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  Exhibit 10.23    
    

 
    Change of Control Agreement    
    
    March 7, 2011    
    

JOHN PATRICK O'SHAUGHNESSY

135 NORTH CHURCH STREET

SPARTANBURG, SC 29306  

Dear Patrick: 

        Advance
America, Cash Advance Centers, Inc., a Delaware corporation (the "Company"), considers it essential to the best interests
of its stockholders to take reasonable steps to retain key management personnel. Further, the Board of Directors of the Company (the "Board") recognizes
that the uncertainty and questions that might arise among management in the context of any possible Change of Control (as defined below) of the Company could result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders. 

        In
order to reinforce and encourage your continued attention and dedication to your assigned duties without distraction in the face of potentially disturbing circumstances arising from
any possible Change of Control, the Company has determined to enter into this letter agreement (the "Agreement"), which addresses the terms and
conditions of your separation from the Company in connection with or within two (2) years following a Change of Control (the "Change of Control
Period"). Capitalized words that are not otherwise defined herein shall have the meanings assigned to those words in Section 11 hereof. 

        1.    Operation of Agreement.    The provisions of this Agreement pertaining to the terms and conditions of your
separation from the Company in connection with a Change in Control (collectively, the "Severance Provisions") shall apply only if a Change of Control
occurs during the Effective Period. If a Change of Control occurs during the Effective Period, the Severance Provisions become effective on the date of the Change of Control (the
"Change of Control Date"). Notwithstanding the foregoing, if (a) a Change of Control occurs during the Effective Period; and (b) your
employment with the Company is terminated during the Effective Period, but within twelve (12) months prior to the date on which the Change of Control occurs; and (c) it is reasonably
demonstrated by you that such termination of employment (i) was at the request of a third party that has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise
arose in connection with or in anticipation of a Change of Control, then the "Change of Control Date" shall mean the date immediately prior to the date
of such termination of employment. This Agreement will remain in effect until the later of (x) the last day of the Effective Period; or (y) if a Change of Control occurs during the
Effective Period, the date on which all benefits due to you under this Agreement, if any, have been paid. 

        2.    Termination of Employment by Reason of Death or Disability.    Your employment shall terminate automatically if
you die during the Change of Control Period. If the Company determines in good faith that you incurred a Disability during the Change of Control Period, it may give you written notice, in accordance
with Section 5 hereof, of its intention to terminate your employment. In such event, your employment with the Company shall terminate effective on the thirtieth (30) calendar day after
your receipt of such notice if you have not returned to full-time duties within thirty (30) calendar days after such receipt. If your employment is terminated for death or
Disability during the Change of Control Period, this Agreement shall terminate without further obligations on the part of the Company other than the obligation to pay to you or your representative, as
applicable, the following amounts: 

        (a)   the
Accrued Obligations, which shall be paid to you in a single sum cash payment no later than the later of (i) fifteen (15) calendar days following the
Date of Termination or (ii) the effective date of the Waiver and Release: 

        (b)   the
Pro Rata Bonus, which shall be paid to you in a single sum cash payment no later than the later of (i) fifteen (15) calendar days following the Date of
Termination or (ii) the effective date of the Waiver and Release; and 

 

        (c)   the
Other Benefits, which shall be paid in accordance with the terms and conditions of such plans, programs, policies, arrangements or agreements. 

        3.    Termination for Cause; Resignation Other Than for Good Reason.    If your employment is terminated for Cause or
you resign for other than Good Reason during the Change of Control Period, your employment will terminate on the Date of Termination in accordance with Section 5 hereof and this Agreement shall
terminate without further obligations on the part of the Company other than the obligation to pay to you the following: 

        (a)   the
Accrued Obligations, which shall be paid to you in a single sum payment within thirty (30) calendar days of the Date of Termination; and 

        (b)   the
Other Benefits, which shall be paid in accordance with the terms and conditions of such plans, programs or policies. 

        4.    Termination as a Result of an Involuntary Termination.    In the event that your employment with the Company
should terminate during the Change of Control Period as a result of an Involuntary Termination, the Company will be obligated, except as provided in Section 8 or Section 9 hereof, to
provide you the following benefits: 

        (a)    Severance Payment.    The Company shall pay to you the following amounts: 

          (i)  the
Accrued Obligations, which shall be paid to you in a single sum cash payment no later than the later of (A) fifteen (15) calendar days following the
Date of Termination or (B) the effective date of the Waiver and Release; 

         (ii)  the
Pro Rata Bonus, which shall be paid to you in a single sum cash payment no later than the later of (A) fifteen (15) calendar days following the Date
of Termination or (B) the effective date of the Waiver and Release; 

        (iii)  an
amount equal to the product of (A) 2.5 times (B) the sum of (1) your Adjusted Base Salary plus (2) your Target Bonus, which amount shall
be paid to you in a single sum cash payment no later than the later of (i) fifteen (15) calendar days following the Date of Termination or (ii) the effective date of the Waiver
and Release; 

        (iv)  if
you had previously consented to the Company's request to relocate your principal place of employment more than fifty (50) miles from its location immediately
prior to the Change of Control Date, all unreimbursed relocation expenses incurred by you in accordance with the Company's relocation policies, which expenses shall be paid to you in a single sum cash
payment no later than the later of (A) fifteen (15) calendar days following the Date of Termination or (B) the effective date of the Waiver and Release; and 

         (v)  the
Other Benefits, which shall be paid in accordance with the then-existing terms and conditions of such plans, programs or policies. 

        (b)    Benefit Continuation.    You and your then eligible dependents shall continue to be covered by and participate
in the group health and dental care plans (collectively, "Health Plans") of the Company (at the Company's cost) in which you participated immediately
prior to the Date of Termination through the end of the Benefit Continuation Period; provided, however,
that any medical or dental welfare benefit otherwise receivable by you hereunder shall terminate to the extent that you and your then eligible dependents become covered under a group health or dental
care plan providing a comparable benefit. You shall be eligible to participate in such Health Plans on terms that are at least as favorable as those in effect immediately prior to the Date of
Termination. However, in the event the Company determines on or prior to the Date of Termination that (i) the terms of the Company's Health Plans do not permit you to participate in those plans
(other than pursuant to an election under the Consolidated Omnibus Budget 

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Reconciliation
Act of 1985 ("COBRA")) or (ii) your participation in such plans would cause such plans to fail to meet the requirements for
tax-favored group health plan coverage under the Code, in lieu of your and your eligible dependent's coverage and participation under the Company's Health Plans, the Company shall pay to
you within thirty (30) calendar days of the Date of Termination a lump sum equal to two (2) times your monthly COBRA premium amount for the number of months remaining in the Benefit
Continuation Period. In addition, for the purposes of eligibility for COBRA continuation coverage, your "qualifying event" as defined under COBRA will be the date of loss of coverage described in this
paragraph above. 

        (c)    Outplacement Services.    The Company shall, at its sole expense as incurred, provide you with outplacement
services on such terms and conditions as may be determined by the Company prior to the Change of Control Date. 

        (d)    Acceleration of Stock Awards.    All your outstanding awards of restricted stock, stock options, and other
equity-based compensation shall become fully vested and exercisable in full immediately upon the Date of Termination; provided, however, that any such awards that would be out of the money as of the
Date of Termination may be terminated pursuant to Section 9(b) hereof. In addition, all your outstanding awards of restricted stock, stock options, and other equity-based compensation that are
not assumed or substituted with awards of equivalent value in connection with a Change of Control shall become fully vested and exercisable in full immediate upon the Change of Control Date. 

        5.    Date and Notice of Termination.    Any termination of your employment by the Company or by you during the Change
of Control Period shall be communicated by a notice of termination to the other party hereto (the "Notice of Termination"). The Notice of Termination
shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated. The date of your termination of employment with the Company (the "Date of Termination") shall be determined
as follows: (i) if your employment is terminated for Disability, thirty (30) calendar days after a Notice of Termination is received by you (provided that you shall not have returned to
the full-time performance of your duties during such thirty (30) calendar day period), (ii) if your employment is terminated by the Company in an Involuntary Termination, the
later of the date specified in the Notice of Termination or five (5) calendar days after the date the Notice of Termination is received by you, (iii) if you terminate your employment for
Good Reason, five (5) calendar days after the date the Notice of Termination is received by the Company, and (iv) if your employment is terminated by the Company for Cause, the later of
the date specified in the Notice of Termination or five (5) calendar days following the date such notice is received by you. The Date of Termination for a resignation of employment other than
for Good Reason shall be the date set forth in the applicable notice. 

        6.    No Mitigation or Offset.    You shall not be required to mitigate the amount of any payment provided for herein
by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for herein be reduced by any compensation earned by you as the result of employment by another
employer after the Date of Termination or otherwise. 

        7.    Confidentiality.    You agree to treat all Confidential Information as confidential information entrusted to you
solely for use as an employee of the Company, and shall not divulge, reveal or transmit any Confidential Information in any way to persons not employed by the Company at any time from the date hereof
until the end of time, whether or not you continue to be an employee of the Company, unless authorized in writing by the Company. 

        8.    Code Section 409A.    This Agreement is intended to comply with the provisions of Section 409A of
the Code and this Agreement should be interpreted accordingly; the parties intend that any payments hereunder that would otherwise be subject to Section 409A shall be made within the 

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short-term
deferral period provided in the Treasury Regulations adopted pursuant to Section 409A. Without limiting any of the foregoing and notwithstanding anything to the contrary
contained herein, if you are a "specified employee," as defined in Section 409A of the Code, at the time you would otherwise be entitled to receive any specific payment hereunder, no
distributions shall be made with respect to that specific payment until the earliest date permitted by Section 409A(a)(2) of the Code. All other payments that do not result in any additional
payments, liability or penalties shall be made as specified. 

        9.    Certain Reduction of Payments by the Company.    

        (a)    Best Net.    Anything in this Agreement to the contrary notwithstanding, in the event that the independent
auditors of the Company (the "Accounting Firm") determine that receipt of all payments or distributions in the nature of compensation to or for your
benefit, whether paid or payable pursuant to this Agreement or otherwise ("Payments"), would subject you to tax under Section 4999 of the Code,
the Payments paid or payable pursuant to this Agreement (the "COC Payments"), including payments made with respect to equity-based compensation
accelerated pursuant to Section 4(d) hereof, but excluding payments made with respect to Sections 4(a)(i) and 4(a)(ii) hereof (except as provided below), may be reduced (but not below
zero) to the Reduced Amount, but only if the Accounting Firm determines that the Net After-Tax Receipt of unreduced aggregate Payments would be equal to or less than one hundred and ten
percent (110%) of the Net After-Tax Receipt of the aggregate Payments as if the COC Payments were reduced to the Reduced Amount. If such a determination is not made by the Accounting Firm,
you shall receive all COC Payments to which you are entitled under this Agreement. 

        (b)    Reduced Amount.    If the Accounting Firm determines that Agreement Payments should be reduced to the Reduced
Amount, the Company shall promptly give you notice to that effect and a copy of the detailed calculation thereof. Absent manifest error, all determinations made by the Accounting Firm under this
Section 9 shall be binding upon you and the Company and shall be made as soon as reasonably practicable and in no event later than twenty (20) business days following the Change of
Control Date, or such later date on which there has been a Payment. For purposes of reducing the COC Payments to the Reduced Amount, only amounts payable under this Agreement (and no other Payments)
shall be reduced. The reduction of the COC Payments, if applicable, shall be made by reducing the payments and benefits under the following sections hereof in the following order and only to the
extent necessary to achieve the Reduced Amount: 

 

 

					
	 	 	 first,	 	any equity-based awards that would vest and become exercisable in full pursuant to Section 4(d) hereof and that would be out of the money as of the Date of Termination shall terminate;
	

 	
 	
second,	
 	
cash severance payments pursuant to Section 4(a)(iii) hereof shall be reduced;
	

 	
 	
 third,	
 	
payment of the Pro Rata Bonus pursuant to Section 4(a)(ii) hereof shall be reduced if, and only to the extent, such payment is determined not to be reasonable compensation for personal services
actually rendered by you on or prior to the Date of Termination;
	

 	
 	
 fourth,	
 	
outplacement services pursuant to Section 4(c) hereof shall be forfeited;
	

 	
 	
 fifth,	
 	
the acceleration of equity based awards pursuant to Section 4(d) hereof shall be forfeited; and
	

 	
 	
 lastly,	
 	
benefit continuation pursuant to Section 4(b) hereof shall be forfeited.

 

 
All
fees and expenses of the Accounting Firm in implementing the provisions of this Section 9 shall be borne by the Company. To the extent requested by you, the Company shall cooperate with you
in good faith in valuing services provided or to be provided by you (including without 

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limitation,
your agreeing to refrain from performing services pursuant to a covenant not to compete or similar covenant) before, on or after the date of a change in ownership or control of the Company
(within the meaning of Q&A-2(b) of the Treasury Regulations adopted under Section 280G of the Code (the "Regulations")), such that
payments in respect of such services may be considered reasonable compensation within the meaning of Q&A-9 and Q&A-40 to Q&A-44 of the Regulations and/or exempt
from the definition of the term "parachute payment" within the meaning of Q&A-2(a) of the Regulations in accordance with Q&A-5(a) of the Regulations. 

        (c)    Subsequent Adjustment.    As a result of the uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by the Accounting Firm hereunder, it is possible that amounts will have been paid or distributed by the Company to you or for your benefit pursuant to this
Agreement which should not have been so paid or distributed ("Overpayment") or that additional amounts which will have not been paid or distributed by
the Company to you or for your benefit pursuant to this Agreement could have been so paid or distributed ("Underpayment"), in each case, consistent with
the calculation of the Reduced Amount hereunder. In the event that the Accounting Firm, based upon the
assertion of a deficiency by the Internal Revenue Service against either the Company or you that the Accounting Firm believes has a high probability of success, determines that an Overpayment has been
made, you shall pay any such Overpayment to the Company; provided, however, that no amount shall be
payable by you to the Company if and to the extent such payment would not either reduce the amount of taxes to which you are subject under Sections 1 and 4999 of the Code or generate a refund
of such taxes. In the event that the Accounting Firm, based upon controlling precedent or substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be paid
promptly (and in no event later than sixty (60) days following the date on which the Underpayment is determined) by the Company to you or for your benefit. 

        10.    Successors; Binding Agreement.    

        (a)    Assumption by Successor.    The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and to agree to perform its obligations under this Agreement in the same
manner and to the same extent that the Company would be required to perform such obligations if no such succession had taken place; provided,  however, that no such assumption shall relieve the Company of its obligations hereunder. As used herein, the
"Company" shall mean the Company as hereinbefore defined and any successor to its business or assets as aforesaid which assumes and agrees to perform
its obligations by operation of law or otherwise. 

        (b)    Enforceability; Beneficiaries.    This Agreement shall be binding upon and inure to the benefit of you (and
your personal representatives and heirs) and the Company and any organization which succeeds to substantially all of the business or assets of the Company, whether by means of merger, consolidation,
acquisition of all or substantially all of the assets of the Company or otherwise, including, without limitation, as a result of a Change of Control or by operation of law. This Agreement shall inure
to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount
would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee,
legatee or other designee or, if there is no such designee, to your estate. 

5

 

  
        11.    Definitions.    For purposes of this Agreement, the following capitalized terms have the meanings set forth
below: 

        (a)   "Accounting Firm" has the meaning assigned thereto in Section 9 hereof. 

        (b)   "Accrued Obligations" shall mean all compensation earned or accrued through the Termination Date but not paid as of the
Termination Date, including base salary, bonus for the prior performance year, accrued but unused vacation, and reimbursement of business expenses accrued in accordance with the Company's business
expense reimbursement policies. 

        (c)   "Adjusted Base Salary" means the greater of your base salary in effect immediately prior to (i) the Change of
Control Date or (ii) the Date of Termination. 

        (d)   "Agreement" has the meaning assigned thereto in the second introductory paragraph hereof. 

        (e)   "Benefit Continuation Period" means the period beginning on the Date of Termination and ending on the last day of the
month in which occurs the earlier of (i) the thirty (30) month anniversary of the Date of Termination and (ii) the date on which you elect coverage for you and your covered
dependents under substantially comparable benefit plans of a subsequent employer. 

        (f)    "Board" has the meaning assigned thereto in the first introductory paragraph hereof. 

        (g)   "Bonus Opportunity" for any performance year means your maximum cash bonus opportunity for that year, on the assumption
that the Company achieves all applicable performance targets and that you achieve all applicable individual performance criteria. 

        (h)   "Cause" shall mean (i) your engaging in willful and continued failure to substantially perform your material
duties with the Company (other than due to becoming Disabled); provided, however, that the Company shall have provided you with written notice of such
failure within sixty (60) calendar days of the most recent occurrence and such failure is not cured by you within twenty (20) calendar days of such notice; (ii) your conviction
of, or plea of no contest to, a felony, other crime of moral turpitude; or (iii) a final non-appealable adjudication in a criminal or civil proceeding that you have committed fraud.
For purposes of the previous sentence, no act or failure to act on your part shall be deemed "willful" if it is done, or omitted to be done, by you in good faith and with a reasonable belief that it
was in the best interest of the Company. 

        (i)    "Change of Control" shall mean: 

          (i)  (A)
any "person" within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), other than George D. Johnson, Jr., his wife, any of his children, any of his grandchildren, any trusts of which the foregoing are the sole beneficiaries, any entities
owned solely by the foregoing, and/or the Phifer/Johnson Foundation (collectively, the "Johnson Group"), is or becomes the beneficial owner within the
meaning of Rule 13d-3 of the Exchange Act, directly or indirectly, of more than thirty percent (30%) of the combined voting power of the Company's then outstanding securities in a
single or series of transactions; or (B) the Johnson Group, separately or together with any other person, is or becomes the beneficial owner within the meaning of Rule 13d-3
of the Exchange Act, directly or indirectly, of more than forty percent (40%) of the combined voting power of the Company's then outstanding securities in a single or series of transactions; 

         (ii)  during
any period of two consecutive years (not including any period prior to the Effective Date), individuals who at the beginning of such period constituted the Board
and any new directors, whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least three-fourths of the directors then still in office who
either were directors at the beginning of the period or whose election or 

6

 

nomination
for election was previously so approved, cease for any reason to constitute a majority thereof; or 

        (iii)  there
occurs a sale of all or substantially all of the assets of the Company (whether such assets are held directly or indirectly), a reorganization, merger or
consolidation of the Company, or any other corporate transaction involving the Company (a "Business Combination"), in each case with respect to
which the stockholders of the Company immediately prior to such transaction do not, immediately after such transaction, own directly or indirectly more than 50% of the combined voting power of the
Company or other corporation resulting from such Business Combination in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the voting securities
of the Company. 

        (j)    "Change of Control Date" has the meaning assigned thereto in Section 1 hereof. 

        (k)   "Change of Control Period" has the meaning assigned thereto in the second introductory paragraph hereof. 

        (l)    "COC Payments" has the meaning assigned thereto in Section 9 hereof. 

        (m)  "Code" shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder. 

        (n)   "Company" has the meaning assigned thereto in the first introductory paragraph hereof. 

        (o)   "Confidential Information" shall mean all financial information, trade secrets, personnel records, training and
operational manuals, records, contracts, lists, business procedures, business methods, accounts, brochures, handbooks and all other documents relating to the Company or persons doing business with the
Company 

        (p)   "Date of Termination" has the meaning assigned thereto in Section 5 hereof. 

        (q)   "Disability" shall mean your incapacity due to physical or mental illness as defined in the long-term
disability plan sponsored by the Company or an affiliate of the Company for your benefit and which causes you to be absent from the full-time performance of your duties. 

        (r)   "Effective Period" shall mean the period commencing on the date hereof and ending on March 6, 2012;  provided, however, that beginning on March 7, 2011
and on each March 7 thereafter (each such date a "Renewal
Date"), the Effective Period shall be automatically extended for a period of two years beginning on such Renewal Date, unless at least sixty (60) calendar days prior to
such Renewal Date, the Company shall give notice that the Effective Period shall not be so extended. 

        (s)   "Good Reason" shall mean the occurrence of any of the following events or circumstances: 

          (i)  a
substantial adverse change in your title, position, offices, authority, status, the nature of your duties or responsibilities from those in effect immediately prior
to the Change of Control Date, or the position, level, or status of the person to whom you report. 

         (ii)  a
reduction by the Company in your annual base salary, Target Bonus, or benefits as in effect immediately prior to the Change of Control Date or as the same may be
increased from time to time thereafter, other than a general reduction in benefits applicable across similarly situated executives within the Company; 

        (iii)  a
failure by the Company to pay you material compensation or benefits when due including, without limitation, failure by the Company to pay any relocation expenses or
Other Benefits accrued prior to the Effective Date; 

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        (iv)  the
relocation of the office of the Company where you are principally employed immediately prior to the Change of Control Date to a location which is more than fifty
(50) miles from such office of the Company (except for required travel on the Company's business to an extent substantially consistent with your customary business travel obligations in the
ordinary course of business prior to the Change of Control Date); or 

         (v)  any
failure by a successor to the Company to assume and agree to perform this Agreement as contemplated by  Section 10(a) hereof or any agreement with respect to your outstanding equity awards.

provided, however, that no event or condition set forth in subparagraphs (i) through
(iii) above shall constitute Good Reason unless (x) you give the Company written notice of your objection to such event or condition within sixty (60) calendar days of such event
or condition and (y) such event or condition is not corrected, in all material respects, by the Company within thirty (30) calendar days of its receipt of such notice; and  provided, further,
however, that your mental or physical incapacity following the occurrence of an event described above in subparagraphs (i)
through (v) above shall not affect your ability to terminate employment for Good Reason and that your death following delivery of a Notice of Termination shall not affect your estate's
entitlement to the payments and benefits provided hereunder upon an Involuntary Termination. 

        (t)    "Involuntary Termination" shall mean, during the Change of Control Period, (i) your termination of employment by
the Company without Cause or (ii) your resignation of employment with the Company for Good Reason. 

        (u)   "Net After-Tax Receipt" shall mean the present value (as determined in accordance with
Section 280G(d)(4) of the Code) of a Payment net of all taxes imposed on you with respect thereto under Sections 1 and 4999 of the Code and under applicable state and local laws,
determined by applying the highest marginal rate under Section 1 of the Code and under state and local laws which applied to your taxable income for the immediately preceding taxable year, or
such other rate(s) as you certify as likely to apply to you in the relevant tax year(s). 

        (v)   "Notice of Termination" has the meaning assigned thereto in Section 5 hereof. 

        (w)  "Other Benefits" means, to the extent not theretofore paid or provided, any other amounts or benefits required to be paid
or provided to you or that you are eligible to receive under any plan, program, policy, practice, contract or agreement of the Company in accordance with such applicable terms at the time of the Date
of Termination. Nothing herein shall prohibit the Company from changing, modifying, amending, or eliminating any benefit plans prior to the Date of Termination, with or without prior notice. In all
circumstances, the terms and provisions of any benefits plans will control. 

        (x)   "Overpayment" has the meaning assigned thereto in Section 9 hereof. 

        (y)   "Pro Rata Bonus" means a pro rata portion of your Projected Bonus for the performance year in which the Date of
Termination occurs, calculated based on the number of days that you are employed in the performance year up through and including the Date of Termination. 

        (z)   "Projected Bonus" means the portion of your Bonus Opportunity the Compensation Committee of the Board determines in good
faith to be reasonable compensation for personal services actually rendered by you on or prior to the Date of Termination. When making such determination, the Compensation Committee of the Board shall
assess actual performance for the partial year up through and including the Date of Termination relative to the applicable Company and individual performance targets, with such targets being adjusted
to reflect the partial performance cycle, and shall consider the seasonality of the Company's historic performance and 

8

 

such
other adjustments for extraordinary events as the Compensation Committee deems appropriate. 

        (aa) "Payment" has the meaning assigned thereto in Section 9 hereof. 

        (bb) "Reduced Amount" shall mean $1,000.00 less than the greatest amount of COC Payments that can be paid that would not
result in the imposition of the excise tax under Section 4999 of the Code. 

        (cc) "Target Bonus" for any year means your total cash target, but not maximum, bonus for that year, on the assumption that
the Company has achieved, but not exceeded, all applicable performance targets and that you have achieved, but not exceeded, all applicable individual performance criteria. 

        (dd) "Underpayment" has the meaning assigned thereto in Section 9 hereof. 

        (ee) "Tax Authority" has the meaning assigned thereto in Section 9 hereof. 

        12.    Notice.    For the purpose of this Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Board
of Directors, Advance America, Cash Advance Centers, Inc., 135 North Church, Spartanburg, South Carolina 29306, with a copy to the General Counsel of the Company, or to you at the address set
forth on the first page of this Agreement or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be
effective only upon receipt. 

        13.    Release.    As a condition to receiving any payments or benefits pursuant to this Agreement by reason of your
death, Disability or Involuntary Termination, you (or in the case of your death, the executor of your estate) must execute a waiver and release of claims, including confidentiality and
non-disparagement covenants, substantially in the form approved by the Company prior to the Change of Control Date (as set forth on  Exhibit A attached hereto) (a "Waiver and
Release"), and such Waiver and Release must be
delivered to the Company no later than 60 days after the end of your taxable year in which occurs the later of (i) the Change of Control Date or (ii) the termination of your
employment with the Company. 

        14.    Arbitration.    Any dispute or controversy arising under or in connection with this Agreement that cannot be
mutually resolved by the parties hereto shall be settled exclusively by arbitration in Spartanburg, South Carolina under the employment arbitration rules of the American Arbitration Association before
one arbitrator of exemplary qualifications and stature, who shall be selected jointly by the Company and you, or, if the Company and you cannot agree on the selection of the arbitrator, such
arbitrator shall be selected by the American Arbitration Association. Judgment may be entered on the arbitrator's award in any court having jurisdiction. The parties hereby agree that the arbitrator
shall be empowered to enter an equitable decree mandating specific enforcement of the terms of this
Agreement. Costs and fees of the arbitration will be divided equitably by the arbitrator between both parties; provided,  however, that
in the event that you prevail over the Company in connection with an arbitration arising out of the breach of this Agreement, the Company
shall be liable for all reasonable attorney's fees and expenses incurred in connection with any action for damages or the enforcement of any provision of this Agreement brought by you. 

        15.    Miscellaneous.    

        (a)    Amendments, Waivers, Etc.    No provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a 

9

 

waiver
of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set forth in this Agreement and this Agreement shall supersede all prior agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written, with respect to the subject matter hereof. 

        (b)    Validity.    The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 

        (c)    Counterparts.    This Agreement may be executed in several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same instrument. 

        (d)    No Contract of Employment.    Nothing in this Agreement shall be construed as giving you any right to be
retained in the employ of the Company or shall affect the terms and conditions of your employment with the Company prior to the commencement of the Change of Control Period. 

        (e)    Withholding.    Amounts paid to you hereunder shall be subject to all applicable federal, state and local
withholding taxes. 

        (f)    Source of Payments.    All payments provided under this Agreement shall be paid in cash from the general funds
of the Company, and no special or separate fund shall be established, and no other segregation of assets made, to assure payment. You will have no right, title or interest whatsoever in or
to any investments which the Company may make to aid it in meeting its obligations hereunder. To the extent that any person acquires a right to receive payments from the Company hereunder, such right
shall be no greater than the right of an unsecured creditor of the Company. 

        (g)    Headings.    The headings contained in this Agreement are intended solely for convenience of reference and
shall not affect the rights of the parties to this Agreement. 

        (h)    Governing Law.    This Agreement shall be subject to the laws of the state of South Carolina, without regard to
conflicts of law. 

*      *      *      *      *

10

 

        By
signing below, you acknowledge that this Agreement sets forth our agreement on the subject matter hereof. Kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject. 

 

 

					
	 	 	Sincerely,
	

 	
 	
ADVANCE AMERICA, CASH ADVANCE CENTERS, INC.
	

 	
 	
 By:	
 	
/s/ W. Thomas Newell

 
	 	 	Name:	 	W. THOMAS NEWELL
	 	 	Title:	 	VICE PRESIDENT—LEGAL AND REGULATORY

 

 

 

			
	Agreed to as of this 7th day of March, 2011	 	 
	
 /s/ J. Patrick O'Shaughnessy

 	
 	

 
	JOHN PATRICK O'SHAUGHNESSY,	 	 
	PRESIDENT AND CHIEF EXECUTIVE OFFICER

 

 11

 

 

 
 

EXHIBIT A    
    

 
    WAIVER AND GENERAL RELEASE AGREEMENT    
    

        This Waiver and Release Agreement (this "Release") is entered into as of the date
indicated on the signature page of this Release by and between Advance America, Cash Advance Centers, Inc., a Delaware corporation (the
"Company") and J. Patrick O'Shaughnessy ("Employee"). Employee has been employed by the Company,
and the parties are entering into this Release because the employment relationship is ending, without fault or wrongdoing on the part of either the Company or Employee, who agree as follows: 

        1.    Release.    (a) In exchange for the valuable consideration set forth in the Change of Control Agreement dated as
of March 7, 2011 (the "Letter Agreement"), between Employee and the Company, the receipt and adequacy of which are herein acknowledged, Employee
hereby agrees to release and forever discharge the Company and its present, former and future partners, shareholder, affiliates, direct and indirect parents, subsidiaries, successors, directors,
officers, employees, agents, attorneys, heirs and assigns (the "Released Parties"), from any and all claims, actions and causes of action (the
"Claims") arising out of (i) his employment relationship with and service as an employee of the Company and its affiliates, and the termination
of such relationship or service, or (ii) any event, condition, circumstance or obligation that occurred, existed or arose on or prior to the date hereof, including, but not limited to any
Claims under the Title VII of the Civil Rights Act of 1964, the Rehabilitation Act of 1973, the Americans With Disabilities Act of 1990, the Civil Rights Act of 1866, the Civil Rights Act of 1991, the
Employee Retirement Income Security Act of 1974, the Family and Medical Leave Act of 1993, the
California Fair Employment and Housing Act; the California Workers' Compensation Act; the California Unruh and Ralph Civil Rights Laws; the California Alcohol and Drug Rehabilitation Law and any other
federal, state or local law, statute, regulation or ordinance, or law of any foreign jurisdiction, whether such Claim arises under statute or common law and whether or not Employee is presently aware
of the existence of such Claim. Employee also forever releases, discharges and waives any right he may have to recover in any proceeding brought by any federal, state or local agency against the
Released Parties to enforce any laws. To ensure that this Release is fully enforceable in accordance with its terms, Employee agrees to waive any and all rights to any Claims, whether or not he knows
or suspects them to exist in his favor, which if known to him would have materially affected his execution of this Release. Notwithstanding the foregoing, this Release does not apply to Employee's
rights, claims, or benefits under the Letter Agreement or to Employee's rights, if any, to payment of benefits pursuant to any employee benefit plan. 

        (b)   To ensure that this Release is fully enforceable in accordance with its terms, Employee hereby agrees to waive any and all rights under
Section 1542 of the California Civil Code (to the extent applicable) as it exists from time to time, which provides:

A general release does not extend to claims which the creditor

does not know or suspect to exist in his favor at the time of

executing the release, which if known by him must have

materially affected his settlement with the debtor.

        In addition, to ensure that this Release is fully enforceable in accordance with its terms, Employee hereby agrees to waive any protection that may exist under
any comparable or similar statute and under any principle of common law of the United States or any and all States.

        EMPLOYEE UNDERSTANDS THAT, BY SIGNING THIS RELEASE, EMPLOYEE WILL HAVE WAIVED ANY RIGHT THAT HE MAY HAVE TO BRING A LAWSUIT OR MAKE ANY CLAIM AGAINST THE COMPANY
AND THE RELEASED PARTIES BASED ON ANY ACT OR OMISSIONS BY THEM UP TO THE DATE OF SIGNING THIS AGREEMENT.

A-1

 

        (c)   In further consideration of the payments and benefits provided to Employee under the Letter Agreement, Employee hereby releases and forever
discharges the Released Parties from any and all Claims that he may have as of the date he signs this Release arising under the federal Age Discrimination in Employment Act of 1967, as amended, and
the applicable rules and regulations promulgated thereunder ("ADEA"). By signing this Release, Employee hereby acknowledges and confirms the following:
(i) he was advised by the Company in connection with his termination to
consult with an attorney of his choice prior to signing this Release and to have such attorney explain to him the terms of this Release, including, without limitation, the terms relating to his
release of claims arising under the ADEA; (ii) if Employee is 40 years of age or older as of the date of execution of this Release, he was given a period of not fewer than 21 calendar
days to consider the terms of this Release and to consult with an attorney of his choosing with respect thereto; and (iii) he is providing the release and discharge set forth in this
Paragraph 1(c) only in exchange for consideration in addition to anything of value to which he is already entitled.

        2.    No Legal Claim.    Employee has not commenced any legal action, which term includes, without limitation, any
demand for arbitration proceedings and any charge, complaint, filing or submission with any federal, state or local agency, court or other tribunal, to assert any Claim against a Released Party, and
covenants and agrees not to do so in the future with respect to the matters released herein. If Employee commences or joins any legal action against a Released Party, Employee agrees that such an
action is prohibited by this Release, and further agrees to promptly indemnify such Released Party for its reasonable costs and attorneys fees incurred in defending such action as well as forfeit or
return any monetary judgment obtained by Employee against any Released Party in such action. Nothing in this Paragraph 2 is intended to reflect any party's belief that Employee's waiver of
claims under the ADEA is invalid or unenforceable under this Release, it being the intent of the parties that such claims are waived. 

        3.    Nondisparagement.    Employee agrees to refrain, except as required by law or in connection with a judicial
proceeding, from making directly or indirectly, now or at any time in the future, any written or oral statements, representations or other communications that disparage or are otherwise damaging to
the business or reputation of the Released Parties. 

        4.    Continuing Obligations.    This Release shall not supersede any continuing obligations Employee may have under
the terms of the Letter Agreement or any other agreement between Employee and the Company. 

        5.    Disclaimer.    Employee hereby certifies that Employee has read the terms of this Release, that Employee has
been advised by the Company to consult with an attorney of Employee's own choice prior to executing this Release, that Employee has had an opportunity to do so, and that Employee understands the
provisions and consequences of this Release. Employee further certifies that the Company has not made any representation to Employee concerning this Release other than those contained herein. 

        6.    Governing Law.    This Release will be governed by and construed in accordance with the laws of the State of
South Carolina. 

        7.    Separability of Clauses.    If any provisions of this Release shall be finally determined to be invalid or
unenforceable under applicable law by a court of competent jurisdiction, that part shall be ineffective
to the extent of such invalidity or unenforceability only, without in any way affecting the remaining provisions of this Release. 

        8.    Counterparts.    This Release may be executed by the parties hereto in counterparts, each of which shall be
deemed an original, but both such counterparts shall together constitute one and the same document. 

        9.    Effectiveness.    This Release shall be effective only when it has been executed by Employee and the executed
original has been returned to the Company, and any applicable revocation period has expired. 

A-2

 

        IN
WITNESS WHEREOF, the Company has caused this Release to be signed by its duly authorized officer, and Employee has executed this Release as of the day and year indicated below
Employee's signature. 

 

 

							
	 	 	ADVANCE AMERICA, CASH ADVANCE CENTERS, INC.
	

 	
 	
By:	
 	
  

 
	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 

 

 If Employee is 40 years of age or older as of the date of execution of this Release, Employee shall have the right to revoke this Release during the
seven-day period (the "Revocation Period") commencing immediately following the date he signs and delivers this Release to the Company. The
Revocation Period shall expire at 5:00 p.m. Eastern Time on the last day of the Revocation Period; provided,  however, that
if such seventh day is not a business day, the Revocation Period shall extend to 5:00 p.m. on the next succeeding business day. In
the event Employee revokes this Release, all obligations of the Company under this Release shall terminate and be of no further force and effect as of the date of such revocation. No such revocation
by Employee shall be effective unless it is in writing and signed by him and received by the Company prior to the expiration of the Revocation Period at the following address: [INSERT
NAME, TITLE, ADDRESS, PHONE NUMBER, AND FAX NUMBER].

I
HAVE READ AND AGREE

TO THIS RELEASE: 

 

 

					
	 

 	 	 
	Name:	 	 	 	 
	Date:	 	 	 	 

 

 A-3

QuickLinks

Exhibit 10.23

Change of Control Agreement March 7, 2011

EXHIBIT A

WAIVER AND GENERAL RELEASE AGREEMENTExhibit 10.14

 

SONUS NETWORKS, INC.

 

2007 STOCK INCENTIVE PLAN, AS AMENDED

 

1.                                       Purpose.

 

The purpose of this 2007 Stock Incentive Plan (the “Plan”) of Sonus Networks, Inc., a Delaware corporation (the “Company”), is to advance the interests of the Company’s stockholders by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions to the Company and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to align their interests with those of the Company’s stockholders. Except where the context otherwise requires, the term “Company” shall include any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”) and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling interest, as determined by the Board of Directors of the Company (the “Board”).

 

2.                                       Eligibility.

 

All of the Company’s employees, officers, directors, consultants and advisors are eligible to receive options, stock appreciation rights (“SARs”), restricted stock, restricted stock units and other stock-based awards (each, an “Award”) under the Plan. Each person who receives an Award under the Plan is deemed a “Participant”.

 

3.                                       Administration and Delegation.

 

(a)                                  Administration by Board of Directors.  The Plan will be administered by the Board. The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may construe and interpret the terms of the Plan and any Award agreements entered into under the Plan. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. All decisions by the Board shall be made in the Board’s sole discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award. No director or person acting pursuant to the authority delegated by the Board shall be liable for any action or determination relating to or under the Plan made in good faith.

 

(b)                                 Appointment of Committees.  To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a “Committee”). All references in the Plan to the “Board” shall

 

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mean the Board or a Committee of the Board or the officers referred to in Section 3(c) to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee or officers.

 

(c)                                  Delegation to Officers.  To the extent permitted by applicable law, the Board may delegate to one or more officers of the Company the power to grant Awards (subject to any limitations under the Plan) to employees or officers of the Company or any of its present or future subsidiary corporations and to exercise such other powers under the Plan as the Board may determine, provided that the Board shall fix the terms of the Awards to be granted by such officers (including the exercise price of such Awards, which may include a formula by which the exercise price will be determined) and the maximum number of shares subject to Awards that the officers may grant; provided further, however, that no officer shall be authorized to grant Awards to any “executive officer” of the Company (as defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or to any “officer” of the Company (as defined by Rule 16a-1 under the Exchange Act).

 

4.                                       Stock Available for Awards.

 

(a)                                  Number of Shares.  Subject to adjustment under Section 9, the aggregate number of shares of common stock, $0.001 par value per share, of the Company (the “Common Stock”) reserved for Awards under the Plan is 34,902,701. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.

 

(b)                                 Share Count.  Shares issued pursuant to Awards of Restricted Stock or Restricted Stock Units or Other Stock Unit Awards will count against the shares of Common Stock available for issuance under the Plan as one and one-half (1.5) shares for every one (1) share issued in connection with the Award. Shares issued pursuant to the exercise of Options will count against the shares available for issuance under the Plan as one (1) share for every one (1) share to which such exercise relates. The total number of shares subject to SARs that are settled in shares shall be counted in full against the number of shares available for issuance under the Plan, regardless of the number of shares actually issued upon settlement of the SARs. If Awards are settled in cash, the shares that would have been delivered had there been no cash settlement shall not be counted against the shares available for issuance under the Plan. If any Award expires or is terminated, surrendered or canceled without having been fully exercised, is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right), then the shares of Common Stock covered by such Award shall again become available for the grant of Awards under the Plan; provided that any one (1) share issued as Restricted Stock or subject to a Restricted Stock Unit Award or Other Stock Unit Award that is forfeited or terminated shall be credited as one and one-half (1.5) shares when determining the number of shares that shall again become available for Awards under the Plan. Shares that are exchanged by a Participant or withheld by the Company as full or partial payment in connection with any Award under the Plan, as well as any shares exchanged by a Participant or withheld by the Company to satisfy the tax withholding obligations related to any Award, shall not be available for subsequent Awards under the Plan. In the case of Incentive Stock Options (as hereinafter defined), the foregoing provisions shall be subject to any limitations under the Code.

 

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(c)                                  Sub-limits.  Subject to adjustment under Section 9, the following sub-limits on the number of shares subject to Awards shall apply:

 

(1)                                  Section 162(m) Per-Participant Limit.  The maximum number of shares of Common Stock with respect to which Awards may be granted to any Participant under the Plan shall be 2,000,000 per calendar year. For purposes of the foregoing limit, the combination of an Option in tandem with a SAR (as each is hereafter defined) shall be treated as a single Award. The per-Participant limit described in this Section 4(b)(1) shall be construed and applied consistently with Section 162(m) of the Code or any successor provision thereto, and the regulations thereunder (“Section 162(m)”).

 

(2)                                  Limit on Awards to Directors.  The maximum number of shares with respect to which Awards may be granted to any director who is not an employee of the Company at the time of grant shall be 100,000 per calendar year.

 

(d)                                 Substitute Awards.  In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Awards in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan. Substitute Awards shall not count against the overall share limit set forth in Section 4(a) or any sublimits contained in the Plan, except as may be required by reason of Section 422 and related provisions of the Code.

 

5.                                       Stock Options.

 

(a)                                  General.  The Board may grant options to purchase Common Stock (each, an “Option”) and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable. An Option that is not an Incentive Stock Option (as hereinafter defined) shall be designated a “Nonstatutory Stock Option.”

 

(b)                                 Incentive Stock Options.  An Option that the Board intends to be an “incentive stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be granted to employees of Sonus Networks, Inc., any of Sonus Networks, Inc.’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code, and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option or for any action taken by the Board, including without limitation the conversion of an Incentive Stock Option to a Nonstatutory Stock Option.

 

(c)                                  Exercise Price.  The Board shall establish the exercise price of each Option and specify such exercise price in the applicable option agreement. The exercise price shall be not less than 100% of the Fair Market Value (as defined below) on the date the Option is granted;

 

3

 

provided that if the Board approves the grant of an Option with an exercise price to be determined on a future date, the exercise price shall be not less than 100% of the Fair Market Value on such future date.

 

(d)                                 Duration of Options.  Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable option agreement, provided, however, that no Option will be granted for a term in excess of 10 years.

 

(e)                                  Exercise of Option.  Options may be exercised by delivery to the Company of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Board, together with payment in full as specified in Section 5(f) for the number of shares for which the Option is exercised. Shares of Common Stock subject to the Option will be delivered by the Company as soon as practicable following exercise.

 

(f)                                    Payment Upon Exercise.  Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows:

 

(1)                                  in cash or by check, payable to the order of the Company;

 

(2)                                  except as may otherwise be provided in the applicable option agreement, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding;

 

(3)                                  to the extent provided for in the applicable option agreement or approved by the Board, in its sole discretion, by delivery (either by actual delivery or attestation) of shares of Common Stock owned by the Participant valued at their fair market value as determined by (or in a manner approved by) the Board (“Fair Market Value”), provided (i) such method of payment is then permitted under applicable law, (ii) such Common Stock, if acquired directly from the Company, was owned by the Participant for such minimum period of time, if any, as may be established by the Board in its discretion and (iii) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements;

 

(4)                                  to the extent permitted by applicable law and provided for in the applicable option agreement or approved by the Board, in its sole discretion, by (i) delivery of a promissory note of the Participant to the Company on terms determined by the Board or (ii) payment of such other lawful consideration as the Board may determine; or

 

(5)                                  by any combination of the above permitted forms of payment.

 

(g)                                 Fair Market Value.  Fair Market Value of a share of Common Stock for purposes of the Plan will be determined as follows:

 

(1)                                  if the Common Stock trades on a national securities exchange, the closing sale price (for the primary trading session) on the date of grant; or

 

4

 

(2)                                  if the Common Stock does not trade on any such exchange, the average of the closing bid and asked prices as reported by the National Association of Securities Dealers, Inc. Automated Quotation System (“Nasdaq”) for the date of grant; or

 

(3)                                  if no such closing sale price information is available, the average of bids and asked prices that Nasdaq reports for the date of grant; or

 

(4)                                  if there are no such closing bid and asked prices, the average of the bid and asked prices as reported by any other commercial service for the date of grant.

 

For any date that is not a trading day, the Fair Market Value of a share of Common Stock for such date will be determined by using the closing sale price or average of the bid and asked prices, as appropriate, for the immediately following trading day and with the timing in the formulas above adjusted accordingly. The Board can substitute a particular time of day or other measure of “closing sale price” or “bid and asked prices” if appropriate because of exchange or market procedures or can, in its sole discretion, use weighted averages either on a daily basis or such longer period as complies with Code Section 409A.

 

(h)                                 Limitation on Repricing.  Unless such action is approved by the Company’s stockholders: (1) no outstanding Option granted under the Plan may be amended to provide an exercise price per share that is lower than the then-current exercise price per share of such outstanding Option (other than adjustments pursuant to Section 9), (2) the Board may not cancel any outstanding option (whether or not granted under the Plan) and grant in substitution therefore new Awards under the Plan covering the same or a different number of share of Common Stock and having an exercise price per share lower than the then-current exercise price per share of the cancelled option, and (3) no outstanding Option granted under the Plan may be purchased by the Company for cash.

 

6.                                       Stock Appreciation Rights.

 

(a)                                  General.  The Board may grant Awards consisting of a SAR entitling the holder, upon exercise, to receive an amount in Common Stock or cash or a combination thereof (such form to be determined by the Board) determined in whole or in part by reference to appreciation, from and after the date of grant, in the Fair Market Value of a share of Common Stock over the exercise price established pursuant to Section 6(c). The date as of which such appreciation or other measure is determined shall be the exercise date.

 

(b)                                 Grants.  SARs may be granted in tandem with, or independently of, Options granted under the Plan.

 

(1)                                  Tandem Awards.  When SARs are expressly granted in tandem with Options, (i) the SAR will be exercisable only at such time or times, and to the extent, that the related Option is exercisable (except to the extent designated by the Board in connection with a Reorganization Event) and will be exercisable in accordance with the procedure required for exercise of the related Option; (ii) the SAR will terminate and no longer be exercisable upon the termination or exercise of the related Option, except to the extent designated by the Board in connection with a Reorganization Event and except that a SAR granted with respect to less than the full number of shares covered by an Option will not be reduced until the number of shares as

 

5

 

to which the related Option has been exercised or has terminated exceeds the number of shares not covered by the SAR; (iii) the Option will terminate and no longer be exercisable upon the exercise of the related SAR; and (iv) the SAR will be transferable only with the related Option.

 

(2)                                  Independent SARs.  A SAR not expressly granted in tandem with an Option will become exercisable at such time or times, and on such conditions, as the Board may specify in the SAR Award.

 

(c)                                  Exercise Price.  The Board shall establish the exercise price of each SAR and specify it in the applicable SAR agreement. The exercise price shall not be less than 100% of the Fair Market Value on the date the SAR is granted; provided that if the Board approves the grant of a SAR with an exercise price to be determined on a future date, the exercise price shall be not less than 100% of the Fair Market Value on such future date.

 

(d)                                 Term.  The term of a SAR shall not be more than 10 years from the date of grant.

 

(e)                                  Exercise.  SARs may be exercised by delivery to the Company of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Board, together with any other documents required by the Board.

 

(f)                                    Limitation of Repricing.  Unless such action is approved by the Company’s stockholders: (1) no outstanding SAR granted under the Plan may be amended to provide an exercise price per share that is lower than the then-current exercise price per share of such outstanding SAR (other than adjustments pursuant to Section 9), (2) the Board may not cancel any outstanding SAR (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan covering the same or a different number of shares of Common Stock and having an exercise price per share lower than the then-current exercise price per share of the cancelled SAR, and (3) no outstanding SAR granted under the Plan may be purchased by the Company for cash.

 

7.                                       Restricted Stock; Restricted Stock Units.

 

(a)                                  General.  The Board may grant Awards entitling recipients to acquire shares of Common Stock (“Restricted Stock”), subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the recipient in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Board for such Award. Instead of granting Awards for Restricted Stock, the Board may grant Awards entitling the recipient to receive shares of Common Stock or cash to be delivered at the time such Award vests (“Restricted Stock Units”) (Restricted Stock and Restricted Stock Units are each referred to herein as a “Restricted Stock Award”).

 

(b)                                 Terms and Conditions for all Restricted Stock Awards.  The Board shall determine the terms and conditions of a Restricted Stock Award, including the conditions for vesting and repurchase (or forfeiture) and the issue price, if any.

 

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(c)                                  Additional Provisions Relating to Restricted Stock.

 

(1)                                  Dividends.  Participants holding shares of Restricted Stock will be entitled to all ordinary cash dividends paid with respect to such shares, unless otherwise provided by the Board; provided, however, that dividends on Restricted Stock that are subject to performance conditions will either be accumulated or reinvested and paid upon vesting of the underlying Restricted Stock. Unless otherwise provided by the Board, if any dividends or distributions are paid in shares, or consist of a dividend or distribution to holders of Common Stock other than an ordinary cash dividend, the shares, cash or other property will be subject to the same restrictions on transferability and forfeitability as the shares of Restricted Stock with respect to which they were paid. Each dividend payment will be made no later than the end of the calendar year in which the dividends are paid to stockholders of that class of stock or, if later, the 15th day of the third month following the date the dividends are paid to stockholders of that class of stock.

 

(2)                                  Stock Certificates.  The Company may require that any stock certificates issued in respect of shares of Restricted Stock shall be deposited in escrow by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant’s death (the “Designated Beneficiary”). In the absence of an effective designation by a Participant, “Designated Beneficiary” shall mean the Participant’s estate.

 

(d)                                 Additional Provisions Relating to Restricted Stock Units.

 

(1)                                  Settlement.  Upon the vesting of and/or lapsing of any other restrictions (i.e., settlement) with respect to each Restricted Stock Unit, the Participant shall be entitled to receive from the Company one share of Common Stock or an amount of cash equal to the Fair Market Value of one share of Common Stock, as provided in the applicable Award agreement. The Board may, in its discretion, provide that settlement of Restricted Stock Units shall be deferred, on a mandatory basis or at the election of the Participant.

 

(2)                                  Voting Rights.  A Participant shall have no voting rights with respect to any Restricted Stock Units.

 

(3)                                  Dividend Equivalents.  To the extent provided by the Board, in its sole discretion, a grant of Restricted Stock Units may provide Participants with the right to receive an amount equal to any dividends or other distributions declared and paid on an equal number of outstanding shares of Common Stock (“Dividend Equivalents”); provided, however, that Dividend Equivalents on Restricted Stock Units that are subject to performance conditions will either we accumulated or reinvested and paid upon vesting of the underlying Restricted Stock Unit. Dividend Equivalents may be paid currently or credited to an account for the Participants, may be settled in cash and/or shares of Common Stock and may be subject to the same restrictions on transfer and forfeitability as the Restricted Stock Units with respect to which paid, as determined by the Board in its sole discretion, subject in each case to such terms and

 

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conditions as the Board shall establish, in each case to be set forth in the applicable Award agreement.

 

8.                                       Other Stock Unit Awards.

 

Other Awards of shares of Common Stock, and other Awards that are valued in whole or in part by reference to, or are otherwise based on, shares of Common Stock or other property, may be granted hereunder to Participants (“Other Stock Unit Awards”), including without limitation Awards entitling recipients to receive shares of Common Stock to be delivered in the future. Such Other Stock Unit Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock Unit Awards may be paid in shares of Common Stock or cash, as the Board shall determine. Subject to the provisions of the Plan, the Board shall determine the terms and conditions of each Other Stock Unit Award, including any purchase price applicable thereto.

 

9.                                       Adjustments for Changes in Common Stock and Certain Other Events.

 

(a)                                  Changes in Capitalization.  In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Common Stock other than an ordinary cash dividend, (i) the number and class of securities available under this Plan, (ii) the sub-limits set forth in Section 4(b), (iii) the number and class of securities and exercise price per share of each outstanding Option, (iv) the share- and per-share provisions and the exercise price of each SAR, (v) the number of shares subject to and the repurchase price per share subject to each outstanding Restricted Stock Award and (vi) the share- and per-share-related provisions and the purchase price, if any, of each outstanding Other Stock Unit Award, shall be equitably adjusted by the Company (or substituted Awards may be made, if applicable) in the manner determined by the Board. Without limiting the generality of the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to an outstanding Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.

 

(b)                                 Reorganization Events.

 

(1)                                  Definition.  A “Reorganization Event” shall mean: (a) any merger or consolidation of the Company with or into another entity as a result of which all of the Common Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or is cancelled, (b) any exchange of all of the Common Stock of the Company for cash, securities or other property pursuant to a share exchange transaction or (c) any liquidation or dissolution of the Company.

 

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(2)                                  Consequences of a Reorganization Event on Awards Other than Restricted Stock Awards.  In connection with a Reorganization Event, the Board may take any one or more of the following actions as to all or any (or any portion of) outstanding Awards other than Restricted Stock Awards on such terms as the Board determines: (i) provide that Awards shall be assumed, or substantially equivalent Awards shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to a Participant, provide that the Participant’s unexercised Awards will terminate immediately prior to the consummation of such Reorganization Event unless exercised by the Participant within a specified period following the date of such notice, (iii) provide that outstanding Awards shall become exercisable, realizable, or deliverable, or restrictions applicable to an Award shall lapse, in whole or in part prior to or upon such Reorganization Event, (iv) in the event of a Reorganization Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share surrendered in the Reorganization Event (the “Acquisition Price”), make or provide for a cash payment to a Participant equal to the excess, if any, of (A) the Acquisition Price times the number of shares of Common Stock subject to the Participant’s Awards (to the extent the exercise price does not exceed the Acquisition Price) over (B) the aggregate exercise price of all such outstanding Awards and any applicable tax withholdings, in exchange for the termination of such Awards, (v) provide that, in connection with a liquidation or dissolution of the Company, Awards shall convert into the right to receive liquidation proceeds (if applicable, net of the exercise price thereof and any applicable tax withholdings) and (vi) any combination of the foregoing. In taking any of the actions permitted under this Section 9(b), the Board shall not be obligated by the Plan to treat all Awards, all Awards held by a Participant, or all Awards of the same type, identically.

 

For purposes of clause (i) above, an Option shall be considered assumed if, following consummation of the Reorganization Event, the Option confers the right to purchase, for each share of Common Stock subject to the Option immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise of Options to consist solely of common stock of the acquiring or succeeding corporation (or an affiliate thereof) equivalent in value (as determined by the Board) to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event.

 

(3)                                  Consequences of a Reorganization Event on Restricted Stock Awards.  Upon the occurrence of a Reorganization Event other than a liquidation or dissolution of the Company, the repurchase and other rights of the Company under each outstanding Restricted Stock Award shall inure to the benefit of the Company’s successor and shall, unless the Board determines otherwise, apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to the Common Stock subject to such Restricted Stock

 

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Award. Upon the occurrence of a Reorganization Event involving the liquidation or dissolution of the Company, except to the extent specifically provided to the contrary in the instrument evidencing any Restricted Stock Award or any other agreement between a Participant and the Company, all restrictions and conditions on all Restricted Stock Awards then outstanding shall automatically be deemed terminated or satisfied.

 

(c)                                  Acquisition.  An “Acquisition” shall mean any (i) merger or consolidation in which the Company is a constituent party or a subsidiary of the Company is a constituent party and the Company issues shares of its capital stock pursuant to such merger or consolidation, which results in the voting securities of the Company outstanding immediately prior thereto representing immediately thereafter (either by remaining outstanding or by being converted into voting securities of the surviving or acquiring entity (the “Acquiror”)) less than a majority of the combined voting power of the voting securities of the Company or the Acquiror outstanding immediately after such merger or consolidation or (ii) sale, transfer or other disposition of all or substantially all of the assets of the Company. The effect of an Acquisition on any Award granted under the Plan shall be specified in the agreement evidencing such Award.

 

10.                                 General Provisions Applicable to Awards.

 

(a)                                  Transferability of Awards.  Awards (other than vested Restricted Stock Awards) shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or, other than in the case of an Incentive Stock Option, pursuant to a qualified domestic relations order, and, during the life of the Participant, shall be exercisable only by the Participant; provided, however, that the Board may permit or provide in an Award for the gratuitous transfer of the Award by the Participant to or for the benefit of any immediate family member, family trust or other entity established for the benefit of the Participant and/or an immediate family member thereof if, with respect to such proposed transferee, the Company would be eligible to use a Form S-8 for the registration of the sale of the Common Stock subject to such Award under the Securities Act of 1933, as amended; provided, further, that the Company shall not be required to recognize any such transfer until such time as the Participant and such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument in form and substance satisfactory to the Company confirming that such transferee shall be bound by all of the terms and conditions of the Award. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees.

 

(b)                                 Documentation.  Each Award shall be evidenced in such form (written, electronic or otherwise) as the Board shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan.

 

(c)                                  Board Discretion.  Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and the Board need not treat Participants uniformly.

 

(d)                                 Termination of Status.  The Board shall determine the effect on an Award of the disability, death, termination of employment, authorized leave of absence or other change in the

 

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employment or other status of a Participant and the extent to which, and the period during which, the Participant, or the Participant’s legal representative, conservator, guardian or Designated Beneficiary, may exercise rights under the Award.

 

(e)                                  Withholding.  The Participant must satisfy all applicable federal, state, and local or other income and employment tax withholding obligations before the Company will deliver stock certificates or otherwise recognize ownership of Common Stock under an Award. The Company may decide to satisfy the withholding obligations through additional withholding on salary or wages. If the Company elects not to or cannot withhold from other compensation, the Participant must pay the Company the full amount, if any, required for withholding or have a broker tender to the Company cash equal to the withholding obligations. Payment of withholding obligations is due before the Company will issue any shares on exercise or release from forfeiture of an Award or, if the Company so requires, at the same time as is payment of the exercise price unless the Company determines otherwise. If provided for in an Award or approved by the Board in its sole discretion, a Participant may satisfy such tax obligations in whole or in part by delivery of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value; provided, however, except as otherwise provided by the Board, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income). Shares surrendered to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.

 

(f)                                    Amendment of Award.  The Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option, provided either (i) that the Participant’s consent to such action shall be required unless the Board determines that the action, taking into account any related action, would not materially and adversely affect the Participant or (ii) that the change is permitted under Section 9 hereof.

 

(g)                                 Conditions on Delivery of Stock.  The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.

 

(h)                                 Acceleration.  The Board may at any time provide that any Award shall become immediately exercisable in full or in part, free of some or all restrictions or conditions, or otherwise realizable in full or in part, as the case may be.

 

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(i)                                     Performance Awards.

 

(1)                                  Grants.  Restricted Stock Awards and Other Stock Unit Awards under the Plan may be made subject to the achievement of performance goals pursuant to this Section 10(i) (“Performance Awards”), subject to the limit in Section 4(b)(1) on shares covered by such grants.

 

(2)                                  Committee.  Grants of Performance Awards to any Covered Employee intended to qualify as “performance-based compensation” under Section 162(m) (“Performance-Based Compensation”) shall be made only by a Committee (or subcommittee of a Committee) comprised solely of two or more directors eligible to serve on a committee making Awards qualifying as “performance-based compensation” under Section 162(m). In the case of such Awards granted to Covered Employees, references to the Board or to a Committee shall be deemed to be references to such Committee or subcommittee. “Covered Employee” shall mean any person who is a “covered employee” under Section 162(m)(3) of the Code.

 

(3)                                  Performance Measures.  For any Award that is intended to qualify as Performance-Based Compensation, the Committee shall specify that the degree of granting, vesting and/or payout shall be subject to the achievement of one or more objective performance measures established by the Committee, which shall be based on the relative or absolute attainment of specified levels of one or any combination of the following: (a) net income, (b) earnings before or after discontinued operations, interest, taxes, depreciation and/or amortization, (c) operating profit before or after discontinued operations and/or taxes, (d) sales, (e) sales growth, (f) earnings growth, (g) cash flow or cash position, (h) gross margins, (i) stock price, (j) market share, (k) return on sales, assets, equity or investment, (l) improvement of financial ratings, (m) achievement of balance sheet or income statement objectives or (n) total stockholder return, and may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated. The Committee may specify that such performance measures shall be adjusted to exclude any one or more of (i) extraordinary items, (ii) gains or losses on the dispositions of discontinued operations, (iii) the cumulative effects of changes in accounting principles, (iv) the writedown of any asset, and (v) charges for restructuring and rationalization programs. Such performance measures: (i) may vary by Participant and may be different for different Awards; (ii) may be particular to a Participant or the department, branch, line of business, subsidiary or other unit in which the Participant works and may cover such period as may be specified by the Committee; and (iii) shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m). Awards that are not intended to qualify as Performance-Based Compensation may be based on these or such other performance measures as the Board may determine.

 

(4)                                  Adjustments.  Notwithstanding any provision of the Plan, with respect to any Performance Award that is intended to qualify as Performance-Based Compensation, the Committee may adjust downwards, but not upwards, the cash or number of Shares payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance measures except in the case of the death or disability of the Participant or a change in control of the Company.

 

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(5)                                  Other.  The Committee shall have the power to impose such other restrictions on Performance Awards as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for Performance-Based Compensation.

 

11.                                 Miscellaneous.

 

(a)                                  No Right To Employment or Other Status.  No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award.

 

(b)                                 No Rights As Stockholder.  Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder of such shares.

 

(c)                                  Effective Date and Term of Plan.  The Plan shall become effective on the date the Plan is approved by the Company’s stockholders (the “Effective Date”). No Awards shall be granted under the Plan after the completion of 10 years from the Effective Date, but Awards previously granted may extend beyond that date.

 

(d)                                 Amendment of Plan.  The Board may amend, suspend or terminate the Plan or any portion thereof at any time provided that (i) to the extent required by Section 162(m), no Award granted to a Participant that is intended to comply with Section 162(m) after the date of such amendment shall become exercisable, realizable or vested, as applicable to such Award, unless and until such amendment shall have been approved by the Company’s stockholders if required by Section 162(m) (including the vote required under Section 162(m)); (ii) no amendment that would require stockholder approval under the rules of The NASDAQ Stock Market (“NASDAQ”) may be made effective unless and until such amendment shall have been approved by the Company’s stockholders; and (iii) if the NASDAQ amends its corporate governance rules so that such rules no longer require stockholder approval of “material amendments” to equity compensation plans, then, from and after the effective date of such amendment to the NASDAQ rules, no amendment to the Plan (A) materially increasing the number of shares authorized under the Plan (other than pursuant to Section 9), (B) expanding the types of Awards that may be granted under the Plan, or (C) materially expanding the class of participants eligible to participate in the Plan shall be effective unless stockholder approval is obtained. In addition, if at any time the approval of the Company’s stockholders is required as to any other modification or amendment under Section 422 of the Code or any successor provision with respect to Incentive Stock Options, the Board may not effect such modification or amendment without such approval. Unless otherwise specified in the amendment, any amendment to the Plan adopted in accordance with this Section 11(d) shall apply to, and be binding on the holders of, all Awards outstanding under the Plan at the time the amendment is adopted, provided the Board determines that such amendment does not materially and adversely affect the rights of Participants under the Plan. No Award shall be made that is conditioned upon stockholder approval of any amendment to the Plan.

 

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(e)                                  Provisions for Foreign Participants.  The Board may modify Awards or Options granted to Participants who are foreign nationals or employed outside the United States or establish subplans or procedures under the Plan to recognize differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters.

 

(f)                                    Compliance With Code Section 409A.  No Award shall provide for deferral of compensation that does not comply with Section 409A of the Code, unless the Board, at the time of grant, specifically provides that the Award is not intended to comply with Section 409A of the Code. The Company shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A is not so exempt or compliant or for any action taken by the Board.

 

(g)                                 Governing Law.  The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than such state.

 

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