Document:

2004 Stock Option Plan

 Exhibit 10.6 
  
 HARRY & DAVID HOLDINGS INC. 
  
 2004 Stock Option Plan 
  
 1. Purpose. The purpose of this Plan is to promote share ownership by key employees, directors, and consultants of Harry & David Holdings Inc.
(the “Company”), thereby reinforcing a mutuality of interest with other shareholders, and to enable the Company to attract, retain, and motivate key employees, directors, and consultants by permitting them to share in its growth.

  
 2. Definitions. As used in this Plan, 
  
 “Board” means the Board of Directors of the
Company and, to the extent of any delegation by the Board to a committee (or subcommittee thereof) pursuant to Section 11 of this Plan, such committee (or subcommittee). 
  
 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor
thereto. 
  
 “Common Shares” means
shares of the Common Stock, $.01 par value per share, of the Company. 
  
 “Date of Grant” means the date specified by the Board on which a grant of Options shall become effective. 
  
 “Director” means a member of the Board of Directors of the Company. 
  
 “Fair Market Value” means, as of any given day,
the amount determined by the Board to be the fair market value of a Common Share on such day. 
  
 “Incentive Stock Options” means Options that are intended to qualify as “incentive stock options” under Section 422 of
the Code or any successor provision. 
  
 “Initial Public Offering” means the first public offering of the Company’s equity securities registered under the Securities Act of 1933, as amended, or any successor statute, or such other event as a result of which
outstanding equity securities of the Company (or any successor entity) shall be publicly traded. 
  
 “Option” means the right to purchase Common Shares upon exercise of an option granted pursuant to Section 4 of this Plan.

  
 “Optionee” means the optionee named
in an agreement evidencing an outstanding Option. 
  
 “Option Price” means the purchase price payable on exercise of an Option. 

 “Option Shares” means Common Shares acquired upon the exercise of an Option.

  
 “Participant” means a person who is
selected by the Board to receive benefits under this Plan and who is at the time an employee, Director, or consultant of the Company or a Subsidiary, or who has agreed to commence serving in any of such capacities within 30 days after the Date of
Grant; provided, however, that with respect to a consultant, (i) such individual must be a natural person, (ii) such individual must provide bona fide services to the Company or a Subsidiary, and (iii) such services may not be in
connection with the offer or sale of securities in a capital-raising transaction and may not directly or indirectly promote or maintain a market for the Company’s securities. 
  
 “Plan” means this 2004 Stock Option Plan of the Company, as amended from time to time. 

 
 “Service” means, in regard to employees,
service as an employee of the Company or Subsidiary and means, in regard to directors or consultants, service as a director or consultant of the Company or Subsidiary. 
  
 “Stock Option Agreement” means the agreement entered into by the Company and Optionee pursuant to
Section 6 of this Plan. 
  
 “Subsidiary” means a corporation, company or other entity (i) more than 50 percent of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii)
which does not have outstanding shares or securities (as may be the case in a partnership, joint venture, or unincorporated association), but more than 50 percent of whose ownership interest representing the right generally to make decisions for
such other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company, except that for purposes of determining whether any person may be a Participant for purposes of any grant of Incentive Stock Options,
“Subsidiary” means any corporation in which at the time the Company owns or controls, directly or indirectly, more than 50 percent of the total combined voting power represented by all classes of stock issued by such corporation.

  
 3. Shares Available. Subject to adjustment as provided
in Section 5 of this Plan, the total number of Common Shares which may be issued and sold under Options granted pursuant to this Plan shall not exceed 81,081 Common Shares. Such shares may be treasury shares or shares of original issue or a
combination of the foregoing. 
  
 4. Options. The Board
may, from time to time and upon such terms and conditions as it may determine, authorize the granting of Options to Participants. Each such grant shall be subject to all of the requirements contained in the following provisions and such other terms
as the Board shall determine: 
  
 (a) Each grant
shall specify the number of Common Shares to which it pertains, subject to the limitations set forth in Section 3 of this Plan. 
  
 (b) Each grant shall specify an Option Price per share, which, in the case of an Incentive Stock Option, may not be less than the Fair
Market Value on the Date of Grant, but otherwise may be more or less than the Fair Market Value on the Date of Grant. 
  

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 (c) The Option Price shall be payable (i) in cash or by other consideration acceptable to
the Company, (ii) by the actual or constructive transfer to the Company of Common Shares owned by the Optionee for at least 6 months having a value at the time of exercise equal to the total Option Price, or (iii) by a combination of such methods of
payment. 
  
 (d) Any grant may provide for
deferred payment of the Option Price from the proceeds of sale through a broker on a date satisfactory to the Company of some or all of the Common Shares to which such exercise relates. 
  
 (e) Successive grants may be made to the same Optionee whether or not any Options previously granted to such
Optionee remain unexercised. 
  
 (f) Each grant
shall specify the period or periods of continuous Service by the Optionee with the Company or any of its Subsidiaries that is or are necessary before the Options or installments thereof will become exercisable at or after grant and may provide for
earlier exercise of the Option, including, without limitation, in the event of a change in control of the Company or similar event. 
  
 (g) Any grant may provide for a repurchase right or right of first refusal in favor of the Company upon the occurrence of certain
specified events. 
  
 (h) Options granted under
this Plan may be (i) options that are intended to qualify under particular provisions of the Code, including, without limitation, Incentive Stock Options, (ii) options that are not intended so to qualify under the Code, or (iii) combinations of the
foregoing. Incentive Stock Options may only be granted to Participants who meet the definition of “employees” under Section 3401(c) of the Code. 
  
 (i) Except as otherwise determined by the Board, no Option shall be transferable by the Optionee except by will or the laws of descent and
distribution. Except as otherwise determined by the Board, Options shall be exercisable during the Optionee’s lifetime only by the Optionee or, in the event of the Optionee’s legal incapacity to do so, the Optionee’s guardian or legal
representative acting on behalf of the Optionee in a fiduciary capacity under state law and court supervision. 
  
 (j) No Option shall be exercisable more than 10 years after the Date of Grant. 
  
 (k) An Optionee may exercise an Option in whole or in part
at any time and from time to time during the period within which an Option may be exercised. To exercise an Option, an Optionee shall give written notice to the Company specifying the number of Common Shares to be purchased and provide payment of
the Option Price and any other documentation that may be required by the Company. 
  
 (l) As of the date the conditions set forth in Section 4(k) are satisfied and an Optionee has exercised all or part of an Option, such
Optionee shall be treated for all purposes as the owner of record of the number of Common Shares purchased pursuant to such exercise of such Option (in whole or in part). 
  

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 (m) To the extent required for “Incentive Stock Option” status under Section
422 of the Code, the aggregate Fair Market Value (determined as of the Date of Grant) of the Common Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year under the Plan
and/or any other stock option plan of the Company (within the meaning of Section 424 of the Code) shall not exceed $100,000. 
  
 (n) The Board may permit Optionees to elect to defer the issuance of Common Shares under this Plan pursuant to such rules, procedures, or
programs as it may establish for purposes of this Plan. The Board also may provide that deferred issuances and settlements include the payment or crediting of dividend equivalents or interest on the deferral amounts. 
  
 (o) Any grant may specify performance conditions that must
be satisfied as a condition to the exercise or early exercise of the Option. 
  
 (p) The Board reserves the discretion after the Date of Grant to provide for (i) the payment of a cash bonus at the time of exercise; (ii) the availability of a loan at exercise; or (iii) the right to tender in
satisfaction of the Option Price nonforfeitable, unrestricted Common Shares, which are already owned by the Optionee and have a value at the time of exercise that is equal to the Option Price. 
  
 (q) Any grant may require, as a condition to the exercise of
the Option, that the Optionee agree to be bound by any shareholders agreement among all or certain shareholders of the Company that may be in effect at the time of exercise, or certain provisions of any such agreement that may be specified by the
Company. 
  
 5. Adjustments. The Board may make or provide
for such adjustments in the Option Price and in the number or kind of shares or other securities covered by outstanding Options as the Board in its sole discretion may in good faith determine to be equitably required in order to prevent dilution or
enlargement of the rights of Optionees that would otherwise result from any (a) stock dividend, stock split, combination of shares, recapitalization, or other change in the capital structure of the Company or (b) merger, consolidation, separation,
reorganization, partial or complete liquidation, issuance of rights or warrants to purchase stock. Moreover, in the event of any such transaction or event, the Board, in its discretion, may provide in substitution for any or all outstanding Options
under this Plan such alternative consideration as it, in good faith, may determine to be equitable in the circumstances and may require in connection therewith the surrender of all Options so replaced. The Board may also make or provide for such
adjustments in the number of shares specified in Section 3 of this Plan as the Board in its sole discretion, exercised in good faith, may determine is appropriate to reflect any transaction or event described in this Section 5; provided,
however, that any such adjustment to the number specified in Section 3 shall be made only if and to the extent that such adjustment would not cause any Option intended to qualify as an Incentive Stock Option to fail so to qualify. 
  
 6. Stock Option Agreement. The form of each Stock Option Agreement
shall be prescribed, and any Stock Option Agreement evidencing an outstanding Option may with the concurrence of the affected Optionee be amended, by the Board, provided that the terms and conditions of each Stock Option Agreement and amendment are
not inconsistent with this Plan 

  

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and that no amendment shall adversely affect the rights of the Optionee with respect to any outstanding Option without the Optionee’s consent.

  
 7. Cancellation of Options. The Board may, with the
concurrence of the affected Optionee, cancel any Option granted under this Plan. In the event of any such cancellation, the Board may authorize the granting of new Options (which may or may not cover the same number of Common Shares that had been
the subject of any prior option) in such manner, at such Option Price and subject to the same terms, conditions, and discretion as would have been applicable under this Plan had the cancelled Options not been granted. 
  
 8. Withholding. No later than the date as of which an amount first
becomes includible in the gross income of the Optionee for applicable income tax purposes with respect to any Option under the Plan, the Optionee shall pay to the Company, or make arrangements satisfactory to the Board regarding the payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Board, the minimum required withholding obligations may be settled with Common Shares, including Common Shares
that are part of the award that gives rise to the withholding requirement. The obligations of the Company under this Plan shall be conditioned on such payment or arrangements and the Company shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise due to the Optionee. 
  
 9. Governing Law. This Plan and all Options granted and actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Delaware. 
  
 10. Fractional Shares. The Company shall not be required to issue any
fractional Common Shares pursuant to this Plan. The Board may provide for the elimination of fractional Common Shares or for the settlement of fractional Common Shares for cash. 
  
 11. Administration. This Plan shall be administered by the Board, which may from time to time delegate all or any
part of its authority under this Plan to a committee of not less than two Directors appointed by the Board. To the extent of any such delegation, references in this Plan to the Board shall also refer to the committee. A majority of the members of
the committee shall constitute a quorum, and any action taken by a majority of the members of the committee who are present at any meeting of the committee at which a quorum is present, or any actions of the committee that are unanimously approved
by the members of the committee in writing, shall be the acts of the committee. Any determination by the Board pursuant to any provision of this Plan shall be final and conclusive. No member of the Board shall be liable for any such determination
made in good faith. 
  
 12. Lock-Up Agreement. The Company
may, in its discretion, require in connection with an Initial Public Offering that a Participant agree that any Option Share not be sold, offered for sale, or otherwise disposed of for a period of time as determined by the Board, provided at least a
majority of the Company’s Directors and officers who hold Option Rights or Common Shares at such time are similarly bound. 
  
 13. Foreign Employees. In order to facilitate the making of any grant or combination of grants under this Plan, the Board may provide for such
special terms for awards 

  

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to Participants who are foreign nationals or who are employed by the Company or any Subsidiary outside of the United States of America as the Board may
consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Board may approve such sub-plans or supplements to or amendments, restatements, or alternative versions of this Plan as it may consider
necessary or appropriate for such purposes, without thereby affecting the terms of this Plan as in effect for any other purpose, and the Secretary or other appropriate officer of the Company may certify any such document as having been approved and
adopted in the same manner as this Plan. 
  
 14.
Amendment, Etc. 
  
 (a) The Board may at
any time and from time to time amend this Plan in whole or in part. 
  
 (b) The Board may condition the grant of any award or combination of awards authorized under this Plan on the surrender or deferral by the Participant of his or her right to receive a cash bonus or other compensation
otherwise payable by the Company or a Subsidiary to the Participant. 
  
 (c) In case of termination of employment or other service by reason of death, disability, or normal or early retirement, or in the case of hardship or other special circumstances, of an Optionee who holds an Option
not immediately exercisable in full, the Board may, in its sole discretion, accelerate the time at which such Option may be exercised. 
  
 (d) This Plan shall not confer upon any Participant any right with respect to continuance of employment or other service with the Company
or any Subsidiary, nor shall it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate such Participant’s employment or other service at any time. 
  
 (e) To the extent that any provision of this Plan would
prevent any Option that was intended to qualify as an Incentive Stock Option from qualifying as such, that provision shall be null and void with respect to such Option. Such provision, however, shall remain in effect for other Options and there
shall be no further effect on any provision of this Plan. 
  
 15.
Effective Date. This Plan shall be effective immediately; provided, however, that the effectiveness of this Plan is conditioned on its approval by the shareholders of the Company in accordance with applicable law within 12 months after
the date this Plan is adopted by the Board. All awards under this Plan shall be null and void if the Plan is not approved by the shareholders within such 12-month period. 
  
 16. Term. No Option shall be granted pursuant to this Plan on or after the tenth anniversary of the date this Plan is
adopted by the Board, but awards granted prior to such tenth anniversary may extend beyond that. The date this Plan is adopted by the Board shall be February 18, 2005. 
  
 17. Compliance with Section 409A of the Code. The Plan is intended to comply with Section 409A of the Code and shall
be construed and interpreted in accordance with such intent. Grants under this Plan shall be treated in a manner that will comply with Section 409A of 

  

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the Code, including proposed, temporary or final regulations or any other guidance issued by the Secretary of Treasury and the Internal Revenue Service with
respect thereto (the “Guidance”). Any provision of the Plan that would cause a grant or any other payment under the Plan to fail to satisfy Section 409A of the Code shall have no force and effect until amended to comply with Code Section
409A (which amendment may be retroactive to the extent permitted by the Guidance). Notwithstanding the foregoing, nothing herein shall create any obligation by the Company to any participant should any grant or other payment fail to satisfy Section
409A of the Code. 
  

 7Form of Liquidity Event Award Agreement

 Exhibit 10.7 
  
 LIQUIDITY EVENT AWARD AGREEMENT 
  
 This Liquidity Event Award Agreement (this “Agreement”) is made and entered into as of
                             (the “Effective Date”), by and between Harry & David
Holdings Inc., a Delaware corporation (the “Company”), and                              (the
“Executive”). 
  
 RECITALS: 
  
 A. The Executive is a key employee of the Company or an Affiliate of the
Company and has made and is expected to continue to make major contributions to the short-term and long-term profitability, growth and financial strength of the Company and its Affiliates. 
  
 B. To provide cash-based awards upon a Change in Control to designated key
employees to encourage the continued attention and dedication of such employees to their assigned duties with the Company and its Affiliates, the Board of Directors of the Company (the “Board”) has approved this Agreement, and the Board
has authorized certain of its officers (other than Executive) to execute this Agreement on behalf of the Company. 
  
 AGREEMENTS: 
  
 NOW THEREFORE, in consideration of the premises and of the covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows: 
  
 1. Operation of
the Agreement. (a) The Executive agrees that the Company and its shareholders are under no obligation to consummate a Change in Control transaction. 
  
 (b) Payments made to the Executive pursuant to the terms of this Agreement will be subject to withholding of all applicable federal, state, local and
other taxes required by law. 
  
 2. Award; Payment. The
Executive will be eligible to receive a Liquidity Event Award equal to [    ]% of the net amount of proceeds actually distributed to the Sponsors on the closing date of the sale of Harry & David Operations Corp.’s Senior
Floating Rate Notes due 2012 and 9% Senior Notes Due 2013 (the “Liquidity Event Award”), the vested portion of which will be paid to the Executive in a lump sum cash payment on the earlier of (i) the occurrence of a 409A Change in Control
and (ii) June 17, 2011 (the “Payment Date”). Notwithstanding the foregoing, if marketable securities are received by the Company in connection with a Change in Control, then in lieu of the cash payment described above, the Executive will
receive a number of marketable securities received by the Company in such Change in Control that is equal to (i) the vested portion of the Liquidity Event Award divided by (ii) the closing sales price (“Closing Price”) of such marketable
security on the principal stock exchange (or NASDAQ) on which such marketable security is listed or traded on the date of such Change in Control.  
  
 3. Vesting of Liquidity Event Award. (a) The Executive will vest in all or a portion of the Liquidity Event Award if, and only if, each of the
provisions of this Section 3 is satisfied. 

 (b) Subject to Section 3(c), the Executive will vest in 20% of the Executive’s Liquidity Event Award
on each of June 17, 2005 and June 17, 2006, and will vest in 5% of the Executive’s Liquidity Event Award on September 17, 2006 and the 17th day of each third month thereafter until June 17, 2009 (each a “Vesting Date”). Notwithstanding the foregoing, in the event of a Change in Control, the portion of Executive’s Liquidity
Event Award that has not otherwise become vested will become immediately vested upon a termination of the Executive’s employment by the Company without Cause, provided such termination of employment occurs within 360 days following consummation
of such Change in Control. 
  
 (c) Except as otherwise provided in
Section 4, the Executive shall be vested in and have a non-forfeitable right to receive payment of the vested portion of the Liquidity Event Award if, and only if: 
  
 (i) the Executive is employed by the Company on the Vesting Date provided in Section 3(b) applicable to the portion of the
Liquidity Event Award in question; 
  
 (ii) a Change in Control
has occurred; 
  
 (iii) the sum of (A) the aggregate net sale
proceeds received by the Sponsors in such Change of Control and (B) return of capital from the sale of notes described in Section 2, from any subsequent securities offerings by the Company before such Change of Control, from any borrowings before
such Change of Control or from operations is at least $165,200,000; and 
  
 (iv) the Company has (A) unrestricted cash at least equal to the aggregate of the Executive’s Liquidity Event Award and similar awards made contemporaneously herewith or (B) if the consideration received in
connection with such Change in Control consists of marketable securities, a number of marketable securities at least equal to (x) the aggregate of the Executive’s Liquidity Event Award and all similar awards made contemporaneously herewith
divided by (y) the Closing Price. 
  
 4. Termination of
Employment. (a) Notwithstanding anything to the contrary in this Agreement or in any employment agreement to which the Executive and any Affiliate of the Company are parties, if the Executive’s employment is terminated prior to the Payment
Date for any reason, the Executive will forfeit and will not be entitled to receive payment of any unvested portion of the Liquidity Event Award (other than such portion, if any, that becomes vested as a result of such termination), unless the Board
determines otherwise in its sole discretion. 
  
 (b)
Notwithstanding the provisions of Section 4(a), if the Executive’s employment is terminated as a buyer pre-closing condition to consummation of a Change in Control, the Executive will be entitled to receive payment of the Liquidity Event Award.

  
 5. Certain Tax Matters. (a) If it is determined (as
hereafter provided) that any payment or distribution by the Company or any of its affiliates to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this 

  

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Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any stock option,
restricted stock, performance share, performance unit, stock appreciation right or similar right, or the lapse or termination of any restriction on, or the vesting or exercisability of, any of the foregoing (a “Payment”), would be
subject to the excise tax imposed by Section 4999 of the Code (or any successor provision thereto) by reason of being considered “contingent on a change in ownership or control” of the Company, within the meaning of Section 280G of the
Code (or any successor provision thereto) or to any similar tax imposed by state or local law, or any interest or penalties with respect to such tax (such tax or taxes, together with any such interest and penalties, being hereafter collectively
referred to as the “Excise Tax”), but for the application of this sentence, then the payments and benefits to be paid or provided under this Agreement will be reduced to the minimum extent necessary (but in no event to less than
zero) so that no portion of any such payment or benefit, as so reduced, will constitute an “excess parachute payment” within the meaning of Section 280G of the Code; provided, however, that the foregoing reduction will be
made only if and to the extent that such reduction would result in an increase in the aggregate payment and benefits to be provided, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the Code,
or any successor provision thereto, any tax imposed by any comparable provision of state law, and any applicable federal, state and local income and employment taxes). The determination of whether any reduction in such payments or benefits to be
provided under this Agreement or otherwise is required pursuant to the preceding sentence will be made at the expense of the Company, if requested by the Executive or the Company, by the Company’s independent accountants. The fact that the
Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 5 will not of itself limit or otherwise affect any other rights of the Executive other than pursuant to this Agreement. In the event
that any payment or benefit intended to be provided under this Agreement or otherwise is required to be reduced pursuant to this Section 5, the Executive will be entitled to designate the payments and/or benefits to be so reduced in order to give
effect to this Section 5. The Company will provide the Executive with all information reasonably requested by the Executive to permit Executive to make such designation. In the event that the Executive fails to make such designation within 10
business days after the effective date of the Executive’s termination of employment or other event giving rise to a potential Excise Tax, the Company may effect such reduction in any manner it deems appropriate. 
  
 (b) Notwithstanding Section 5(a), if no stock in the Company is readily
tradable on an established securities market or otherwise, within the meaning of Section 280G(b)(5) of the Code (or any successor provision thereto) at the time of any change in ownership or control of the Company, within the meaning of Section 280G
of the Code (or any successor provision thereto), then the Board and Executive may submit each Payment considered “contingent on a change in ownership or control” of the Company, within the meaning of Section 280G of the Code (or any
successor provision thereto), for approval by all voting shareholders of the Company as of the proposed effective date of such change in ownership or control, and provide all voting shareholders of the Company the disclosure information required
under Section 280G(b)(5)(B) of the Code (or any successor provision thereto) for purposes of Sections 280G and 4999 of the Code. Within a reasonable time after such disclosure, such shareholders will approve or not approve the Payments. Such
Payments will not be effective and binding on the parties hereto unless and until more than 75% of the voting shareholders approve such Payments and the amounts payable thereunder. In the event that the Board and the Executive cannot agree 

  

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on which Payments will be submitted to shareholders as described above or the shareholders of the Company do not approve any such Payment, the provisions of
Section 5(a) will apply. 
  
 6. Arbitration. Except as
otherwise provided in this Agreement, any and all disputes between the Executive and the Company that arise out of this Agreement will be resolved through final and binding arbitration. Binding arbitration will be conducted in Portland, Oregon in
accordance with the rules and regulations of the American Arbitration Association. Each party will pay one-half of the cost of the arbitration filing and hearing fees, and the cost of the arbitrator; each side will bear its own attorneys’ fees,
that is, the arbitrator will not have authority to award attorneys’ fees unless a statutory section at issue in the dispute authorizes the award of attorneys’ fees to the prevailing party, in which case the arbitrator has authority to make
such award as permitted by the statute in question. The Executive understands and agrees that the arbitration will be instead of any civil litigation and that this will mean that the Executive is waiving the Executive’s right to a jury trial as
to such claims. The parties further understand and agree that the arbitrator’s decision will be final and binding to the fullest extent permitted by law and enforceable by any court having jurisdiction thereof. 
  
 7. Definitions. Terms used in this Agreement with initial capital
letters will have the following meanings: 
  
 (a) “409A
Change in Control” means the occurrence of an event that constitutes a change in the ownership or effective control of the Company within the meaning of Section 409A of the Code and the Guidance. 
  
 (b) “Affiliate” means, with respect to a Person, another Person
that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person. 
  
 (c) “Agreement” has the meaning set forth in the introductory paragraph of this Agreement. 
  
 (d) “Board” has the meaning set forth in recital B. 
  
 (e) “Cause” shall have the meaning set forth in any employment
agreement to which the Company and the Executive are parties or, if the Company and the Executive are not parties to any such employment agreement, shall mean the Executive shall have committed prior to termination of employment any of the following
acts: 
  
 (i) an intentional act of fraud, embezzlement, theft,
or any other material violation of law in connection with the Executive’s duties or in the course of the Executive’s employment; 
  
 (ii) intentional wrongful damage to material assets of the Company; 
  
 (iii) intentional wrongful disclosure of material confidential information of the Company; 
  

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 (iv) intentional wrongful engagement in any competitive activity that would constitute a material breach
of the duty of loyalty; or 
  
 (v) intentional breach of any
stated material employment policy of the Company. 
  
 (f)
“Change in Control” means and shall be deemed to occur if any of the following occurs: 
  
 (i) the acquisition, after the date hereof, by an individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the combined voting power of the Voting Securities of the Company then
outstanding after giving effect to such acquisition; or 
  
 (ii)
individuals who, on the date hereof, constituted the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then serving and comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents; or 
  
 (iii) the Company is merged or consolidated or reorganized into or with another corporation or other legal entity, and as a result of such merger,
consolidation or reorganization less than a majority of the combined voting power of the Voting Securities of such corporation or entity immediately after such transaction is held in the aggregate by the holders of Voting Securities of the Company
immediately prior to such merger, consolidation or reorganization; or 
  
 (iv) the Company sells or otherwise transfers all or substantially all of its assets to another corporation or legal entity, and as a result of such sale or transfer, less than a majority of the combined voting power of the then outstanding
Voting Securities of such corporation or entity immediately after such sale or transfer is held in the aggregate by the holders of Voting Securities of the Company immediately prior to such sale or transfer; or 
  
 (v) approval by the Board or the shareholders of the Company of a complete
or substantial liquidation or dissolution of the Company. 
  

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 Notwithstanding the foregoing, (x) the initial public offering of the Company’s capital stock under
the Securities Act of 1933, as amended, will not constitute a Change in Control and (y) unless otherwise determined in a specific case by majority vote of the Board, a “Change in Control” shall not be deemed to have occurred under clause
(i) of the preceding paragraph of this definition solely because (A) the Company, any Affiliate of Wasserstein & Co., LP or of Highfields Capital Management LP, (B) a Subsidiary, (C) any one or more members of executive management of the Company
or its Affiliates, (D) any employee stock ownership plan or any other employee benefit plan of the Company or any Subsidiary or (E) any combination of the persons or entities referred to in the preceding clauses (A) through (D) becomes the actual or
beneficial owner (within the meaning of rule 13d-3 promulgated under the Exchange Act) of 50% or more of the Voting Securities of the Company, or files or becomes obligated to file a Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) under the Exchange Act disclosing beneficial ownership by it of Voting Securities of the Company, or because the Company reports that a change in control of the Company has or will occur in the
future by reason of such beneficial ownership. 
  
 (g)
“Closing Date” means the consummation of a Change in Control transaction. 
  
 (h) “Code” means the Internal Revenue Code of 1986, as amended. 
  
 (i) “Company” has the meaning set forth in the introductory paragraph of this Agreement. 
  
 (j) “Executive” has the meaning set forth in the introductory
paragraph of this Agreement. 
  
 (k) “Guidance” has the
meaning set forth in Section 8. 
  
 (l) “Liquidity Event
Award” has the meaning set forth in Section 2. 
  
 (m)
“Payment Date” has the meaning set forth in Section 2. 
  
 (n) “Person” means any individual or legal entity, including any governmental entity or authority. 
  
 (o) “Sponsors” means Affiliates of Wasserstein & Co. and of Highfields Capital Management LP who acquired common shares of the Company on or
before June 17, 2004. 
  
 (p) “Subsidiary” means a
corporation, company or other entity (i) more than 50 percent of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or
securities (as may be the case in a partnership, joint venture, or unincorporated association), but more than 50 percent of whose ownership interest representing the right generally to make decisions for such other entity is, now or hereafter, owned
or controlled, directly or indirectly, by the Company 
  
 (q)
“Voting Securities” means, with respect to any Person, any securities entitled to vote (including by the execution of action by written consent) generally in the election of 

  

 6 

 
directors of such Person (together with direct or indirect options or other rights to acquire any such securities). 
  
 8. Compliance with Law. This Agreement is intended to comply with
Section 409A of the Code and shall be construed and interpreted in accordance with such intent. To the extent that the Liquidity Event Award is subject to Section 409A of the Code, it shall be paid in a manner that will comply with Section 409A of
the Code, including proposed, temporary or final regulations or any other guidance issued by the Secretary of the Treasury and the Internal Revenue Service with respect thereto (the “Guidance”). Any provision of this Agreement that would
cause the payment of the Liquidity Event Award to fail to satisfy Section 409A of the Code shall have no force and effect until amended to comply with Code Section 409A (which amendment may be retroactive to the extent permitted by the Guidance).

  
 9. Notices. (a) Any and all notices, demands or other
communications required or permitted to be given hereunder by any party must be in writing and will be deemed to have been validly given or made to another party (i) upon receipt, when delivered personally; (ii) five days after being sent by United
States certified mail, return receipt requested; or (iii) one day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses for such notices, demands or
other communications will be: 
  

			
	if to the Company, to:	  	Bear Creek Holdings Inc.
c/o Wasserstein & Co., LP
1301 Avenue of the Americas
44th Floor
New York, New York 10019
Attention: Board of Directors
		
	with a copy to:	  	Wasserstein & Co., LP
1301 Avenue of the Americas
44th Floor
New York, New York 10019
Attention: George L. Majoros, Jr.
		
	if to Executive to:	  	 

  
 (b) Any party hereto
may change its address for the purpose of receiving notices, demands and other communications as herein provided by a written notice given in the manner aforesaid to the other party hereto. 
  
 10. Miscellaneous. 
  
 (a) The interpretation, performance and enforcement of this Agreement will be
governed by the laws of the State of Delaware, without regard to principles of conflicts of law. 
  

 7 

 (b) If any of the terms of this Agreement or the application of any term to any Person or circumstance is
held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of the term to any other person or circumstance will not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal
will be reformed to the extent (and only to the extent) necessary to make it enforceable, valid or legal. To the extent any term held to be invalid, unenforceable or otherwise illegal cannot be reformed, it will be substituted for a term that
reflects the intent of the parties and the remainder of this Agreement will be binding on the Executive and the Company and their respective successors and assigns as if such invalid or illegal provisions were never included. 
  
 (c) No waiver or modification of this Agreement shall be binding unless it is
in writing, specifically referring to this Agreement and approved by the Board and signed by the parties hereto. No waiver by a party of a breach hereof by the other party shall be deemed to constitute a waiver of a future breach, whether of a
similar or dissimilar nature, except to the extent specifically provided in any written waiver under this Section 10(c). 
  
 (d) This Agreement shall inure to the benefit of the Company and the Executive and their respective successors, heirs (in the Executive’s case) and
assigns. No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company except that any such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which the Company
is not the continuing entity or the sale or liquidation of all or substantially all of the assets of the Company, provided that the assignee or transferee is the successor (and such successor shall thereafter be deemed the “Company”
for the purposes of this Agreement) to all or substantially all of the assets of the Company and such assignee or transferee assumes the liabilities, obligations and duties of the Company, as contained in this Agreement, either contractually or as a
matter of law. 
  
 (e) None of the Executive’s rights to
receive any form of compensation payable pursuant to this Agreement shall be assignable or transferable except through a testamentary disposition or by the laws of descent and distribution upon the Executive’s death. Any other attempted
assignment, transfer, conveyance or other disposition of any interest in the Executive’s rights to receive any form of compensation to be made by the Company pursuant to this Agreement shall be void. 
  
 (f) This Agreement may be executed in two counterparts, each of which shall
be deemed an original, but both of which taken together shall constitute one and the same agreement. 
  
 (g) Unless otherwise noted, the headings of sections herein are included solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. 
  
 (h)
Notwithstanding anything herein to the contrary, non-competition, forfeiture and other restrictive covenant provisions existing as of the Effective Date under any other arrangements, policies or agreements between the Executive and the Company will
not be affected by the terms of this Agreement and will continue to apply in accordance with their terms. 
  

 8 

  
 IN WITNESS WHEREOF, the
Company has caused this Agreement to be signed by its authorized officer pursuant to the authority of its Board, and the Executive has executed this Agreement as of the day and year first written above. 
  

	
	BEAR CREEK HOLDINGS INC.
	
	 
	 Authorized Officer

  

	
	Approved and Agreed:
	
	  
	Executive

  

 9

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