Document:

exhibit102.htm

    Exhibit
10.2

    CRACKER
BARREL OLD COUNTRY STORE, INC.

    

    2002
OMNIBUS INCENTIVE COMPENSATION PLAN

     

    (As amended through November
25, 2008)

     

    1.           PURPOSE.

    

    The purpose of the Cracker Barrel Old
Country Store, Inc. 2002 Omnibus Incentive Compensation Plan (the “Plan”) is to
provide motivation to Employees of the Company and its Subsidiaries and
Affiliates to put forth maximum efforts toward the continued growth,
profitability, and success of the Company and its Subsidiaries and Affiliates by
providing incentives to such Employees through the ownership and performance of
Common Stock of the Company.  Toward this objective, the Committee may
grant stock options, SAR, Stock Awards, performance shares, cash bonuses and
other incentive awards to Employees of the Company and its Subsidiaries and
Affiliates on the terms and subject to the conditions set forth in the Plan. In
addition, this Plan is intended to enable the Company to effectively attract,
retain and reward Outside Directors by providing for grants of Outside Director
Awards to Outside Directors.

    

    2.           DEFINITIONS.

    

    2.1           “Affiliate” means any entity
(other than the Company and any Subsidiary) that is designated by the Board as a
participating employer under the Plan, provided that the Company directly or
indirectly owns at least 20% of the combined voting power of all classes of
stock of that entity or at least 20% of the ownership interests in that
entity.

     

    2.2           “Award” means any form of stock
option, SAR, Stock Award, performance shares, cash bonus or other incentive
award granted under the Plan, whether singly, in combination, or in tandem, to a
Participant by the Committee pursuant to terms, conditions, restrictions and
limitations, if any, as the Committee may establish by the Award Notice or
otherwise.

     

    2.3           “Award Notice” means a written
notice from the Company to a Participant that establishes the terms, conditions,
restrictions, and limitations applicable to an Award in addition to those
established by the Plan and by the Committee’s exercise of its administrative
powers.

     

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

     

    2.5           “Cause” means matters which, in
the judgment of the Committee, constitute any one or more of the following: (i)
intoxication while on the job; (ii) theft or dishonesty in the conduct of the
Company’s business; (iii) willful neglect or negligence in the management of the
Company’s business, or violation of Company race or gender anti-harassment
policies; (iv) violence that results in personal injury; or (v) conviction of a
crime involving moral turpitude.

     

    2.6           “Change In Control” means the
happening of any of the following:

     

    a.  any
person or entity, including a “group” as defined in Section 13(d)(3) of the
Exchange Act, other than the Company or a wholly-owned Subsidiary, or any
employee benefit plan of the Company or any Subsidiary, becomes the beneficial
owner of the Company’s securities having 50% or more of the combined voting
power of the then outstanding securities of the Company that may be cast for the
election of directors of the Company (other than as a result of an issuance of
securities initiated by the Company in the ordinary course of business);
or

     

    
      
        
        

      

      
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    b.  as
the result of, or in connection with, any cash tender or exchange offer, merger
or other business combination, sales of assets or contested election, or any
combination of the foregoing transactions, after the transaction less than a
majority of the combined voting power of the then outstanding securities of the
Company, or any successor corporation or cooperative or entity, entitled to vote
generally in the election of the directors of the Company, or other successor
corporation or other entity, are held in the aggregate by the holders of the
Company’s securities who immediately prior to the transaction had been entitled
to vote generally in the election of directors of the Company; or

     

    c.  during
any period of 2 consecutive years, individuals who at the beginning of the
period constitute the Board cease for any reason to constitute at least a
majority of the Board, unless the election, or the nomination for election by
the Company’s shareholders, of each director of the Company first elected during
the relevant 2-year period was approved by a vote of at least 2/3 of the
directors of the Company then still in office who were directors of the Company
at the beginning of that period.

     

    2.7           “Change In Control Price” means
the highest closing price (or, if the shares are not traded on an exchange, the
highest last sale price or closing “asked” price) per share paid for the
purchase of Common Stock in a national securities market during the 60-day
period ending on the date the Change In Control occurs (or, where applicable,
the occurrence of the Potential Change in Control event), as determined by the
Committee.

     

    2.8           “Code” means the Internal
Revenue Code of 1986, as amended from time to time.

     

    2.9           “Committee” means the
Compensation Committee of the Board, or any other committee designated by the
Board, authorized to administer the Plan under Section 3 of this Plan. The
Committee shall consist of not less than 2 members who shall be appointed by,
and shall serve at the pleasure of, the Board. It is intended that the directors
appointed to serve on the Committee shall be “independent” as defined by the
Company from time to time, and that they shall be “non-employee directors”
(within the meaning of Rule 16b-3 under the Exchange Act) and “outside
directors” (within the meaning of Code Section 162(m) and its related
regulations).  However, the mere fact that a Committee member fails to
qualify under any of the foregoing requirements shall not invalidate any Award
made by the Committee if the Award is otherwise validly made under the
Plan.

     

    2.10           “Common Stock” means the $0.01
par value common stock of the Company.

     

    2.11           “Company” means Cracker Barrel
Old Country Store, Inc. or any successor.

     

    2.12           “Covered Employee” means an
individual who is, with respect to the Company, an individual defined in Code
Section 162(m)(3).

     

    2.13           “Disability” has the same
meaning as provided in the long-term disability plan or policy maintained by the
Company or if applicable, most recently maintained, by the Company or if
applicable, a Subsidiary or Affiliate, for the Participant, whether or not that
Participant actually receives disability benefits under the plan or
policy.  If no long-term disability plan or policy was ever maintained
on behalf of Participant or if the determination of Disability relates to an
incentive stock option (within the meaning of Section 8 of this Plan),
Disability means Permanent and Total Disability as defined in Section 22(e)(3)
of the Code.  In a dispute, the determination whether a Participant
has suffered a Disability will be made by the Committee and may be supported by
the advice of a physician competent in the area to which that Disability
relates.

     

    
      
        
        

      

      
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    2.14           “Effective Date” is defined in
Section 6.

     

    2.15           “Employee” means an employee of
the Company, a Subsidiary or an Affiliate.

     

    2.16           “Exchange Act” means the
Securities and Exchange Act of 1934, as amended from time to time.

     

    2.17           “Fair Market Value” with
respect to the Common Stock, as of any given date, unless otherwise determined
by the Committee in good faith, means the reported closing sale price of a share
of Common Stock on the automated quotation system or other market or exchange
that is the principal trading market for the Common Stock, or if no sale of a
share of Common Stock is so reported on that date, the fair market value of a
share of Common Stock as determined by the Committee in good faith.

     

    2.18           “Immediate Family” means any
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, and includes adoptive relationships.

     

    2.19           “Outside Director” means a
member of the Board who is not an officer or employee of the Company or any
Subsidiary or Affiliate of the Company.

     

    2.20           “Outside Director Award” means
either a Director Option or a Director Stock Award or combination thereof
awarded to an Outside Director under Section 27.

     

    2.21           “Participant” means any
individual to whom an Award has been granted by the Committee under this
Plan.

     

    2.22           “Potential Change in Control” means the happening
of any one of the following:

     

    a.
 the approval by shareholders of an agreement by the Company which would
result in a Change in Control of the Company when consummated; or

     

    b.
 the acquisition of beneficial ownership, directly or indirectly, by any
entity, person or group (other than the Company or a Subsidiary or any Company
or Subsidiary employee benefit plan, including any trustee of the plan acting as
trustee) of securities of the Company representing 25% or more of the combined
voting power of the then outstanding securities of the Company (without being
accompanied by a formal statement or public filing disclaiming any intention to
obtain or exercise control of the Company) and the adoption by the Committee of
a resolution to the effect that a Potential Change in Control of the Company has
occurred for purposes of this Plan.

     

    2.23           “Qualified Performance-Based
Award” means (i) any stock option or SAR granted under the Plan, or (ii)
any other Award that is intended to qualify for the Section 162(m) Exemption and
is made subject to performance goals based on Qualified Performance Measures as
set forth in Section 13.

     

    2.24           “Qualified Performance
Measures” means 1 or more of the performance measures listed in Section
13.2 upon which performance goals for certain Qualified Performance-Based Awards
may be established by the Committee.

     

    2.25           “SAR” is an Award that shall
entitle the recipient to receive a payment equal to the appreciation in value of
a stated number of shares of Common Stock from the price established in the
Award to the market value of that number of shares of Common Stock on the date
of exercise.

     

    
      
        
        

      

      
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    2.26           “Section 162(m) Exemption”
means the exemption from the limitation on deductibility imposed by Section
162(m) of the Code that is set forth in Section 162(m)(4)(C) of the Code or any
successor provision thereto.

     

    2.27           “Section 162(m) Cash Maximum”
means $5,000,000.

     

    2.28           “Section 16 Insider” means a
Participant who is subject to the reporting requirements of Section 16 of the
Exchange Act with respect to the Company.

     

    2.29           “Stock Award” means an Award
granted pursuant to Section 10 in the form of shares of Common Stock, restricted
shares of Common Stock or Units of Common Stock.

     

    2.30           “Subsidiary” means a
corporation or other business entity in which the Company directly or indirectly
has an ownership interest of 50% or more.

     

    2.31           “Unit” means a bookkeeping
entry used by the Company to record and account for the grant of the following
Awards until the Award is paid, canceled, forfeited or terminated, as the case
may be: shares of Common Stock, SARs and performance shares may be expressed in
terms of Units of Common Stock.

     

    
      	
              3. 

            	
              ADMINISTRATION.

            

    

    

    The Plan
shall be administered by the Committee.  The Committee shall have the
discretionary authority to: (a) interpret the Plan; (b) establish any rules and
regulations it deems necessary for the proper operation and administration of
the Plan; (c) select Employees to become Participants and receive Awards under
the Plan; (d) determine the form of an Award, whether a stock option, SAR, Stock
Award, performance share, cash bonus, or other incentive award established by
the Committee, the number of shares or Units subject to the Award, all the
terms, conditions, restrictions and limitations, if any, of an Award, including
the time and conditions of exercise or vesting, and the terms of any Award
Notice; (e) determine whether Awards should be granted singly, in combination or
in tandem; (f) grant waivers of Plan terms, conditions, restrictions and
limitations; (g) accelerate the vesting, exercise or payment of an Award or the
performance period of an Award in the event of a Participant’s termination of
employment or when that action or actions would be in the best interests of the
Company; (h) establish such other types of Awards, besides those specifically
enumerated in Section 2.2, which the Committee determines are consistent with
the Plan’s purpose; and (i) take all other action it deems necessary or
advisable for the proper operation or administration of the
Plan.  Subject to Section 24, the Committee also shall have the
authority to grant Awards in replacement of Awards previously granted under the
Plan or any other executive compensation plan of the Company or a
Subsidiary.  All determinations of the Committee shall be made by a
majority of its members, and its determinations shall be final, binding and
conclusive on all persons, including the Company and Participants.

    

    The
Committee, in its discretion, may delegate its authority and duties under the
Plan to the Chief Executive Officer or to other senior officers of the Company
under conditions and limitations the Committee may establish; however, only the
Committee may select, grant, and establish the terms of Awards to Section 16
Insiders or Covered Employees.

    

    Notwithstanding
the general authority granted in this Section 3, the Committee (and any delegate
of the Committee) has no authority to determine terms or conditions of Outside
Director Awards, which shall be governed solely by Section 27 of this
Plan.

    

    
      
        
        

      

      
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              4.  

            	
              ELIGIBILITY.

            

    

    

    Any
Employee is eligible to become a Participant in the Plan.  Outside
Directors are eligible to receive awards only pursuant to Section 27 and not
pursuant to any other provisions of this Plan.

    

    
      	
              5.  

            	
              NUMBER OF SHARES
      AVAILABLE.

            

    

    

    The
maximum number of shares of Common Stock that shall be available for grant of
Awards under the Plan (including incentive stock options) during its term shall
not exceed [4.5] million shares, subject to adjustment as provided in Section
19.  Any shares of Common Stock related to Awards that are settled in
cash in lieu of Common Stock shall be available again for grant under the
Plan.  Similarly, any shares of Common Stock related to Awards that
terminate by expiration, forfeiture, cancellation or otherwise without the
issuance of the related shares or are exchanged with the Committee’s permission
for Awards not involving Common Stock, shall be available again for grant under
the Plan. Further, any shares of Common Stock that are used by a Participant for
the full or partial payment to the Company of the purchase price of Common Stock
upon exercise of a stock option, or for withholding taxes due as a result of
that exercise, shall again be available for Awards under the
Plan.  Notwithstanding any provision in the Plan to the contrary, the
maximum number of shares of Common Stock with respect to 1 or more options
and/or SARs that may be granted during any 1 calendar year under the Plan to any
1 Participant shall be 300,000.  For purposes of this limitation,
forfeited, canceled or repriced shares granted to a Participant in any given
calendar year shall continue to be counted against the maximum number of shares
that may be granted to that Participant in that calendar year.  The maximum
fair market value of any Awards (other than options, SARs and cash bonuses) that
may be received by a Participant (less any consideration paid by the Participant
for that Award) during any 1 calendar year under the Plan shall be the
equivalent value of 300,000 shares of Common Stock as of the first business day
of such calendar year. The shares of Common Stock available for issuance under
the Plan may be authorized and unissued shares.

    

    
      	
              6.  

            	
              EFFECTIVE DATE;
      TERM.

            

    

    

    The Plan
shall become effective as of the date upon which it is approved by the
shareholders of the Company (the “Effective Date”).  No Awards or
Outside Director Awards shall be exercisable or payable before the Plan becomes
effective.  This Plan shall remain in effect until terminated by action of
the Board.

    

    
      	
              7.  

            	
              PARTICIPATION.

            

    

    

    The
Committee shall select, from time to time, Participants from those Employees
who, in the opinion of the Committee, can further the Plan’s
purposes.  Once a Participant is selected, the Committee shall
determine the type or types of Awards to be made to the Participant and shall
establish in the related Award Notices the terms, conditions, restrictions and
limitations, if any, applicable to the Awards in addition to those set forth in
the Plan and the administrative rules and regulations issued by the
Committee.

    

    8.           STOCK
OPTIONS.

    

    8.1           Grants.
 Awards may be granted in the form of stock options.  These stock
options may be incentive stock options within the meaning of Section 422 of the
Code, other tax-qualified stock options, or non-qualified stock options (i.e.,
stock options that are not incentive or other tax-qualified stock options), or a
combination of any of those.

     

    
      
        
        

      

      
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    8.2           Terms and
Conditions of Options.  An option shall be exercisable in whole or
in such installments and at the times determined by the
Committee.  The Committee also shall determine the performance or
other conditions, if any, which must be satisfied before all or part of an
option may be exercised. The price at which Common Stock may be purchased upon
exercise of a stock option shall be established by the Committee, but such price
shall not be less than 100% (or, in the case of any employee who owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or of any of its Subsidiaries, not less than 110%) in the
case of incentive stock options, and not less than 85% (or, in the case of a
Covered Employee, not less than 100%) in the case of other stock options, of the
Fair Market Value of the Common Stock on the date of the stock option
grant.  Each stock option shall expire not later than 10 years (or, in
the case of an Employee who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any of its
Subsidiaries, not later than 5 years) from its date of grant.

     

    8.3           Restrictions
Relating to Incentive Stock Options.  Stock options issued in the
form of incentive stock options shall, in addition to being subject to all
applicable terms, conditions, restrictions and limitations established by the
Committee, comply with Section 422 of the Code. Accordingly, incentive stock
options may only be granted to Employees who are employees of the Company or a
Subsidiary, and the aggregate market value (determined at the time the option
was granted) of the Common Stock with respect to which incentive stock options
are exercisable for the first time by a Participant during any calendar year
(under the Plan or any other plan of the Company or any of its Subsidiaries)
shall not exceed $100,000 (or other limit required by the Code).  Each
incentive stock option shall expire not later than 10 years from its date of
grant.

     

    8.4           Additional
Terms and Conditions.  The Committee may, by way of the Award Notice
or otherwise, establish other terms, conditions, restrictions and limitations,
if any, on any stock option Award, provided they are not inconsistent with the
Plan. Without limiting the generality of the foregoing, options may provide for
the automatic granting of new options at the time of exercise.

     

    8.5           Exercise.
 The Committee shall determine the methods by which the exercise price of
an option may be paid, the form of payment, including, without limitation, cash,
shares of Common Stock, or other property (including “cashless exercise”
arrangements, so long as they do not in any way conflict with the requirements
of applicable law), and the methods by which shares of Common Stock shall be
delivered or deemed to be delivered by Participants; however, if shares of
Common Stock are used to pay the exercise price of a stock option, those shares
must have been held by the Participant for at least 6 months (or any shorter or
longer period necessary to avoid a charge to the Company’s earnings for
financial reporting purposes).

     

    9.           STOCK APPRECIATION
RIGHTS.

    

    9.1           Grants.
 Awards may be granted in the form of SARs. The SAR may be granted in
tandem with all or a portion of a related stock option under the Plan (“Tandem
SARs”), or may be granted separately (“Freestanding SARs”).  A Tandem
SAR may be granted either at the time of the grant of the related stock option
or at any time thereafter during the term of the stock option.  In the
case of SARs granted in tandem with stock options granted prior to the grant of
the SARs, the appreciation in value is the difference between the option price
of the related stock option and the Fair Market Value of the Common Stock on the
date of exercise.  The number of SARs granted may never exceed the lesser
of the number of shares of Common Stock still available under the Plan at the
time of the SAR grant or 625,000.

     

    9.2           Terms and
Conditions of Tandem SARs.  A Tandem SAR shall be exercisable to the
extent, and only to the extent, that the related stock option is exercisable,
and the “exercise price” of that 

     

    
      
        
        

      

      
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    SAR (the
base from which the value of the SAR is measured at its exercise) shall be the
option price under the related stock option.  If a related stock
option is exercised as to some or all of the shares covered by the Award, the
related Tandem SAR, if any, shall be canceled automatically to the extent of the
number of shares covered by the stock option exercise.  Upon exercise
of a Tandem SAR as to some or all of the shares covered by the Award, the
related stock option shall be canceled automatically to the extent of the number
of shares covered by the exercise.

     

    9.3           Terms and
Conditions of Freestanding SARs.  Freestanding SARs shall be
exercisable in whole or in the installments and at the times determined by the
Committee.  Freestanding SARs shall have a term specified by the
Committee, in no event to exceed 10 years.  The exercise price of a
Freestanding SAR shall also be determined by the Committee; however, that price
shall not be less than 100% of the Fair Market Value of the Common Stock on the
date of the Freestanding SAR grant.  The Committee also shall
determine the performance or other conditions, if any, that must be satisfied
before all or part of a Freestanding SAR may be exercised.

     

    9.4           Deemed
Exercise.  The Committee may provide that an SAR shall be deemed to
be exercised at the close of business on the scheduled expiration date of the
affected SAR if at that time the SAR by its terms remains exercisable and, if so
exercised, would result in a payment to the holder of the SAR.

     

    9.5           Additional
Terms and Conditions.  The Committee may, by way of the Award Notice
or otherwise, determine such other terms, conditions, restrictions and
limitations, if any, of any SAR Award, provided they are not inconsistent with
the Plan.

     

    10.           STOCK
AWARDS.

     

    10.1           Grants.
 Awards may be granted in the form of Stock Awards.  Stock Awards
shall be awarded in such numbers and at such times during the term of the Plan
as the Committee shall determine. Stock Awards may be actual shares of Common
Stock or the economic equivalent thereof (“Stock Award Units”).  The total
number of Stock Award Units granted at any time may not exceed the lesser of the
number of shares of Common Stock available for grant at the time of the Stock
Award Unit grant or 625,000.

     

    10.2           Award
Restrictions.  Stock Awards shall be subject to terms, conditions,
restrictions, and limitations, if any, the Committee deems appropriate
including, without limitation, restrictions on transferability and continued
employment of the Participant.  The Committee also shall determine the
performance or other conditions, if any, that must be satisfied before all or
part of the applicable restrictions lapse.

     

    10.3           Rights as
Shareholder.  During the period in which any restricted shares of
Common Stock are subject to restrictions imposed pursuant to Section 10.2, the
Committee may, in its discretion, grant to the Participant to whom restricted
shares have been awarded all or any of the rights of a shareholder with respect
to those shares, including, without limitation, the right to vote those shares
and to receive dividends.

     

    10.4           Evidence
of Award.  Any Stock Award granted under the Plan may be evidenced
in any manner the Committee deems appropriate, including, without limitation,
book-entry registration or issuance of a stock certificate or
certificates.

     

    
      
        
        

      

      
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    11.           PERFORMANCE
SHARES.

     

    11.1           Grants.
 Awards may be granted in the form of performance shares. “Performance
shares” in this Plan mean shares of Common Stock or Units which are expressed in
terms of Common Stock and which are subject to Qualified Performance Measures as
discussed in Section 11.2.

     

    11.2           Performance
Criteria.  The award of performance shares shall be contingent upon
the attainment during a performance period of certain Qualified Performance
Measures.  The length of the performance period, the performance
objectives to be achieved during the performance period, and the measure of
whether and to what degree the objectives have been attained shall be
conclusively determined by the Committee in the exercise of its absolute
discretion.  Performance objectives may be revised by the Committee,
at times it deems appropriate during the performance period, in order to take
into consideration any unforeseen events or changes in
circumstances.

     

    11.3           Additional
Terms and Conditions.  The Committee may, by way of the Award Notice
or otherwise, determine other terms, conditions, restrictions and limitations,
if any, of any Award of performance shares, provided they are not inconsistent
with the Plan.

     

    
      
        	12.	PLAN CASH
    BONUSES.

      

       

    

    While
cash bonuses may be granted at any time outside this Plan, cash awards may also
be granted in addition to other Awards granted under the Plan and to cash awards
made outside of the Plan.  Subject to the provisions of the Plan, the
Committee shall have authority to determine the persons to whom cash bonuses
shall be granted and the amount, terms and conditions of those cash bonuses.
 Notwithstanding anything to the contrary in this Plan, no Covered Employee
shall be eligible to receive a cash bonus under the Plan in excess of the
Section 162(m) Cash Maximum in any fiscal year; and no
cash bonus shall be granted pursuant to this Plan to any Covered Employee unless
the cash bonus constitutes a Qualified Performance-Based Award in accordance
with the provisions of Section 13.

    
       

      
        	13.	PERFORMANCE GOALS FOR CERTAIN SECTION
      162(m) AWARDS.

      

    

     

    13.1           162(m)
Exemption.  This Plan shall be
operated to ensure that all stock options and SARs granted hereunder to any
Covered Employee qualify for the Section 162(m) Exemption.

     

    13.2           Qualified
Performance-Based Awards.  When granting any Award
other than stock options or SARs, the Committee may designate the Award as a
Qualified Performance-Based Award, based upon a determination that the recipient
is or may be a Covered Employee with respect to that Award, and the Committee
wishes the Award to qualify for the Section 162(m) Exemption.  If an
Award is so designated, the Committee shall establish performance goals for the
Award within the time period prescribed by Section 162(m) of the Code based on
one or more of the following Qualified Performance Measures, which may be
expressed in terms of Company-wide objectives or in terms of objectives that
relate to the performance of a Subsidiary or a division, region, department or
function within the Company or a Subsidiary:

     

    
      	
               
      

            	
              (1)

            	
              return
      on capital, equity, or assets (including economic value
      created),

            

    

    
      	
               
      

            	
              (2)

            	
              productivity,

            

    

    
      	
               
      

            	
              (3)

            	
              cost
      improvements,

            

    

    
      	
               
      

            	
              (4)

            	
              cash
      flow,

            

    

    
      	
               
      

            	
              (5)

            	
              sales
      revenue growth,

            

    

    
      	
               
      

            	
              (6)

            	
              net
      income, earnings per share, or earnings from
  operations,

            

    

    
      	
               
      

            	
              (7)

            	
              quality,

            

    

     

    
      
        
        

      

      
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              (8)

            	
              customer
      satisfaction,

            

    

    
      	
               
      

            	
              (9)

            	
              comparable
      store sales,

            

    

    
      	
               
      

            	
              (10)

            	
              stock
      price or total shareholder return;

            

    

    
      	
               
      

            	
              (11)

            	
              satisfaction
      of specified business expansion
goals;

            

    

    
      	
               
      

            	
              (12)

            	
              diversity
      goals;

            

    

    
      	
               
      

            	
              (13)

            	
              turnover;

            

    

    
      	
               
      

            	
              (14)

            	
              specified
      objective social goals;

            

    

    
      	
               
      

            	
              (15)

            	
              hiring
      or retention of high-potential employees or
  executives;

            

    

    
      	
               
      

            	
              (16)

            	
              growth
      in locations; or

            

    

    
      	
               
      

            	
              (17)

            	
              brand
      positioning goals.

            

    

    

    Measurement
of the Company’s performance against the goals established by the Committee
shall be objectively determinable, and to the extent goals are expressed in
standard accounting terms, performance shall be measured according to generally
accepted accounting principles as in existence on the date on which the
performance goals are established and without regard to any changes in those
principles after that date.

    

    13.3           Performance
Goal Conditions.
 Each
Qualified Performance-Based Award (other than a stock option or SAR) shall be
earned, vested and payable (as applicable) only upon the achievement of
performance goals established by the Committee based upon one or more of the
Qualified Performance Measures, together with the satisfaction of any other
conditions, such as continued employment, the Committee may determine to be
appropriate; however, (i) the Committee may provide, either in connection with
the grant of an Award or by later amendment, that achievement of the performance
goals will be waived upon the death or Disability of the Participant, and (ii)
the provisions of Section 26 shall apply notwithstanding this
sentence.

     

    13.4           Certification
of Goal Achievement.
 Any payment
of a Qualified Performance-Based Award granted with performance goals shall be
conditioned on the written certification of the Committee in each case that the
performance goals and any other material conditions were satisfied.  Except
as specifically provided in Section 13.3, no Qualified Performance-Based Award
may be amended, nor may the Committee exercise any discretionary authority it
may otherwise have under the Plan with respect to a Qualified Performance-Based
Award, in any manner to waive the achievement of the applicable performance goal
based on Qualified Performance Measures or to increase the amount payable under,
or the value of, the Award, or otherwise in a manner that would cause the
Qualified Performance-Based Award to cease to qualify for the Section 162(m)
Exemption.

     

    14.           PAYMENT OF
AWARDS.

    

    At the
discretion of the Committee, payment of Awards may be made in cash, Common
Stock, a combination of cash and Common Stock, or any other form of property the
Committee shall determine. In addition, payment of Awards may include terms,
conditions, restrictions and limitations, if any, the Committee deems
appropriate, including, in the case of Awards paid in the form of Common Stock,
restrictions on transfer and forfeiture provisions. Payment of Awards may be
made in a lump sum, or in installments, as determined by the
Committee.

     

    
      
        	15.	DIVIDEND AND DIVIDEND
      EQUIVALENTS.

      

       

    

    If an
Award is granted in the form of a Stock Award, stock option, or performance
share, or in the form of any other stock-based grant, the Committee may choose,
at the time of the grant of the Award or any time thereafter up to the time of
the Award’s payment, subject to Section 13.1 of this Plan, to include as part of
the Award in those forms an entitlement to receive dividends or dividend
equivalents with 

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    respect
to Stock Awards, performance shares, or options which are vested, subject to
terms, conditions, restrictions and limitations, if any, the Committee may
establish. Dividends and dividend equivalents shall be paid in a form and manner
(i.e., lump sum or installments), and at a time or times the Committee shall
determine.  All dividends or dividend equivalents that are not paid
currently may, at the Committee’s discretion, accrue interest, be reinvested in
additional shares of Common Stock or, in the case of dividends or dividend
equivalents credited in connection with performance shares, be credited as
additional performance shares and paid to the Participant if and when, and to
the extent that, payment is made pursuant to that Award.

     

    
      
        	16.	DEFERRAL OF
    AWARDS.

      

    

     

    At the
discretion of the Committee, payment of a Stock Award, performance share,
dividend, dividend equivalent, or any portion thereof may be deferred by a
Participant until a time the Committee may establish.  All deferrals shall
be accomplished by the delivery of a written, irrevocable request by the
Participant prior to the time payment would otherwise be made, on a form
provided by the Company.  Further, all deferrals shall be made in
accordance with administrative guidelines established by the Committee to ensure
that deferrals comply with all applicable requirements of the Code and its
regulations.  Deferred payments shall be paid in a lump sum or
installments, as determined by the Committee.  The Committee also may
credit interest, at rates to be determined by the Committee, on cash payments
that are deferred and credit dividends or dividend equivalents on deferred
payments denominated in the form of Common Stock.  The Committee also may,
in its discretion, require deferral of payment of any Award or portion of it, if
payment of the Award would, or could in the reasonable estimation of the
Committee, result in the Participant receiving compensation in excess of the
maximum amount deductible by the Company under the provisions of Code Section
162(m), as amended.  Notwithstanding the foregoing, no Award under
this Plan (or modification thereof) shall provide for deferral of compensation
that does not comply with Section 409A of the Code unless the Committee, at the
time of grant, specifically provides that the Award is not intended to comply
with Section 409A of the Code.  Notwithstanding any provision of this
Plan to the contrary, if one or more of the payments or benefits received or to
be received by a Participant pursuant to an Award would cause the Participant to
incur any additional tax or interest under Section 409A of the Code, the
Committee may reform such provision to maintain to the maximum extent
practicable the original intent of the applicable provision without violating
the provisions of Section 409A of the Code.

     

    
      
        	17.	TERMINATION OF
      EMPLOYMENT.

      

       

    

    If a
Participant’s employment with the Company or a Subsidiary or Affiliate
terminates for Cause or for a reason other than death, Disability, retirement,
or any other approved reason, all unexercised, unearned, and unpaid Awards,
including without limitation, Awards earned but not yet paid, all unpaid
dividends and dividend equivalents, and all interest accrued on the foregoing
shall be canceled or forfeited, as the case may be, unless the Participant’s
Award Notice provides otherwise.  The Committee shall have the authority to
promulgate rules and regulations to (i) determine what events constitute
Disability, retirement or termination for an approved reason for purposes of the
Plan, and (ii) determine the treatment of a Participant under the Plan in the
event of a Participant’s death, Disability, retirement or termination for an
approved reason.

     

    
      
        	18.	NO
  ASSIGNMENT.

      

    

     

    No Awards
(other than unrestricted Stock Awards) or any other payment under the Plan shall
be subject in any manner to alienation, anticipation, sale, transfer (except by
will or the laws of descent and distribution), assignment, pledge, or
encumbrance; however, the Committee may (but need not) permit other transfers
where the Committee concludes that transferability (i) does not result in
accelerated 

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    taxation,
(ii) does not cause any option intended to be an incentive stock option to fail
to be described in Code Section 422(b), and (iii) is otherwise appropriate and
desirable, taking into account any state or federal securities laws applicable
to transferable Awards.  During the lifetime of the Participant no Award
shall be payable to or exercisable by anyone other than the Participant to whom
it was granted, other than (a) the duly appointed conservator or other lawfully
designated representative of the Participant in the case of a permanent
Disability involving a mental incapacity or (b) the transferee in the case of an
Award transferred in accordance with the preceding sentence.

     

    
      
        	19.	CAPITAL
      ADJUSTMENTS.

      

       

    

    The
number and price of shares of Common Stock covered by each Award and Outside
Director Award and the total number of shares of Common Stock that may be
awarded under the Plan shall be proportionately adjusted to reflect any stock
dividend, stock split or share combination of the Common Stock or any
recapitalization of the Company.  In the event of any merger,
consolidation, reorganization, liquidation or dissolution of the Company, or any
exchange of shares involving the Common Stock, any Award or Outside Director
Award granted under the Plan shall automatically be deemed to pertain to the
securities and other property to which a holder of the number of Common Stock
covered by the Award or Outside Director Award would have been entitled to
receive in connection with any such event.  The Committee shall have
the sole discretion to make all interpretations and determinations required
under this section to the extent it deems equitable and
appropriate.  It is the intent of any such adjustment that the value
of the Awards or Outside Director Awards held by the Participants or Outside
Directors, as the case may be, immediately following the change is the same as
that value immediately prior to the change.

     

    
      
        	20.	WITHHOLDING
    TAXES.

      

       

    

    The
Company shall have the power and the right to deduct or withhold, or require a
Participant to remit to the Company, an amount sufficient to satisfy Federal,
state, and local taxes (including the Participant’s FICA obligation) required by
law to be withheld with respect to any taxable event arising as a result of this
Plan.  With respect to withholding required upon any taxable event, the
Company may elect in its discretion, and Participants may elect, subject to the
approval of the Committee, to satisfy the withholding requirement, in whole or
in part, by withholding or having the Company withhold shares of Common Stock
having a Fair Market Value on the date the tax is to be determined equal to the
minimum statutory total tax which could be imposed on the transaction.  All
elections by Participants shall be irrevocable, made in writing, and signed by
the Participant.

     

    
      
        	21.	NONCOMPETITION;
      CONFIDENTIALITY.

      

       

    

    For
purposes of this Section 21, “Company” shall include any Subsidiary or Affiliate
employing the Participant.  A Participant will not, without the written
consent of the Company, either during or after his or her employment by the
Company, disclose to anyone or make use of any confidential information which he
or she has acquired during his or her employment relating to any of the business
of the Company, except as such disclosure or use may be required in connection
with his or her work as an employee of Company, or as demanded by a subpoena
issued by a court of competent jurisdiction, if the Participant gives notice of
the demand to the Company as soon as reasonably possible after receipt of the
subpoena.  The confidential information of the Company includes, but is not
limited to, all technology, recipes, business systems and styles, customer lists
and all other Company proprietary information not generally known to the public.
 During Participant’s employment by the Company, he or she will not, either
as principal, agent, consultant, employee or otherwise, engage in any work or
other activity in competition with the Company in the field or fields in which
he or she has worked for the Company.  Unless the Award Notice specifies
otherwise, a Participant shall forfeit all rights under this Plan to any
unexercised or unpaid Awards or to the deferral of any Award, dividend, or
dividend equivalent, if, in the 

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    determination
of the Committee, the Participant has violated the Agreement set forth in this
Section 21, and in that event any further payment, deferral of payment, or other
action with respect to any Award, dividend, or dividend equivalent shall be made
or taken, if at all, in the sole discretion of the Committee.

     

    
      
        	22. 	REGULATORY APPROVALS AND
      LISTINGS.

      

       

    

    Notwithstanding
anything contained in the Plan to the contrary, the Company shall have no
obligation to issue or deliver certificates of Common Stock evidencing Stock
Awards or any other Award resulting in the payment of Common Stock prior to (a)
the obtaining of any approval from any governmental agency which the Company
shall, in its sole discretion, determine to be necessary or advisable, (b) the
admission of the shares to quotation or listing on the automated quotation
system or stock exchange on which the Common Stock may be listed, and (c) the
completion of any registration or other qualification of the shares under any
State or Federal law or ruling of any governmental body that the Company shall,
in its sole discretion, determine to be necessary or advisable.

     

    
      
        	23.	PLAN
  AMENDMENT.

      

    

     

    Except as
provided in Section 26, the Board or the Committee may, at any time and from
time to time, suspend, amend, modify, or terminate the Plan without shareholder
approval; however, if an amendment to the Plan would, in the reasonable opinion
of the Board or the Committee, either (i) result in repricing stock options or
otherwise increase the benefits accruing to Participants or Outside Directors,
(ii) increase the number of shares of Common Stock issuable under the Plan, or
(iii) modify the requirements for eligibility, then that amendment shall be
subject to shareholder approval; and, the Board or Committee may condition any
amendment or modification on the approval of shareholders of the Company if that
approval is necessary or deemed advisable to (i) permit Awards to be exempt from
liability under Section 16(b) of the Exchange Act, (ii) to comply with the
listing or other requirements of an automated quotation system or stock
exchange, or (iii) to satisfy any other tax, securities or other applicable
laws, policies or regulations.

     

    
      
        	24. 	AWARD
    AMENDMENTS.

      

       

    

    Except as
provided in Section 26, the Committee may amend, modify or terminate any
outstanding Award or Outside Director Award without approval of the Participant
or Outside Director, as applicable; however:

     

    a.  except
as otherwise provided in Section 21, subject to the terms of the applicable
Award Notice, an amendment, modification or termination shall not, without the
Participant’s or Outside Director’s consent, as applicable, reduce or diminish
the value of the Award or Outside Director Award determined as if the Award or
Outside Director Award had been exercised, vested, cashed in (at the spread
value in the case of stock options or SARs) or otherwise settled on the date of
that amendment or termination;

    

    b.  the
original term of any stock option or SAR may not be extended without the prior
approval of the shareholders of the Company;

    

    c.  except
as otherwise provided in Section 19, the exercise price of any stock option or
SAR may not be reduced, directly or indirectly, without the prior approval of
the shareholders of the Company; and

    

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    d.  no
termination, amendment, or modification of the Plan shall adversely affect any
Award or Outside Director Awards previously granted under the Plan, without the
written consent of the affected Participant or Outside Director.

    

    25.           GOVERNING
LAW.

    

    This Plan
shall be governed by and construed in accordance with the laws of the State of
Tennessee, except as superseded by applicable Federal law.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    26.           CHANGE IN
CONTROL.

    

    Subject
to the limitations set forth in this Section 26, but only if and to the extent
determined by the Committee or the Board at or after the affected award or grant
and subject to any right of approval expressly reserved by the Committee or the
Board at the time of the determination, in case of a Change in Control or a
Potential Change in Control, the following provisions shall apply to any Award
which has not previously terminated or expired:

     

    a.  any
SAR and any stock option or Outside Director Award awarded under this Plan that
is not previously vested and exercisable shall become fully vested and
exercisable;

    

    b.  the
restrictions applicable to any Award which are not already vested under the Plan
shall lapse, and those existing shares and awards shall be deemed fully
vested;

    

    c.  unless
otherwise determined by the Board or by the Committee in its sole discretion
prior to any Change in Control, the value of all vested outstanding stock
options, SARs, Outside Director Awards and other Awards, shall be cashed out on
the basis of the Change in Control Price as of the date the Change in Control or
Potential Change in Control is determined to have occurred (or other date
determined by the Board or Committee prior to the Change in
Control);

    

    d.  the
Board or the Committee may impose additional conditions on the acceleration or
valuation of any Award in the applicable Award Notice; and

    

    e.  for
purposes of making payment to Participants in connection with performance
shares, each performance period for which the Committee has granted performance
shares (a “current performance period”) shall be treated as terminating upon the
date the Change in Control or Potential Change in Control is determined to have
occurred (or other date determined by the Board or Committee prior to the Change
in Control), and for each current performance period and each completed
performance period for which the Committee has not on or before that date made a
determination as to whether and what degree the performance objectives for the
period have been attained (a “completed performance period”), it shall be
assumed that the performance objectives have been attained at a level of 100% or
the equivalent. If the Participant is participating in one or more current
performance periods, he or she shall be considered to have earned and,
therefore, be entitled to receive that prorated portion of the Awards previously
granted for each of those performance periods. The prorated portion shall be
determined by multiplying the number of performance shares granted to the
Participant by a fraction, the numerator of which is the total number of whole
and partial years (with each partial year being treated as a whole year) that
have elapsed since the beginning of the performance period, and the denominator
of which is the total number of years in the performance period. A Participant
in one or more completed performance periods shall be considered to have earned
and, therefore, be entitled to receive all the performance shares previously
granted during each performance period.

    

    27.           AWARDS TO OUTSIDE
DIRECTORS.

    

    27.1          Application.  The
provisions of this Section 27 apply only to Outside Director Awards made in
accordance with this Section.  Except as expressly set forth herein,
the Committee shall have no authority to determine the timing of or the terms or
conditions of any Outside Director Award.

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    27.2        Awards,
Restrictions and Conditions.

     

    a.  On
the date of each Annual Meeting of Shareholders of the Company following the
Annual Meeting of Shareholders in 2007, unless this Plan has been previously
terminated, each Outside Director who will continue as a director following the
meeting will receive (1) a non-qualified stock option (within the meaning of
Section 8.1) to purchase up to 5,000 shares of Common Stock (a “Director
Option”), (2) a Stock Award of up to 5,000 shares of Common Stock or Units of
Common Stock (a “Director Stock Award”), or (3) any combination of Director
Option or Director Stock Award, each subject to the maximum amounts set forth in
clauses (1) and (2).  The date on which the Annual Meeting of
Shareholders occurs shall be deemed the date of the grant of either a Director
Option or a Director Stock Award.  The exercise price per share of a
Director Option shall equal the Fair Market Value per share of Common Stock on
the date of the grant.  Both Director Options and Director Stock
Awards shall vest (and, in the case of Director Options, become exercisable) in
3 equal annual installments with the first 1/3 vesting on the first anniversary
of the date of the grant.  Before the end of each fiscal year, the
Committee shall designate the number of shares (or Units) of Common Stock (up to
the maximums set forth above) that will be subject to Director Options and/or
Director Stock Awards at succeeding Annual Meeting of
Shareholders.  Unless there is a change in designation, any
designation made in a prior year shall continue until modified or
rescinded.

    

    b.  If
any person who was not previously a member of the Board is elected or appointed
an Outside Director prior to the July 31 immediately preceding the first annual
meeting of shareholders following his or her election or appointment, that
Outside Director will receive a Director Option to purchase 5,000 shares of
Common Stock.  The date prior to July 31 on which the election or
appointment occurs shall be deemed the date of the grant. The exercise price per
share of a Director Option granted pursuant to this Section 27.2.c. shall equal
the Fair Market Value per share of Common Stock on the date of the
grant.  These options shall vest and become exercisable in 3 equal
annual installments, with the first 1/3 vesting on the first anniversary of the
date of this grant.

    

    c.  No
Director Option shall be exercisable prior to vesting.  Each
unexercised Director Option shall expire on the 10th anniversary of the date of
grant.

    

    d.  The
exercise price of a Director Option may be paid in cash or in shares of Common
Stock which have been owned for at least 6 months (or any shorter or longer
period necessary to avoid a charge to the Company’s earnings for financial
reporting purposes), and including shares of Common Stock subject to a Director
Option.

    

    e.  Outside
Director Awards shall not be transferable without the prior written consent of
the Board other than transfers by the Outside Director (i) to a member of his or
her Immediate Family or to a trust for the benefit of the Outside Director or a
member of his or her Immediate Family, directly or by will or by the laws of
descent and distribution, or (ii) to a fund affiliated with him or
her.

    

    f.  Grantees
of Outside Director Awards shall receive an Award Notice setting forth other
terms and restrictions as provided in this Plan and, in the case of a Director
Option, the exercise price.

    

    g.  Upon
termination of an Outside Director’s service as a Company director, (i) all
Outside Director Awards that are vested and/or exercisable and held by that
Outside Director will remain vested and/or exercisable through their expiration
dates and (ii) all remaining Outside 

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

       

      Director
Awards held by that Outside Director will vest and/or become exercisable to the
extent of any shares that would have vested and/or become exercisable within a
12-month period ending on the anniversary date of termination of
service.  Any Director Options which vest under this provision must be
exercised, if at all, within that same 12-month period, unless the director has
qualified for retirement from the Board by reaching at least 50 years of age and
having served at least 7 years as a director of the Company.  After
reaching retirement status, a director whose Board service ends will be
permitted to exercise all options vested pursuant to these provisions until the
stated expiration date of the options.  Any unvested Outside Director
Award held by the Outside Director on the date of termination of service will
lapse and be forfeited to the extent that they do not vest and/or become
exercisable pursuant to the preceding sentences. The Board may, in its sole
discretion, elect to accelerate the vesting of any Outside Director Award in
connection with the termination of service of any individual Outside
Director.

    

    

    h.  Outside
Director Awards shall be subject to Section 26.  The number of shares
and the exercise price per share of each existing Director Option shall be
adjusted automatically when, and in the same manner as, the number of shares and
the exercise price of Stock Options under Section 19 are adjusted pursuant to
Section 19.  The number of shares underlying potential future Director
Options shall be adjusted automatically when, and in the same manner as, the
number of shares underlying outstanding Stock Options are adjusted pursuant to
Section 19.

    

    i.  The
Board, in its sole discretion (and absent other express action, without
affecting the size of future option grants), may reduce the size of any Outside
Director Award prior to grant or to postpone or extend the vesting and
exercisability of any Outside Director Award prior to grant.

    

    28.           NO RIGHT TO EMPLOYMENT OR
PARTICIPATION.

    

    Participation
in the Plan shall not give any Participant any right to remain in the employ, or
to serve as a director, of the Company or any Subsidiary or Affiliate. The
Company or, in the case of employment with a Subsidiary or Affiliate, the
Subsidiary or Affiliate, reserves the right to terminate the employment of any
Participant at any time. Further, the adoption of this Plan shall not be deemed
to give any Employee or any other individual any right to be selected as a
Participant or to be granted an Award.

     

    
      
        	29.	NO RIGHT, TITLE OR INTEREST IN COMPANY
      ASSETS.

      

       

    

    The Plan
is intended to constitute an “unfunded” plan for incentive and deferred
compensation. No Participant shall have any rights as a shareholder as a result
of participation in the Plan until the date of issuance of a stock certificate
in the Participant’s name, and, in the case of restricted shares of Common
Stock, such rights are granted to the Participant under Section 10.3 hereof. To
the extent any person acquires a right to receive payments from the Company
under the Plan, those rights shall be no greater than the rights of an unsecured
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Stock or to make payments in lieu of, or with respect
to, Plan awards. However, unless the Committee determines otherwise with the
express consent of the affected Participant, the existence of any such trusts or
other arrangements is consistent with this “unfunded” status of the
Plan.

     

    
      
        	30.	SECURITIES
  LAWS.

      

       

    

    With
respect to Section 16 Insiders, transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under the
Exchange Act. To the extent any provision of the Plan or action by the Committee
fails so to comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Committee.

    

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    
       

      
        	31.	REQUIRED WRITTEN
      REPRESENTATIONS.

      

       

    

    The
Committee may require each person purchasing shares pursuant to a stock option
or other award under the Plan to represent to and agree with the Company in
writing that the optionee or Participant is acquiring any shares of Common Stock
without a view to their distribution. The certificates for shares may include
any legend which the Committee deems appropriate to reflect any restrictions on
transfer. All certificates for shares of Common Stock or other securities
delivered under the Plan shall be subject to stop transfer orders and other
restrictions the Committee deems advisable under the rules, regulations and
other requirements of the Securities and Exchange Commission, any stock exchange
upon which the Common Stock is then listed, and any applicable Federal or state
securities laws, and the Committee may cause a legend or legends to be put on
any certificates to make appropriate reference to the applicable restrictions.
Each Participant is responsible for fully complying with all applicable state
and federal securities laws and rules and the Company assumes no responsibility
for compliance with any such laws or rules pertaining to a Participant’s resale
of any shares of Common Stock acquired pursuant to this Plan.

     

    
      
        	32.	NON-EXCLUSIVE
      ARRANGEMENT.

      

       

    

    Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, subject to shareholder approval if required; and
those arrangements may be either generally applicable or applicable only in
specific cases.

     

    
      
        	33.	LIMITS ON LIABILITY AND
      INDEMNIFICATION.

      

       

    

    The
members of the Committee and the Board shall not be liable to any employee or
other person with respect to any determination made under the Plan in a manner
that is not inconsistent with their legal obligations as members of the Board.
In addition to all other rights of indemnification they may have as directors or
as members of the Committee, the members of the Committee shall be indemnified
by the Company against reasonable expenses, including attorneys’ fees actually
and necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party because of any action taken or failure to act under or in
connection with the Plan or any Award granted under it, and against all amounts
paid by them in settlement (provided the settlement is approved by independent
legal counsel selected by the Company) or paid to them in satisfaction of a
judgment in that action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in the action, suit or proceeding that the Committee
member is liable for negligence or misconduct in the performance of his or her
duties. Within 60 days after institution of any action, suit or proceeding
covered by this Section, the Committee member must inform the Company in writing
of the claim and offer the Company the opportunity, at its own expense, to
handle and defend the matter.

     

    -17-<PAGE>

EXHIBIT 10.1

                AMENDMENT NO. 2 TO SECURITIES PURCHASE AGREEMENT

         This Amendment No. 2 to Securities Purchase Agreement (this "SPA
AMENDMENT") is dated effective as of March 6, 2009, among Integrated Healthcare
Holdings, Inc., a Nevada corporation (the "COMPANY"), Kali P. Chaudhuri, M.D.,
an individual ("INVESTOR"), and William E. Thomas, an individual ("THOMAS").
Capitalized terms used herein and not otherwise defined herein have the meanings
set forth in the SPA (as defined below).

                                 R E C I T A L S

         WHEREAS, the parties entered into a Securities Purchase Agreement on
July 18, 2008 and then entered into Amendment No. 1 to Securities Purchase
Agreement on January 30, 2009 (the Securities Purchase Agreement, as amended by
Amendment No. 1 to Securities Purchase Agreement, the "SPA").

         WHEREAS, Section 4.9 of the SPA describes certain pre-emptive rights
granted by the Company to Investor and Thomas, which pre-emptive rights were
clarified in Amendment No. 1 to Securities Purchase Agreement and remain in full
force and effect.

         WHEREAS, the parties desire to revise Section 4.9 to further clarify
their intentions with respect to those pre-emptive rights.

                                A G R E E M E N T

         NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this SPA Amendment and the SPA, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties agree as
follows:

         1. The defined term "Agreement" is hereby amended and restated in its
entirety as follows:

                           "AGREEMENT" means the SPA, as amended by the SPA
                  Amendment and Amendment No. 2 to Securities Agreement among
                  the parties hereto, and as further amended from time to time
                  in accordance with Section 6.4.

         2. Section 4.9 is hereby amended and restated in its entirety as
follows:

                           4.9 PRE-EMPTIVE RIGHTS. Effective July 18, 2008, the
                  Company hereby grants to Investor and Thomas pre-emptive
                  rights with respect to issuances, on or after July 18, 2008,
                  by the Company of its equity securities or securities or
                  rights convertible into or exercisable for equity securities
                  (other than issuances of Additional Shares, SPR Shares, or
                  shares of Common Stock issued on July 18, 2008 upon exercise
                  of the Exercised Warrants), where issuance of those securities
                  or rights would result in (a) dilution of Investor's or
                  Thomas's beneficial

<PAGE>

                  ownership (as calculated by Investor or Thomas for purposes of
                  Section 13(d) of the Exchange Act) of the Common Stock of the
                  Company on a fully-diluted basis taking into account all
                  Common Stock Equivalents (each a "POST-TRANSACTION
                  PERCENTAGE") to less than his respective beneficial ownership
                  of the Common Stock of the Company on a fully-diluted basis
                  taking into account all Common Stock Equivalents immediately
                  prior to the consummation of the proposed issuance (each a
                  "PRE-TRANSACTION PERCENTAGE") and/or (b) dilution of
                  Investor's or Thomas's ownership of outstanding voting shares
                  of the Company to less than the greater of (i) 51.0% and 5.0%,
                  respectively, of the outstanding voting shares of the Company
                  and (ii) his respective percentage ownership of the
                  outstanding voting shares of the Company prior to the issuance
                  (each of (i) and (ii), a "VOTING THRESHOLD"). Each time the
                  Company proposes to issue or offer any shares of, or
                  securities or rights convertible into or exercisable for any
                  shares of, any class of the Company's equity securities (the
                  "NEW SHARES") that would reduce Investor's or Thomas's
                  Post-Transaction Percentage to below his respective
                  Pre-Transaction Percentage and/or would reduce Investor's or
                  Thomas's percentage ownership of voting shares below one of
                  his respective Voting Thresholds, the Company shall first make
                  a written offer (the "OFFER NOTICE") to Investor and Thomas of
                  such portion of the New Shares that would maintain Investor's
                  and Thomas's Post-Transaction Percentage at a minimum of their
                  respective Pre-Transaction Percentage and would maintain
                  Investor's and Thomas's ownership of voting shares at or above
                  their respective Voting Thresholds (the "PRO RATA SHARE"). The
                  Offer Notice would state the Company's (A) bona fide intention
                  to issue or offer the New Shares, (B) the identity of the
                  Person(s) to whom the New Shares are to be issued or offered,
                  (C) the number of New Shares to be issued or offered, and (D)
                  the price and terms upon which it proposes to issue or offer
                  the New Shares. Investor and/or Thomas may, by written notice
                  to the Company delivered within thirty (30) days of their
                  respective receipt of the Offer Notice, elect to purchase, at
                  the price and on the terms specified in the Offer Notice, up
                  to the Pro Rata Share. The closing of the sale of such portion
                  of the Pro Rata Share as Investor and/or Thomas elect to
                  purchase shall occur simultaneously with the issuance or sale
                  of the New Shares to other Person(s) identified in the Offer
                  Notice, no earlier than forty-five (45) days following
                  Investor's and Thomas's receipt of the Offer Notice (unless a
                  shorter period of time is agreed to by Investor and Thomas in
                  their sole discretion), and the Pro Rata Share shall be priced
                  equal to the lowest price paid by any of the other Person(s)
                  identified in the Offer Notice, including any who may be
                  receiving or purchasing New Shares by virtue of similar
                  pre-emptive or other purchase rights. If the Company does not
                  consummate the issuance or sale of the New Shares within sixty
                  (60) days following Investor's and Thomas's receipt of the
                  Offer Notice, then the New Shares shall not be offered, issued
                  or sold unless again offered to Investor and Thomas in
                  accordance with this Section 4.9. Effective July 18, 2008, the
                  pre-emptive rights contained in this Section 4.9 shall
                  supersede and replace the pre-

                                       2

<PAGE>

                  emptive rights contained or incorporated by reference in the
                  Rescission Agreement. For the avoidance of doubt, the parties
                  acknowledge and agree that unless and until this Section 4.9
                  is specifically terminated in a writing signed by Investor and
                  Thomas that explicitly refers to and provides for the
                  termination of this Section 4.9, this Section 4.9 shall
                  survive each Closing and the Outside Date, regardless of
                  whether any Additional Shares or SPR Shares are purchased by
                  Investor and notwithstanding any other termination, expiration
                  or lapse of this Agreement or the Purchase Right. The parties
                  further acknowledge and agree that neither Investor nor Thomas
                  is obligated to exercise his respective pre-emptive rights in
                  full or in part as to any or all proposed issuances by the
                  Company, and that no failure on the part of Investor or Thomas
                  to exercise his respective pre-emptive rights in full or in
                  part as to any proposed issuance by the Company shall be a
                  waiver of or preclude exercise of his respective pre-emptive
                  rights as to any other proposed issuances by the Company.

         3. Section 6.17 is hereby deleted. In lieu of adopting a replacement to
Section 6.17, the parties hereby acknowledge that except as specifically amended
by Amendment No. 1 to Securities Purchase Agreement or by this SPA Amendment,
all terms, conditions, covenants, representations and warranties contained in
the Securities Purchase Agreement dated as of July 18, 2008 remain in full force
and effect.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                             SIGNATURE PAGES FOLLOW]

                                       3

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized signatories as of the date first
indicated above.

                                            INTEGRATED HEALTHCARE HOLDINGS, INC.

                                            By: /s/ Ken Westbrook
                                                --------------------------------
                                                Name: Ken Westbrook
                                                Title: President and CEO

                                            INVESTOR

                                            /s/ Kali P. Chaudhuri, M.D.
                                            ------------------------------------
                                            Kali P. Chaudhuri, M.D.

                                            THOMAS

                                            /s/ William E. Thomas
                                            ------------------------------------
                                            William E. Thomas

                                       4

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