Document:

exv4w1

 

OMNIBUS INSTRUMENT

     WHEREAS, the parties named herein desire to enter into certain Program
Documents contained herein, each such document dated as of this 5th day of
November, 2004, relating to the issuance by Principal Life Income Fundings
Trust 2004-66 (the “Trust”) of Notes to investors under Principal Life’s
secured notes program;

     WHEREAS, the Trust is a trust and will be organized under and its
activities will be governed by the provisions of the Trust Agreement (set forth
in Section A of this Omnibus Instrument), dated as of the date of the Pricing
Supplement (attached to this Omnibus Instrument as Exhibit D) (the “Pricing
Supplement”), by and between the parties thereto indicated in Section F herein;

     WHEREAS, certain expense and indemnification arrangements between
Principal Life and the Trustee, on behalf of itself and on behalf of the Trust,
are governed pursuant to the provisions of the Expense and Indemnity Agreement
dated as of March 5, 2004, by and between Principal Life and the Trustee;

     WHEREAS, certain licensing arrangements between the Trust and Principal
Financial Services, Inc. will be governed pursuant to the provisions of the
License Agreement (set forth in Section B of this Omnibus Instrument), dated as
of the date of the Pricing Supplement, by and between the parties thereto
indicated in Section F herein;

     WHEREAS, certain custodial arrangements of the Funding Agreement and the
Guarantee will be governed pursuant to the provisions of the Custodial
Agreement (the “Custodial Agreement”) dated as of March 5, 2004 by and among
Bankers Trust Company, N.A., acting as custodian (the “Custodian”), the
Indenture Trustee and the Trustee, on behalf of the Trust;

     WHEREAS, the Notes will be issued pursuant to the Indenture (set forth in
Section C of this Omnibus Instrument), dated as of the Original Issue Date, by
and between the parties thereto indicated in Section F herein;

     WHEREAS, the sale of the Notes will be governed by the Terms Agreement
(set forth in Section D of this Omnibus Instrument), dated the date of the
Pricing Supplement, by and among the parties thereto indicated in Section F
herein; and

     WHEREAS, certain agreements relating to the Notes, the Funding Agreement
and the Guarantee are set forth in the Coordination Agreement (set forth in
Section E of this Omnibus Instrument), dated as of the date of the Pricing
Supplement, by and among the parties thereto indicated in Section F herein.

     All capitalized terms used herein and not otherwise defined will have the
meanings set forth in the Indenture.

[Remainder of Page Left Intentionally Blank.]

 

 

SECTION A

TRUST AGREEMENT

     This TRUST AGREEMENT (this “Trust Agreement”), dated as of the date of the
Pricing Supplement, is entered into by and between GSS Holdings II, Inc., a
Delaware corporation, as trust beneficial owner (the “Trust Beneficial Owner”),
and U.S. Bank Trust National Association, a national banking association, as
Trustee (the “Trustee”).

W I T N E S S E T H:

     WHEREAS, the Trust Beneficial Owner and the Trustee desire to authorize
the issuance of a Trust Beneficial Interest and a series of Notes in connection
with the entry into this Trust Agreement;

     WHEREAS, all things necessary to make this Trust Agreement a valid and
legally binding agreement of the Trustee and the Trust Beneficial Owner,
enforceable in accordance with its terms, have been done;

     WHEREAS, the parties intend to provide for, among other things, (i) the
issuance and sale of the Notes (pursuant to the Indenture, the Distribution
Agreement and the related Terms Agreement) and the Trust Beneficial Interest,
(ii) the use of the proceeds of the sale of the Notes and Trust Beneficial
Interest to acquire the Funding Agreement, the payment obligations of which
will be fully and unconditionally guaranteed by the Guarantee, and (iii) all
other actions deemed necessary or desirable in connection with the transactions
contemplated by this Trust Agreement; and

     WHEREAS, the parties hereto desire to incorporate by reference those
certain Standard Trust Terms, dated as of March 5, 2004, and attached to the
Omnibus Instrument as Exhibit A (the “Standard Trust Terms”) and all
capitalized terms not otherwise defined herein (including the recitals hereof)
shall have the meanings set forth in the Standard Trust Terms (the Standard
Trust Terms and this Trust Agreement, collectively, the “Trust Agreement”).

     NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the sufficiency of
which are hereby acknowledged, each party hereby agrees as follows:

ARTICLE 1

     Section 1.01 Incorporation by Reference. All terms, provisions and
agreements set forth in the Standard Trust Terms (except to the extent
expressly modified herein) are hereby incorporated herein by reference with the
same force and effect as though fully set forth herein. To the extent that the
terms set forth in Article 2 of this Trust Agreement are inconsistent with the
terms of the Standard Trust Terms, the terms set forth in Article 2 herein
shall apply.

A-1

 

ARTICLE 2

     Section 2.01 Name. The Trust created and governed by the Trust Agreement
shall be the trust specified in the Omnibus Instrument. The name of the Trust
shall be the name specified in the first paragraph of the Omnibus Instrument,
as such name may be modified from time to time by the Trustee following written
notice to the Trust Beneficial Owner.

     Section 2.02 Jurisdiction. The Trust is hereby organized in, and formed
under and pursuant to, the laws of the State of New York.

     Section 2.03 Initial Capital Contribution and Ownership. The Trust
Beneficial Owner has paid or has caused to be paid to, or to an account at the
direction of, the Trustee, on the date hereof, the sum of $15 (or, in the case
of Notes issued with original issue discount, such amount multiplied by the
issue price of the Notes). The Trustee hereby acknowledges receipt in trust
from the Trust Beneficial Owner, as of the date hereof, of the foregoing
contribution, which shall be used along with the proceeds from the sale of the
series of Notes to purchase the Funding Agreement. Upon the creation of the
Trust and the registration of the Trust Beneficial Interest in the Securities
Register (as defined in the Trust Agreement) by the Registrar in the name of
the Trust Beneficial Owner, the Trust Beneficial Owner shall be the sole
beneficial owner of the Trust.

     Section 2.04 Acknowledgment. The Trustee, on behalf of the Trust,
expressly acknowledges its duties and obligations set forth in the Standard
Trust Terms incorporated herein.

     Section 2.05 Additional Terms.

     None

     Section 2.06 Omnibus Instrument; Execution and Incorporation of Terms.

     The parties to the Trust Agreement will enter into the Trust Agreement by
executing the Omnibus Instrument.

     By executing the Omnibus Instrument, the Trustee and the Trust Beneficial
Owner hereby agree that the Trust Agreement will constitute a legal, valid and
binding agreement between the Trustee and the Trust Beneficial Owner.

     All terms relating to the Trust or the series of Notes not otherwise
included in the Trust Agreement will be as specified in the Omnibus Instrument
or Pricing Supplement, as indicated herein.

A-2

 

     Section 2.07 Governing Law. The Trust Agreement will be governed by, and
construed in accordance with, the laws of the State of New York.

     Section 2.08 Counterparts. The Trust Agreement, through the Omnibus
Instrument, may be executed in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.

[Remainder of Page Left Intentionally Blank.]

A-3

 

SECTION B

LICENSE AGREEMENT

     This LICENSE AGREEMENT (this “License Agreement”), dated as of the date of
the Pricing Supplement, is entered into by and between Principal Financial
Services, Inc., an Iowa corporation with its principal place of business at 711
High Street, Des Moines, Iowa 50392 (the “Licensor”), and the Principal Life
Income Fundings Trust specified in the Omnibus Instrument (the “Licensee”).

W I T N E S S E T H:

     WHEREAS, the Licensor is the owner of certain trademarks and service marks
and registrations and pending applications therefor, and may acquire additional
trademarks and service marks in the future, all as described more fully below;

     WHEREAS, the Licensee desires to use certain of the Licensor’s trademarks
and service marks in connection with the Licensee’s activities, as described
more fully below;

     WHEREAS, the Licensor and the Licensee wish to formalize the agreement
between them regarding the Licensee’s use of the Licensor’s marks; and

     WHEREAS, the parties hereto desire to incorporate by reference those
certain Standard License Agreement Terms, dated March 5, 2004, and attached to
the Omnibus Instrument as Exhibit B (the “Standard License Agreement Terms”)
and all capitalized terms not otherwise defined herein (including the recitals
hereof) shall have the meanings set forth in the Standard License Agreement
Terms (the Standard License Agreement Terms and this License Agreement,
collectively, the “License Agreement”).

     NOW, THEREFORE, in consideration of the mutual promises set forth herein
and for other good and valuable consideration, the sufficiency and receipt of
which are hereby acknowledged, each party hereby agrees as follows:

ARTICLE 1

     Section 1.01 Incorporation by Reference. All terms, provisions and
agreements set forth in the Standard License Agreement Terms (except to the
extent expressly modified herein) are hereby incorporated herein by reference
with the same force and effect as though fully set forth herein. To the extent
that the terms set forth in Article 2 of this License Agreement are
inconsistent with the terms of the Standard License Agreement Terms, the terms
set forth in Article 2 herein shall apply.

ARTICLE 2

     Section 2.01 Additional Terms.

     None

B-1

 

     Section 2.02 Omnibus Instrument; Execution and Incorporation of Terms.

     The parties to the License Agreement will enter into the License Agreement
by executing the Omnibus Instrument.

     By executing the Omnibus Instrument, the Licensor and the Licensee hereby
agree that the License Agreement will constitute a legal, valid and binding
agreement between the Licensor and the Licensee.

     All terms relating to the Trust or the Notes not otherwise included in the
License Agreement will be as specified in the Omnibus Instrument or Pricing
Supplement, as indicated herein.

     Section 2.03 Counterparts. The License Agreement, through the Omnibus
Instrument, may be executed in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.

[Remainder of Page Left Intentionally Blank.]

B-2

 

SECTION C

INDENTURE

     This INDENTURE (this “Indenture”) is entered into as of the Original Issue
Date by and between the Principal Life Income Fundings Trust specified in the
Omnibus Instrument (the “Trust”) and Citibank, N.A., as indenture trustee (the
“Indenture Trustee”).

     Citibank, N.A., in its capacity as indenture trustee, hereby accepts its
role as Registrar, Paying Agent, Transfer Agent and Calculation Agent
hereunder.

     References herein to “Indenture Trustee,” “Registrar,” “Transfer Agent,”
“Paying Agent” or “Calculation Agent” shall include the permitted successors
and assigns of any such entity from time to time.

W I T N E S S E T H:

     WHEREAS, the Trust has duly authorized the execution and delivery of this
Indenture to provide for the issuance of Notes;

     WHEREAS, all things necessary to make this Indenture a valid and legally
binding agreement of the Trust and the other parties to this Indenture,
enforceable in accordance with its terms, have been done, and the Trust
proposes to do all things necessary to make the Notes, when executed by the
Trust and authenticated and delivered pursuant hereto, valid and legally
binding obligations of the Trust as hereinafter provided; and

     WHEREAS, the parties hereto desire to incorporate by reference those
certain Standard Indenture Terms, dated as of March 5, 2004, and attached to
the Omnibus Instrument as Exhibit C (the “Standard Indenture Terms”) and all
capitalized terms not otherwise defined herein (including the recitals hereof)
shall have the meanings set forth in the Standard Indenture Terms (the Standard
Indenture Terms and this Indenture, collectively, the “Indenture”).

     NOW, THEREFORE, for and in consideration of the premises and the purchase
of the Notes by the Holders thereof, it is mutually covenanted and agreed by
each of the parties hereto as follows:

ARTICLE 1

     Section 1.01 Incorporation by Reference. All terms, provisions and
agreements set forth in the Standard Indenture Terms (except to the extent
expressly modified herein) are hereby incorporated herein by reference (with
the same force and effect as though fully set forth herein). To the extent
that the terms set forth in Article 2 of this Indenture are inconsistent with
the terms of the Standard Indenture Terms, the terms set forth in Article 2
herein shall apply.

C-1

 

ARTICLE 2

     Section 2.01 Agreement to be Bound. Each of the Trust, the Indenture
Trustee, the Registrar, the Transfer Agent, the Paying Agent and the
Calculation Agent hereby agrees to be bound by all of the terms, provisions and
agreements set forth in the Indenture, with respect to all matters contemplated
in the Indenture, including, without limitation, those relating to the issuance
of the below-referenced Notes.

     Section 2.02 Designation of the Trust, the Notes, the Funding Agreement
and the Guarantee. The Trust created by the Trust Agreement and referred to in
the Indenture is the Principal Life Income Fundings Trust specified in the
Omnibus Instrument. The Notes issued by the Trust and governed by the
Indenture shall be the Notes specified in the Pricing Supplement. The Funding
Agreement designated hereby is the Funding Agreement designated in the Pricing
Supplement dated as of the Original Issue Date between the Trust and Principal
Life. The Guarantee designated hereby is the Guarantee dated as of the Original
Issue Date of PFG.

     Section 2.03 Additional Terms.

     None

     Section 2.04 Omnibus Instrument; Execution and Incorporation of Terms.

     The parties to the Indenture will enter into the Indenture by executing
the Omnibus Instrument.

     By executing the Omnibus Instrument, the Indenture Trustee, the Registrar,
the Transfer Agent, the Paying Agent, the Calculation Agent and the Trust
hereby agree that the Indenture will constitute a legal, valid and binding
agreement between the Indenture Trustee, the Registrar, the Transfer Agent, the
Paying Agent, the Calculation Agent and the Trust.

     All terms relating to the Trust or the Notes not otherwise included in the
Indenture will be as specified in the Omnibus Instrument or Pricing Supplement,
as indicated herein.

     Section 2.05 Counterparts. The Indenture, through the Omnibus Instrument,
may be executed in any number of counterparts, each of which counterparts shall
be deemed to be an original, and all of which counterparts shall constitute one
and the same instrument.

[Remainder of Page Left Intentionally Blank.]

C-2

 

SECTION D

TERMS AGREEMENT

     This TERMS AGREEMENT (this “Terms Agreement”) is entered into as of the
Original Issue Date by and among Principal Life Insurance Company (“Principal
Life”), Principal Financial Group, Inc. (“PFG”), the Principal Life Income
Fundings Trust specified in the Omnibus Instrument (the “Trust”) and the
Purchasing Agent specified in the Pricing Supplement (the “Purchasing Agent”).

W I T N E S S E T H:

     WHEREAS, Principal Life, PFG and the agents named therein, including the
Purchasing Agent have entered into that certain Distribution Agreement dated
March 5, 2004 (the “Distribution Agreement”).

     NOW, THEREFORE, in consideration of the mutual promises set forth herein
and other good and valuable consideration, the sufficiency and receipt of which
are hereby acknowledged, each of the parties hereby agrees as follows:

ARTICLE 1

     Section 1.01 Incorporation by Reference. The provisions of the
Distribution Agreement and the related definitions (unless otherwise specified
herein) are incorporated by reference herein and shall be deemed to have the
same force and effect as if set forth in full herein.

ARTICLE 2

     Section 2.01 Addition of Trust as Party to Distribution Agreement.

     Pursuant to Section 1 of the Distribution Agreement, each of the
undersigned parties hereby acknowledges and agrees that the Trust, upon
execution hereof by the Trust and the other parties to the Distribution
Agreement (other than any other trusts organized in connection with the
Registration Statement that are party thereto as of the date hereof), shall
become a Trust for purposes of the Distribution Agreement in accordance with
the terms thereof, in respect of the Notes, with all the authority, rights,
powers, duties and obligations of a Trust under the Distribution Agreement.
The Trust confirms that any agreement, covenant, acknowledgment, representation
or warranty under the Distribution Agreement applicable to the Trust is made by
the Trust at the date hereof, unless another time or times are specified in the
Distribution Agreement, in which case such agreement, covenant, acknowledgment,
representation or warranty shall be deemed to be confirmed by the Trust at such
specified time or times.

     Section 2.02 Purchase of Notes as Principal.

     (a) Subject in all respects to the terms and conditions of the
Distribution Agreement, the Trust hereby agrees to sell to the Purchasing Agent
and the Purchasing Agent hereby agrees to purchase the Notes having the terms
specified in the Pricing Supplement relating to such Notes.

D-1

 

     (b) In connection with any purchase of Notes from the Trust by the
Purchasing Agent as principal, the parties agrees that the items specified on
Schedule I of the Omnibus Instrument will be delivered as of the Settlement
Date.

     Section 2.03 Termination. Upon the termination of this Terms Agreement
pursuant to Section 13(b) of the Distribution Agreement the undersigned parties
hereby agree to that the expenses reasonably incurred prior to or in connection
with such termination will be borne by Principal Life and PFG.

     Section 2.04 Governing Law. This Terms Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard
to the principles of conflicts of laws thereof.

     Section 2.05 Notices. For purposes of Section 14 of the Distribution
Agreement, the Trust’s communications details are as set forth in Section E of
the Omnibus Instrument.

     Section 2.06 Omnibus Instrument; Execution and Incorporation of Terms.

     The parties to this Terms Agreement will enter into this Terms Agreement
by executing the Omnibus Instrument.

     By executing the Omnibus Instrument, each party hereto agrees that this
Terms Agreement will constitute a legal, valid and binding agreement by and
among such parties.

     All terms relating to the Trust or the Notes not otherwise included in
this Terms Agreement will be as specified in the Omnibus Instrument or Pricing
Supplement, as indicated herein.

     Section 2.07 Counterparts. This Terms Agreement, through the Omnibus
Instrument, may be executed in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.

[Remainder of Page Left Intentionally Blank.]

D-2

 

SECTION E

COORDINATION AGREEMENT

     This COORDINATION AGREEMENT (this “Coordination Agreement”), dated as of
the date of the Pricing Supplement, is entered into by and among Principal Life
Insurance Company (“Principal Life”), Principal Financial Group, Inc. (“PFG”),
the Principal Life Income Fundings Trust specified in the Omnibus Instrument
(the “Trust”), Principal Financial Services, Inc. (“PFSI”), Bankers Trust
Company, N.A. and Citibank, N.A., as indenture trustee (the “Indenture
Trustee”).

W I T N E S S E T H

     WHEREAS, the Trust will enter into the Funding Agreement with Principal
Life dated as of the Original Issue Date specified in the Pricing Supplement;

     WHEREAS, PFG will issue a Guarantee to the Trust as of the Original Issue
Date specified in the Pricing Supplement, which will fully and unconditionally
guarantee the payment obligations of Principal Life under the Funding
Agreement;

     WHEREAS, the Purchasing Agent (as defined in the Distribution Agreement)
have agreed to sell the Notes in accordance with the Registration Statement;

     WHEREAS, the Trust intends to issue the Notes in accordance with the
Indenture, to collaterally assign to, and grant a security interest in, the
Funding Agreement and the Guarantee to and in favor of the Indenture Trustee in
accordance with the Indenture to secure payment of the Notes;

     WHEREAS, the Custodian will hold the Funding Agreement and the Guarantee
on behalf of the Indenture Trustee pursuant to the terms of the Custodial
Agreement; and

     WHEREAS, certain licensing arrangements between the Trust and PFSI will be
governed pursuant to the provisions of the License Agreement.

     NOW, THEREFORE, to give effect to the agreements and arrangements
established under the Terms Agreement included in the Omnibus Instrument, as
applicable, the Trust Agreement, the Indenture and the Notes, and in
consideration of the agreements and obligations set forth herein and for other
good and valuable consideration, the sufficiency of which are hereby
acknowledged, each party hereby agrees as follows:

ARTICLE 1

     Section 1.01 Delivery of the Funding Agreement and the Guarantee. The
Trust hereby authorizes the Custodian, on behalf of the Indenture Trustee, to
receive the Funding Agreement from Principal Life and the Guarantee from PFG
pursuant to the assignment of the Funding Agreement and Guarantee (the
“Assignment”), to be entered into on the Original Issue Date, included in the
closing instrument dated as of the Original Issue Date (the “Closing
Instrument”).

E-1

 

     Section 1.02 Issuance and Purchase of the Notes.

     (a) Delivery of the Funding Agreement and the Guarantee to the Custodian,
on behalf of the Indenture Trustee, pursuant to the Assignment or execution of
the cross receipt contained in the Closing Instrument shall be confirmation of
payment by the Trust for the Funding Agreement.

     (b) The Trust hereby directs the Indenture Trustee, upon receipt by the
Custodian, on behalf of the Indenture Trustee, of the Funding Agreement
pursuant to the Assignment and upon receipt by the Custodian, on behalf of the
Indenture Trustee, of the Guarantee, (i) to authenticate the certificates
representing the Notes (the “Notes Certificates”) in accordance with the
Indenture and (ii) to (A) deliver each relevant Notes Certificate to the
clearing system or systems identified in each such Notes Certificate, or to the
nominee of such clearing system, or the custodian thereof, for credit to such
accounts as the Purchasing Agent may direct, or (B) deliver each relevant Notes
Certificate to the purchasers thereof as identified by the Purchasing Agent.

ARTICLE 2

     Section 2.01 Directions Regarding Periodic Payments. As registered owner
of the Funding Agreement and the Guarantee as collateral securing payments on
the Notes, the Indenture Trustee will receive payments on the Funding Agreement
and the Guarantee on behalf of the Trust. The Trust hereby directs the
Indenture Trustee to use such funds to make payments on behalf of the Trust
pursuant to the Trust Agreement and the Indenture.

     Section 2.02 Maturity of the Funding Agreement. Upon the maturity of the
Funding Agreement and the return of funds thereunder, the Trust hereby directs
the Indenture Trustee to set aside from such funds an amount sufficient for the
repayment of the outstanding principal on the Notes and Trust Beneficial
Interest when due.

ARTICLE 3

     Section 3.01 Certificates. Principal Life hereby agrees to deliver an
Officer’s Certificate, a copy of which is attached hereto as Exhibit E, on a
quarterly basis to any rating agency currently rating the Program. The Trust
hereby agrees to deliver an Officer’s Certificate, a copy of which is attached
hereto as Exhibit F, on a quarterly basis to any rating agency currently rating
the Program.

     Section 3.02 Filings. Principal Life hereby covenants to file, or cause
to be filed, in a timely manner on behalf of the Trust all reports,
certifications or similar filings required under the Securities Exchange Act of
1934, as amended.

ARTICLE 4

     Section 4.01 No Additional Liability. Nothing in this Coordination
Agreement shall impose any liability or obligation on the part of any party to
this Coordination Agreement to make any payment or disbursement in addition to
any liability or obligation such party has under the Program Documents, except
to the extent that a party has actually received funds which it is obligated to
disburse pursuant to this Coordination Agreement.

E-2

 

     Section 4.02 No Conflict. This Coordination Agreement is intended to be
in furtherance of the agreements reflected in the documents related to the
Program Documents, and not in conflict. To the extent that a provision of this
Coordination Agreement conflicts with the provisions of one or more Program
Documents, the provisions of such Program Documents shall govern.

     Section 4.03 Governing Law. This Coordination Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
regard to the principles of conflicts of laws thereof.

     Section 4.04 Severability. If any provision in this Coordination
Agreement shall be invalid, illegal or unenforceable, such provision shall be
deemed severable from the remaining provisions of this Coordination Agreement
and shall in no way affect the validity or enforceability of such other
provisions of this Coordination Agreement.

     Section 4.05 Severability. If any provision in this Coordination
Agreement shall be invalid, illegal or unenforceable, such provision shall be
deemed severable from the remaining provisions of this Coordination Agreement
and shall in no way affect the validity or enforceability of such other
provisions of this Coordination Agreement.

     Section 4.06 Notices. All demands, notices and communications under this
Coordination Agreement shall be in writing and shall be deemed to have been
duly given upon receipt at the addresses set forth below:

	 	 	 
	To the Trust:
	 	 
	 
	

	 	Principal Life Income Fundings
Trust (followed by the number set forth in the Omnibus Instrument)
	

	 	c/o U.S. Bank Trust National Association
	

	 	100 Wall Street, 16th Floor
	

	 	New York, New York 10005
	

	 	Attention: Corporate Trust Administration
	

	 	Telephone: (212) 361-2458
	

	 	Facsimile: (212) 809-5459 and (212) 509-3384
	 
	To the Indenture Trustee:
	 	 
	 
	

	 	Citibank, N.A.
	

	 	Citibank Agency & Trust
	

	 	111 Wall Street, 14th Floor, Zone 3
	

	 	New York, New York 10005
	

	 	Attention: Nancy Forte
	

	 	Telephone: (212) 657-4703
	

	 	Facsimile: (212) 657-3862

E-3

 

	 	 	 
	To Principal Life:

	 
	

	 	Principal Life Insurance Company
	

	 	711 High Street
	

	 	Des Moines, Iowa 50392
	

	 	Attention: General Counsel
	

	 	Telephone: (515) 247-5111
	

	 	Facsimile: (515) 248-3011
	 
	 	 	With a copy to:

	 
	

	 	Principal Life Insurance Company
	

	 	711 High Street
	

	 	Des Moines, Iowa 50392
	

	 	Attention: Jim Fifield
	

	 	Telephone: (515) 248-9196
	

	 	Facsimile: (515) 235-9353
	 
	To PFG:

	 
	

	 	Principal Financial Group, Inc.
	

	 	711 High Street
	

	 	Des Moines, Iowa 50392
	

	 	Attention: General Counsel
	

	 	Telephone: (515) 247-5111
	

	 	Facsimile: (515) 248-3011
	 
	 	 	With a copy to:
	 	 
	 
	

	 	Principal Life Insurance Company
	

	 	711 High Street
	

	 	Des Moines, Iowa 50392
	

	 	Attention: Jim Fifield
	

	 	Telephone: (515) 248-9196
	

	 	Facsimile: (515) 235-9353
	 
	To Principal Financial
Services, Inc.:
	 	 
	 
	

	 	Principal Financial Services, Inc.
	

	 	711 High Street
	

	 	Des Moines, Iowa 50392
	

	 	Attention: General Counsel
	

	 	Telephone: (515) 247-5111
	

	 	Facsimile: (515) 248-3011

E-4

 

	 	 	 
	 	 	With a copy to:
	 	 
	 
	

	 	Principal Life Insurance Company
	

	 	711 High Street
	

	 	Des Moines, Iowa 50392
	

	 	Attention: Jim Fifield
	

	 	Telephone: (515) 248-9196
	

	 	Facsimile: (515) 235-9353
	 
	To Bankers Trust Company, N.A:
	 	 
	 
	

	 	Bankers Trust Company, N.A.
	

	 	665 Locust Street
	

	 	Des Moines, Iowa 50309-3702
	

	 	Attention: Angela C. Brick
	

	 	Telephone: (515) 245-2820
	

	 	Facsimile: (515) 247-2101

or at such other address as shall be designated by any such party in a written
notice to the other parties.

ARTICLE 5

     Section 5.01 Omnibus Instrument; Execution and Incorporation of Terms.

     The parties to this Coordination Agreement will enter into this
Coordination Agreement by executing the Omnibus Instrument.

     By executing the Omnibus Instrument, each party hereto agrees that this
Coordination Agreement will constitute a legal, valid and binding agreement by
and among the Trust, Principal Life, PFG, PFSI, the Custodian and the Indenture
Trustee.

     All terms relating to the Trust or the Notes not otherwise included in
this Coordination Agreement will be as specified in the Omnibus Instrument or
Pricing Supplement, as indicated herein.

     Section 5.02 Acknowledgment. Principal Life hereby acknowledges Section
2.10 of the Indenture and Section 6.1 of the Custodial Agreement. The Trust
hereby acknowledges and agrees to the terms of the Custodial Agreement.

     Section 5.03 Counterparts. This Coordination Agreement, through the
Omnibus Instrument, may be executed in any number of counterparts, each of
which counterparts shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same instrument.

     Section 5.04 Capitalized Terms. All capitalized terms used herein and not
otherwise defined in this Coordination Agreement will have the meanings set
forth in the Indenture.

[Remainder of Page Left Intentionally Blank.]

E-5

 

SECTION F

MISCELLANEOUS AND EXECUTION PAGES

     This Omnibus Instrument may be executed by each of the parties hereto in
any number of counterparts, and by each of the parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original, but all such counterparts shall together
constitute but one and the same instrument.

     Each signatory, by its execution hereof, does hereby become a party to
each of the agreements or indenture identified for such party as of the date
specified in such agreements or indenture.

     IN WITNESS WHEREOF, the undersigned have executed this Omnibus Instrument
with respect to the Notes as of the date first written above.

	 	 	 	 	 
	 	PRINCIPAL LIFE INSURANCE COMPANY (in

executing below agrees and becomes a party

to (i) the Terms Agreement set forth in

Section D herein and (ii) the Coordination

Agreement set forth in Section E herein)

 	 
	 	By:  	/s/ Christopher P. Freese
 	 
	 	 	Name:  	Christopher P. Freese 	 
	 	 	Title:  	Officer 	 
	 
	 	PRINCIPAL FINANCIAL GROUP, INC. (in

executing below agrees and becomes a party

to (i) the Terms Agreement set forth in

Section D herein and (ii) the Coordination

Agreement set forth in Section E herein)

 	 
	 	By:  	/s/ Elizabeth D. Swanson
 	 
	 	 	Name:  	Elizabeth D. Swanson 	 
	 	 	Title:  	Counsel 	 
	 
	 	PRINCIPAL FINANCIAL SERVICES, INC. (in

executing below agrees and becomes a party

to (i) the License Agreement set forth in

Section B herein and (ii) the Coordination

Agreement set forth in Section E herein)

 	 
	 	By:  	/s/ Elizabeth D. Swanson
 	 
	 	 	Name:  	Elizabeth D. Swanson 	 
	 	 	Title:  	Counsel 	 
	 

[Execution Page 1 of 3]

 

 

	 	 	 	 	 
	 	THE PRINCIPAL LIFE INCOME FUNDINGS TRUST

DESIGNATED IN THIS OMNIBUS INSTRUMENT (in

executing below agrees and becomes a party

to (i) the License Agreement set forth in

Section B herein, (ii) the Indenture set

forth in Section C herein, (iii) the Terms

Agreement set forth in Section D herein and

(iv) the Coordination Agreement set forth in

Section E herein)

By: U.S. Bank Trust National Association,

not in its individual capacity but solely in

its capacity as trustee of the Trust

 	 
	 	By:  	/s/ Ward A. Spooner
 	 
	 	 	Name:  	Ward A. Spooner 	 
	 	 	Title:  	Vice President 	 
	 
	 	U.S. BANK TRUST NATIONAL ASSOCIATION (in

executing below agrees and becomes a party

to the Trust Agreement set forth in Section

A herein), as Trustee

 	 
	 	By:  	/s/ Ward A. Spooner
 	 
	 	 	Name:  	Ward A. Spooner 	 
	 	 	Title:  	Vice President 	 
	 
	 	GSS HOLDINGS II, INC. (in executing below

agrees and becomes a party to the Trust

Agreement set forth in Section A herein), as

Trust Beneficial Owner

 	 
	 	By:  	/s/ Andrew L. Stidd
 	 
	 	 	Name:  	Andrew L. Stidd 	 
	 	 	Title:  	President 	 
	 
	 	CITIBANK, N.A. (in executing below agrees

and becomes a party to (i) the Indenture set

forth in Section C herein, as Indenture

Trustee, Registrar, Transfer Agent, Paying

Agent and Calculation Agent and (ii) the

Coordination Agreement set forth in Section

E herein), as Indenture Trustee, Registrar,

Transfer Agent, Paying Agent and Calculation

Agent

 	 
	 	By:  	/s/ Nancy Forte
 	 
	 	 	Name:  	Nancy Forte 	 
	 	 	Title:  	Assistant Vice President 	 
	 

[Execution Page 2 of 3]

 

 

	 	 	 	 	 
	 	BANKERS TRUST COMPANY, N.A. (in executing

below agrees and becomes a party to the

Coordination Agreement set forth in Section

E herein)

 	 
	 	By:  	/s/ Patty Ashbaugh
 	 
	 	 	Name:  	Patty Ashbaugh 	 
	 	 	Title:  	Vice President 	 
	 
	 	MERRILL LYNCH, PIERCE, FENNER & SMITH

INCORPORATED (in executing below agrees and

becomes a party to the Terms Agreement set

forth in Section D herein)

 	 
	 	By:  	/s/ Sabina Ceddia
 	 
	 	 	Name:  	Sabina Ceddia 	 
	 	 	Title:  	Duly Authorized Attorney 	 
	 

[Execution Page 3 of 3]

 

 

INDEX OF EXHIBITS AND SCHEDULES TO THE OMNIBUS INSTRUMENT

	 	 	 
	Exhibit A

	 	Standard Trust Terms – Incorporated herein by reference to Exhibit
4.6 to Principal Life Insurance Company’s and Principal Financial
Group, Inc.’s Registration Statement on Form S-3 (Registration
Nos. 333-110499 and 333-110499-01.
	 
	 	 
	Exhibit B

	 	Standard License Agreement Terms – Incorporated herein by
reference to Exhibit 99.1 to Principal Life Insurance Company’s
Current Report on Form 8-K, filed on March 29, 2004.
	 
	 	 
	Exhibit C

	 	Standard Indenture Terms – Incorporated herein by reference to
Exhibit 4.1 to Principal Life Insurance Company’s and Principal
Financial Group, Inc.’s Registration Statement on Form S-3
(Registration Nos. 333-110499 and 333-110499-01.
	 
	 	 
	Exhibit D

	 	Pricing Supplement – Incorporated herein by reference to the
Pricing Supplement with respect to Principal Life Income Fundings
Trust 2004-66, filed on November 8, 2004, with the Securities and
Exchange Commission pursuant to Rule 424(b)(5) under the
Securities Act of 1933, as amended.
	 
	 	 
	Exhibit E

	 	Principal Life Insurance Company Officer’s Certificate
	 
	 	 
	Exhibit F

	 	Principal Life Income Fundings Trusts Trustee Officer’s Certificate
	 
	 	 
	Schedule I

	 	Terms Agreement Specifications

 

 

EXHIBIT E

Principal Life Insurance Company

Officer’s Certificate

     The undersigned, an officer of Principal Life Insurance Company, an Iowa
stock life insurance company (“Principal Life”), does hereby certify to
Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies,
Inc., in such capacity and on behalf of Principal Life, to the knowledge of the
undersigned and after reasonable inquiry, that:

	 	 	 
	1.

	 	each of the representations and warranties of Principal Life
contained in each Expense and Indemnity Agreement entered into in
connection with the Registration Statement (defined below), and each
Funding Agreement issued in connection with the Program (the
“Specified Agreements”) (other than any representation or warranty
expressly made as of a date prior to the date hereof) are true and
correct on and as of the date hereof, with the same effect as though
such representation or warranty had been made on and as of the date
hereof;
	 
	2.

	 	no default under any of the Specified Agreements and no event
or any condition which, with notice or lapse of time or both, would
become a default, has occurred and is continuing as of the date
hereof;
	 
	3.

	 	Principal Life has performed and complied with, respectively,
in all material respects, all of the agreements, covenants,
obligations and conditions applicable to Principal Life required by
the Specified Agreements to be performed or complied with by
Principal Life on or before the date hereof;
	 
	4.

	 	the Registration Statement filed on Form S-3 (File Nos.
333-110499 and 333-110499-01) (the “Registration Statement”) by
Principal Life and Principal Financial Group, Inc. has been declared
effective by the Securities and Exchange Commission (the
“Commission”) under the Securities Act of 1933, as amended (the
“Act”) and no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been commenced by or are pending before or contemplated
by the Commission;
	 
	5.

	 	all filings, if any, required by Rule 424 and Rule 430A under
the Act have been made in a timely manner;
	 
	6.

	 	since
     , the Trusts organized in connection with the
program contemplated by the Registration Statement have issued the
following series of Notes:
	 
	

	 	[List each series of Notes.] [(collectively, the “Designated Notes”)]; and
	 
	7.

	 	the Funding Agreements issued in connection with the Designated
Notes have been executed and delivered by Principal Life in accordance
with the terms and conditions of the Program Documents.

E-1

 

          Capitalized terms used herein and not otherwise defined herein shall have the meanings set
forth in the Standard Indenture Terms attached as Exhibit 4.1 to the
Registration Statement.

     IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
the • day of •, 200•.

	 	 	 
	

	[Name], [in his/her] capacity as an
authorized officer of Principal Life
	 
	 	By:
	 
	 	 	

	

	 	Name:
	

	 	Title:

	 	 	 	 	 

E-2

 

EXHIBIT F

Principal Life Income Fundings Trusts

Trustee Officer’s Certificate

     U.S. Bank Trust National Association, not in its individual capacity but
solely in its capacity as trustee acting on behalf of each common law trust
organized under the laws of the State of New York (in such capacity, the
“Trustee,” and each such common law trust being referred to herein as, a
“Trust”) in connection with the program contemplated by Registration Statement
Nos. 333-110499 and 333-110499-01 filed on Form S-3 (the “Registration
Statement”) by Principal Life Insurance Company and Principal Financial Group,
Inc. with the Securities and Exchange Commission, does hereby certify to
Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies,
Inc., in such capacity and on behalf of each Trust, to the knowledge of the
Trustee, that:

	 	 	 
	1.

	 	each of the representations and warranties of each Trust
contained in the Notes issued in connection with the Program, each
Indenture entered into in connection with the Registration Statement
and the Expense and Indemnity Agreement concerning the Trusts (the
“Specified Agreements”) (other than any representation or warranty
expressly made as of a date prior to the date hereof) are true and
correct on and as of the date hereof, with the same effect as though
such representation or warranty had been made on and as of the date
hereof;
	 
	2.

	 	no default under any of the Specified Agreements and no event
or any condition which, with notice or lapse of time or both, would
become a default, has occurred and is continuing as of the date
hereof;
	 
	3.

	 	each Trust has performed and complied with, respectively, in
all material respects, all of the agreements, covenants, obligations
and conditions applicable to such Trust required by the Specified
Agreements to be performed or complied with by such Trust on or
before the date hereof;
	 
	4.

	 	the Notes issued in connection with the Program, have been
issued, in all material respects, in accordance with the terms and
conditions of the Program Documents; and
	 
	5.

	 	each Funding Agreement has been executed and delivered by the
related Trust in accordance with the terms and conditions of the
Program Documents.

     Capitalized terms used herein and not otherwise defined herein shall have
the meanings set forth in the Standard Indenture Terms attached as Exhibit 4.1
to the Registration Statement. In no event shall U.S. Bank Trust National
Association in its personal corporate capacity have any liability for any of
the certifications or statements contained in this Trustee Officer’s
Certificate, such liability being solely that of each Trust.

F-1

 

     IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
the • day of •, 200•.

	 	 	 
	

	 	U.S. Bank Trust National Association, not
in its capacity but solely in its capacity
as Trustee acting on behalf of each Trust
	 
	 	By:
	 
	 	 	

	

	 	Name:
	

	 	Title:

F-2

 

SCHEDULE I

Terms Agreement Specifications

     In connection with Section 3(a)(iv) of the Distribution Agreement, the
Program under which the Notes are issued is rated Aa2 by Moody’s Investors
Service, Inc. (“Moody’s”) and AA by Standard & Poor’s Rating Services, a
division of The McGraw-Hill Companies, Inc. (“S&P”). Principal Life and PFG
expect that the Notes will be rated Aa2 by Moody’s. The Company’s financial
strength rating is Aa2 by Moody’s and AA by S&P.

     In accordance with Section 2.02(b) of the Terms Agreement and in
connection with the purchase of Notes from the Trust by the Purchasing Agent as
principal, the following items will be delivered on the Settlement Date:

	 	•	 	Opinion of Sidley Austin Brown & Wood LLP regarding the
enforceability of the Guarantee and the Notes.

     All capitalized terms used herein and not otherwise defined herein will
have the meanings set forth in the Distribution Agreement.

I-1exv10w19xay

 

EXHIBIT 10.19(a)

CINEMARK, INC.

2004 LONG TERM INCENTIVE PLAN

ARTICLE I.

PURPOSES

     1.1 Purposes of Plan. The purposes of the 2004 Cinemark, Inc. Long Term
Incentive Plan (the “Plan”) are to (i) advance the interests of Cinemark, Inc.
(the “Company”) and its stockholders by providing significant incentives to
selected Employees, Directors and Consultants (as defined herein) of the
Company and its Subsidiaries (as defined herein), (ii) enhance the interest of
such persons in the success and progress of the Company and its Subsidiaries by
providing them with an opportunity to become stockholders of the Company, and
(iii) enhance the ability of the Company and its Subsidiaries to attract and
retain qualified management and other personnel necessary for the success and
progress of the Company and its Subsidiaries. The Plan provides for Restricted
Shares grants, Incentive Option grants and Nonqualified Option grants. The
Plan is intended to be a “compensatory benefit plan” within the meaning of such
term under Rule 701 of the Securities Act of 1933, as amended.

ARTICLE II.

DEFINITIONS

     2.1 Definitions. Certain terms used herein shall have the meaning below
stated.

          (a) “Administrator” means the Board or Committee designated to administer
the Plan in accordance with Section 7.1.

          (b) “Affiliate” or “ Affiliates” means any Person that directly, or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with the Person specified. For purposes of this
definition, control of a Person means the power, direct or indirect, to direct
or cause the direction of the management and polices of such Person, whether by
Contract or otherwise and, in any event and without limitation of the previous
sentence, any Person owning ten percent (10%) or more of the voting securities
of another Person shall be deemed to control that Person.

          (c) “Award” means a Restricted Share, an Incentive Option or a
Nonqualified Option granted under the Plan.

          (d) “Award Agreement” means an agreement between the Company and a
Participant containing the terms of an Award under this Plan.

          (e) “Board” or “Board of Directors” means the Board of Directors of the
Company.

          (f) “Cause” shall mean “Cause” as defined in any written Service Agreement
in effect between the applicable Participant and the Company or a Subsidiary,
or if such Participant is not a party to a written Service Agreement in which
Cause is defined, then Cause shall mean (i) the abuse of illegal drugs, alcohol
or other controlled substances or the intoxication of such Participant during
working hours, (ii) the arrest for, or conviction of, a felony, (iii) the
commission of fraud, embezzlement or theft by such Participant (iv) the
unexcused absence by such Participant from such Participant’s regular job
location for more than five consecutive days or for more than the aggregate
number of days permitted to the Participant under Company vacation and sick
leave policies applicable to the Participant or (v) any conduct or activity of
such Participant deemed injurious to the Company in the reasonable discretion
of the Company or the Board of Directors.

          (g) “Code” means the Internal Revenue Code of 1986, as amended.

1

 

          (h) “Committee” means the committee of directors appointed by the Board to
administer the Plan pursuant to Article VII hereof.

          (i) “Common Stock” means (i) the authorized Class A Common Stock of the
Company, par value $.001 per share, as constituted on the date the Plan becomes
effective or (ii) the shares resulting from a change in the Common Stock as
presently constituted which is limited to a change of all of its authorized
shares with par value into the same number of shares without par value or as a
change in the par value.

          (j) “Company” means Cinemark Inc., a Delaware corporation.

          (k) “Consultant” means a consultant or advisor who is a natural person and
who provides bona fide services to the Company or a Subsidiary, provided such
services are not in connection with the offer or sale of securities in a
capital-raising transaction and do not directly or indirectly promote or
maintain a market for the Company’s securities.

          (l) “Corporate Event” shall have the meaning ascribed to such term in
Section 6.5.

          (m) “Designee” means a party designated by the Company as having the
Repurchase Right described in Section 9 including, without limitation, the
stockholders of the Company on a pro rata basis.

          (n) “Director” means a member of the Board or a member of the board of
directors of a Subsidiary.

          (o) “Disability” shall mean “Disability” as defined in any written Service
Agreement in effect between the applicable Participant and the Company or a
Subsidiary, or if such Participant is not a party to a written Service
Agreement in which Disability is defined, then “Disability” shall mean a
physical or mental impairment that (a) renders Participant unable to perform
the essential functions of Participant’s Service to the Company or its
Subsidiaries, even with reasonable accommodation that does not impose an undue
hardship on the Company or its Subsidiaries, (b) has existed for at least sixty
(60) consecutive days, and (c) in the opinion of a physician selected by the
Company will last for a duration of at least one hundred eight (180)
consecutive days. Participant’s Disability shall be determined by the Company,
in good faith, based upon information supplied by Participant and a physician
selected by the Company. For purposes of determining the rules relating to an
Incentive Option, the term “Disability” shall have the meaning ascribed to it
under Code Section 22(e)(3). Participant shall submit to physical exams and
diagnostic tests reasonably recommended by such physician.

          (p) “Employee” means an officer or other employee of the Company or a
Subsidiary.

          (q) “Fair Market Value” of each share of Common Stock on the date for
which fair market value is to be determined means:

               (i) if the Common Stock is listed on any securities exchange, the reported
closing price of the Common Stock on all such securities exchanges on the date
of determination; or

               (ii) if on any day the Common Stock is not listed on any securities
exchange, the closing price quoted in the NASDAQ System as of 4:00 p.m. New
York time on the date of determination; or

               (iii) if on any day the Common Stock is not quoted in the NASDAQ System,
the average of the highest “bid” and lowest “asked” prices on the date of
determination in the domestic over-the-counter market as reported by the
National Quotation Bureau Incorporated, or any similar successor organization;
or

               (iv) if at any time the Common Stock is not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter market, the
Fair Market Value shall be the fair value of the Common Stock determined in
good faith by the Board (without taking into account the effect of any
illiquidity or minority discounts) on the date of determination. In addition,
Fair Market Value shall be determined without regard to any restriction other
than a restriction which, by its terms, will never lapse.

2

 

          (r) “Immediate Family” has the meaning given to such term in Section
5.5(c).

          (s) “Incentive Option” means an Option intended to qualify as an incentive
option under Section 422 of the Code.

          (t) “Incentive Option Agreement” has the meaning given to such term in
Section 5.2.

          (u) “MDCP” means Madison Dearborn Capital Partners IV, L.P. and its
Affiliates.

          (v) “Nonqualified Option” means an Option that is not intended to qualify
as an Incentive Option.

          (w) “Nonqualified Option Agreement” has the meaning given to such term in
Section 5.3.

          (x) “Option” means an option to purchase Common Stock granted by the
Administrator to a Participant pursuant to Article V hereof.

          (y) “Option Agreement” means an Incentive Option Agreement and/or a
Nonqualified Option Agreement, as applicable.

          (z) “Option Shares” means shares of Common Stock purchased as a result of
the exercise by an Option holder of an Option, as well as any securities
received by the holder in respect of such Option Shares.

          (aa) “Optionee” means a Participant to whom an Option has been granted
under the Plan.

          (bb) “Participant” means an Employee, Director or Consultant to whom
Incentive Options, Nonqualified Options or Restricted Shares have been granted
or awarded under the Plan.

          (cc) “Permitted Transferee” has the meaning given to such term in Section
5.5(c).

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

          (ee) “Plan” means the Cinemark, Inc. 2004 Long Term Incentive Plan, as set
forth herein and as from time to time amended.

          (ff) “Publicly Traded” shall mean corporate stock that is listed or
admitted to unlisted trading privileges on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the NASD or if sales or bid and offer quotations are reported for
that class of stock on the NASDAQ National Market.

          (gg) “Requisite Holders” means the holders of the Company’s capital stock
constituting more than 50% of the Company’s voting power of all classes of
Common Stock of the Company then outstanding.

          (hh) “Restricted Shares” means the shares of Common Stock that are awarded
to a Participant pursuant to Section 5.6 which on the date of award are both
nontransferable and subject to a substantial risk of forfeiture.

          (ii) “Restricted Period” means the period during which the Restricted
Shares remain nontransferable and subject to the substantial risk of
forfeiture.

          (jj) “Sale of the Company” means the “Sale of the Company” as defined in
any written Service Agreement in effect between the applicable Participant and
the Company or a Subsidiary, or if such Participant is not a party to a written
Service Agreement in which “Sale of the Company” is defined, the “Sale of the

3

 

Company” shall mean the sale of the Company to a Person or Persons,
pursuant to which such Person or Persons directly or indirectly acquire (i)
capital stock of the Company possessing the voting power under normal
circumstances to elect a majority of the Company’s board of directors or
entitling such Person or Persons to exercise more than fifty percent (50%) of
the total voting power of the outstanding shares of capital stock entitled to
vote of the Company or of the surviving entity (whether by merger,
consolidation or sale or transfer of the Company’s capital stock) or (ii) all
or substantially all of the Company’s assets determined on a consolidated
basis.

          (kk) “Service” means service provided to the Company or a Subsidiary as an
Employee, Director or Consultant.

          (ll) “Service Agreement” means any written agreement between a Participant
and the Company or any of its Subsidiaries regarding the provision of Service
to the Company or any of its Subsidiaries by such Participant.

          (mm) “Securities Laws” means the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended.

          (nn) “Stockholders Agreement” means that certain Stockholder Agreement
dated April 2, 2004 among the Company, Madison Dearborn Capital Partners IV,
L.P., the Mitchell Investors (as defined therein) and certain Executives (as
defined therein) of the Company, as amended from time to time.

          (oo) “Subsidiary” or “Subsidiaries” means , as to any Person, any other
Person (i) of which such Person or any other Subsidiary of such Person is a
general partner, (ii) of which such Person, any one or more of its other
subsidiaries of such Person, or such Person and any one or more of its other
Subsidiaries, directly or indirectly owns or controls securities or other
equity interests representing more than fifty percent (50%) of the aggregate
voting power, or (iii) of which such Person, any one or more of its other
Subsidiaries of such Person, or such Person and any one or more of its other
Subsidiaries, possesses he right to elect more than fifty percent (50%) of the
board of directors or Persons holding similar positions; provided, however,
with respect to determining rules relating to Incentive Options, the term
“Subsidiary” or “Subsidiaries” shall mean a subsidiary of the Company within
the meaning of Section 424(f) of the Code.

ARTICLE III.

STOCKHOLDER APPROVAL; RESERVATION OF SHARES

     3.1 Stockholder Approval. The Plan shall become effective only if, within
12 months from the date the Plan is adopted by the Board, the Plan is approved
by the affirmative vote of the Requisite Holders, or by written consent of such
Requisite Holders, in accordance with the applicable provisions of the
Certificate of Incorporation and Bylaws of the Company and applicable state
law.

     3.2 Shares Reserved Under Plan. The aggregate number of shares of Common
Stock which may be issued, whether upon the exercise of Options granted under
the Plan or as Restricted Shares granted under the Plan, shall not exceed
3,074,991 shares (as such shares may be adjusted pursuant to Section 9.4 of the
Plan). When the exercise price for an Option granted under this Plan is paid
with previously outstanding shares of Common Stock or with shares of Common
Stock as to which the Option is being exercised, as permitted in Section
5.5(f), the total number of shares of Common Stock for which Options granted
under this Plan may thereafter be exercised shall be irrevocably reduced by the
total number of shares for which such Option is thus exercised. Shares of
Common Stock issued upon the exercise of Options granted under the Plan and
Restricted Shares granted under the Plan may consist of either authorized but
unissued shares or shares which have been issued and which shall have been
heretofore or shall be hereafter reacquired by the Company. The total number
of shares of Common Stock authorized under the Plan shall be subject to
increase or decrease in order to give effect to the provisions of Section 9.4
hereof and to give effect to any amendment adopted pursuant to Article VIII.
If any Option granted under the Plan shall expire, terminate or be cancelled
for any reason without having been exercised in full, the number of shares as
to which such Option was not exercised shall again be available for purposes of
the Plan. If any Restricted Shares granted under the Plan are terminated,
cancelled or forfeited for any reason, such Restricted Shares shall

4

 

again be available for purposes of the Plan. The Company shall at all
times while the Plan is in effect reserve such number of shares of Common
Stock, subject to this Section 3.2, as will be sufficient to satisfy the
requirements of the Plan.

ARTICLE IV.

PARTICIPATION IN PLAN

     4.1 Eligibility. Awards under the Plan may be granted to any Employee,
Director or Consultant of the Company or a Subsidiary. The Administrator shall
determine those Employees, Directors and Consultants to whom Awards shall be
granted, and, subject to Section 3.2 hereof, the number of shares of Common
Stock subject to each such Award. The grant of an Award under the Plan to a
Participant shall not be deemed either to entitle such Participant to, or
disqualify such Participant from, participation in any other grant of Awards
under the Plan.

     4.2 Participation Not Guarantee of Service. Subject to the terms of any
Service Agreement with a Participant, nothing in this Plan or in any Award
Agreement shall in any manner be construed to limit in any way the right of the
Company or any Subsidiary to terminate a Participant’s Service at any time,
without regard to the effect of such termination on any rights such Participant
would otherwise have under this Plan or any Award Agreement, or to give any
right to a Participant to remain employed or retained by the Company or a
Subsidiary thereof in any particular position or at any particular rate of
compensation.

     4.3 Effect of Plan. Neither the adoption of the Plan nor any action of
the Board, the Committee or the Administrator shall be deemed to give any
Employee, Director or Consultant any right to be granted an Award or any other
rights, except as may be evidenced by an Award Agreement, or any amendment
thereto, duly authorized by the Administrator and executed on behalf of the
Company, and then only to the extent and on the terms and conditions expressly
set forth in such Award Agreement. The existence of the Plan and the Awards
granted hereunder shall not affect in any way the right of the Board or the
stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any
issue of bonds, debentures, or shares of preferred stock ahead of or affecting
the Common Stock or the rights thereof, the dissolution or liquidation of the
Company or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding.

ARTICLE V.

GRANT AND EXERCISE OF OPTIONS; GRANT OF RESTRICTED SHARES

     5.1 Grant of Options. The Administrator may from time to time in its
discretion grant Options, which may be Incentive Options or Nonqualified
Options, to Employees, Directors or Consultants. All Options under the Plan
shall be granted within ten years from the date the Plan is adopted by the
Board or the date the Plan is approved by the Requisite Holders, whichever is
earlier.

     5.2 Incentive Options. The Administrator may authorize the grant of
Incentive Options subject to the terms and conditions set forth herein. The
grant of an Incentive Option shall be evidenced by a written agreement between
the Company and the Optionee setting forth the number of shares of Common Stock
subject to the Incentive Option evidenced thereby and the terms, conditions and
restrictions applicable thereto (an “Incentive Option Agreement”). The
aggregate Fair Market Value of the Common Stock with respect to which Incentive
Options granted under all incentive stock option plans of the Company and its
Subsidiaries are exercisable for the first time by the Optionee during any
calendar year shall not exceed $100,000 or such other threshold in accordance
with applicable law. Incentive Options may only be granted to Employees.

     5.3 Nonqualified Options. The Administrator may authorize the grant of
Nonqualified Options subject to the terms and conditions set forth herein. The
grant of a Nonqualified Option shall be evidenced by a written agreement
between the Company and the Optionee setting forth the number of shares of
Common Stock subject to the Nonqualified Option evidenced thereby and the
terms, conditions and restrictions applicable thereto (a “Nonqualified Option
Agreement”).

5

 

     5.4 Intentionally Omitted.

     5.5 Option Terms. Options granted under the Plan shall be subject to the
following requirements:

          (a) Option Price. The exercise price of each Incentive Option granted
under the Plan shall not be less than the greater of (i) the aggregate par
value of the underlying shares of Common Stock and (ii) 100% of the Fair Market
Value of the underlying shares of Common Stock on the date the Option is
granted. The exercise price of any Nonqualified Options granted under the Plan
shall be determined by the Administrator. The exercise price of an Option may
be subject to adjustment pursuant to Section 9.4 hereof.

          (b) Term of Option. The term during which an Option is exercisable shall
be that period determined by the Administrator as set forth in the applicable
Option Agreement, provided that no Option shall have a term that exceeds a
period of ten years from the date of its grant. Notwithstanding anything
herein to the contrary, no portion of an Option may be exercised after the end
of the term of such Option.

          (c) Nontransferability of Options. Any Option granted under the Plan
shall not be transferable by the Optionee other than by will or the laws of
descent and distribution, and each such Option shall be exercisable during the
Optionee’s lifetime only by him or her. No transfer of an Option by an
Optionee by will or by the laws of descent and distribution shall be effective
to bind the Company unless the Company shall have been furnished with written
notice thereof and a copy of the will and/or such other evidence as the
Administrator may determine necessary to establish the validity of the
transfer. Notwithstanding the foregoing, the Administrator, in its sole
discretion, may permit the transfer of a Nonqualified Option as follows: (i) by
gift to a member of the Optionee’s immediate family or (ii) by transfer by
instrument to a trust providing that the Option is to be passed to
beneficiaries upon death of the trustor (the recipient of the Nonqualified
Option under either or both of (i) or (ii) immediately above is referred to
herein as a “Permitted Transferee”). For purposes of this Section 5.5(c)
“immediate family” shall mean the Optionee’s spouse (but shall not include a
former spouse), child, stepchild, grandchild, child-in-law, parent, stepparent,
grandparent, parent-in-law, sibling, and sibling-in-law and shall include
adoptive relationships. A transfer of a Nonqualified Option permitted under
this Section hereof may be made only upon written notice to and approval
thereof by the Administrator. A Permitted Transferee may not further assign,
sell or transfer the transferred Option, in whole or in part, other than by
will or by operation of the laws of descent and distribution provided that the
Company shall have been furnished with written notice thereof and a copy of the
will and/or such other evidence as the Administrator may determine necessary to
establish the validity of the transfer. In addition, following the transfer,
the Nonqualified Option shall continue to be subject to the terms of this Plan
and the Option Agreement evidencing the Nonqualified Option; provided, however,
that where appropriate, the term “Optionee” shall be deemed to apply to the
Permitted Transferee. Upon the termination of Service of the Optionee, the
provisions of this Plan or the Option Agreement pursuant to which the Option
was granted will apply to the Permitted Transferee as if such Permitted
Transferee was substituted for the Optionee in such provisions.

          (d) Time and Amount Exercisable. Each Option shall be exercisable in
accordance with the provisions of the Option Agreement pursuant to which it is
granted in whole or in part, from time to time, subject to any limitations with
respect to the number of shares of Common Stock for which the Option may be
exercised at a particular time and to such other conditions as the
Administrator, in its discretion, may specify in the applicable Option
Agreement. Any portion of an Option which has become exercisable shall remain
exercisable until it is exercised in full or it terminates or expires pursuant
to the terms of the Plan or the applicable Option Agreement. The Administrator
may provide that an Option may be immediately exercisable and provide that upon
exercise of the Option, the Optionee shall receive Restricted Shares subject to
any remaining vesting restrictions on such Option.

          (e) Terms of Incentive Options Granted to Ten Percent Stockholders.
Notwithstanding the foregoing, no Incentive Option shall be granted to any
Employee who owns, directly or indirectly within the meaning of Section 424(d)
of the Code, stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any Subsidiary, unless at the time
the Incentive Option is granted, the exercise price of the Incentive Option is
at least 110% of the Fair Market Value of the Common Stock subject to such
Incentive Option and such Incentive Option, by its terms, is not exercisable
after the expiration of five years from

6

 

the date such Incentive Option is granted. For the purpose of
clarification the limitations contained in this Section 5.5(e) shall not apply
to the grant of Nonqualified Options.

          (f) Payment of Exercise Price and Delivery of Shares. The entire exercise
price of shares of Common Stock purchased upon exercise of Options shall, at
the time of purchase, be paid for in full (the “Exercise Price”). To the
extent that the right to purchase shares has become exercisable in accordance
with the terms of the Plan and the applicable Option Agreement, Options may be
exercised from time to time by written notice to the Administrator, stating the
full number of shares with respect to which the Option is being exercised and
the proposed time of delivery thereof (which shall be at least five (5) days
after the giving of such notice, unless an earlier date shall have been
mutually agreed upon by the Optionee (or other person entitled to exercise the
Option) and the Administrator), accompanied by payment to the Company of the
Exercise Price in full . Such payment shall be effected (i) by certified or
official bank check, (ii) if so permitted by the Administrator, by the delivery
of a number of shares of Common Stock owned by the Participant for at least six
months (or such other period as may be established from time to time by the
Administrator or required by generally accepted accounting principles) (the
“Requisite Holding Period”) duly endorsed for transfer to the Company (plus
cash if necessary) having a Fair Market Value equal to the amount of such
Exercise Price (iii) if so permitted by the Administrator, by payment with
financial assistance from the Company in accordance with the provisions of
Section 7.4 hereof or (iv) in the case of an Option, during any period for
which the Common Stock is publicly traded (i.e., the Common Stock is listed on
any established stock exchange or a national market system, including without
limitation the Nasdaq National Market, or if the Common Stock is quoted on the
Nasdaq System (but not on the Nasdaq National Market) or any similar system
whereby the stock is regularly quoted by a recognized securities dealer but
closing sale prices are not reported), by a copy of instructions to a broker
directing such broker to sell the Common Stock for which such Option is
exercised, and to remit to the Company the aggregate Exercise Price of such
Options (a “Cashless Exercise”) ; provided, however, a Cashless Exercise by a
Director or executive officer that involves or may involve a direct or indirect
extension of credit or arrangement of an extension of credit by the Company or
a Subsidiary in violation of Section 402(a) of the Sarbanes-Oxley Act (codified
as Section 13(k) of the Securities Exchange Act of 1934, 15 U.S.C. § 78m(k))
shall be prohibited. In addition to payment of the Exercise Price, the
Optionee shall be required to include payment of the amount of all federal,
state, local or other income, excise or employment taxes subject to withholding
(if any) by the Company or a Subsidiary as a result of the exercise of an
Option. The Optionee may pay all or a portion of the tax withholding by cash
or check payable to the Company, or, at the discretion of the Administrator,
upon such terms as the Administrator shall approve, by (i) certified or
official bank check (ii) Cashless Exercise, if the Stock is publicly traded and
the cashless exercise does not violate Section 402(a) of the Sarbanes-Oxley
Act; (iii) tendering Common Stock owned by the Optionee meeting the Requisite
Holding Period, duly endorsed for transfer to the Company, with a Fair Market
Value on the date of delivery equal to the withholding due for the number of
shares being exercised or purchased; (iv) in the case of an Option, by paying
all or a portion of the tax withholding for the number of shares being
purchased by withholding shares from any transfer or payment to the Optionee
(“Stock Withholding"); or (v) a combination of one or more of the foregoing
payment methods. Any shares issued pursuant to the exercise of an Option and
transferred by the Optionee to the Company for the purpose of satisfying any
withholding obligation shall not again be available for issuance under the
Plan. The Administrator will, as soon as reasonably possible, notify the
Optionee (or such Optionee’s representative) of the amount of employment tax
and other withholding tax that must be paid under federal, state and local law
due to the exercise of the Option. At the time of delivery, the Company shall,
without transfer or issue tax to the Optionee (or other person entitled to
exercise the Option), deliver to the Optionee (or to such other person) at the
principal office of the Company, or such other place as shall be mutually
agreed upon, a certificate or certificates for the Option Shares after the
Exercise Price and all federal, state, local or other income, excise or
employment taxes subject to withholding have been paid; provided, however, that
the time of delivery may be postponed by the Administrator for such period as
may be required for it with reasonable diligence to comply with any
requirements of law.

          (g) Rights of Optionee in Common Stock. Neither any Optionee nor the
legal representatives, heirs, legatees, distributees or Permitted Transferees
of any Optionee shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any Option Shares unless and until such
shares of Common Stock are issued to such Person and such Person has received a
certificate or certificates therefor. Upon the issuance and receipt of such
certificate or certificates, such Option holder shall have absolute ownership
of the shares of Common Stock evidenced thereby, including the right to vote
such shares, to the same extent as any other

7

 

owner of shares of Common Stock, and to receive dividends thereon,
subject, however, to the terms, conditions and restrictions of the Plan, the
Stockholders Agreement, and any other undertakings of such holder of Common
Stock.

     5.6 Restricted Shares.

          (a) General. The Administrator, in its sole discretion, may from time to
time authorize the grant of Restricted Shares to Employees, Directors or
Consultants. The Administrator may determine the basis on which the
restrictions imposed on the Restricted Shares may lapse. A certificate or
certificates representing the number of Restricted Shares granted shall be
registered in the name of the Participant. Until the expiration of the
Restriction Period or the lapse of restrictions in the manner provided in
paragraph 5.6(c) or Article VI, the certificate or certificates shall be held
by the Company for the account of the Participant, and the Participant shall
have beneficial ownership of the Restricted Shares, subject to the provisions
of paragraph 5.6(b).

          (b) Restrictions. Until the expiration of the Restriction Period or the
lapse of restrictions in the manner provided in paragraph 5.6(c) or Article VI,
Restricted Shares shall be subject to the following restrictions and any
additional restrictions that the Administrator, in its sole discretion, may
from time to time deem desirable in furtherance of the objectives of the Plan:

               (i) The Participant shall not be entitled to receive the certificate or
certificates representing the Restricted Shares;

               (ii) The Restricted Shares may not be sold, transferred, assigned,
pledged, conveyed, hypothecated, or otherwise disposed of;

               (iii) The Restricted Shares will be forfeited immediately upon termination
of Participant’s employment with the Company or one of its Subsidiaries, unless
otherwise expressly provided herein or in the Award Agreement pursuant to such
Restricted Shares were granted; and

               (iv) The holder of Restricted Shares shall not be entitled to receive
dividends thereon or to vote such Restricted Shares.

          (c) Waiver of Restrictions. The Administrator, in its sole discretion,
may waive any or all restrictions with respect to Restricted Shares.

          (d) Distribution of Restricted Shares. If a Participant to whom
Restricted Shares have been granted continues to provide Services to the
Company or a Subsidiary during the Restriction Period set forth in the Award
Agreement, and all other applicable provisions of this Plan have been complied
with, then upon the expiration of the Restriction Period all restrictions
applicable to the Restricted Shares shall lapse, and the certificate or
certificates representing the shares of Common Stock that were granted to the
Participant in the form of Restricted Shares shall be delivered to the
Participant.

          (e) Agreement. An award of Restricted Shares hereunder shall be evidenced
by an Award Agreement containing such terms and provisions as are approved by
the Administrator, but not inconsistent with the Plan. The Company shall
execute such Award Agreements upon instructions from the Administrator.

          (f) Section 83(b) Election. Within thirty days after date a Participant
is awarded Restricted Shares hereunder, the Participant may file a Code Section
83(b) election with the Internal Revenue Service with respect to all or a
portion of the Restricted Shares. The Code Section 83(b) election, if any,
shall be filed in compliance with the Treasury regulations promulgated pursuant
to Code Section 83(b) of the Code.

8

 

ARTICLE VI.

TERMINATION OF SERVICE; SALE OF THE COMPANY;

CORPORATE EVENT; DISSOLUTION OR LIQUIDATION

     6.1 Termination of Service for Cause. In the event that a Participant’s
Service with the Company or a Subsidiary shall terminate for Cause, immediately
upon such termination of Service all Options granted to the Participant
pursuant to this Plan shall terminate and the Company shall repurchase such
Restricted Shares at the cost paid by the Participant and the Company shall
cancel such Restricted Shares, and such Options and Restricted Shares shall be
of no further force or effect.

     6.2 Death or Disability.

          (a) In the event that a Participant’s Service to the Company or a
Subsidiary is terminated because of Participant’s death or Disability, the
Participant or his estate or legal representative, as applicable, shall have
the right to:

               (i) exercise any Options granted hereunder at any time within one year
after the date of termination of the Participant’s Service due to death or six
months after the date of termination of the Participant’s Service due to
Disability unless a longer period is otherwise required by the Code (but in no
event later than the date on which the Option otherwise would have expired by
its terms) only to the extent the Participant was entitled to exercise his
Option immediately prior to such date of termination; provided that, in
addition to the Options held by such Participant that have already vested as of
such date of termination, the lesser of (A) an additional twenty percent (20%)
of the number of shares of Common Stock covered by the Option and (B) the
remaining amount of unvested shares of Common Stock covered by the Option shall
become vested and exercisable on the date of termination due to death or
Disability; and

               (ii) receive certificates for (x) all Restricted Shares on which the
restrictions have lapsed in accordance with the Plan and the applicable Award
Agreement and for which certificates have not previously been delivered by the
Company as of the date of termination, and (y) the lesser of (A) an additional
twenty percent (20%) of the number of Restricted Shares covered by the
applicable Award Agreement measured as of the date of termination and (B) the
remaining Restricted Shares covered by the applicable Award Agreement on which
the restrictions have not lapsed as of the date of termination. The Company
shall as promptly as practical deliver the certificates required to be
delivered under this Section 6.2(a)(ii) to the Participant, his estate, or
legal representative, as applicable.

          (b) If a Participant dies during the three-month period after the
termination of his Service to the Company or a Subsidiary and at the time of
his death the Participant was entitled to exercise an Option theretofore
granted to him, the Option shall, unless the applicable Option Agreement
provides otherwise, expire one year after the date on which his position as an
Employee, Director or Consultant of the Company or a Subsidiary terminated, but
in no event later than the date on which the Option would have expired if the
Participant had lived. Until the expiration of such period the Option may be
exercised by the Participant’s executor or administrator or by any person or
persons who shall have acquired the Option directly from the Participant by
will or in accordance with the laws of descent and distribution, upon delivery
of written notice thereof, a copy of the will, or such other evidence as the
Administrator may determine necessary to establish the validity of the
Transfer, but only to the extent that the Participant was entitled to exercise
the Option at the date of his death and, to the extent the Option is not so
exercised, it shall expire at the end of such period.

     6.3 Other Terminations. In the event that a Participant’s Service to the
Company or a Subsidiary terminates other than for Cause or due to a
Participant’s death or Disability pursuant to Sections 6.1 or 6.2 above, as
applicable, the Participant shall have the right to (i) exercise any
unexercised Options at any time within three months after such termination to
the extent such Participant was entitled to exercise the same immediately prior
to such termination and (ii) receive certificates for all Restricted Shares on
which the restrictions have lapsed in accordance with this Plan and the
applicable Award Agreement and for which certificates have not previously been
delivered by the Company as of the date of termination. To the extent that
restrictions on any Restricted Shares have not lapsed as of such termination
date, the Company shall purchase any such Restricted Shares on which the

9

 

restrictions have not lapsed at the cost paid by the Participant and the
Company shall cancel such Restricted Shares as of such date and such Restricted
Shares shall be of no further force or effect. To the extent that any Option
is not exercised in accordance with this paragraph 6.3, such Option shall
expire at the end of the three-month period beginning on the termination date.

     6.4 Sale of the Company. With respect to Options, upon a Sale of the
Company, all outstanding Options shall become fully vested and exercisable
without regard to the limitations on exerciseability contained in Section 5.5
or the applicable Option Agreement immediately prior to such transaction. With
respect to Restricted Shares, upon a Sale of the Company, all restrictions
shall lapse automatically and the Administrator shall deliver certificates
representing such Restricted Shares to the Participant as promptly as practical
prior to the consummation of such Sale of the Company. Upon the Sale of the
Company, the Committee shall (i) cancel any or all outstanding Options under
the Plan in consideration for payment to the Participants thereof of an amount
equal to the portion of the consideration that would have been payable to such
Participants pursuant to such transaction giving effect to the accelerated
vesting and as if such Options had been fully vested immediately prior to such
transaction, less the aggregate exercise price that would have been payable
therefore and any required withholding tax and (ii) cause all Restricted Shares
to be purchased for an equivalent consideration payable in such transaction.
Payment of any amount payable pursuant to the preceding sentence may be made in
cash or, in the event that the consideration to be received in such transaction
includes securities or other property, in cash and/or publicly tradable
securities in the Committee’s discretion.

     6.5 Corporate Event. In the event of any corporate separation or
division, including, but not limited to, a split-up, a split-off or a spin-off
of the assets of the Company; a merger or consolidation in which the Company is
not the surviving entity; or a reverse merger in which the Company is the
surviving entity, but the shares of Company Common Stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise that does
not constitute a Sale of the Company (collectively, a “Corporate Event”), then,
the Company, to the extent permitted by applicable law, but otherwise in its
sole discretion may provide for: (i) the continuation of outstanding Awards by
the Company (if the Company is the surviving entity); (ii) the assumption of
the Plan and such outstanding Awards by the surviving entity or its parent; or
(iii) the substitution by the surviving entity or its parent of Awards with
substantially the same terms for such outstanding Awards.

     6.6 Dissolution or Liquidation of the Company. In the event of the
proposed dissolution or liquidation of the Company that does not constitute a
Sale of the Company, outstanding Awards granted hereunder shall terminate as of
a date to be fixed by the Administrator; provided that not less than fifteen
days’ prior written notice of the date so fixed shall be given to each
Participant, and each Participant shall have the right, (i) to exercise his or
her Options to the extent they are vested and exercisable and purchase or
receive the full number of shares of Common Stock not previously exercised
under such Options as applicable, if (and only if) such Options have not at the
time expired or been terminated and (ii) to receive certificates for all of
Participant’s Restricted Shares on which all restrictions have lapsed in
accordance with the Plan and the applicable Award Agreement and for which
certificates have not already been delivered prior to such termination date.
Failing such exercise, any unexercised portion of all Options granted hereunder
and all Restricted Shares on which restrictions have not lapsed as of the
termination date shall be forfeited and deemed cancelled as of the effective
date of such liquidation or dissolution. The Company shall deliver the
certificates required to be delivered by clause (ii) of the immediately
preceding sentence no later than 3 days prior to the termination date.

     6.7 Subject to Repurchase. All shares of Common Stock purchased by an
Optionee or his or her Permitted Transferee and all Restricted Shares granted
hereunder shall be subject to repurchase pursuant to Section 9.3 of this Plan.

     6.8 Alternative Provisions. The provisions of this Article VI shall apply
to all Options granted under the Plan except to the extent expressly provided
otherwise in any Option Agreement.

10

 

ARTICLE VII.

ADMINISTRATION OF PLAN

     7.1 Administration. The Plan shall be administered by the Board of
Directors or a Committee of the Board of Directors in accordance with the terms
of this Article VII (the “Administrator”). If the Common Stock of the Company
is Publicly Traded, the committee shall consist of not less than three
Directors appointed to the Committee by the Board, each of whom shall be
members of the Board and each of whom shall qualify as (i) Non-Employee
Directors (within the meaning of Item 404 of Regulation S-K of the Securities
Act of 1933, as amended) and (ii) “outside directors” within the meaning of
Treas. Reg. §1.162-27(e)(3) as may be appointed by the Board of the Company,
all of whom are members of the Board. Any such committee appointed by the
Board, or the Board itself during such periods as no such properly constituted
and appointed committee exists, is herein referred to as the “Committee.” A
majority of the Committee shall constitute a quorum thereof and the actions of
a majority of the Committee approved at a meeting at which a quorum is present,
or actions unanimously approved in writing by all members of the Committee,
shall be the actions of the Committee. Vacancies occurring on the Committee
shall be filled by the Board. The Board shall have full and final authority
(i) to interpret the Plan and each of the Option Agreements and other Award
Agreements evidencing Restricted Shares, (ii) to prescribe, amend and rescind
rules and regulations, if any, relating to the Plan, (iii) to make all
determinations necessary or advisable for the administration of the Plan, (iv)
to correct any defect, supply any omission and reconcile any inconsistency in
the Plan and any Option Agreements or other Award Agreements evidencing
Restricted Shares and (v) to amend any outstanding Option Agreements and other
Award Agreements evidencing Restricted Shares (collectively “Rights”) for the
purpose of modifying the time or manner of vesting, the Purchase Price or
Exercise Price, as the case may be, subject to applicable legal restrictions;
provided, however, that if any such amendment impairs a Participant’s Rights or
increases a Participant’s obligations under such Participant’s Right, such
amendment shall also be subject to the Participant’s consent. For the purposes
of clarity, a purchase of a Participant’s Rights in accordance with this Plan
or the applicable Award in which the Participant receives consideration for
such Right shall in no event be deemed an impairment of the Participant’s
Rights that requires consent from such Participant. The determination by the
Board in all matters referred to herein shall be conclusive and binding for all
purposes and upon all persons, including, without limitation, the Company, the
stockholders of the Company, the Administrator, and each of the members
thereof, and the Optionees and the Participants and their respective successors
in interest. The Board may delegate such authority to the Committee (if the
Board is not the Administrator) with respect to this Plan as it deems to be in
the Company’s best interests in its sole discretion, pursuant to a resolution
of the Board granting such authority. However, the Board will retain ultimate
authority in all matters related to this Plan or any Awards granted hereunder.

     7.2 Liability. No member of the Board or any Committee shall be liable
for anything done or omitted to be done by him or by any other member of the
Board or any Committee in connection with the Plan, except for his own willful
misconduct or gross negligence (unless the Company’s Certificate of
Incorporation or Bylaws, or any indemnification agreement between the Company
and such person, in each case in accordance with applicable law, provides
otherwise). The Board and any Committee shall have power to engage outside
consultants, auditors or other professional help to assist in the fulfillment
of the duties of the Board or any Committee under the Plan at the Company’s
expense.

     7.3 Determinations. In making its determinations concerning the
Participants who shall receive Options and awards of Restricted Shares, as well
as the number of shares of Common Stock to be covered thereby and the time or
times at which they shall be granted, the Administrator shall take into account
the nature of the Service rendered by such Participants, their past, present
and potential contribution to the Company’s success and such factors as the
Administrator may deem relevant. The Administrator shall determine the form of
Award Agreements evidencing Awards under the Plan and the terms and conditions
to be included therein; provided such terms and conditions are not inconsistent
with the terms of the Plan, the Company’s Certificate of Incorporation or
Bylaws. The Administrator may waive any provisions of any Award Agreement,
provided such waiver is not inconsistent with the terms of the Plan, the
Company’s Certificate of Incorporation or Bylaws. The determinations of the
Administrator under the Plan need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, Options or
Restricted Shares under the Plan, whether or not such persons are similarly
situated. All powers exercised by the Administrator hereunder shall be subject
to the ultimate authority of the Board.

11

 

     7.4 Financial Assistance. Subject to any prohibitions, restrictions or
other requirements contained in the Securities Laws and any other applicable
law, and prior to the Company becoming a registrant or an issuer under the
Securities Laws, the Company is vested with authority under this Plan to assist
any Participant to whom an Option is granted hereunder in the payment of the
Exercise Price payable on exercise of that Option by lending the amount of such
Exercise Price to such Participant pursuant to a full recourse promissory note
on such terms and at such rates of interest and upon such security (or
unsecured) as shall have been authorized by or under authority of the
Administrator. Notwithstanding the foregoing, in the event there is a stated
par value of the Common Stock and applicable law requires, the par value of the
Common Stock, if newly issued, shall be paid in cash or cash equivalents. The
interest rate payable under the terms of the promissory note shall not be less
than the minimum rate (if any) required to avoid the imputation of additional
interest under the Code. Unless the Board determines otherwise, shares of
Common Stock having a Fair Market Value at least equal to the principal amount
of the loan shall be pledged by the holder to the Company as security for
payment of the unpaid balance of the loan and such pledge shall be evidenced by
a pledge agreement, the terms of which shall be determined by the Board, in its
discretion; provided, however, that each loan shall comply with all applicable
laws, regulations and rules of the Board of Governors of the Federal Reserve
System and any other governmental agency having jurisdiction. Notwithstanding
the foregoing, all financial assistance provided by the Company to a
Participant pursuant to this Section 7.4 shall be repaid in full no later than
immediately prior to the Company becoming a registrant or an issuer under the
Securities Laws.

     7.5 Withholding. The Administrator may establish such rules and
procedures as it considers desirable in order to satisfy any obligation of the
Company or its Subsidiaries to withhold Federal, state or local income tax or
other employment taxes with respect to any Awards granted, exercised or
surrendered under the Plan.

ARTICLE VIII.

AMENDMENT AND TERMINATION OF PLAN

     8.1 Amendment of Plan. The Plan may be amended at any time and from time
to time by the Board, but no amendment which (i) increases the aggregate number
of shares of Common Stock which may be issued pursuant to Awards granted under
the Plan or (ii) changes the class of individuals eligible to be granted
Awards, shall be effective unless and until the same is approved by the
Requisite Holders or the written consent of such Requisite Holders.
Notwithstanding the foregoing and subject to the provisions of Section 8.4, no
amendment to the Plan that has a material, adverse affect on a Participant with
regard to outstanding Awards shall be effective, without the consent of such
Participant.

     8.2 Other Award Provisions. Options and Restricted Share awards granted
under this Plan shall contain such other terms and provisions which are not
inconsistent with this Plan, the Stockholders Agreement or other undertakings
of the Participant in his/her capacity as such or as a holder of Common Stock
or Restricted Shares, as the Board or Committee may authorize, including but
not limited to (a) vesting schedules governing the exercisability of such
Options and Restricted Shares, (b) provisions for acceleration of such vesting
schedules in certain events, (c) arrangements whereby the Company may fulfill
any tax withholding obligations it may have in connection with the exercise of
such Options and Restricted Shares, (d) provisions imposing restrictions upon
the transferability of Common Stock acquired on exercise of such Options or
Restricted Shares, whether required by this Plan, Securities Laws or imposed
for other reasons, and (e) provisions regarding the termination or survival of
any such Options or Restricted Shares, upon the Participant’s death,
Disability, retirement or other termination of Service and the extent, if any,
to which any such Options may be exercised or the restrictions on any
Restricted Shares may be caused to lapse after such event. Incentive Options
shall contain the terms and provisions required of them under the Code.

     8.3 Termination. The Board may, at any time, terminate the Plan as of any
date specified in a resolution adopted by the Board. If not earlier
terminated, the Plan shall terminate on [   ], 2014. No Options or
Restricted Shares may be granted or awarded after the Plan has terminated, but
the Administrator shall continue to supervise the administration of Options or
Restricted Shares previously granted or awarded.

12

 

     8.4 Tax Status of Options. To the extent applicable, the Plan is intended
to permit the issuance of Incentive Options to Employees in accordance with the
provisions of Section 422 of the Code. Subject to the provision of Sections
7.4 and 8.1 of the Plan, the Plan and Option Agreements may be modified or
amended at any time, both prospectively and retroactively, and in a manner that
may affect Options previously granted, if such amendment or modification is
necessary for the Plan and Options granted hereunder to qualify under said
provision of the Code. The Option Agreement shall specify whether the Option
is an Incentive Option or Nonqualified Option. To the extent that any portion
of the Options granted under the Plan does not meet the requirements of Section
422 of the Code or the Option is not specified as an Incentive Option in the
Option Agreement, such Options or portion thereof shall be deemed to be
Nonqualified Options. Nothing in the Plan shall be deemed to prohibit the
issuance of Nonqualified Options to Employees, Directors and Consultants under
the Plan.

ARTICLE IX.

MISCELLANEOUS PROVISIONS

     9.1 Restrictions Upon Grant of Awards. If the listing upon any stock
exchange or the registration or qualification under any federal or state law of
any shares of Common Stock to be issued pursuant to an Award granted under the
Plan (whether to permit the grant of Awards, the issuance of shares of Common
Stock to any Permitted Transferee or the resale or other disposition of any
such shares of Common Stock by or on behalf of the Participants receiving such
shares) should be or become required or desirable for the Company, the Board in
its sole discretion may determine that delivery of the certificates for such
shares of Common Stock shall not be made until such listing, registration or
qualification shall have been completed. The Company agrees that it will use
its reasonable efforts to effect any such listing, registration or
qualification; provided, however, that the Company shall not be required to use
its reasonable efforts to effect such registration under the Securities Act of
1933 other than on Form S-8 or such other forms as may be in effect from time
to time calling for information comparable to that presently required to be
furnished under Form S-8. The previous sentence does not grant a Participant
registration rights with respect to Common Stock. In no event shall the
Company be required to register shares of Common Stock for issuance to a
Permitted Transferee and any requested exercise of Options by a Permitted
Transferee shall be subject to any applicable prior registration of the shares
of Common Stock issuable upon such exercise.

     9.2 Restrictions Upon Resale of Unregistered Stock. Each Participant
shall, if the Company deems it advisable, represent and agree in writing (i)
that any shares of Common Stock acquired by such Participant pursuant to this
Plan will not be sold except pursuant to an effective registration statement
under the Securities Act of 1933 or pursuant to an exemption from registration
under said Act, (ii) that such Participant is acquiring such shares of Common
Stock for his or her own account and not with a view to the distribution
thereof and (iii) to such other customary matters as the Company may request.
In such case, no shares of Common Stock shall be issued to such Participant
unless such Participant provides such representations and agreements and the
Company is reasonably satisfied that such representations and agreements are
correct.

     9.3 Repurchase by the Company and/or its Designee; Restriction on
Transfer; Right of First Refusal.

          (a) At any time before the Common Stock becomes Publicly Traded, the
Company and its Designee shall have the right (the “Repurchase Right”), to
repurchase any shares of Common Stock that were acquired pursuant to the
exercise of an Option under this Plan (“Option Shares”) or any Restricted
Shares (or securities into which such Option Shares or Restricted Shares have
been converted) at the Repurchase Price (as hereinafter defined) upon
termination of a Participant’s Service with the Company or its Subsidiaries.
To the extent that a Participant holds exercisable Options at the time of such
termination of Service, the Company or its Designee, as applicable, may elect
to purchase such exercisable Options in the same manner as the Option Shares at
a price equal to the Repurchase Price less the Exercise Price of such
exercisable Options. Notwithstanding the foregoing, the Company’s and its
Designee’s right to repurchase shares of Option Shares and the vested portion
of Restricted Shares under this Section 9.3 shall lapse in the event the
Company’s Common Stock becomes Publicly Traded.

          (b) The Repurchase Price (A) to be paid by the Company or a Designee which
is a Subsidiary shall be defined as (i) if the Participant’s Service is
terminated for Cause, the price paid by the Participant for the Option Shares
or Restricted Shares, if any, or (ii) if the Participant’s Service is
terminated for any reason

13

 

other than Cause, the Fair Market Value of the Common Stock underlying the
Option Shares or (iii) if the Participant’s Service is terminated for any
reason other than Cause, the Fair Market Value of the portion of Restricted
Shares for which the restrictions have lapsed at the time of exercise of the
Repurchase Right and the price paid by the Participant for the portion of the
Restricted Shares for which the restrictions have not lapsed at the time of the
exercise of the Repurchase Right or (B) to be paid by a Designee which is not a
Subsidiary shall be defined as the Fair Market Value of the Common Stock
underlying the Option Shares or the Restricted Stock as applicable if the
Participants Service is terminated for any reason.

          (c) To the extent that the Company or its Designee has the right to
repurchase Option Shares or Restricted Shares, the Company or its Designee may
exercise such right by delivery of written notice to the Participant (or such
other holder of Option Shares or Restricted Shares) stating the full number of
Option Shares or Restricted Shares that the Company or its Designee has elected
to repurchase, the Repurchase Price per Option Share or Restricted Share, and
the time of repurchase (which time shall not be earlier than 5 days from the
date of notice). The Repurchase Right may be exercised until the later of (i)
fifteen (15) days after the expiration of the Option, (ii) two hundred (200)
days after (A) the latest purchase of Option Shares by the Participant or (B)
the latest receipt by Participant of certificates representing Restricted
Shares on which the restrictions have lapsed and for which certificates have
not been delivered by the Company and (iii) sixty (60) days after the date of
Participant’s termination of Service to the Company or a Subsidiary. At the
time of repurchase, the Participant shall deliver the certificate or
certificates representing his Option Shares or Restricted Shares to the Company
or its Designee, as applicable, at its offices and shall execute any stock
powers or other instruments as may be necessary to transfer full ownership of
the Option Shares or Restricted Shares to the Company or its Designee. At the
time of repurchase, the Company or its Designee shall issue their own check
within ten (10) days to the Participant in an amount equal to the aggregate
Repurchase Price for the Option Shares or Restricted Shares for which the
Company or its Designee has exercised its right to repurchase, less any amounts
required to be withheld under applicable laws. In the event of Participant’s
death or Disability, the Company’s or its Designee’s right to purchase and the
manner of purchase shall apply with regard to the Participant’s estate,
beneficiary, administrator or personal representative.

          (d) If the Company’s Common Stock is not publicly traded, then during the
period a Participant is employed by the Company or a Subsidiary, and for six
months after such Participant’s Service to the Company or a Subsidiary is
terminated, such Participant shall not, except as provided in this Plan with
respect to a Sale of the Company or a Corporate Event, transfer, pledge,
mortgage or otherwise encumber or make any disposition of Option Shares or
Restricted Shares whatsoever, whether voluntary or involuntary without the
Company’s prior written consent (collectively, a “Disposition”), other than to
the Company or a Designee. Any purported or attempted Disposition of shares of
Common Stock made in violation of this Section 9.3(d) shall be void and of no
force and effect.

          (e) If (i) the Company or a Designee does not exercise its Repurchase
Right as described in this Section 9.3, (ii) the Participant is not otherwise
prohibited from making a Disposition of shares of Common Stock pursuant to this
Plan and (iii) the Company’s Common Stock is not publicly traded, then if a
Participant receives a written offer from any bona fide third party
purchaser(s) to acquire some or all of the Option Shares of the Participant,
other than Option Shares subject to the Stockholders Agreement (the “Offered
Shares”), and the Participant intends to accept such offer, the Participant
shall first make an irrevocable offer (the “Offer”) to sell the Offered Shares
to the Company. The Offer shall be written and either actually delivered or
sent by certified or registered mail, return receipt requested, to the Company
and shall identify the Offered Shares, the name and address of the prospective
purchaser and the terms of the Offer by said prospective purchaser to purchase
the Offered Shares. The date of the Offer shall be the date on which a notice
containing the Offer has been actually delivered or sent to the Company. The
Company or a Designee shall have the irrevocable right and option (the “Right
of First Refusal”), for 60 days following the date such notice has been
actually delivered or sent, to purchase the Offered Shares at the price
stipulated in the Offer and, in the sole discretion of the Company or the
Designee, either for cash or on the same credit terms as those contained in the
Offer. If the stated price set forth in the Offer includes any property other
than cash, such stated price shall be deemed to be the amount of any cash
included in the stated price plus the value, as determined by the Company, of
such other property included in such price. The Company or the Designee shall
exercise its Right of First Refusal to purchase the Offered Shares hereunder by
actual delivery to the Participant of a written notice of intent to purchase
such Offered Shares or by sending such notice by certified or registered mail,
return receipt requested, properly stamped and addressed to the address of the

14

 

Participant. The sale and purchase shall be closed at the offices of the
Company or the Designee or its counsel on such date within 30 days thereafter
as the Company or the Designee shall determine. Upon the exercise of the Right
of First Refusal, the Company or the Designee shall be obligated at the closing
to make payment as provided above and the Participant shall be obligated at the
closing to duly endorse and deliver to the Company or the Designee the
certificate(s) evidencing the Offered Shares. Certificates representing the
Offered Shares purchased shall be delivered by the Participant at the closing
against payment. Each such certificate shall be endorsed in blank or have
attached a duly executed stock power, in each case in proper form for transfer.
By delivering the certificates at the closing, the Participant shall be deemed
to represent (and so shall certify if requested by the Company or the Designee)
that the sale of the Common Stock has been duly authorized, the certificates
evidencing the Common Stock have been duly and validly endorsed and delivered
for transfer to the purchaser and that the Company will receive good title to
such shares, free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders’ agreements, voting trusts, and preemptive rights.

     9.4 Adjustments. The number of shares of Common Stock authorized for
issuance under the Plan, as well as the price to be paid and the number of
shares issued upon exercise of outstanding Options, shall be adjusted by the
Company to reflect any stock split, reverse stock split, stock dividend,
recapitalization, combination, reclassification, dissolution or liquidation of
the Company, any corporate separation or division (including, but not limited
to, a split-up, a split-off or a spin-off), a merger or consolidation, a
reverse merger or similar transaction which does not constitute a Sale of the
Company. All adjustments permitted by this Plan shall be made by the
Administrator, whose determination as to what adjustments shall be made and the
extent thereof shall be final, binding and conclusive for all purposes of the
Plan and of each Option Agreement or other Award Agreement; provided, however,
that each Incentive Option granted pursuant to the Plan shall not be adjusted
in a manner that causes such Incentive Option to fail to continue to qualify as
an Incentive Option without the prior consent of the Optionee thereof.

     9.5 Use of Proceeds. The proceeds from the sale of Common Stock pursuant
to Options and Restricted Shares granted under the Plan shall constitute
general funds of the Company and may be used for such corporate purposes as the
Company may determine.

     9.6 Substitution of Options.

          (a) The Administrator may, with the consent of the holder of any Option
granted under the Plan, cancel such Option and grant a new Option in
substitution therefor, provided that the new Option as so substituted shall
satisfy all of the requirements of the Plan as of the date such new Option is
granted.

          (b) Options may be granted under the Plan in substitution for options held
by individuals who are employees, directors or consultants of another
corporation and who become Employees, Directors or Consultants of the Company
or any Subsidiary of the Company eligible to receive Options pursuant to the
Plan as a result of a merger, consolidation, reorganization or similar event.
The terms and conditions of any Options so granted may vary from those set
forth in the Plan to the extent deemed appropriate by the Administrator in
order to conform the provisions of Options granted pursuant to the Plan to the
provisions of the options in substitution for which they are granted.

     9.7 Restrictive Legends.

          (a) Certificates representing shares of Common Stock delivered pursuant to
the exercise of Options and certificates representing Restricted Shares shall
bear an appropriate legend referring to the terms, conditions and restrictions
described in this Plan. Any attempt to dispose of any such shares of Common
Stock or Restricted Shares in contravention of the terms, conditions and
restrictions described in the Plan shall be ineffective, null and void, and the
Company shall not effect any such transfer on its books.

          (b) Any shares of Common Stock of the Company received by an Optionee (or
his or her heirs, legatees, distributees or legal representative) or any
Restricted Shares received as a stock dividend on, or as a

15

 

result of a stock split, combination, exchange of shares, reorganization,
merger, consolidation or otherwise with respect to, shares of Common Stock
received pursuant to the exercise of Options or the grant of Restricted Shares,
shall be subject to the terms and conditions of the Plan and bear the same
legend as the shares received pursuant to the exercise of Options or the grant
of Restricted Shares.

     9.8 Market Stand-Off. Each Option Agreement and Restricted Stock Award
shall provide that in connection with any underwritten public offering by the
Company of its equity securities pursuant to an effective registration
statement filed under the Securities Act of 1933, as amended, including the
Company’s initial public offering, the Participant shall agree not to sell,
make any short sale of, loan, hypothecate, pledge, grant any option for the
repurchase of, transfer the economic consequences of ownership or otherwise
dispose or transfer for value or otherwise agree to engage in any of the
foregoing transactions with respect to any Common Stock acquired pursuant to
this Plan without the prior written consent of the Company or its underwriters,
for such period of time from and after the effective date of such registration
statement as may be requested by the Company or such underwriters (the “Market
Stand-Off”). In order to enforce the Market Stand-Off, the Company may impose
stop-transfer instructions with respect to the Common Stock acquired under this
Plan until the end of the applicable stand-off period. If there is any change
in the number of outstanding shares of Common Stock by reason of a stock split,
reverse stock split, stock dividend, recapitalization, combination,
reclassification, dissolution or liquidation of the Company, any corporate
separation or division (including, but not limited to, a split-up, a split-off
or a spin-off), a merger or consolidation; a reverse merger or similar
transaction, then any new, substituted or additional securities which are by
reason of such transaction distributed with respect to any Common Stock subject
to the Market Stand-Off, or into which such Common Stock thereby become
convertible, shall immediately be subject to the Market Stand-Off.

     9.9 Notices. Any notice required or permitted hereunder shall be
sufficiently given only if delivered personally, sent by registered or
certified mail, return receipt requested, postage prepaid, addressed to the
Company at its principal place of business or sent by a nationally recognized
overnight delivery service, and to the Participant at the address on file with
the Company at the time of grant hereunder, or to such other address as either
party may hereafter designate in writing by notice similarly given by one party
to the other.

16

 

     IN WITNESS WHEREOF, upon authorization of the Board of Directors and the
stockholders of the Company entitled to vote, the undersigned has caused the
Cinemark, Inc. 2004 Long Term Incentive Plan to be executed effective on the
30th day of September, 2004.

	 	 	 	 	 	 	 
	 	 	CINEMARK, INC.
	 
	 	 	 	 	 	 
	

	 	By:	 	/s/ Lee Roy Mitchell	 	 
	

	 	 	 	
	 	 
	

	 	Name: Lee Roy Mitchell	 	 
	

	 	Title:  Chairman and Chief Executive Officer	 	 

 

ADDENDUM TO CINEMARK, INC. 2004 LONG TERM INCENTIVE PLAN FOR GRANTS MADE TO

CALIFORNIA RESIDENTS

     Securities sold and options granted in California to employees, directors,
managers or consultants of Cinemark, Inc. or any of its Affiliates shall be
subject to the following additional provisions, which shall be part of the
Cinemark, Inc. 2004 Long Term Incentive Plan.

ARTICLE I. EXERCISE AND PURCHASE PRICE

	 	 	 
	Section 1.1

	 	Exercise Price Restrictions Applicable to Non-Qualified Stock Options.

	 	(a)	 	In the case of Non-Qualified Stock Options, the
Exercise Price shall be determined in the sole discretion of
the Administrator; provided, however, that the Exercise Price
shall be no less than 85% of the Fair Market Value of the shares of Stock on the Date of Grant of the Non-Qualified
Stock Option.

	 	(b)	 	A Ten Percent Shareholder shall not be eligible
for designation as an Optionee, unless (i) the Exercise Price
of a Non-Qualified Stock Option is at least 110% of the Fair
Market Value of a Share on the Date of Grant.

	 	 	 
	Section 1.2

	 	Purchase Price Restrictions Applicable to Restricted Shares.

	 	(a)	 	Each Award Agreement for Restricted Shares shall
state the price at which the Stock subject to such Restricted
Share Agreement may be purchased (the “Purchase Price”),
which, with respect to Restricted Shares, shall be determined
in the sole discretion of the Administrator; provided,
however, that the Purchase Price shall be no less than 85% of
the Fair Market Value of the shares of Common Stock on the
Award date of the Restricted Stock subject to the Award
Agreement.

	 	(b)	 	A Ten Percent Shareholder shall not be eligible
for An Award Agreement for Restricted Shares unless the
Purchase Price (if any) is at least 100% of the Fair Market
Value of a share of Common Stock.

	 	(c)	 	At the discretion of the Administrator,
Restricted Shares may be awarded under the Plan in
consideration of services rendered to the Company, a parent or
a Subsidiary prior to the Award.

	 	 	 
	Section 1.3

	 	Non-Applicability. The Exercise Price restrictions applicable
to Non-Qualified Stock Options required by Section 1.1 hereof
and the Purchase Price restrictions applicable to Restricted
Shares required by Section 1.2 hereof shall be inoperative if
(a) the shares of Stock to be issued upon payment of the
Purchase Price have been registered under a then currently
effective registration statement under applicable federal
securities laws and the Company (i) is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange
Act or becomes an investment company registered or required to
be registered under the Investment Company Act of 1940, and
(ii) the Company’s Stock is listed or approved for listing
upon notice of issuance on a national securities exchange or
on the National Market System of the Nasdaq Stock Market (or
any successor to that entity), if the exchange or Nasdaq Stock
Market (or its successor) has been certified by rule or order
of the California Commissioner of Corporations; or (b) a
determination is made by counsel for the Company that such
Exercise Price restrictions are not required in the
circumstances under applicable federal or state securities
laws.

ARTICLE II. EXERCISABILITY AND VESTING

	 	 	 
	Section 2.1

	 	Options. Each Stock Option Agreement shall specify the date
when all or any installment of the Option becomes exercisable.
Unless a determination is made by counsel for the Company
that Section 25102(o) of the California Corporations Code no
longer requires and another exemption from qualification under
the California Corporations Code applies which does not
require, an Option granted to an Optionee who is not an
officer of the Company, a Director or a Consultant

 

 

	 	 	 	shall become exercisable at least as rapidly as 20% per year over the five-year
period commencing on the Date of Grant. Subject to the preceding sentence, the
exercise provisions of any Stock Option Agreement shall be determined by the
Administrator, in its sole discretion.

	 	 	 
	Section 2.2

	 	Restricted Shares. The Restricted Shares will be
forfeited immediately upon termination of
Participant’s employment with the Company or one of
its Subsidiaries, unless otherwise expressly provided
herein or in the Award Agreement pursuant to such
Restricted Shares were granted. Unless a
determination is made by counsel for the Company that
Section 25102(o) of the California Corporations Code
no longer requires and another exemption from
qualification under the California Corporations Code
applies which does not require, an Award of
Restricted Shares granted to an employee who is not
an officer of the Company, a Director, a manager or a
Consultant shall provide that the risk of forfeiture
and any right to repurchase unvested stock at less
than Fair Market Value shall lapse at a rate of at
least 20% per year over five years from the date the
Award Agreement for Restricted Shares is granted.
Subject to the preceding sentence, the vesting and
forfeiture provisions of any Restricted Share Award
Agreement shall be determined by the Administrator,
in its sole discretion.

ARTICLE III. TERM

	 	 	 
	Section 3.1

	 	Term of Option. Unless Optionee’s Service with the
Company, a parent, or Subsidiaries is terminated for
Cause, in no event may the right to exercise any
Option in the event of termination of Service (to the
extent that the Optionee is entitled to exercise on
the date of termination of Service) be (i) less than
six months from the date of termination if
termination was caused by death or Disability and
(ii) less than 30 days from the date of termination
if termination was caused by other than death,
Disability or Cause.
	 
	 	 
	Section 3.2

	 	Limits on Post Termination Exercise. The provisions
of Section 3.1 may not (i) allow any Option to be
exercised after the expiration of ten years after the
date the Option is granted or (ii) preclude a Ten
Percent Shareholder from receiving an ISO satisfying
the requirements of Section 422(c)(5) of the Code,
including without limitation, that such ISO by its
terms not be exercisable after the expiration of five
years from the Date of Grant.

ARTICLE IV. REPURCHASE RIGHTS

	 	 	 
	Section 4.1

	 	Lapse of Repurchase Rights. For purposes of the
Repurchase Right under Section 9.3 of the Plan upon
termination of Service, the Repurchase Price shall be
presumptively reasonable if:

	 	(a)	 	In the case of vested Common Stock, it is not
less than the Fair Market Value of the Common Stock to be
repurchased on the date of termination of Service, and the
Repurchase Right must be exercised for cash or cancellation of
purchase money indebtedness for the Common Stock within 90
days of termination of Service (or in the case of Common Stock
issued upon exercise of Options after the date of termination,
within 90 days after the date of exercise), and the Repurchase
Right terminates when the Company’s securities become publicly
traded.

	 	(b)	 	In the case of unvested Common Stock, it is at
the lesser of the original purchase price or Fair Market
Value, provided the Repurchase Right at the original purchase
price lapses at the rate of at least 20% per year over five
years from the date the Option Agreement or Award Agreement
for Restricted Shares is granted (without respect to the date
the Option or Award Agreement was exercised or became
exercisable) and the Repurchase Right must be exercised for
cash or cancellation of purchase money indebtedness for the
Common Stock within 90 days of termination of Service (or in
the case of Common Stock issued upon exercise of Options after
the date of termination, within 90 days after the date of
exercise).

	 	 	 
	Section 4.2

	 	Additional Restrictions Permitted. In addition to the
restrictions set forth in clauses (a) and (b) of Section 4.1,
the Common Stock held by an officer, a Director, a manager or
a Consultant of the Company or an Affiliate may be subject to
additional or greater restrictions.

 

 

ARTICLE V. ADDITIONAL COMPLIANCE PROVISIONS

	 	 	 
	Section 5.1

	 	Voting Rights. Notwithstanding anything to the contrary in
the Plan, Common Stock issued pursuant to the Plan shall carry
equal voting rights on all matters where such vote is required
by applicable law.
	 
	 	 
	Section 5.2

	 	Financial Information. To the extent necessary to comply with
California law, the Company each year shall furnish to
Participants its balance sheet and income statement, unless
such Participants are limited to key Employees whose duties
with the Company assure them access to equivalent information.

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