amended and Restated Series A Senior Notes due November 23,
2006, (b) US$63,406,000 aggregate original principal amount of its Amended
and Restated Series B Senior Notes due November 23, 2009,

 

 

(c) US$115,000,000 aggregate original principal amount of its
Amended and Restated Series C Senior Notes due November 23, 2009, and
(d) US$29,594,000 aggregate original principal amount of its Amended and
Restated Series D Notes due November 23, 2009 (as in effect immediately
prior to the Effective Time (as defined below), the “Existing Notes” and,
as may be amended pursuant to the Amendments or further amended, restated or
otherwise modified from time to time, the “Notes”).

 

This Third Amendment, Consent and Waiver
Agreement is referred to herein as this “Agreement”. 
The register kept by the Company for the registration and transfer of
the Notes indicates that each of the Persons named in Annex 1 (collectively,
the “Current Noteholders”)
is currently a holder of the Notes in the aggregate principal amount indicated
opposite such Person’s name in such Annex and that the Persons named in Annex 1
currently hold 100% of the outstanding Notes.

 

2.             DEFINED
TERMS.

 

Capitalized terms used herein and not
otherwise defined have the meanings ascribed to them in the Existing Note
Purchase Agreement.

 

3.             REQUEST
FOR CONSENT.

 

The Company requests that each of you consent
to the Amendments with respect to certain terms of the Existing Note Purchase
Agreement and to certain other matters specified in this Agreement.

 

4.             COMPANY
WARRANTIES AND REPRESENTATIONS.

 

To induce you to enter into this Agreement,
the Company warrants and represents as follows (it being agreed, however, that
nothing in this Section 4 shall affect any of the warranties and
representations previously made by the Company in or pursuant to the Note
Purchase Agreement and that all of such other warranties and representations,
as well as the warranties and representations in this Section 4, shall
survive the effectiveness of the Amendments and the Waiver):

 

4.1          Corporate Organization
and Authority.

 

(a)           The
Company and each of its Material Subsidiaries is a corporation or other legal
entity duly organized, validly existing and, in the case of each such Material
Subsidiary organized under the laws of any state of the United States of
America, in good standing under the laws of its jurisdiction of incorporation.

 

(b)           The
Company and each of its Material Subsidiaries has the corporate or other power
and authority to own or hold under lease the properties it purports to own or
hold under lease, to transact its business as now conducted and as presently
proposed to be conducted.

 

(c)           The
Company and each of its Material Subsidiaries is duly qualified and, in the
case of each such Material Subsidiary conducting business in any state of the
United States of America, is in good standing as a foreign corporation in each
jurisdiction wherein the nature of the business transacted by it, or the nature
of the property owned or leased by it, makes such qualification required by law
and where

 

3

 

failure to be so
qualified or in good standing would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the business,
operations or financial condition of the Company and its Subsidiaries, taken as
a whole.

 

4.2          Financial Indebtedness.

 

The Financial
Indebtedness of the Company and its Subsidiaries as at December 31, 2004
is described in Part 4.2 of Annex 2.

 

4.3          Agreements Authorized;
Obligations Enforceable.

 

(a)           The
execution and delivery by the Company of this Agreement has been duly
authorized by all necessary corporate action on its part.  This Agreement has been executed and
delivered by one or more duly authorized officers or directors of the Company,
and each of this Agreement, the Notes and the Note Purchase Agreement, after
giving effect to the Amendments and the Waiver, constitute a legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
except that the enforceability hereof and thereof may be limited by:

 

(i)            applicable bankruptcy, reorganization, arrangement,
insolvency, moratorium, or other similar laws affecting the enforceability of
creditors’ rights generally; and

 

(ii)           general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).

 

(b)           The
execution and delivery by the Guarantors of the Acknowledgement and Consent
attached hereto has been duly authorized by all necessary action on the part of
each Guarantor.  The Acknowledgement and
Consent attached hereto has been executed and delivered by one or more duly
authorized officers or directors of each Guarantor, and the Subsidiary
Guarantees, after giving effect to the Amendments and the Waiver, will
constitute a legal, valid and binding obligation of each Guarantor in respect
thereof, enforceable in accordance with their terms, except that the
enforceability hereof and thereof may be limited by:

 

(i)            applicable bankruptcy, reorganization, arrangement,
insolvency, moratorium, or other similar laws affecting the enforceability of
creditors’ rights generally; and

 

(ii)           general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).

 

4.4          No Conflicts.

 

Neither the
execution nor delivery of this Agreement, nor performance by the Company with
the terms and provisions of the Notes or the Note Purchase Agreement, after
giving effect to the Amendments and the Waiver, nor compliance by each
Guarantor with the terms and provisions of its respective Subsidiary Guarantee,
will conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under, or result in any violation of, or
result in the creation of any Lien upon any of the properties of the Company or
any of its Subsidiaries under the

 

4

 

memorandum or articles of association (or
charter or by-laws) of the Company or any of its Subsidiaries, or any award of
any arbitrator or any agreement, instrument, order, judgment, decree, statute,
law, rule or regulation to which the Company or any of its Subsidiaries is
subject (including, without limitation, the 2005 Bank Facility (defined below)
and any agreement with shareholders).

 

4.5          Full Disclosure.

 

Neither this
Agreement nor any other written statement furnished by or on behalf of the
Company or any of its Subsidiaries to the Current Noteholders in connection
with the proposal and negotiation of the Amendments and the Waiver, or the
other terms and provisions of this Agreement, contains any untrue statement of
a material fact or omits a material fact necessary to make the statements
contained therein, taken as a whole, under the circumstances under which made,
not misleading.  Except as previously
disclosed in writing to each Current Noteholder, there is no fact known to the
Company or any Material Subsidiary that could reasonably be expected to have a
Material Adverse Effect upon the business, operations or principal properties
of the Company and its Subsidiaries taken as a whole.

 

4.6          Amendments to 2005 Bank
Facility.

 

There have been no amendments, waivers or other modifications to the
new credit facility dated February 2, 2005 which replaces the New Bank
Facility (as defined in the Amendment and Consent Agreement dated December 31,
2003) and provides for total commitments or borrowing availability in an
aggregate amount of at least £30,000,000 (the “2005 Bank Facility”) subsequent to February 2,
2005, and the 2005 Bank Facility is in full force and effect on the date
hereof.

 

4.7          No Defaults.

 

After giving
effect to the Waiver provided in Section 6, no Default or Event of Default
has occurred and is continuing.  No event
has occurred and no condition exists that would constitute a default, event of
default or potential default (howsoever described) under the 2005 Bank
Facility.

 

4.8          Guaranties.

 

No Subsidiary
of the Company, other than Subsidiaries which are Guarantors as at the
Effective Time, has entered into or is liable under any guaranty of any
Financial Indebtedness of any Person arising under the 2005 Bank Facility.

 

5.             AMENDMENTS TO EXISTING NOTE PURCHASE
AGREEMENT.

 

Subject to the conditions specified in Section 7,
the Existing Note Purchase Agreement is hereby amended in the manner provided
in Exhibit A to this Agreement (the “Amendments”).

 

6.             WAIVER.

 

Subject to the conditions specified in Section 7,
each Noteholder party hereto hereby waives (the “Waiver”), from the date of this Agreement,
the Event of Default constituted by the breach by the Company of the provision
of the letter agreement dated February 18, 2004

 

5

 

between the
Company and the Current Noteholders attached hereto as Annex 3 requiring the
Company to extend or refinance the New Bank Facility prior to January 30,
2005 (the existence of which Event of Default the Company hereby acknowledges
and confirms). The Company acknowledges and confirms that the Current
Noteholders do not confirm or waive, and fully reserve all their rights with
respect to, any other Default or Event of Default that may have occurred or may
occur.

 

7.             CONDITIONS
TO EFFECTIVENESS.

 

The Amendments and the Waiver shall each
become effective, if at all, at such time (the “Effective Time”) as the Company and the
Required Holders shall have executed and delivered counterparts of this
Agreement and the following conditions shall have been satisfied by the Company
(or waived by the Required Holders):

 

7.1          Representations and
Warranties.

 

The representations and warranties set forth
in Section 4 shall be true and correct.

 

7.2          Due Authorization, etc.

 

The Company
shall have authorized, by all necessary corporate action, the execution and
delivery of this Agreement, the performance of all of its obligations under
this Agreement, and the consummation of all transactions by it contemplated by
this Agreement, and each Guarantor shall have authorized, by all necessary
corporate action, the execution and delivery of the Acknowledgement and Consent
attached hereto, and the Current Noteholders and their special counsel shall
have received such certificates and other evidence to such effect (including,
without limitation, secretary’s certificates and board resolutions) as the Required
Holders and their special counsel may reasonably request.

 

7.3          Fees and Expenses.

 

The Company shall have paid all amounts required to have been paid to
date pursuant to Section 8, including, without limitation, the reasonable
fees and expenses of Bingham McCutchen LLP, special counsel for the holders of
the Notes, and PricewaterhouseCoopers LLP, reporting accountants to the holders
of the Notes, as reflected in statements to be presented to the Company before
the Effective Time.

 

7.4          Consent of Guarantors.

 

Each Guarantor
shall have indicated its acknowledgement and consent in respect of this
Agreement by executing and delivering the Acknowledgement and Consent attached
hereto.

 

8.             EXPENSES.

 

Whether or not the Amendments and/or the
Waiver become effective, the Company will promptly (and in any event within
thirty (30) days of receiving any statement or invoice therefor) pay all
reasonable out-of-pocket costs and expenses of the Current Noteholders relating
to this Agreement and all related documentation contemplated herein, including,
but not limited to, (a) the cost of reproducing this Agreement and any
other documents delivered in connection herewith and the transactions
contemplated hereby, and (b) the reasonable fees

 

6

 

and expenses of
Bingham McCutchen LLP, special counsel for the holders of the Notes, and
PricewaterhouseCoopers LLP, reporting accountants to the holders of the Notes,
incurred in connection with such matters.

 

9.             MISCELLANEOUS.

 

9.1          Part of Note
Purchase Agreement, Future References, etc.

 

This Agreement
shall be construed in connection with and as a part of the Notes and the Note
Purchase Agreement and, except as expressly amended by this Agreement, all
terms, conditions and covenants contained in the Notes, the Note Purchase
Agreement and the Subsidiary Guarantees are hereby ratified and shall be and
remain in full force and effect.  Any and
all notices, requests, certificates and other instruments executed and
delivered after the execution and delivery of this Agreement may refer to the
Notes and the Note Purchase Agreement without making specific reference to this
Agreement, but nevertheless all such references shall include this Agreement
unless the context otherwise requires.

 

9.2          Governing Law.

 

THIS
AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF
THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK EXCLUDING
CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION
OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.

 

9.3          Duplicate Originals,
Execution in Counterpart.

 

Two (2) or
more duplicate originals hereof may be signed by the parties, each of which
shall be an original but all of which together shall constitute one and the
same instrument.  This Agreement may be
executed in one or more counterparts and shall be effective at the time
provided in Section 7 and each set of counterparts that, collectively,
show execution by the Company and each consenting Current Noteholder shall
constitute one duplicate original.

 

 

[signature pages immediately follow]

 

7

 

If this Agreement is satisfactory to you,
please so indicate by signing the applicable acceptance on a counterpart hereof
and returning such counterpart to the Company.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  SPIRENT plc

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

[Signature
page for THIRD AMENDMENT, CONSENT AND WAIVER AGREEMENT of SPIRENT PLC]

 

 

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

	
  By:

  	
   

  	
  Delaware Investment Advisers, a Series of
  Delaware

  
	
   

  	
   

  	
  Management Business Trust, Its
  Attorney-in-Fact

  

 

 

	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

LINCOLN LIFE & ANNUITY COMPANY OF
NEW YORK

	
  By:

  	
   

  	
  Delaware Investment Advisers, a Series of
  Delaware

  
	
   

  	
   

  	
  Management Business Trust, Its
  Attorney-in-Fact

  

 

 

	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

 

FIRST PENN-PACIFIC LIFE INSURANCE COMPANY

	
  By:

  	
   

  	
  Delaware Investment Advisers, a Series of
  Delaware

  
	
   

  	
   

  	
  Management Business Trust, Its
  Attorney-in-Fact

  

 

 

	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

 

METROPOLITAN LIFE INSURANCE COMPANY

 

 

	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

METROPOLITAN PROPERTY AND CASUALTY

INSURANCE COMPANY

	
  By:

  	
   

  	
  Metropolitan Life Insurance Company

  
	
   

  	
   

  	
  Its Investment Manager

  

 

 

	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

METROPOLITAN TOWER LIFE INSURANCE COMPANY

	
  By:

  	
   

  	
  Metropolitan Life Insurance Company

  
	
   

  	
   

  	
  Its Investment Manager

  

 

 

	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

TEACHERS INSURANCE AND ANNUITY

ASSOCIATION OF AMERICA

 

 

	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

THE TRAVELERS INSURANCE COMPANY

 

 

	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

PRIMERICA LIFE INSURANCE COMPANY

 

 

	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

CONNECTICUT GENERAL LIFE INSURANCE COMPANY

	
  By:

  	
   

  	
  CIGNA Investments, Inc. (authorized
  agent)

  

 

 

	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

LIFE INSURANCE COMPANY OF NORTH AMERICA

	
  By:

  	
   

  	
  CIGNA Investments, Inc. (authorized
  agent)

  

 

 

	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY

	
  By:

  	
   

  	
  Babson Capital Management LLC as

  
	
   

  	
   

  	
  Its Investment Adviser

  

 

 

	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

SWISS RE LIFE & HEALTH AMERICA INC

	
  By:

  	
   

  	
  Swiss Re Asset Management (Americas) Inc.

  

 

 

	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

ACKNOWLEDGEMENT
AND CONSENT

 

Each of the undersigned hereby acknowledges, consents and agrees to the
terms and provisions of this Agreement and confirms that its Subsidiary
Guarantee continues in full force and effect in respect of the Notes and the
Note Purchase Agreement as amended by the Amendment and Consent Agreement dated
December 31, 2003, the Second Amendment and Consent Agreement dated August 13,
2004 and by the terms of this Agreement.

 

EXECUTED
by

PG DRIVES TECHNOLOGY,
INC.

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXECUTED
by

SPIRENT
COMMUNICATIONS INC.

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXECUTED
by

SPIRENT
COMMUNICATIONS OF ROCKVILLE, INC.

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXECUTED
by

HELLERMANNTYTON
CORPORATION

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXECUTED
by

HELLERMANNTYTON
CANADA INCORPORATED

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

 

EXECUTED
by

SPIRENT
COMMUNICATIONS OF OTTAWA LIMITED

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXECUTED
by

PG INTERNATIONAL PLC

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXECUTED
by

HELLERMANNTYTON DATA
LIMITED

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXECUTED
by

SPIRENT
COMMUNICATIONS (SCOTLAND) LIMITED

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXECUTED
by

SPIRENT
COMMUNICATIONS (SW) LIMITED

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXECUTED
by

SPIRENT
COMMUNICATIONS LIMITED

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXECUTED
by

SPIRENT HOLDINGS
CORPORATION

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXECUTED
by

SPIRENT FINANCING
CORP.

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXECUTED
by

NETCOM SYSTEMS
HOLDINGS CORPORATION

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXECUTED
by

SPIRENT OVERSEAS
LIMITED

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

ANNEX
1

 

CURRENT
NOTEHOLDERS

 

Series A Notes

 

	
  Name of Noteholder

  	
   

  	
  Principal
  Amount of Notes Held

  	
   

  
	
  The
  Travelers Insurance Company

  	
   

  	
  $

  	
  5,467,312.91

  	
   

  
					

 

Series B
Notes

 

	
  Name of Noteholder

  	
   

  	
  Principal
  Amount(s) of Notes Held

  	
   

  
	
  Connecticut
  General Life Insurance Company

  	
   

  	
  $

  	
  11,944,461.95

  	
   

  
	
  Life
  Insurance Company of North America

  	
   

  	
  $

  	
  2,571,036.00

  	
   

  
	
  Massachusetts
  Mutual Life Insurance Company

  	
   

  	
  $

  	
  11,426,826.67

  	
   

  
	
  Primerica
  Life Insurance Company

  	
   

  	
  $

  	
  1,714,024.00

  	
   

  
	
  The
  Travelers Insurance Company

  	
   

  	
  $

  	
  8,570,120.01

  	
   

  

 

Series C
Notes

 

	
  Name of Noteholder

  	
   

  	
  Principal
  Amount(s) of Notes Held

  	
   

  
	
  Metropolitan
  Life Insurance Company

  	
   

  	
  $

  	
  33,804,997.13

  	
   

  
	
  Metropolitan
  Tower Life Insurance Company

  	
   

  	
  $

  	
  4,583,728.42

  	
   

  
	
  Metropolitan
  Property and Casualty Insurance Company

  	
   

  	
  $

  	
  4,583,728.42

  	
   

  
	
  Teachers
  Insurance and Annuity Association of America

  	
   

  	
  $

  	
  22,918,642.11

  	
   

  

 

Series D
Notes

 

	
  Name of Noteholder

  	
   

  	
  Principal
  Amount(s) of Notes Held

  	
   

  
	
  Swiss Re
  Life & Health America Inc

  	
   

  	
  $

  	
  1,164,566.35

  	
   

  
	
  The Lincoln
  National Life Insurance Company

  	
   

  	
  $

  	
  14,611,813.99

  	
   

  
	
  Lincoln Life &
  Annuity Company of New York

  	
   

  	
  $

  	
  291,141.59

  	
   

  
	
  First
  Penn-Pacific Life Insurance Company

  	
   

  	
  $

  	
  1,164,566.35

  	
   

  

 

1

 

ANNEX
2

 

INFORMATION
AS TO COMPANY AND SUBSIDIARIES

 

	
  Part 4.2

  	
   

  	
  Financial Indebtedness

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [See attached spreadsheet]

  

 

2

 

SPIRENT
PLC AND ITS SUBSIDIARIES

 

FINANCIAL
INDEBTEDNESS AS OF AS AT 31 DECEMBER 2004

 

	
   

  	
   

  	
  TOTAL O/DRAFT

  FACILITIES

  AVAILABLE

  (000)

  	
   

  	
  TOTAL LOAN

  FACILITIES

  AVAILABLE

  (000)

  	
   

  	
  OVERDRAFT

  BALANCE AS AT

  31-Dec-04

  (000)

  	
   

  	
  LOAN

  BALANCE AS AT

  31-Dec-04

  (000)

  	
   

  	
  TOTAL

  OUTSTANDING

  31-Dec-04

  GBP (000)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECURED

  	
   

  	
  855

  	
   

  	
  3,306

  	
   

  	
  724

  	
   

  	
  3,044

  	
   

  	
  3,768

  	
   

  
	
  UNSECURED

  	
   

  	
  6,010

  	
   

  	
  95,815

  	
   

  	
  80

  	
   

  	
  65,198

  	
   

  	
  65,278

  	
   

  
	
  FINANCE LEASES

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  9,559

  	
   

  	
  9,559

  	
   

  
	
  TOTAL

  	
   

  	
  6,866

  	
   

  	
  99,121

  	
   

  	
  804

  	
   

  	
  77,801

  	
   

  	
  78,605

  	
   

  
	
  UNSECURED SPIRENT PLC INDEBTEDNESS

  	
   

  	
  6,000

  	
   

  	
  95,009

  	
   

  	
  —

  	
   

  	
  65,009

  	
   

  	
  65,009

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL SUBSIDIARY FINANCIAL INDEBTEDNESS

  	
   

  	
  £

  	
  866

  	
   

  	
  £

  	
  4,112

  	
   

  	
  £

  	
  804

  	
   

  	
  £

  	
  12,792

  	
   

  	
  £

  	
  13,596

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
																	

 

 

ANNEX
3

 

[See attached letter agreement dated February 18, 2004]

 

3

 

SPIRENT plc

 

18 February 2004

 

To each of the Current Noteholders

Named in Annex 1 hereto:

 

                With
reference to (i) the Amendment and Consent Agreement dated as of December 31,
2003 (the "Amendment Agreement"; all capitalized terms used herein
without definition to have the meanings assigned thereto in the Amendment
Agreement), among you and Spirent plc (the "Company") and (ii) the
New Bank Facility, the Company hereby agrees that it shall, no earlier than
December 31, 2004 but prior to January 30, 2005, exercise the Term-Out Option
contained in the New Bank Facility unless prior to such exercise date the New
Bank Facility has been extended or refinanced so as to comply with the provisions
of Section 9.8 of the Note Purchase Agreement. 
Immediately after exercising such Term-Out Option, the Company shall
give the Current Noteholders and their special counsel Bingham McCutchen LLP
written notice of such exercise.  Any
breach of this letter agreement shall constitute an Event of Default under the
Note Purchase Agreement.

 

	
   

  	
  Very truly yours

  
	
   

  	
  SPIRENT PLC

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Eric Hutchinson

  
	
   

  	
  Name: Eric Hutchinson

  
	
   

  	
  Title: Director

  

 

 

EXHIBIT A

 

AMENDMENTS

 

§1           Amendments to Section 7.1(B) of the
Existing Note Purchase Agreement.  Section 7.1(B) of
the Existing Note Purchase Agreement is hereby amended by deleting the word “and”
at the end of Section 7.1(B)(j), deleting the period and inserting the
word “;and” at the end of Section 7.1(B) (k) and by adding a new
7.1(B)(1) in its appropriate place in such Section:

 

“(l)          Conference Call — by
way of a conference call conducted on a semi-annual basis within seven days of
receipt by the Noteholders of the Company’s annual statements or semi-annual
statements, as the case may be, by the group finance director of the Company
with the Noteholders and their special counsel, an update on the Group’s
financial performance.”

 

§2           Amendment to Section 10.3 of the
Existing Note Purchase Agreement. 
Section 10.3 of the Existing Note Purchase Agreement is
hereby amended and restated in its entirety to read as follows:

 

“10.3 Liens, etc.

 

The Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly create, incur, assume or permit
to exist (upon the happening of a contingency or otherwise) any Lien on or with
respect to any property or asset (including, without limitation, any document
or instrument in respect of goods or accounts receivable) of the Company or any
such Subsidiary (and in no event shall any amounts outstanding under the Bank
Facility, any Committed Medium-Term Financing or any Committed External
Financing be secured by any Liens) whether now owned or hereafter acquired, or
any income or profits therefrom or assign or otherwise convey any right to
receive income or profits unless it makes, or causes to be made, effective
provision whereby the Notes will be equally and ratably secured with any and
all other obligations thereby secured, (x) such security to be granted (i) no
later than the date upon which the Lien is granted, and (ii) pursuant to
an agreement reasonably satisfactory to the Required Holders and (y) if such
obligations are the Bank Facility, any Committed Medium-Term Financing or any
Committed External Financing, the holders of such obligations shall have
entered into an intercreditor agreement with the Noteholders satisfactory in
form, scope and substance to each Noteholder in its sole discretion and, in any
case, the Notes shall have the benefit to the fullest extent that, and with
such priority as, the holders of the Notes may be entitled under applicable
law, of an equitable Lien on such property, except:

 

(a)           Liens existing as of December 31, 2002 and
described in Schedule 5.13;

 

(b)           Liens for taxes or assessments or other
applicable governmental charges or levies not yet delinquent or which are being
contested as permitted by Section 9.4;

 

(c)           Liens created or arising by operation of law in
the ordinary course of business, including, without limitation, landlords’
liens and statutory liens of carriers, warehousemen, mechanics, materialmen,
vendors and other Liens securing amounts which are not yet due or which are
being contested on a timely basis in good faith by

 

A-1

 

appropriate means (so long as the enforcement of any such
Lien shall be stayed during such contest) and for which appropriate reserves or
similar provision have been made under Applicable GAAP;

 

(d)           Liens incurred or deposits made in the ordinary
course of business in connection with workers’ compensation, unemployment
insurance and other types of social security or to secure the performance of
tenders, statutory obligations, surety or appeal bonds, bids, leases,
government contracts, performances in return of money bonds and similar
obligations;

 

(e)           easements, rights-of-way, zoning and similar
restrictions and other similar Liens not materially impairing the value of the
property to which such restrictions or other similar Liens attach or
interfering with the ordinary conduct of the business of the Company and its
Subsidiaries;

 

(f)            any attachment or judgment Lien unless the
judgment it secures shall not, within 60 days after the entry thereof, have
been discharged or execution thereof stayed pending appeal, or shall not have
been discharged within 60 days after the expiration of any such stay;

 

(g)           Liens in favor of banks or other depository
institutions arising in the ordinary course of business from statutory rights
of set-off;

 

(h)           Liens encumbering goods and documents of title
with respect to such goods and arising in the ordinary course of business in
connection with the issue of documentary letters of credit, in each case not
incurred or made in connection with the borrowing of money or the obtaining of
advances or similar credit, and Liens arising out of title retention provisions
in a supplier’s standard condition of supply of goods acquired in the ordinary
course of business (so long as the obligations that are material and are owing
to such supplier are not overdue);

 

(i)            Liens in respect of property of any Subsidiary
in favor of the Company or another Wholly-Owned Subsidiary;

 

(j)            in the case of any Person that after the date
hereof is acquired by or consolidated with or merged with or into the Company
or any Subsidiary, Liens existing at the time such Person is so acquired,
consolidated or merged (and not incurred in anticipation thereof), or in the
case of any property or assets acquired by the Company or any Subsidiary after
the date hereof, Liens existing on such property or assets at the time of
acquisition thereof (and not incurred in anticipation thereof), whether or not
the Financial Indebtedness secured thereby is assumed by the Company or such
Subsidiary, provided that:

 

(i)            no such Lien shall extend to or cover any other property of
the Company or such Subsidiary, as the case may be; and

 

(ii)           the Company shall cause such Lien to be discharged within
180 days after the effective date of such acquisition, consolidation or merger;

 

(k)           Liens in respect of property or assets
(including real property) acquired or developed by the Company or any
Subsidiary after the date hereof, which Liens are

 

A-2

 

created at the
time of acquisition or on or before completion of development of such property
or assets, to secure Financial Indebtedness assumed or incurred to finance all
or any part of the purchase price or cost of developing such property or
assets, provided that:

 

(i)            no such Lien shall extend to or cover any other property or
assets of the Company or such Subsidiary, as the case may be; and

 

(ii)           the principal amount of the Financial Indebtedness secured
by all such Liens in respect of any such property or assets shall not exceed
the lesser of the Fair Market Value (determined at the time of acquisition or
development) or the cost of such property or assets;

 

(l)            extensions, renewals or replacements of any
Lien permitted by clause (a) or (k) of this Section 10.3 in
connection with extensions, renewals or refundings of the Financial
Indebtedness secured thereby (including the undrawn portion of facilities set
forth in Schedule 5.13) so long as the principal amount of such Financial
Indebtedness or facility is not increased and such Lien as so extended, renewed
or replaced does not extend to or cover any property other than the property
covered thereby immediately prior to such extension, renewal or replacement;
and

 

(m)          other Liens to the extent not otherwise
permitted by clauses (a) through (l) of this Section 10.3, inclusive,
provided that the sum of (i) the
aggregate amount of the Financial Indebtedness and other obligations of the
Group secured by Liens other than Liens listed on Schedule 5.13 except to
the extent the principal amount secured by such Lien exceeds the amount stated
in such Schedule, plus (without
duplication) (ii) Total Subsidiary Debt at such time, does not exceed
£30,000,000 (or its equivalent in other currencies) at such time.

 

Notwithstanding the foregoing provisions of
this Section 10.3, the Company shall not, and shall procure that no member
of the Group shall, create or allow to exist any Lien on any of its assets in
favor of a Person securing any amounts outstanding under the Bank Facility, the
New Bank Facility, the 2005 Bank Facility, any Committed Medium-Term Financing,
any Committed External Financing or any bank or other creditor financing
facility replacing such facility or any part of such facility, regardless of
the principal amount or the committed amount secured or the scheduled final
maturity date thereof.  If any member of
the Group intends to create, creates or permits to subsist any Lien on any of
its assets in violation of the preceding sentence, the Company shall ensure, by
no later than the date on which such Lien is granted, that (x) the relevant
member of the Group executes such security and intercreditor documentation as
the Required Holders may require to ensure that all the obligations under the
Financing Documents shall be secured by the same assets and shall rank pari passu with the other obligations
secured on those assets, or (y) at the request of the Company, such other
security and intercreditor documentation in respect of any other assets of the
Group as the Required Holders shall agree, provided
that in the case of both (x) and (y) such violation shall nevertheless
constitute an Event of Default.”

 

A-3

 

§3           Amendment to Section 10.4(b) of the
Existing Note Purchase Agreement.  Section 10.4(b) of
the Existing Note Purchase Agreement is hereby amended and restated in its
entirety to read as follows:

 

“(b)         Prior
to the Normalization Date, the Company will not, and will not permit any Subsidiary
to, make any Transfer without the prior written consent of the Required Holders
except for Permitted Disposals
and Asset Dispositions permitted under Section 10.2; provided that,
notwithstanding the terms hereof, no Transfer will be permitted under this Section 10.4(b) if
it is otherwise prohibited by the terms of the 2005 Bank Facility or any
replacement bank or other credit or financing facility in respect thereof.”

 

§4           Amendment to Section 10.4(c) of the
Existing Note Purchase Agreement.  Section 10.4(c) of
the Existing Note Purchase Agreement is hereby amended and restated in its
entirety to read as follows:

 

“(c)         On
and after the Normalization Date, except as permitted under Section 10.2
of this Agreement, the Company will not, and will not permit any Subsidiary to,
make an Asset Disposition unless:

 

(i)            in the good faith opinion of the Company, the Asset
Disposition is in the best interest of the Company or such Subsidiary;

 

(ii)           immediately after giving effect to the Asset Disposition, no
Default or Event of Default would exist; and

 

(iii)          immediately after giving effect to the Asset Disposition,
the Net Proceeds Amount arising from all Asset Dispositions of all property
that was the subject of any Asset Disposition occurring on and after the Effective
Date would not exceed £25,000,000.

 

If the Net Proceeds Amount received in
respect of any Transfer is applied to a Debt Prepayment Application or a
Property Reinvestment Application within 365 days after such Transfer, then
such Net Proceeds Amount shall be excluded for the purpose of determining
compliance with clause (c) of this Section 10.4 as of any date.  Notwithstanding the foregoing, no Asset
Disposition will be permitted under this Section 10.4(c) if it is
otherwise prohibited by the terms of the 2005 Bank Facility or any replacement
bank or other credit or financing facility in respect thereof.”

 

§5           Amendment to Section 10.7(d) of the
Existing Note Purchase Agreement.  Section 10.7(d) of
the Existing Note Purchase Agreement is hereby amended and restated in its
entirety to read as follows:

 

“(d)         Required
Additional Subsidiary Guarantees. 
The Company will not permit any Subsidiary (other than a Subsidiary that
is a Guarantor) to enter into, incur, grant or be or become liable under or
otherwise permit to exist any Guaranty in respect of any Financial Indebtedness
(other than the Financial Indebtedness evidenced by the Notes), unless a
Subsidiary Guarantee has been granted by such Subsidiary in favor of the
holders of the Notes in respect of the obligations of the Company under and
pursuant to this Agreement and the Notes and such Subsidiary has otherwise
complied with the provisions of clause (b) of this Section 10.7.”

 

A-4

 

§6           Amendment to Section 10.11(b) of
the Existing Note Purchase Agreement.  Section 10.11(b) of
the Existing Note Purchase Agreement is hereby amended and restated in its
entirety to read as follows:

 

“(b)         Acquisitions
on and after the Normalization Date. 
On and after the Normalization Date, the Company will not, and will not
permit any of its Subsidiaries to, make an Acquisition or commit to make an
Acquisition whether for cash, shares or other consideration unless the group
finance director of the Company certifies to the holders of the Notes that such
Acquisition would not on a pro forma basis have resulted in the Company
breaching any of the financial covenants set out in this Agreement (and as in
effect on and after the Normalization Date) on either of (i) the two
Testing Dates immediately prior to and (ii) the two Testing Dates (based
on the Company’s projections) immediately after the proposed date of the
Acquisition.  For the purpose of
calculating pro forma financial information for purposes of this Section 10.11(b) for
a period ending on a Testing Date, it shall be assumed that the Acquisition
shall have occurred on the first day of the Accounting Period (which for the
avoidance of doubt shall be a twelve month period) ending on the applicable
Testing Date.

 

Notwithstanding the foregoing, the Company
will not, and will not permit any of its Subsidiaries to, make any Acquisition:

 

(a)           (except
pursuant to clause (a)(i) or clause (a)(iii) above)
during the continuance of an Event of Default under this Agreement whether
before or after the Normalization Date; or

 

(b)           if any such Acquisition would be otherwise prohibited by the
terms of the 2005 Bank Facility or any replacement bank facility.”

 

§7           Amendments to Schedule B
of the Existing Note Purchase Agreement.  Schedule B of the
Existing Note Purchase Agreement is hereby amended by replacing each of the
following defined terms in its appropriate place in alphabetical order in such
Schedule:

 

“Committed Medium-Term Financing — means a
loan, credit or financing facility or facilities (including an extension to the
2005 Bank Facility) providing for revolving or term loans pursuant to a written
commitment by one or more banks or other financial institutions or any other
external debt financing entered into by the Company, in each case with a
maturity or maturities of no earlier than February 1, 2006, providing for
aggregate total commitments of not less than £30,000,000.”

 

“Designated Debt Subsidiaries — means On-Site
Limited (provided that at least
90% of all of its Voting Shares, other equity interests and voting interests
are at all times owned directly or indirectly by the Company (except directors’
qualifying shares and shares or other equity interests owned by directors or
employers to the extent such ownership is required to comply with applicable
local law or regulation)), HellermannTyton (Pty) Limited (provided that at least 90% of all of its
Voting Shares, other equity interests and voting interests are at all times
owned directly or indirectly by the Company (except directors’ qualifying
shares and shares or other equity interests owned by directors or employers to
the extent such ownership is required to comply with applicable local law or
regulation)), HellermannTyton Pte Limited (provided
that at least 75% of all of its Voting Shares, other equity interests and
voting interests are at all times owned directly or indirectly by the Company
(except

 

A-5

 

directors’ qualifying shares and shares or other equity interests owned
by directors or employers to the extent such ownership is required to comply
with applicable local law or regulation)) or HellermannTyton (Wuxi) Electrical
Accessories Co. Ltd (provided
that at least 75% of all of its Voting Shares, other equity interests and
voting interests are at all times owned directly or indirectly by the Company
(except directors’ qualifying shares and shares or other equity interests owned
by directors or employers to the extent such ownership is required to comply
with applicable local law or regulation)).”

 

“Network Products Division — means the Company’s
division comprised of the following entities: HellermannTyton (“HT”), divisions of Spirent plc
(divisions: HT Broadband, HT Plymouth, HT Ireland, HT BHD, HT Manchester and
the assets and business of Staeng Limited), Staeng Limited, HT Data Limited,
Spirent Australia pty Limited, HellermannTyton GmbH, HellermannTyton S.A.,
HellermannTyton pty Limited, HellermannTyton AB, HellermannTyton Limitada,
HellermannTyton Srl, HellermannTyton Corporation, Spirent BV’s interest in
HellermannTyton Pte Limited (75%), Spirent plc’s interest in Tyton Corporation
of Japan (49%) and all Subsidiaries of such companies.”

 

“Permitted Bank — means:

 

(a)           any commercial bank or trust company having, in
respect of its long-term unsecured debt obligations, a rating of “A” or higher
by Standard & Poor’s or IBCA or “A-2” or higher by Moody’s or a
comparable rating from a nationally recognized (in England) credit rating
agency; or

 

(b)           the Bank Agent, so long as its ultimate parent
shall have in respect of its long-term unsecured debt obligations, a rating of “A-”
or higher by Standard & Poor’s or IBCA or “A-3” or higher by
Moody’s or a comparable rating from a nationally recognized (in England) credit
rating agency.”

 

“Systems - Drive Division — means the business
and assets of PG DrivesTechnology Limited owned by Spirent plc, PG
International plc, PG Drives Technology Limited and PG Drives Technology Inc.”

 

§8           Amendment to Schedule B
of the Existing Note Purchase Agreement.  Schedule B of the Existing Note Purchase
Agreement is hereby amended by adding the following defined terms in its
appropriate place in alphabetical order in such Schedule:

 

“Bank
Agent — means Lloyds TSB Bank plc or any successor
or replacement entity acting as agent under the 2005 Bank Facility or any
replacement bank facility.”

 

New
Bank Facility — means the £30,000,000 credit
facility entered into by the Company dated February 4, 2004.

 

2005
Bank Facility — means the £30,000,000 credit
facility entered into by the Company dated February 2, 2005, and as in
effect on February 2, 2005.”

 

A-6

 

§9           Amendment to Exhibit B of the Existing
Note Purchase Agreement.    Exhibit B of the Existing Note Purchase
Agreement is hereby amended and restated in its entirety to read as follows:

 

“EXHIBIT B

 

FORM OF
NORMALIZATION CERTIFICATE

 

To:          Each of the Noteholders
listed on Schedule A hereto

 

From:      Spirent plc

 

Date:                            

 

SPIRENT plc
(formerly BOWTHORPE plc)

Amended and
Restated Note Purchase Agreement

 

This is a Normalization Certificate.

 

The Company hereby represents and warrants as of the date hereof that:

 

1.             On
three consecutive Normalization Testing Dates (as such term is defined in the
Amended and Restated Note Purchase Agreement, as amended from time to time (the
“Agreement”), dated as of March 11, 2003, between Spirent plc (the “Company”)
and the Noteholders listed on Schedule A hereto; capitalized terms used
herein without definition have the respective meanings specified in the
Agreement), the Company’s ratio of Consolidated Net Debt, as of each such
Normalization Testing Date, to Consolidated EBITDA, for the Accounting Period
ending on such Normalization Testing Date, was less than 1.5 to 1.0.  The relevant Normalization Testing Dates and
ratios are set out below:

 

	
  Normalization Testing Date

  	
   

  	
  Ratio of Consolidated Net Debt

  
	
   

  	
   

  	
  to Consolidated EBITDA

  

 

2.             On
the same three consecutive Normalization Testing Dates as mentioned in paragraph
1 above, the Company’s ratio of Consolidated EBITA to Consolidated Net Interest
Expense, in each case determined for the Accounting Period ending on such
Normalization Testing Date, was in excess of 4.5 to 1. The relevant
Normalization Testing Dates and ratios are set out below:

 

	
  Normalization Testing Date

  	
   

  	
  Ratio of Consolidated EBITA

  
	
   

  	
   

  	
  to Consolidated Net Interest Expense

  

 

3.             The
Company has obtained Committed Medium-Term Financing(s) with                       
[fill in names(s) of bank(s)/financial institution(s)], with a
maturity/maturities of no earlier than February 1, 2006, providing for
aggregate total commitments of not less than £30,000,000.  The principal terms and conditions of such
Committed Medium-Term Financing(s) are set out on Schedule B hereto.

 

4.             No
Default or Event of Default has occurred which is continuing.

 

Schedule C contains supporting calculations in reasonable detail
with respect to the representations and warranties contained in paragraphs 1
and 2 hereof.

 

A-7

 

	
   

  	
  SPIRENT PLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
  [group finance director]

  	
   

  

 

A-8

 

Schedule A

 

Metropolitan Life Insurance Company

 

Metropolitan Tower Life Insurance Company

 

Metropolitan Property and Casualty Insurance Company

 

Teachers Insurance and Annuity Association of America

 

The Lincoln National Life Insurance Company

 

Lincoln Life & Annuity Company of New York

 

First Penn-Pacific Life Insurance Company

 

The Travelers Insurance Company

 

Primerica Life Insurance Company

 

Connecticut General Life Insurance Company

 

Life Insurance Company of North America

 

Massachusetts Mutual Life Insurance Company

 

Swiss Re Life & Health America Inc

 

 

[To be updated as required at
the time of delivery to

accurately reflect the Noteholders at such time.]

 

A-9

 

Schedule B

 

[to
be provided by the Company]

 

A-10

 

Schedule C

 

[to
be provided by the Company]”

 

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Exhibit 10.1  

 
 

APPENDIX A    
    

CARTER'S, INC.

AMENDED AND RESTATED 2003 EQUITY INCENTIVE PLAN  

1.     Definitions.  

        Exhibit A, which is incorporated by reference, defines the terms used in the Plan and sets forth certain
operational rules related to those terms. 

2.     Purpose.  

        The purpose of this amended and restated Plan is to advance the interests of the Company by enhancing the ability of the Company and its subsidiaries to attract
and retain able Employees and Directors; to reward such individuals for their contributions; and to encourage such individuals to take into account the long-term interests of the Company
and its subsidiaries by providing for the grant to Participants of Stock-based incentive Awards. 

3.     Administration.  

        The Administrator has discretionary authority, subject only to the express provisions of the Plan, to interpret the Plan; determine eligibility for and grant
Awards; determine, modify or waive the terms and conditions of any Award; prescribe forms, rules and procedures; and otherwise do all things necessary to carry out the purposes of the Plan. In the
case of any Award intended to be eligible for the performance-based compensation exception under Section 162(m), the Administrator will exercise its discretion consistent with qualifying the
Award for that exception. Determinations of the Administrator made under the Plan will be conclusive and will bind all parties. 

4.     Effective Date and Term of Plan.  

        The Plan was originally adopted on August 15, 2001 and was approved by stockholders on August 15, 2001. The Plan was amended, restated and renamed
on October 10, 2003, and approved by stockholders on October 10, 2003, prior to the Company's initial public offering, and subsequently at the Company's 2004 annual meeting of
stockholders on May 14, 2004. The provisions of this amendment and restatement of the Plan, including without limitation the increase in the number of shares available to be delivered under
Awards, shall become effective on the date on which this amendment and restatement is approved by the stockholders of the Company. Except as hereinafter provided, any Award made prior to stockholder
approval of the amendment and restatement set forth herein shall be subject to the terms of the Plan as in effect prior to such amendment and restatement. Notwithstanding the foregoing, an Award may
be made under the terms of this amendment and restatement of the Plan but prior to stockholder approval of such amendment and restatement if the Award is conditioned upon such approval. 

        No
ISOs may be granted under the Plan after August 15, 2011. 

5.     Shares Subject to the Plan.  

	(a)
	Number of Shares.    The aggregate maximum number of shares of Stock that may be delivered in satisfaction of Awards under
the Plan shall be 5,744,196. For the avoidance of doubt, if any Award granted under the Plan terminates without having been exercised in full, or upon exercise is satisfied other than by delivery of
Stock, the number of shares of Stock as to which such Award was not exercised shall be available for future grants. In no event shall more than 

1

 

630,000
of the 1,400,000 additional shares authorized by this amendment and restatement be used for Awards other than Stock Options. For the avoidance of doubt, all of the shares of Stock available
for delivery under Awards issued under the Plan immediately prior to the effective date of this restatement shall remain available for delivery under any type of Award granted under the Plan. 

	(b)
	Shares to be Delivered.    Stock delivered under the Plan shall be authorized but unissued Stock, or if the Administrator so
decides in its sole discretion, previously issued Stock acquired by the Company and held in its treasury. No fractional shares of Stock shall be delivered under the Plan.

	(c)
	Section 162(m) Limits.    The maximum number of shares of Stock for which Stock Options may be granted to any person
in any calendar year and the maximum number of shares of Stock subject to SARs granted to any person in any calendar year will each be 1,000,000. The maximum benefit that may be paid to any person
under other Awards in any calendar year will be, to the extent paid in shares, 1,000,000 shares (or their value in dollars), and, with respect to any cash Award made in connection with a related Award
pursuant to paragraph (vii) under the definition of "Award" in Appendix A, an amount not to exceed the amount necessary to defray in whole or in part the cost (including tax cost) of the
related Award to the Participant. The Plan and Awards hereunder made to Covered Employees (as such term is defined in Section 162(m)) are intended to satisfy Section 162(m) and shall be
construed in accordance with that intention. 

6.     Eligibility and Participation.  

        Persons eligible to receive Awards under the Plan shall be such Employees and Directors selected by the Administrator. Eligibility for ISOs is limited to
Employees of the Company or of a "parent corporation" or a "subsidiary corporation" of the Company as those terms are defined in Section 424 of the Code. 

7.     Terms and Conditions of Awards.  

	(a)
	All
Awards. 

        (i)    Award Provisions.    The Administrator will determine the terms of all Awards, subject to the limitations
provided herein. 

        (ii)    Transferability.    No Award may be transferred other than by will or by the laws of descent and distribution,
and during a Participant's lifetime an Award may be exercised only by him or her; provided, however, that the foregoing provisions shall not prohibit
the transfer of an Award of Unrestricted Stock or, for periods after Restricted Stock ceases to be subject to restrictions requiring that it be redelivered or offered for sale to the Company if
specified conditions are not satisfied, Restricted Stock. 

        (iii)    Vesting, Etc.    An Award will vest or become exercisable at such time or times and upon such conditions as
the Administrator shall specify. Without limiting the foregoing, the Administrator may at any time accelerate the vesting or exercisability of all or any part of an Award. 

        (iv)    Taxes.    The Administrator will make such provision for the withholding of taxes as it deems necessary. The
Administrator may, but need not, hold back shares of Stock from an Award or permit a Participant to tender previously owned shares of Stock (which in the case of Stock acquired from the Company shall
have been owned by the Participant for such minimum time, if 

2

 

any,
as the Administrator may determine) in satisfaction of tax withholding requirements (but not in excess of the minimum withholding required by law). 

        (v)    Dividend Equivalents, Etc.    The Administrator may provide for the payment of amounts in lieu of cash
dividends or other cash distributions with respect to Stock subject to an Award. 

        (vi)    Section 162(m).    Except as hereinafter provided, this Section 7(a)(vi) applies to any
Performance Award intended to qualify as performance-based for the purposes of Section 162(m). In the case of any Performance Award to which this Section 7(a)(vi) applies, the
Plan and such Award will be construed to the maximum extent permitted by law in a manner consistent with qualifying the Award for such
exception. With respect to such Performance Awards, the Administrator will pre-establish, in writing, one or more specific Performance Criteria no later than 90 days after the
commencement of the period of service to which the performance relates (or at such earlier time as is required to qualify the Award as performance-based under Section 162(m)). The Performance
Criteria so established shall serve as a condition to the grant, vesting or payment of the Performance Award, as determined by the Administrator. Prior to grant, vesting or payment of the Performance
Award, as the case may be, the Administrator will certify whether the Performance Criteria have been attained and such determination will be final and conclusive. If the Performance Criteria with
respect to the Award are not attained, no other Award will be provided in substitution of the Performance Award. 

	(b)
	Awards
Requiring Exercise. 

        (i)    Time and Manner of Exercise of Awards.    Any exercise of an Award shall be in writing, signed by the proper
person and furnished to the Company, accompanied by (A) such documents as may be required by the Administrator and (B) payment in full as specified below. A Stock Option shall be
exercisable during such period or periods as the Administrator may specify. The latest date on which a Stock Option may be exercised shall be the Expiration Date. 

        (ii)    Exercise Price.    The Exercise Price shall be determined by the Administrator, but shall not be less than
100% of the Fair Market Value at the time the Stock Option or SAR is granted; nor shall the Exercise Price be less, in the case of an original issue of authorized stock, than par value. No such Award,
once granted, may be re-priced (which includes both a lowering of the Exercise Price and the cancellation of an outstanding Stock Option or SAR accompanied by the grant of a replacement
Award of the same or a different type) other than in accordance with the applicable stockholder approval requirements of the New York Stock Exchange (or the rules of such other market in which the
shares of the Company's stock then are listed). In no event shall the Exercise Price of an ISO granted to a ten-percent stockholder be less than 110% of the Fair Market Value at the time
the Stock Option is awarded. For this purpose, "ten-percent stockholder" shall mean any Participant who at the time of grant owns directly, or by reason of the attribution rules set forth
in Section 424(d) of the Code is deemed to own, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of any of its parent or subsidiary
corporations. 

        (iii)    Term.    The Administrator shall determine the term of each Stock Option and SAR, provided that in no event
shall such term extend beyond the Expiration Date. 

        (iv)    Payment of Exercise Price.    Stock purchased upon exercise of a Stock Option under the Plan shall be paid for
as follows: (i) in cash, by check acceptable to the Administrator (determined in accordance with such guidelines as the Administrator may prescribe), or by money order payable to the order of
the Company, or (ii) if so permitted by the Administrator, (A) through the delivery of shares of Stock (which, in the case of Stock acquired from the Company, shall have been held for at
least six months unless the Administrator approves a shorter period) having a Fair Market Value on the last business day preceding the date of exercise equal to the exercise price, 

3

 

(B) through
a broker-assisted exercise program acceptable to the Administrator, (C) by other means acceptable to the administrator or (D) by any combination of the foregoing
permissible forms of payment; provided, that if the Stock delivered upon exercise of the Stock Option is an original issue of authorized Stock, at least
so much of the Exercise Price as represents the par value of such Stock shall be paid other than with a personal check of the person exercising the Stock Option. 

        (v)    Delivery of Stock.    A Participant shall not have the rights of a stockholder with regard to Awards under the
Plan except as to Stock actually received by him or her under the Plan. 

        The
Company shall not be obligated to deliver any shares of Stock under the Plan (i) until, in the opinion of the Company's counsel, all applicable federal and state laws and
regulations have been complied with, (ii) if the outstanding Stock is at the time listed on any stock exchange, until the shares to be delivered have been listed or authorized to be listed on
such exchange upon official notice of issuance, and (iii) until all other legal matters in connection with the issuance and delivery of such shares have been approved by the Company's counsel.
Without limiting the generality of the foregoing, if the sale of Stock has not been registered under the Securities Act, the Company may require, as a condition to exercise of the Award, such
representations or agreements as counsel for the Company may consider appropriate to avoid violation of the Securities Act and may require that the certificates evidencing such Stock bear an
appropriate legend restricting transfer. 

        If
an Award is exercised by the executor or administrator of a deceased Participant, or by the person or persons to whom the Award has been transferred by the Participant's will or the
applicable laws of descent and distribution, the Administrator shall be under no obligation to deliver Stock pursuant to exercise until the Administrator is satisfied as to the authority of the person
or persons exercising the Award. 

        (vi)    ISOs.    In the case of an ISO, the Administrator may require as a condition of exercise that the Participant
exercising the ISO agree to inform the Company promptly of any disposition (within the meaning of Section 424(c) of the Code and the regulations thereunder) of Stock received upon exercise of
the ISO. 

	(c)
	Awards
Not Requiring Exercise. 

        Awards
of Restricted Stock and Unrestricted Stock may be made in exchange for past services or other lawful consideration. 

8.     Effect of Certain Transactions.  

	(a)
	Mergers,
Etc. 

        Except
as otherwise provided in an Award, in the event of a Covered Transaction in which there is an acquiring or surviving entity the following rules shall apply: 

        (i)    Awards Other Than Stock Options.    

        (A)  The
Administrator may provide for the assumption of some or all outstanding Awards, or for the grant of new awards in substitution therefore, by the acquirer or survivor
or an affiliate of the acquirer or survivor, in each case on such terms and subject to such conditions as the Administrator determines. 

        (B)  In
the absence of such an assumption or if there is no substitution, except as otherwise provided in the Award, each SAR and other Award requiring exercise (other than
Stock Options) will become fully exercisable, and the delivery of shares of Stock issuable under each outstanding Award of Deferred Stock will be accelerated and such shares will be 

4

 

issued,
prior to the Covered Transaction, in each case on a basis that gives the holder of the Award a reasonable opportunity, as determined by the Administrator, following exercise of the Award or
the issuance of the shares, as the case may be, to participate as a stockholder in the Covered Transaction, and the Award will terminate upon consummation of the Covered Transaction. 

        (C)  In
the case of Restricted Stock, the Administrator may require that any amounts delivered, exchanged or otherwise paid in respect of such Stock in connection with the
Covered Transaction be placed in escrow or otherwise made subject to such restrictions as the Administrator deems appropriate to carry out the intent of the Plan. 

        (ii)    Stock Options.    

        (A)  Subject
to paragraph 8(a)(ii)(B) below, all outstanding Stock Options will cease to be exercisable and will be forfeited (after any payment or other consideration
deemed equitable by the Administrator for the termination of any vested portion of any Award is made), as of the effective time of the Covered Transaction; provided, that the Administrator may in its
sole discretion on or prior to the effective date of the Covered Transaction, (1) make any outstanding Stock Options exercisable in part or in full, (2) remove any performance or other
conditions or restrictions on any Stock Options, and/or (3) in the event of a Covered Transaction under the terms of which holders of the Stock of the Company will receive upon consummation
thereof a payment (whether cash, non-cash or a combination of the foregoing) for each share of such Stock surrendered in the Covered Transaction, make or provide for a payment (whether
cash, non-cash or a combination of the foregoing) to the Participant equal to the difference between (A) the Fair Market Value times the number of shares of Stock subject to
outstanding Stock Options (to the extent then exercisable at prices not in excess of the Fair Market Value) and (B) the aggregate Exercise Price of all such outstanding Stock Options in
exchange for the termination of such Stock Options. 

        (B)  With
respect to an outstanding Stock Option held by a Participant who, following the Covered Transaction, will be employed by or otherwise providing services to an
entity which is a surviving or acquiring entity in the Covered Transaction or an affiliate of such an entity, the Administrator may at or prior to the effective time of the Covered Transaction, in its
sole discretion and in lieu of the action described in paragraph 8(a)(ii)(A) above, arrange to have such surviving or acquiring entity or affiliate assume any Stock Option held by such
Participant outstanding hereunder or grant a replacement award which, in the judgment of the Administrator, is substantially equivalent to any Stock Option being replaced. 

        (iii)    Other Situations.    The Administrator may grant Awards under the Plan in substitution for awards held by
Employees and Directors of another corporation who concurrently become Employees or Directors of the Company or a subsidiary of the Company as the result of a merger or consolidation of that
corporation with the Company or a subsidiary of the Company, or as the result of the acquisition by the Company or a subsidiary of the Company of property or stock of that corporation. The Company may
direct that substitute Awards be granted on such terms and conditions as the Administrator considers appropriate in the circumstances. 

	(b)
	Changes
in and Distributions with Respect to the Stock. 

        (i)    Basic Adjustment Provisions.    In the event of a stock dividend, stock split or combination of shares
(including a reverse stock split), recapitalization or other change in the Company's capital structure, the Administrator will make appropriate adjustments to the maximum number of shares that may be
delivered under the Plan under Section 5(a) and to the maximum share limits described in Section 5(c), and will also make appropriate adjustments to the number and kind of shares of
stock or securities subject to Awards then outstanding or subsequently granted, any 

5

 

Exercise
Prices relating to Awards and any other provision of Awards affected by such change, whose determination will be binding on all persons. 

        (ii)    Certain Other Adjustments.    To the extent consistent with qualification of ISOs under Section 422 of
the Code and with the performance-based compensation rules of Section 162(m), where applicable, the Administrator may also make adjustments of the type described in paragraph (i) above
to take into account distributions to stockholders other than those provided for in Section 8(a) and 8(b)(i), material changes in accounting practices or principles, extraordinary dividends,
consolidations or mergers (except those described in Section 8(a)), acquisition of stock or property, or any other event, if the Administrator determines that adjustments are appropriate to
avoid distortion in the operation of the Plan and to preserve the value of Awards made hereunder. 

9.     Termination of Employment.  

        In the case of any Award, the Administrator may, through agreement with the Participant, (including, without limitation, any stockholder agreement of the Company
to which the Participant is a party) resolution, or otherwise, provide for post-termination exercise provisions different from those expressly set forth in this Section 9, including
without limitation the vesting immediately prior to termination of all or any portion of an Award not otherwise vested prior to termination, and terms allowing a later exercise by a former employee or
director (or, in the case of a former employee or director who is deceased, the person or persons to whom the Award is transferred by will or the laws of descent and distribution) as to all or any
portion of the Award not exercisable immediately prior to termination of Employment, but in no case may an Award be exercised after the Expiration Date. If the Administrator does not otherwise provide
for such provisions and if a Participant's Employment terminates prior to the Expiration Date (including by reason of death) the following provisions shall apply: 

	(a)
	All
Stock Options and SARs held by the Participant immediately prior to the cessation of the Participant's Employment that are not vested immediately prior to the cessation of
Employment shall automatically terminate upon such cessation of Employment.

	(b)
	To
the extent vested immediately prior to cessation of Employment, the Stock Option or SAR shall continue to be vested and shall be exercisable thereafter during the period prior to
the Expiration Date for 60 days following such cessation (120 days in the event that a Participant's service terminates by reason of death);  provided, however, that if the Participant's Employment is terminated "for Cause" as defined herein, all
unvested or unexercised Awards shall terminate immediately.

	(c)
	Except
as otherwise provided in an Award, after completion of the exercise period described in paragraph (b) above, the Awards described in paragraph (b) above shall
terminate to the extent not previously exercised, expired, or terminated. 

        No
Award requiring exercise shall be exercised or surrendered in exchange for a cash payment after the Expiration Date. 

10.   Employment Rights.  

        Neither the adoption of the Plan nor the grant of Awards shall confer upon any Participant any right to continue as an Employee or Director of the Company or any
subsidiary or affect in any way the right of the Company or a subsidiary to terminate the Participant's relationship at any time. Except as specifically provided by the Administrator in any particular
case, the loss of existing or potential profit on Awards granted under this Plan shall not constitute an element of damages in the event of 

6

 

termination
of the relationship of a Participant even if the termination is in violation of an obligation of the Company to the Participant by contract or otherwise. 

11.   Effect, Discontinuance, Cancellation, Amendment, and Termination.  

        Neither adoption of the Plan nor the grant of Awards to a Participant shall affect the Company's right to make awards to such Participant that are not subject to
the Plan, to issue to such Participant Stock as a bonus or otherwise, or to adopt other plans or compensation arrangements under which Stock may be issued. 

        The
Administrator may at any time discontinue granting Awards under the Plan. With the consent of the Participant, the Administrator may at any time, subject to the limitations of the
second sentence of Section 7(b)(ii), cancel an existing Award in whole or in part and grant another Award for such number of shares as the Administrator specifies. The Administrator may, but
shall not be obligated to, at any time or times amend the Plan or any outstanding Award for the purpose of satisfying the requirements of Sections 409A and 422 of the Code or of any changes in
applicable laws or regulations or for any other purpose that may at the time be permitted by law, or may at any time terminate the Plan as to any further grants of Awards;  provided, that except to the
extent expressly required by the Plan, no such amendment shall adversely affect the rights of any Participant (without his
or her consent) under any Award previously granted, nor shall such amendment, without the approval of the stockholders of the Company, effectuate a change for which stockholder approval is required
under the listing standards of the New York Stock Exchange (or the rules of such other market in which the shares of the Company's Stock then are listed) or in order for the Plan to continue to
qualify for the Award of incentive stock options under Section 422 of the Code. 

7

 
 
 

EXHIBIT A    
    

Definition of Terms  

        The following terms, when used in the Plan, will have the meanings and be subject to the provisions set forth below: 

        "Administrator":    The committee of the Board, consisting of two of more Directors, all of whom shall be
"non-employee Directors" within the meaning of Rule 16b-3 under the 1934 Act and "outside Directors" within the meaning of Section 162(m). In addition, membership
of the committee shall satisfy such independence or other requirements as may be imposed by the rules of the New York Stock Exchange (or the rules of such other market in which the shares of the
Company's Stock then are listed). The Administrator may delegate ministerial tasks to such persons as it deems appropriate. 

        "Affiliate":    Any corporation or other entity owning, directly or indirectly, 50% or more of the outstanding Stock of the
Company, or in which the Company or any such corporation or other entity owns, directly or indirectly, 50% of the outstanding capital stock (determined by aggregate voting rights) or other voting
interests. 

        "Award":    Any or a combination of the following: 

	(i)
	Stock
Options;

	(ii)
	SARs;

	(iii)
	Restricted
Stock;

	(iv)
	Unrestricted
Stock;

	(v)
	Deferred
Stock;

	(vi)
	Performance
Awards; and

	(vii)
	Grants
of cash made in connection with other Awards in order to help defray in whole or in part the cost (including tax cost) of the Award to the Participant. 

        "Board":    The Board of Directors of the Company. 

        "Cause":    The Board's determination, in its reasonable judgment, that any one or more of the following has occurred: 

	(i)
	the
Participant shall have been convicted of, or shall have pleaded guilty or nolo contendere to, any felony or any crime
involving dishonesty or moral turpitude;

	(ii)
	the
Participant shall have committed any fraud, theft, embezzlement, misappropriation of funds, breach of fiduciary duty or act of dishonesty;

	(iii)
	the
Participant shall have breached in any material respect any of the provisions of any agreement between the Participant and the Company or an Affiliate;

	(iv)
	the
Participant shall have engaged in conduct likely to make the Company or any of its Affiliates subject to criminal liabilities other than those arising from the
Company's normal business activities; or

	(v)
	the
Participant shall have willfully engaged in any other conduct that involves a breach of fiduciary obligation on the part of the Participant or otherwise could
reasonably be expected to have a material adverse effect upon the business, interests or reputation of the Company or any of its Affiliates. 

8

 

        "Code":    The U.S. Internal Revenue Code of 1986, as from time to time amended and in effect, or any successor statute as from
time to time in effect. 

        "Company":    Carter's, Inc., a Delaware corporation. 

        "Covered Transaction":    Except as otherwise specifically provided in an Award Agreement, any of (i) a consolidation,
merger, or similar transaction or series of related transactions in which the Company is not the surviving corporation or which results in the acquisition of all or substantially all of the Company's
then outstanding voting stock by a single person or entity or by a group of persons and/or entities acting in concert, or (ii) a sale or transfer of all or substantially all the Company's
assets. 

        "Deferred Stock":    An unfunded and unsecured promise to deliver Stock or other securities in the future on specified terms. 

        "Employee":    Any person who is employed by the Company or an Affiliate. 

        "Employment":    A Participant's employment or other service relationship with the Company and its Affiliates. Employment will
be deemed to continue, unless the Administrator expressly provides otherwise, so long as the Participant is employed by, or otherwise is providing services in a capacity described in Section 6
to the Company or its Affiliates. If a Participant's employment or other service relationship is with an Affiliate and that entity ceases to be an Affiliate, the Participant's Employment will be
deemed to have terminated when the entity ceases to be an Affiliate unless the Participant transfers Employment to the Company or its remaining Affiliates. 

        "Exercise Price":    The price at which a share of Stock may be purchased under a Stock Option or the value an increase above
which may allow Stock to be purchased under a SAR. 

        "Expiration Date":    In the case of an Award requiring exercise, the date which is ten years (five years in the case of an ISO
granted to anyone other than a "ten percent stockholder" as defined in Section 7(b)(ii)) from the date the Award was granted or such earlier date as may be specified by the Administrator at the
time the Award is granted. 

        "Fair Market Value":    The value of one share of Stock, determined as follows: 

	(i)
	if
the Stock is listed on a national securities exchange (such as the New York Stock Exchange) or is quoted on The NASDAQ Stock Market ("NASDAQ"), the closing price of a
share of Stock on the relevant date (or, if such date is not a business day or a day on which quotations are reported, then on the immediately preceding date on which quotations were reported), as
reported by the principal national exchange on which such shares are traded (in the case of an exchange) or by NASDAQ, as the case may be;

	(ii)
	if
the Stock is not listed on a national securities exchange or quoted on NASDAQ, but is actively traded in the over-the-counter market, the
average of the closing bid and asked prices for a share of the Stock on the relevant date (or, if such date is not a business day or a day on which the quotations are reported, then on the immediately
preceding date on which quotations were reported), or the most recent date for which such quotations are reported; and

	(iii)
	if,
on the relevant date, the Stock is not publicly traded or reported as described in (i) or (ii) above, the value determined in good faith in
accordance with such reasonable valuation method as the Administrator may determine. 

        "ISO":    A Stock Option intended to be an "incentive stock option" within the meaning of Section 422 of the Code. Each
Stock Option granted pursuant to the Plan will be treated as providing 

9

 

by
its terms that it is to be a non-incentive stock option unless, as of the date of grant, it is expressly designated as an ISO. 

        "Participant":    A person who is granted an Award under the Plan. 

        "Performance Award":    An Award subject to Performance Criteria. The Administrator in its discretion may grant Performance
Awards that are intended to qualify for the performance-based compensation exception under Section 162(m) and Performance Awards that are not intended so to qualify. 

        "Performance Criteria":    Specified criteria the satisfaction of which is a condition for the grant, exercisability, vesting or
full enjoyment of an Award. For purposes of Awards that are intended to qualify for the performance-based compensation exception under Section 162(m) a Performance Criterion will mean an
objectively determinable measure of performance relating to any or any combination of the following (determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary,
line of business, project or geographical basis or in combinations thereof): sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes,
depreciation, or amortization, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital or assets; one or more operating ratios; borrowing
levels, leverage ratios or credit rating; market share; capital expenditures; cash flow; stock price; stockholder return; sales of particular products or services; customer acquisition or retention;
acquisitions and divestitures (in whole or in part); joint ventures and strategic alliances; spin-offs, split-ups and the like; reorganizations; or recapitalizations,
restructurings, financings (issuance of debt or equity) or refinancings. A Performance Criterion measure and any targets with respect thereto determined by the Administrator need not be based upon an
increase, a positive or improved result or avoidance of loss. 

        "Plan":    The Carter's, Inc. 2003 Amended and Restated Equity Incentive Plan, from time to time amended and in effect. 

        "Restricted Stock":    An Award of Stock for so long as the Stock remains subject to restrictions requiring that it be
redelivered or offered for sale to the Company if specified conditions are not satisfied. 

        "Section 162(m)":    Section 162(m) of the Code. 

        "SARs":    Rights entitling the holder upon exercise to receive Stock equal in value to the excess of the Fair Market Value of
the shares of Stock subject to the right over the Fair Market Value of such shares of Stock on the date of grant. 

        "Securities Act":    The Securities Act of 1933, as amended. 

        "Stock":    Common Stock of the Company, par value $.01 per share. 

        "Stock Options":    Options entitling the recipient to acquire shares of Stock upon payment of the exercise price. 

        "Unrestricted Stock":    An Award of Stock not subject to any restrictions under the Plan. 

10

QuickLinks

APPENDIX A

EXHIBIT A

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