Document:

Exhibit
4.1

 

 

 

NEW WORLD RESTAURANT GROUP, INC.

STOCK APPRECIATION RIGHTS PLAN

 

 

 

 

 

Effective February
9, 2007

 

 

NEW WORLD RESTAURANT GROUP, INC.

STOCK APPRECIATION RIGHTS PLAN

ARTICLE I

INTRODUCTION

1.1 Establishment. 
New World Restaurant Group, Inc., a Delaware corporation, hereby
establishes the New World Restaurant Group, Inc. Stock Appreciation Rights Plan
for certain employees of the Company.

1.2 Purposes.  The
purposes of the Plan are to provide those who are selected for participation in
the Plan with added incentives to continue in the long-term service of
the Company and to create in such persons a more direct interest in the future
success of the operations of the Company by relating incentive compensation to
increases in shareholder value, so that the income of those participating in
the Plan is more closely aligned with the income of the Company’s shareholders.  The Plan is also designed to provide a
financial incentive that will help the Company attract, retain and motivate the
most qualified employees.

ARTICLE II

DEFINITIONS

2.1 “Affiliated Corporation” means any corporation or other
entity that is affiliated with the Plan Sponsor through stock ownership or
otherwise.

2.2 “Award” means a Stock Appreciation Right issued under
the Plan.

2.3 “Board” means the Board of Directors of the Plan
Sponsor.

2.4 “Cause” shall have the meaning assigned to it by the Participant’s
employment agreement, if the Company has entered into an employment agreement
with the Participant; otherwise termination for “Cause” shall mean termination
of employment as a result of a violation of any Company policy, procedure or
guideline, or engaging in any of the following forms of misconduct: conviction
of any felony or of any misdemeanor involving dishonesty or moral turpitude;
theft or misuse of the Company’s property or time; use of alcohol or controlled
substances on the Company’s premises or appearing on such premises while
intoxicated or under the influence of drugs not prescribed by a physician, or
after having abused prescribed medications; illegal use of any controlled
substance; illegal gambling on the Company’s premises; discriminatory or
harassing behavior, whether or not illegal under federal, state or local law;
willful misconduct; or falsifying any document or making any false or
misleading statement  relating to
employment by the Company; or injures the economic or ethical welfare of the
Company by misconduct or inattention to duties and responsibilities, or fails
to meet the Company’s performance expectations, as determined by the Company in
its sole discretion.

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2.5 “Code” means the Internal Revenue Code of 1986, as it may
be amended from time to time.

2.6 “Committee” means a committee established under Article V
of the Plan which is empowered to take actions with respect to the
administration of the Plan.

2.7 “Company” means the Plan Sponsor and the Affiliated
Corporations.

2.8 “Disabled” or “Disability” shall have the meaning given to
such terms in Code § 22(e)(3).

2.9 “Effective Date” means the effective date of the Plan
which is February 9, 2007.

2.10 “Eligible Employees” means the employees of the Company
who are selected for participation in the Plan. 
For purposes of the Plan, an employee is an individual whose wages are
subject to the withholding of federal income tax under Code § 3401.  An Eligible Employee who is subject to
Section 16 of the Securities Exchange Act of 1934 is not eligible to
participate in the Plan.

2.11 “Fair Market Value” means the closing price, on the
NASDAQ National Market System, the principal stock exchange or other market on
which the Stock is traded, on the trading day preceding the grant date, if any,
or if Shares were not traded on such date, then on the next preceding date on
which a trade occurred.  If the price of
the Stock is not reported on any securities exchange or national market system,
the Fair Market Value of the Stock on a particular date shall be as determined
by the Committee in good faith by applying any reasonable valuation method
permitted under Code § 409A to determine fair market value in accordance
with Code § 409A.

2.12 “Participant” means an Eligible Employee designated by
the Board or the Committee during the term of the Plan to receive one or more
Awards under the Plan.

2.13 “Plan” means the New World Restaurant Group, Inc. Stock
Appreciation Rights Plan.

2.14 “Plan Sponsor” means New World Restaurant Group, Inc.
and any successor thereto.

2.15 “SAR Agreement” shall
have the meaning given to it in Section 4.3.

2.16 “SAR Holder” means a Participant who has been granted
one or more SARs under the Plan.

2.17 “SAR Period” shall have the meaning given to it in
Section 4.3(c).

 2
 

 

2.18 “SARs” means Stock
Appreciation Rights.

2.19 “Section” or “Subsection” means a reference to a section
or subsection of the Plan, unless another reference specifically applies.

2.20 “Share” means a share of Stock.

2.21 “Stock” means the $.001 par value common stock of the
Plan Sponsor and any stock issued or issuable subsequent to the Effective Date
in substitution for the common stock.

2.22 “Stock Appreciation Right” means the right, granted by
the Committee pursuant to the Plan, to receive a payment equal to the increase
in the Fair Market Value of a Share subsequent to the grant of such right.

ARTICLE III

PARTICIPATION

3.1 Participation.  Participants in the Plan shall be those
Eligible Employees who, in the judgment of the Board or the Committee, are
expected to significantly contribute to the achievement of long-term corporate
economic objectives or who are performing services important to the operation
and growth of the Company.  An Eligible
Employee who is subject to Section 16 of the Securities Exchange Act of 1934 is
not eligible to participate in the Plan. Participants may be granted from time
to time one or more Awards.

ARTICLE IV

STOCK APPRECIATION RIGHTS

4.1 Persons
Eligible.  The Committee,
in its sole discretion, may grant a Participant one or more Stock Appreciation
Rights.

4.2 Types of Stock Appreciation Rights.
The Committee may grant Stock Appreciation Rights that are settled in Stock.

4.3 Terms of Grant. 
The Committee shall determine at the time of the grant of a Stock
Appreciation Right the time period during which the Stock Appreciation Right
may be exercised, the type of Stock Appreciation Right being granted, and any
other terms that will apply to the Stock Appreciation Right.  Each Stock Appreciation Right granted under
the Plan shall be evidenced by a written stock appreciation right agreement (a “SAR
Agreement”).  A SAR Agreement shall be
issued by the Plan Sponsor in the name of the SAR Holder and in such form as
may be approved by the Committee.  The
SAR Agreement shall incorporate and conform to the conditions in the Plan as
well as any other terms and conditions that are not inconsistent as the
Committee may consider appropriate. In the event of any inconsistency between
the provisions of the Plan and any SAR Agreement, the provisions of the Plan
shall govern.

 3
 

 

(a)                                  Number of SARs.  Each SAR Agreement shall state that it covers
a specified number of Stock Appreciation Rights, as determined by the
Committee.

(b)                                 Stock Price for Determining
Appreciation.  Each SAR
Agreement shall state the Fair Market Value of a Share from which appreciation
of the SAR will be measured.  The Stock
price specified shall not be less than 100% of the Fair Market Value of the
Stock on the date the SAR is granted.

(c)                                  Duration of SARs.  Each SAR Agreement shall state the period of
time, determined by the Committee, within which the SAR may be exercised by the
SAR Holder (the “SAR Period”).  The SAR
Period must end not more than five years from the date the SAR is granted.  If no SAR Period is stated in the SAR
Agreement, the SAR Period shall end on the day immediately preceding the 5th anniversary of the date of grant.

(d)                                 Restrictions on Exercise.  The SAR Agreement shall also set forth any
restrictions on SAR exercise during the SAR Period, if any, as may be
determined by the Committee.  Each SAR
shall become exercisable (vest) over such period of time, if any, or upon such
events, as determined by the Committee. 
If no restrictions are stated in the SAR Agreement, 50% of the SAR Award
shall be exercisable on and after the 1st anniversary of
the date of grant and the remaining 50% of the SAR Award shall be exercisable
on and after the 2nd anniversary of the date of grant.

(e)                                  Termination of Services, Death, or
Disability.  The Committee
may specify the period, if any, after which an SAR may be exercised following
termination of the SAR Holder’s services in the SAR Agreement.  If the SAR Agreement does not specify the
period of time following termination of service during which SARs may be
exercised, the time periods in this Subsection shall apply.  Once a SAR is granted, the Committee may not
change the time period during which a SAR may be exercised following
termination of the SAR Holder’s services, unless such a change would not cause
additional taxes to be imposed pursuant to Code § 409A.

(i)                                     Termination for Cause.  If the services of the SAR Holder are
terminated within the SAR Period for Cause, as determined by the Company, the
SAR shall thereafter be void for all purposes.

(ii)                                  Disability. 
If the SAR Holder becomes Disabled and terminates services, the SAR
may be exercised by the SAR Holder within 90 calendar days following the SAR
Holder’s termination of services on account of Disability (provided that such
exercise must occur within the SAR Period and not after the end of the SAR
Period).  The SAR may be exercised only
with respect to the extent the SAR had become exercisable on or before the date
of the SAR Holder’s termination of services because of Disability.

 4
 

 

(iii)                               Death. 
 If the SAR Holder dies during
the SAR Period while still performing services for the Company, the SAR may be
exercised by those entitled to do so under the SAR Holder’s will or by the laws
of descent and distribution within 90 calendar days following the SAR Holder’s
death, (provided that such exercise must occur within the SAR Period and not
after the end of the SAR Period).  The
SAR may be exercised only to the extent the SAR had become exercisable on or
before the date of the SAR Holder’s termination of services because of the SAR
Holder’s death.

(iv)                              Termination for Reasons Other than Cause, Disability
or Death.  If the SAR
Holder is no longer employed by the Company or performing services for the
Company for any reason other than Cause, Disability or the SAR Holder’s death,
the SAR may be exercised by the SAR Holder within 90 calendar days following
the date of termination (provided that the exercise must occur within the SAR
Period and not after the end of the SAR Period).  The SAR may be exercised only to the extent the
SAR had become exercisable on or before the date of termination of services.

4.4 Exercise
of Stock Appreciation Rights. Upon vesting in a Stock
Appreciation Right, a Participant shall be permitted to exercise the Stock
Appreciation Right at any time prior to the date the Stock Appreciation Right
expires.  The effective date of exercise
of a Stock Appreciation Right is the date on which the Company receives notice
from the Participant of the exercise of the Stock Appreciation Right. Upon the
exercise of one or more Stock Appreciation Rights settled in Stock, the Company
will issue to the Participant the number of whole Shares determined by dividing
(i) the number of Stock Appreciation Rights being exercised, multiplied by the
difference in the Fair Market Value of one Share on the exercise date of the
Stock Appreciation Right and the Fair Market Value of one Share on the grant
date in the Stock Appreciation Right by (ii) the Fair Market Value of one
Share on the exercise date.

4.5 Withholding Requirement.  All payments under the Plan are subject to
withholding of all taxes, government mandated social benefit contributions, or
other payments required to be withheld which are applicable to the
Participant.  All amounts required to be
withheld must be paid in cash to the Company by the Participant on the date of
exercise, or as soon thereafter as administratively feasible.

4.6 Effect of Exercise. 
The exercise or cash-out of a Stock Appreciation Right will result in an
equal reduction in the number of Stock Appreciation Rights that were granted.

4.7 No Equity Holder Privileges.  No holder of a Stock Appreciation Right shall
have any privileges as an equity holder with respect to any Stock Appreciation
Rights.

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ARTICLE V

PLAN ADMINISTRATION

5.1 Committee.  The Plan
shall be administered by a Committee appointed by and serving at the pleasure
of the Board (the “Committee”). The Board may from time to time remove members
from or add members to the Committee, and vacancies on the Committee, howsoever
caused, shall be filled by the Board. Members of the Committee and any
subcommittee or special committee shall be appointed from time to time by the
Board, shall serve at the pleasure of the Board and may resign at any time upon
written notice to the Board.

5.2 Committee Meetings and Actions.  The
Committee shall hold meetings at such times and places as it may
determine.  A majority of the members of
the Committee shall constitute a quorum, and the acts of the majority of the
members present at a meeting or a consent in writing signed by all members of
the Committee shall be the acts of the Committee and shall be final, binding
and conclusive upon all persons, including the Company, its shareholders, and
all persons having any interest in Awards which may be or have been granted
pursuant to the Plan.

5.3 Powers of Committee.  In
accordance with the provisions of the Plan, the Committee shall, in its sole
discretion, select the Participants from among the Eligible Employees,
determine the Awards to be made pursuant to the Plan, and the time at which
such Awards are to be made, fix the terms of the Awards as the Committee may
deem necessary or desirable and consistent with the terms of the Plan.  The Committee shall determine the form or
forms of the agreements with Participants that shall evidence the particular
provisions, terms, conditions, rights and duties of the Plan Sponsor and the
Participants with respect to Awards granted pursuant to the Plan, which
provisions need not be identical except as may be provided herein. The
Committee shall have the full and exclusive right to grant and determine terms
and conditions of all SARs granted under the Plan.  The Committee may from time to time adopt
such rules and regulations for carrying out the purposes of the Plan as it may
deem proper and in the best interests of the Company.  The Committee may correct any defect, supply
any omission or reconcile any inconsistency in the Plan or in any agreement
entered into hereunder in the manner and to the extent it shall deem expedient
and it shall be the sole and final judge of such expediency.  No member of the Committee shall be liable
for any action or determination made in good faith.  The determinations, interpretations and other
actions of the Committee pursuant to the provisions of the Plan shall be
binding and conclusive for all purposes and on all persons.

5.4 Interpretation of Plan.  The
determination of the Committee as to any disputed question arising under the
Plan, including questions of construction and interpretation, shall be final,
binding and conclusive upon all persons, including the Company, its
shareholders, and all persons having any interest in Awards which may be or
have been granted pursuant to the Plan.

5.5  Indemnification.  Each person who is or shall have
been a member of the Committee or of the Board of Directors shall be
indemnified and held harmless by the Plan Sponsor against and from any loss,
cost, liability or expense that may be imposed upon or reasonably incurred in
connection with or resulting from any claim, action, suit or proceeding to
which such person may be a party or in which such person may be involved by
reason of any action taken or failure to act under the Plan and against and
from any and all amounts paid in settlement thereof, with the Company’s
approval, or paid in satisfaction of a judgment in any such action, suit or
proceeding against him, provided such person shall give the Company an
opportunity, at its own expense, to 

 6
 

 

handle
and defend the same before undertaking to handle and defend it on such person’s
own behalf.  The foregoing right of
indemnification shall not be exclusive of, and is in addition to, any other
rights of indemnification to which any person may be entitled under the Plan
Sponsor’s Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold
them harmless.

ARTICLE VI

STOCK SUBJECT TO THE PLAN

6.1 Number of Shares. 
The number of Shares that are authorized for issuance under the Plan in
accordance with the provisions of the Plan and subject to such restrictions or
other provisions as the Committee may from time to time deem necessary shall
not exceed 150,000, subject to the provisions regarding changes in
capital.  The Shares may be either
authorized and unissued Shares or previously issued Shares acquired by the Plan
Sponsor.  This authorization may be
increased from time to time by approval of the Board and by the stockholders of
the Plan Sponsor if, in the opinion of counsel for the Plan Sponsor,
stockholder approval is required.  Shares
that may be issued upon exercise of SARs under the Plan shall be applied to
reduce the maximum number of Shares remaining available for use under the Plan.  The Plan Sponsor shall at all times during
the term of the Plan and while any SARs are outstanding retain as authorized
and unissued Stock at least the number of Shares from time to time required
under the provisions of the Plan, or otherwise assure itself of its ability to
perform its obligations hereunder.

6.2 Unused Stock.  Any
Shares that are subject to a SAR that expires or for any reason is terminated
unexercised shall automatically become available for use under the Plan.

6.3 Adjustments for Stock Splits and Stock Dividends.  If the Plan Sponsor shall at any time
increase or decrease the number of its outstanding Shares or change in any way
the rights and privileges of such Shares by means of the payment of a stock
dividend or any other distribution upon such Shares payable in Stock, or
through a stock split, subdivision, consolidation, combination,
reclassification or recapitalization involving the Stock, then in relation to
the Stock that is affected by one or more of the above events, the numbers,
rights and privileges of the following shall be increased, decreased or changed
in like manner as if they had been issued and outstanding, fully paid and
nonassessable at the time of such occurrence: 
(i) the Shares as to which Awards may be granted under the Plan and (ii)
the Shares then included in each outstanding Award granted hereunder. Any
change or adjustment made pursuant to this Section must comply with the
requirements of Code § 409A, and may only be taken pursuant to this
Section if the action would not cause adverse tax consequences under Code
§ 409A.

6.4 Other Distributions and Changes in the Stock.  If the Plan Sponsor distributes assets or
securities of persons other than the Plan Sponsor (excluding cash or
distributions referred to in Section 6.3) with respect to the Stock, or if the
Plan Sponsor grants rights to subscribe pro rata for additional Shares or for
any other securities of the Plan Sponsor to the holders of its Stock, or if
there is any other change (except as described in Section 6.3) in the number or
kind of outstanding Shares or of any stock or other securities into which the
Stock will be changed or for 

 7
 

 

which
it has been exchanged, and if the Committee in its discretion determines
that the event equitably requires an adjustment in the SAR Price or the taking
of any other action by the Committee, including without limitation, the setting
aside of any property for delivery to the Participant upon the exercise of an
Award or the full vesting of an Award, then such adjustments shall be made, or
other action shall be taken, by the Committee and shall be effective for all
purposes of the Plan and on each outstanding Award.  Any change or adjustment made pursuant to
this Section must comply with the requirements of Code § 409A, and may
only be taken pursuant to this Section if the action would not cause adverse
tax consequences under Code § 409A.

6.5 Determination by the Committee.  Adjustments under this Article shall be made
by the Committee, whose determinations shall be final and binding upon all
parties.

ARTICLE VII

GENERAL RESTRICTIONS

7.1 Investment Representations.  The Plan Sponsor may require any person to
whom an Award is granted, as a condition of receiving Stock pursuant to the
Award, to give written assurances in substance and form satisfactory to the
Plan Sponsor and its counsel to the effect that such person is acquiring the
Stock for his own account for investment and not with any present intention of
selling or otherwise distributing the same, and to such other effects as the
Plan Sponsor deems necessary or appropriate in order to comply with federal and
applicable state securities laws. 
Legends evidencing such restrictions may be placed on the Stock
certificates.

7.2  Compliance with Securities Laws.  Each Award shall be subject to the
requirement that, if at any time counsel to the Plan Sponsor shall determine
that the listing, registration or qualification of the Shares subject to such
Award upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, is necessary as a
condition of, or in connection with, the issuance or purchase of shares
thereunder, such Award may not be accepted or exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall
have been effected or obtained on conditions acceptable to the Committee.  Nothing herein shall be deemed to require the
Plan Sponsor to apply for or to obtain such listing, registration or
qualification.

7.3 Changes in Accounting Rules.  Except as provided otherwise at the time an
Award is granted, notwithstanding any other provision of the Plan to the
contrary, if, during the term of the Plan, any changes in the financial or tax
accounting rules applicable to Awards shall occur which, in the sole judgment
of the Committee, may have a material adverse effect on the reported earnings,
assets or liabilities of the Plan Sponsor, the Committee shall have the right
and power to modify as necessary, any then outstanding Awards as to which the
applicable services or other restrictions have not been satisfied.

 8
 

 

ARTICLE VIII

REQUIREMENTS OF LAW

8.1 Requirements
of Law.  The issuance of
Stock and the payment of cash pursuant to the Plan shall be subject to all
applicable laws, rules and regulations.

8.2 Governing Law. 
The Plan and all agreements hereunder shall be construed in accordance
with and governed by the laws of the State of Colorado.

ARTICLE IX

PLAN AMENDMENT, MODIFICATION AND TERMINATION

The Board may at any time terminate, and from time to time may amend or
modify the Plan. No amendment, modification or termination of the Plan shall in
any manner adversely affect any Award previously granted under the Plan,
without the consent of the Participant holding such Award.

ARTICLE X

MISCELLANEOUS

10.1 Gender and Number. 
Except when otherwise indicated by the context, the masculine gender
shall also include the feminine gender, and the definition of any term herein
in the singular shall also include the plural.

10.2 No Right to Continued Employment.  Nothing contained in the Plan or in any Award
granted under the Plan shall confer upon any Participant any right with respect
to the continuation of his employment by, or consulting relationship with, the
Company, or interfere in any way with the right of the Company, subject to the
terms of any separate employment agreement or other contract to the contrary,
at any time to terminate such services or to increase or decrease the
compensation of the Participant from the rate in existence at the time of the
grant of an Award. Nothing in this Plan shall limit or impair the Company’s
right to terminate the employment of any employee, to terminate the consulting
services of any consultant, or to terminate the services of any director.  Whether an authorized leave of absence, or
absence in military or government service, shall constitute a termination of
service shall be determined by the Committee at the time.

10.3 Nontransferability. 
Except as provided otherwise at the time of grant or as otherwise
provided in the Plan, no right or interest of any Participant in an Award
granted pursuant to the Plan shall be assignable or transferable during the
lifetime of the Participant, either voluntarily or involuntarily, or subjected
to any lien, directly or indirectly, by operation of law, or otherwise, including
execution, levy, garnishment, attachment, pledge or bankruptcy.  In the event of a Participant’s death, a
Participant’s rights and interests in Awards shall, to the extent provided in
the Plan, be transferable by will or the laws of descent and distribution, and
payment 

 9
 

 

of
any amounts due under the Plan shall be made to, and exercise of any Awards may
be made by, the Participant’s legal representatives, heirs or legatees.  If in the opinion of the Committee a person
entitled to payments or to exercise rights with respect to the Plan is unable
to take care of his or her affairs because of mental condition, physical
condition or age, payment due such person may be made to, and such rights shall
be exercised by, such person’s guardian, conservator or other legal personal
representative upon furnishing the Committee with evidence satisfactory to the
Committee of such status.

10.4 No Plan Funding. 
Obligations to Participants under the Plan will not be funded, trusteed,
insured or secured in any manner.  The
Participants under the Plan shall have no security interest in any assets of
the Company, and shall be only general creditors of the Company.

10.5 Other Employee Benefits. 
Except as specifically required by the documentation governing the
employee benefit, the amount of any compensation deemed to be received by a
Participant as a result of Awards under the Plan shall not constitute “earnings”
or “compensation” with respect to which any other employee benefits of such
employee are determined, including without limitation benefits under any
pension, profit sharing, 401(k), life insurance or salary continuation plan.

IN WITNESS WHEREOF, the Plan Sponsor has caused this Plan to be duly
executed, effective as of the Effective Date.

	
  

  	
  NEW WORLD RESTAURANT GROUP, INC.

  
	
   

  	
  Plan Sponsor

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul J.B. Murphy, III

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
  Date:

  	
  February 20, 2007

  

 

 10Exhibit 4.2

FORM
OF STOCK APPRECIATION RIGHTS AGREEMENT

This SAR Agreement between New World Restaurant
Group, Inc. (the “Company”) and ___________________________________ (the “Participant”
or “SAR Holder”) shall be effective as of Grant.   The Company and SAR Holder agree as follows:

1.                                       Grant of Rights.  SAR
Holder is hereby granted stock appreciation rights (“SARs”) under the New World
Restaurant Group, Inc. Stock Appreciation Rights Plan (“Plan”).   The SARs and this SAR Agreement are subject
to and shall be construed in accordance with the terms and conditions of the
Plan, as it is currently in effect and as it may be amended from time to
time.  Any terms which are used in this
SAR Agreement without being defined and which are defined in the Plan shall have
the meaning specified in the Plan.

2.                                       Date of Grant.  The
date of grant of the SARs shall be _________________________.

3.                                       Number of Time-Vested SARs.  The
number of Time-Vested SARs granted is __________.

4.                                       Number of Performance-Vested
SARs.  The
number of Performance-Vested SARs granted is __________.

5.                                       Value of a Share.  The
value of a Share from which appreciation is determined is 100% of the Fair
Market Value of a Share as of the Date of the Grant, which is
$__________________.

6.                                       Vesting of Time-Vested SARs
Awarded.  The Time-Vested SARs granted pursuant to this
SAR Agreement shall become vested as set forth in the following schedule:

	
  

  	
   

  	
  Percentage of Total Number

  	
   

  
	
   

  	
   

  	
  Of Time-Vested SARs Granted

  	
   

  
	
  Vesting Date

  	
   

  	
  Which Are Vested

  	
   

  
	
  April 1, 20  

  	
   

  	
  50%

  	
   

  
	
  April 1, 20  

  	
   

  	
  100%

  	
   

  

 

In order to vest in accordance with the schedule, the SAR Holder must
have been continuously performing services for the Company from the Date of
Grant until the vesting date specified in the schedule.

7.                                       Vesting of
Performance-Vested SARs Awarded.  Performance-Vested SARs granted pursuant to
this SAR Agreement shall become vested as set forth in the following schedule:

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Percentage of Total

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Number of

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Performance-Vested

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  SARs Granted Which Are

  	
   

  
	
  EBITDA Period

  	
   

  	
  EBITDA

  	
   

  	
  Vesting Date

  	
   

  	
  Vested on Vesting Date

  	
   

  
	
  20  
  Calendar Year

  	
   

  	
  Less than $                 

  	
   

  	
  April 1, 20  

  	
   

  	
  0

  	
  %

  
	
  20  
  Calendar Year

  	
   

  	
  $

  	
                   
  or more

  	
   

  	
  April 1, 20  

  	
   

  	
  50

  	
  %

  
	
  20  
  Calendar Year

  	
   

  	
  Less than $                 

  	
   

  	
  April 1, 20  

  	
   

  	
  0

  	
  %

  
	
  20   Calendar Year

  	
   

  	
  $

  	
                   
  or more

  	
   

  	
  April 1, 20  

  	
   

  	
  50

  	
  %

  

 

 1
 

 

If the Company achieves Earnings Before Interest, Taxes, Depreciation
and Amortization (“EBITDA”) for 20   of less than $                 , then no Performance-Vested SARs will vest
on April 1, 20  .  If the Company achieves EBITDA for 20   of at least $                 , then 50% of the Performance-Vested SARs
will vest on April 1, 20  .  If the Company achieves EBITDA
for 20   of
less than $                 , then no additional Performance-Vested SARs
will vest on April 1, 20  , but the Performance-Vested SARs vested in 20  ,
unless redeemed, will continue to be vested. 
If the Company achieves EBITDA for 20   of at least $                  and had achieved EBITDA for 20   of at least $                 , then 100% of the Performance-Vested SARs
will be vested.

The Committee shall determine, in its sole discretion, whether the
EBITDA target is actually met each calendar year. In order to vest in
accordance with the schedule, the SAR Holder must have been continuously
performing services for the Company from the Date of Grant until the vesting
date specified in the schedule.  To the
extent SARs do not vest for a calendar year, the SARs shall be forfeited as of
the Vesting Date.

8.                                       Expiration Date. SARs shall expire at the end of the SAR
Period.  The SAR Period shall end on
March 31, 20  , and in no event may any vested SARs be
redeemed after that date.

9.                                       Redemption of Vested SARs. 
Vested SARs may be redeemed at any time during the SAR Period, if the
SAR Holder remains employed by the Company. The SAR Holder may redeem vested SARs
by delivering written notice to the Plan Sponsor of the number of vested SARs
that are being redeemed pursuant to the procedure prescribed by the Committee.
If the SAR Holder terminates employment (other than termination for Cause),
becomes Disabled, or dies, vested SARs may be redeemed during the SAR Period by
the SAR Holder (or the SAR Holder’s beneficiary, if applicable) no later than
90 days following the SAR Holder’s termination of services, death, or
Disability.

10.                                 Cancellation of Vested SARs.  If
the services of the SAR Holder are terminated for Cause, then all SARs held by
the SAR Holder shall be canceled, and the SAR Agreement shall be terminated on
the SAR Holder’s termination date.

11.                                 Payment Upon Redemption of
Vested SARs.  Upon redemption of a vested SAR, the Plan
Sponsor shall make a payment for each vested SAR redeemed equal to (a) the
excess of the Fair Market Value of a Share on the date the Plan Sponsor
receives the Redemption Notice over (b) the value of a Share stated in this
SAR Agreement.  The payment shall be made
in Shares with a Fair Market Value (as of the date the Plan Sponsor receives
the Redemption Notice) equal to the required payment.

12.                                 Taxes. The Plan Sponsor shall have the right to
deduct from SAR Holder’s salary or cash payment any federal, state, local or
foreign taxes required by law to be withheld with respect to any payments under
the Plan. The Plan Sponsor shall not be required to make payment in Shares
pursuant to this SAR Agreement upon redemption of vested SARs, unless and until
the SAR Holder has delivered payment to the Plan Sponsor of any taxes,
government mandated social benefit contributions, or other payments required by
law to be withheld with respect to the redemption of SARs.

13.                                 Nontransferability of SARs.  SARs are not transferable by the SAR Holder other than by will or the
laws of descent and distribution.  Upon
any attempt to transfer, assign,

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                                                pledge, hypothecate or otherwise dispose of
the SARs contrary to the provisions hereof, or upon the levy of any attachment
or similar process upon the SARs, the SARs shall immediately become null and
void.

14.                                 Amendment.  Subject to the terms and conditions of the Plan, the Committee may
modify or terminate this SAR Agreement, except that no such action shall
diminish or impair the rights under the SARs or this SAR Agreement without the
consent of the SAR Holder.

15.                                 Interpretation.  The
interpretations and constructions of any provision of and determinations on any
question arising under the Plan or this SAR Agreement shall be made by the
Committee, and all such interpretations, constructions and determinations shall
be final and conclusive as to all parties.

16.                                 Receipt of Plan. By entering into this SAR Agreement, SAR
Holder acknowledges (i) that he or she has received, has read, and understands
the Plan and (ii) that this SAR Agreement is subject to and shall be construed
in accordance with the terms and conditions of the Plan, as currently in effect
or as subsequently amended. By entering into this SAR Agreement, SAR Holder
further acknowledges that all grants of SARs are determined by the Committee in
its sole discretion and that nothing contained in the Plan or in any grant
under the Plan shall confer a right or entitlement to receive any further
grants in the future.

17.                                 Governing Law. This SAR Agreement shall be construed and
shall take effect in accordance with the laws of the State of Colorado, United
States of America.

18.                                 Miscellaneous. This SAR Agreement constitutes the entire
understanding and agreement of the parties with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied, written or oral,
between the parties with respect hereto. 
If any provision of this SAR Agreement, or the application thereof,
shall for any reason and to any extent be invalid or unenforceable, the
remainder of this SAR Agreement and the application of such provision to other
circumstances shall be interpreted so as best to reasonably effect the intent
of the parties hereto.  All notices or
other communications which are required to be given or may be given to either
party pursuant to the terms of this SAR Agreement shall be in writing and shall
be delivered personally or by registered or certified mail, postage prepaid, to
the address of the parties as set forth following the signature of such
party.  Notice shall be deemed given on
the date of delivery in the case of personal delivery or on the delivery or
refusal date as specified on the return receipt in the case of registered or
certified mail.  Either party may change
its address for such communications by giving notice thereof to the other party
in conformity with the Plan.

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IN WITNESS WHEREOF, the Plan Sponsor by a duly authorized officer of
the Plan Sponsor and SAR Holder have executed this SAR Agreement, effective as
of the date of grant.

	
  

  	
  NEW WORLD
  RESTAURANT GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
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