Document:

Exhibit 10.04

Exhibit 10.04

FLEXTRONICS INTERNATIONAL USA, INC.

2010 DEFERRED COMPENSATION PLAN

1. Purpose.

Flextronics International USA, Inc. hereby adopts this 2010 Deferred Compensation Plan (the
“Plan”). The Plan sets forth the terms of an unfunded deferred compensation plan for a
select group of management, highly compensated employees, directors and persons who have been part
of a select group of management, highly compensated employees or directors of the Company (as
defined below). It is intended that the Plan constitute an unfunded “top hat plan” for purposes of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Each
Participant who is an employee of the Company or its Affiliates shall participate in the Plan in
the Participant’s capacity as an employee whether or not the Participant also serves as a member of
the Company’s board of directors; provided that a Participant who participates in the Plan pursuant
to both an employee arrangement and a director arrangement will be treated as participating in the
director arrangement in the Participant’s capacity as a director if the director arrangement is
substantially similar to arrangements providing benefits to non-employee directors.

2. Definitions.

The following terms used in the Plan shall have the meanings set forth below:

(a) “Affiliate” means, with respect to the Company, any entity directly or indirectly
controlling, controlled by, or under common control with the Company or any other entity designated
by the Board in which the Company or an Affiliate has an interest.

(b) “Arbitrable Dispute” shall have the meaning set forth in Section 9(f).

(c) “Award Agreement” shall mean an agreement between the Company and a Participant
for the payment to the Participant of compensation that is deferred under this Plan.

(d) “Beneficiary” shall mean any person, persons, trust or other entity designated by
a Participant to receive benefits, if any, under the Plan upon such Participant’s death in
accordance with Section 6(g).

(e) “Board” shall mean the Board of Directors of FIL.

(f) “Change in Control” shall mean a change in the ownership or effective control of
the Company, or in the ownership of a substantial portion of its assets, within the meaning of Code
Section 409A(a)(2)(A)(v) and Treasury Regulations thereunder.

(g) “Claimant” shall have the meaning set forth in Section 9(a).

(h) “Code” shall mean the Internal Revenue Code of 1986, as amended, and Treasury
Regulations issued thereunder.

 

 

 

(i) “Committee” shall mean the Compensation Committee appointed by the Board.

(j) “Company” shall mean Flextronics International USA, Inc. and, for purposes of
determining the benefits provided under the Plan or as applicable under ERISA or the Code, any
successor to all or a major portion of the Company’s assets or business that assumes the
obligations of the Company, and any other corporation or unincorporated trade or business that has
adopted the Plan with the approval of the Company, and is a member of the same controlled group of
corporations or the same group of trades or businesses under common control (within the meaning of
Code Sections 414(b) and 414(c) as modified by Code Section 415(h)) as the Company, or an
affiliated service group (as defined in Code Section 414(m)) which includes the Company, or any
other entity required to be aggregated with the Company pursuant to regulations under Code Sections
414(o) and 409A or any other affiliated entity that is designated by the Company as eligible to
adopt the Plan.

(k) “Deferral Account” shall mean the recordkeeping account, and any sub-accounts that
are determined by the Committee to be necessary or appropriate for the proper administration of the
Plan, that are established and maintained by the Company in the name of a Participant as provided
in Section 4(b) for compensation payable to a Participant pursuant to a Deferral Agreement. As the
context requires, a reference to a Deferral Account shall include, if applicable, any subaccount
thereof.

(l) “Deferral Agreement” shall mean an agreement executed by the Participant and the
Company, in such form as approved by the Committee, and as may be revised from time to time with
respect to any one or more Participants by or at the direction of the Committee, whereby (i) the
Participant (A) agrees to receive certain types of compensation in the future pursuant to the
provisions of this Plan, (B) elects to defer future compensation such Participant would otherwise
be entitled to receive in cash from the Company, expressed as an amount or percentage of
compensation to be deferred, and/or (C) makes such other elections as are permitted and provides
such other information as is required under the Plan, and (ii) the Participant specifies a time and
form of payment according to which the Participant will receive the payout of the compensation
subject to the Deferral Agreement. Each Deferral Agreement shall be consistent with this Plan and
shall incorporate by its terms the provisions of this Plan.

(m) “Deferral Day” shall mean, for each Participant, the day on which the Company is
required, by the terms of an applicable Deferral Agreement or any other agreement between the
Participant and the Company, to credit an amount to a Deferral Account under this Plan. In the
absence of any such requirement to the contrary, a Deferral Day for an amount deferred under the
Plan shall be a date as soon as practicable after such amount is deemed earned, or in the case of
elective deferrals, as soon as practicable after such amount would have been payable to the
Participant if the Participant had not elected to defer such amount, in each case as determined by
the Plan Administrator in its sole discretion.

(n) “Disabled” shall mean, with respect to a Participant, that the Social Security
Administration has determined that such Participant is totally disabled. This definition shall be
construed and administered in accordance with the requirements of Code Section 409A(a)(2)(C) and
Treasury Regulations thereunder.

(o) “ERISA” shall have the meaning set forth in Section 1.

 

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(p) “Fair Market Value” shall mean, on a given date of valuation, (i) with respect to
any mutual fund, the closing net asset value as reported in The Wall Street Journal with respect to
the date of valuation and (ii) with respect to a security traded on a national securities exchange
or the NASDAQ National Market, the closing price on the date of valuation as reported in The Wall
Street Journal.

(q) “FIL” shall mean Flextronics International Ltd

(r) “For Cause” shall mean (i) Participant shall have committed a felony, fraud,
theft, embezzlement involving the assets of the Company; (ii) Participant willfully violates or
causes the Company to violate, in a material respect, any statute, law, ordinance, rule or
regulation relating to, or written policy of, the Company, which violation results in a material
adverse effect to Company’s business or financial condition; (iii) Participant engages in any
activity which is outside the scope of Participant’s authority and can reasonably be expected to
have a material adverse effect on the Company’s business.

(s) “Hypothetical Investments” shall have the meaning set forth in Section 4(c)

(t) “Involuntary Separation from Service” shall mean any Separation from Service that
is either an Involuntary Termination Without Cause or a Voluntary Termination for Good Reason.

(u) “Involuntary Termination Without Cause” shall mean a Separation from Service due
to the independent exercise of the unilateral authority of the Company to terminate a Participant’s
services other than For Cause. A termination by the Company shall be presumed to be an Involuntary
Termination Without Cause unless the Company sets forth in a written notice of termination the
grounds for such termination to be For Cause.

(v) “Manager” shall have the meaning set forth in Section 4(c).

(w) “Officers” shall have the meaning set forth in Section 8(b)(ii).

(x) “Participant” shall mean a present or former employee or director of the Company
who participates in this Plan and any other present or former employee or director designated to
participate in the Plan from time to time by the Committee.

(y) “Payment Subaccount” shall have the meaning set forth in Section 6(c)(ii).

(z) “Plan” has the meaning set forth in Section 1.

(aa) “Plan Administrator” shall mean the Plan Administrator, if any, appointed
pursuant to Section 3(c).

(bb) “Released Party” shall have the meaning set forth in Section 8(b)(iii).

(cc) “Relevant” shall have the meaning set forth in Section 9(c)(i).

(dd) “Separation from Service” shall mean a Participant’s separation from service from
the Company within the meaning of Code Section 409A(a)(2)(A)(i) and Treasury Regulations
thereunder.

 

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(ee) “Specified Employee” shall mean a key employee (as defined in Code Section 416(i)
without regard to paragraph 5 thereof) of the Company, including all persons with whom the Company
would be treated as a single employer under Code Section 414(b) or 414(c), for so long as any of
the stock of any such person is publicly traded on an established securities market or otherwise.
This definition shall be construed and administered in accordance with the requirements of Code
Section 409A(a)(2)(B)(i) and Treasury Regulations thereunder. For purposes of applying this
definition, the Committee may, at its discretion, specify a “specified employee effective date” in
accordance with the requirements of Treasury Regulation § 1.409A-1(i).

(ff) “Trust” shall mean any trust or trusts established or designated by the Company
pursuant to Section 5(a) to hold assets in connection with the Plan.

(gg) “Trustee” shall have the meaning set forth in Section 5(a).

(hh) “Unforeseeable Emergency” shall mean a severe financial hardship to a Participant
resulting from an illness or accident of the Participant, the Participant’s Spouse, the
Participant’s beneficiary, or a dependent (as defined in Section 152(a) of the Code) of the
Participant, loss of the Participant’s property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of the Participant.
This definition shall be construed and administered in accordance with the requirements of Code
Section 409A(a)(2)(B)(ii) and Treasury Regulations thereunder.

(ii) “USERRA” shall mean the Uniformed Service Employment and Reemployment Rights Act
of 1994, as amended, 38 U.S.C. 4301-4334.

(jj) “Valuation Date” shall have the meaning set forth in Section 6(c)(ii)

(kk) “Voluntary Termination for Good Reason” shall mean a Separation from Service due
to the independent exercise of the unilateral authority of a Participant to terminate his or her
employment with the Company due to one the following conditions arising without the consent of the
Participant:

	 	(i)	 	A material diminution in the authority, duties, or responsibilities of the
Participant or of the budget over which the Participant retains authority;
	 
	 	(ii)	 	A material reduction by the Company in the Participant’s base
salary or other compensation;
	 
	 	(iii)	 	A material diminution in the authority, duties, or
responsibilities of the supervisor to whom the Participant reports;
	 
	 	(iv)	 	A relocation of the Participant’s principal office to a
location more than 50 miles from the current location of the Participant’
principal office; and,
	 
	 	(v)	 	Any other action or inaction of the Company that constitutes a
material breach by the Company of any provision of this Agreement or any other
agreement under which the Participant provides services to the Company.

Notwithstanding anything to the contrary in this Agreement, no Voluntary Termination for Good
Reason shall occur unless (i) Participant has given written notice to the Company of the existence
of a condition described in this Section 2(kk) within ninety (90) days of the initial existence of
such condition and such condition has not been remedied by the Company within thirty (30) days
after the receipt of such notice.

 

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3. Authority and Administration of the Committee and Plan Administrator.

(a) In General. The Committee shall administer the Plan and may select one or more
persons to serve as the Plan Administrator. The Plan Administrator shall have authority to perform
any act that the Committee is entitled to perform under this Plan, except to the extent that the
Committee specifies limitations on the Plan Administrator’s authority. Any person selected to
serve as the Plan Administrator may, but need not, be a Committee member or an officer or employee
of the Company. However, if a person serving as Plan Administrator or a member of the Committee is
a Participant, such person may not decide or vote on a matter affecting his interest as a
Participant.

(b) Administration by Committee or Plan Administrator. The Committee or Plan
Administrator shall administer the Plan in accordance with its terms, and shall have all powers
necessary to accomplish such purpose, including the power and authority to reasonably construe and
interpret the Plan, to reasonably define the terms used herein, to reasonably prescribe, amend and
rescind rules and regulations, agreements, forms, and notices relating to the administration of the
Plan, and to make all other determinations reasonably necessary or advisable for the administration
of the Plan. The Committee or Plan Administrator may appoint additional agents and delegate
thereto powers and duties under the Plan

(c) Designation of Plan Administrator. The initial Plan Administrator shall be the
FIL’s Executive Vice President Worldwide HR and Management Systems. The Committee may from time to
time designate a different person to serve as Plan Administrator.

4. Deferral Agreements, Deferral Accounts and Share Award Deferrals.

(a) Deferral Agreement. The Company and any Participant may agree to defer all or a
portion of his or her compensation by executing a completed Deferral Agreement in the form, and
within the time period, specified by the Committee. The Committee shall determine for each
Participant the amount and type of compensation that may or shall be deferred pursuant to the Plan
and such determination will be reflected on
a Deferral Agreement form presented to the Participant. The Committee may establish maximum
or minimum amounts of aggregate deferrals that may be elected by a Participant. A Participant
shall not be entitled to vary any term set forth in a Deferral Agreement form except to the extent
that the Deferral Agreement form itself permits variations. As permitted by the Committee,
different components of compensation payable for a single service period, and different tranches of
compensation payable for different service periods, may be subject to different Deferral Agreements
that provide for different times and forms of payment. Deferrals of compensation may be made under
the Plan only within the time periods permitted by Code Section 409A and Treasury Regulations
thereunder.

(b) Establishment of Deferral Accounts. The Committee shall establish a Deferral
Account for each Participant. Each Deferral Account shall be maintained for the Participant solely
as a bookkeeping entry by the Company to evidence unfunded obligations of the Company. The
Participant shall be vested in the Participant’s Deferral Account to the extent specified in an
applicable Award Agreement, Deferral Agreement or in any other agreement between the Company and
the Participant. The provisions with respect to vesting in any such Deferral Agreement or other
agreement shall be incorporated in this Plan and given effect as if fully set forth herein. The
Committee is authorized in its sole and absolute discretion to waive vesting conditions, or
accelerate vesting, with respect to any portion of a Participant’s Deferral
Account. A
Participant’s Deferral Account shall be credited with the amounts required to be credited to the
Participant’s Deferral Account pursuant to an Award Agreement, the Participant’s initial Deferral
Agreement, or pursuant to any subsequent Deferral Agreement entered into by that Participant and
the Company, in each case, less the amount of federal, state or local tax required by law to be
withheld with respect to such amounts, unless such withholding is provided from another source, and
shall be adjusted for Hypothetical Investment earnings or losses as described herein.

 

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(c) Hypothetical Investments and Managers. The Committee shall select one or more
hypothetical investment options (“Hypothetical Investments”). Hypothetical Investments
shall be mutual funds or securities readily tradable on a U.S. securities exchange. At its sole
discretion, the Committee may (but shall not be required to) allow a Participant to designate one
or more investment managers approved by the Committee (each a “Manager”) and a Manager will
then select hypothetical investments that, if permitted by the Committee, may or may not be
Hypothetical Investments designated by the Committee, but which shall be mutual funds or securities
readily tradable on a U.S. securities exchange. Amounts invested with a Manager shall be deemed
Hypothetical Investments. The Committee may change or discontinue any Hypothetical Investment or
Manager if reasonably necessary to satisfy business objectives of the Company or its Affiliates;
provided that, following a Change in Control, the investment options existing immediately prior to
such Change in Control shall not be changed or modified in a manner that is reasonably likely to be
adverse to the Participants. The Committee may limit Hypothetical Investment choices to designated
alternative groups or portfolios of Hypothetical Investments. The Committee may designate
Hypothetical Investment (or groups or portfolios of Hypothetical Investments) as available only for
vested or unvested amounts in a Participant’s Deferral Account and
may require that any unvested amounts be invested only in Hypothetical Investments (or groups
or portfolios of Hypothetical Investments) of the Company’s choosing.

(d) Investment of Deferral Accounts. As provided in Section 4(c), each Deferral
Account shall be deemed to be invested in one or more Hypothetical Investments as elected by the
Participant in the manner designated by the Committee for such election. The amounts of
hypothetical gains and losses in value of the Hypothetical Investments shall be credited and
debited to, or otherwise reflected in, such Deferral Account from time to time in accordance with
procedures established by the Committee. In the event that a Participant fails to specify a
Hypothetical Investment for any portion of his or her Deferral Account, such portion shall be
deemed invested in the manner determined by the Committee. As permitted by the Committee, a
Participant shall be allowed to change his or her investment election no less frequently than once
per month. Unless otherwise determined by the Committee, amounts credited to a Deferral Account
(or to a subaccount) shall be deemed invested in Hypothetical Investments as of the date such
amount is credited to a Participant’s Deferral Account pursuant to an Award Agreement or Deferral
Agreement.

(e) No Actual Investment. Notwithstanding any other provision of this Plan that may
be interpreted to the contrary, the Hypothetical Investments are to be used for measurement
purposes only. A Participant’s election of any Hypothetical Investment, the allocation of any
deferred amounts to Hypothetical Investments, the calculation of additional amounts and the
crediting or debiting of any amounts to a Participant’s Deferral Account shall not be considered or
construed in any manner as an actual investment of his or her Deferral Account in any such
Hypothetical Investment. In the event that the Company in its own discretion, decides to invest
(or to cause the Trustee to invest) funds in any or all of the Hypothetical Investments, no
Participant shall have any rights in or to such investments themselves. Without limiting the
foregoing, a Participant’s Deferral Account shall at all times be a bookkeeping entry only and
shall not represent any investment made on his or her behalf by the Company or the Trust. The
Participant shall at all times remain an unsecured creditor of the Company.

 

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(f) Forfeiture of Unvested Portions of Deferral Accounts Upon Separation from Service.
Upon a Participant’s Separation from Service, any unvested portion of the Participant’s Deferral
Account (excluding the portion, if any, that vests as a result of such Separation from Service
pursuant to Section 4(g) or otherwise) shall be forfeited and terminated, except as otherwise
determined by the Committee in its sole and absolute discretion or as provided for in an applicable
Award Agreement.

(g) Special Vesting Upon an Involuntary Separation from Service following a Change in
Control. Notwithstanding Section 4(f), and unless the terms of this Section 4(g) are varied by
the terms of an applicable Award Agreement, any unvested portion of a Participant’s Deferral
Account shall vest immediately prior to an Involuntary Separation from Service within the two year
period that follows a Change in Control.

(h) Change in Law. If a future change in law would, in the judgment of the Committee, likely accelerate taxation to a Participant of amounts that would be credited to the
Participant’s Deferral Account in the future under the Participant’s
Deferral Agreement, the Company and the Participant will attempt to amend the Plan to satisfy
the requirements of the change in law and, unless and until such an amendment is agreed to, Company
shall cease deferrals under the Participant’s Deferral Agreement on the effective date of such
change in law; provided however, the Company shall not cease deferrals if such cessation would
violate the provisions of Code Section 409A.

(i) Separate Maintenance of Vested Subaccounts. Separate vested subaccounts shall be
established and maintained for each Participant with respect to each portion of the Participant’s
Deferral Account (a) that has vested, (b) that vests in accordance with a certain schedule, or (c)
that is payable to the Participant in accordance with a certain schedule. Except as otherwise
provided in an applicable Award Agreement or applicable Deferral Agreement, the entire amount of a
subaccount, as adjusted for Hypothetical Investment gains or losses immediately prior to vesting,
shall vest at the same time and pursuant to the same conditions as the amount initially credited to
the subaccount; and the amount of each vested subaccount, as adjusted for Hypothetical Investment
gains or losses, shall be subject to the same payout conditions as the amount initially credited to
the subaccount.

(j) USSERA Rights. The Committee shall make available to a Participant an initial
deferral election, and an election to change the time or form of payment of the Participant’s
Deferral Account, if and as required to satisfy the requirements of the USERRA and Treasury
Regulation 1.409-2(a)(15).

 

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5. Establishment of Trust.

(a) The Trust Agreement. The Company has entered or will enter into a Trust Agreement
for the Plan, providing for the establishment of a trust to be held and administered by a trustee
(the “Trustee”) designated in the Trust Agreement (the “Trust”). The Trustee shall
be the agent for purposes of such duties delegated to the Trustee by the Committee as set forth in
the Trust Agreement. The Trust shall be irrevocable; provided that, upon a Participant’s
Separation from Service, the Trustee Agreement shall require that the Trustee pay to the Company an
amount equal to the unvested portion of the Participant’s Deferral Account as determined under the
Plan.

(b) Funding the Trust. On each relevant Deferral Day, the Company shall deposit into
the Trust cash equal to the aggregate amount required to be credited to the Participant’s Deferral
Account for that Deferral Day, less applicable taxes withheld, if any. The assets of the Trust
shall remain subject to the claims of the general creditors of the Company in the event of an
insolvency of the Company. Assets of the Trust shall at all times be located within the United
States.

(c) Taxes and Expenses of the Trust. The Committee shall make all investment
decisions for the Trust, and no Participant shall be entitled to direct any investments of the
Trust. All taxes on any gains and losses from the investment of the assets of the Trust shall be
recognized by the Company and the taxes thereon shall be paid by the Company and shall not be
recovered from the Deferral Accounts or the Trust. The third-party administrative expenses of the
Plan and the Trust, including expenses charged by the Trustee to establish the Trust and the
Trustee’s annual fee per Deferral Account, shall be paid by the Company, and shall neither be
payable by Trustee from the Trust nor reduce any Deferral Accounts; provided that any Managers’
fees or other
expenses incurred with respect to particular Hypothetical Investment or any asset of the Trust
which corresponds to a particular Hypothetical Investment shall be charged to the Deferral Account
that is deemed invested in such Hypothetical Investment. No part of the Company’s internal
expenses to administer the Plan, including overhead expenses, shall be charged to the Trust or the
Deferral Accounts.

6. Settlement of Deferral Accounts.

(a) Payout Elections. The Company shall pay or direct the Trustee to pay the net
amount of the Participant’s vested Deferral Account as elected by the Participant in the
Participant’s Deferral Agreement in accordance with the provisions of this Plan or as provided in
an Award Agreement. A Participant shall be required to select one of the payout alternatives set
forth in the form of Deferral Agreements provided to the Participant by the Committee from time to
time. Except for payouts due to the death, Disability, Unforeseeable Emergency or Separation from
Service of the Participant, no payout of amounts credited to a Participant’s Deferral Account shall
occur prior to the first anniversary of the Deferral Agreement. The Committee may, in its sole
discretion, allow a Participant to redefer the payout of his Deferral Account, or of one or more
subaccounts of the Participant’s Deferral Account, one or more times; provided, that (i)
such redeferral may not take effect until at least 12 months after the date on which such election
is made; (ii) in the case of an election related to any payment other than a payment that would be
made upon the Participant’s death, Disability, or the occurrence of an Unforeseeable Emergency, the
first payment with respect to which such election is made must be deferred for a period of not less
than 5 years from the date such payment would otherwise have been made; and (iii) any election that
would affect a scheduled payout may be made not less than 12 months prior to the date of the first
scheduled payout date. The preceding restrictions on redeferrals shall be construed and
administered in accordance with the requirements of Code Section 409A(a)(4)(C) and Treasury
Regulations thereunder. No Participant shall be entitled to accelerate the time or schedule of any
payment under the Plan, except where an acceleration would not result in the imposition of
additional tax under Code Section 409A.

 

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(b) Form of Payment. Distributions from a Participant’s Deferral Account shall be
made in cash or, in the sole discretion of the Committee, in marketable securities selected by the
Committee, which shall be valued at their Fair Market Value on the date of such distribution. If a
Participant has elected a Hypothetical Investment that is in whole or in part not marketable or for
which a Fair Market Value cannot be determined, the actual security represented by such
Hypothetical Investment may be distributed to Participant in lieu of cash or marketable securities.
Any distributions to a Participant shall reduce the Company’s obligations under the Plan to such
Participant. The Company’s obligation under the Plan may be satisfied by distributions from the
Trust.

(c) Timing of Payments.

(i) Payments in settlement of a Participant’s Deferral Account shall be distributed no
earlier than the Participant’s Separation from Service, Disability, death, a specified time
(or pursuant to a fixed schedule) specified in the applicable Deferral Agreement, Change in
Control or the occurrence of an
Unforeseeable Emergency. If no date is specified for payment of a subaccount of a
Participant’ Deferral Account in an applicable Deferral Agreement, payment of such
subaccount shall made on the date that is six (6) months after the date of the Participant’s
Separation from Service (or, if earlier, the date of the Participant’s death). In the case
of a Participant who is a Specified Employee, a payment on account of Separation from
Service may not be made before the date which is 6 months after the date of Separation from
Service (or, if earlier, the date of the Participant’s death). In such event, any payment
(including a single lump sum payment or any installment payments) that otherwise would have
been payable within such six (6) month period will be accumulated and paid as soon as
administratively practicable after such six (6) month period, but no later than 90 days
after such 6 month period (with the Plan Administrator retaining discretion as to the
specific payment date within that 90 day period). Any payment election set forth in a
Participant’s Deferral Agreement shall be construed as prohibiting distributions that would
otherwise be payable within the six (6) month period following the Participant’s Separation
from Service to the extent, and only to the extent, required under the preceding two
sentences.

(ii) Payments in settlement of a Deferral Account shall be made as soon as practicable
after the date or dates (including upon the occurrence of specified events), but no later
than 90 days after the date or dates (with the Plan Administrator retaining discretion as to
the specific payment date within that 90 day period), and in such number of installments, as
directed by the Participant in the Participant’s Deferral Agreement, unless otherwise
provided in this Section 6. All amounts needed for a payment shall be deemed withdrawn from
the Hypothetical Investments on a date (a “Valuation Date”) that is prior to and
reasonably proximate to, but in no event shall be no more than 10 days prior to, the date of
a payment to a Participant and transferred to a separate subaccount (a “Payout
Subaccount”). Payout Subaccounts shall not be adjusted for any investment gains or
losses subsequent to the Valuation Date. If a Participant has elected to receive
installment payments, the amount of the distribution payable shall be based upon the value
of the Deferral Account on the Valuation Date, and Participant’s Hypothetical Investments
shall be reduced pro rata on the basis of the value of the Participant’s Hypothetical
Investments on the Valuation Date. If a Participant has elected to receive partial payments
of the amount in his or her Deferral Account, unpaid balances shall continue to be deemed to
be invested in the Hypothetical Investments as designated in the applicable Deferral
Agreement.

 

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(iii) If a Participant fails to designate a Beneficiary or if all designated
Beneficiaries predecease the Participant or die prior to complete distribution of the
Participant’s benefits, the Participant’s designated Beneficiary shall be the executor or
personal representative of the Participant’s estate, if a probate proceeding is open at the
time for the distribution(s), and otherwise shall be the person(s) who would be entitled to
the distribution(s) under the Participant’s last will and /or revocable trust (if such will
distributes the residuary estate to such trust) and otherwise to the person(s) who would
inherit the Participant’s property under the law of the Participant’s last domicile. The
payment of benefits under the Plan to a Beneficiary shall fully and completely
discharge the Company from all further obligations under this Plan with respect to the
Participant, and such Participant’s interest in the Plan shall terminate upon such full
payment of benefits.

(iv) Irrespective of any elections made by a Participant, if the Committee, acting in
good faith, determines that a Participant is Disabled, the net vested amount credited to a
Participant’s Deferral Account shall be paid out in a single lump sum to the Participant as
soon as practicable after the date that that the Participant is determined to be Disabled,
but in no event later than the 90th day after such date.

(v) Whenever a payment in settlement or partial settlement of a Participant’s Deferral
Account is required to be made within a specified period of time, the Participant shall have
no right to designate the taxable year of the payment (other than pursuant to a redeferral
election made in accordance with the requirements of Section 6(a).

(vi) Each separately identifiable payment under the Plan shall be treated as a separate
payment for purposes of Code Section 409A to the fullest extent permitted by Code Section
409A. For purposes of this Plan, a right to receive installment payments shall be treated as
a right to receive a series of separate payments.

(vii) The Company may delay a payment to a Participant to the extent that the Company
reasonably anticipates that if the payment were made as scheduled under the Plan and the
applicable Deferral Agreement, the Company’s deduction with respect to such payment would
not be permitted due to the application of Code Section 162(m), provided that the payment is
made either during the Company’s first taxable year in which the Company reasonably
anticipates, or should reasonably anticipate, that if the payment is made during such year,
the deduction of such payment will not be barred by application of Code Section 162(m) or
during the period beginning with the date of the Participant’s Separation from Service and
ending on the later of the last day of the taxable year of Company in which the service
provider separates from service or the 15th day of the third month following the
Participant’s Separation from Service, and provided further that where any scheduled payment
to a Participant in the Company’s taxable year is delayed in accordance with this paragraph,
all scheduled payments to that Participant that could be delayed in accordance with this
paragraph are also delayed. This paragraph shall be construed and administered in
accordance with the requirements of Treasury Regulation §1.409A-2(b)(7)(i).

 

10

 

(d) Unforeseeable Emergency. Other provisions of the Plan notwithstanding, if the
Committee, acting in good faith, determines that the Participant has an Unforeseeable Emergency,
the Committee shall direct the immediate lump sum payment to the Participant of vested amounts that
the Committee determines to be necessary to satisfy such Unforeseeable Emergency plus amounts
necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into
account the extent to which such Unforeseeable Emergency is or may be relieved through
reimbursement or
compensation by insurance, any additional compensation that is available due to the
cancellation of a deferral election upon a payment due to an unforeseeable emergency, or otherwise
or by liquidation of the Participant’s assets (to the extent the liquidation of such assets would
not itself cause severe financial hardship). The preceding sentence shall be construed and
administered in accordance with the requirements of Code Section 409A(a)(2)(B)(ii) and Treasury
Regulations thereunder. If the Committee determines that a Participant has an Unforeseeable
Emergency, the Committee shall authorize the cessation of deferrals by such Participant under the
Plan.

(e) Distribution upon Income Inclusion under Code Section 409A or to Satisfy other Tax
Obligations. If the Committee determines that the Plan fails to meet the requirements of Code
Section 409A and Treasury Regulations thereunder, the Trustee shall distribute to the Participant
the portion of the Participant’s Deferral Account that is required to be included in income as a
result of the failure of the Plan to comply with the requirements of Code Section 409A and Treasury
Regulations thereunder. If the Committee determines that state, local or foreign tax obligations
(including employment taxes and income tax withholding at source on wages) arise from a
Participant’s participation in the Plan with respect to an amount deferred under the Plan before
the amount is paid or made available to the Participant, the Participant may receive a distribution
from the Participant’s Deferral Account (either in the form of withholding that is paid over to a
governmental entity pursuant to provisions of applicable law or by distributions directly to the
Participant) to reflect such tax obligation, provided the amount so distributed shall not exceed
the amount of such taxes due as a result of participation in the Plan. Additionally, a Participant
may receive a distribution from the Participant’s Deferral Account to pay income tax at source on
wages imposed under Code Section 3401 attributable to additional Section 3401 wages and taxes. Any
distribution made to a Participant pursuant to this Section 6(e) shall be paid, to the extent
possible, out of the vested portion of the Participant’s Deferral Account. The provisions of this
Section 6(e) shall be construed and administered in accordance with the requirements of Treasury
Regulation § 1.409A-3(j)(4)(vi), (vii), and (xi), as applicable, so as to prevent, to the extent
possible, the imposition of any tax pursuant to Code Section 409A.

(f) Effect on Deferral Account. A Participant’s Deferral Account shall be debited to
the extent of any distributions to, or the tax withholding for the benefit of, the Participant
pursuant to this Section 6.

 

11

 

(g) Designation of Beneficiary. Each Participant may from time to time designate any
individual, trust, charity or other person or persons to whom the value (or a portion of the value)
of the Participant’s Deferral Account shall be paid if the Participant dies before
receiving the full value of his or her Deferral Account (the Participant’s “Beneficiary”).
A Beneficiary designation shall be made in the manner required by the Plan Administrator for this
purpose. Primary, secondary, or contingent Beneficiaries are permitted. A married participant
designating a Beneficiary other than his or her spouse must obtain the consent of his or her spouse
to such designation (in accordance with procedures determined by the Plan Administrator). Payments
to the Participant’s Beneficiary(ies) shall be made in accordance with applicable provisions of
the Plan after the Plan Administrator has received proper notification of the Participant’s
death.

A Beneficiary designation shall be effective only when the Beneficiary designation is filed
with the Plan Administrator while the Participant is alive, and a subsequent Beneficiary
designation will cancel all of the Participant’s Beneficiary designations previously filed with the
Plan Administrator. Once received and acknowledged by the Plan Administrator, a Beneficiary
designation shall be effective as of the date the designation was executed, but without prejudice
to the Plan Administrator on account of any payment made before the change is received and
acknowledged by the Plan Administrator. If a deceased Participant failed to designate a
Beneficiary, or if a designated Beneficiary predeceases the Participant, the value of the
Participant’s Deferral Accounts shall be payable to the Participant’s spouse or, if there is none,
to the Participant’s estate, or in accordance with such other equitable procedures as determined by
the Plan Administrator.

(h) Reemployment. If a former Participant is rehired by the Company, or any person
with whom the Company would be considered a single employer under Code Section 414(b) and (c), and
regardless of whether such former Participant is designated as a Participant, or a former
Participant returns to service as a member of the Board, any payments being made to such former
Participant hereunder by reason of such former Participant’s previous Separation from Service shall
continue to be made without regard to such rehire or return to service.

7. Amendment and Termination.

(a) Amendment. The Plan Administrator may, with prospective or retroactive effect,
amend or alter the Plan (i) if the Internal Revenue Service determines that any amounts deferred
under the Plan are includible in the Participant’s gross income prior to being paid out to the
Participant, (ii) any time, if determined to be necessary, appropriate or advisable in response to
administrative guidance issued under Code Section 409A or to comply with the provisions of Code
Section 409A, or (iii) if no Participant is materially adversely affected by such action with
respect to amounts required to be credited to the Participant’s Deferral Account under any
previously executed Deferral Agreement; provided further that, following a Change in
Control, the Plan will not be subject to amendment, alteration, suspension, discontinuation or
termination without the prior written consent of each Participant who would be reasonable expected
to be materially adversely affected by such action; and provided further that, in each
case, the Company may accelerate distributions under this Plan only to the extent (if any) that
doing so will not result in the imposition of additional tax or interest under Code Section 409A.
Following a Change in Control, the Company will use commercially reasonable efforts to amend the
Plan without detriment to a Participant whenever necessary to avoid the imposition of additional
tax and interest under Section 409A.

(b) Termination. Notwithstanding any other provision to the contrary and except as
may otherwise be provided by the Committee, the Plan shall terminate as
soon as possible following the payment of all amounts in respect of all Deferral Accounts.

 

12

 

8. General Provisions.

(a) Limits on Transfer of Awards. Other than by will, the laws of descent and
distribution, or by appointing a Beneficiary, no right, title or interest of any kind in the Plan
shall be transferable or assignable by a Participant (or the Participant’s Beneficiary) or be
subject to alienation, anticipation, encumbrance, garnishment, attachment, levy, execution or other
legal or equitable process, nor subject to the debts, contracts, liabilities or engagements, or
torts of any Participant or the Participant’s Beneficiary. Any attempt to alienate, sell,
transfer, assign, pledge, garnish, attach or take any other action subject to legal or equitable
process or encumber or dispose of any interest in the Plan shall be void.

(b) Waiver, Receipt and Release.

(i) As between the Participant and the Company, a Participant and the Participant’s
Beneficiary shall assume all risk (other than for the gross negligence of the Company or the
Committee or Plan Administrator, or breach by the Company of the terms of this Plan) in
connection with the Plan, Trust design, implementation or administration, decisions made by
the Participant’s Manager and the resulting value of the Participant’s Deferral Account, the
selection and actions of the Trustee or any other third party providing services to the
Company or the Trust in connection with the Plan or Trust (including their administrative
and investment expenses), including any income taxes of the Participant or Participant’s
Beneficiary relating to or arising out of his or her participation in the Plan, and neither
the Company nor the Committee or Plan Administrator shall be liable or responsible therefor
other than as provided in Section 5(c). Notwithstanding the foregoing sentence, the Company
shall indemnify a Participant for any additional tax and interest imposed pursuant to Code
Section 409A as a result of any action of the Company in administering or operating the
Plan; provided, however, that the foregoing indemnity shall not apply to additional
tax and interest that could have been avoided by any action or inaction of the Participant
reasonably requested by the Company that would have had the effect of reducing such
additional tax or interest. In addition, the Company shall indemnify each Participant for
reasonable defense costs, including reasonable attorneys’ fees and other professional fees,
incurred by that Participant as a result of any audit by a taxing authority and subsequent
appeals and litigation with respect any matter for which the Participant is indemnified
pursuant to this Section 8(b)(i). An amount for which a Participant is indemnified under
the preceding two sentences (“Indemnified Amount”) shall be computed on an after-tax basis,
so that after the payment by the Participant of any and all taxes (including any interest on
such taxes, additions to tax, and penalties) and amounts payable pursuant to Code Section
409A(a)(1)(B)) with respect to matters for which Participant is indemnified, including any
Indemnified Amount, the Participant will retain an amount equal to the amount that the
Participant would have had if the Participant had not been subject to Code Section
409A(a)(1)(B) with respect to matters for which the Participant is indemnified hereunder.
Any
Indemnified Amount with respect to taxes, additions to tax or interest shall be paid no
later than the end of the Participant’s taxable year following the taxable year of the
Participant in which the Participant remits the related taxes; and any Indemnified Amount
with respect to fees, expenses or costs of conducting a tax controversy shall be paid no
later than the end of the Participant’s taxable year following the taxable year of the
Participant in which the taxes that are the subject of the audit or litigation are remitted
to the applicable taxing authority, or, where as a result of such audit or litigation no
taxes are remitted, no later than the end of the Participant’s taxable year following the
taxable year of the Participant in which the audit is completed or there is a final and
nonappealable settlement or other resolution of the audit or litigation.

 

13

 

(ii) As a condition of being a Participant in the Plan, each Participant must sign a
waiver (which may be a part of the Deferral Agreement) releasing the Company and its
Affiliates, the Committee, the Plan Administrator, officers of the Company or its Affiliates
(the “Officers”) and the Board from any claims and liabilities regarding the matters
to which the Participant has assumed the risk as set forth in this Section. Payments (in
any form) to any Participant or Beneficiary in accordance with the provisions of the Plan
shall, to the extent thereof, be in full satisfaction of all claims for compensation
deferred and relating to the Deferral Account to which the payments relate against the
Company or any Affiliate or the Committee or Plan Administrator, and the Committee or Plan
Administrator may require such Participant or Beneficiary, as a condition to such payments,
to execute a waiver, receipt and release to such effect.

(iii) As a condition of being a Participant in the Plan, each Participant must sign a
waiver releasing the Trustee and each of its Affiliates (each, a “Released Party”)
against any and all loss, claims, liability and expenses imposed on or incurred by any
Released Party as a result of any acts taken or any failure to act by the Trustee, where
such act or failure to act is in accordance with the directions from the Committee or Plan
Administrator or any designee of the Committee or Plan Administrator.

(iv) Subject to the Company’s indemnification of Participants described in Section
8(b)(i), each Participant agrees to pay any taxes, penalties and interest such Participant
or Beneficiary may incur in connection with his or her participation in this Plan, and
further agrees to indemnify the Company and its Affiliates, the Committee, the Plan
Administrator, Officers, the Board and the Company’s agents for such taxes, penalties and
interest the Participant or Participant’s Beneficiary incurs and fails to pay and for which
the Company is made liable by the appropriate tax authority.

(c) Unfunded Status of Awards, Creation of Trusts. The Plan is intended to constitute
an unfunded plan for deferred compensation and each Participant shall rely solely on the unsecured
promise of the Company for payment hereunder. With respect to any payment not yet made to a
Participant under the Plan, nothing contained in the Plan shall give a Participant any rights that
are greater than those of a general unsecured creditor of the Company.

(d) Participant Rights. No provision of the Plan or transaction hereunder shall
confer upon any Participant any right or impose upon any Participant any obligation to be employed
by the Company or an Affiliate, or to interfere in any way with the right of the Company or an
Affiliate to increase or decrease the amount of any compensation payable to such Participant.
Subject to the limitations set forth in Section 8(c) hereof, the Plan shall inure to the benefit
of, and be binding upon, the parties hereto and their successors and assigns.

 

14

 

(e) Tax Withholding. The Company shall have the right to deduct from amounts
otherwise credited to or paid from a Deferral Account any sums that federal, state, local or
foreign tax law requires to be withheld.

(f) Governing Law. The validity, construction, and effect of the Plan and any rules
and regulations relating to the Plan shall be determined in accordance with the laws of the State
of California, without giving effect to principles of conflicts of laws to the extent not
pre-empted by federal law.

(g) Limitation. A Participant and the Participant’s Beneficiary shall assume all risk
in connection with (i) the performance of the Managers, (ii) the performance of the Hypothetical
Investments, and (iii) the tax treatment of amounts deferred under or paid pursuant to the Plan,
and the Company, the Committee, the Plan Administrator, and the Board shall not be liable or
responsible therefor.

(h) Construction. The captions and numbers preceding the sections of the Plan are
included solely as a matter of convenience of reference and are not to be taken as limiting or
extending the meaning of any of the terms and provisions of the Plan. Whenever appropriate, words
used in the singular shall include the plural or the plural may be read as the singular.

(i) Severability. In the event that any provision of the Plan shall be declared
illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining
provisions of the Plan but shall be fully severable, and the Plan shall be construed and enforced
as if said illegal or invalid provision had never been inserted herein.

(j) Status. The establishment and maintenance of, or allocations and credits to, the
Deferral Account of any Participant shall not vest in any Participant any right, title or interest
in or to any Plan or Company assets or benefits except at the time or times and upon the terms and
conditions and to the extent expressly set forth in the Plan and in accordance with the terms of
any Trust.

(k) Spouse’s Interest. The interest in the benefits hereunder of a Participant’s
spouse who has predeceased the Participant shall automatically pass to the Participant and shall
not be transferable by such spouse in any manner, including but not limited to such spouse’s will,
nor shall such interest pass under the laws of intestate succession.

(l) Successors. The provisions of the Plan shall bind the Company and its successors.

 

15

 

9. Claims Procedures.

The procedures for filing claims for payments under the Plan are described below:

(a) Presentation of Claim. It is the intent of the Company to make payments under the
Plan without the Participant having to complete or submit any claim forms. However, any
Participant or Beneficiary who believes he or she is entitled to a payment under the Plan may
submit a claim for payment to the Plan Administrator. Any claim for payments under the Plan must
be made by the Participant or his Beneficiary in writing and state the Claimant’s name and nature
of benefits payable under the Plan. The Claimant’s claim shall be deemed to be filed when
delivered to the Plan Administrator which shall make all determinations as to the right of any
person(s) to benefits hereunder. Claims for benefits under this Plan shall be made by the
Participant, his or her Beneficiary or a duly authorized representative thereof
(“Claimant”). If such a claim relates to the contents of a notice received by the Claimant,
the claim must be made within sixty (60) days after such notice was received by the Claimant. All
other claims must be made within one hundred eighty (180) days of the date on which the event that
caused the claim to arise occurred. The claim must state with particularity the benefit or other
determination desired by the Claimant. The claim must be accompanied with sufficient supporting
documentation for the benefit or other determination requested by the Claimant.

(b) Notification of Decision.

(i) Claim for benefits other than upon Disability. If the claim is wholly or
partially denied, the Plan Administrator shall provide written or electronic notice thereof to the
Claimant within a reasonable period of time, but not later than 90 days after receipt of the claim.
An extension of time for processing the claim for benefits is allowable if special circumstances
require an extension, but such an extension shall not extend beyond 180 days from the date the
claim for benefits is received by the Plan Administrator. Written notice of any extension of time
shall be delivered or mailed within 90 days after receipt of the claim and shall include an
explanation of the special circumstances requiring the extension and the date by which the Plan
Administrator expects to render the final decision.

(ii) Claim for benefits upon Disability. If the claim is wholly or partially denied,
the Plan Administrator shall provide written or electronic notice thereof to the Claimant within a
reasonable period of time, but not later than 45 days after receipt of the claim. An initial
extension of time for processing the claim for benefits is allowable if necessary due to
circumstances beyond the Plan Administrator’s control, but such an initial extension shall not
extend beyond 30 days from the date the claim for benefits is received by the Plan Administrator.
Written notice of the initial extension of time shall be delivered or mailed within 45 days after
receipt of the claim and shall include an explanation of the circumstances requiring the extension,
the date by which the Plan Administrator expects to render the final decision, the standards on
which entitlement to a benefit is based, unresolved issues that prevent a decision and any
additional information needed to resolve these issues. If prior to the end of the initial
extension, the Plan Administrator determines that, due to matters beyond its control, a decision
cannot be rendered within the first 30 day extension period, the period for
making the determination may be extended for up to an additional 30 days. Written notice of
the additional extension of time shall be delivered or mailed within the initial extension period
and shall include an explanation of the circumstances requiring the extension, the date by which
the Plan Administrator expects to render the final decision, the standards on which entitlement to
a benefit is based, unresolved issues that prevent a decision and any additional information needed
to resolve these issues. The Claimant shall have 45 days to provide such additional information.

(iii) Required content of the Notice of Adverse Benefit Determination.

	 	(1)	 	In general. The notice of adverse benefit determination shall:

	 	(A)	 	specify the reason or reasons the
claim was denied;
	 
	 	(B)	 	reference the pertinent Plan
provisions upon which the decision was based;

 

16

 

	 	(C)	 	describe any additional material
or information necessary for the Claimant to perfect the claim,
and an explanation of why such material or information is
necessary;
	 
	 	(D)	 	indicate the steps to be taken by
the Claimant if a review of the denial is desired, including the
time limits applicable thereto; and
	 
	 	(E)	 	contain a statement of the
Claimant’s right to bring a civil action under ERISA in the
event of an adverse determination on review.

If notice of the adverse benefit determination is not furnished in
accordance with the preceding provisions of this Section, the claim shall be
deemed accepted and payment shall be made to the Claimant in accordance with
the claim.

(2) Claim for disability benefits. The notice of adverse benefit
determination shall, in addition to the information specified in (1) above,
disclose any internal rule, guidelines, protocol or similar criterion relied
on in making the adverse determination or a statement that such information
will be provided free of charge upon request.

(c) Review of a Denied Claim.

(i) Claim for benefits other than upon disability. If a claim is denied and a review
is desired, the Claimant shall notify the Committee in writing within 60 days after receipt of
written notice of a denial of a claim. In requesting a review, the Claimant may submit any written
comments, documents, records, and other information relating to the claim, the Claimant feels are
appropriate. The Claimant shall, upon request and free of charge, be provided reasonable access
to, and copies of, all documents, records and other information that, with respect to the
Claimant’s claim for benefits (A) was relied upon in making the benefit determination, (B) was
submitted, considered, or generated in the course of making the benefit determination, whether or
not actually relied upon in making the determination; or (C) demonstrates compliance with the
administrative processes and safeguards of this claims procedure (sometimes referred to for
purposes of this Section 9 as “Relevant”). The Committee shall review the claim taking
into account all comments, documents, records and other information submitted by the Claimant,
without regard to whether such information was submitted or considered in the initial benefit
determination.

(ii) Claim for benefits upon disability. The review procedures in Section 9(c)(i)
above shall apply, except the Claimant shall notify the Committee in writing within 180 days after
receipt of written notice of a denial of a claim, and no deference shall be given to the initial
benefit determination. The review shall be conducted by a different individual than the person who
made the initial benefit determination or a subordinate of that person. The following procedures
will apply to the review of an adverse benefit determination:

(1) In the case of a claim denied on the grounds of a medical judgment, the
Committee will consult with a health professional with appropriate training
and experience. The health care professional who is consulted on review
will not be the same individual who was consulted, if any, regarding the
initial benefit determination or a subordinate of that individual.

 

17

 

(2) A Claimant shall, on request and free of charge, be given reasonable
access to, and copies of, all documents, records, and other information
Relevant to the Claimant’s claim for benefits. If the advice of a medical
or vocational expert was obtained in connection with the initial benefit
determination, the names of each such expert shall be provided on request by
the Claimant, regardless of whether the advice was relied on by the Plan
Administrator.

(d) Decision on Review.

(i) Claim for benefits other than upon disability. The Committee shall provide the
Claimant with written notice of its decision on review within a reasonable period of time, but not
later than 60 days after receipt of a request for a review. An extension of time for making the
decision on the request for review is allowable if special circumstances shall occur, but such an
extension shall not extend beyond 120 days from the date the request for review is received by the
Committee.
Written notice of the extension of time shall be delivered or mailed within 60 days after
receipt of the request for review, indicating the special circumstances requiring an extension and
the date by which the Committee expects to render a determination.

(ii) Claim for benefits upon disability. The Committee shall provide the Claimant
with written notice of its decision on review within a reasonable period of time, but not later
than 45 days after receipt of a request for a review. An extension of time for making the decision
on the request for review is allowable if special circumstances shall occur, but such an extension
shall not extend beyond 90 days from the date the request for review is received by the Committee.
Written notice of the extension of time shall be delivered or mailed within 45 days after receipt
of the request for review, indicating the special circumstances requiring an extension and the date
by which the Committee expects to render a determination.

(iii) Required content of the Notice of Adverse Benefit Determination.

(1) In general. In the event of an adverse benefit determination on
review, the notice thereof shall (A) specify the reason or reasons for the
adverse determination; (B) reference the specific provisions of this Plan on
which the benefit determination is based; (C) contain a statement that the
Claimant is entitled to receive, upon request and free of charge, reasonable
access to, and copies of all records and other information Relevant to the
Claimant’s claim for benefits; (D) a statement describing any voluntary
appeal procedures offered by the Plan, including the arbitration procedures
in Section 9(f); and (E) inform the Claimant of the right to bring a civil
action under the provisions of ERISA. If notice of the adverse benefit
determination is not furnished in accordance with the preceding provisions
of this Section, the claim shall be deemed accepted and payment shall be
made to the Claimant in accordance with the claim.

 

18

 

(2) Claim for disability benefits. The notice of adverse benefit
determination shall, in addition to the information specified in (1) above,
(A) disclose any internal rule, guidelines, protocol or similar criterion
relied on in making the adverse determination or a statement that such
information will be provided free of charge upon request, and (B) include
the following statement: “You and your Plan may have other voluntary
alternative dispute resolution options, such as mediation. One way to find
out what may be available is to contact your local U.S. Department of Labor
Office and your State insurance regulatory agency.”

(e) Preservation of Remedies. After exhaustion of the claims procedure as provided
herein, nothing shall prevent the Claimant from pursuing any other legal or equitable remedy
otherwise available, including the right to bring a civil action under Section 502(a) of ERISA, if
applicable.

(f) Elective Arbitration. If a Claimant’s claim described in Section 9(a) is denied
pursuant to Sections 9(b) and 9(d) (an “Arbitrable Dispute”), the Claimant may, in lieu of
the Claimant’s right to bring a civil action under Section 502(a) of ERISA, and as the Claimant’s
only further recourse, submit the claim to final and binding arbitration in the city of San Jose,
State of California, before an experienced employment arbitrator selected in accordance with the
Employment Dispute Resolution Rules of the American Arbitration Association. Except as otherwise
provided in this Section 9(f) or Section 9(h), each party shall pay the fees of their respective
attorneys, the expenses of their witnesses and any other expenses connected with the arbitration,
but all other costs of the arbitration, including the fees of the arbitrator, costs of any record
or transcript of the arbitration, administrative fees and other fees and costs shall be paid in
equal shares by each party (or, if applicable, each group of parties) to the arbitration. In any
Arbitrable Dispute in which the Claimant prevails, the Company shall reimburse the Claimant’s
reasonable attorneys fees and related expenses. Related expenses shall include, but not be limited
to, witness expenses, fees of the arbitrator, costs of any record or transcript of the arbitration,
administrative fees and other fees and expenses connected with the arbitration. Arbitration in
this manner shall be the exclusive remedy for any Arbitrable Dispute for which an arbitration is
elected. The arbitrator’s decision or award shall be fully enforceable and subject to an entry of
judgment by a court of competent jurisdiction. Should any party attempt to resolve an Arbitrable
Dispute for which an arbitration is elected by any method other than arbitration pursuant to this
Section, the responding party shall be entitled to recover from the initiating party all damages,
expenses and attorneys fees incurred as a result.

(g) Legal Action. Prior to a Change in Control, except to enforce an arbitrator’s
award, no actions may be brought by a Claimant in any court with respect to an Arbitrable Dispute
that is arbitrated.

 

19

 

(h) Following a Change in Control. Upon the occurrence of a Change in Control, an
independent party selected jointly by the Participants in the Plan prior to the Change in Control
and the Committee or the Plan Administrator or other appropriate person shall assume all duties and
responsibilities of the Committee or Plan Administrator under this Section 9 and actions may be
brought by a Claimant in any appropriate court with respect to an Arbitrable Dispute that is
arbitrated. After a Change in Control, if any person or entity has failed to comply (or is
threatening not to comply) with any of its obligations under the Plan, or takes or threatens to
take any action to deny, diminish or to recover from any Participant the benefits intended to be
provided thereunder, the Company shall reimburse the Participant for reasonable attorneys fees and
related costs incurred in the pursuance or defense of the Participant’s rights. If the Participant
does not prevail, attorneys fees shall also be payable under the preceding sentence to the extent
the Participant had reasonable justification for pursuing its claim, but only to the extent that
the scope of such representation was reasonable.

10. Effective Date.

The Plan shall be effective as of July 1, 2010.

	 	 	 	 	 
	Flextronics International USA, Inc.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Paul J. Humphries
 

Paul J. Humphries
	 	 
	 

	 	Executive VP WW HR & Management Systems	 	 

Date Signed: October 8, 2010

 

20Exhibit 4.1

Exhibit 4.1

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS
SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

UFOOD RESTAURANT GROUP, INC.

			
	 	 	 
	Warrant Shares:
 _____ 

	 	Initial Exercise Date: October 29, 2010

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received,
                     
or its assigns (the “Holder”) is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time on or after the date
hereof (the “Initial Exercise Date”) and on or prior to the close of business on the five
year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter,
to subscribe for and purchase from UFood Restaurant Group, Inc., a Nevada corporation (the
“Company”), up to
 _____ 
shares (as subject to adjustment hereunder, the “Warrant
Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant
shall be equal to the Exercise Price, as defined in Section 2(b).

Section 1. Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Securities Purchase Agreement (the
“Purchase Agreement”), dated October 29, 2010, among the Company and the purchasers
signatory thereto.

 

 

 

Section 2. Exercise.

a) Exercise of Warrant. Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by delivery to the Company (or such
other office or agency of the Company as it may designate by notice in writing to
the registered Holder at the address of the Holder appearing on the books of the
Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto.
Within three (3) Trading Days following the date of exercise as aforesaid, the Holder shall
deliver the aggregate Exercise Price for the shares specified in the applicable Notice of
Exercise by wire transfer or cashier’s check drawn on a United States bank unless the
cashless exercise procedure specified in Section 2(c) below is specified in the applicable
Notice of Exercise. Notwithstanding anything herein to the contrary, the Holder shall not be
required to physically surrender this Warrant to the Company until the Holder has purchased
all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in
which case, the Holder shall surrender this Warrant to the Company for cancellation within
three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company.
Partial exercises of this Warrant resulting in purchases of a portion of the total number of
Warrant Shares available hereunder shall have the effect of lowering the outstanding number
of Warrant Shares purchasable hereunder in an amount equal to the applicable number of
Warrant Shares purchased. The Holder and the Company shall maintain records showing the
number of Warrant Shares purchased and the date of such purchases. The Company shall deliver
any objection to any Notice of Exercise Form within one (1) Business Day of receipt of such
notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree
that, by reason of the provisions of this paragraph, following the purchase of a portion of
the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder
at any given time may be less than the amount stated on the face hereof.

b) Exercise Price. The exercise price per share of the Common Stock under this
Warrant shall be $0.29, subject to adjustment hereunder (the “Exercise Price”).

c) Cashless Exercise. If at any time after the earlier of (i) the one year
anniversary of the date of the Purchase Agreement and (ii) the completion of the
then-applicable holding period required by Rule 144, or any successor provision then in
effect, there is no effective Registration Statement registering, or no current prospectus
available for, the resale of the Warrant Shares by the Holder, then] this Warrant may also
be exercised, in whole or in part, at such time by means of a “cashless exercise” in which
the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal
to the quotient obtained by dividing [(A-B) (X)] by (A), where:

	 	(A) =	 	the VWAP on the Trading Day immediately preceding the date
on which Holder elects to exercise this Warrant by means of a “cashless
exercise,” as set forth in the applicable Notice of Exercise;

	 
	 	(B) =	 	 the Exercise Price of this Warrant, as adjusted hereunder;
and

	 
	 	(X) =	 	the number of Warrant Shares that would be issuable upon
exercise of this Warrant in accordance with the terms of this Warrant if such
exercise were by means of a cash exercise rather than a cashless exercise.

 

2

 

	 	d)	 	Mechanics of Exercise.

i. Delivery of Certificates Upon Exercise. Certificates for
 shares purchased hereunder shall be transmitted by the Transfer Agent to
the Holder by crediting the account of the Holder’s prime broker with The
Depository Trust Company through its Deposit or Withdrawal at Custodian
system (“DWAC”) if the Company is then a participant in such
system and either (A) there is an effective registration statement
permitting the issuance of the Warrant Shares to or resale of the Warrant
Shares by the Holder or (B) the shares are eligible for resale by the
Holder without volume or manner-of-sale limitations pursuant to Rule 144,
and otherwise by physical delivery to the address specified by the Holder
in the Notice of Exercise by the date that is three (3) Trading Days after
the latest of (A) the delivery to the Company of the Notice of Exercise,
(B) surrender of this Warrant (if required), and (C) payment of the
aggregate Exercise Price as set forth above (including by cashless
exercise, if permitted) (such date, the “Warrant Share Delivery
Date”). The Warrant Shares shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be
deemed to have become a holder of record of such shares for all purposes,
as of the date the Warrant has been exercised, with payment to the Company
of the Exercise Price (or by cashless exercise, if permitted) and all
taxes required to be paid by the Holder, if any, pursuant to Section
2(d)(vi) prior to the issuance of such shares, having been paid.

ii. Delivery of New Warrants Upon Exercise. If this Warrant
shall have been exercised in part, the Company shall, at the request of a
Holder and upon surrender of this Warrant certificate, at the time of
delivery of the certificate or certificates representing Warrant Shares,
deliver to the Holder a new Warrant evidencing the rights of the Holder to
purchase the unpurchased Warrant Shares called for by this Warrant, which
new Warrant shall in all other respects be identical with this Warrant.

iii. Rescission Rights. If the Company fails to cause the
Transfer Agent to transmit to the Holder a certificate or the certificates
representing the Warrant Shares pursuant to Section 2(d)(i) by the Warrant
Share Delivery Date, then the Holder will have the right to rescind such
exercise.

iv. Compensation for Buy-In on Failure to Timely Deliver
Certificates Upon Exercise. In addition to any other rights available
to the Holder, if the Company fails to cause the Transfer Agent to
transmit to the Holder a certificate or the certificates representing the
Warrant Shares pursuant to an exercise on or before the Warrant Share
Delivery Date, and if after such date the Holder is required by its broker
to purchase (in an open market transaction or otherwise) or the Holder’s
brokerage firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a

 

3

 

sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”),
then the Company shall (A) pay in cash to the Holder the amount, if any,
by which (x) the Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased exceeds
(y) the amount obtained by multiplying (1) the number of Warrant Shares
that the Company was required to deliver to the Holder in connection with
the exercise at issue times (2) the price at which the sell order giving
rise to such purchase obligation was executed, and (B) at the option of
the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares for which such exercise was not honored (in which
case such exercise shall be deemed rescinded) or deliver to the Holder the
number of shares of Common Stock that would have been issued had the
Company timely complied with its exercise and delivery obligations
hereunder. For example, if the Holder purchases Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to an
attempted exercise of shares of Common Stock with an aggregate sale price
giving rise to such purchase obligation of $10,000, under clause (A) of
the immediately preceding sentence the Company shall be required to pay
the Holder $1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In and,
upon request of the Company, evidence of the amount of such loss. Nothing
herein shall limit a Holder’s right to pursue any other remedies available
to it hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief with respect to
the Company’s failure to timely deliver certificates representing shares
of Common Stock upon exercise of the Warrant as required pursuant to the
terms hereof.

v. No Fractional Shares or Scrip. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise of
this Warrant. As to any fraction of a share which the Holder would
otherwise be entitled to purchase upon such exercise, the Company shall,
at its election, either pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the Exercise
Price or round up to the next whole share.

vi. Charges, Taxes and Expenses. Issuance of certificates
for Warrant Shares shall be made without charge to the Holder for any
issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be
paid by the Company, and such certificates shall be issued in the name of
the Holder or in such name or names as may be directed by the Holder;
provided, however, that in the event certificates for
Warrant Shares are to be issued in a name other than the name of the
Holder, this Warrant when surrendered for exercise shall be accompanied by
the Assignment Form attached hereto duly executed by the Holder and the
Company may
require, as a condition thereto, the payment of a sum sufficient to
reimburse it for any transfer tax incidental thereto.

 

4

 

vii. Closing of Books. The Company will not close its
stockholder books or records in any manner which prevents the timely
exercise of this Warrant, pursuant to the terms hereof.

e) Holder’s Exercise Limitations. The Company shall not effect any
exercise of this Warrant, and a Holder shall not have the right to exercise any
portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that
after giving effect to such issuance after exercise as set forth on the applicable
Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s
Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation
(as defined below). For purposes of the foregoing sentence, the number of shares of
Common Stock beneficially owned by the Holder and its Affiliates shall include the
number of shares of Common Stock issuable upon exercise of this Warrant with respect
to which such determination is being made, but shall exclude the number of shares of
Common Stock which would be issuable upon (i) exercise of the remaining,
nonexercised portion of this Warrant beneficially owned by the Holder or any of its
Affiliates and (ii) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company (including, without limitation, any
other Common Stock Equivalents) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by the Holder or any
of its Affiliates. Except as set forth in the preceding sentence, for purposes of
this Section 2(e), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is not representing
to the Holder that such calculation is in compliance with Section 13(d) of the
Exchange Act and the Holder is solely responsible for any schedules required to be
filed in accordance therewith. To the extent that the limitation contained in this
Section 2(e) applies, the determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder together with any Affiliates) and
of which portion of this Warrant is exercisable shall be in the sole discretion of
the Holder, and the submission of a Notice of Exercise shall be deemed to be the
Holder’s determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates) and of which portion of
this Warrant is exercisable, in each case subject to the Beneficial Ownership
Limitation, and the Company shall have no obligation to verify or confirm the
accuracy of such determination. In addition, a determination as to any group
status as contemplated above shall be determined in accordance with Section 13(d) of
the Exchange Act and the rules and regulations promulgated thereunder. For purposes
of this Section 2(e), in determining the number of outstanding shares of Common
Stock, a Holder may rely on the number of outstanding shares of Common Stock as
reflected in (A) the Company’s most recent periodic or annual report filed with the
Commission, as the case may be,

 

5

 

(B) a more recent public announcement by the Company or (C) a more recent written notice by the Company
or the Transfer Agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of a Holder, the Company shall within
two Trading Days confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding. In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the conversion or exercise
of securities of the Company, including this Warrant, by the Holder or its
Affiliates since the date as of which such number of outstanding shares of Common
Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of
the number of shares of the Common Stock outstanding immediately after giving effect
to the issuance of shares of Common Stock issuable upon exercise of this Warrant.
The Holder, upon not less than 61 days’ prior notice to the Company, may increase or
decrease the Beneficial Ownership Limitation provisions of this Section 2(e),
provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the
number of shares of the Common Stock outstanding immediately after giving effect to
the issuance of shares of Common Stock upon exercise of this Warrant held by the
Holder and the provisions of this Section 2(e) shall continue to apply. Any such
increase or decrease will not be effective until the 61st day after such
notice is delivered to the Company. The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict conformity with the
terms of this Section 2(e) to correct this paragraph (or any portion hereof) which
may be defective or inconsistent with the intended Beneficial Ownership Limitation
herein contained or to make changes or supplements necessary or desirable to
properly give effect to such limitation. The limitations contained in this paragraph
shall apply to a successor holder of this Warrant.

Section 3. Certain Adjustments.

a) Stock Dividends and Splits. If the Company, at any time while this Warrant
is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions
on shares of its Common Stock or any other equity or equity equivalent securities payable in
 shares of Common Stock (which, for avoidance of doubt, shall not include any shares of
Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, (iii) combines (including
by way of reverse stock split) outstanding shares of Common Stock into a smaller number of
 shares or (iv) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding immediately after such
event, and the number of shares issuable upon exercise of this Warrant shall be
proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain
unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective
immediately after the record date for the determination of stockholders entitled to receive
such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.

 

6

 

b) Subsequent Equity Sales. If the Company or any Subsidiary thereof, as
applicable, at any time while this Warrant is outstanding, shall sell or grant any option to
purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or
announce any offer, sale, grant or any option to purchase or other disposition) any Common
Stock or Common Stock Equivalents, at an effective price per share less than the Exercise
Price then in effect (such lower price, the “Base Share Price” and such issuances
collectively, a “Dilutive Issuance”) (it being understood and agreed that if the
holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether
by operation of purchase price adjustments, reset provisions, floating conversion, exercise
or exchange prices or otherwise, or due to warrants, options or rights per share which are
issued in connection with such issuance, be entitled to receive shares of Common Stock at an
effective price per share that is less than the Exercise Price, such issuance shall be
deemed to have occurred for less than the Exercise Price on such date of the Dilutive
Issuance at such effective price), then (a) the Exercise Price shall be reduced and only
reduced by multiplying the Exercise Price by a fraction, the numerator of which is the
number of shares of Common Stock issued and outstanding immediately prior to the Dilutive
Issuance plus the number of shares of Common Stock which the offering price for such
Dilutive Issuance would purchase at the then Exercise Price, and the denominator of which
shall be the sum of the number of shares of Common Stock issued and outstanding immediately
prior to the Dilutive Issuance plus the number of shares of Common Stock so issued or
issuable in connection with the Dilutive Issuance and (b) the number of Warrant Shares
issuable hereunder shall be increased such that the aggregate Exercise Price payable
hereunder, after taking into account the decrease in the Exercise Price, shall be equal to
the aggregate Exercise Price prior to such adjustment. Such adjustment shall be made
whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the
foregoing, no adjustments shall be made, paid or issued under this Section 3(b) in respect
of an Exempt Issuance. The Company shall notify the Holder, in writing, no later than the
Trading Day following the issuance or deemed issuance of any Common Stock or Common Stock
Equivalents subject to this Section 3(b), indicating therein the applicable issuance price,
or applicable reset price, exchange price, conversion price and other pricing terms (such
notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or
not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the
occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Warrant
Shares based upon the Base Share Price regardless of whether the Holder accurately refers to
the Base Share Price in the Notice of Exercise. If the Company enters into a Variable Rate
Transaction, despite the prohibition thereon in the Purchase Agreement, the Company shall be
deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible
conversion or exercise price at which such securities may be converted or exercised.

 

7

 

c) Subsequent Rights Offerings. If the Company, at any time while the Warrant
is outstanding, shall issue rights, options or warrants to all holders of Common Stock (and
not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a
price per share less than the closing bid price of the Common Stock
on the record date mentioned below, then the Exercise Price shall be multiplied by a
fraction, of which the denominator shall be the number of shares of the Common Stock
outstanding on the date of issuance of such rights, options or warrants plus the number of
additional shares of Common Stock offered for subscription or purchase, and of which the
numerator shall be the number of shares of the Common Stock outstanding on the date of
issuance of such rights, options or warrants plus the number of shares which the aggregate
offering price of the total number of shares so offered (assuming receipt by the Company in
full of all consideration payable upon exercise of such rights, options or warrants) would
purchase at such closing bid price of the Common Stock. Such adjustment shall be made
whenever such rights, options or warrants are issued, and shall become effective immediately
after the record date for the determination of stockholders entitled to receive such rights,
options or warrants.

d) Pro Rata Distributions. If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to the Holder)
evidences of its indebtedness or assets (including cash and cash dividends) or rights or
warrants to subscribe for or purchase any security other than the Common Stock (which shall
be subject to Section 3(b)), then in each such case the Exercise Price shall be adjusted by
multiplying the Exercise Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution by a fraction of which
the denominator shall be the closing bid price of the Common Stock determined as of the
record date mentioned above, and of which the numerator shall be such closing bid price of
the Common Stock on such record date less the then per share fair market value at such
record date of the portion of such assets or evidence of indebtedness or rights or warrants
so distributed applicable to one outstanding share of the Common Stock as determined by the
Board of Directors in good faith. In either case the adjustments shall be described in a
statement provided to the Holder of the portion of assets or evidences of indebtedness so
distributed or such subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.

e) Fundamental Transaction. If, at any time while this Warrant is outstanding,
(i) the Company, directly or indirectly, in one or more related transactions effects any
merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance
or other disposition of all or substantially all of its assets in one or a series of related
transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to sell, tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the outstanding Common
Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects
any reclassification, reorganization or recapitalization of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is effectively converted into
or exchanged for other securities, cash or property, (v) the Company, directly or
indirectly, in one or more related transactions consummates a stock or share purchase
agreement or other business combination

 

8

 

(including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another
Person whereby such other Person acquires more than 50% of the outstanding shares of Common
Stock (not including any shares of Common Stock held by the other Person or other Persons
making or party to, or associated or affiliated with the other Persons making or party to,
such stock or share purchase agreement or other business combination) (each a
“Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, for each Warrant Share that would have been issuable
upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the
number of shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration (the
“Alternate Consideration”) receivable as a result of such Fundamental Transaction by
a holder of the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such Fundamental Transaction (without regard to any limitation in
Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the
determination of the Exercise Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and the Company shall
apportion the Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate Consideration.
If holders of Common Stock are given any choice as to the securities, cash or property to be
received in a Fundamental Transaction, then the Holder shall be given the same choice as to
the Alternate Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a
Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3 transaction”
as defined in Rule 13e-3 under the Exchange Act, or (3) a Fundamental Transaction involving
a person or entity not traded on a national securities exchange, the Company or any
Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time
concurrently with, or within 30 days after, the consummation of the Fundamental Transaction,
purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the
Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the
consummation of such Fundamental Transaction. “Black Scholes Value” means the value
of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation
of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a
risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the
time between the date of the public announcement of the applicable Fundamental Transaction
and the Termination Date, (B) an expected volatility equal to the greater of 100% and the
100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day
immediately following the public announcement of the applicable Fundamental Transaction, (C)
the underlying price per share used in such calculation shall be the sum of the price per
share being offered in cash, if any, plus the value of any non-cash consideration, if any,
being offered in such Fundamental Transaction and (D) a remaining option time equal to the
time between the date of the public announcement of the applicable Fundamental Transaction
and the Termination Date. The

 

9

 

Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”)
to assume in writing all of the obligations of the Company under this Warrant and the other
Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to
written agreements in form and substance reasonably satisfactory to the Holder and approved
by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall,
at the option of the holder of this Warrant, deliver to the Holder in exchange for this
Warrant a security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Warrant which is exercisable for a corresponding
number of shares of capital stock of such Successor Entity (or its parent entity) equivalent
to the shares of Common Stock acquirable and receivable upon exercise of this Warrant
(without regard to any limitations on the exercise of this Warrant) prior to such
Fundamental Transaction, and with an exercise price which applies the exercise price
hereunder to such shares of capital stock (but taking into account the relative value of the
 shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares
of capital stock, such number of shares of capital stock and such exercise price being for
the purpose of protecting the economic value of this Warrant immediately prior to the
consummation of such Fundamental Transaction), and which is reasonably satisfactory in form
and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the
Successor Entity shall succeed to, and be substituted for (so that from and after the date
of such Fundamental Transaction, the provisions of this Warrant and the other Transaction
Documents referring to the “Company” shall refer instead to the Successor Entity), and may
exercise every right and power of the Company and shall assume all of the obligations of the
Company under this Warrant and the other Transaction Documents with the same effect as if
such Successor Entity had been named as the Company herein.

f) Calculations. All calculations under this Section 3 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this
Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding treasury
 shares, if any) issued and outstanding.

g) Notice to Holder.

i. Adjustment to Exercise Price. Whenever the Exercise Price is
adjusted pursuant to any provision of this Section 3, the Company shall
promptly mail to the Holder a notice setting forth the Exercise Price after
such adjustment and any resulting adjustment to the number of Warrant Shares
and setting forth a brief statement of the facts requiring such adjustment.

 

10

 

ii. Notice to Allow Exercise by Holder. If (A) the Company
shall declare a dividend (or any other distribution in whatever form) on the
Common Stock, (B) the Company shall declare a special nonrecurring cash
dividend on or a redemption of the Common Stock, (C) the Company shall
authorize the granting to all holders of the Common Stock rights or warrants
to subscribe for or purchase any shares of capital stock of any

class or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the
Common Stock, any consolidation or merger to which the Company is a party,
any sale or transfer of all or substantially all of the assets of the
Company, or any compulsory share exchange whereby the Common Stock is
converted into other securities, cash or property, or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding
up of the affairs of the Company, then, in each case, the Company shall
cause to be mailed to the Holder at its last address as it shall appear upon
the Warrant Register of the Company, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is
not to be taken, the date as of which the holders of the Common Stock of
record to be entitled to such dividend, distributions, redemption, rights or
warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to mail such
notice or any defect therein or in the mailing thereof shall not affect the
validity of the corporate action required to be specified in such notice.
To the extent that any notice provided hereunder constitutes, or contains,
material, non-public information regarding the Company or any of the
Subsidiaries, the Company shall simultaneously file such notice with the
Commission pursuant to a Current Report on Form 8-K. The Holder shall
remain entitled to exercise this Warrant during the period commencing on the
date of such notice to the effective date of the event triggering such
notice except as may otherwise be expressly set forth herein.

Section 4. Transfer of Warrant.

a) Transferability. Subject to compliance with any applicable securities laws
and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of
the Purchase Agreement, this Warrant and all rights hereunder (including, without
limitation, any registration rights) are transferable, in whole or in part, upon surrender
of this Warrant at the principal office of the Company or its designated agent, together
with a written assignment of this Warrant substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any transfer
taxes payable upon the making of such transfer. Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees, as applicable, and in the denomination or denominations specified in
such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the
portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The
Warrant, if properly assigned in accordance herewith,
may be exercised by a new holder for the purchase of Warrant Shares without having a
new Warrant issued.

 

11

 

b) New Warrants. This Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company, together with a written
notice specifying the names and denominations in which new Warrants are to be issued, signed
by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any
transfer which may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice. All Warrants issued on transfers or exchanges
shall be dated the Initial Exercise Date and shall be identical with this Warrant except as
to the number of Warrant Shares issuable pursuant thereto and the name of the holder
thereof.

c) Warrant Register. The Company shall register this Warrant, upon records to
be maintained by the Company for that purpose (the “Warrant Register”), in the name
of the record Holder hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose of any
exercise hereof or any distribution to the Holder, and for all other purposes, absent actual
notice to the contrary.

d) Transfer Restrictions. If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of this Warrant shall not be
either (i) registered pursuant to an effective registration statement under the Securities
Act and under applicable state securities or blue sky laws or (ii) eligible for resale
without volume or manner-of-sale restrictions or current public information requirements
pursuant to Rule 144, the Company may require, as a condition of allowing such transfer,
that the Holder or transferee of this Warrant, as the case may be, comply with the
provisions of Section 5.7 of the Purchase Agreement.

e) Representation by the Holder. The Holder, by the acceptance hereof,
represents and warrants that it is acquiring this Warrant and, upon any exercise hereof,
will acquire the Warrant Shares issuable upon such exercise, for its own account and not
with a view to or for distributing or reselling such Warrant Shares or any part thereof in
violation of the Securities Act or any applicable state securities law, except pursuant to
sales registered or exempted under the Securities Act.

Section 5. Miscellaneous.

a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the
Holder to any voting rights, dividends or other rights as a stockholder of the Company prior
to the exercise hereof as set forth in Section 2(d)(i).

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants
that upon receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant or any stock certificate relating to the
Warrant Shares, and in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it (which, in the case of the Warrant, shall not include the
posting of any bond), and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or
stock certificate.

 

12

 

c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein shall not be
a Business Day, then, such action may be taken or such right may be exercised on the next
succeeding Business Day.

d) Authorized Shares.

The Company covenants that, during the period the Warrant is outstanding, it
will reserve from its authorized and unissued Common Stock a sufficient number of
 shares to provide for the issuance of the Warrant Shares upon the exercise of any
purchase rights under this Warrant. The Company further covenants that its issuance
of this Warrant shall constitute full authority to its officers who are charged with
the duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Shares upon the exercise of the purchase rights under
this Warrant. The Company will take all such reasonable action as may be necessary
to assure that such Warrant Shares may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of the Trading
Market upon which the Common Stock may be listed. The Company covenants that all
Warrant Shares which may be issued upon the exercise of the purchase rights
represented by this Warrant will, upon exercise of the purchase rights represented
by this Warrant and payment for such Warrant Shares in accordance herewith, be duly
authorized, validly issued, fully paid and nonassessable and free from all taxes,
liens and charges created by the Company in respect of the issue thereof (other than
taxes in respect of any transfer occurring contemporaneously with such issue).

Except and to the extent as waived or consented to by the Holder, the Company
shall not by any action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such actions as may be necessary or appropriate to
protect the rights of Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will (i) not increase
the par value of any Warrant Shares above the amount payable therefor upon such
exercise immediately prior to such increase in par value, (ii) take all such action
as may be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant
and (iii) use commercially reasonable efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body
having jurisdiction thereof, as may be, necessary to enable the Company to
perform its obligations under this Warrant.

 

13

 

Before taking any action which would result in an adjustment in the number of
Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.

e) Jurisdiction. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be determined in accordance with the
provisions of the Purchase Agreement.

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon
the exercise of this Warrant, if not registered and the Holder does not utilize cashless
exercise, will have restrictions upon resale imposed by state and federal securities laws.

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of such right
or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that
all rights hereunder terminate on the Termination Date. If the Company willfully and
knowingly fails to comply with any provision of this Warrant, which results in any material
damages to the Holder, the Company shall pay to the Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to, reasonable
attorneys’ fees, including those of appellate proceedings, incurred by the Holder in
collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder.

h) Notices. Any notice, request or other document required or permitted to be
given or delivered to the Holder by the Company shall be delivered in accordance with the
notice provisions of the Purchase Agreement.

i) Limitation of Liability. No provision hereof, in the absence of any
affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Holder, shall give rise to any
liability of the Holder for the purchase price of any Common Stock or as a stockholder of
the Company, whether such liability is asserted by the Company or by creditors of the
Company.

j) Remedies. The Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific performance of
its rights under this Warrant. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the provisions of
this Warrant and hereby agrees to waive and not to assert the defense in any action for
specific performance that a remedy at law would be adequate.

 

14

 

k) Successors and Assigns. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of and be binding
upon the successors and permitted assigns of the Company and the successors and permitted
assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any
Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of
Warrant Shares.

l) Amendment. This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and the Holders holding Warrants at least
equal to 67% of the Warrant Shares issuable upon exercise of all then outstanding Warrants.

m) Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of this Warrant.

n) Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

(Signature Page Follows)

 

15

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer
thereunto duly authorized as of the date first above indicated.

	 	 	 	 	 
	 	UFOOD RESTAURANT GROUP, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

16

 

NOTICE OF EXERCISE

TO: UFOOD RESTAURANT GROUP, INC.

(1) The undersigned hereby elects to purchase
 _____ 
Warrant Shares of the Company pursuant
to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of
the exercise price in full, together with all applicable transfer taxes, if any.

(2) Payment shall take the form of (check applicable box):

o  in lawful money of the United States; or

o   [if permitted] the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in subsection 2(c), to
exercise this Warrant with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise procedure set forth in subsection
2(c).

(3) Please issue a certificate or certificates representing said Warrant Shares in the name of
the undersigned or in such other name as is specified below:

 

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery
of a certificate to:

 

 

 

(4) Accredited Investor. The undersigned is an “accredited investor” as defined in
Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

	 	 	 
	Name of Investing Entity:
	 	 
	 

	 	 

	 	 	 
	Signature of Authorized Signatory of Investing Entity:
	 	 
	 

	 	 

	 	 	 
	Name of Authorized Signatory:
	 	 
	 

	 	 

	 	 	 
	Title of Authorized Signatory:
	 	 
	 

	 	 

	 	 	 
	Date:
	 	 
	 

	 	 

 

 

 

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, [_____] all of or [_____] shares of the foregoing Warrant and all rights
evidenced thereby are hereby assigned to

_______________________________________________ whose address is

	 	 	 
	 
	. 	 
	 	 	 
	 
	 	 

Dated:           
          ,           

	 	 	 	 	 	 
	 
	 	Holder’s Signature:	 	 	 
	 
	 	 	 	 
	 
	 
	 	 	 	 	 
	 
	 	Holder’s Address:	 	 	 
	 
	 	 	 	 
	 
	 
	 	 	 	 	 
	 
	 	 	 	 
	 

			
	Signature Guaranteed:	 	 

 
	NOTE: 	 	The signature to this Assignment Form must correspond with the name as it appears on the
face of the Warrant, without alteration or enlargement or any change whatsoever, and must be
guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign the foregoing
Warrant.

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