Document:

Exhibit 4.2

 

 

CORPORATE OFFICE PROPERTIES, L.P.

AS ISSUER

 

CORPORATE OFFICE PROPERTIES TRUST

AS GUARANTOR

 

AND

 

U.S. BANK NATIONAL ASSOCIATION

AS TRUSTEE

 

 

FIRST SUPPLEMENTAL INDENTURE
 DATED AS OF SEPTEMBER 16, 2013

 

 

$250,000,000 5.25% SENIOR NOTES DUE 2024

 

 

SUPPLEMENT TO INDENTURE

DATED AS OF SEPTEMBER 16, 2013, AMONG

CORPORATE OFFICE PROPERTIES, L.P. (AS ISSUER),

CORPORATE OFFICE PROPERTIES TRUST (AS GUARANTOR) AND

U.S. BANK NATIONAL ASSOCIATION (AS TRUSTEE)

 

 

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FIRST SUPPLEMENTAL INDENTURE, dated as of September 16, 2013 (this “First Supplemental Indenture”), between CORPORATE OFFICE PROPERTIES, L.P., a Delaware limited partnership (the “Operating Partnership”), having its principal executive office located at 6711 Columbia Gateway Drive, Suite 300, Columbia, Maryland 21046; CORPORATE OFFICE PROPERTIES TRUST, a Maryland real estate investment trust (the “Guarantor”) having its principal executive office located at 6711 Columbia Gateway Drive, Suite 300, Columbia, Maryland 21046; and U.S. BANK NATIONAL ASSOCIATION (the “Trustee”), supplements that certain Indenture, dated as of September 16, 2013, by and among the Operating Partnership, the Guarantor and the Trustee (the “Original Indenture,” and together with this First Supplemental Indenture, the “Indenture”).

 

RECITALS

 

WHEREAS, the Operating Partnership and the Guarantor have duly authorized the execution and delivery of the Original Indenture to the Trustee to issue from time to time for its lawful purposes debt securities evidencing the Operating Partnership’s senior unsecured debentures, notes or other evidences of indebtedness.

 

WHEREAS, Section 301 of the Original Indenture provides that by means of a supplemental indenture the Operating Partnership may create one or more series of the Operating Partnership’s debt securities and establish the form, terms and provisions thereof.

 

WHEREAS, the Operating Partnership and the Guarantor intend by this First Supplemental Indenture to (i) create a series of the Operating Partnership’s debt securities, in an aggregate principal amount equal to $250,000,000, entitled 5.25% Senior Notes due 2024 (the “Notes”) and (ii) establish the form and the terms and provisions of the Notes.

 

WHEREAS, the Board of Trustees of the Guarantor, as the sole general partner of the Operating Partnership, has approved the creation of the Notes and the form, terms and provisions thereof.

 

WHEREAS, the consent of Holders to the execution and delivery of this First Supplemental Indenture is not required, and all other actions required to be taken under the Original Indenture with respect to this First Supplemental Indenture have been taken.

 

NOW, THEREFORE IT IS AGREED:

 

ARTICLE ONE

 

DEFINITIONS, CREATION, FORM AND TERMS AND CONDITIONS OF THE DEBT SECURITIES

 

Section 1.1            Definitions.  Capitalized terms used but not otherwise defined in this First Supplemental Indenture shall have the meanings ascribed to them in the Original Indenture.  In addition, the following terms shall have the following meanings to be equally applicable to both the singular and the plural forms of the terms set forth below:

 

“Acquired Debt” means Debt of a Person (1) existing at the time such Person is merged or consolidated with or into the Operating Partnership or any of its Subsidiaries or becomes a Subsidiary of the Operating Partnership or (2) assumed by the Operating Partnership or any of its Subsidiaries in connection with the acquisition of assets from such Person. Acquired Debt shall be deemed to be incurred on the date the acquired Person is merged or consolidated with or into the Operating Partnership or any of its Subsidiaries or becomes a Subsidiary of the Operating Partnership or the date of the related acquisition, as the case may be.

 

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“Adjusted Treasury Rate” means, with respect to any Redemption Date, the rate per year equal to the semi-annual equivalent yield to maturity (computed on the third Business Day immediately preceding the Redemption Date) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

 

“Annual Debt Service Charge” means, for any period, the interest expense of the Operating Partnership and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

 

“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having an actual or interpolated maturity comparable to the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Notes.

 

“Comparable Treasury Price” means, with respect to any Redemption Date, (1) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations.

 

“Consolidated Income Available for Debt Service” means, for any period, Consolidated Net Income of the Operating Partnership and its Subsidiaries for such period, plus amounts which have been deducted and minus amounts which have been added for, without duplication: (1) interest expense on Debt, (2) provision for taxes based on income, (3) amortization of debt discount, premium and deferred financing costs, (4) impairments losses and gains on sales or other dispositions of properties and other investments, (5) real estate related depreciation and amortization, (6) the effect of any non-recurring non-cash items, (7) amortization of deferred charges, (8) gains or losses on early extinguishment of debt, and (9) acquisition expenses, all determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Net Income” means, for any period, the amount of net income (or loss) of the Operating Partnership and its Subsidiaries for such period, excluding, without duplication: (1) extraordinary items, and (2) the portion of net income (but not losses) of the Operating Partnership and its Subsidiaries allocable to minority interests in unconsolidated persons to the extent that cash dividends or distributions have not actually been received by the Operating Partnership or one of its Subsidiaries, all determined on a consolidated basis in accordance with GAAP.

 

“Debt” means, with respect to any person, any indebtedness of such person in respect of (1) borrowed money or evidenced by bonds, notes, debentures or similar instruments, (2) indebtedness secured by any Lien on any property or asset owned by such person, but only to the extent of the lesser of (a) the amount of indebtedness so secured and (b) the fair market value (determined in good faith by the board of directors of such person or, in the case of the Operating Partnership and a Subsidiary, by the Board of Trustees of the Guarantor or a duly authorized committee thereof) of the property subject to such Lien, (3) reimbursement obligations, contingent or otherwise, in connection with any letters of credit actually issued or amounts representing the balance deferred and unpaid of the purchase price of any property except any such balance that constitutes an accrued expense or trade payable, or (4) any lease of property by such Person as lessee which is required to be reflected on such Person’s balance sheet as a capitalized lease in accordance with GAAP.  The term “Debt” also includes, to the extent not otherwise included, any non-contingent obligation of such Person to be liable for, or to pay, as obligor, guarantor or otherwise (other than for purposes of collection in the ordinary course of business), Debt of the types referred to above of another Person (it being understood that Debt shall be deemed to be incurred by such

 

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Person whenever such Person shall create, assume, guarantee (on a non-contingent basis) or otherwise become liable in respect thereof).

 

“Depository” means The Depository Trust Company.

 

“Indenture” means the Original Indenture as supplemented by this First Supplemental Indenture and as further amended, modified or supplemented with respect to the Notes pursuant to the provisions of the Original Indenture.

 

“Lien” means any mortgage, deed of trust, lien, charge, pledge, security interest, security agreement, or other encumbrance of any kind.

 

“Maturity Date” means February 15, 2024.

 

“Predecessor Note” of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note, and, for the purposes of this definition, any Note authenticated and delivered under Section 306 of the Original Indenture in lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same debt as the lost, destroyed or stolen Note that it replaces.

 

“Primary Treasury Dealer” means a primary U.S. Government securities dealer.

 

“Quotation Agent” means the Reference Treasury Dealer appointed by the Operating Partnership.

 

“Redemption Date” means, with respect to any Note or portion thereof to be redeemed in accordance with the provisions of Section 1.4(d) hereof, the date fixed for such redemption in accordance with the provisions of Section 1.4(d) hereof.

 

“Reference Treasury Dealer” means (1) a Primary Treasury Dealer  selected by Wells Fargo Securities, LLC, (2) Barclays Capital Inc., Citigroup Global Markets Inc. or their respective successors, and (3)  any one other Primary Treasury Dealer selected by the Operating Partnership; provided, however, that if any of the Reference Treasury Dealers referred to in clause (1) or (2) above ceases to be a Primary Treasury Dealer, the Operating Partnership will substitute therefor another Primary Treasury Dealer.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by Operating Partnership, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date.

 

“Subsidiary” means, with respect to the Operating Partnership or the Guarantor, any person (as defined in the Original Indenture but excluding an individual), a majority of the outstanding Voting Stock, partnership interests, membership interests or other equity interest, as the case may be, of which is owned or controlled, directly or indirectly, by the Operating Partnership or the Guarantor, as the case may be, or by one or more other Subsidiaries of the Operating Partnership or the Guarantor, as the case may be.

 

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“Total Assets” means the sum of, without duplication (1) Undepreciated Real Estate Assets and (2) all other assets (excluding accounts receivable and non-real estate intangibles) of the Operating Partnership and its Subsidiaries, all determined on a consolidated basis in accordance with GAAP.

 

“Total Unencumbered Assets” means the sum of, without duplication, (1) those Undepreciated Real Estate Assets which are not subject to a Lien securing Debt and (2) all other assets (excluding accounts receivable and non-real estate intangibles) of the Operating Partnership and its Subsidiaries not subject to a Lien securing Debt, all determined on a consolidated basis in accordance with GAAP; provided, however, that, in determining Total Unencumbered Assets as a percentage of outstanding Unsecured Debt for purposes of the covenant set forth in Section 2.2(d) hereof entitled “Maintenance of Total Unencumbered Assets,” all investments in unconsolidated limited partnerships, unconsolidated limited liability companies and other unconsolidated entities shall be excluded from Total Unencumbered Assets.

 

“Undepreciated Real Estate Assets” means, as of any date, the cost (original cost plus capital improvements) of real estate assets and related intangibles of the Operating Partnership and its Subsidiaries on such date, before depreciation and amortization, all determined on a consolidated basis in accordance with GAAP.

 

“Unsecured Debt” means Debt of the Operating Partnership or any of its Subsidiaries which is not secured by a Lien on any property or assets of the Operating Partnership or any of its Subsidiaries.

 

“Voting Stock” means stock having voting power for the election of directors, trustees or managers, as the case may be, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.

 

Section 1.2            Creation of Notes.  In accordance with Section 301 of the Original Indenture, the Operating Partnership hereby creates the Notes as a separate series of its debt securities, entitled “5.25% Senior Notes due 2024,” issued pursuant to the Indenture.  The Notes shall initially be limited to an aggregate principal amount equal to $250,000,000, subject to the exceptions set forth in Section 301(2) of the Original Indenture and Section 1.4(h) hereof.

 

Section 1.3            Form of Notes.  The Notes will be issued in the form of one or more fully registered global securities (the “Global Note”) that will be deposited with, or on behalf of the Depository, and registered in the name of the Depository or its nominee, as the case may be, subject to Section 305 of the Original Indenture.  So long as the Depository, or its nominee, is the registered owner of the Global Note, the Depository or its nominee, as the case may be, will be considered the sole Holder of the Notes represented by the Global Note for all purposes under the Indenture.

 

Section 1.4            Terms and Provisions of Notes.  The Notes shall be governed by all of the terms and provisions of the Original Indenture, as supplemented by this First Supplemental Indenture, and in particular, the following provisions shall be terms of the Notes:

 

(a)         Registration and Form.  The Notes shall be issuable in registered form without coupons in denominations of $2,000 principal amount and integral multiples of $1,000 in excess thereof.  Each Note shall be dated the date of its authentication and shall bear interest from the date specified on the face of the form of Note attached as Exhibit A hereto.

 

(b)         Payment of Principal and Interest.  All payments of principal and interest in respect of the Global Note will be made by the Operating Partnership in immediately available funds to the Depository or its nominee, as the case may be, as the Holder of the Global Note.  The Notes shall

 

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mature, and the unpaid principal thereon, shall be payable, on February 15, 2024, subject to the provisions of the Original Indenture.  The rate per anum at which interest shall be payable on the Notes shall be 5.25%.  Interest on the Notes will be payable semi-annually in arrears on each February 15 and August 15, commencing February 15, 2014 (each, an “Interest Payment Date”) and on the Stated Maturity as specified in Section 1.4(b) hereof, to the Persons in whose names the Notes are registered in the Security Register applicable to the Notes at the close of business on February 1st for Interest Payment Dates of February 15th and August 1st for Interest Payment Dates of August 15th (each a “Record Date”).  Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months.  Interest on the Notes shall accrue from September 16, 2013.

 

(c)          Sinking Fund.  There shall be no sinking fund provided for the Notes.

 

(d)         Redemption at the Option of the Operating Partnership.

 

(1)                                 The Operating Partnership shall have the right to redeem the Notes at its option and in its sole discretion at any time or from time to time prior to three months prior to the Maturity Date, in whole or in part.  The redemption price (“Redemption Price”) will equal the greater of (i) 100% of the principal amount of the Notes to be redeemed or (ii) as determined by the Quotation Agent, the sum of the present values of the remaining scheduled payments of principal and interest thereon (not including any portion of such payments of interest accrued as of the Redemption Date) discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate plus 40 basis points (0.40% or forty one-hundredths of one percent), plus, in each case, accrued and unpaid interest thereon to the Redemption Date; provided, however, that if the Redemption Date falls after a Record Date and on or prior to the corresponding Interest Payment Date, the Operating Partnership will pay the full amount of accrued and unpaid interest, if any, on such Interest Payment Date to the Holder of record at the close of business on the corresponding Record Date (instead of the Holder surrendering its Notes for redemption).  Notwithstanding the foregoing, if the Notes are redeemed on or after the date that is three months prior to the Maturity Date, the Redemption Price will be equal to 100% of the principal amount of the Notes being redeemed plus unpaid interest, if any, accrued thereon to, but excluding, the Redemption Date.

 

(2)                                 The Operating Partnership shall not redeem the Notes pursuant to Section 1.4(d)(1) hereof on any date if the principal amount of the Notes has been accelerated, and such an acceleration has not been rescinded or cured on or prior to such date (except in the case of an acceleration resulting from a default by the Operating Partnership in the payment of the Redemption Price with respect to the Notes to be redeemed).

 

(e)          Notice of Optional Redemption; Selection of Notes.

 

(1)                                 In case the Operating Partnership shall desire to exercise the right to redeem all or, as the case may be, any part of the Notes pursuant to Section 1.4(d) hereof, it shall fix a date for redemption and it or, at its written request received by the Trustee not fewer than five (5) Business Days prior (or such shorter period of time as may be acceptable to the Trustee) to the date the notice of redemption is to be mailed (or sent by electronic transmission), the Trustee in the name of and at the expense of the Operating Partnership, shall mail

 

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(or send by electronic transmission) or cause to be mailed (or sent by electronic transmission) a notice of such redemption not fewer than thirty (30) calendar days nor more than sixty (60) calendar days prior to the Redemption Date to each Holder of Notes so to be redeemed in whole or in part at its last address as the same appears on the Note Register; provided, that if the Operating Partnership makes such request of the Trustee, it shall, together with such request, also give written notice of the Redemption Date to the Trustee; provided further that the text of the notice shall be prepared by the Operating Partnership.  Such mailing shall be by first class mail (unless sent by electronic transmission).  The notice, if mailed in the manner herein provided, shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice.  In any case, failure to give such notice by mail or any defect in the notice to the Holder of any Note designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Note.

 

(2)                                 Each such notice of redemption shall specify: (i) the aggregate principal amount of Notes to be redeemed, (ii) the CUSIP number or numbers, if any, of the Notes being redeemed, (iii) the Redemption Date (which shall be a Business Day), (iv) the Redemption Price at which Notes are to be redeemed, (v) the place or places of payment and that payment will be made upon presentation and surrender of such Notes and (vi) that interest accrued and unpaid to, but excluding, the Redemption Date will be paid as specified in said notice, and that on and after said date interest thereon or on the portion thereof to be redeemed will cease to accrue.  If fewer than all the Notes are to be redeemed, the notice of redemption shall identify the Notes to be redeemed (including CUSIP numbers, if any).  In case any Note is to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that, on and after the Redemption Date, upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion thereof will be issued.

 

(3)                                 Whenever any Notes are to be redeemed, the Operating Partnership will give the Trustee written notice of the Redemption Date, together with an Officers’ Certificate as to the aggregate principal amount of Notes to be redeemed not fewer than thirty-five (35) calendar days (or such shorter period of time as may be acceptable to the Trustee) prior to the Redemption Date.

 

(4)                                 On or prior to the Redemption Date specified in the notice of redemption given as provided in this Section 1.4(e), the Operating Partnership will deposit with the Paying Agent an amount of monies in immediately available funds sufficient to redeem on the Redemption Date all the Notes (or portions thereof) so called for redemption at the appropriate Redemption Price; provided, that if such payment is made on the Redemption Date, it must be received by the Paying Agent, by 11:00 a.m., New York City time, on such date.  The Operating Partnership shall be entitled to retain any interest, yield or gain on amounts deposited with the Paying Agent pursuant to this Section 1.4(e) in excess of amounts required hereunder to pay the Redemption Price.

 

(5)                                 If less than all of the outstanding Notes are to be redeemed, the Trustee shall select the Notes or portions thereof of the Global Note or the Notes in certificated form to be redeemed (in principal amounts of $2,000 and integral

 

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multiples of $1,000 in excess thereof), on a pro rata basis or such other method the Trustee deems fair and appropriate or is required by the Depository.  The Notes (or portions thereof) so selected for redemption shall be deemed duly selected for redemption for all purposes hereof.

 

(f)           Payment of Notes Called for Redemption by the Operating Partnership.

 

(1)                                 If notice of redemption has been given as provided in Section 1.4(e) hereof, the Notes or portion of Notes with respect to which such notice has been given shall become due and payable on the Redemption Date and at the place or places stated in such notice at the Redemption Price, and unless the Operating Partnership shall default in the payment of such Notes at the Redemption Price, so long as Paying Agent holds funds sufficient to pay the Redemption Price of the Notes to be redeemed on the Redemption Date, then (a) such Notes will cease to be outstanding on and after the Redemption Date, (b) interest on the Notes or portion of Notes so called for redemption shall cease to accrue on and after the Redemption Date, (c) after 5:00 p.m., New York City time, on the second Business Day immediately preceding the Redemption Date (unless the Operating Partnership shall default in the payment of the Redemption Price) and, except as provided in Section 403 and Section 605 of the Original Indenture, such Notes will cease to be entitled to any benefit or security under the Indenture, and (d) the Holders of the Notes shall have no right in respect of such Notes except the right to receive the Redemption Price thereof.  On presentation and surrender of such Notes at a place of payment in said notice specified, the said Notes or the specified portions thereof shall be paid and redeemed by the Operating Partnership at the Redemption Price, together with interest accrued thereon to, but excluding, the Redemption Date.

 

(2)                                 Upon presentation of any Note redeemed in part only, the Operating Partnership shall execute and the Trustee shall authenticate and make available for delivery to the Holder thereof, at the expense of the Operating Partnership, a new Note or Notes, of authorized denominations, in principal amount equal to the unredeemed portion of the Notes so presented.

 

(g)          Additional Issues.  The Operating Partnership may, from time to time, without the consent of the Holders, create and issue further securities having the same terms and conditions as the Notes in all respects, except for any difference in the issue date, issue price, interest accrued prior to the issue date of the additional notes, and, if applicable, the first interest payment date so long as such additional notes are fungible for U.S. federal income tax purposes with the previously outstanding Notes. Additional notes issued in this manner shall be consolidated with and shall form a single series with the previously outstanding Notes. Notice of any such issuance shall be given to the Trustee and a new supplemental indenture shall be executed in connection with the issuance of such securities.

 

Section 1.5            Book-Entry Provisions.  This Section 1.5 shall apply only to the Global Note deposited with or on behalf of the Depository.

 

(a)         The Operating Partnership shall execute and the Trustee shall, in accordance with this Section 1.5, authenticate and deliver the Global Note that shall be registered in the name of the Depository or its nominee and shall be held by the Trustee as custodian for the Depository.

 

(b)         Participants of the Depository shall have no rights either under the Indenture or with respect to the Global Note.  The Depository or its nominee, as applicable, shall be treated by the

 

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Operating Partnership, the Guarantor, the Trustee and any agent of the Operating Partnership, the Guarantor or the Trustee as the absolute owner and Holder of such Global Note for all purposes under the Indenture.  Notwithstanding the foregoing, nothing herein shall prevent the Operating Partnership, the Guarantor or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or its nominee, as applicable, or impair, as between the Depository and its participants, the operation of customary practices of such depository governing the exercise of the rights of an owner of a beneficial interest in the Global Note.

 

Section 1.6            Transfer and Exchange of the Notes.

 

(a)         The transfer and exchange of beneficial interests in the Global Note shall be effected through the Depository in accordance with the Indenture and the applicable procedures of the Depository.  Except as provided in Section 1.6(b) hereof, beneficial owners of the Global Note shall not be entitled to have certificates registered in their names, will not receive or be entitled to receive physical delivery of definitive notes in registered certificated form (the “Certificated Notes”) and will not be considered Holders of the Global Note.

 

(b)         The Global Note is exchangeable for Certificated Notes if:

 

(1)                                 the Depository (a) notifies the Operating Partnership that it is unwilling or unable to continue as depository for the Global Note or (b) has ceased to be a clearing agency registered under the Exchange Act and, in either case, the Operating Partnership fails to appoint a successor depository;

 

(2)                                 the Operating Partnership, at its option, notifies the Trustee in writing that the Operating Partnership elects to cause the issuance of the Certificated Notes; or

 

(3)                                 upon request from the Depository if there has occurred and is continuing a default or Event of Default with respect to the Notes.

 

ARTICLE TWO

 

ADDITIONAL COVENANTS FOR BENEFIT OF HOLDERS OF NOTES

 

In addition to the covenants set forth in the Original Indenture, the Operating Partnership hereby further covenants as follows:

 

Section 2.1            Provision of Financial Information. The Operating Partnership and the Guarantor will:

 

(a)         file with the Trustee, within 15 days after the Operating Partnership or the Guarantor is required to file them with the Commission, copies of the annual reports and information, documents and other reports which the Operating Partnership or the Guarantor may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Operating Partnership or the Guarantor is not required to file information, documents or reports pursuant to those Sections, then the Operating Partnership and the Guarantor will file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which Section 13 of the Exchange Act may require with respect to a security listed and registered on a national securities exchange;

 

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(b)         file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Operating Partnership and the Guarantor with the conditions and covenants of the indenture as may be required from time to time by such rules and regulations; and

 

(c)          transmit to the Holders of the Notes, within 30 days after filing with the Trustee, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, such summaries of any information, documents and reports required to be filed by the Operating Partnership or the Guarantor pursuant to Section 2.1(a) and (b) above as may be required by rules and regulations prescribed from time to time by the Commission.

 

Reports, information and documents filed with the Commission via the EDGAR system will be deemed to be delivered to the Trustee as of the time of such filing via EDGAR for purposes of this covenant; provided, however, that the Trustee shall have no obligation whatsoever to determine whether or not such information, documents or reports have been filed via EDGAR. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including its compliance with any of its covenants relating to the notes (as to which the Trustee is entitled to rely exclusively on an officers’ certificate).

 

Section 2.2            Limitations on Incurrence of Debt.

 

(a)         Limitation on Total Outstanding Debt.  The Operating Partnership will not, and will not permit any of its Subsidiaries to, incur any Debt (including, without limitation, Acquired Debt) if, immediately after giving effect to the incurrence of such Debt and the application of the proceeds from such Debt on a pro forma basis, the aggregate principal amount of all of the Operating Partnership’s and its Subsidiaries’ outstanding Debt (determined on a consolidated basis in accordance with GAAP) is greater than 60% of the sum of the following (without duplication): (1) the Operating Partnership’s and its Subsidiaries’ Total Assets as of the last day of the then most recently ended fiscal quarter and (2) the aggregate purchase price of any real estate assets or mortgages receivable acquired, and the aggregate amount of any securities offering proceeds received (to the extent such proceeds were not used to acquire real estate assets or mortgages receivable or used to reduce Debt), by the Operating Partnership or any Subsidiary since the end of such fiscal quarter, including the proceeds obtained from the incurrence of such additional Debt.

 

(b)         Secured Debt Test.  The Operating Partnership will not, and will not permit any of its Subsidiaries to, incur any Debt (including, without limitation, Acquired Debt) secured by any Lien on any of the Operating Partnership’s or any of its Subsidiaries’ property or assets, whether owned on the date of the indenture or subsequently acquired, if, immediately after giving effect to the incurrence of such Debt and the application of the proceeds from such Debt on a pro forma basis, the aggregate principal amount (determined on a consolidated basis in accordance with GAAP) of all of the Operating Partnership’s and its Subsidiaries’ outstanding Debt which is secured by a Lien on any of the Operating Partnership’s and its Subsidiaries’ property or assets is greater than 40% of the sum of (without duplication): (1) the Operating Partnership’s and its Subsidiaries’ Total Assets as of the last day of the then most recently ended fiscal quarter; and (2) the aggregate purchase price of any real estate assets or mortgages receivable acquired, and the aggregate amount of any securities offering proceeds received (to the extent such proceeds were not used to acquire real estate assets or mortgages receivable or used to reduce Debt), by the Operating Partnership or any of its Subsidiaries since the end of such fiscal quarter, including the proceeds obtained from the incurrence of such additional Debt.

 

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(c)   Debt Service Test.

 

(1)           The Operating Partnership will not, and will not permit any of its Subsidiaries to, incur any Debt (including without limitation Acquired Debt) if the ratio of Consolidated Income Available for Debt Service to Annual Debt Service Charge for the period consisting of the four consecutive fiscal quarters most recently ended prior to the date on which such additional Debt is to be incurred shall have been less than 1.5:1 on a pro forma basis after giving effect to the incurrence of such Debt and the application of the proceeds from such Debt (determined on a consolidated basis in accordance with GAAP), and calculated on the following assumptions:

 

(2)           such Debt and any other Debt (including, without limitation, Acquired Debt) incurred by us or any of our Subsidiaries since the first day of such four-quarter period had been incurred, and the application of the proceeds from such Debt (including to repay or retire other Debt) had occurred, on the first day of such period;

 

(3)           the repayment or retirement of any other Debt of the Operating Partnership or any of its Subsidiaries since the first day of such four-quarter period had occurred on the first day of such period (except that, in making this computation, the amount of Debt under any revolving credit facility, line of credit or similar facility will be computed based upon the average daily balance of such Debt during such period); and

 

(4)           in the case of any acquisition or disposition by the Operating Partnership or any of its Subsidiaries of any asset or group of assets with a fair market value in excess of $1.0 million since the first day of such four-quarter period, whether by merger, stock purchase or sale or asset purchase or sale or otherwise, such acquisition or disposition had occurred as of the first day of such period with the appropriate adjustments with respect to such acquisition or disposition being included in such pro forma calculation.

 

(5)           If the Debt giving rise to the need to make the calculation described in Section 2.2(c)(1) or any other Debt incurred after the first day of the relevant four-quarter period bears interest at a floating rate, then, for purposes of calculating the Annual Debt Service Charge, the interest rate on such Debt will be computed on a pro forma basis by applying the average daily rate which would have been in effect during the entire four-quarter period to the greater of the amount of such Debt outstanding at the end of such period or the average amount of such Debt outstanding during such period.  For purposes of this Section 2.2(c), Debt will be deemed to be incurred by the Operating Partnership or any of its Subsidiaries whenever the Operating Partnership or such Subsidiary shall create, assume, guarantee (on a non-contingent basis) or otherwise become liable in respect thereof.

 

(d)   Maintenance of Total Unencumbered Assets.  The Operating Partnership will not have at any time Total Unencumbered Assets of less than 150% of the aggregate principal amount of all of the Operating Partnership’s and its Subsidiaries’ outstanding Unsecured Debt determined on a consolidated basis in accordance with GAAP.

 

Section 2.3    Insurance.  The Operating Partnership will, and will cause each of its Subsidiaries to, keep in force upon all of the Operating Partnership’s and each of its Subsidiaries’ properties and operations insurance policies carried with responsible insurance companies in such amounts and covering all such risks as is customary in the industry in which the Operating Partnership and its Subsidiaries do business in accordance with prevailing market conditions and availability.

 

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Section 2.4    Maintenance of Properties.  The Operating Partnership will cause all of its properties used or useful in the conduct of the business of the Operating Partnership or any of its Subsidiaries to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and the Operating Partnership will cause all necessary repairs, renewals, replacements, betterments and improvements to be made, all as in the Operating Partnership’s judgment may be necessary in order for Operating Partnership to at all times properly and advantageously conduct its business carried on in connection with such properties.

 

Section 2.5    Payment of Taxes and Other Claims.  The Operating Partnership and the Guarantor will each pay or discharge or cause to be paid or discharged before it becomes delinquent: (i) all taxes, assessments and governmental charges levied or imposed on the Operating Partnership, the Guarantor or any of their respective Subsidiaries or on their respective or any such Subsidiary’s income, profits or property; and (ii) all lawful claims for labor, materials and supplies that, if unpaid, might by law become a Lien upon their respective property or the property of any of their respective Subsidiaries; provided, however, that neither the Operating Partnership nor the Guarantor will be required to pay or discharge or cause to be paid or discharged any tax, assessment, charge or claim the amount, applicability or validity of which is being contested in good faith.

 

Section 2.6    Existence.  Subject to Article Eight of the Original Indenture, each of the Operating Partnership and the Guarantor will do or cause to be done all things necessary to preserve and keep in full force and effect its (i) existence, and (ii) rights (charter and statutory) and franchises; provided, that neither the Operating Partnership nor the Guarantor shall be required to preserve any such right or franchise if the Board of Trustees (or any duly authorized committee of that Board of Trustees), as applicable, shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Operating Partnership or the Guarantor, as applicable.

 

ARTICLE THREE

 

ASSUMPTION BY GUARANTOR

 

Section 3.1    Assumption by Guarantor.  Without the consent of any Holders of the Notes, the Guarantor, or a Subsidiary thereof, may directly assume, by an indenture supplemental to the Indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of, any premium and interest on all the Notes and the performance of every covenant of the Indenture on the part of the Operating Partnership to be performed or observed. Upon any such assumption, the Guarantor or such Subsidiary shall succeed to, and be substituted for and may exercise every right and power of, the Operating Partnership under the Indenture with the same effect as if the Guarantor or such Subsidiary had been named as the Operating Partnership in the Indenture and the Operating Partnership shall be released from all obligations and covenants with respect to the Notes. No such assumption shall be permitted unless the Guarantor has delivered to the Trustee (i) an Officers’ Certificate and an Opinion of Counsel, each stating that such assumption and supplemental indenture comply with this Section 3.1 and Article Eight of the Original Indenture, and that all conditions precedent in the Indenture provided for relating to such transaction have been complied with and that, in the event of assumption by a Subsidiary, the Guarantee and all other covenants of the Guarantor in the Indenture remain in full force and effect and (ii) an opinion of independent counsel that the Holders of Notes shall have no materially adverse United States federal tax consequences as a result of such assumption, and that, if any Notes are then listed on the New York Stock Exchange, that such Notes shall not be delisted as a result of such assumption.

 

ARTICLE FOUR

 

NOTICE OF DEFAULTS

 

Section 4.1    Notice of Defaults.  The Trustee shall, within ninety (90) calendar days after a Responsible Officer of the Trustee has knowledge of the occurrence of a Default, mail (or send by electronic transmission) to all Noteholders, as the names and addresses of such Holders appear upon the Note Register, notice of all Defaults known to a Responsible Officer, unless such Defaults shall have been cured or waived before the giving of such notice; provided, that except in the case of default in the payment of the principal of (including the Redemption Price upon redemption pursuant to Article 3 hereof), or interest on any of the Notes, the Trustee shall be protected in withholding such notice if and so long as a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interest of the Noteholders.

 

12

 

ARTICLE FIVE

 

TRUSTEE

 

Section 5.1            Trustee.  The Trustee is appointed as the principal paying agent, transfer agent and registrar for the Notes and for the purposes of Section 1002 of the Original Indenture.  The Notes may be presented for payment at the Corporate Trust Office of the Trustee or at any other agency as may be appointed from time to time by the Operating Partnership in The City of New York.  The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this First Supplemental Indenture or the due execution hereof by the Operating Partnership.  The recitals of fact contained herein shall be taken as the statements solely of the Operating Partnership, and the Trustee assumes no responsibility for the correctness thereof.

 

Section 5.2            Duties and Responsibilities of Trustee.  The Trustee, prior to the occurrence of an Event of Default and after the curing or waiver of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in the Indenture.  In case an Event of Default has occurred (which has not been cured or waived), the Trustee shall exercise such of the rights and powers vested in it by the Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of its own affairs.  Except as explicitly specified otherwise in the Indenture, the Operating Partnership will be responsible for making all calculations required under the Indenture and the Notes.  The Operating Partnership will make such calculations in good faith and, absent manifest error, Issuer’s calculations will be final and binding on Holders of the Notes.  The Operating Partnership will provide a schedule of its calculations to the Trustee, and the Trustee is entitled to rely upon the accuracy of the Operating Partnership’s calculations without independent verification.  The Trustee will forward the Operating Partnership’s calculations to any Holder of the Notes upon request.

 

Section 5.3            Preferential Collection of Claims.  If and when the Trustee shall be or become a creditor of the Issuer (or any other obligor upon the Notes), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of the claims against the Issuer (or any such other obligor).

 

ARTICLE SIX

 

MISCELLANEOUS PROVISIONS

 

Section 6.1            Ratification of Original Indenture.  This First Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture, and as supplemented and modified hereby, the Original Indenture is in all respects ratified and confirmed, and the Original Indenture and this First Supplemental Indenture shall be read, taken and construed as one and the same instrument.  In the event of a conflict between the language of this First Supplemental Indenture and the Original Indenture, the language of this First Supplemental Indenture shall control.

 

Section 6.2            Effect of Headings.  The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

 

Section 6.3            Successors and Assigns.  All covenants and agreements in this First Supplemental Indenture by the Operating Partnership shall bind its respective successors and assigns, whether so expressed or not.

 

Section 6.4            Separability Clause.  In case any one or more of the provisions contained in this First Supplemental Indenture shall for any reason be held to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

Section 6.5            Governing Law.  This First Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York without regard to conflict of law principles that would result in the application of any laws other than the laws of the State of New York.  This First Supplemental Indenture is subject to the provisions of the Trust Indenture Act, that are required to be part of this First Supplemental Indenture and shall, to the extent applicable, be governed by such provisions.

 

Section 6.6            Counterparts.  This First Supplemental Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument.

 

13

 

IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed all as of the day and year first above written.

 

	
 
    	
CORPORATE   OFFICE PROPERTIES, L.P.,
    
	
 
    	
as   Operating Partnership
    
	
 
    	
 
    
	
 
    	
By:
    	
Corporate   Office Properties Trust,
    
	
 
    	
 
    	
its   general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
CORPORATE   OFFICE PROPERTIES TRUST,
    
	
 
    	
as   Guarantor
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    

 

[Signature Page to First Supplemental Indenture]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed all as of the day and year first above written.

 

	
 
    	
U.S.   BANK NATIONAL ASSOCIATION,
    
	
 
    	
as   Trustee
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

[Signature Page to First Supplemental Indenture]

 

 

EXHIBIT A

 

Form of 5.25% Senior Note due 2024

 

THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE FIRST SUPPLEMENTAL INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 1.6 OF THE FIRST SUPPLEMENTAL INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 1.6 OF THE FIRST SUPPLEMENTAL INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 401 OF THE ORIGINAL INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITORY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER.

 

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

 

CORPORATE OFFICE PROPERTIES, L.P. 
 5.25% SENIOR NOTES DUE 2024

 

No. 001

 

CUSIP No.:           22003B AH9

 

ISIN:      US22003BAH96

 

$250,000,000

 

Corporate Office Properties, L.P., a Delaware limited partnership (herein called the “Issuer,” which term includes any successor entity under the Indenture referred to on the reverse hereof), for value received hereby promises to pay to Cede & Co., or its registered assigns, the principal sum of TWO HUNDRED AND FIFTY MILLION DOLLARS ($250,000,000), or such lesser amount as is set forth in the Schedule of Increases or Decreases In Note on the other side of this Note, on February 15, 2024 at the office or agency of the Issuer maintained for that purpose in accordance with the terms of the Indenture, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest, semi-annually on February 15 and August 15 of each year, commencing February 15, 2014, on said principal sum at said office or agency, in like coin or currency, at the rate per annum of 5.25%, from the February 15 or August 15, as the case may be, next preceding the date of this Note to which interest has been paid or duly provided for, unless no interest has been paid or duly provided for on the Notes, in which case from September 16, 2013 until payment of said principal sum has been made or duly provided for.  The Issuer shall pay interest on any Notes in certificated form by check mailed to the address of the Person entitled thereto as it appears in the Note Register; provided, however, that a Holder of any Notes in certificated form in the aggregate principal amount of more than $2.0 million may specify by written notice to the Issuer that it pay interest by wire transfer of immediately available funds to the account specified by the Noteholder in such notice, or on any Global Note by wire transfer of immediately available funds to the account of the Depository or its nominee.

 

Reference is made to the further provisions of this Note set forth on the reverse hereof and the Indenture governing this Note.  Such further provisions shall for all purposes have the same effect as though fully set forth at this place.

 

This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed manually or by facsimile or other electronic imaging means by the Trustee or a duly authorized authenticating agent under the Indenture.

 

 

IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed.

 

Dated:  September 16, 2013

 

	
 
    	
CORPORATE OFFICE   PROPERTIES, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
Corporate Office   Properties Trust,
    
	
 
    	
 
    	
its sole general partner
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name: 
    	
Stephen E. Riffee
    
	
 
    	
 
    	
Title: 
    	
Chief Financial Officer
    

 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes described in the within-named Indenture.

 

Dated:  September 16, 2013

 

	
 
    	
U.S. BANK NATIONAL   ASSOCIATION,
    
	
 
    	
as Trustee
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Authorized Signatory
    

 

 

REVERSE SIDE OF NOTE

 

Corporate Office Properties, L.P.
 5.25% SENIOR NOTES DUE 2024

 

This Note is one of a duly authorized issue of Notes of the Issuer, designated as its 5.25% Senior Notes due 2024 (herein called the “Notes”), issued under and pursuant to an Indenture dated as of September 16, 2013 (herein called the “Original Indenture”), among the Issuer, the Guarantor and U.S. Bank National Association, as trustee (herein called the “Trustee”), as supplemented by the First Supplemental Indenture dated September 16, 2013 (herein called the “First Supplemental Indenture,” and together with the Original Indenture, the “Indenture”), among the Issuer, the Guarantor and the Trustee, to which Indenture and any indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Issuer, the Guarantor and the Holders of the Notes.  Defined terms used but not otherwise defined in this Note shall have the respective meanings ascribed thereto in the Indenture.

 

If an Event of Default (other than an Event of Default specified in Section 501(5), 501(6) or 501(7) of the Original Indenture with respect to the Issuer) occurs and is continuing, the principal of, premium, if any, and accrued and unpaid interest on all Notes may be declared to be due and payable by either the Trustee or the Holders of at least twenty five percent (25%) in aggregate principal amount of the Notes then outstanding, and, upon said declaration the same shall be immediately due and payable.  If an Event of Default specified in Section 501(5), 501(6) or 501(7) of the Original Indenture occurs with respect to the Issuer, the principal of and premium, if any, and interest accrued and unpaid on all the Notes shall be immediately and automatically due and payable without necessity of further action.

 

The Indenture contains provisions permitting the Issuer and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the Holders of the Notes, subject to exceptions set forth in Section 902 of the Original Indenture.  Subject to the provisions of the Indenture, the Holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding may, on behalf of the Holders of all of the Notes, waive any past Default or Event of Default, subject to exceptions set forth in the Indenture.

 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall impair, as among the Issuer and the Holder of the Notes, the obligation of the Issuer, which is absolute and unconditional, to pay the principal of, premium, if any, on and interest on this Note at the place, at the respective times, at the rate and in the coin or currency herein and in the Indenture prescribed.

 

Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months.

 

The Notes are issuable in fully registered form, without coupons, in denominations of $2,000 principal amount and any multiple of $2,000.  At the office or agency of the Issuer referred to on the face hereof, and in the manner and subject to the limitations provided in the Indenture, without payment of any service charge but with payment of a sum sufficient to cover any tax, assessment or other governmental charge that may be imposed in connection with any registration or exchange of Notes, Notes may be exchanged for a like aggregate principal amount of Notes of any other authorized denominations.

 

 

The Issuer shall have the right to redeem the Notes under certain circumstances as set forth in Section 1.4(d), Section 1.4(e) and Section 1.4(f) of the First Supplemental Indenture.

 

The Notes are not subject to redemption through the operation of any sinking fund.

 

Except as expressly provided in Article 16 of the Original Indenture, no recourse for the payment of the principal of or any premium or interest on this Note, or for any claim based hereon or otherwise in respect hereof, and no recourse under or upon any obligation, covenant or agreement of the Issuer in the Indenture or any supplemental indenture or in any Note, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, limited partner, member, manager, employee, agent, officer, director or subsidiary, as such, past, present or future, of the Guarantor, the Issuer or any of the Issuer’s Subsidiaries or of any successor thereto, either directly or through the Guarantor, the Issuer or any of the Issuer’s subsidiaries or of any successor thereto, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as consideration for, the execution of the Indenture and the issue of this Note.

 

 

ASSIGNMENT FORM

 

To assign this Note, fill in the form below:

 

	
(I) or (we) assign and   transfer this Note to:
    	
 
    
	
 
    	
(Insert assignee’s   legal name)
    
	
 
    
	
(Insert assignee’s   soc. sec. or tax I.D. no.)
    
	
 
    
	
 
    
	
 
    
	
 
    
	
(Print or type   assignee’s name, address and zip code)
    

 

and irrevocably appoint                                to transfer this Note on the books of the Issuer.  The agent may substitute another to act for him.

 

	
Date:
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Your Signature:
    	
 
    
	
 
    	
 
    	
(Sign exactly as your name   appears on the face of this Note)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Signature Guarantee*:
    	
 
    	
 
    	
 
    
							

 

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE *

 

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

 

	
Date of Exchange
    	
 
    	
Amount of
   decrease in
   Principal Amount
   at maturity of
   this Global Note
    	
 
    	
Amount of
   increase in
   Principal Amount
   at maturity of
   this Global Note
    	
 
    	
Principal Amount
   at maturity of
   this Global Note
   following such
   decrease (or
   increase)
    	
 
    	
Signature of
   authorized officer
   of Trustee or
   Custodian
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

*  This schedule should be included only if the Note is issued in global form.ACTIONS
SEMICONDUCTOR CO., LTD.

 

Third
Amended and Restated 2007 Equity Performance and Incentive Plan

 

		1.	Purpose.
                                                                                            The
                                                                                            purpose of the
                                                                                            Third Amended and Restated
                                                                                            2007 Equity Performance and Incentive
                                                                                            Plan (the “Plan”) is to
                                                                                            attract and retain officers, employees,
                                                                                            non-employee directors and consultants
                                                                                            for Actions Semiconductor Co., Ltd.,
                                                                                            a Cayman Islands exempted company,
                                                                                            and its Subsidiaries and to provide
                                                                                            to such persons incentives to stay
                                                                                            with the Company and make superior
                                                                                            contributions to the Company in the
                                                                                            future.

 

		2.	Definitions.
                                                          As used in this Plan,

 

		(a)	“Board”
                                                               means the Board of Directors of the Company and, to the extent
                                                               of any delegation by the Board to a committee (or subcommittee
                                                               thereof) pursuant to Section 13 of this Plan, such committee (or
                                                               subcommittee).

 

		(b)	“Company”
                                                               means Actions Semiconductor Co., Ltd., a Cayman Islands exempted
                                                               company, or any successor corporation thereto.

 

		(c)	“Date
                                                                                                 of Grant” means the date
                                                                                                 specified by the Board on which
                                                                                                 a grant of Option Rights or a
                                                                                                 grant or sale of Restricted Shares
                                                                                                 or Restricted Share Units will
                                                                                                 become effective (which date
                                                                                                 will not be earlier than the
                                                                                                 later
                                                                                                 of (i) the date on which
                                                                                                 the Board takes action with respect
                                                                                                 thereto;
                                                                                                 or (ii) the date on which a Participant
                                                                                                 commences the provision of services
                                                                                                 to the Company or any one or
                                                                                                 more of its Subsidiaries).

 

		(d)	“Director”
                                                               means a member of the Board of Directors of the Company.

 

		(e)	“Employee”
                                                               means any person employed by the Company or any of the Company’s
                                                               present or future parent or subsidiary corporations as defined
                                                               in sections 424(e) or (f) of the U.S. Code, and any other entities
                                                               the employees of which are eligible to receive incentive stock
                                                               options under the U.S. Code. Neither service as a Director nor
                                                               payment of a director’s fee by the Company will be sufficient
                                                               to constitute “employment” by the Company.

 

		(f)	“Evidence
                                                               of Award” means an agreement, certificate, resolution or
                                                               other type or form of writing or other evidence approved by the
                                                               Board that sets forth the terms and conditions of the awards granted.
                                                               An Evidence of Award may be in an electronic medium, may be limited
                                                               to notation on the books and records of the Company and, with the
                                                               approval of the Board, need not be signed by a representative of
                                                               the Company or a Participant.

 

		(g)	“Market
                                                               Value per Share” means, as of any particular date, the fair
                                                               market value of one of the Shares of the Company as determined
                                                               by the Board.

 

		(h)	“Optionee”
                                                               means the optionee named in an Evidence of Award evidencing an
                                                               outstanding Option Right.

 

    	 

    	 

    

 

		(i)	“Option
                                                               Price” means the purchase price payable on exercise of an
                                                               Option Right.

 

		(j)	“Option
                                                               Right” means the right to purchase Shares upon exercise of
                                                               an option granted pursuant to Section 4 of this Plan.

 

		(k)	“Participant”
                                                                                                 means a person who is selected
                                                                                                 by the Board to receive benefits
                                                                                                 under this Plan and who is at
                                                                                                 the time an officer, employee,
                                                                                                 non-employee director or consultant
                                                                                                 of the Company or any one or
                                                                                                 more of its Subsidiaries, or
                                                                                                 who has agreed to commence serving
                                                                                                 in any of such capacities within
                                                                                                 90 days of the date
                                                                                                 on which the Board takes action
                                                                                                 to approve a grant of an award
                                                                                                 under this Plan. The term
                                                                                                 “Participant” shall
                                                                                                 also include any person who provides
                                                                                                 services to the Company or a
                                                                                                 Subsidiary that are equivalent
                                                                                                 to those typically provided by
                                                                                                 an employee.

 

		(l)	“PRC”
                                                               means the People’s Republic of China.

 

		(m)	“Restriction
                                                               Period” means the period of time during which Restricted
                                                               Share Units are subject to deferral limitations under Section 6
                                                               of this Plan.

 

		(n)	“Restricted
                                                               Shares” means Shares granted or sold pursuant to Section
                                                               5 of this Plan as to which neither the risk of forfeiture nor the
                                                               prohibition on transfers referred to in such Section 5 has expired.

 

		(o)	“Restricted
                                                               Share Units” means an award made pursuant to Section 6 of
                                                               this Plan of the right to receive Shares at the end of a specified
                                                               Restriction Period.

 

		(p)	“Shares”
                                                               means the American Depositary Shares representing ordinary shares,
                                                               par value US $0.000001 per share, of the Company, or any security
                                                               into which such Shares may be changed by reason of any transaction
                                                               or event of the type referred to in Section 9 of this Plan.

 

		(q)	“Subsidiary”
                                                               means a corporation, company or other entity (i) more than 50 percent
                                                               of whose outstanding shares or securities (representing the right
                                                               to vote for the election of directors or other managing authority)
                                                               are, or (ii) which does not have outstanding shares or securities
                                                               (as may be the case in a partnership, joint venture or unincorporated
                                                               association), but more than 50 percent of whose ownership interest
                                                               representing the right generally to make decisions for such other
                                                               entity is, now or hereafter, owned or controlled, directly or indirectly,
                                                               by the Company.

 

		(r)	“U.S.
                                                               Code” means the United States Internal Revenue Code of 1986,
                                                               as amended.

 

    	 

    	 

    

 

		3.	Shares
                                                                                                                 Available Under
                                                                                                                 the Plan. Subject
                                                                                                                 to adjustment
                                                                                                                 as provided in
                                                                                                                 Section 9 of
                                                                                                                 this Plan, the
                                                                                                                 number of Shares
                                                                                                                 that may be issued
                                                                                                                 or transferred
                                                                                                                 (i)
                                                                                                                 upon the exercise
                                                                                                                 of Option Rights,
                                                                                                                 (ii) as Restricted
                                                                                                                 Shares and released
                                                                                                                 from the risk
                                                                                                                 of forfeiture
                                                                                                                 thereof, (iii)
                                                                                                                 upon payment
                                                                                                                 of Restricted
                                                                                                                 Share Units,
                                                                                                                 or (iv) in payment
                                                                                                                 of dividend equivalents
                                                                                                                 paid with respect
                                                                                                                 to awards made
                                                                                                                 under the Plan
                                                                                                                 shall not exceed
                                                                                                                 in the aggregate
                                                                                                                 11,400,000
                                                                                                                 Shares,
                                                                                                                 all of which
                                                                                                                 are available
                                                                                                                 to be granted
                                                                                                                 as incentive
                                                                                                                 stock options
                                                                                                                 within
                                                                                                                 the meaning of
                                                                                                                 section 422 of
                                                                                                                 the U.S. Code.
                                                                                                                 In addition to
                                                                                                                 the Shares authorized
                                                                                                                 by the preceding
                                                                                                                 sentence, to
                                                                                                                 the extent any
                                                                                                                 award under this
                                                                                                                 Plan otherwise
                                                                                                                 terminates without
                                                                                                                 the issuance
                                                                                                                 of some or all
                                                                                                                 of the Shares
                                                                                                                 underlying the
                                                                                                                 award to a Participant
                                                                                                                 or if
                                                                                                                 any Option Right
                                                                                                                 under this Plan
                                                                                                                 terminates without
                                                                                                                 having been exercised
                                                                                                                 in full, the
                                                                                                                 Shares underlying
                                                                                                                 such award, to
                                                                                                                 the extent of
                                                                                                                 any such forfeiture
                                                                                                                 or termination,
                                                                                                                 shall be available
                                                                                                                 for future grant
                                                                                                                 under this Plan
                                                                                                                 and credited
                                                                                                                 toward the Plan
                                                                                                                 limit. Such
                                                                                                                 Shares may be
                                                                                                                 Shares of original
                                                                                                                 issuance or Shares
                                                                                                                 that have been
                                                                                                                 previously issued
                                                                                                                 and acquired
                                                                                                                 by the Company
                                                                                                                 or a combination
                                                                                                                 of the foregoing.
                                                                                                                 The Board
                                                                                                                 may, at any time,
                                                                                                                 increase or reduce
                                                                                                                 the number of
                                                                                                                 Shares subject
                                                                                                                 to this Plan,
                                                                                                                 but not below
                                                                                                                 the number of
                                                                                                                 Shares then issuable
                                                                                                                 upon outstanding,
                                                                                                                 unexercised Option
                                                                                                                 Rights and unvested
                                                                                                                 Restricted Shares
                                                                                                                 and Restricted
                                                                                                                 Share Units.
                                                                                                                 

 

		4.	Option
                                                                                                   Rights.
                                                                                                   The
                                                                                                   Board may, from time to time
                                                                                                   and upon such terms and conditions
                                                                                                   as it may determine, authorize
                                                                                                   the granting to Participants
                                                                                                   of options to purchase Shares.
                                                                                                   Such options may be “incentive
                                                                                                   stock options” (within
                                                                                                   the meaning of section 422
                                                                                                   of the U.S. Code. Each such
                                                                                                   grant may utilize any or all
                                                                                                   of the authorizations, and
                                                                                                   will be subject to all of the
                                                                                                   requirements, contained in
                                                                                                   the following provisions:

 

		(a)	Each
                                                               grant will specify the number of Shares to which it pertains subject
                                                               to the limitations set forth in Section 3 of this Plan.

 

		(b)	Each
                                                                                                 grant will specify an Option
                                                                                                 Price per Share
                                                                                                 as determined by the Board, provided
                                                                                                 that, if the Participant receiving
                                                                                                 such grant is a United States
                                                                                                 taxpayer, such Option Price per
                                                                                                 Share shall not be less
                                                                                                 than 100%
                                                                                                 of the Market Value per
                                                                                                 Share on the Date of Grant. In
                                                                                                 the case of an incentive stock
                                                                                                 option (A) granted to an Employee
                                                                                                 who, at the time the incentive
                                                                                                 stock option is granted, owns
                                                                                                 Shares representing more than
                                                                                                 ten percent (10%) of the voting
                                                                                                 power of all classes of share
                                                                                                 capital of the Company or any
                                                                                                 of the Company’s present
                                                                                                 or future parent or subsidiary
                                                                                                 corporations as defined in sections
                                                                                                 424(e) or (f) of the U.S. Code,
                                                                                                 the Option Price per Share will
                                                                                                 be no less than one hundred ten
                                                                                                 percent (110%) of the Market
                                                                                                 Value per Share on the Date of
                                                                                                 Grant; and (B) granted to any
                                                                                                 Employee other than an Employee
                                                                                                 described in paragraph (A) immediately
                                                                                                 above, the Option Price per Share
                                                                                                 will be no less than one hundred
                                                                                                 percent (100%) of the Market
                                                                                                 Value per Share on the Date of
                                                                                                 Grant.

 

		(c)	Each
                                                               grant will specify whether the Option Price will be payable (i)
                                                               in cash or by check acceptable to the Company in a currency determined
                                                               by the Board, (ii) to the extent authorized by the Board, by the
                                                               actual or constructive transfer to the Company of Shares owned
                                                               by the Optionee having a value at the time of exercise equal to
                                                               the total Option Price, (iii) by such other method of payment authorized
                                                               by the Board, or (iv) by a combination of such methods of payment.

 

    	 

    	 

    

 

		(d)	To the
                                                               extent permitted by law, any grant may provide for deferred payment
                                                               of the Option Price from the proceeds of sale through a broker
                                                               on a date satisfactory to the Company of some or all of the Shares
                                                               to which such exercise relates.

 

		(e)	Successive
                                                               grants may be made to the same Participant whether or not any Option
                                                               Rights previously granted to such Participant remain unexercised.

 

		(f)	Each
                                                               grant will specify the period or periods of continuous service
                                                               by the Optionee with the Company or any Subsidiary that is necessary
                                                               before the Option Rights or installments thereof will become exercisable.
                                                               Notwithstanding the foregoing, any such grant of Option Rights
                                                               may provide for the immediate exercisability of the Option Right.

 

		(g)	Any
                                                               grant of Option Rights may specify management objectives that must
                                                               be achieved as a condition to the exercise of such rights.

 

		(h)	The
                                                               Board may, on or after the Date of Grant of any Option Rights,
                                                               provide for the payment of dividend equivalents to the Optionee
                                                               on either a current or deferred or contingent basis or may provide
                                                               that such equivalents will be credited against the Option Price.

 

		(i)	No Option
                                                               Right will be exercisable more than 10 years from the Date of Grant,
                                                               except that an Option Right intended to be an incentive stock option
                                                               issued to an individual who owns more than ten percent of the total
                                                               outstanding voting power of the Company’s outstanding stock
                                                               (within the meaning of section 422 of the U.S. Code) will not have
                                                               a term of more than 5 years.

 

		(j)	The
                                                               Board reserves the discretion after the Date of Grant to provide
                                                               for (i) the payment of a cash bonus at the time of exercise; (ii)
                                                               the availability of a loan at exercise; (iii) the right to tender
                                                               in satisfaction of the Option Price nonforfeitable, unrestricted
                                                               Shares, which are already owned by the Optionee and have a value
                                                               at the time of exercise that is equal to the Option Price.

 

		(k)	Each
                                                               grant of Option Rights will be evidenced by an Evidence of Award.
                                                               Each Evidence of Award shall be subject to the Plan and shall contain
                                                               such terms and provisions as the Board may approve.

 

		(l)	A grant
                                                               of Option Rights that is not intended to be an incentive stock
                                                               option shall be designated as a “Nonstatutory Stock Option”
                                                               or a “Nonqualified Stock Option.” Each grant that is
                                                               intended to be an incentive stock option shall be subject to the
                                                               following additional terms and conditions: (i) it shall only be
                                                               granted to Employees, and shall be subject to and construed consistently
                                                               with the requirements of section 422 of the U.S. Code, (ii) it
                                                               shall be treated as a nonqualified stock option to the extent that,
                                                               in the calendar year in which the Option is first exercisable,
                                                               the aggregate fair market value of the Shares subject to the Option
                                                               Right (when added to other awards granted to the same individual
                                                               that are intended to be incentive stock options under any plan
                                                               maintained by the Company and certain related corporations) exceeds
                                                               US$100,000 or such other limitation as might apply under section
                                                               422 of the U.S. Code, (iii) it must be granted within 10 years
                                                               from the adoption of the Plan or the date that it is approved by
                                                               shareholders, whichever is earlier, (iv) it is not transferable
                                                               other than by the laws of descent and distribution, and, during
                                                               the optionholder’s lifetime, can be exercised only by the
                                                               optionholder, and (iii) the Company shall have no liability to
                                                               a Participant, or any other party, if an Option Right (or any part
                                                               thereof) that is intended to be an incentive stock option is not
                                                               an incentive stock option, or for any action taken by the Board,
                                                               including without limitation the conversion of an incentive stock
                                                               option to a nonstatutory stock option.

 

    	 

    	 

    

 

		5.	Restricted
                                                          Shares. The Board may also authorize
                                                          the grant or sale of Restricted Shares to Participants. Each such grant
                                                          or sale may utilize any or all of the authorizations, and will be subject
                                                          to all of the requirements, contained in the following provisions:

 

		(a)	Each
                                                               such grant or sale will constitute an immediate transfer of the
                                                               ownership of Shares to the Participant in consideration of the
                                                               performance of services, entitling such Participant to voting,
                                                               dividend and other ownership rights, but subject to the risk of
                                                               forfeiture and restrictions on transfer hereinafter referred to.

 

		(b)	Each
                                                               such grant or sale may be made without additional consideration
                                                               or in consideration of a payment by such Participant that is less
                                                               than the Market Value per Share at the Date of Grant.

 

		(c)	Each
                                                               such grant or sale will provide that the Restricted Shares covered
                                                               by such grant or sale will be subject to a risk of forfeiture for
                                                               a period to be determined by the Board at the Date of Grant.

 

		(d)	Each
                                                               such grant or sale will provide that during the period for which
                                                               such risk of forfeiture is to continue, the transferability of
                                                               the Restricted Shares will be prohibited or restricted in the manner
                                                               and to the extent prescribed by the Board at the Date of Grant
                                                               (which restrictions may include, without limitation, rights of
                                                               repurchase or first refusal in the Company or provisions subjecting
                                                               the Restricted Shares to a continuing risk of repurchase in the
                                                               hands of any transferee).

 

		(e)	Any
                                                               grant of Restricted Shares may specify management objectives that,
                                                               if achieved, will result in termination or early termination of
                                                               the restrictions applicable to such Shares.

 

		(f)	Any
                                                               such grant or sale of Restricted Shares may require that any or
                                                               all dividends or other distributions paid thereon during the period
                                                               of such restrictions be automatically deferred and reinvested in
                                                               additional Restricted Shares, which may be subject to the same
                                                               restrictions as the underlying award.

 

    	 

    	 

    

 

		(g)	Each
                                                               grant or sale of Restricted Shares will be evidenced by an Evidence
                                                               of Award and will contain such terms and provisions, consistent
                                                               with this Plan, as the Board may approve. Unless otherwise directed
                                                               by the Board, all certificates representing Restricted Shares will
                                                               be held in custody by the Company until all restrictions thereon
                                                               will have lapsed, together with a stock power or powers executed
                                                               by the Participant in whose name such certificates are registered,
                                                               endorsed in blank and covering such Shares.

 

		6.	Restricted
                                                          Share Units. The Board may also authorize the granting or sale of
                                                          Restricted Share Units to Participants. Each such grant or sale may
                                                          utilize any or all of the authorizations, and shall be subject to all
                                                          of the requirements, contained in the following provisions:

 

		(a)	Each
                                                               such grant or sale shall constitute the agreement by the Company
                                                               to deliver Shares to the Participant in the future in consideration
                                                               of the performance of services, but subject to the fulfillment
                                                               of such conditions during the Restriction Period as the Board may
                                                               specify.

 

		(b)	Each
                                                               such grant or sale may be made without additional consideration
                                                               or in consideration of a payment by such Participant that is less
                                                               than the Market Value per Share at the Date of Grant.

 

		(c)	Each
                                                               such grant or sale shall be subject to a Restriction Period, as
                                                               determined by the Board at the Date of Grant.

 

		(d)	During
                                                               the Restriction Period, the Participant shall have no right to
                                                               transfer any rights under his or her award and shall have no rights
                                                               of ownership in the Restricted Share Units and shall have no right
                                                               to vote them, but the Board may, at or after the Date of Grant,
                                                               authorize the payment of dividend equivalents on the Shares underlying
                                                               such units on either a current or deferred or contingent basis,
                                                               either in cash or in additional Shares.

 

		(e)	Each
                                                               grant will specify whether the Restricted Share Units will be payable
                                                               at the end of the Restriction Period (i) in cash in a currency
                                                               determined by the Board, (ii) by the actual transfer to the Participant
                                                               of Shares, or (iii) by a combination of such methods of payment.

 

		(f)	Any
                                                               grant of Restricted Share Units may specify management objectives
                                                               that, if achieved, will result in termination or early termination
                                                               of the Restriction Period.

 

		(g)	Each
                                                               grant or sale of Restricted Share Units shall be evidenced by an
                                                               Evidence of Award and shall contain such terms and provisions,
                                                               consistent with this Plan, as the Board may approve.

 

    	 

    	 

    

 

		7.	Type
                                                                                                                 of Securities
                                                                                                                 Issued.
                                                                                                                 In lieu of delivering
                                                                                                                 Shares in connection
                                                                                                                 with an award
                                                                                                                 of Option Rights,
                                                                                                                 Restricted Shares,
                                                                                                                 or Restricted
                                                                                                                 Shares Units
                                                                                                                 under this Plan,
                                                                                                                 the Board may
                                                                                                                 provide, at or
                                                                                                                 after the Date
                                                                                                                 of Grant, that
                                                                                                                 the securities
                                                                                                                 to be issued
                                                                                                                 or transferred
                                                                                                                 in connection
                                                                                                                 with such awards
                                                                                                                 shall be ordinary
                                                                                                                 shares, par value
                                                                                                                 US $0.000001
                                                                                                                 per ordinary
                                                                                                                 share,
                                                                                                                 of the Company.
                                                                                                                 

 

		8.	Transferability.

 

		(a)	Except
                                                               as otherwise determined by the Board, no Option Right or other
                                                               security granted under this Plan shall be transferable by a Participant
                                                               other than by will or the laws of descent and distribution. Except
                                                               as otherwise determined by the Board, Option Rights shall be exercisable
                                                               during the Optionee’s lifetime only by him or her or by his
                                                               or her guardian or legal representative.

 

		(b)	The
                                                               Board may specify at the Date of Grant that part or all of the
                                                               Shares that are (i) to be issued or transferred by the Company
                                                               upon the exercise of Option Rights or upon the termination of the
                                                               Restriction Period applicable to Restricted Share Units or (ii)
                                                               no longer subject to the risk of forfeiture and restrictions on
                                                               transfer referred to in Sections 5 and 6 of this Plan, will be
                                                               subject to further restrictions on transfer.

 

		9.	Adjustments.
                                                                                            The
                                                                                            Board shall make or provide for such
                                                                                            adjustments in the numbers of Shares
                                                                                            covered by outstanding Option Rights
                                                                                            granted hereunder, in the Option Price,
                                                                                            and in the kind of shares covered
                                                                                            thereby
                                                                                            and such other amendments to the terms
                                                                                            of any outstanding awards granted
                                                                                            hereunder, as the Board, in
                                                                                            its sole discretion, exercised in
                                                                                            good faith, may determine is equitably
                                                                                            required
                                                                                            or appropriate to prevent dilution
                                                                                            or enlargement of the rights of Participants
                                                                                            that otherwise would result from (a)
                                                                                            any stock dividend, stock split, combination
                                                                                            of shares, recapitalization or other
                                                                                            change in the capital structure of
                                                                                            the Company, (b) any merger, consolidation,
                                                                                            spin-off, split-off, spin-out, split-up,
                                                                                            reorganization, partial or complete
                                                                                            liquidation or other distribution
                                                                                            of assets, issuance of rights or warrants
                                                                                            to purchase securities, or (c) any
                                                                                            other corporate transaction or event
                                                                                            having an effect similar to any of
                                                                                            the foregoing. Moreover, in the event
                                                                                            of any such transaction or event,
                                                                                            the Board, in its discretion, may
                                                                                            provide in substitution for any or
                                                                                            all outstanding awards under this
                                                                                            Plan such alternative consideration
                                                                                            as it, in good faith, may determine
                                                                                            to be equitable in the circumstances
                                                                                            and may require in connection therewith
                                                                                            the surrender of all awards so replaced.
                                                                                            The Board shall also make or provide
                                                                                            for such adjustments in the number
                                                                                            of Shares specified in Section 3 of
                                                                                            this Plan as the Board in its sole
                                                                                            discretion, exercised in good faith,
                                                                                            may determine is appropriate to reflect
                                                                                            any transaction or event described
                                                                                            in this Section 9.

 

		10.	Fractional
                                                           Shares. The Company shall not
                                                           be required to issue any fractional Shares pursuant to this Plan. The
                                                           Board may provide for the elimination of fractions or for the settlement
                                                           of fractions in cash.

 

		11.	Withholding
                                                           Taxes. To the extent that the
                                                           Company is required to withhold PRC or other taxes in connection with
                                                           any payment made or benefit realized by a Participant or other person
                                                           under this Plan, and the amounts available to the Company for such
                                                           withholding are insufficient, it will be a condition to the receipt
                                                           of such payment or the realization of such benefit that the Participant
                                                           or such other person make arrangements satisfactory to the Company
                                                           for payment of the balance of such taxes required to be withheld, which
                                                           arrangements (in the discretion of the Board) may include relinquishment
                                                           of a portion of such benefit.

 

    	 

    	 

    

 

		12.	Multiple
                                                                                                                                                Jurisdictions.
                                                                                                                                                In
                                                                                                                                                order
                                                                                                                                                to
                                                                                                                                                facilitate
                                                                                                                                                the
                                                                                                                                                making
                                                                                                                                                of
                                                                                                                                                any
                                                                                                                                                grant
                                                                                                                                                under
                                                                                                                                                this
                                                                                                                                                Plan,
                                                                                                                                                the
                                                                                                                                                Board
                                                                                                                                                may
                                                                                                                                                provide
                                                                                                                                                for
                                                                                                                                                such
                                                                                                                                                special
                                                                                                                                                terms
                                                                                                                                                for
                                                                                                                                                awards
                                                                                                                                                to
                                                                                                                                                Participants
                                                                                                                                                who
                                                                                                                                                are
                                                                                                                                                employed
                                                                                                                                                by
                                                                                                                                                the
                                                                                                                                                Company
                                                                                                                                                or
                                                                                                                                                any
                                                                                                                                                of
                                                                                                                                                its
                                                                                                                                                Subsidiaries
                                                                                                                                                in
                                                                                                                                                any
                                                                                                                                                particular
                                                                                                                                                jurisdiction
                                                                                                                                                other
                                                                                                                                                than
                                                                                                                                                the
                                                                                                                                                PRC,
                                                                                                                                                or
                                                                                                                                                who
                                                                                                                                                are
                                                                                                                                                nationals
                                                                                                                                                of
                                                                                                                                                any
                                                                                                                                                particular
                                                                                                                                                jurisdiction
                                                                                                                                                other
                                                                                                                                                than
                                                                                                                                                the
                                                                                                                                                PRC,
                                                                                                                                                as
                                                                                                                                                the
                                                                                                                                                Board
                                                                                                                                                may
                                                                                                                                                consider
                                                                                                                                                necessary
                                                                                                                                                or
                                                                                                                                                appropriate
                                                                                                                                                to
                                                                                                                                                accommodate
                                                                                                                                                differences
                                                                                                                                                in
                                                                                                                                                local
                                                                                                                                                law,
                                                                                                                                                tax
                                                                                                                                                policy
                                                                                                                                                or
                                                                                                                                                custom.
                                                                                                                                                In
                                                                                                                                                addition,
                                                                                                                                                the
                                                                                                                                                Board
                                                                                                                                                may
                                                                                                                                                approve
                                                                                                                                                such
                                                                                                                                                supplements
                                                                                                                                                to
                                                                                                                                                or
                                                                                                                                                restatements
                                                                                                                                                or
                                                                                                                                                alternative
                                                                                                                                                versions
                                                                                                                                                of
                                                                                                                                                this
                                                                                                                                                Plan,
                                                                                                                                                including,
                                                                                                                                                without
                                                                                                                                                limitation,
                                                                                                                                                a
                                                                                                                                                sub-plan
                                                                                                                                                to
                                                                                                                                                this
                                                                                                                                                Plan,
                                                                                                                                                as
                                                                                                                                                it
                                                                                                                                                may
                                                                                                                                                consider
                                                                                                                                                necessary
                                                                                                                                                or
                                                                                                                                                appropriate
                                                                                                                                                for
                                                                                                                                                such
                                                                                                                                                purposes,
                                                                                                                                                without
                                                                                                                                                thereby
                                                                                                                                                affecting
                                                                                                                                                the
                                                                                                                                                terms
                                                                                                                                                of
                                                                                                                                                this
                                                                                                                                                Plan
                                                                                                                                                as
                                                                                                                                                in
                                                                                                                                                effect
                                                                                                                                                for
                                                                                                                                                any
                                                                                                                                                other
                                                                                                                                                purpose,
                                                                                                                                                and
                                                                                                                                                the
                                                                                                                                                Company
                                                                                                                                                Secretary
                                                                                                                                                or
                                                                                                                                                other
                                                                                                                                                appropriate
                                                                                                                                                officer
                                                                                                                                                of
                                                                                                                                                the
                                                                                                                                                Company
                                                                                                                                                may
                                                                                                                                                certify
                                                                                                                                                any
                                                                                                                                                such
                                                                                                                                                document
                                                                                                                                                as
                                                                                                                                                having
                                                                                                                                                been
                                                                                                                                                approved
                                                                                                                                                and
                                                                                                                                                adopted
                                                                                                                                                in
                                                                                                                                                the
                                                                                                                                                same
                                                                                                                                                manner
                                                                                                                                                as
                                                                                                                                                this
                                                                                                                                                Plan.
                                                                                                                                                No
                                                                                                                                                such
                                                                                                                                                special
                                                                                                                                                terms,
                                                                                                                                                supplements
                                                                                                                                                or
                                                                                                                                                restatements,
                                                                                                                                                however,
                                                                                                                                                shall
                                                                                                                                                include
                                                                                                                                                any
                                                                                                                                                provisions
                                                                                                                                                that
                                                                                                                                                are
                                                                                                                                                inconsistent
                                                                                                                                                with
                                                                                                                                                the
                                                                                                                                                terms
                                                                                                                                                of
                                                                                                                                                this
                                                                                                                                                Plan
                                                                                                                                                as
                                                                                                                                                then
                                                                                                                                                in
                                                                                                                                                effect
                                                                                                                                                unless
                                                                                                                                                this
                                                                                                                                                Plan
                                                                                                                                                could
                                                                                                                                                have
                                                                                                                                                been
                                                                                                                                                amended
                                                                                                                                                to
                                                                                                                                                eliminate
                                                                                                                                                such
                                                                                                                                                inconsistency
                                                                                                                                                without
                                                                                                                                                further
                                                                                                                                                approval
                                                                                                                                                by
                                                                                                                                                the
                                                                                                                                                shareholders
                                                                                                                                                of
                                                                                                                                                the
                                                                                                                                                Company.

 

		13.	Administration
                                                           of the Plan.

 

		(a)	This
                                                               Plan will be administered by the Board, which may from time to
                                                               time delegate all or any part of its authority under this Plan
                                                               to the Compensation Committee of the Board (or a subcommittee thereof),
                                                               as constituted from time to time. A majority of the committee (or
                                                               subcommittee) will constitute a quorum, and the action of the members
                                                               of the committee (or subcommittee) present at any meeting at which
                                                               a quorum is present, or acts unanimously approved in writing, will
                                                               be the acts of the committee (or subcommittee). To the extent of
                                                               any such delegation, references in this Plan to the Board will
                                                               be deemed to be references to such committee or subcommittee.

 

		(b)	The
                                                               interpretation and construction by the Board of any provision of
                                                               this Plan or of any agreement, notification or document evidencing
                                                               the grant of Option Rights, Restricted Shares or Restricted Share
                                                               Units and any determination by the Board pursuant to any provision
                                                               of this Plan or of any such agreement, notification or document
                                                               will be final and conclusive. No member of the Board will be liable
                                                               for any such action or determination made in good faith.

 

		14.	Amendments,
                                                                                                    Etc.

 

		(a)	The
                                                               Board may at any time and from time to time amend the Plan in whole
                                                               or in part; provided, however, that any amendment
                                                               which must be approved by the shareholders of the Company in order
                                                               to comply with applicable law or the rules of the NASDAQ Global
                                                               Market or, if the Shares are not quoted on the NASDAQ Global Market,
                                                               the principal national securities exchange upon which the Shares
                                                               are traded or quoted (“Applicable Law”), will not be
                                                               effective unless and until such approval has been obtained. Nothing
                                                               herein shall be construed to limit the Company’s authority
                                                               to offer similar or dissimilar benefits under other plans or otherwise
                                                               with or without further shareholder approval.

 

    	 

    	 

    

 

		(b)	The
                                                               Board also may permit Participants to elect to defer the issuance
                                                               of Shares or the settlement of awards in cash under the Plan pursuant
                                                               to such rules, procedures or programs as it may establish for purposes
                                                               of this Plan. The Board also may provide that deferred issuances
                                                               and settlements include the payment or crediting of dividend equivalents
                                                               or interest on the deferral amounts.

 

		(c)	The
                                                               Board may condition the grant of any award or combination of awards
                                                               authorized under this Plan on the surrender or deferral by the
                                                               Participant of his or her right to receive a cash bonus or other
                                                               compensation otherwise payable by the Company or a Subsidiary to
                                                               the Participant.

 

		(d)	In case
                                                               of termination of employment by reason of death, disability or
                                                               normal or early retirement, or in the case of hardship or other
                                                               special circumstances, of a Participant who holds an Option Right
                                                               not immediately exercisable in full, or any Restricted Shares as
                                                               to which the risk of forfeiture or the prohibition or restriction
                                                               on transfer has not lapsed, or any Restricted Share Units as to
                                                               which the Restriction Period has not been completed, or who holds
                                                               Shares subject to any transfer restriction imposed pursuant to
                                                               Section 8(b) of this Plan, the Board may, in its sole discretion,
                                                               accelerate the time at which such Option Right may be exercised
                                                               or the time at which such risk of forfeiture or prohibition or
                                                               restriction on transfer will lapse or the time when such Restriction
                                                               Period will end or the time when such transfer restriction will
                                                               terminate or may waive any other limitation or requirement under
                                                               any such award.

 

		(e)	This
                                                               Plan shall not confer upon any Participant any right with respect
                                                               to employment or other service with the Company or any Subsidiary
                                                               (including, without limitation, continuation of employment), nor
                                                               shall it interfere in any way with any right the Company or any
                                                               Subsidiary would otherwise have to terminate such Participant’s
                                                               employment or other service at any time, with or without cause.
                                                               The terms of employment of an employee shall not be affected by
                                                               the execution of this Plan. Awards granted under this Plan shall
                                                               not form a part of the terms of employment of an employee or entitle
                                                               such employee to take into account awards granted under this Plan
                                                               when calculating any compensation or damages upon the termination
                                                               of such employee’s employment for any reason.

 

		(f)	This Plan shall be effective immediately
                                                               upon its adoption by the Board; provided, however, that this Plan
                                                               will be subject to approval by the shareholders of the Company
                                                               within 12 months after the date this Plan is adopted by the Board,
                                                               which shareholder approval will be obtained in the manner and to
                                                               the degree required under Applicable Law. Any Option Rights intended
                                                               to be granted as incentive stock options under this Plan shall
                                                               be deemed nonstatutory stock options or nonqualified stock options
                                                               if the Plan is not approved by the shareholders within such 12-month
                                                               period.

 

    	 

    	 

    

 

		15.	Governing
                                                           Law. The Plan and all grants
                                                           and awards and actions taken thereunder shall be governed by and construed
                                                           in accordance with the internal substantive laws of the Cayman Islands.

 

		16.	Compliance
                                                           with Law. The grant of awards
                                                           and the issuance of Shares in connection with such awards under this
                                                           Plan shall be subject to compliance with all applicable requirements
                                                           of the laws of the PRC, the laws of the Cayman Islands, and United
                                                           States federal and state law with respect to such securities.
                                                           Option Rights may not be exercised and Restricted Share Units may not
                                                           be paid out if the issuance of Shares would constitute a violation
                                                           of any such applicable or other laws or regulations or the requirements
                                                           of any stock exchange or market system upon which the Shares may then
                                                           be listed. In addition, no Option Rights may be exercised and no Restricted
                                                           Share Units may be paid out unless (a) a registration statement under
                                                           the United States Securities Act of 1933, as amended (the “Securities
                                                           Act”), shall at the time of exercise of the Option Rights or
                                                           the payment of the Restricted Share Units be in effect with respect
                                                           to the shares issuable upon exercise of the Option Rights or the payment
                                                           of the Restricted Share Units or (b) in the opinion of legal counsel
                                                           to the Company, the shares issuable upon exercise of the Option Rights
                                                           or payment of the Restricted Share Units may be issued in accordance
                                                           with the terms of an applicable exemption or exception from the registration
                                                           requirements of the Securities Act. The inability of the Company to
                                                           obtain from any regulatory body having jurisdiction the authority,
                                                           if any, deemed by the Company’s legal counsel to be necessary
                                                           to the lawful issuance and sale of any Shares hereunder shall relieve
                                                           the Company of any liability in respect of the failure to issue or
                                                           sell such shares as to which such requisite authority shall not have
                                                           been obtained. As a condition to the exercise of any Option Rights
                                                           or payment of Restricted Share Units, the Company may require the Participant
                                                           to satisfy any qualifications that may be necessary or appropriate,
                                                           to evidence compliance with any applicable law or regulation and to
                                                           make any representation or warranty with respect thereto as may be
                                                           requested by the Company.

 

		17.	Termination.
                                                           No grant will be made under this
                                                           Plan after a term of ten (10) years after the effectiveness of the
                                                           Plan as provided in Section 14(f), but all grants made on or prior
                                                           to such date will continue in effect thereafter subject to the terms
                                                           thereof and of this Plan.

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