Document:

Exhibit 4.1

 

NEW HORIZONS WORLDWIDE, INC.

 

2007 OMNIBUS EQUITY COMPENSATION PLAN

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 1.

  	
  Purpose

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 2.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 3.

  	
  Administration

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 4.

  	
  Grants

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 5.

  	
  Shares of Stock Subject to the Plan

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 6.

  	
  Eligibility for Participation

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 7.

  	
  Options

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 8.

  	
  SARs

  	
  8

  
	
   

  	
   

  	
   

  
	
  Section 9.

  	
  Stock Units

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 10.

  	
  Performance Shares

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 11.

  	
  Stock Awards

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 12.

  	
  Other Stock-Based Awards

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 13.

  	
  Qualified Performance-Based Compensation

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 14.

  	
  Deferrals

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 15.

  	
  Withholding of Taxes

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 16.

  	
  Transferability of Grants

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 17.

  	
  Consequences of a Change in Control

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 18.

  	
  Requirements for Issuance of Shares

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section 19.

  	
  Amendment and Termination of the Plan

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section 20.

  	
  Miscellaneous

  	
  16

  

 

i

 

NEW
HORIZONS WORLDWIDE, INC.

 

2007
OMNIBUS EQUITY COMPENSATION PLAN

 

Section 1.                                          Purpose

 

The purpose of the Plan is to provide designated (i) Employees
of New Horizons and its Subsidiaries, (ii) Non-Employee Directors of New
Horizons and its Subsidiaries, and (iii) Consultants who perform services
for New Horizons and its Subsidiaries, with the opportunity to receive grants
of Options, SARs, Stock Units, Performance Shares, Stock Awards and Other
Stock-Based Awards.  New Horizons
believes that the Plan will encourage the Participants to contribute materially
to the growth of New Horizons, thereby benefiting New Horizons’s stockholders,
and will align the economic interests of the Participants with those of the
stockholders.  All capitalized terms
shall be as defined in Section 2 below.

 

Section 2.                                          Definitions

 

Whenever used in this Plan, the following terms will
have the respective meanings set forth below:

 

(a)           “Board” means the Board of Directors of New Horizons.

 

(b)           “Change in Control” means the occurrence of any of the following events, each of which shall be
determined independently of the others:

 

(i)            Any
Person becomes a “beneficial owner,” as such term is used in Rule 13d-3 promulgated under the Exchange Act, of 50% or
more of New Horizons’s stock entitled to vote in the election of directors;

 

(ii)           Individuals who are Continuing Directors
cease to constitute a majority of the members of the Board;

 

(iii)          Stockholders of New Horizons adopt a plan of
complete or substantial liquidation or an agreement providing for the
distribution of all or substantially all of New Horizons’s assets;

 

(iv)          New Horizons is party to a merger,
consolidation, other form of business combination or a sale of all or
substantially all of its assets, unless the business of New Horizons is
continued following any such transaction by a resulting entity (which may be,
but need not be, New Horizons) and the stockholders of New Horizons immediately
prior to such transaction (the “Prior Stockholders”) hold, directly or
indirectly, at least two-thirds of the voting power of the resulting entity
(there being excluded from the voting power held by the Prior Stockholders, but
not from the total voting power of the resulting entity, any voting power
received by affiliates of a party to the transaction (other than New Horizons)
in their capacities as stockholders of New Horizons); provided, however, that a
merger or consolidation effected to implement a 

 

1

 

recapitalization of New
Horizons (or similar transaction) in which no Person acquires more than 50% of
the combined voting power of New Horizons’s then outstanding securities shall
not constitute a Change in Control;

 

(v)           There is a Change in Control of New Horizons
of a nature that would be required to be reported in response to item 1(a) of
Current Report on Form 8-K or item 6(e) of Schedule 14A of Regulation
14A or any similar item, schedule or form under the Exchange Act, as in effect
at the time of the change, whether or not New Horizons is then subject to such
reporting requirement;

 

(vi)          New Horizons
is a subject of a “Rule 13e-3 transaction” as that term is defined in
Exchange Act Rule 13e-3; or

 

(vii)         There
has occurred a “change in control,” as such term (or any term of like import)
is defined in any of the following documents which is in effect with respect to
New Horizons at the time in question: any note, evidence of indebtedness or
agreement to lend funds to New Horizons, any option, incentive or employee
benefit plan of New Horizons or any employment, severance, termination or
similar agreement with any person who is then an employee of the Company.

 

Notwithstanding the foregoing, the Committee may
modify the definition of a Change in Control for a particular Grant as the
Committee deems appropriate to comply with section 409A of the Code.

 

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

 

(d)           “Committee”
means the Compensation Committee of the Board or its delegate or successor, or
such other committee appointed by the Board to administer the Plan or its
delegate or successor.  Notwithstanding
the foregoing, with respect to Grants to members of the Board and Employees
that are intended as “qualified performance-based compensation” (as defined
under section 162(m) of the Code), as well as to Employees who are
officers of New Horizons, the Committee shall consist of two or more persons
appointed by the Board, all of whom shall be “outside directors” (as defined
under section 162(m) of the Code and related Treasury regulations) and “non-employee
directors” as defined under Rule 16b-3 promulgated under the Exchange Act.

 

(e)           “Company”
means New Horizons and any Subsidiary.

 

(f)            “Consultant”
means an advisor or consultant who performs services for the Company.

 

(g)           “Continuing Directors” mean the members
of the Board on the date of adoption of this Plan, provided that any person
becoming a member of the Board subsequent to such date whose election or
nomination for election was supported by two-thirds of the directors who then
comprised the Continuing Directors shall be considered to be a Continuing
Director.

 

2

 

(h)           “Date of
Grant” means the date a Grant is effective; provided, however, that
no retroactive Grants will be made.

 

(i)            “Effective
Date” means August 24, 2007, subject to approval by the
stockholders of New Horizons.

 

(j)            “Employee”
means an employee of the Company (including an officer or director who is also
an employee).

 

(k)           “Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

(l)            “Fair Market
Value” means, as of any date, unless otherwise required by any
applicable provision of the Code or any regulations thereunder, (i) if the
Stock is listed on a national securities exchange, the last reported sales
price thereof on the relevant date or, if there were no trades on that date,
the last preceding date upon which a sale was reported; (ii) if the Stock
is not so listed or traded, the mean between the last reported “bid” and “asked”
price thereof, as reported on a national securities exchange; or (iii) if
not so reported, as reported by the National Daily Quotation Bureau, Inc.
or as reported in a customary financial reporting service, as applicable, and
as the Committee determines.

 

(m)          “Grant”
means an Option, SAR, Stock Unit, Performance Share, Stock Award or Other
Stock-Based Award granted under the Plan.

 

(n)           “Grant
Letter” means the written agreement that sets forth the terms and
conditions of a Grant, including all amendments thereto.

 

(o)           “Incentive
Stock Option” means a stock option that is intended to meet the
requirements of section 422 of the Code, as described in Section 7.

 

(p)           “New
Horizons” means New Horizons Worldwide, Inc., a Delaware corporation and any successor thereto.

 

(q)           “Non-Employee
Director” means a member of the Board, or a member of the board of
directors of a Subsidiary, who is not an employee of the Company.

 

(r)            “Nonqualified
Stock Option” means a stock option that is not intended to meet the
requirements of section 422 of the Code, as described in Section 7.

 

(s)           “Option”
means an Incentive Stock Option or Nonqualified Stock Option to purchase shares
of Stock at an Option Price for a specified period of time.

 

(t)            “Option
Price” means an amount per share of Stock purchasable under an
Option, as designated by the Committee.

 

3

 

(u)           “Other
Stock-Based Award” means any Grant based on, measured by or payable
in Stock (other than Grants described in Sections 7, 8, 9, 10 and 11), as
described in Section 12.

 

(v)           “Parent”
means a “parent corporation,” as defined in section 424(e) of the Code, of
New Horizons.

 

(w)          “Participant”
means an Employee, Consultant or Non-Employee Director designated by the
Committee to receive a Grant under the Plan.

 

(x)            “Performance
Shares” means an award of phantom units, representing one or more
shares of Stock, as described in Section 10.

 

(y)           “Person”
means as such term is used in sections
13(d) and 14(d) of the Exchange Act; provided, however that, unless
the Committee determines to the contrary, the term shall not include (i) New
Horizons, any trustee or other fiduciary holding securities under an employee
benefit plan of New Horizons, or any corporation owned, directly or indirectly,
by the stockholders of New Horizons in substantially the same proportions as
their ownership of stock of New Horizons, (ii) such individual as the
Board may determine, his or her issue and/or his or her heirs, executors,
administrators and successors (but excluding a successor as a result of a sale
for value), (iii) such corporation, partnership, limited liability
company, trust or other entity or association as the Board may determine, or (iv) the
Continuing Directors, individually or to the extent that they act or agree to
act in concert.

 

(z)            “Plan”
means this New Horizons Technologies, Inc. 2007 Omnibus Equity
Compensation Plan, as in effect from time to time.

 

(aa)         “Stock”
means the common stock, par value $0.01 per share, of New Horizons or such
other securities of New Horizons as may be substituted for Stock pursuant to
Sections 5(d) or 17.

 

(bb)         “SAR”
means an award of a stock appreciation right, as described in Section 8.

 

(cc)         “Stock Award”
means an award of Stock, as described in Section 11.

 

(dd)         “Stock Unit”
means an award of a phantom unit, representing one or more shares of Stock, as
described in Section 9.

 

(ee)         “Subsidiary”
means a “subsidiary corporation,” as defined in section 424(f) of
the Code, of New Horizons.

 

(ff)           “Successor
Participant” means the personal representative or other person
entitled to succeed to the rights of the Participant in accordance with Section 16.

 

4

 

Section 3.                                          Administration

 

(a)           Committee.  The Plan shall be administered and
interpreted by the Committee.  Day to day
administrative functions may be performed by employees of New Horizons, as
approved by the Committee.

 

(b)           Committee Authority.  The Committee shall have the sole authority
to (i) determine the Employees, Consultants and Non-Employee Directors to
whom Grants shall be made under the Plan; (ii) determine the type, size
and terms of the Grants to be made to each Participant; (iii) determine
the time when the Grants will be made and the duration of any applicable
exercise or restriction period, including the criteria for exercisability and
the possible acceleration of exercisability and vesting, which acceleration may
only occur upon death, disability, retirement or a Change in Control (as
defined below); (iv) amend the terms of any previously issued Grant,
subject to the provisions of Section 19; (v) adopt guidelines
separate from the Plan that set forth the specific terms and conditions for
Grants under the Plan; and (vi) deal with any other matters arising under
the Plan.  However, the Board may ratify
or approve any Grants as it deems appropriate and has the authority to
administer the Plan.  To the extent that
the Board makes Grants and administers the Plan, references in the Plan to the “Committee”
shall be deemed to refer to the Board.

 

(c)           Committee
Determinations.  The Committee shall
have full power and express discretionary authority to administer and interpret
the Plan, to make factual determinations and to adopt or amend such rules,
regulations, agreements and instruments for implementing the Plan and for the
conduct of its business as it deems necessary or advisable, in its sole
discretion.  The Committee’s
interpretations of the Plan and all determinations made by the Committee
pursuant to the powers vested in it hereunder shall be conclusive and binding
on all persons having any interest in the Plan or in any Grants awarded
hereunder.  All powers of the Committee
shall be executed in its sole discretion, in the best interest of New Horizons,
not as a fiduciary, and in keeping with the objectives of the Plan and need not
be uniform as to similarly situated individuals.

 

Section 4.                                          Grants

 

Grants under the Plan may consist of Options, SARs,
Stock Units, Performance Shares, Stock Awards and Other Stock-Based
Awards.  All Grants shall be subject to
the terms and conditions set forth herein and to such other terms and
conditions consistent with the Plan as the Committee deems appropriate and as
are specified in writing by the Committee in separate guidelines or to the
individual in the Grant Letter or an amendment to the guidelines or Grant
Letter.  The Committee shall approve the
form and provisions of each Grant Letter. 
Grants under a particular Section of the Plan need not be uniform
as among the Participants.  All Grants
shall be made conditional upon the Participant’s acknowledgement, in writing or
by acceptance of the Grant, that all decisions and determinations of the
Committee shall be final and binding on the Participant, his or her
beneficiaries, and any other person having or claiming an interest under such
Grant.

 

5

 

Section 5.              Shares of Stock Subject to the Plan

 

(a)           Shares Authorized.  Subject to adjustment as described below, the
aggregate number of shares of Stock that may be issued or transferred under the
Plan is 2,000,000 shares.  The Shares may
be authorized, but unissued, shares of Stock or reacquired shares of Stock,
including shares purchased by New Horizons on the open market for purposes of
the Plan.  Grants paid in cash shall not
count against the foregoing share limits.

 

(b)           Share Counting.  For administrative purposes, when the
Committee makes a Grant payable in Stock, the Committee shall reserve shares of
Stock equal to the maximum number of shares of Stock that may be payable under
the Grant.  If and to the extent Options
or SARs granted under the Plan terminate, expire, or are canceled, forfeited,
exchanged or surrendered without having been exercised or if any Stock Awards,
Stock Units, Performance Shares or Other Stock-Based Awards are forfeited or
terminated, or otherwise not paid in full, the shares subject to such Grants
which have not been issued shall again be available for purposes of the
Plan.  To the extent any Grants are paid
in cash, and not in shares of Stock, any shares previously reserved for issuance
or transfer pursuant to such Grants shall again be available for issuance or
transfer under the Plan.  To the extent
SARs are exercised under the Plan, the total number of shares of Stock subject
to the exercised portion of the SAR shall count against the number of shares
reserved for issuance under the Plan if shares of Stock are paid out upon
exercise of the SAR.

 

(c)           Individual Limits.  All Grants under the Plan shall be expressed
in shares of Stock.  The maximum
aggregate number of shares of Stock with respect to which all Grants may be
made under the Plan to any individual during any fiscal year shall be 500,000
shares, subject to adjustment as described below.  The individual limit described in this
subsection (c) shall apply without regard to whether the Grants are to be
paid in Stock or in cash.  All cash
payments shall equal the Fair Market Value of the shares of Stock to which the
cash payment relates.

 

(d)           Adjustments.  If there is any change in the number or kind
of shares of Stock outstanding (i) by reason of a stock dividend, spinoff,
recapitalization, stock split, or combination or exchange of shares; (ii) by
reason of a merger, reorganization or consolidation; (iii) by reason of a
reclassification or change in par value; or (iv) by reason of any other
extraordinary or unusual event affecting the outstanding Stock as a class
without New Horizons’s receipt of consideration, or if the value of outstanding
shares of Stock is substantially reduced as a result of a spinoff or New
Horizons’s payment of an extraordinary dividend or distribution, the maximum
number of shares of Stock available for issuance under the Plan, the maximum
number of shares of Stock for which any individual may receive pursuant to
Grants in any year, the number of shares covered by outstanding Grants, the
kind of shares to be issued or transferred under the Plan, and the price per
share or the applicable market value of such Grants shall be appropriately
adjusted by the Committee to reflect any increase or decrease in the number of,
or change in the kind or value of, issued shares of Stock to preclude, to the
extent practicable, the enlargement or dilution of rights and benefits under
such Grants; provided, 

 

6

 

however, that any fractional shares resulting from
such adjustment shall be eliminated.  Any
adjustments determined by the Committee shall be final, binding and conclusive.

 

Section 6.                                          Eligibility for Participation

 

(a)           Eligible Persons.  All Employees, including Employees who are
officers or members of the Board, and all Non-Employee Directors shall be
eligible to participate in the Plan. 
Consultants are eligible to participate in the Plan if they perform bona
fide services for the Company, the services are not in connection with the
offer or sale of securities in a capital-raising transaction, and the
Consultants do not directly or indirectly promote or maintain a market for New
Horizons’s securities.

 

(b)           Selection of
Participants.  The Committee shall
select the Employees, Consultants and Non-Employee Directors to receive Grants
and shall determine the terms and conditions of the Grant and the number of
shares of Stock subject to each Grant.

 

Section 7.                                          Options

 

(a)           General Requirements.  The Committee may grant Options to any
Employee, Consultant or Non-Employee Director upon such terms and conditions as
the Committee deems appropriate under this Section 7.

 

(b)           Number of Shares.  The Committee shall determine the number of
shares of Stock that will be subject to each Grant of Options to Employees,
Consultants and Non-Employee Directors.

 

(c)           Type of Option and
Price.

 

(i)            The Committee may
grant Incentive Stock Options or Nonqualified Stock Options or any combination
of Incentive Stock Options and Nonqualified Stock Options.  Incentive Stock Options may be granted only
to Employees of New Horizons or its Parent or Subsidiaries.  Nonqualified Stock Options may be granted to
Employees, Consultants and Non-Employee Directors.

 

(ii)           The Option Price shall
be determined by the Committee and may be equal to or greater than the Fair
Market Value of the shares of Stock subject to the Grant on the Date of Grant;
provided, however, that an Incentive Stock Option may not be granted to an
Employee who, at the Date of Grant, owns stock possessing more than 10% of the
total combined voting power of all classes of stock of New Horizons or any
Parent or Subsidiary, unless the Option Price is not less than 110% of the Fair
Market Value on the Date of Grant.

 

(d)           Option Term.  The Committee shall determine the term of
each Option.  The term of an Option shall
not exceed ten years from the Date of Grant. 
However, an Incentive Stock Option that is granted to an Employee who,
at the Date of Grant, owns stock possessing more 

 

7

 

than 10% of the total combined voting power of all
classes of stock of New Horizons, or any Parent or Subsidiary, may not have a
term that exceeds five years from the Date of Grant.

 

(e)           Exercisability of
Options.  Options shall become
exercisable in accordance with such terms and conditions as may be determined
by the Committee and specified in the Grant Letter.  The Committee may accelerate the
exercisability of any or all outstanding Options at any time for any reason.

 

(f)            Termination of
Employment or Service.  Except as
provided in the Grant Letter, an Option may only be exercised while the
Participant is employed by, or providing service to, the Company.  The Committee shall specify in the Grant
Letter under what circumstances and during what time periods a Participant may
exercise an Option after termination of employment or service.

 

(g)           Exercise of Options.  A Participant may exercise an Option that has
become exercisable, in whole or in part, by delivering a notice of exercise to
New Horizons or its designated agent. 
The Participant shall pay the Option Price and any withholding taxes for
the Option (i) in cash or by certified or cashier’s check; (ii) with
the approval of the Committee, by delivering shares of Stock owned by the
Participant and having a Fair Market Value on the date of exercise equal to the
Option Price or by attestation (on a form prescribed by the Committee) to
ownership of shares of Stock having an aggregate Fair Market Value on the date
of exercise equal to the Option Price; (iii) in cash, on the T+3 settlement date that occurs after the exercise date
specified in the notice of exercise, provided that the Participant exercises
the Option through an irrevocable agreement with a registered broker and the
payment is made in accordance with procedures permitted by Regulation T of the
Federal Reserve Board and such procedures do not violate applicable law;
or (iv) by such other method as the Committee may approve, to the extent
permitted by applicable law.  Shares of
Stock used to exercise an Option pursuant to subsection (ii) shall have
been held by the Participant for the requisite period of time to avoid adverse
accounting consequences to New Horizons with respect to the Option.  Payment for the shares pursuant to the
Option, and any required withholding taxes, must be received by the time
specified by the Committee depending on the type of payment being made.

 

(h)           Limits on Incentive
Stock Options.  Each Incentive Stock
Option shall provide that if the aggregate Fair Market Value on the Date of
Grant with respect to which Incentive Stock Options are exercisable for the
first time by a Participant during any calendar year, under the Plan or any
other stock option plan of New Horizons or a Parent or Subsidiary, exceeds
$100,000, then the Option, as to the excess, shall be treated as a Nonqualified
Stock Option.

 

Section 8.                                          SARs

 

(a)           General Requirements.  The Committee may grant SARs to any Employee,
Consultant or Non-Employee Director, upon such terms and conditions as the
Committee deems appropriate under this Section 8.  Each SAR shall represent the right of the
Participant to receive, upon settlement of the SAR, shares of Stock or cash
equal to the amount by which the Fair 

 

8

 

Market Value of a share of Stock on the date of
exercise of the SAR exceeds the base amount of the SAR as described below in Section 8(c).

 

(b)           Terms of SARs.  The Committee shall determine the terms and
conditions of SARs and may grant SARs separately from or in tandem with any
Option (for all or a portion of the applicable Option).  Tandem SARs may be granted either at the time
the Option is granted or any time thereafter while the Option remains
outstanding; provided, however, that in the case of an Incentive Stock Option,
SARs may be granted only at the time of the grant of the Incentive Stock
Option.  The Committee will determine the
number of SARs to be granted, the base amount, the vesting and other
restrictions applicable to SARs and the period during which SARs will remain
exercisable.

 

(c)           Base Amount.  The Committee shall establish the base amount
of the SAR at the time the SAR is granted; provided, however, that the base
amount shall not be less than the Fair Market Value of a share of Stock on the
Date of Grant.

 

(d)           Payment With Respect
to SARs.  The Committee shall
determine whether the appreciation in an SAR shall be paid in the form of cash,
in Stock, or in a combination of the two, in such proportion as the Committee
deems appropriate.  For purposes of
calculating the number of shares of Stock to be received, Stock shall be valued
at its Fair Market Value on the date of exercise of the SAR.  If shares of Stock are to be received upon
exercise of an SAR, cash shall be delivered in lieu of any fractional share.

 

(e)           Requirement of
Employment or Service.  The Committee
shall determine in the Grant Letter under what circumstances a Participant may
retain SARs after termination of the Participant’s employment or service, and
the circumstances under which SARs may be forfeited.

 

Section 9.                                          Stock Units

 

(a)           General Requirements.  The Committee may grant Stock Units to any
Employee, Consultant or Non-Employee Director, upon such terms and conditions
as the Committee deems appropriate under this Section 9.  Each Stock Unit shall represent the right of
the Participant to receive a share of Stock or an amount based on the value of
a share of Stock.  All Stock Units shall
be credited to accounts on New Horizons’s records for purposes of the Plan.

 

(b)           Terms of Stock Units.  The Committee may grant Stock Units that are
payable if specified performance goals or other conditions are met, or under
other circumstances.  Stock Units may be
paid at the end of a specified period, or payment may be deferred to a date
authorized by the Committee.  The
Committee shall determine the number of Stock Units to be granted and the
requirements applicable to such Stock Units; provided, however, that no
performance-based Stock Units shall vest earlier than one year after the date
of grant and no time-based Stock Units shall fully vest over a period that is
less than three years after the date of grant.

 

9

 

(c)           Payment
With Respect to Stock Units.  Payment
with respect to Stock Units shall be made in cash, in Stock, or in a
combination of the two, as determined by the Committee.  The Grant Letter shall specify the maximum
number of shares that shall be paid under the Stock Units.

 

(d)           Requirement
of Employment or Service.  The
Committee shall determine in the Grant Letter under what circumstances a
Participant may retain Stock Units after termination of the Participant’s
employment or service, and the circumstances under which Stock Units may be
forfeited.

 

Section 10.                                   Performance Shares

 

(a)           General
Requirements.  The Committee may
grant Performance Shares to an Employee, Consultant or Non-Employee Director,
upon such terms and conditions as the Committee deems appropriate under this Section 10.  Each Performance Share shall represent the
right of the Participant to receive a share of Stock or an amount based on the
value of a share of Stock, if specified performance goals are met.  All Performance Shares shall be credited to
accounts on New Horizons’s records for purposes of the Plan.

 

(b)           Terms
of Performance Shares.  The Committee
shall establish the performance goals and other conditions for payment of
Performance Shares.  Performance Shares
may be paid at the end of a specified performance or other period, or payment
may be deferred to a date authorized by the Committee.  The Committee shall determine the number of
Performance Shares to be granted and the requirements applicable to such
Performance Shares; provided, however, that no Performance Shares shall vest
earlier than one year after the date of grant.

 

(c)           Payment
With Respect to Performance Shares. 
Payment with respect to Performance Shares shall be made in cash, in
Stock, or in a combination of the two, as determined by the Committee.  The Committee shall establish in the Grant
Letter a target amount to be paid under a Performance Share based on
achievement of the performance goals.

 

(d)           Requirement
of Employment or Service.  The
Committee shall determine in the Grant Letter under what circumstances a
Participant may retain Performance Shares after termination of the Participant’s
employment or service, and the circumstances under which Performance Shares may
be forfeited.

 

Section 11.                                   Stock Awards

 

(a)           General
Requirements.  The Committee may
issue or transfer shares of Stock to an Employee, Consultant or Non-Employee
Director under a Stock Award, upon such terms and conditions as the Committee
deems appropriate under this Section 11. 
Shares of Stock issued or transferred pursuant to Stock Awards may be
issued or transferred for cash consideration or for no cash consideration, and
subject to restrictions or no restrictions, as determined by the
Committee.  The Committee may establish
conditions under which restrictions on Stock Awards shall lapse over a period
of time or according to such other criteria as the Committee deems 

 

10

 

appropriate, including restrictions based upon the
achievement of specific performance goals; provided, however, that no
performance-based Stock Awards shall vest earlier than one year after the date
of grant and no time-based Stock Awards shall fully vest over a period that is
less than three years after the date of grant.

 

(b)           Number
of Shares.  The Committee shall
determine the number of shares of Stock to be issued or transferred pursuant to
a Stock Award and any restrictions applicable to such shares.

 

(c)           Requirement
of Employment or Service.  The
Committee shall determine in the Grant Letter under what circumstances a
Participant may retain Stock Awards after termination of the Participant’s
employment or service, and the circumstances under which Stock Awards may be
forfeited.

 

(d)           Restrictions on
Transfer.  While Stock Awards are
subject to restrictions, a Participant may not sell, assign, transfer, pledge
or otherwise dispose of the shares of a Stock Award except upon death as
described in Section 16.  Each
certificate, or electronic book entry equivalent, for a share of a Stock Award
shall contain a legend giving appropriate notice of the restrictions in the
Grant.  The Participant shall be entitled
to have the legend removed when all restrictions on such shares have lapsed.  The Committee may retain possession of any
stock certificates for Stock Awards until all restrictions on such shares have
lapsed.

 

(e)           Right
to Vote and to Receive Dividends. 
Unless the Committee determines otherwise, the Participant shall have
the right to vote shares subject to Stock Awards and to receive any dividends
or other distributions paid on such shares during the restriction period.  The Committee may determine that a
Participant’s entitlement to dividends or other distributions with respect to a
Stock Award shall be subject to achievement of performance goals or other
conditions.

 

Section 12.                                   Other Stock-Based Awards

 

The Committee may grant other awards that are
cash-based or based on, measured by or payable in Stock to Employees,
Consultants or Non-Employee Directors, on such terms and conditions as the
Committee deems appropriate under this Section 12.  Other Stock-Based Awards may be granted
subject to achievement of performance goals or other conditions and may be
payable in Stock or cash, or in a combination of the two, as determined by the
Committee in the Grant Letter.

 

Section 13.                                   Qualified Performance-Based Compensation

 

(a)           Designation
as Qualified Performance-Based Compensation.  The Committee may determine that Stock Units,
Performance Shares, Stock Awards or Other Stock-Based Awards granted to an
Employee shall be considered “qualified performance-based compensation” under
section 162(m) of the Code.  The
provisions of this Section 13 shall apply to any such Grants that are to
be considered “qualified performance-based compensation” under 

 

11

 

section 162(m) of the Code.  To the extent that Grants of Stock Units,
Performance Shares, Stock Awards or Other Stock-Based Awards designated as “qualified
performance-based compensation” under section 162(m) of the Code are made,
no such Grant may be made as an alternative to another Grant that is not
designated as “qualified performance based compensation” but instead must be
separate and apart from all other Grants made.

 

(b)           Performance
Goals.  When Stock Units, Performance
Shares, Stock Awards or Other Stock-Based Awards that are to be considered “qualified
performance-based compensation” are granted, the Committee shall establish in
writing (i) the objective performance goals that must be met; (ii) the
period during which performance will be measured; (iii) the maximum
amounts that may be paid if the performance goals are met; and (iv) any
other conditions that the Committee deems appropriate and consistent with the
Plan and the requirements of section 162(m) of the Code for “qualified
performance-based compensation.”  The
performance goals shall satisfy the requirements for “qualified
performance-based compensation,” including the requirement that the achievement
of the goals be substantially uncertain at the time they are established and
that the performance goals be established in such a way that a third party with
knowledge of the relevant facts could determine whether and to what extent the
performance goals have been met.  The Committee
shall not have discretion to increase the amount of compensation that is
payable upon achievement of the designated performance goals, but the Committee
may reduce the amount of compensation that is payable upon achievement of the
designated performance goals.

 

(c)           Criteria
Used for Objective Performance Goals. 
The Committee shall use objectively determinable performance goals based
on one or more of the following criteria: 
Stock price, earnings per share of Stock, net earnings, operating
earnings, return on assets, stockholder return, return on equity, growth in
assets, unit volume, sales, market share, or strategic business criteria
consisting of one or more objectives based on meeting specific revenue goals,
market penetration goals, geographic business expansion goals, cost goals, or
goals relating to acquisitions or divestitures. 
The performance goals may relate to the Participant’s business unit or
the performance of New Horizons, a Subsidiary, or New Horizons and its
Subsidiaries as a whole, or any combination of the foregoing.  Performance goals need not be uniform as
among Participants.

 

(d)           Timing
of Establishment of Goals.  The
Committee shall establish the performance goals in writing either before the
beginning of the performance period or during a period ending no later than the
earlier of (i) 90 days after the beginning of the performance period or (ii) the
date on which 25% of the performance period has been completed, or such other
date as may be required or permitted under applicable regulations under section
162(m) of the Code.

 

(e)           Certification
of Results.  The Committee shall
certify and announce the results for the performance period to all Participants
after New Horizons announces New Horizons’s financial results for the performance
period.  The Committee shall determine
the amount, if any, 

 

12

 

to be paid pursuant to each Grant based on the
achievement of the performance goals and the terms of each Grant Letter.

 

(f)            Death,
Disability or Other Circumstances. 
The Committee may provide in the Grant Letter that Grants shall be
payable, in whole or in part, in the event of the Participant’s death or
disability, a Change in Control or under other circumstances consistent with
the Treasury regulations and rulings under section 162(m) of the Code.

 

Section 14.                                   Deferrals

 

The Committee may permit
or require a Participant to defer receipt of the payment of cash or the
delivery of shares of Stock that would otherwise be due to the Participant in
connection with any Grant.  The Committee
shall establish rules and procedures for such deferrals, which shall be
consistent with the requirements of section 409A of the Code and the
corresponding Treasury regulations and rulings.

 

Section 15.                                   Withholding of Taxes

 

(a)           Required
Withholding.  All Grants under the
Plan shall be subject to applicable federal (including FICA), state and local
tax withholding requirements.  New
Horizons may (i) require that the Participant or other person receiving or
exercising Grants pay to the Company the amount of any federal, state or local
taxes that the Company is required to withhold with respect to such Grants, or (ii) deduct
from other wages paid by the Company the amount of any withholding taxes due
with respect to such Grants.

 

(b)           Election
to Withhold Shares.  If the Committee
so permits, a Participant may elect to satisfy the Company’s tax withholding
obligation with respect to Grants paid in Stock by having shares withheld, at
the time such Grants become taxable, up to an amount that does not exceed the
minimum applicable withholding tax rate for federal (including FICA), state and
local tax liabilities.  In addition, with
respect to any required tax withholding amount that exceeds the minimum
applicable withholding tax rate, the Committee may permit a Participant to
satisfy such tax withholding obligation with respect to such excess amount by
providing that the Participant may elect to deliver to New Horizons shares of
Stock owned by the Participant that have been held by the Participant for the
requisite period of time to avoid adverse accounting consequences to New
Horizons.  The elections described in
this subsection (b) must be in a form and manner prescribed by the
Committee and may be subject to the prior approval of the Committee.

 

Section 16.                                   Transferability of Grants

 

(a)           In
General.  Except as provided in this Section 16,
only the Participant may exercise rights under a Grant during the Participant’s
lifetime.  A Participant may not transfer
those rights except by will or by the laws of descent and distribution, or,
with respect to Grants other than Incentive Stock Options, if permitted in any
specific case by the Committee, pursuant to a domestic relations order.  When a Participant dies, the Successor Participant
may exercise 

 

13

 

such rights in accordance with the terms of the
Plan.  A Successor Participant must
furnish proof satisfactory to New Horizons of his or her right to receive the
Grant under the Participant’s will or under the applicable laws of descent and
distribution.

 

(b)           Transfer
of Nonqualified Stock Options. 
Notwithstanding the foregoing, the Committee may provide in a Grant
Letter that a Participant may transfer Nonqualified Stock Options to family
members or other persons or entities, consistent with applicable securities
laws, according to such terms as the Committee may determine; provided that the
Participant receives no consideration for the transfer of a Nonqualified Stock
Option and the transferred Nonqualified Stock Option shall continue to be
subject to the same terms and conditions as were applicable to the Nonqualified
Stock Option immediately before the transfer.

 

Section 17.            Consequences of a Change in Control

 

(a)           Assumption
of Grants.  Upon a Change in Control
where New Horizons is not the surviving corporation (or survives only as a
subsidiary of another corporation), unless the Committee determines otherwise,
all outstanding Options and SARs that are not exercised shall be assumed by, or
replaced with comparable options and rights by, the surviving corporation (or a
parent or subsidiary of the surviving corporation), and other Grants that
remain outstanding shall be converted to similar grants of the surviving
corporation (or a parent or subsidiary of the surviving corporation).

 

(b)           Acceleration
of Exercisability/Vesting.  In the
event of a Change in Control, Grants will automatically become fully
exercisable and/or vested, as applicable, but only with respect to those Participants
who, in the good faith determination and sole discretion of the Committee, are
likely to have their relationship with the Company or a successor to the
Company terminated (including a constructive termination through a significant
decrease in authority, responsibility or overall total compensation) as a
result of such Change in Control.  This
subsection (b) shall be in addition to, and not in lieu of, the actions
the Committee may take pursuant to subsection (c) below.

 

(c)           Other
Alternatives.  Notwithstanding the
foregoing, in the event of a Change in Control, the Committee may take any of
the following actions with respect to any or all outstanding Grants, without
the consent of any Participant: (i) determine that outstanding Options and
SARs shall accelerate and become exercisable, in whole or in part; (ii) determine
that the restrictions and conditions on outstanding Stock Awards shall lapse,
in whole or in part; (iii) provide that Participants holding outstanding
Performance Shares shall receive payment, in whole or in part, in settlement of
such Performance Shares, in an amount determined by the Committee, based on the
Participant’s target payment for the performance period and the portion of the
performance period that precedes the Change in Control; (iv) determine
that outstanding Stock Units shall become payable, in whole or in part, in
cash, Stock or other property in an amount not less than their target amount,
as determined by the Committee; (v) provide that Other Stock-Based Awards
shall become fully payable, in whole or in part, in cash, Stock or other
property, in amounts determined by the Committee; (vi) the Committee may
require that 

 

14

 

Participants surrender their outstanding Options and
SARs in exchange for a payment by New Horizons, in cash, Stock or other
property, as determined by the Committee, in an amount equal to the amount by
which the then Fair Market Value subject to the Participant’s unexercised
Options and SARs exceeds the Option Price of the Options or the base amount of
the SARs, as applicable; (vii) after giving Participants an opportunity to
exercise their outstanding Options and SARs, the Committee may terminate any or
all unexercised Options and SARs at such time as the Committee deems
appropriate; and (viii) with respect to Participants holding Stock Units,
Performance Shares or Other Stock-Based Awards, the Committee may determine
that such Participants shall receive a payment in settlement of such Stock
Units, Performance Shares or Other Stock-Based Awards, in such amount and form
as may be determined by the Committee. 
Such acceleration, surrender, termination or settlement shall take place
as of the date of the Change in Control or such other date as the Committee may
specify.

 

Section 18.                                   Requirements for Issuance of Shares

 

No shares of Stock shall be issued or transferred in
connection with any Grant hereunder unless and until all legal requirements
applicable to the issuance of such shares have been complied with to the
satisfaction of the Committee.  The
Committee shall have the right to condition any Grant made to any Participant
hereunder on such Participant’s undertaking in writing to comply with such
restrictions on his or her subsequent disposition of such shares of Stock as
the Committee shall deem necessary or advisable, and certificates representing
such shares may be legended to reflect any such restrictions.  Certificates representing shares of Stock
issued or transferred under the Plan will be subject to such stop-transfer
orders and other restrictions as may be required by applicable laws,
regulations and interpretations, including any requirement that a legend be
placed thereon.

 

Section 19.                                   Amendment and Termination of the Plan

 

(a)           Amendment.  The Board may amend or terminate the Plan at
any time; provided, however, that the Board shall not amend the Plan without
approval of the stockholders of New Horizons if such approval is required in
order to comply with the Code or applicable laws, or to comply with applicable
stock exchange requirements.  No
amendment or termination of this Plan shall, without the consent of the
Participant, impair any rights or obligations under any Grant previously made
to the Participant, unless such right has been reserved in the Plan or the
Grant Letter, or except as provided in Section 20(b) below.

 

(b)           No
Repricing Without Stockholder Approval. 
Notwithstanding anything in the Plan to the contrary, without the prior
approval of New Horizons’s stockholders, no Grant under the Plan may be
repriced, replaced, regranted through cancellation or modified if the effect
would be to reduce the exercise price for the shares underlying such Grant;
provided, however, that the foregoing shall not apply to any adjustment made to
a Grant pursuant to Section 5(d) of the Plan.  In addition, without the prior approval of
New Horizons’s stockholders, the Committee may not cancel an outstanding Grant
that is underwater for the purpose of granting a replacement Grant of a
different type.

 

15

 

(c)           Stockholder
Approval for “Qualified Performance-Based Compensation.”  If Stock Units, Performance Shares, Stock
Awards or Other Stock-Based Awards are granted as “qualified performance-based
compensation” under Section 13 above, the Plan must be reapproved by New
Horizons’s stockholders no later than the first stockholders meeting that
occurs in the fifth year following the year in which the stockholders
previously approved the provisions of Section 13, if additional Grants are
to be made under Section 13 and if required by section 162(m) of the
Code or the regulations thereunder.

 

(d)           Termination
of Plan.  The Plan shall terminate on
the day immediately preceding the tenth anniversary of its Effective Date, unless
the Plan is terminated earlier by the Board or is extended by the Board with
the approval of the stockholders.  The
termination of the Plan shall not impair the power and authority of the
Committee with respect to an outstanding Grant.

 

Section 20.                                   Miscellaneous

 

(a)           Grants
in Connection with Corporate Transactions and Otherwise.  Nothing contained in this Plan shall be
construed to (i) limit the right of the Committee to make Grants under
this Plan in connection with the acquisition, by purchase, lease, merger,
consolidation or otherwise, of the business or assets of any corporation, firm
or association, including Grants to employees thereof who become Employees, or
for other proper corporate purposes, or (ii) limit the right of New
Horizons to grant stock options or make other awards outside of this Plan.  Without limiting the foregoing, the Committee
may make a Grant to an employee of another corporation who becomes an Employee
by reason of a corporate merger, consolidation, acquisition of stock or property,
reorganization or liquidation involving New Horizons in substitution for a
grant made by such corporation.  The
terms and conditions of the substitute Grants may vary from the terms and
conditions required by the Plan and from those of the substituted stock
incentives.  The Committee shall
prescribe the provisions of the substitute Grants.

 

(b)           Compliance
with Law.  The Plan, the exercise of
Options and the obligations of New Horizons to issue or transfer shares of
Stock under Grants shall be subject to all applicable laws and to approvals by
any governmental or regulatory agency as may be required.  With respect to persons subject to section 16
of the Exchange Act, it is the intent of New Horizons that the Plan and all
transactions under the Plan comply with all applicable provisions of Rule 16b-3
or its successors under the Exchange Act. 
In addition, it is the intent of New Horizons that the Plan and
applicable Grants comply with the applicable provisions of sections 162(m),
409A and 422 of the Code.  To the extent
that any legal requirement of section 16 of the Exchange Act or sections
162(m), 409A or 422 of the Code as set forth in the Plan ceases to be required
under section 16 of the Exchange Act or sections 162(m), 409A or 422 of the
Code, that Plan provision shall cease to apply. 
The Committee may revoke any Grant if it is contrary to law or modify a
Grant to bring it into compliance with any valid and mandatory government
regulation.  The Committee may also adopt
rules regarding the withholding of taxes on payments to Participants.  The Committee may, in its sole discretion,
agree to limit its authority under this Section.

 

16

 

(c)           Enforceability.  The Plan shall be binding upon and
enforceable against New Horizons and its successors and assigns.

 

(d)           Funding
of the Plan; Limitation on Rights. 
This Plan shall be unfunded. 
Neither New Horizons nor any other Company shall be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan.  Nothing contained in the Plan and no action
taken pursuant hereto shall create or be construed to create a fiduciary
relationship between New Horizons or any other Company and any Participant or
any other person.  No Participant or any
other person shall under any circumstances acquire any property interest in any
specific assets of New Horizons or any other Company.  To the extent that any person acquires a
right to receive payment from New Horizons hereunder, such right shall be no
greater than the right of any unsecured general creditor of New Horizons.

 

(e)           Rights
of Participants.  Nothing in this
Plan shall entitle any Employee, Consultant, Non-Employee Director or other
person to any claim or right to receive a Grant under this Plan.  Neither this Plan nor any action taken
hereunder shall be construed as giving any individual any rights to be retained
by or in the employment or service of the Company.

 

(f)            No
Fractional Shares.  No fractional
shares of Stock shall be issued or delivered pursuant to the Plan or any
Grant.  The Committee shall determine
whether cash, other awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

 

(g)           Employees
Subject to Taxation Outside the United States.  With respect to Participants who are subject
to taxation in countries other than the United States, the Committee may make
Grants on such terms and conditions as the Committee deems appropriate to
comply with the laws of the applicable countries, and the Committee may create
such procedures, addenda and subplans and make such modifications as may be
necessary or advisable to comply with such laws.

 

(h)           Governing
Law.  The validity, construction,
interpretation and effect of the Plan and Grant Letters issued under the Plan
shall be governed and construed by and determined in accordance with the laws
of the State of Delaware, without giving effect to the conflict of laws
provisions thereof.

 

17EXHIBIT
10.1

 

INVESTMENT SUB-ADVISORY AGREEMENT

 

AGREEMENT made this 20th day of March, 2008 between
Allstate Institutional Advisors, LLC (the “Adviser”) and Allstate Investment
Management Company (the “Sub-Adviser”).

 

WHEREAS, the Allstate Large Cap Index Fund (the
“Fund”) is a series of Allstate Financial Investment Trust, a Delaware
statutory trust (the “Trust”), which is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
“1940 Act”); and

 

WHEREAS, the Adviser has entered into an Investment
Management Agreement dated March 20, 2008 with the Trust for the Fund
(such agreement and any successor agreement thereto, the “Advisory Agreement”),
pursuant to which the Adviser acts as investment manager to the Fund and
provides certain investment advisory and other services with respect to the
Fund; and

 

WHEREAS, the Adviser, with the approval of the Trust’s
Board of Trustees, including a majority of the Trustees who are not “interested
persons,” as defined in the 1940 Act, desires to retain the Sub-Adviser to
provide investment advisory services in connection with the management of the
Fund, and the Sub-Adviser is willing to render such investment advisory
services.

 

NOW, THEREFORE, the parties hereto agree as follows:

 

1.                                       Duties of the Sub-Adviser. 
Subject to supervision and oversight by the Adviser and the Trust’s
Board of Trustees, the Sub-Adviser shall manage all of the securities and other
assets of the Fund entrusted to it by the Adviser hereunder (the “Assets”),
including the purchase, retention and disposition of the Assets, in accordance
with the Fund’s investment objective, policies and restrictions as stated in
the Fund’s prospectus, statement of additional information, as currently in
effect and as amended or supplemented from time to time (referred to
collectively as the “Prospectus”), as well as any other objectives, policies or
limitations as may be provided by Adviser to Sub-Adviser in writing from time
to time, and subject to the following:

 

(a)                                  In the performance of its duties and
obligations under this Agreement, the Sub-Adviser shall act in conformity with
the Trust’s constituent documents and the Prospectus (the “Operating Documents”
and attached hereto as Appendix A) which have been put into effect in
conformity by and with the instructions and directions of the Adviser and of
the Board of Trustees of the Trust and will conform to and comply with the
requirements of the 1940 Act, the Internal Revenue Code of 1986, as amended
(the “Code”), and all other applicable federal and state laws and regulations,
as each is amended from time to time; provided however, that the Sub-Adviser
shall be under no obligation to comply with any amendment and/or supplement to
the Prospectus until such time as the Sub-Adviser has been notified of and has
agreed to any and all such amendment and/or supplement and to the extent that
such amendment and/or supplement 

 

 

 

relates to the services provided by the Sub-Adviser
under this Agreement.  The Adviser shall
inform the Sub-Adviser of any changes to the 1940 Act or other applicable
federal and state laws having effect on the services provided by the
Sub-Adviser under this Agreement.

 

(b)                                 The Sub-Adviser shall determine the
Assets to be purchased or sold by the Fund and will place all orders for the
purchase and sale of Assets on behalf of the Fund with or through those brokers
or dealers selected by the Sub-Adviser. 
The Sub-Adviser will carry out the policy with respect to brokerage set
forth in the Fund’s registration statement and the Prospectus or as the Board
of Trustees or the Adviser may direct from time to time, in conformity with
federal securities laws.  In executing
portfolio transactions and selecting brokers or dealers, the Sub-Adviser will
use its best efforts to obtain on behalf of the Fund best execution.  In evaluating best execution for any
transaction, the Sub-Adviser shall consider all factors that it deems relevant,
including the breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker or dealer, and
the reasonableness of the commission, if any, both for the specific transaction
and on a continuing basis.  In evaluating
best execution, and in selecting the broker-dealer to execute a particular
transaction, subject to any instructions and directions of the Adviser or the
Board of Trustees, the Sub-Adviser may also consider the brokerage and
research services provided (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended). 
Provided the Sub-Adviser is acting in accordance with any such
instructions and directions of the Adviser or the Board of Trustees, the
Sub-Adviser is authorized to pay to a broker or dealer who provides such brokerage
and research services a commission for executing a portfolio transaction for
the Fund which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if, but only if, the
Sub-Adviser determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer — viewed in terms of that particular transaction or in terms
of the overall responsibilities of the Sub-Adviser to the Fund.  In no instance, however, will the Fund’s
Assets be purchased from or sold to the Adviser, the Sub-Adviser, any other
sub-adviser of the Fund or other registered investment companies (or series or
portions thereof) that may be deemed to be under common control, the Fund’s
principal underwriter, or any affiliated person of either the Fund, the
Adviser, the Sub-Adviser or any other sub-adviser of the Fund or other
registered investment companies (or series or portions thereof) that may be deemed
to be under common control, or the Fund’s principal underwriter, acting as
principal in the transaction, except to the extent permitted by the Securities
and Exchange Commission (“SEC”) and the 1940 Act and approved by (or pursuant
to procedures of) the Adviser and the Board of Trustees.  The Adviser or its affiliates may, from time
to time, engage other sub-advisers to advise the Fund (or portions thereof),
other series of the Trust (or portions thereof) or other registered investment
companies (or series or portions thereof) that may be deemed to be under common
control (each a “Sub-Advised Fund”).  The
Sub-Adviser agrees that it will not consult with any other sub-adviser engaged
by the Adviser or its affiliates with respect to transactions in securities or
other assets concerning the Fund or another Sub-Advised Fund, except to the
extent permitted by the certain exemptive rules under the 1940 Act that
permit certain transactions with a sub-adviser or its affiliates.

 

On occasions when the Sub-Adviser deems the purchase
or sale of a security to be in the best interests of the Fund as well as other
clients of the Sub-Adviser, the Sub-Adviser, to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation to, 

 

2

 

aggregate the securities
to be sold or purchased in order to obtain the most favorable price or lower
brokerage commissions and efficient execution. 
In such event, allocation of securities so sold or purchased, as well as
the expenses incurred in the transaction, will be made by the Sub-Adviser in
the manner the Sub-Adviser considers to be the most equitable and consistent
with its fiduciary obligations to the Fund and to such other clients.

 

The Sub-Adviser may, but shall be under no obligation
to, buy securities for the Fund at the same time it is selling such securities
for another client account and may sell securities for the Fund at the time it
is buying such securities for another client account.  In such cases, subject to applicable legal
and regulatory requirements, and in compliance with such procedures of the Fund
as may be in effect from time to time, the Sub-Adviser may effectuate cross
transactions between the Fund and such other account if it deems this to be
advantageous to both of the accounts involved.

 

Notwithstanding the foregoing, the Sub-Adviser agrees
that the Adviser shall have the right by written notice to identify securities
that may not be purchased on behalf of the Fund.

 

(c)                                  The Sub-Adviser shall keep the Adviser
informed of developments materially affecting the Fund.  The Sub-Adviser shall provide to the Adviser
or the Board of Trustees such information as provided for in Appendix B to this
Agreement.

 

The Sub-Adviser shall keep and maintain the books and
records relating to the Assets required to be kept and maintained by the
Sub-Adviser under this Agreement.  The
Adviser shall inform the Sub-Adviser in a timely manner about such information
relating to the Sub-Adviser’s services under this Agreement needed by the
Adviser or the Fund under law applicable to the Adviser or the Fund.  The Sub-Adviser shall also furnish to the
Adviser, upon written request by the Adviser, any other reasonable information
relating to the Assets that is required to be filed by the Adviser or the Fund
with the SEC or sent to shareholders under the Securities Act of 1933, as
amended (the “1933 Act”), or 1940 Act (including the rules adopted
hereunder) or any exemptive or other relief that the Adviser or the Fund
obtains from the SEC.  The Sub-Adviser
agrees that it will provide copies of such records it maintains pursuant to
this Agreement upon the Fund’s request; provided, however, that the Sub-Adviser
may also retain a copy of such records. 
The Sub-Adviser agrees to permit the Adviser, the Trust’s officers and
the Fund’s independent registered public accounting firm to inspect and audit
such records pertaining to the Fund at reasonable times during regular business
hours upon due written notice.  In
addition, for the duration of this Agreement, the Sub-Adviser shall preserve
for the periods prescribed by Rule 31a-2 under the 1940 Act, and Rule 204-2
under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), any
such records as are required to be maintained by it pursuant to this Agreement,
and shall transfer said records to any successor sub-adviser and to the Adviser
upon the termination of this Agreement at the Fund’s request provided, however,
that the Sub-Adviser may also retain a copy of such records.  The Sub-Adviser shall maintain and enforce
adequate security procedures with respect to all materials, records, documents
and data relating to any of its responsibilities under this Agreement including
all means for the effecting of securities transactions.

 

(d)                                 The Sub-Adviser will make its officers
and employees available to meet with the officers of the Adviser and the
Trust’s officers and Trustees on due notice to review the 

 

3

 

investments and investment program of the Fund in the
light of current and prospective economic and market conditions.  In addition, the Sub-Adviser shall, as
reasonably requested by the Adviser, for itself and on behalf of the Fund,
furnish to the Adviser from time to time whatever information the Adviser
reasonably believes appropriate for this purpose.  From time to time as the Adviser for itself
and on behalf of the Fund may reasonably request, the Sub-Adviser will furnish
to the Adviser, at the Sub-Adviser’s expense, reports on portfolio transactions
and reports on issuers of securities held by the Fund, all in such detail as
the Fund or the Adviser may reasonably request. 
In addition, the Sub-Adviser shall provide advice and assistance to the
Adviser as to the determination of the value of securities held or to be
acquired by the Fund for valuation purposes in accordance with the process
described in the Fund’s Prospectus and valuation procedures.  The Sub-Adviser will make its officers and
employees available to meet with the officers of the Adviser and the Trust’s
officers and Trustees and provide such information as the Board of Trustees and
the Adviser reasonably believe appropriate for purposes of the Board’s
consideration of this Agreement and any continuations thereof, including
information about the profitability to the Sub-Adviser of providing advisory
services hereunder.

 

(e)                                  The Sub-Adviser shall provide the Fund’s
custodian and the Fund’s Accountant with each business day’s information
relating to all matched transactions concerning the Fund’s Assets, including
the name of the issuer, the description and amount or number of shares of the
security purchased or sold, the market price, commission and gross or net
price, trade date, settlement date and identity of the effecting broker or
dealer, and such other information as may be reasonably required.  The Sub-Adviser shall additionally provide
the Fund’s Accountant with a trade log with the above information of all matched
and unmatched transactions.  The Sub-Adviser
shall also provide the Adviser with such information upon written request of
the Adviser.  The Adviser is required to
notify and inform the compliance department of the Sub-Adviser in advance of
any reports and documents which are necessary to comply with the legal
requirements of the Fund.  The
Sub-Adviser shall provide such sub-certifications as officers of the Adviser or
the Trust may reasonably request in connection with the filings of Form N-CSR
or Form N-Q (or any similar form) by the Fund.

 

The parties to this Agreement agree that the Fund has
made arrangements for the safekeeping of any of the Fund’s assets (and the
Fund’s documents of title) with such custodian as chosen by the Adviser from
time to time with notice to the Sub-Adviser of the same.  The Sub-Adviser shall not hold any asset of
the Fund (or the Fund’s documents of title, if any) on behalf of the Fund or
the Adviser.

 

In the performance of its duties hereunder, the
Sub-Adviser is and shall be an independent contractor and, except as expressly
provided for herein or otherwise expressly provided or authorized in writing by
the Adviser, shall have no authority to act for or represent the Fund or the
Trust in any way or otherwise be deemed to be an agent of the Fund, the Trust
or the Adviser.  If any occasion should
arise in which the Sub-Adviser gives any advice to its clients concerning the
shares of the Fund, the Sub-Adviser will act solely as investment counsel for
such clients and not in any way on behalf of the Fund.  The Sub-Adviser’s services to the Fund
pursuant to this Agreement are not to be deemed to be exclusive, and it is
understood that the Sub-Adviser may render investment advice, management and
other services to other investment companies and clients.  The Sub-Adviser may provide advice and take
certain actions 

 

4

 

with respect to clients
other than the Fund or for the Sub-Adviser’s own accounts that may differ from
the advice or the timing or nature of actions taken with respect to the
Fund.  Furthermore, the Sub-Adviser shall
have no obligation to recommend the purchase or sale of any asset on behalf of
the Fund that the Sub-Adviser or an affiliate may purchase or sell for its own account
or for the account of any clients of the Sub-Adviser.

 

The Sub-Adviser shall be responsible for exercising
voting rights relating to any of the Assets of the Fund.  The Sub-Adviser shall also provide advice and
act on behalf of the Fund or the Adviser in all class action proceedings involving
assets held by the Fund or Assets of issuers of securities held by the Fund.

 

2.                                       Duties of the Adviser. 
The Adviser shall continue to have responsibility for all services to be
provided to the Fund pursuant to the Advisory Agreement and shall supervise and
oversee the Sub-Adviser’s performance of its duties under this Agreement;
provided, however, that in connection with its management of the Assets,
nothing herein shall be construed to relieve the Sub-Adviser of responsibility
for compliance with the Operating Documents, the instruction and directions of
the Board of Trustees of the Trust, the requirements of the 1940 Act, the Code,
and all other applicable federal and state laws and regulations, as each is
amended from time to time.

 

3.                                       Delivery of Documents.

 

(a)                                  The Adviser has furnished the Sub-Adviser
with copies properly certified or authenticated of each of the following
documents:

 

(i)                                     The Trust’s Declaration of Trust, as in
effect on the date of this Agreement and as amended from time to time;

 

(ii)                                  By-Laws of the Trust; and

 

(iii)                               Prospectus of the Fund.

 

(b)           The Sub-Adviser has furnished the
Adviser with copies properly certified or authenticated of each of the
following documents:

 

(i)                                     The Sub-Adviser’s most recent audited
financial statements;

 

(ii)                                  An organizational chart showing public
companies and registered broker-dealers affiliated with the Sub-Adviser;

 

(iii)                               The Sub-Adviser’s Form ADV; and

 

(iv)                              The Sub-Adviser’s Code of Ethics adopted
pursuant to Rule 17j-1 under the 1940 Act.

 

5

 

4.                                       Certain Representations and Warranties of
the Sub-Adviser.

 

(a)                                  The Sub-Adviser represents and warrants
that it is a duly registered investment adviser under the Advisers Act and that
the Sub-Adviser will maintain all registrations and licenses necessary to
conduct and maintain the Sub-Adviser’s business.  The Sub-Adviser covenants to maintain such
registration, license and approval in effect during the term of this Agreement,
provided however, that the Sub-Adviser shall not be required to provide any
service or engage in any activity herewith which the Sub-Adviser determines in
its sole discretion could require the Sub-Adviser to obtain any approval or
license other than the license referred to above or which would otherwise cause
the Sub-Adviser to violate any applicable law, regulation or government policy.

 

(b)                                 The Sub-Adviser represents that it has
read and understands the Prospectus and warrants that in investing the Assets
it will use all reasonable efforts to adhere to the Fund’s investment
objective, policies and restrictions contained therein.

 

(c)                                  The Sub-Adviser represents that it will
provide the Fund with any amendments to its Code of Ethics and any
certifications required by Rule 17j-1 under the 1940 Act.  The Sub-Adviser represents that it has
policies, and procedures regarding the detection and prevention and the misuse
of material, nonpublic information by the Sub-Adviser and its employees as
required by the Insider Trading and Securities Fraud Enforcement Act of 1988.

 

(d)                                 The Sub-Adviser represents and warrants
that it will maintain written policies and procedures that are reasonably
designed to prevent violation of Federal Securities Laws as defined in Rule 38a-1
under the 1940 Act and that are otherwise in compliance with Rule 206(4)-7
under the Advisers Act.  The Sub-Adviser
agrees to provide the Fund and the Adviser, from time to time, with copies of
such policies and procedures, summaries thereof and certifications with respect
thereto.  The Sub-Adviser, agrees to
cooperate with the Trust’s Chief Compliance Officer in providing information to
fulfill the requirements of Rule 38a-1 under the 1940 Act as interpreted
by the SEC or the Board of Trustees.

 

5.                                       Compliance.

 

(a)                                  The Sub-Adviser agrees that it shall
promptly notify the Adviser and the Fund: (i) in the event that the SEC or
any other regulatory authority has censured its activities, functions or
operations; suspended or revoked its registration as an investment adviser; or
has commenced proceedings or an investigation that may result in any of these
actions; (ii) of the occurrence of any event that could disqualify the
Sub-Adviser from serving as an investment adviser pursuant to Section 9 of
the 1940 Act; (iii) in the event that there is a change in the
Sub-Adviser, financial or otherwise, that would in the reasonable opinion of
the Sub-Adviser materially and adversely affect its ability to perform services
under this Agreement; or (iv) upon having a reasonable basis for believing
that, as a result of the Sub-Adviser’s investing the Assets, the Fund’s
investment portfolio has ceased to adhere to the Fund’s investment objective,
policies or restrictions as stated in the Prospectus or is otherwise in
violation of applicable law; provided, however, that the Sub-Adviser shall be
bound by the terms of this Section 5(a) upon actually becoming aware
of the occurrence of any of the events contemplated in this Section 5(a) and

 

6

 

only in the event that such action by the Sub-Adviser
is not prohibited by applicable law or regulation, court or regulatory or other
official body with competent jurisdiction.

 

(b)                                 The Sub-Adviser shall, unless prohibited
by any applicable law or regulation, court or regulatory body or other official
body with competent jurisdiction, forward as soon as reasonably practicable,
upon receipt of a notice in writing, to the Adviser copies of any material
correspondence from the SEC or other regulatory authority with competent jurisdiction
that relates to the Fund or the Adviser generally, including SEC inspection
reports, if any.

 

(c)                                  The Fund and the Adviser shall be given
access to such records or other documents of the Sub-Adviser at reasonable
times solely as is necessary for the purpose of monitoring compliance with the
terms of this Agreement and the rules and regulations applicable to the
Sub-Adviser relating to its providing investment advisory services to the Fund,
provided however, that the Sub-Adviser shall have no obligation to furnish the
Fund or the Adviser with records relating to trading by employees of the
Sub-Adviser for their own accounts and on behalf of other clients.  The Sub-Adviser agrees to cooperate with the
Fund and the Adviser and their representatives in connection with requests for
such records or other documents.

 

6.                                       Compensation to the Sub-Adviser. 
For the services to be provided by the Sub-Adviser pursuant to this
Agreement, the Adviser will pay the Sub-Adviser, and the Sub-Adviser agrees to
accept, a sub-advisory fee based on the average daily net assets of the Fund at
the following annual rate, subject to a minimum of $75,000 per annum:  0.06% on the first $200 million of net
assets, 0.05% on the next $200 million of net assets and 0.04% thereafter.  The fee will be computed daily and will be
paid to the Sub-Adviser monthly.  For the
purpose of calculating the sub-advisory fee, the net assets of the Fund will be
determined in the manner and on the dates set forth in the Prospectus and, on
days on which the net assets are not so determined, the net asset value
computation to be used will be as determined on the immediately preceding day
on which the net assets were determined. 
Upon the termination of this Agreement, all compensation due through the
date of termination will be calculated on a pro-rata basis through the date of
termination and paid within 30 business days of the date of termination.

 

7.                                       Expenses.  The
Sub-Adviser shall bear all of its separate expenses (such as its general
overhead expenses including the rent of offices, compensation and benefits of
the administrative staff of the Sub-Adviser, maintenance of its books and
records and its fixed expenses, telephones and general purpose office
equipment) (excluding brokerage costs, custodian fees, fees of independent
registered public accounting firms or other expenses of the Fund to be borne by
the Fund) in connection with the performance of its services under this
Agreement.  The Fund will bear certain
other expenses to be incurred in its operation and shall not be borne by the
Sub-Adviser.  Such expenses include, but
are not limited to, investment management fees, fees for necessary professional
and brokerage services to the Fund; costs relating to local administration of
securities; fees for any pricing service; the costs of the Fund’s regulatory
compliance (other than costs primarily relating to the Adviser’s or
Sub-Adviser’s regulatory compliance); and pro rata costs associated with
maintaining the Fund’s legal existence and shareholder relations.  All other Fund operating expenses not
specifically assumed by the Sub-Adviser hereunder or by the Adviser are borne
by the Fund.

 

7

 

 

8.                                       Standard of Care and Liability of
Sub-Adviser.  The Sub-Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except that
nothing herein contained will be construed to protect the Sub-Adviser against
any liability to the Adviser, the Fund or its shareholders by reason of:  (a) the Sub-Adviser’s causing the Fund
to be in violation of any applicable federal or state law, rule or
regulation or any investment policy or restriction set forth in the Prospectus
or any written guidelines, policies or instruction provided in writing by the
Trust’s Board of Trustees or the Adviser or (b) the Sub-Adviser’s willful
misfeasance, bad faith or gross negligence in the performance of its duties
hereunder or its reckless disregard of its obligations and duties under this
Agreement.

 

9.                                       Insurance.  The
Sub-Adviser shall maintain for the duration hereof, with an insurer acceptable
to the Adviser, a blanket bond and professional liability or errors and
omissions insurance in an amount or amounts deemed by the Sub-Adviser in its
sole discretion to be sufficient to meet its obligations to its clients,
including the Fund.

 

10.                                 Duration and Termination.

 

(a)                                  This Agreement shall become effective
with respect to the Fund on March 20, 2008 and shall remain in full force
until March 20, 2010 and from year to year thereafter, but only as long as
such continuance is specifically approved at least annually and in the manner
required by the 1940 Act.  The
requirement that continuance of this Agreement be “specifically approved at
least annually” shall be construed in a manner consistent with the 1940 Act and
the rules and regulations thereunder and any applicable SEC exemptive
order therefrom.

 

(b)                                 This Agreement shall automatically
terminate in the event of its assignment or in the event of the termination of
the Advisory Agreement.  In addition, the
Adviser has the right to terminate this Agreement upon immediate notice if the
Sub-Adviser becomes statutorily disqualified from performing its duties under
this Agreement or otherwise is legally prohibited from operating as an
investment adviser.

 

(c)                                  If a party breaches this Agreement in any
material respect which is not cured within sixty (60) days of the other party
giving it written notice of such breach, the other party may effect termination
of this Agreement on written notice to the defaulting party.

 

(d)                                 This Agreement may be terminated at any
time, without the payment by the Fund of any penalty, by the Board of Trustees
of the Trust, or by vote of a majority of the outstanding voting securities of
the Fund, or by the Adviser.  The Fund
may effect termination of this Agreement by action of the Board of Trustees of
the Trust or by vote of a majority of the outstanding voting securities of the
Fund on sixty (60) days’ written notice to the Adviser and the
Sub-Adviser.  The Adviser may effect
termination of this Agreement on sixty (60) days’ written notice to the
Sub-Adviser.

 

(e)                                  The Sub-Adviser may at any time, without
payment of any penalty, terminate this Agreement upon sixty (60) days’ written
notice to the Adviser.  The Sub-Adviser
may without payment of any penalty terminate this Agreement upon prior written
notice, if the Sub-Adviser determines in its sole discretion that the services
provided by the Sub-Adviser 

 

8

 

under this Agreement would cause the Sub-Adviser to
register with or obtain any regulatory or official approvals or licenses other
than licenses as provided for in Section 4(a) sentence 1 of this
Agreement, which in the opinion of the Sub-Adviser may be unreasonably
detrimental to the Sub-Adviser.

 

(f)                                    Termination of this Agreement shall not
affect the right of the Sub-Adviser to receive payments on any unpaid balance
of the compensation described in Section 6 earned prior to such
termination.

 

11.                                 Confidentiality. 
Each party agrees that it shall hold in strict confidence all data and
information obtained from another party hereto or the Fund (unless such
information is or becomes readily ascertainable from public or published
information or trade sources other than through a breach of this
Confidentiality Clause) other than to its affiliates and any other party
performing functions for the Fund and shall ensure that its officers, employees
and authorized representatives do not disclose such information to others
without the prior written consent of the party from whom it was obtained,
unless such disclosure is required by a court with competent jurisdiction, the
SEC, other regulatory or official body with applicable jurisdiction, or the
Fund’s independent registered public accounting firm, or in the opinion of its
counsel, applicable law, and then only with as much prior written notice to the
other party as is practicable under the circumstances.

 

12.                                 Governing Law. 
This Agreement shall be governed by the laws of the State of Delaware,
without regard to conflict of law principles; provided, however, that nothing
herein shall be construed as being inconsistent with the 1940 Act.

 

13.                                 Severability. 
Should any part of this Agreement be held invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.  This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors.

 

14.                                 Notice.  Any notice,
advice or report to be given pursuant to this Agreement shall be in writing and
mailed or delivered to the address(es) listed below or to such other
address(es) or to such other individual(s) as shall be specified by the
respective party from time to time; provided, that all such deliveries by mail
or otherwise shall be conclusive upon receipt.

 

To the Adviser:

 

Allstate Institutional Advisors, LLC

3100 Sanders Road, Suite J5

Northbrook, IL  60062

Attn:  William P. Marshall

 

With a copy to:  Joseph P. Rath

 

9

 

To the Sub-Adviser:

 

Allstate Investment Management Company

3075 Sanders Road, Suite G5D

Northbrook, IL  60062

 

Attn:  Jerry
Zinkula

 

With
a copy to:  Mary J. McGinn, Suite G5A

 

15.                                 Questions of Interpretation. 
Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the 1940 Act shall be resolved by reference to such term or provision of the
1940 Act and to interpretations thereof, if any, by the United States Courts or
in the absence of any controlling decision of any such court, by rules,
regulations or orders of the SEC issued pursuant to the 1940 Act.  Specifically, the terms “vote of a majority
of the outstanding voting securities,” “interested person,” “control,”
“assignment” and “affiliated person,” as used in this Agreement, shall have the
meanings assigned to them by Section 2(a) of the 1940 Act.  In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
modified or interpreted by any applicable order or orders of the SEC or any rules or
regulations adopted by, or interpretative releases of, the SEC thereunder, such
provision shall be deemed to incorporate the effect of such order, rule,
regulation or interpretative release.

 

16.                                 Entire Agreement. 
This Agreement states the entire agreement of the parties hereto, and is
intended to be the complete and exclusive statement of the terms hereof.  It may not be added to or changed orally, and
may not be modified or rescinded, except by a writing signed by the parties hereto
and in accordance with the 1940 Act or pursuant to applicable orders or
interpretations of the SEC.

 

17.                                 Miscellaneous. 
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.

 

10

 

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their officers designated below as of the day
and year first written above.

 

	
  ALLSTATE INSTITUTIONAL 

  ADVISORS, LLC

  	
   

  	
  ALLSTATE INVESTMENT 

  MANAGEMENT COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ William P. Marshall

  	
   

  	
  By:

  	
  /s/ Eric A. Simonson

  	 

	
  Name: William P. Marshall

  	
   

  	
  Name: Eric A. Simonson

  
	
  Title: President

  	
   

  	
  Title: President

  
						

 

11

 

 

Appendix
A

 

Operating
Documents

 

1.                                       Prospectus

 

2.                                       Statement of
Additional Information

 

3.                                       Declaration of
Trust

 

4.                                       By-laws and any
pertinent amendments thereto

 

A-1

 

 

APPENDIX B

 

 

Pursuant to Section 1(c) of the Agreement
the Sub-Adviser shall furnish to the Adviser such periodic and special reports,
balance sheets or financial information, and such other information with regard
to its affairs as the Adviser or Board of Trustees may reasonably request as
follows:

 

1.                                       Quarterly
Compliance Certifications and Reports

 

2.                                       Code of Ethics
Reports

 

3.                                       Code of Ethics
Certifications

 

4.                                       Soft Dollar
Commission Reports

 

5.                                       Rule 17e-1
Certifications (Broker/Adviser), as applicable

 

6.                                       Compliance
Program Assessments and Certifications under Rules 38a-1/206(4)-7

 

7.                                       Compliance Due
Diligence Questionnaires

 

8.                                       Policies,
Procedures and Summaries

 

B-1

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