Document:

Exhibit 4.2

 

EXECUTION COPY

 

	
  

  	
  CLIFFORD CHANCE US LLP

  

 

 

 

 

REGISTRATION RIGHTS AGREEMENT

 

Dated
as of November 15, 2005

 

among

 

SIMON PROPERTY GROUP, L.P.

 

and

 

 

CITIGROUP GLOBAL MARKETS INC.

J.P. MORGAN SECURITIES INC.

UBS SECURITIES LLC

WACHOVIA CAPITAL MARKETS, LLC

 

 

 

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (the “Agreement”) is
made and entered into this 15th day of November, 2005, among Simon Property
Group, L.P., a Delaware limited partnership (the “Operating Partnership”), and
Citigroup Global Markets Inc. (“Citigroup”), J.P. Morgan Securities Inc. (“JPMorgan”),
UBS Securities LLC (“UBS”), Wachovia Capital Markets, LLC (“Wachovia”) and the
other Initial Purchasers named in Schedule 1 to the Purchase Agreement (as
hereinafter defined) (collectively, the “Initial Purchasers”).  Capitalized terms used but not defined herein
shall have the meanings ascribed to them in the Purchase Agreement.

 

This Agreement is made pursuant to the Purchase
Agreement, dated November 8, 2005, among the Operating Partnership and the
Initial Purchasers (the “Purchase Agreement”), which provides for the sale by
the Operating Partnership to the Initial Purchasers of an aggregate of
$500,000,000 principal amount of the Operating Partnership’s 5.375% senior
unsecured notes due 2011 and an aggregate of $600,000,000  principal amount of the Operating Partnership’s
5.75% senior unsecured notes due 2015 (collectively, the “Securities”).  In order to induce the Initial Purchasers to
enter into the Purchase Agreement, the Operating Partnership has agreed to
provide to the Initial Purchasers and their direct and indirect transferees the
registration rights set forth in this Agreement.  The execution of this Agreement is a
condition to the closing under the Purchase Agreement.

 

In consideration of the foregoing, the parties hereto
agree as follows:

 

1.                                       Definitions.

 

As used in this Agreement, the following capitalized
defined terms shall have the following meanings:

 

“1933 Act” shall mean the Securities Act of 1933,
as amended from time to time.

 

“1934 Act” shall mean the Securities Exchange
Act of 1934, as amended from time to time.

 

“Citigroup” shall have the meaning set forth in
the preamble.

 

“Closing Date” shall mean the Closing Time as
defined in the Purchase Agreement.

 

“Depositary” shall mean The Depository Trust
Company, or any other depositary appointed by the Operating Partnership, provided, however, that such depositary must have an address
in the Borough of Manhattan, in the City of New York.

 

“Exchange Offer” shall mean the exchange offer
by the Operating Partnership of Exchange Securities for Registrable Securities
pursuant to Section 2.1 hereof.

 

“Exchange Offer Registration” shall mean a
registration under the 1933 Act effected pursuant to Section 2.1 hereof.

 

“Exchange Offer Registration Statement” shall
mean an exchange offer registration statement on Form S-4 (or, if
applicable, on another appropriate form), and all amendments and supplements to
such registration statement, including the Prospectus contained therein, all
exhibits thereto and all documents incorporated by reference therein.

 

“Exchange Period” shall have the meaning set
forth in Section 2.1 hereof.

 

“Exchange Securities” shall mean the 5.375%
senior unsecured notes due 2011 and the 5.75% senior unsecured notes due 2015 issued by the Operating Partnership
under the Indenture containing terms identical to the Securities in all
material respects (except for references to certain interest rate

 

 

provisions, restrictions on transfers and restrictive
legends), to be offered to Holders of Securities in exchange for Registrable
Securities pursuant to the Exchange Offer.

 

“Holder” shall mean an Initial Purchaser, for
so long as it owns any Registrable Securities, and each of its successors,
assigns and direct and indirect transferees who become registered owners of
Registrable Securities under the Indenture and each Participating Broker-Dealer
that holds Exchange Securities for so long as such Participating Broker-Dealer
is required to deliver a prospectus meeting the requirements of the 1933 Act in
connection with any resale of such Exchange Securities.

 

“Indenture” shall mean the Indenture relating
to the Securities, dated as of November 26, 1996, between the Operating
Partnership, Simon Property Group, L.P., a Delaware limited partnership (which,
effective December 31, 1997, was merged into the Operating Partnership)
and The Chase Manhattan Bank (now, JPMorgan Chase Bank), as trustee, as the
same may be amended, supplemented, waived or otherwise modified from time to
time in accordance with the terms thereof.

 

“Initial Purchaser” or “Initial Purchasers”
shall have the meaning set forth in the preamble.

 

“JPMorgan” shall have the meaning set forth in
the preamble.

 

“Majority Holders” shall mean the Holders of a
majority of the aggregate principal amount of Outstanding (as defined in the
Indenture) Registrable Securities; provided, that
whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by
the Operating Partnership and other obligors or any Affiliate (as defined in
the Indenture) of the Operating Partnership shall be disregarded in determining
whether such consent or approval was given by the Holders of such required
percentage amount.

 

“Operating Partnership” shall have the meaning
set forth in the preamble and shall also include the Operating Partnership’s
successors.

 

“Participating Broker-Dealer” shall mean any of
Citigroup, JPMorgan, UBS and Wachovia and, if applicable, any other
broker-dealer which makes a market in the Securities and exchanges Registrable
Securities in the Exchange Offer for Exchange Securities.

 

“Person” shall mean an individual, partnership
(general or limited), corporation, limited liability company, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.

 

“Private Exchange” shall have the meaning set
forth in Section 2.1 hereof.

 

“Private Exchange Securities” shall have the
meaning set forth in Section 2.1 hereof.

 

“Prospectus” shall mean the prospectus included
in a Registration Statement, including any preliminary prospectus, and any such
prospectus as amended or supplemented by any prospectus supplement, including
any such prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Shelf Registration
Statement, and by all other amendments and supplements to a prospectus,
including post-effective amendments, and in each case including all material
incorporated by reference therein.

 

“Purchase Agreement” shall have the meaning set
forth in the preamble.

 

“Registrable Securities” shall mean the
Securities and, if issued, the Private Exchange Securities; provided, however, the Securities and, if issued, the
Private Exchange Securities, shall cease to be Registrable Securities when (i) a
Registration Statement with respect to such Securities shall have been declared
effective under the 1933 Act and such Securities shall have been disposed of
pursuant to such Registration Statement, (ii) such Securities have been
sold to the public pursuant to Rule 144 (or any similar provision then in
force, but not Rule 144A) under the 1933 Act, (iii) such
Securities shall have

 

3

 

ceased to be outstanding, or (iv) the Exchange
Offer is consummated (except in the case of Securities purchased from the
Operating Partnership and continued to be held by the Initial Purchasers).

 

“Registration Expenses” shall mean any and all
expenses incident to performance of or compliance by the Operating Partnership
with this Agreement, including without limitation: (i) all SEC, stock
exchange or National Association of Securities Dealers, Inc. (the “NASD”) registration
and filing fees, including, if applicable, the fees and expenses of any “qualified
independent underwriter” (and its counsel) that is required to be retained
by any holder of Registrable Securities in accordance with the rules and
regulations of the NASD, (ii) all fees and expenses incurred in connection
with compliance with state securities or blue sky laws and compliance with the rules of
the NASD (including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with the blue sky qualification of any of
the Exchange Securities or Registrable Securities and any filings with the
NASD), (iii) all expenses of any Persons in preparing or assisting in
preparing, word processing, printing and distributing any Registration Statement,
any Prospectus, any amendments or supplements thereto, any underwriting
agreements, securities sales agreements and other documents relating to the
performance of and compliance with this Agreement, (iv) all fees and
expenses incurred in connection with the listing, if any, of any of the
Registrable Securities on any securities exchange or exchanges, (v) all
rating agency fees, (vi) the fees and disbursements of counsel for the
Operating Partnership and of the independent public accountants of the
Operating Partnership, including the expenses of any special audits or “cold
comfort” letters required by or incident to such performance and compliance, (vii) the
fees and expenses of the Trustee, and any escrow agent or custodian, (viii) the
reasonable fees and expenses of the Initial Purchasers in connection with the
Exchange Offer, including the reasonable fees and expenses of counsel to the
Initial Purchasers in connection therewith, (ix) the reasonable fees and
disbursements of any special counsel representing the Holders of Registrable
Securities, and (x) any fees and disbursements of the underwriters
customarily required to be paid by issuers or sellers of securities and the
fees and expenses of any special experts retained by the Operating Partnership
in connection with any Registration Statement, but excluding underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of Registrable Securities by a Holder.

 

“Registration Statement” shall mean any
registration statement of the Operating Partnership which covers any of the
Exchange Securities or Registrable Securities pursuant to the provisions of
this Agreement, and all amendments and supplements to any such Registration
Statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.

 

“SEC” shall mean the Securities and Exchange
Commission or any successor agency or government body performing the functions
currently performed by the United States Securities and Exchange Commission.

 

“Shelf Registration” shall mean a registration
effected pursuant to Section 2.2 hereof.

 

“Shelf Registration Statement” shall mean a “shelf”
registration statement of the Operating Partnership pursuant to the provisions
of Section 2.2 of this Agreement which covers all of the Registrable
Securities or all of the Private Exchange Securities on an appropriate form
under Rule 415 under the 1933 Act, or any similar rule that may be
adopted by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.

 

“TIA” shall mean the Trust Indenture Act of
1939, as amended from time to time.

 

“Trustee” shall mean the trustee with respect
to the Securities under the Indenture.

 

“UBS” shall have the meaning set forth in the
preamble.

 

4

 

“Wachovia” shall have the meaning set forth in
the preamble.

 

2.                                       Registration
Under the 1933 Act.

 

2.1                                 Exchange
Offer.  The Operating Partnership
shall, for the benefit of the Holders, at the Operating Partnership’s cost, (A) use
its reasonable best efforts to prepare and, as soon as practicable but not
later than 180 days after the Closing Date, file with the SEC an Exchange Offer
Registration Statement on an appropriate form under the 1933 Act with respect
to a proposed Exchange Offer and the issuance and delivery to the Holders, in
exchange for the Registrable Securities (other than Private Exchange
Securities), of a like principal amount of Exchange Securities, (B) use
its reasonable best efforts to cause the Exchange Offer Registration Statement
to be declared effective under the 1933 Act within 210 days of the Closing
Date, (C) use its reasonable best efforts to keep the Exchange Offer
Registration Statement effective until the closing of the Exchange Offer, and (D) use
its reasonable best efforts to cause the Exchange Offer to be completed not
later than 240 days following the Closing Date. 
The Exchange Securities shall be issued under the Indenture.  Upon the effectiveness of the Exchange Offer
Registration Statement, the Operating Partnership shall promptly commence the
Exchange Offer, it being the objective of such Exchange Offer to enable each
Holder eligible and electing to exchange Registrable Securities for Exchange
Securities (assuming that such Holder (a) is not an affiliate of the
Operating Partnership within the meaning of Rule 405 under the 1933 Act, (b) is
not a broker-dealer tendering Registrable Securities acquired directly from the
Operating Partnership for its own account, (c) acquired the Exchange
Securities in the ordinary course of such Holder’s business, or (d) has no
arrangements or understandings with any Person to participate in the Exchange
Offer for the purpose of distributing the Exchange Securities) to transfer
such Exchange Securities from and after their receipt without any limitations
or restrictions under the 1933 Act and under state securities or blue sky laws.

 

In connection with the Exchange Offer, the Operating
Partnership shall:

 

(a)                                  mail
as promptly as practicable to each Holder a copy of the Prospectus forming part
of the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;

 

(b)                                 keep
the Exchange Offer open for acceptance for a period of not less than 30
calendar days after the date notice thereof is mailed to the Holders (or longer
if required by applicable law) (such period referred to herein as the “Exchange
Period”);

 

(c)                                  utilize
the services of the Depositary for the Exchange Offer;

 

(d)                                 permit
Holders to withdraw tendered Registrable Securities at any time prior to 5:00 p.m.
(Eastern Time), on the last business day of the Exchange Period, by sending to
the institution specified in the notice, a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Registrable Securities delivered for exchange, and a statement that
such Holder is withdrawing such Holder’s election to have such Securities
exchanged;

 

(e)                                  notify
each Holder that any Registrable Security not tendered shall remain outstanding
and continue to accrue interest, but shall not retain any rights under this
Agreement (except in the case of the Initial Purchasers and Participating
Broker-Dealers as provided herein); and

 

(f)                                    otherwise
comply in all respects with all applicable laws relating to the Exchange Offer.

 

5

 

If, prior to consummation of the Exchange Offer, the
Initial Purchasers hold any Securities acquired by them and having the status
of an unsold allotment in the initial distribution, the Operating Partnership
upon the request of any Initial Purchaser shall, simultaneously with the
delivery of the Exchange Securities in the Exchange Offer, issue and deliver to
such Initial Purchaser in exchange (the “Private Exchange”) for the
Securities held by such Initial Purchaser, a like principal amount of debt
securities of the Operating Partnership that are identical (except that such
securities shall bear appropriate transfer restrictions) to the Exchange
Securities (the “Private Exchange Securities”).

 

The Exchange Securities and the Private Exchange
Securities shall be issued under (i) the Indenture or (ii) an
indenture identical in all material respects to the Indenture and which, in
either case, has been qualified under the TIA, or is exempt from such
qualification and shall provide that the Exchange Securities shall not be
subject to the transfer restrictions set forth in the Indenture but that the
Private Exchange Securities shall be subject to such transfer restrictions.  The Indenture or such indenture shall provide
that the Exchange Securities, the Private Exchange Securities and the
Securities shall vote and consent together on all matters as one class and that
none of the Exchange Securities, the Private Exchange Securities or the
Securities shall have the right to vote or consent as a separate class on any
matter.  The Private Exchange Securities
shall be of the same series as and the Operating Partnership shall use all commercially
reasonable efforts to have the Private Exchange Securities bear the same CUSIP
number as the Exchange Securities.  The
Operating Partnership shall not have any liability under this Agreement solely
as a result of such Private Exchange Securities not bearing the same CUSIP
number as the Exchange Securities.

 

As soon as practicable after the close of the Exchange
Offer and/or the Private Exchange, as the case may be, the Operating
Partnership shall:

 

(i)                                     accept
for exchange all Registrable Securities duly tendered and not validly withdrawn
pursuant to the Exchange Offer in accordance with the terms of the Exchange
Offer Registration Statement and the letter of transmittal which shall be an
exhibit thereto;

 

(ii)                                  accept
for exchange all Securities properly tendered pursuant to the Private Exchange;

 

(iii)                               deliver to the Trustee
for cancellation all Registrable Securities so accepted for exchange; and

 

(iv)                              cause
the Trustee promptly to authenticate and deliver Exchange Securities or Private
Exchange Securities, as the case may be, to each Holder of Registrable
Securities so accepted for exchange in a principal amount equal to the
principal amount of the Registrable Securities of such Holder so accepted for
exchange.

 

Interest on each Exchange Security and Private
Exchange Security shall accrue from the last date on which interest was paid on
the Registrable Securities surrendered in exchange therefor or, if no interest
has been paid on the Registrable Securities, from the date of original
issuance.  The Exchange Offer and the
Private Exchange shall not be subject to any conditions, other than (i) that
the Exchange Offer or the Private Exchange, or the making of any exchange by a
Holder, does not violate applicable law or any applicable interpretation of the
staff of the SEC, (ii) the due tendering of Registrable Securities in
accordance with the Exchange Offer and the Private Exchange, (iii) that
each Holder of Registrable Securities exchanged in the Exchange Offer shall
have represented that all Exchange Securities to be received by it shall be acquired
in the ordinary course of its business and that at the time of the consummation
of the Exchange Offer it shall have no arrangement or understanding with any
person to participate in the distribution (within the meaning of the 1933
Act) of the Exchange Securities and shall have made such other
representations as may be reasonably necessary under applicable SEC rules,

 

6

 

regulations or interpretations to render the use of Form S-4
or other appropriate form under the 1933 Act available, and (iv) that no
action or proceeding shall have been instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer or the
Private Exchange which, in the Operating Partnership’s judgment, would
reasonably be expected to impair the ability of the Operating Partnership to
proceed with the Exchange Offer or the Private Exchange.  The Operating Partnership shall inform the
Initial Purchasers of the names and addresses of the Holders to whom the
Exchange Offer is made, and the Initial Purchasers shall have the right to
contact such Holders and otherwise facilitate the tender of Registrable
Securities in the Exchange Offer.

 

2.2                                 Shelf
Registration.

 

(a)                                  (i) If,
because of any changes in law, SEC rules or regulations or applicable
interpretations thereof by the staff of the SEC, the Operating Partnership is
not permitted to effect the Exchange Offer as contemplated by Section 2.1
hereof, (ii) if for any other reason the Exchange Offer is not completed
within 240 days after the original issue of the Registrable Securities, or (iii) if
a Holder is not permitted to participate in the Exchange Offer or does not
receive fully tradeable Exchange Securities pursuant to the Exchange Offer (other
than due solely to the status of such holder as an affiliate of the Operating
Partnership within the meaning of the 1933 Act or as a broker dealer), then in
case of each of clauses (i) through (iii) the Operating Partnership
shall (x) promptly deliver to the holders written notice thereof and
(y) at the Operating Partnership’s sole expense:

 

(b)                                 As
promptly as practicable, (but in no event more than 60 days after so required
or requested pursuant to this Agreement) file with the SEC, and thereafter
shall use its best efforts to cause to be declared effective as promptly as
practicable (but in no event more than 60 days after such filing), a Shelf
Registration Statement relating to the offer and sale of the Registrable
Securities by the Holders from time to time in accordance with the methods of
distribution elected by the Majority Holders participating in the Shelf
Registration and set forth in such Shelf Registration Statement.

 

(c)                                  Use
its best efforts to keep the Shelf Registration Statement continuously
effective in order to permit the Prospectus forming part thereof to be usable
by Holders for a period of two years from the date the Shelf Registration
Statement is declared effective by the SEC, or for such shorter period that
will terminate when all Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement or cease to be outstanding or otherwise to be Registrable Securities
(the “Effectiveness Period”); provided, however,
that the Effectiveness Period in respect of the Shelf Registration Statement
shall be extended to the extent required to permit dealers to comply with the
applicable prospectus delivery requirements of Rule 174 under the 1933 Act
and as otherwise provided herein.

 

(d)                                 Notwithstanding
any other provisions hereof, use its best efforts to ensure that (i) any
Shelf Registration Statement and any amendment thereto and any Prospectus
forming part thereof and any supplement thereto complies in all material
respects with the 1933 Act and the rules and regulations thereunder, (ii) any
Shelf Registration Statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and (iii) any Prospectus forming part
of any Shelf Registration Statement, and any supplement to such Prospectus (as
amended or supplemented from time to time), does not include an untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements, in light of the circumstances under which they were made, not
misleading.

 

No Holder of Registrable Securities shall be entitled
to include any of its Registrable Securities in any Shelf Registration pursuant
to this Agreement unless and until such Holder agrees in writing to be

 

7

 

bound by all of the provisions of this Agreement
applicable to such Holder and furnishes to the Operating Partnership in writing
within 15 days after receipt of a request therefor, such information as the
Operating Partnership may, after conferring with counsel, reasonably request
for inclusion in any Shelf Registration Statement or Prospectus included
therein.  Each Holder as to which any
Shelf Registration is being effected agrees to furnish to the Operating
Partnership all information with respect to such Holder necessary to make the
information previously furnished to the Operating Partnership by such Holder
not materially misleading.

 

The Operating Partnership shall not permit any
securities other than Registrable Securities to be included in the Shelf
Registration Statement.  The Operating
Partnership further agrees, if necessary, to supplement or amend the Shelf
Registration Statement, as required by Section 3(b) below, and to
furnish to the Holders of Registrable Securities copies of any such supplement
or amendment promptly after its being used or filed with the SEC.

 

2.3                                 Expenses.  The Operating Partnership shall pay all
Registration Expenses in connection with the registration pursuant to Section 2.1
or Section 2.2.  Each Holder shall
pay all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder’s Registrable Securities
pursuant to the Shelf Registration Statement.

 

2.4                                 Effectiveness.

 

(a)                                  The
Operating Partnership shall be deemed not to have used its best efforts to
cause the Exchange Offer Registration Statement or the Shelf Registration
Statement, as the case may be, to become, or to remain, effective during the
requisite period if the Operating Partnership voluntarily takes any action that
would, or omits to take any action which omission would, result in any such
Registration Statement not being declared effective or in the Holders of
Registrable Securities covered thereby not being able to exchange or offer and
sell such Registrable Securities during that period as and to the extent
contemplated hereby, unless such action is required by applicable law.

 

(b)                                 An
Exchange Offer Registration Statement pursuant to Section 2.1 hereof or a
Shelf Registration Statement pursuant to Section 2.2 hereof shall not be
deemed to have become effective unless it has been declared effective by the
SEC; provided, however, that if, after it has
been declared effective, the offering of Registrable Securities pursuant to an
Exchange Offer Registration Statement or a Shelf Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Registration Statement
shall be deemed not to have become effective during the period of such
interference, until the offering of Registrable Securities pursuant to such
Registration Statement may legally resume.

 

2.5                                 Interest.  The Indenture executed in connection with the
Securities shall provide that if (i) the Exchange Offer Registration
Statement is not filed with the Commission on or prior to the 180th day
following the Closing Date, (ii) the Exchange Offer Registration Statement
is not declared effective on or prior to the 210th day following the Closing
Date, (iii) the Exchange Offer is not completed on or prior to the 240th
day following the Closing Date, (iv) the Shelf Registration Statement is
not filed with the SEC on or prior to the 60th day following the
date the obligation arises or (v) the Shelf Registration Statement is not
declared effective on or prior to the 60th day following the date the Shelf
Registration Statement is filed, the Special Interest Premium shall accrue from
and including the next day following each of (a)  such 180-day period in
the case of clause (i) above, (b) such 210-day period in the case of
clause (ii) above, (c) such 240-day period in the case of clause (iii) above,
and (d) such 60-day periods in the case of clauses (iv) and (v) above,
in each case at a rate equal to 0.25% per annum.  The aggregate amount of the Special Interest
Premium payable pursuant to the above provisions shall in no event exceed 0.25%
per annum.  If the Exchange Offer
Registration Statement is not declared effective on or prior to the 210th day
following the Closing Date and the Operating Partnership shall request holders

 

8

 

of Securities to provide the information called for by the Registration
Rights Agreement referred to herein for inclusion in the Shelf Registration
Statement, the Securities owned by holders who do not deliver such information
to the Operating Partnership when required pursuant to the Registration Rights
Agreement shall not be entitled to any such increase in the interest rate for
any day after the Operating Partnership has filed the Shelf Registration
Statement.  Upon (1) the filing of
the Exchange Offer Registration Statement after the 180-day period described in
clause (i) above, (2) the effectiveness of the Exchange Offer
Registration Statement after the 210-day period described in clause (ii) above,
(3) the completion of the Exchange Offer after the 240-day period
described in clause (iii) above, (4) the filing of the Shelf
Registration Statement after the 60-day period described in clause (iv) above
or (5) the effectiveness of the Shelf Registration Statement after the 60-day
period described in clause (v) above, the interest rate on each series of
Securities from the date of such filing, effectiveness or consummation, as the
case may be, shall be reduced to the original interest rate.

 

If a Shelf Registration Statement is declared
effective pursuant to the foregoing paragraphs, and if the Operating
Partnership fails to keep such Shelf Registration Statement continuously
(x) effective or (y) useable for resales for the period required by
this Agreement due to certain circumstances relating to pending corporate
developments, public filings with the Commission and similar events, or because
the Prospectus contains an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading, and such failure continues for more
than 60 days (whether or not consecutive) in any 12-month period (the 61st
day being referred to as the “Default Day”), then from the Default Day until
the earlier of (i) the date that the Shelf Registration Statement is again
deemed effective or is useable, (ii) the date that is the second
anniversary of the Closing Date (or, if Rule 144(k) is amended to
provide a shorter restrictive period, the end of such shorter period) or (iii) the
date as of which all the Securities are sold pursuant to the Shelf Registration
Statement, the Special Interest Premium shall accrue at a rate equal to 0.25%
per annum.

 

If the Operating Partnership fails to keep the Shelf
Registration Statement continuously effective or useable for resales pursuant
to the preceding paragraph, it shall give the Holders notice to suspend the
sale of the Securities and shall extend the relevant period referred to above
during which the Operating Partnership is required to keep effective the Shelf
Registration Statement (or the period during which Participating Broker-Dealers
are entitled to use the prospectus included in the Exchange Offer Registration
Statement in connection with the resale of Exchange Securities, as the case may
be) by the number of days during the period from and including the date of
the giving of such notice to and including the date when holders shall have
received copies of the supplemental or amended prospectus necessary to permit
resales of the Securities or to and including the date on which the Operating
Partnership has given notice that the sale of Securities may be resumed, as the
case may be.

 

Each Note shall contain a legend to the effect that
the holder thereof, by its acceptance thereof, shall be deemed to have agreed
to be bound by the provisions of this Agreement.

 

The Operating Partnership shall notify the Trustee
within three business days after each and every date on which an event occurs
in respect of which the Special Interest Premium is required to be paid (an “Event
Date”).  The Special Interest Premium
shall be paid by depositing with the Trustee, in trust, for the benefit of the
Holders of Registrable Securities, on or before the applicable semiannual
interest payment date, immediately available funds in sums sufficient to pay
the Special Interest Premium then due. 
The Special Interest Premium due shall be payable on each interest
payment date to the record Holder of Securities entitled to receive the
interest payment to be paid on such date as set forth in the Indenture.  Each obligation to pay the Special Interest
Premium shall be deemed to accrue from and include the day following the
applicable Event Date.

 

9

 

3.                                       Registration
Procedures.

 

In connection with the obligations of the Operating
Partnership with respect to Registration Statements pursuant to Section 2.1
and Section 2.2 hereof, the Operating Partnership shall:

 

(a)                                  prepare
and file with the SEC a Registration Statement, within the relevant time period
specified in Section 2, on the appropriate form under the 1933 Act, which
form (i) shall be selected by the Operating Partnership, (ii) shall,
in the case of a Shelf Registration, be available for the sale of the Registrable
Securities by the selling Holders thereof, (iii) shall comply as to form
in all material respects with the requirements of the applicable form and
include or incorporate by reference all financial statements required by the
SEC to be filed therewith or incorporated by reference therein, and (iv) shall
comply in all respects with the requirements of Regulation S-T under the 1933
Act, and use its best efforts to cause such Registration Statement to become
effective and remain effective in accordance with Section 2 hereof;

 

(b)                                 prepare
and file with the SEC such amendments and post-effective amendments to each
Registration Statement as may be necessary under applicable law to keep such
Registration Statement effective for the applicable period; and cause each
Prospectus to be supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar provision
then in force) under the 1933 Act and comply with the provisions of the
1933 Act, the 1934 Act and the rules and regulations thereunder applicable
to them with respect to the disposition of all securities covered by each
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the selling Holders thereof
(including sales by any Participating Broker-Dealer);

 

(c)                                  in
the case of a Shelf Registration, (i) notify each Holder of Registrable
Securities, at least five business days prior to filing, that a Shelf
Registration Statement with respect to the Registrable Securities is being
filed and advise such Holders that the distribution of Registrable Securities
shall be made in accordance with the method selected by the Majority Holders
participating in the Shelf Registration; (ii) furnish to each Holder of
Registrable Securities and to each underwriter of an underwritten offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or underwriter may
reasonably request, including financial statements and schedules and, if the
Holder so requests, all exhibits in order to facilitate the public sale or
other disposition of the Registrable Securities; and (iii) hereby consent
to the use of the Prospectus or any amendment or supplement thereto by each of
the selling Holders of Registrable Securities in connection with the offering
and sale of the Registrable Securities covered by the Prospectus or any amendment
or supplement thereto;

 

(d)                                 in
the case of a Shelf Registration, use its best efforts to register or qualify
the Registrable Securities under all applicable state securities or “blue sky”
laws of such jurisdictions as any Holder of Registrable Securities covered by a
Registration Statement and each underwriter of an underwritten offering of
Registrable Securities shall reasonably request by the time the applicable
Registration Statement is declared effective by the SEC, and do any and all
other acts and things which may be reasonably necessary or advisable to enable
each such Holder and underwriter to consummate the disposition in each such
jurisdiction of such Registrable Securities owned by such Holder; provided, however, that the Operating Partnership shall not
be required to (i) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d), or (ii) take any action which
would subject it to general service of process or taxation in any such
jurisdiction where it is not then so subject;

 

(e)                                  notify
promptly each Holder of Registrable Securities under a Shelf Registration or
any Participating Broker-Dealer who has notified the Operating Partnership that
it is utilizing the Exchange

 

10

 

Offer Registration Statement as provided in paragraph (f) below
and, if requested by such Holder or Participating Broker-Dealer, confirm such
advice in writing promptly (i) when a Registration Statement has become
effective and when any post-effective amendments and supplements thereto become
effective, (ii) of any request by the SEC or any state securities
authority for post-effective amendments and supplements to a Registration
Statement and Prospectus or for additional information after the Registration
Statement has become effective, (iii) of the issuance by the SEC or any
state securities authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose, (iv) in
the case of a Shelf Registration, if, between the effective date of a
Registration Statement and the closing of any sale of Registrable Securities
covered thereby, the representations and warranties of the Operating
Partnership contained in any underwriting agreement, securities sales agreement
or other similar agreement, if any, relating to the offering cease to be true
and correct in all material respects, (v) of the happening of any event or
the discovery of any facts during the period a Shelf Registration Statement is
effective which makes any statement made in such Registration Statement or the
related Prospectus untrue in any material respect or which requires the making
of any changes in such Registration Statement or Prospectus in order to make
the statements therein not misleading, (vi) of the receipt by the
Operating Partnership of any notification with respect to the suspension of the
qualification of the Registrable Securities or the Exchange Securities, as the
case may be, for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose, and (vii) of any determination by the
Operating Partnership that a post-effective amendment to such Registration Statement
would be appropriate;

 

(f)                                    (i)                                     in
the case of the Exchange Offer Registration Statement (a) include in the
Exchange Offer Registration Statement a section entitled “Plan of
Distribution” which section shall be reasonably acceptable to Citigroup,
JPMorgan, UBS and Wachovia on behalf of the Participating Broker-Dealers, and
which shall contain a summary statement of the positions taken or policies made
by the staff of the SEC with respect to the potential “underwriter” status of
any broker-dealer that holds Registrable Securities acquired for its own
account as a result of market-making activities or other trading activities and
that shall be the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Securities to be received by such broker-dealer
in the Exchange Offer, whether such positions or policies have been publicly
disseminated by the staff of the SEC or such positions or policies, in the
reasonable judgment of Citigroup, JPMorgan, UBS and Wachovia on behalf of the
Participating Broker-Dealers and their counsel, represent the prevailing views
of the staff of the SEC, including a statement that any such broker-dealer who
receives Exchange Securities for Registrable Securities pursuant to the
Exchange Offer may be deemed a statutory underwriter and must deliver a
prospectus meeting the requirements of the 1933 Act in connection with any
resale of such Exchange Securities, (b) furnish to each Participating
Broker-Dealer who has delivered to the Operating Partnership the notice referred
to in Section 3(e), without charge, as many copies of each Prospectus
included in the Exchange Offer Registration Statement, including any
preliminary prospectus, and any amendment or supplement thereto, as such
Participating Broker-Dealer may reasonably request, (c) hereby consent to
the use of the Prospectus forming part of the Exchange Offer Registration
Statement or any amendment or supplement thereto, by any Person subject to the
prospectus delivery requirements of the SEC, including all Participating
Broker-Dealers, in connection with the sale or transfer of the Exchange
Securities covered by the Prospectus or any amendment or supplement thereto,
and (d) include in the transmittal letter or similar documentation to be
executed by an exchange offeree in order to participate in the Exchange Offer (i) the
following provision:

 

“If
the exchange offeree is a broker-dealer holding Registrable Securities acquired
for its own account as a result of market-making activities or other trading
activities, it will deliver a prospectus meeting the requirements of the 1933
Act in connection with any resale of Exchange

 

11

 

Securities
received in respect of such Registrable Securities pursuant to the Exchange
Offer;” and

 

(ii)                                  a
statement to the effect that, by a broker-dealer making the acknowledgment
described in clause (i) and by delivering a Prospectus in connection with
the exchange of Registrable Securities, the broker-dealer shall not be deemed
to admit that it is an underwriter within the meaning of the 1933 Act; and

 

(iii)                               in
the case of any Exchange Offer Registration Statement, the Operating
Partnership agrees to deliver to the Initial Purchasers on behalf of the
Participating Broker-Dealers upon the effectiveness of the Exchange Offer
Registration Statement (a) an opinion of counsel or opinions of counsel
substantially in the form attached hereto as Exhibit A, (b) officers’
certificates substantially in the form customarily delivered in a public
offering of debt securities and (c) a comfort letter or comfort letters in
customary form to the extent permitted by Statement on Auditing Standards No. 72
of the American Institute of Certified Public Accountants (or if such a comfort
letter is not permitted, an agreed upon procedures letter in customary
form) from the Operating Partnership’s independent certified public
accountants (and, if necessary, any other independent certified public
accountants of any subsidiary of the Operating Partnership or of any business
acquired by the Operating Partnership for which financial statements are, or
are required to be, included in the Registration Statement) at least as
broad in scope and coverage as the comfort letter or comfort letters delivered
to the Initial Purchasers in connection with the initial sale of the Securities
to the Initial Purchasers;

 

(g)                                 The
Operating Partnership may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Operating
Partnership, as applicable, such information regarding such seller as may be
required by the staff of the SEC to be included in a Registration
Statement.  The Operating Partnership
shall have no obligation to register under the Securities Act the Registrable
Securities of a seller who so fails to furnish such information.

 

(h)                                 (i)                                     in
the case of an Exchange Offer, furnish counsel for the Initial Purchasers and (ii) in
the case of a Shelf Registration, furnish counsel for the Holders of
Registrable Securities copies of any comment letters received from the SEC or
any other request by the SEC or any state securities authority for amendments
or supplements to a Registration Statement and Prospectus or for additional
information;

 

(i)                                     make
every reasonable effort to obtain the withdrawal of any order suspending the
effectiveness of a Registration Statement at the earliest possible moment;

 

(j)                                     in
the case of a Shelf Registration, furnish to each Holder of Registrable
Securities, and each underwriter, if any, without charge, at least one
conformed copy of each Registration Statement and any post-effective amendment
thereto, including financial statements and schedules (without documents
incorporated therein by reference and all exhibits thereto, unless requested);

 

(k)                                  in
the case of a Shelf Registration, cooperate with the selling Holders of
Registrable Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends; and enable such Registrable Securities to be in such
denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holders or the underwriters, if any,
may reasonably request at least three business days prior to the closing of any
sale of Registrable Securities;

 

(l)                                     in
the case of a Shelf Registration, upon the occurrence of any event or the
discovery of any facts, each as contemplated by Section 3(e)(v) and Section 3(e)(vi) hereof,
as promptly as practicable after the occurrence of such an event, use its best
efforts to prepare a supplement or post-effective

 

12

 

amendment to the Registration Statement or the related Prospectus or
any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the Registrable
Securities or Participating Broker-Dealers, such Prospectus shall not contain
at the time of such delivery any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or shall remain so
qualified.  At such time as such public
disclosure is otherwise made or the Operating Partnership determines that such
disclosure is not necessary, in each case to correct any misstatement of a
material fact or to include any omitted material fact, the Operating
Partnership agrees promptly to notify each Holder of such determination and to
furnish each Holder such number of copies of the Prospectus as amended or
supplemented, as such Holder may reasonably request;

 

(m)                               in
the case of a Shelf Registration, a reasonable time prior to the filing of any
Registration Statement, any Prospectus, any amendment to a Registration
Statement or amendment or supplement to a Prospectus or any document which is
to be incorporated by reference into a Registration Statement or a Prospectus
after initial filing of a Registration Statement, provide copies of such document
to the Initial Purchasers on behalf of such Holders; and make representatives
of the Operating Partnership as shall be reasonably requested by the Holders of
Registrable Securities, or the Initial Purchasers on behalf of such Holders,
available for discussion of such document;

 

(n)                                 use
its reasonable best efforts to obtain a CUSIP number for all Exchange
Securities, Private Exchange Securities or Registrable Securities, as the case
may be, not later than the effective date of a Registration Statement, and
provide the Trustee with printed certificates for the Exchange Securities,
Private Exchange Securities or the Registrable Securities, as the case may be,
in a form eligible for deposit with the Depositary;

 

(o)                                 use
its reasonable best efforts to (i) cause the Indenture Supplement to be
qualified under the TIA in connection with the registration of the Exchange
Securities or Registrable Securities, as the case may be, (ii) cooperate
with the Trustee and the Holders to effect such changes to the Indenture as may
be required for the Indenture to be so qualified in accordance with the terms
of the TIA, and (iii) execute, and use its best efforts to cause the
Trustee to execute, all documents as may be required to effect such changes,
and all other forms and documents required to be filed with the SEC to enable
the Indenture to be so qualified in a timely manner;

 

(p)                                 in
the case of a Shelf Registration, enter into agreements (including underwriting
agreements) and take all other customary and appropriate actions in order
to expedite or facilitate the disposition of such Registrable Securities and in
such connection whether or not an underwriting agreement is entered into and
whether or not the registration is an underwritten registration:

 

(i)                                     make
such representations and warranties to the Holders of such Registrable
Securities and the underwriters, if any, in form, substance and scope as are
customarily made by issuers to underwriters in similar underwritten offerings
as may be reasonably requested by them;

 

(ii)                                  obtain
opinions of counsel to the Operating Partnership and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any, and the holders of a
majority in principal amount of the Registrable Securities being
sold) addressed to each selling Holder and the underwriters, if any,
covering the matters customarily covered in opinions requested in sales of
securities or underwritten offerings and such other matters as may be reasonably
requested by such Holders and underwriters;

 

(iii)                               obtain “cold comfort”
letters and updates thereof from the Operating Partnership’s independent
certified public accountants (and, if necessary, any other independent
certified

 

13

 

public accountants of any subsidiary of the Operating Partnership or of
any business acquired by the Operating Partnership for which financial
statements are, or are required to be, included in the Registration
Statement) addressed to the underwriters, if any, and use reasonable
efforts to have such letter addressed to the selling Holders of Registrable
Securities (to the extent consistent with Statement on Auditing Standards No. 72
of the American Institute of Certified Public Accounts), such letters to be in
customary form and covering matters of the type customarily covered in “cold
comfort” letters to underwriters in connection with similar underwritten
offerings;

 

(iv)                              enter
into a securities sales agreement with the Holders and an agent of the Holders
providing for, among other things, the appointment of such agent for the
selling Holders for the purpose of soliciting purchases of Registrable
Securities, which agreement shall be in form, substance and scope customary for
similar offerings;

 

(v)                                 if
an underwriting agreement is entered into, cause the same to set forth
indemnification provisions and procedures substantially equivalent to the
indemnification provisions and procedures set forth in Section 4 hereof
with respect to the underwriters and all other parties to be indemnified
pursuant to said Section or, at the request of any underwriters, in the
form customarily provided to such underwriters in similar types of
transactions; and

 

(vi)                              deliver
such documents and certificates as may be reasonably requested and as are
customarily delivered in similar offerings to the Holders of a majority in
principal amount of the Registrable Securities being sold and the managing
underwriters, if any.

 

The above shall be done at (A) the effectiveness
of such Registration Statement (and each post-effective amendment
thereto) and (B) each closing under any underwriting or similar
agreement as and to the extent required thereunder;

 

(q)                                 in
the case of a Shelf Registration or if a Prospectus is required to be delivered
by any Participating Broker-Dealer in the case of an Exchange Offer, make
available for inspection by representatives of the Holders of the Registrable
Securities, any underwriters participating in any disposition pursuant to a
Shelf Registration Statement, any Participating Broker-Dealer and any counsel
or accountant retained by any of the foregoing, all financial and other
records, pertinent corporate documents and properties of the Operating
Partnership reasonably requested by any such persons, and cause the respective
officers, directors, employees, and any other agents of the Operating
Partnership to supply all information reasonably requested by any such
representative, underwriter, special counsel or accountant in connection with a
Registration Statement, and make such representatives of the Operating
Partnership available for discussion of such documents as shall be reasonably
requested by the Initial Purchasers provided, however, that the foregoing inspection and information
gathering shall be coordinated on behalf of the Purchasers by the
Representative and on behalf of the other parties, by one counsel designated by
the Representatives and on behalf of such other parties as described in Section 3(c) hereof.  Records which the Operating Partnership
determines in good faith, to be confidential and any records which they notify
such representatives are confidential shall not be disclosed by such
representatives unless (i) the disclosure of such Records is necessary to
avoid or correct a material misstatement or omission in such Registration
Statement, (ii) the release of such Records is ordered pursuant to a
subpoena or other order from a court a competent jurisdiction or is necessary
in connection with any action, suit or proceeding or (iii) the information
in such Records has been made generally available to the public.  Each selling Holder of such Registrable
Securities and each such Participating Broker-Dealer shall be required to agree
in writing that information obtained by it as a result of such inspections
shall be deemed confidential, shall not be communicated to any third-party
(other than its agents and affiliates (who shall also be subject to the
confidentially requirements of this paragraph) on a “need-to-know” basis) and
shall not be used by it as the basis for market transaction in the securities
of

 

14

 

the Operating Partnership unless and until such is made generally
available to the public.  Each selling
holder of such Registrable Securities and each such Participating Broker-Dealer
shall be required to further agree in writing that it shall, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, give
notice to the Operating Partnership and allow the Operating Partnership at its
expense to undertake appropriate action to prevent disclosure of the Records
deemed confidential;

 

(r)                                    (i)                                     in
the case of an Exchange Offer Registration Statement, a reasonable time prior
to the filing of any Exchange Offer Registration Statement, any Prospectus
forming a part thereof, any amendment to an Exchange Offer Registration
Statement or amendment or supplement to such Prospectus, provide copies of such
document to the Initial Purchasers and to counsel to the Holders of Registrable
Securities and make such changes in any such document prior to the filing
thereof as the Initial Purchasers or counsel to the Holders of Registrable
Securities may reasonably request and, except as otherwise required by
applicable law, not file any such document in a form to which the Initial
Purchasers on behalf of the Holders of Registrable Securities and counsel to
the Holders of Registrable Securities shall not have previously been advised
and furnished a copy of or to which the Initial Purchasers on behalf of the
Holders of Registrable Securities or counsel to the Holders of Registrable
Securities shall reasonably object, and make the representatives of the
Operating Partnership available for discussion of such documents as shall be
reasonably requested by the Initial Purchasers; and

 

(ii)                                  in
the case of a Shelf Registration, a reasonable time prior to filing any Shelf
Registration Statement, any Prospectus forming a part thereof, any amendment to
such Shelf Registration Statement or amendment or supplement to such
Prospectus, provide copies of such document to the Holders of Registrable
Securities, to the Initial Purchasers, to counsel for the Holders and to the
underwriter or underwriters of an underwritten offering of Registrable
Securities, if any, make such changes in any such document prior to the filing
thereof as the Initial Purchasers, the counsel to the Holders or the
underwriter or underwriters reasonably request and not file any such document
in a form to which the Majority Holders, the Initial Purchasers on behalf of
the Holders of Registrable Securities, counsel for the Holders of Registrable
Securities or any underwriter shall not have previously been advised and
furnished a copy of or to which the Majority Holders, the Initial Purchasers on
behalf of the Holders of Registrable Securities, counsel to the Holders of
Registrable Securities or any underwriter shall reasonably object, and make the
representatives of the Operating Partnership available for discussion of such
document as shall be reasonably requested by the Holders of Registrable
Securities, the Initial Purchasers on behalf of such Holders, counsel for the
Holders of Registrable Securities or any underwriter.

 

(s)                                  in
the case of a Shelf Registration, use its best efforts to cause all Registrable
Securities to be listed on any securities exchange on which similar debt
securities issued by the Operating Partnership are then listed if requested by
the Majority Holders, or if requested by the underwriter or underwriters of an
underwritten offering of Registrable Securities, if any;

 

(t)                                    in
the case of a Shelf Registration, use its best efforts to cause the Registrable
Securities to be rated by the appropriate rating agencies, if so requested by
the Majority Holders, or if requested by the underwriter or underwriters of an
underwritten offering of Registrable Securities, if any;

 

(u)                                 otherwise
comply with all applicable rules and regulations of the SEC and make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering at least 12 months which shall satisfy the
provisions of Section 11(a) of the 1933 Act and Rule 158
thereunder;

 

(v)                                 cooperate
and assist in any filings required to be made with the NASD and, in the case of
a Shelf Registration, in the performance of any due diligence investigation by
any underwriter and its

 

15

 

counsel (including any “qualified independent underwriter” that is
required to be retained in accordance with the rules and regulations of
the NASD); and

 

(w)                               upon
consummation of an Exchange Offer or a Private Exchange, obtain a customary
opinion of counsel to the Operating Partnership addressed to the Trustee for
the benefit of all Holders of Registrable Securities participating in the
Exchange Offer or Private Exchange, and which includes an opinion that (i) the
Operating Partnership has duly authorized, executed and delivered the Exchange
Securities and/or Private Exchange Securities, as applicable, and the related
indenture, and (ii) each of the Exchange Securities and related indenture
constitute a legal, valid and binding obligation of the Operating Partnership,
enforceable against the Operating Partnership in accordance with its respective
terms (with customary exceptions).

 

In the case of a Shelf Registration Statement, the
Operating Partnership may (as a condition to such Holder’s participation in the
Shelf Registration) require each Holder of Registrable Securities to
furnish to the Operating Partnership such information regarding the Holder and
the proposed distribution by such Holder of such Registrable Securities as the
Operating Partnership may from time to time reasonably request in writing.

 

In the case of a Shelf Registration Statement, each
Holder agrees that, upon receipt of any notice from the Operating Partnership
of the happening of any event or the discovery of any facts, each of the kind
described in Section 3(e)(v) hereof, such Holder shall forthwith
discontinue disposition of Registrable Securities pursuant to a Registration
Statement until such Holder’s receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(l) hereof, and, if so
directed by the Operating Partnership, such Holder shall deliver to the
Operating Partnership (at its expense) all copies in such Holder’s
possession, other than permanent file copies then in such Holder’s possession,
of the Prospectus covering such Registrable Securities current at the time of
receipt of such notice.

 

In the event that the Operating Partnership fails to
effect the Exchange Offer or file any Shelf Registration Statement and maintain
the effectiveness of any Shelf Registration Statement as provided herein, the
Operating Partnership shall not file any Registration Statement with respect to
any securities (within the meaning of Section 2(1) of the 1933
Act) of the Operating Partnership other than Registrable Securities.

 

If any of the Registrable Securities covered by any
Shelf Registration Statement are to be sold in an underwritten offering, the
underwriter or underwriters and manager or managers that will manage such
offering shall be selected by the Majority Holders of such Registrable
Securities included in such offering and shall be acceptable to the Operating
Partnership.  No Holder of Registrable
Securities may participate in any underwritten registration hereunder unless
such Holder (a) agrees to sell such Holder’s Registrable Securities on the
basis provided in any underwriting arrangements approved by the persons
entitled hereunder to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.

 

4.                                       Indemnification,
Contribution.

 

(a)                                  The
Operating Partnership agrees to indemnify and hold harmless the Initial
Purchasers, each Holder, each Participating Broker-Dealer, each Person who
participates as an underwriter (any such Person being an “Underwriter”) and
each Person, if any, who controls any Initial Purchaser, Holder, Participating
Broker-Dealer or Underwriter within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act as follows:

 

16

 

(i)                                     against
any and all loss, liability, claim, damage and expense whatsoever, as incurred,
arising out of any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement (or any amendment or supplement
thereto) pursuant to which Exchange Securities or Registrable Securities
were registered under the 1933 Act, including all documents incorporated
therein by reference, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;

 

(ii)                                  against
any and all loss, liability, claim, damage and expense whatsoever, as incurred,
to the extent of the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental agency or body, commenced
or threatened, or of any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission; provided that
(subject to Section 4(d) below) any such settlement is effected
with the written consent of the Operating Partnership; and

 

(iii)                               against any and all
expense whatsoever, as incurred (including the fees and disbursements of
counsel chosen by any indemnified party), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense is
not paid under subparagraph (i) or subparagraph (ii) above;

 

provided, however, that this
indemnity agreement shall not apply to any loss, liability, claim, damage or
expense to the extent arising out of any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Operating Partnership by the Holder
or Underwriter expressly for use in a Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto).

 

(b)                                 Each
Holder severally, but not jointly, agrees to indemnify and hold harmless the
Operating Partnership, the Initial Purchasers, each underwriter and the other
selling Holders, and each of their respective directors and officers, and each
Person, if any, who controls the Operating Partnership, the Initial Purchasers,
any Underwriter or any other selling Holder within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act, against any and all loss,
liability, claim, damage and expense described in the indemnity contained in Section 4(a) hereof,
as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Shelf Registration
Statement (or any amendment thereto) or any Prospectus included therein
(or any amendment or supplement thereto) in reliance upon and in
conformity with written information with respect to such Holder furnished to
the Operating Partnership by such Holder expressly for use in the Shelf
Registration Statement (or any amendment thereto) or such Prospectus (or
any amendment or supplement thereto); provided, however,
that no such Holder shall be liable for any claims hereunder in excess of the
amount of net proceeds received by such Holder from the sale of Registrable
Securities pursuant to such Shelf Registration Statement.

 

(c)                                  Each
indemnified party shall give notice as promptly as reasonably practicable to
each indemnifying party of any action or proceeding commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof,
and in any event shall not relieve it from any liability which it may have
otherwise than on account of this

 

17

 

indemnity agreement.  An
indemnifying party may participate at its own expense in the defense of such
action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party.  In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one counsel (in
addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances.  No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
in respect of which indemnification or contribution could be sought under this Section 4
(whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim, and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.

 

(d)                                 If
at any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 4(a)(ii) effected without its written
consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement
at least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.

 

(e)                                  If
the indemnification provided for in this Section 4 is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such indemnified
party, as incurred, in such proportion as is appropriate to reflect the
relative fault of the Operating Partnership on the one hand and the Holders and
the Initial Purchasers on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.

 

The relative fault of the Operating Partnership on the
one hand and the Holders and the Initial Purchasers on the other hand shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Operating
Partnership, the Holders or the Initial Purchasers and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

 

The Operating Partnership, the Holders and the Initial
Purchasers agree that it would not be just and equitable if contributions
pursuant to this Section 4 were determined by pro rata allocation (even if
the Initial Purchasers were treated as one entity for such purpose) or by
any other method of allocation which does not take account of the equitable
considerations referred to above in this Section 4.  The aggregate amount of losses, liabilities,
claims, damages and expenses incurred by an indemnified party and referred to
above in this Section 4 shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission.

 

Notwithstanding the provisions of this Section 4,
no Holder or Initial Purchaser shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities sold by

 

18

 

it were offered exceeds the amount of any damages
which such Holder or Initial Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission.

 

No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation.

 

For purposes of this Section 4, each Person, if
any, who controls an Initial Purchaser or Holder within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act shall have the same rights
to contribution as such Initial Purchaser or Holder, and each director of the
Operating Partnership, and each Person, if any, who controls the Operating
Partnership within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as the Operating
Partnership.  The Initial Purchasers’
respective obligations to contribute pursuant to this Section 4 are
several in proportion to the principal amount of Securities set forth opposite
their respective names in Schedule A to the Purchase Agreement and not
joint.

 

5.                                       Miscellaneous.

 

5.1                                 Rule 144
and Rule 144A.  For so long as
the Operating Partnership is subject to the reporting requirements of Section 13
or Section 15 of the 1934 Act, the Operating Partnership covenants that it
shall file the reports required to be filed by it under the 1933 Act and Section 13(a) or
Section 15(d) of the 1934 Act and the rules and regulations
adopted by the SEC thereunder.  If the
Operating Partnership ceases to be so required to file such reports, the
Operating Partnership covenants that it shall upon the request of any Holder of
Registrable Securities (a) make publicly available such information as is
necessary to permit sales pursuant to Rule 144 under the 1933 Act, (b) deliver
such information to a prospective purchaser as is necessary to permit sales
pursuant to Rule 144A under the 1933 Act and it shall take such further
action as any Holder of Registrable Securities may reasonably request, and (c) take
such further action that is reasonable in the circumstances, in each case, to
the extent required from time to time to enable such Holder to sell its
Registrable Securities without registration under the 1933 Act within the
limitation of the exemptions provided by (i) Rule 144 under the 1933
Act, as such Rule may be amended from time to time, (ii) Rule 144A
under the 1933 Act, as such Rule may be amended from time to time, or (iii) any
similar rules or regulations hereafter adopted by the SEC.  Upon the request of any Holder of Registrable
Securities, the Operating Partnership shall deliver to such Holder a written
statement as to whether it has complied with such requirements.

 

5.2                                 No
Inconsistent Agreements.  The
Operating Partnership has not entered into and the Operating Partnership shall not
after the date of this Agreement enter into any agreement which is inconsistent
with the rights granted to the Holders of Registrable Securities in this
Agreement or otherwise conflicts with the provisions hereof.  The rights granted to the Holders hereunder
do not and shall not for the term of this Agreement in any way conflict with
the rights granted to the holders of the Operating Partnership’s other issued
and outstanding securities under any such agreements.

 

5.3                                 Amendments
and Waivers.  The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Operating Partnership has
obtained the written consent of Holders of at least a majority in aggregate
principal amount of the outstanding Registrable Securities affected by such
amendment, modification, supplement, waiver or departure.

 

5.4                                 Notices.  All notices and other communications provided
for or permitted hereunder shall be made in writing by hand delivery,
registered first-class mail, telex, telecopier, or any courier guaranteeing
overnight delivery (a) if to a Holder, at the most current address given
by such

 

19

 

Holder to the Operating Partnership by means of a notice given in
accordance with the provisions of this Section 5.4, which address
initially is the address set forth in the Purchase Agreement with respect to
the Initial Purchasers; and (b) if to the Operating Partnership, initially
at the Operating Partnership’s address set forth in the Purchase Agreement, and
thereafter at such other address of which notice is given in accordance with
the provisions of this Section 5.4.

 

All such notices and communications shall be deemed to
have been duly given: at the time delivered by hand, if personally delivered;
two business days after being deposited in the mail, postage prepaid, if
mailed; when answered back, if telexed; when receipt is acknowledged, if telecopied;
and on the next business day if timely delivered to an air courier guaranteeing
overnight delivery.

 

Copies of all such notices, demands, or other
communications shall be concurrently delivered by the person giving the same to
the Trustee under the Indenture, at the address specified in such Indenture.

 

5.5                                 Successor
and Assigns.  This Agreement shall
inure to the benefit of and be binding upon the successors, assigns and
transferees of each of the parties, including, without limitation and without the
need for an express assignment, subsequent Holders; provided,
that nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Registrable Securities in violation of the terms of the Purchase
Agreement or the Indenture.  If any
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement, including the restrictions on resale set forth in this Agreement
and, if applicable, the Purchase Agreement, and such person shall be entitled
to receive the benefits hereof.

 

5.6                                 Third
Party Beneficiaries.  The Initial
Purchasers (even if the Initial Purchasers are not Holders of Registrable
Securities) shall be third party beneficiaries to the agreements made
hereunder between the Operating Partnership, on the one hand, and the Holders,
on the other hand, and shall have the right to enforce such agreements directly
to the extent they deem such enforcement necessary or advisable to protect
their rights or the rights of Holders hereunder.  Each Holder of Registrable Securities shall
be a third party beneficiary to the agreements made hereunder between the
Operating Partnership, on the one hand, and the Initial Purchasers, on the
other hand, and shall have the right to enforce such agreements directly to the
extent it deems such enforcement necessary or advisable to protect its rights
hereunder.

 

5.7                                 Specific
Enforcement.  Without limiting the
remedies available to the Initial Purchasers and the Holders, the Operating
Partnership acknowledges that any failure by the Operating Partnership to
comply with its obligations under Section 2.1 through Section 2.4
hereof may result in material irreparable injury to the Initial Purchasers or
the Holders for which there is no adequate remedy at law, that it would not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, the Initial Purchasers or any Holder may obtain such
relief as may be required to specifically enforce the Operating Partnership’s
obligations under Section 2.1 through Section 2.4 hereof.

 

5.8                                 Restriction
on Resales.  Until the expiration of
two years after the original issuance of the Securities, the Operating
Partnership shall not, and shall cause its “affiliates” (as such term is
defined in Rule 144(a)(1) under the 1933 Act) not to, resell any
Securities which are “restricted securities” (as such term is defined under Rule 144(a)(3) under
the 1933 Act) that have been reacquired by any of them and shall immediately
upon any purchase of any such Securities submit such Securities to the Trustee
for cancellation.

 

20

 

5.9                                 Counterparts.  This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

 

5.10                           Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

5.11                           GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.

 

5.12                           Severability.
In the event that any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.

 

21

 

IN WITNESS WHEREOF, the parties
have executed this Registration Rights Agreement as of the date first written
above.

 

 

	
   

  	
  SIMON PROPERTY
  GROUP, L.P.

  
	
   

  	
   

  	
  as Issuer

  
	
   

  	
   

  
	
   

  	
  By:

  	
  SIMON PROPERTY
  GROUP, INC.

  
	
   

  	
   

  	
  as General
  Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David Simon

  
	
   

  	
   

  	
   

  	
  Name: David
  Simon

  
	
   

  	
   

  	
   

  	
  Title: Chief
  Executive Officer

  

 

CONFIRMED AND ACCEPTED

AS OF THE DATE FIRST
ABOVE

WRITTEN:

 

	
  CITIGROUP GLOBAL MARKETS INC.

  
	
   

  
	
   

  
	
  By:

  	
   /s/ Paul Ingrassia

  	
   

  
	
   

  	
  Name: Paul Ingrassia

  
	
   

  	
  Title: Managing Director

  
	
   

  
	
  J.P. MORGAN SECURITIES INC.

  
	
   

  
	
   

  
	
  By:

  	
   /s/ Robert Bottamedi

  	
   

  
	
   

  	
  Name: Robert Bottamedi

  
	
   

  	
  Title: Vice President

  
	
   

  
	
  UBS SECURITIES LLC

  
	
   

  
	
   

  
	
  By:

  	
   /s/ Christopher Forshner

  	
   

  
	
   

  	
  Name: Christopher Forshner

  
	
   

  	
  Title: Managing Director

  
	
   

  
	
   

  
	
  By:

  	
   /s/ Ryan Donovan

  	
   

  
	
   

  	
  Name: Ryan Donovan

  
	
   

  	
  Title: Director

  
	
   

  
	
  WACHOVIA CAPITAL MARKETS, LLC

  
	
   

  
	
   

  
	
  By:

  	
   /s/ Teresa Hee

  	
   

  
	
   

  	
  Name: Teresa Hee

  
	
   

  	
  Title: Director

  

 

For themselves and for the

other Initial Purchasers named

in Schedule 1 to the
Purchase Agreement.

 

 

Exhibit A

 

Form of
Opinion of Counsel

 

Citigroup Global Markets
Inc.

388 Greenwich Street

New York, New York  10013

 

Ladies and Gentlemen:

 

We have acted as counsel for Simon Property Group,
L.P., a Delaware limited partnership (the “Operating Partnership”), in
connection with the sale by the Operating Partnership to the Initial Purchasers
(as defined below) of $500,000,000 aggregate principal amount of 5.375% senior
unsecured notes due 2011 and $600,000,000 aggregate principal amount of 5.75%
senior unsecured notes due 2015 (the “Securities”) of the Operating Partnership
pursuant to the Purchase Agreement dated November 8, 2005 (the “Purchase
Agreement”) among the Operating Partnership, and Citigroup Global Markets Inc.,
J.P. Morgan Securities Inc., UBS Securities LLC, Wachovia Capital Markets, LLC
and the other Initial Purchasers named in Schedule 1 to the Purchase
Agreement (collectively, the “Initial Purchasers”) and the filing by the
Operating Partnership of an Exchange Offer Registration Statement (the “Registration
Statement”) in connection with an Exchange Offer to be effected pursuant
to the Registration Rights Agreement (the “Registration Rights Agreement”), dated
November 15, 2005, between the Operating Partnership and the Initial
Purchasers.  This opinion is furnished to
you pursuant to Section 3(f)(iii) of the Registration Rights
Agreement.  Unless otherwise defined
herein, capitalized terms used in this opinion that are defined in the
Registration Rights Agreement are used herein as so defined.

 

We have examined such documents, records and matters
of law as we have deemed necessary for purposes of this opinion.  In rendering this opinion, as to all matters
of fact relevant to this opinion, we have assumed the completeness and accuracy
of, and are relying solely upon, the representations and warranties of the
Operating Partnership set forth in the Purchase Agreement and the statements
set forth in certificates of public officials and officers of the Operating
Partnership, without making any independent investigation or inquiry with
respect to the completeness or accuracy of such representations, warranties or
statements, other than a review of the certificate of incorporation, by-laws
and relevant minute books of the Operating Partnership.

 

Based on and subject to the foregoing, we are of the
opinion that:

 

1.                                       The
Exchange Offer Registration Statement and the Prospectus (other than the
financial statements, notes or schedules thereto and other financial data and
supplemental schedules included or incorporated by reference therein or omitted
therefrom and the Form T-1, as to which such counsel need express no
opinion), comply as to form in all material respects with the requirements of
the 1933 Act and the applicable rules and regulations promulgated under
the 1933 Act.

 

2.                                       We
have participated in the preparation of the Registration Statement and the
Prospectus and in the course thereof have had discussions with representatives
of the underwriters, officers and other representatives of the Operating
Partnership and Ernst & Young LLP, the Operating Partnership’s
independent public accountants, during which the contents of the Registration
Statement and the Prospectus were discussed. 
We have not, however, independently verified and are not passing upon,
and do not assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Registration Statement and the
Prospectus.  Based on our participation
as described

 

 

above, nothing has come to our attention that would
lead us to believe that the Registration Statement (except for financial
statements and schedules and other financial data included therein as to which
we make no statement) contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus or any
amendment or supplement thereto (except for financial statements and schedules
and other financial data included therein, as to which such counsel need make
no statement), as of the date of the Prospectus, as of the date of any such
amended or supplemented Prospectus or on the Closing Date, included or includes
an untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

 

This opinion is being furnished to you solely for your
benefit in connection with the transactions contemplated by the Registration
Rights Agreement, and may not be used for any other purpose or relied upon by
any person other than you.  Except with
our prior written consent, the opinions herein expressed are not to be used,
circulated, quoted or otherwise referred to in connection with any transactions
other than those contemplated by the Registration Rights Agreement by or to any
other person.

 

Very
truly yours,Exhibit 10.22

 

DITECH COMMUNICATIONS CORPORATION

 

2005 NEW RECRUIT STOCK OPTION PLAN

 

ADOPTED BY THE BOARD OF DIRECTORS: November 15,
2005

STOCKHOLDER APPROVAL NOT REQUIRED

TERMINATION DATE: November 14, 2015

 

1.             GENERAL.

 

(a)           Eligible Stock Award Recipients.  Only Eligible Employees may receive Stock
Awards under the Plan.

 

(b)           Available Stock Awards.  The Plan provides for the grant of Nonstatutory
Stock Options.

 

(c)           Purpose.  The Company, by means of the Plan, seeks to
secure and retain the services of Eligible Employees, to provide incentives for
such persons to exert maximum efforts for the success of the Company and any
Affiliate, and to provide a means by which such eligible recipients may be
given an opportunity to benefit from increases in value of the Common Stock
through the granting of Stock Awards. 
The Plan is intended to be exempt from the stockholder approval
requirements under the “inducement grant exception” provided by Rule 4350(i)(1)(A)(iv) of
the NASD Marketplace Rules.

 

2.             DEFINITIONS.

 

As used in the Plan, the
following definitions shall apply to the capitalized terms indicated below:

 

(a)           “Affiliate” means (i) any corporation (other than
the Company) in an unbroken chain of corporations ending with the Company,
provided each corporation in the unbroken chain (other than the Company) owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain, and (ii) any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company,
provided each corporation (other than the last corporation) in the unbroken
chain owns, at the time of the determination, stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain. 
The Board shall have the authority to determine (i) the time or
times at which the ownership tests are applied, and (ii) whether “Affiliate”
includes entities other than corporations within the foregoing definition.

 

(b)           “Board” means the Board of Directors of the Company.

 

(c)           “Capitalization Adjustment” has the meaning ascribed to
that term in Section 9(a).

 

(d)           “Change in Control” means the occurrence, in a single
transaction or in a series of related transactions, of any one or more of the
following events:

 

1

 

(i)            any
Exchange Act Person becomes the Owner, directly or indirectly, of securities of
the Company representing more than fifty
percent (50%) of the combined voting power of the Company’s then
outstanding securities other than by virtue of a merger, consolidation or
similar transaction.  Notwithstanding the foregoing, a Change in
Control shall not be deemed to occur (A) on account of the acquisition of
securities of the Company by an investor, any affiliate thereof or any other
Exchange Act Person from the Company in a transaction or series of related
transactions the primary purpose of which is to obtain financing for the
Company through the issuance of equity securities or (B) solely because
the level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage
threshold of the outstanding voting securities as a result of a repurchase or
other acquisition of voting securities by the Company reducing the number of
shares outstanding, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of voting
securities by the Company, and after such share acquisition, the Subject Person
becomes the Owner of any additional voting securities that, assuming the
repurchase or other acquisition had not occurred, increases the percentage of
the then outstanding voting securities Owned by the Subject Person over the
designated percentage threshold, then a Change in Control shall be deemed to
occur;

 

(ii)           there
is consummated a merger, consolidation or similar transaction involving
(directly or indirectly) the Company and, immediately after the consummation of
such merger, consolidation or similar transaction, the stockholders of the
Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding
voting securities representing more than fifty percent (50%) of the combined outstanding voting power of
the surviving Entity in such merger, consolidation or similar transaction or (B) more
than fifty percent (50%) of the
combined outstanding voting power of the parent of the surviving Entity in such
merger, consolidation or similar transaction, in each case in substantially the
same proportions as their Ownership of the outstanding voting securities of the
Company immediately prior to such transaction;

 

(iii)         the
stockholders of the Company approve or the Board approves a plan of complete
dissolution or liquidation of the Company, or a complete dissolution or
liquidation of the Company shall otherwise occur;

 

(iv)          there
is consummated a sale, lease, exclusive license or other disposition of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries, other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries to an Entity, more than fifty
percent (50%) of the combined voting power of the voting securities of
which are Owned by stockholders of the Company in substantially the same
proportions as their Ownership of the outstanding voting securities of the
Company immediately prior to such sale, lease, license or other disposition; or

 

(v)            individuals
who, on the date this Plan is adopted by the Board, are members of the Board
(the “Incumbent Board”)
cease for any reason to constitute at least a majority of the members of the Board;
provided, however, that if the
appointment or election (or nomination for election) of any new Board member
was approved or recommended by a majority vote of the members of the Incumbent
Board then still in office, such new member shall, for purposes of this Plan,
be considered as a member of the Incumbent Board.

 

2

 

The term Change in
Control shall not include a sale of assets, merger or other transaction
effected exclusively for the purpose of changing the domicile of the Company.

 

Notwithstanding the
foregoing or any other provision of this Plan, the definition of Change in
Control (or any analogous term) in an individual written agreement between the
Company or any Affiliate and the Participant shall supersede the foregoing
definition with respect to Stock Awards subject to such agreement; provided, however, that if no definition
of Change in Control or any analogous term is set forth in such an individual
written agreement, the foregoing definition shall apply.

 

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

 

(f)            “Committee” means a committee of one (1) or more
members of the Board to whom authority has been delegated by the Board in
accordance with Section 3(c).

 

(g)           “Common Stock” means the common stock of the Company.

 

(h)           “Company” means Ditech Communications Corporation, a
Delaware corporation.

 

(i)            “Consultant”
means any person, including an advisor, who is (i) engaged by the Company
or an Affiliate to render consulting or advisory services and is compensated
for such services, or (ii) serving as a member of the Board of Directors
of an Affiliate and is compensated for such services.  However, service solely as a Director, or
payment of a fee for such service, shall not cause a Director to be considered
a “Consultant” for purposes of the Plan.

 

(j)            “Continuous Service” means that the Participant’s
service with the Company or an Affiliate, whether as an Employee, Director or
Consultant, is not interrupted or terminated. 
A change in the capacity in which the Participant renders service to the
Company or an Affiliate as an Employee, Consultant or Director or a change in
the entity for which the Participant renders such service, provided that there
is no interruption or termination of the Participant’s service with the Company
or an Affiliate, shall not terminate a Participant’s Continuous Service.  For example, a change in status from an
employee of the Company to a consultant of an Affiliate or to a Director shall
not constitute an interruption of Continuous Service.  To the extent permitted by law, the Board or
the chief executive officer of the Company, in that party’s sole discretion,
may determine whether Continuous Service shall be considered interrupted in the
case of any leave of absence approved by that party, including sick leave,
military leave or any other personal leave. 
Notwithstanding the foregoing, a leave of absence shall be treated as
Continuous Service for purposes of vesting in a Stock Award only to such extent
as may be provided in the Company’s leave of absence policy or in the written
terms of the Participant’s leave of absence.

 

(k)           “Corporate Transaction” means the occurrence, in a
single transaction or in a series of related transactions, of any one or more
of the following events:

 

(i)            a
sale or other disposition of all or
substantially all, as determined by the Board in its sole discretion, of the
consolidated assets of the Company and its Subsidiaries;

 

(ii)           a
sale or other disposition of at least ninety
percent (90%) of the
outstanding securities of the Company;

 

3

 

(iii)         the
consummation of a merger, consolidation or similar transaction following which
the Company is not the surviving corporation; or

 

(iv)          the consummation
of a merger, consolidation or similar transaction following which the Company
is the surviving corporation but the shares of Common Stock outstanding
immediately preceding the merger, consolidation or similar transaction are
converted or exchanged by virtue of the merger, consolidation or similar
transaction into other property, whether in the form of securities, cash or
otherwise.

 

(l)            “Director” means a member of the Board.

 

(m)          “Disability” means the permanent and total disability of
a person within the meaning of Section 22(e)(3) of the Code.

 

(n)           “Eligible Employee” means an Employee newly employed by
the Company or an Affiliate; provided, however,
that (i) such person was not previously an Employee or director of the
Company or an Affiliate, or (ii) such person enters into an employment
relationship with the Company following a bona fide
period of non-employment.

 

(o)           “Employee”
means any person employed by the Company or an Affiliate.  However, service solely as a Director, or
payment of a fee for such services, shall not cause a Director to be considered
an “Employee” for purposes of the Plan.

 

(p)           “Entity” means a corporation, partnership or other
entity.

 

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

 

(r)           “Exchange Act Person” means any natural person, Entity
or “group” (within the meaning of Section 13(d) or 14(d) of the
Exchange Act), except that “Exchange Act Person” shall not include (i) the
Company or any Subsidiary of the Company, (ii) any employee benefit plan
of the Company or any Subsidiary of the Company or any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
any Subsidiary of the Company, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, (iv) an Entity
Owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their Ownership of stock of the Company;
or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or
14(d) of the Exchange Act) that, as of the effective date of the Plan as
set forth in Section 12, is the Owner, directly or indirectly, of
securities of the Company representing more than fifty percent (50%) of the
combined voting power of the Company’s then outstanding securities.

 

(s)           “Fair Market Value” means, as of any date, the value of
the Common Stock determined as follows:

 

(i)            If
the Common Stock is listed on any established stock exchange or traded on the
Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of
a share of Common Stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or market
(or the exchange or market with the greatest volume of trading in the Common
Stock) on the date of determination, as reported in

 

4

 

The Wall
Street Journal or such other
source as the Board deems reliable. 
Unless otherwise provided by the Board, if there is no closing sales
price (or closing bid if no sales were reported) for the Common Stock on the
date of determination, then the Fair Market Value shall be the closing selling price
(or closing bid if no sales were reported) on the last preceding date for which
such quotation exists.

 

(ii)           In
the absence of such markets for the Common Stock, the Fair Market Value shall
be determined by the Board in good faith.

 

(t)            “Independent Director” means a Director who is an “independent
director” within the meaning of Rule 4200 of the NASD Marketplace Rules.

 

(u)           “Non-Employee Director”  means a Director who either (i) is
not a current employee or officer of the Company or an Affiliate, does not
receive compensation, either directly or indirectly, from the Company or an
Affiliate for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act (“Regulation
S-K”)), does not possess an interest in any other transaction
for which disclosure would be required under Item 404(a) of Regulation
S-K, and is not engaged in a business relationship for which disclosure would
be required pursuant to Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a “non-employee director” for purposes of Rule 16b-3.

 

(v)            “Nonstatutory Stock Option” means an Option not intended
to qualify as an incentive stock option within the meaning of Section 422
of the Code and the regulations promulgated thereunder.

 

(w)           “Option” means a Nonstatutory Stock Option to purchase
shares of Common Stock granted pursuant to the Plan.

 

(x)           “Option Agreement” means a written agreement between the
Company and an Optionholder evidencing the terms and conditions of an Option
grant.  Each Option Agreement shall be
subject to the terms and conditions of the Plan.

 

(y)           “Optionholder” means a person to whom an Option is
granted pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.

 

(z)           “Own,” “Owned,” “Owner,” “Ownership”  A person or Entity shall be deemed to “Own,”
to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of
securities if such person or Entity, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, has or shares voting
power, which includes the power to vote or to direct the voting, with respect
to such securities.

 

(aa)         “Participant” means a person to whom a Stock Award is
granted pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

 

(bb)         “Plan” means this Ditech Communications Corporation 2005
New Recruit Stock Option Plan.

 

5

 

(cc)         “Rule 16b-3” means Rule 16b-3 promulgated
under the Exchange Act or any successor to Rule 16b-3, as in effect from
time to time.

 

(dd)         “Securities Act” means the Securities Act of 1933, as
amended.

 

(ee)         “Stock Award” means any right granted under the Plan,
including a Nonstatutory Stock Option.

 

(ff)           “Stock Award Agreement”
means a written agreement between the Company and a Participant evidencing the
terms and conditions of a Stock Award grant. 
Each Stock Award Agreement shall be subject to the terms and conditions
of the Plan.

 

(gg)         “Subsidiary” means, with respect to the Company, (i) any
corporation of which more than fifty percent (50%) of the outstanding capital
stock having ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether, at the time, stock of
any other class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time, directly
or indirectly, Owned by the Company, and (ii) any partnership in which the
Company has a direct or indirect interest (whether in the form of voting or
participation in profits or capital contribution) of more than fifty percent
(50%).

 

3.             ADMINISTRATION.

 

(a)           Administration
by Board.  The Board shall administer
the Plan unless and until the Board delegates administration of the Plan to a
Committee, as provided in Section 3(c). 
All grants of Stock Awards to Eligible Employees must be approved either
by a majority of Independent Directors or by the Company’s independent
Compensation Committee.

 

(b)           Powers of
Board.  The Board shall have the
power, subject to, and within the limitations of, the express provisions of the
Plan:

 

(i)            To
determine from time to time (1) which of the persons eligible under the
Plan shall be granted Stock Awards; (2) when and how each Stock Award
shall be granted; (3) the provisions of each Stock Award granted (which
need not be identical), including the time or times when a person shall be
permitted to receive Common Stock pursuant to a Stock Award; and (4) the
number of shares of Common Stock with respect to which a Stock Award shall be
granted to each such person.

 

(ii)           To
construe and interpret the Plan and Stock Awards granted under it, and to
establish, amend and revoke rules and regulations for its
administration.  The Board, in the
exercise of this power, may correct any defect, omission or inconsistency in
the Plan or in any Stock Award Agreement, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.

 

(iii)         To
amend the Plan or a Stock Award as provided in Section 10.

 

(iv)          To
terminate or suspend the Plan as provided in Section 11.

 

6

 

(v)            Generally,
to exercise such powers and to perform such acts as the Board deems necessary
or expedient to promote the best interests of the Company and that are not in
conflict with the provisions of the Plan.

 

(vi)          To
adopt such procedures and sub-plans as are necessary or appropriate to permit
participation in the Plan by Eligible Employees who are foreign nationals or
employed outside the United States.

 

(c)           Delegation
to Committee.

 

(i)            General.  The Board may delegate some or all of the
administration of the Plan to a Committee or Committees.  If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board that have been
delegated to the Committee, including the power to delegate to a subcommittee any
of the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board.  The Board may retain the authority to
concurrently administer the Plan with the Committee and may, at any time,
revest in the Board some or all of the powers previously delegated.

 

(ii)           Rule 16b-3 Compliance.  In the sole discretion of the Board, the
Committee may consist solely of two (2) or more Non-Employee Directors, in
accordance with Rule 16b-3.

 

(d)           Effect of Board’s Decision. All
determinations, interpretations and constructions made by the Board in good
faith shall not be subject to review by any person and shall be final, binding
and conclusive on all persons.

 

4.             SHARES
SUBJECT TO THE PLAN.

 

(a)           Share
Reserve.  Subject to the provisions
of Section 9(a) relating to Capitalization Adjustments, the number of
shares of Common Stock that may be issued pursuant to Stock Awards shall not
exceed, in the aggregate, two hundred thousand (200,000) shares of Common
Stock.

 

(b)           Reversion
of Shares to the Share Reserve.  If
any Stock Award shall for any reason expire or otherwise terminate, in whole or
in part, without having been exercised in full, if any shares of Common Stock
issued to a Participant pursuant to a Stock Award are forfeited to or
repurchased by the Company, including, but not limited to, any repurchase or
forfeiture caused by the failure to meet a contingency or condition required
for the vesting of such shares, then the shares of Common Stock not issued
under such Stock Award, or forfeited to or repurchased by the Company, shall
revert to and again become available for issuance under the Plan.  If any shares subject to a Stock Award are
not delivered to a Participant because such shares are withheld for the payment
of taxes or the Stock Award is exercised through a reduction of shares subject
to the Stock Award (i.e., “net
exercised”), the number of shares that are not delivered to the Participant
shall remain available for issuance under the Plan.  If the exercise price of any Stock Award is
satisfied by tendering shares of Common Stock held by the

 

7

 

Participant
(either by actual delivery or attestation), then the number of shares so
tendered shall remain available for issuance under the Plan.

 

(c)           Source of
Shares.  The stock issuable under the
Plan shall be shares of authorized but unissued or reacquired Common Stock,
including shares repurchased by the Company on the open market.

 

5.             OPTION
PROVISIONS.

 

Each Option shall be in such form and shall contain
such terms and conditions as the Board shall deem appropriate.  All Options shall be designated as Nonstatutory
Stock Options at the time of grant.  The
provisions of separate Options need not be identical; provided, however, that each Option
Agreement shall include (through incorporation of provisions hereof by
reference in the Option or otherwise) the substance of each of the following
provisions:

 

(a)           Term.  No Option shall be exercisable after the
expiration of ten (10) years from the date of grant, or such shorter
period specified in the Option Agreement.

 

(b)           Exercise
Price of a Nonstatutory Stock Option. 
The exercise price of each Nonstatutory Stock Option shall be not less
than one hundred percent (100%) of the Fair Market Value of the Common Stock
subject to the Option on the date the Option is granted.  Notwithstanding the foregoing, a Nonstatutory
Stock Option may be granted with an exercise price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner consistent with the provisions of Section 424(a) of
the Code.

 

(c)           Consideration.  The purchase price of Common Stock acquired
pursuant to the exercise of an Option shall be paid, to the extent permitted by
applicable law and as determined by the Board in its sole discretion, by any
combination of the methods of payment set forth below.  The Board shall have the authority to grant
Options that do not permit all of the following methods of payment (or otherwise
restrict the ability to use certain methods) and to grant Options that require
the consent of the Company to utilize a particular method of payment.  The methods of payment permitted by this Section 5(c) are:

 

(i)            by
cash or check;

 

(ii)           pursuant
to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the
receipt of cash (or check) by the Company or the receipt of irrevocable
instructions to pay the aggregate exercise price to the Company from the sales
proceeds;

 

(iii)         by
delivery to the Company (either by actual delivery or attestation) of shares of
Common Stock;

 

(iv)          by a “net
exercise” arrangement pursuant to which the Company will reduce the number of
shares of Common Stock issued upon exercise by the largest whole number of
shares with a Fair Market Value that does not exceed the aggregate exercise
price; provided, however, the
Company shall accept a cash or other payment from the Participant to the

 

8

 

extent
of any remaining balance of the aggregate exercise price not satisfied by such reduction
in the number of whole shares to be issued; provided,
however, shares of Common Stock will no longer be outstanding under
an Option and will not be exercisable thereafter to the extent that (i) shares
are used to pay the exercise price pursuant to the “net exercise,” (ii) shares
are delivered to the Participant as a result of such exercise, and (iii) shares
are withheld to satisfy tax withholding obligations;

 

(v)            according
to a deferred payment or similar arrangement with the Optionholder; provided, however, that interest shall
compound at least annually and shall be charged at the minimum rate of interest
necessary to avoid (i) the imputation of interest income to the Company
and compensation income to the Optionholder under any applicable provisions of
the Code, and (ii) the treatment of the Option as a variable award for
financial accounting purposes; or

 

(vi)          in any
other form of legal consideration that may be acceptable to the Board.

 

(d)           Transferability
of Options.  The Board may, in its
sole discretion, impose such limitations on the transferability of Options as
the Board shall determine.  In the
absence of such a determination by the Board to the contrary, the following
restrictions on the transferability of Options shall apply:

 

(i)            Restrictions
on Transfer.  An Option shall not be
transferable except by will or by the laws of descent and distribution and
shall be exercisable during the lifetime of the Optionholder only by the
Optionholder.

 

(ii)           Domestic
Relations Orders.  Notwithstanding
the foregoing, an Option may be transferred pursuant to a domestic relations
order.

 

(iii)         Beneficiary
Designation.  Notwithstanding the
foregoing, the Optionholder may, by delivering written notice to the Company,
in a form provided by or otherwise satisfactory to the Company, designate a
third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.

 

(e)           Vesting Generally.  The total number of shares of Common Stock
subject to an Option may vest and therefore become exercisable in periodic
installments that may or may not be equal. 
The Option may be subject to such other terms and conditions on the time
or times when it may or may not be exercised (which may be based on performance
or other criteria) as the Board may deem appropriate.  The vesting provisions of individual Options
may vary.  The provisions of this Section 5(e) are
subject to any Option provisions governing the minimum number of shares of
Common Stock as to which an Option may be exercised.

 

(f)            Termination of Continuous Service.  In the event that an Optionholder’s
Continuous Service terminates (other than upon the Optionholder’s death or
Disability), the Optionholder may exercise his or her Option (to the extent
that the Optionholder was entitled to exercise such Option as of the date of
termination of Continuous Service) but only within such period of time ending
on the earlier of (i) the date three (3) months following the
termination of the Optionholder’s Continuous Service (or such longer or shorter
period specified in the Option

 

9

 

Agreement),
or (ii) the expiration of the term of the Option as set forth in the
Option Agreement.  If, after termination
of Continuous Service, the Optionholder does not exercise his or her Option
within the time specified herein or in the Option Agreement (as applicable),
the Option shall terminate.

 

(g)           Extension of Termination Date.  An Optionholder’s Option Agreement may
provide that if the exercise of the Option following the termination of the
Optionholder’s Continuous Service (other than upon the Optionholder’s death or
Disability or upon a Change in Control) would be prohibited at any time solely
because the issuance of shares of Common Stock would violate the registration
requirements under the Securities Act, then the Option shall terminate on the
earlier of (i) the expiration of a period of three (3) months after
the termination of the Optionholder’s Continuous Service during which the
exercise of the Option would not be in violation of such registration
requirements, or (ii) the expiration of the term of the Option as set
forth in the Option Agreement.

 

(h)           Disability of Optionholder.  In the event that an Optionholder’s
Continuous Service terminates as a result of the Optionholder’s Disability, the
Optionholder may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise such Option as of the date of termination
of Continuous Service), but only within such period of time ending on the
earlier of (i) the date twelve (12) months following such termination of
Continuous Service (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth
in the Option Agreement.  If, after
termination of Continuous Service, the Optionholder does not exercise his or
her Option within the time specified herein or in the Option Agreement (as
applicable), the Option shall terminate.

 

(i)            Death of Optionholder.  In the event that (i) an Optionholder’s
Continuous Service terminates as a result of the Optionholder’s death, or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholder’s Continuous Service for a reason
other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder’s estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
option upon the Optionholder’s death, but only within the period ending on the
earlier of (i) the date eighteen (18) months following the date of death
(or such longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of such Option as set forth in the Option
Agreement.  If, after the Optionholder’s
death, the Option is not exercised within the time specified herein or in the
Option Agreement (as applicable), the Option shall terminate.

 

6.             COVENANTS
OF THE COMPANY.

 

(a)           Availability
of Shares.  During the terms of the
Stock Awards, the Company shall keep available at all times the number of
shares of Common Stock required to satisfy such Stock Awards.

 

(b)           Securities
Law Compliance.  The Company shall
seek to obtain from each regulatory commission or agency having jurisdiction
over the Plan such authority as may be required to grant Stock Awards and to
issue and sell shares of Common Stock upon exercise of

 

10

 

the
Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to
any such Stock Award.  If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority that counsel for the Company deems necessary
for the lawful issuance and sale of Common Stock under the Plan, the Company
shall be relieved from any liability for failure to issue and sell Common Stock
upon exercise of such Stock Awards unless and until such authority is obtained.

 

7.             USE
OF PROCEEDS FROM SALES OF COMMON STOCK.

 

Proceeds from the sale of shares of Common Stock
pursuant to Stock Awards shall constitute general funds of the Company.

 

8.             MISCELLANEOUS.

 

(a)           Acceleration
of Exercisability and Vesting.  The
Board shall have the power to accelerate the time at which a Stock Award may
first be exercised or the time during which a Stock Award or any part thereof
will vest in accordance with the Plan, notwithstanding the provisions in the
Stock Award stating the time at which it may first be exercised or the time
during which it will vest.

 

(b)           Stockholder
Rights.  No Participant shall be
deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares of Common Stock subject to such Stock Award unless and
until such Participant has satisfied all requirements for exercise of the Stock
Award pursuant to its terms.

 

(c)           No
Employment or Other Service Rights. 
Nothing in the Plan, any Stock Award Agreement or other instrument
executed thereunder or any Stock Award granted pursuant thereto shall confer
upon any Participant any right to continue to serve the Company or an Affiliate
in the capacity in effect at the time the Stock Award was granted or shall
affect the right of the Company or an Affiliate to terminate (i) the
employment of an Employee with or without notice and with or without cause, (ii) the
service of a Consultant pursuant to the terms of such Consultant’s agreement
with the Company or an Affiliate, or (iii) the service of a Director
pursuant to the Bylaws of the Company or an Affiliate, and any applicable
provisions of the corporate law of the state in which the Company or the
Affiliate is incorporated, as the case may be.

 

(d)           Investment
Assurances.  The Company may require
a Participant, as a condition of exercising or acquiring Common Stock under any
Stock Award, (i) to give written assurances satisfactory to the Company as
to the Participant’s knowledge and experience in financial and business matters
and/or to employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and business matters
and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the Stock Award;
and (ii) to give written assurances satisfactory to the Company stating
that the Participant is acquiring Common Stock subject to the Stock Award for
the Participant’s own account and not with any present intention of selling or
otherwise distributing the Common Stock. 
The foregoing requirements, and any assurances given pursuant

 

11

 

to
such requirements, shall be inoperative if (i) the issuance of the shares
upon the exercise or acquisition of Common Stock under the Stock Award has been
registered under a then currently effective registration statement under the
Securities Act, or (ii) as to any particular requirement, a determination
is made by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws.  The Company may, upon advice of counsel to
the Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the
transfer of the Common Stock.

 

(e)           Withholding
Obligations.  To the extent provided
by the terms of a Stock Award Agreement, the Company may, in its sole
discretion, satisfy any federal, state or local tax withholding obligation
relating to a Stock Award by any of the following means (in addition to the
Company’s right to withhold from any compensation paid to the Participant by
the Company) or by a combination of such means: (i) causing the
Participant to tender a cash payment; (ii) withholding shares of Common
Stock from the shares of Common Stock issued or otherwise issuable to the
Participant in connection with the Stock Award; provided,
however, that no shares of Common Stock are withheld with a value
exceeding the minimum amount of tax required to be withheld by law (or such
lower amount as may be necessary to avoid variable award accounting); or (iii) by
such other method as may be set forth in the Stock Award Agreement.

 

(f)            Electronic
Delivery.  Any reference herein to a “written”
agreement or document shall include any agreement or document delivered
electronically or posted on the Company’s intranet.

 

9.             ADJUSTMENTS
UPON CHANGES IN COMMON STOCK; CORPORATE TRANSACTIONS.

 

(a)           Capitalization
Adjustments.  If any change is made
in, or other events occur with respect to, the Common Stock subject to the Plan
or subject to any Stock Award after the effective date of the Plan set forth in
Section 12 without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by
the Company (each a “Capitalization
Adjustment”)), the Board shall appropriately adjust: (i) the
class(es) and maximum number of securities subject to the Plan pursuant to Section 4(a),
and (ii) the class(es) and number of securities and price per share of
stock subject to outstanding Stock Awards. 
The Board shall make such adjustments, and its determination shall be
final, binding and conclusive. 
(Notwithstanding the foregoing, the conversion of any convertible
securities of the Company shall not be treated as a transaction “without
receipt of consideration” by the Company.)

 

(b)           Dissolution
or Liquidation.  In the event of a
dissolution or liquidation of the Company, all outstanding Stock Awards (other
than Stock Awards consisting of vested and outstanding shares of Common Stock
not subject to the Company’s right of repurchase) shall terminate immediately
prior to the completion of such dissolution or liquidation, and the shares of
Common Stock subject to the Company’s repurchase option may be repurchased by
the Company notwithstanding the fact that the holder of such Stock Award is
providing Continuous Service, provided,
however, that the Board may, in its sole discretion, cause some or
all Stock

 

12

 

Awards
to become fully vested, exercisable and/or no longer subject to repurchase or
forfeiture (to the extent such Stock Awards have not previously expired or
terminated) before the dissolution or liquidation is completed but contingent
on its completion.

 

(c)           Corporate
Transaction.  The following
provisions shall apply to Stock Awards in the event of a Corporate Transaction
unless otherwise provided in a written agreement between the Company or any
Affiliate and the holder of the Stock Award:

 

(i)            Stock Awards May Be Assumed.  In the event of a Corporate Transaction, any
surviving corporation or acquiring corporation (or the surviving or acquiring
corporation’s parent company) may assume or continue any or all Stock Awards
outstanding under the Plan or may substitute similar stock awards for Stock
Awards outstanding under the Plan (including but not limited to, awards to
acquire the same consideration paid to the stockholders of the Company pursuant
to the Corporate Transaction), and any reacquisition or repurchase rights held
by the Company in respect of Common Stock issued pursuant to Stock Awards may
be assigned by the Company to the successor of the Company (or the successor’s
parent company, if any), in connection with such Corporate Transaction.  A surviving corporation or acquiring
corporation may choose to assume or continue only a portion of a Stock Award or
substitute a similar stock award for only a portion of a Stock Award.  The terms of any assumption, continuation or
substitution shall be set by the Board in accordance with the provisions of Section 3(b).

 

(ii)           Stock Awards Held by Current Participants.  In the event of a Corporate Transaction in
which the surviving corporation or acquiring corporation (or its parent
company) does not assume or continue such outstanding Stock Awards or
substitute similar stock awards for such outstanding Stock Awards, then with
respect to Stock Awards that have not been assumed, continued or substituted
and that are held by Participants whose Continuous Service has not terminated
prior to the effective time of the Corporate Transaction (referred to as the “Current Participants”),
the vesting of such Stock Awards (and, if applicable, the time at which such
Stock Awards may be exercised) shall (contingent upon the effectiveness of the
Corporate Transaction) be accelerated in full to a date prior to the effective
time of such Corporate Transaction as the Board shall determine (or, if the Board
shall not determine such a date, to the date that is five (5) days prior
to the effective time of the Corporate Transaction), and such Stock Awards
shall terminate if not exercised (if applicable) at or prior to the effective
time of the Corporate Transaction, and any reacquisition or repurchase rights
held by the Company with respect to such Stock Awards shall lapse (contingent
upon the effectiveness of the Corporate Transaction).

 

(iii)         Stock Awards Held by Former Participants.  In the event of a Corporate Transaction in
which the surviving corporation or acquiring corporation (or its parent
company) does not assume or continue such outstanding Stock Awards or
substitute similar stock awards for such outstanding Stock Awards, then with
respect to Stock Awards that have not been assumed, continued or substituted
and that are held by persons other than Current Participants, the vesting of
such Stock Awards (and, if applicable, the time at which such Stock Award may
be exercised) shall not be accelerated and such Stock Awards (other than a
Stock Award consisting of vested and outstanding shares of Common Stock not
subject to the Company’s right of repurchase) shall terminate if not exercised
(if applicable) prior to the

 

13

 

effective
time of the Corporate Transaction; provided,
however, that any reacquisition or repurchase rights held by the
Company with respect to such Stock Awards shall not terminate and may continue
to be exercised notwithstanding the Corporate Transaction.

 

(iv)          Payment for Stock Awards in Lieu of Exercise.  Notwithstanding the foregoing, in the event a
Stock Award will terminate if not exercised prior to the effective time of a
Corporate Transaction, the Board may provide, in its sole discretion, that the
holder of such Stock Award may not exercise such Stock Award but will receive a
payment, in such form as may be determined by the Board, equal in value to the
excess, if any, of (i) the value of the property the holder of the Stock
Award would have received upon the exercise of the Stock Award, over (ii) any
exercise price payable by such holder in connection with such exercise.

 

(d)           Change in
Control.  A Stock Award may be
subject to additional acceleration of vesting and exercisability upon or after
a Change in Control as may be provided in the Stock Award Agreement for such
Stock Award or as may be provided in any other written agreement between the
Company or any Affiliate and the Participant. 
A Stock Award may vest as to all or any portion of the shares subject to
the Stock Award (i) immediately upon the occurrence of a Change in
Control, whether or not such Stock Award is assumed, continued, or substituted
by a surviving or acquiring entity in the Change in Control, or (ii) in
the event a Participant’s Continuous Service is terminated, actually or
constructively, within a designated period following the occurrence of a Change
in Control.  In the absence of such
provisions, no such acceleration shall occur.

 

10.          AMENDMENT
OF THE PLAN AND STOCK AWARDS.

 

(a)           Amendment
of Plan.  Subject to the limitations,
if any, of applicable law, the Board at any time, and from time to time, may
amend the Plan.  However, except as
provided in Section 9(a) relating to Capitalization Adjustments, no
amendment shall be effective unless approved by the stockholders of the Company
to the extent stockholder approval is necessary to satisfy applicable law.

 

(b)           Contemplated
Amendments.  It is expressly
contemplated that the Board may amend the Plan in any respect the Board deems
necessary or advisable to provide Eligible Employees with the maximum benefits
provided hereunder.

 

(c)           No
Impairment of Rights.  Rights under
any Stock Award granted before amendment of the Plan shall not be impaired by
any amendment of the Plan unless (i) the Company requests the consent of
the affected Participant, and (ii) such Participant consents in writing.

 

(d)           Amendment
of Stock Awards.  The Board, at any
time and from time to time, may amend the terms of any one or more Stock Awards,
including, but not limited to, amendments to provide terms more favorable than
previously provided in the Stock Award Agreement, subject to any specified
limits in the Plan that are not subject to Board discretion; provided, however, that the rights under any Stock Award
shall not be impaired by any such amendment unless (i) the Company
requests the consent of the affected Participant, and (ii) such
Participant consents in writing.

 

14

 

11.                               TERMINATION
OR SUSPENSION OF THE PLAN.

 

(a)                                  Plan
Term.  The Board may suspend or
terminate the Plan at any time.  Unless
sooner terminated, the Plan shall terminate on the day before the tenth (10th)
anniversary of the date the Plan is adopted by the Board.  No Stock Awards may be granted under the Plan
while the Plan is suspended or after it is terminated.

 

(b)                                  No
Impairment of Rights.  Suspension or
termination of the Plan shall not impair rights and obligations under any Stock
Award granted while the Plan is in effect except with the written consent of
the affected Participant.

 

12.                               EFFECTIVE
DATE OF PLAN.

 

The Plan shall become
effective as determined by the Board.

 

13.                               CHOICE
OF LAW.

 

The law of the State of
Delaware shall govern all questions concerning the construction, validity and
interpretation of this Plan, without regard to that state’s conflict of laws
rules.

 

15

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