Document:

ExecFormofRestrictedStock2014

Executive Version

AMERICAN ASSETS TRUST, INC.
 
2011 EQUITY INCENTIVE AWARD PLAN

RESTRICTED STOCK AWARD GRANT NOTICE AND 
RESTRICTED STOCK AWARD AGREEMENT

American Assets Trust, Inc., a Maryland corporation (the “Company”), pursuant to its 2011 Equity Incentive Award Plan (the “Plan”), hereby grants to the individual listed below (“Participant”) the number of shares of the Company’s Stock (the “Shares”) set forth below.  This Restricted Stock award (the “Award”) is subject to all of the terms and conditions as set forth herein and in the Restricted Stock Award Agreement attached hereto as Exhibit A (the “Restricted Stock Agreement”) and the Plan, which are incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Restricted Stock Agreement.

	
		
	Participant:
	[__________]

	Grant Date:
	[__________]

	Grant Number:
	[__________]

	Maximum Number of Shares of Restricted Stock (“Maximum Shares”):
	[__________]

	Target Number of Shares of Restricted Stock (“Target Shares”):
	[__________]

	Vesting Schedule:
	This Award shall vest in accordance with the vesting schedule set forth on Exhibit C attached hereto.

By his or her signature, Participant agrees to be bound by the terms and conditions of the Plan, the Restricted Stock Agreement and this Grant Notice. Participant has reviewed the Restricted Stock Agreement, the Plan and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Restricted Stock Agreement and the Plan.  Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator of the Plan upon any questions arising under the Plan, this Grant Notice or the Restricted Stock Agreement.

	
									
	AMERICAN ASSETS TRUST, INC.
	 
	PARTICIPANT

	By:
	 
	 
	By:
	 

	 
	John W. Chamberlain, CEO
11455 El Camino Real, #200
San Diego, CA 92130
	 
	 
	[__________]
11455 El Camino Real, #200
San Diego, CA 92130

Executive Version

EXHIBIT A
TO RESTRICTED STOCK AWARD GRANT NOTICE
RESTRICTED STOCK AWARD AGREEMENT
Pursuant to the Restricted Stock Award Grant Notice (“Grant Notice”) to which this Restricted Stock Award Agreement (this “Agreement”) is attached, American Assets Trust, Inc., a Maryland corporation (the “Company”), has granted to Participant the right to purchase the number of shares of Restricted Stock under the Company’s 2011 Equity Incentive Award Plan (the “Plan”) indicated in the Grant Notice. The Shares are subject to the terms and conditions of the Plan which are incorporated herein by reference.  Capitalized terms not specifically defined herein shall have the meanings specified in the Plan and the Grant Notice.
 
ARTICLE I
ISSUANCE OF SHARES
1.1    Issuance of Shares.  Pursuant to the Plan and subject to the terms and conditions of this Agreement, effective on the Grant Date, the Company irrevocably grants to Participant the number of shares of Stock set forth in the Grant Notice (the “Shares”), in consideration of Participant’s employment with or service to the Company, the Partnership or one of their Subsidiaries on or before the Grant Date, for which the Administrator has determined Participant has not been fully compensated, and the Administrator has determined that the benefit received by the Company as a result of such employment or service has a value that exceeds the aggregate par value of the Shares, which Shares, when issued in accordance with the terms hereof, shall be fully paid and nonassessable. 
1.2    Issuance Mechanics.  On the Grant Date, the Company shall issue the Shares to Participant and shall (a) cause a stock certificate or certificates representing the Shares to be registered in the name of Participant, or (b) cause such Shares to be held in book entry form.  If a stock certificate is issued, it shall be delivered to and held in custody by the Company and shall bear the restrictive legends required by Section 4.1 below.  If the Shares are held in book entry form, then such entry will reflect that the Shares are subject to the restrictions of this Agreement.  Participant’s execution of a stock assignment in the form attached as Exhibit B to the Grant Notice (the “Stock Assignment”) shall be a condition to the issuance of the Shares.
ARTICLE II
FORFEITURE AND TRANSFER RESTRICTIONS
2.1    Forfeiture Restriction.  Subject to the provisions of Section 2.2 below, in the event of Participant’s cessation of Service for any reason, including as a result of Participant’s death or Disability, all of the Unreleased Shares (as defined below) shall thereupon be forfeited immediately and without any further action by the Company (the “Forfeiture Restriction”).  Upon the occurrence of such a forfeiture, the Company shall become the legal and beneficial owner of the Unreleased Shares and all rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name the number of Unreleased Shares being forfeited by Participant.  The Unreleased Shares and Participant’s executed stock assignment in the form attached as Exhibit B to the Grant Notice shall be held by the Company in accordance with Section 2.4 until the Shares are forfeited as provided in this Section 2.1, until such Unreleased Shares are fully released from the Forfeiture Restriction, or until such time as this Agreement 

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no longer is in effect.  Participant hereby authorizes and directs the Secretary of the Company, or such other person designated by the Committee, to transfer the Unreleased Shares which have been forfeited pursuant to this Section 2.1 from Participant to the Company.  

2.2    Release of Shares from Forfeiture Restriction.  The Shares shall be released from the Forfeiture Restriction in accordance with the vesting schedule set forth in Exhibit C attached to the Grant Notice.  Any of the Shares which, from time to time, have not yet been released from the Forfeiture Restriction are referred to herein as “Unreleased Shares.”  As soon as administratively practicable following the release of any Shares from the Forfeiture Restriction, the Company shall, as applicable, either deliver to Participant the certificate or certificates representing such Shares in the Company’s possession belonging to Participant, or, if the Shares are held in book entry form, then the Company shall remove the notations on the book form.  Participant (or the beneficiary or personal representative of Participant in the event of Participant’s death or incapacity, as the case may be) shall deliver to the Company any representations or other documents or assurances as the Company or its representatives deem necessary or advisable in connection with any such delivery.

2.3    Transfer Restriction.  No Unreleased Shares or any interest or right therein or part thereof shall be liable for the debts, contracts or engagements of the Participant or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect.
2.4    Escrow.  The Unreleased Shares and Participant’s executed Stock Assignment shall be held by the Company until the Shares are forfeited as provided in Section 2.1, until such Unreleased Shares are fully released from the Forfeiture Restriction, or until such time as this Agreement no longer is in effect.  In such event, Participant shall not retain physical custody of any certificates representing Unreleased Shares issued to Participant.  Participant, by acceptance of this Award, shall be deemed to appoint, and does so appoint, the Company and each of its authorized representatives as Participant’s attorney(s)-in-fact to effect any transfer of forfeited Unreleased Shares to the Company as may be required pursuant to the Plan or this Agreement, and to execute such representations or other documents or assurances as the Company or such representatives deem necessary or advisable in connection with any such transfer.  The Company, or its designee, shall not be liable for any act it may do or omit to do with respect to holding the Shares in escrow and while acting in good faith and in the exercise of its judgment.
2.5    Rights as Stockholder.  Except as otherwise provided herein, upon issuance of the Shares by the Company, Participant shall have all the rights of a stockholder with respect to said Shares, subject to the restrictions herein, including the right to vote the Shares and to receive all dividends or other distributions paid or made with respect to the Shares.
2.6    Ownership Limit and REIT Status.  The Forfeiture Restriction on the Shares shall not lapse if the lapsing of such restrictions would likely result in any of the following:    
(a)    a violation of the restrictions or limitations on ownership provided for from time to time under the terms of the organizational documents of the Company; or

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(b)    income to the Company that could impair the Company’s status as a real estate investment trust, within the meaning of Section 856 through 860 of the Code.    
ARTICLE III
TAXATION REPRESENTATIONS

3.1    Tax Representation.  Participant represents to the Company that Participant has reviewed with his or her own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement.  Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.  Participant understands that Participant (and not the Company) shall be responsible for his or her own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.  
3.2    No 83(b) Election Without Administrator Consent.  Participant covenants that he or she will not make an election under Section 83(b) of the Code with respect to the receipt of any of the Shares without the consent of the Administrator, which the Administrator may grant or withhold in its sole discretion.
3.3    Tax Withholding.  Notwithstanding anything to the contrary in this Agreement, the Company, the Partnership and their Subsidiaries shall be entitled to require payment of any sums required by federal, state and local income and employment or payroll tax law to be withheld with respect to the issuance, lapsing of restrictions on or sale of the Shares.  The Company, the Partnership and their Subsidiaries may withhold or the Participant may make such payment in one or more of the forms specified below:
(a)     by cash or check made payable to the Company; 

(b)     by the deduction of such amount from other compensation payable to Participant; 

(c)     with respect to any withholding taxes arising in connection with the vesting of the Shares, and with the consent of the Administrator, through the delivery of a notice that Participant has placed a market sell order with a broker acceptable to the Company with respect to those Shares that are then becoming vested and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company, the Partnership or any Subsidiary with respect to which the withholding obligation arises in satisfaction of such withholding taxes; provided that payment of such proceeds is then made to the Company, the Partnership or the applicable Subsidiary at such time as may be required by the Administrator, but in any event not later the settlement of such;
(d)    with respect to any withholding taxes arising in connection with the vesting of the Shares, and with the consent of the Administrator, by requesting that the Company withhold a net number of vested Shares otherwise deliverable pursuant to this Agreement having a then current Fair Market Value not exceeding the amount necessary to satisfy the withholding obligation of the Company, the Partnership and their Subsidiaries based on the minimum applicable statutory withholding rates for federal, state and local income tax and payroll tax purposes;

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(e)     with respect to any withholding taxes arising in connection with the vesting of the Shares, and with the consent of the Administrator, by tendering vested shares of Stock owned by Participant having a then current Fair Market Value not exceeding the amount necessary to satisfy the withholding obligation of the Company, the Partnership and their Subsidiaries based on the minimum applicable statutory withholding rates for federal, state and local income tax and payroll tax purposes; or 

(f)     in any combination of the foregoing. 

In the event Participant fails to provide timely payment of all sums required pursuant to this Section 3.3, the Company shall have the right and option, but not the obligation, to treat such failure as an election by Participant to satisfy all or any portion of Participant’s required payment obligation pursuant to clauses (c) or (d) above, at the Company’s option.  The Company shall not be obligated to deliver any stock certificate representing vested Shares to Participant or Participant’s legal representative, or, if the Shares are held in book entry form, to remove the notations on the book form, unless and until Participant or Participant’s legal representative shall have paid or otherwise satisfied in full the amount of all federal, state and local taxes applicable to the taxable income of Participant resulting from the issuance, lapsing of restrictions on or sale of the Shares.

In the event any tax withholding obligation arising in connection with the Shares will be satisfied under clause (c) above, then the Company may elect to instruct any brokerage firm determined acceptable to the Company for such purpose to sell on Participant’s behalf a whole number of shares of Stock from those Shares that are then becoming vested as the Company determines to be appropriate to generate cash proceeds sufficient to satisfy the tax withholding obligation and to remit the proceeds of such sale to the Company, the Partnership or any Subsidiary with respect to which the withholding obligation arises.  Participant’s acceptance of this Award constitutes Participant’s instruction and authorization to the Company and such brokerage firm to complete the transactions described in this paragraph, including the transactions described in the previous sentence, as applicable.  The Company may refuse to deliver any certificate representing the Shares to Participant or his or her legal representative until the foregoing tax withholding obligations are satisfied.  In the event of any broker-assisted sale of shares of Stock in connection with the payment of withholding taxes as provided in this Section 3.3: (i) any shares of Stock to be sold through a broker-assisted sale will be sold on the day the tax withholding obligation arises or as soon thereafter as practicable; (ii) such shares of Stock may be sold as part of a block trade with other participants in the Plan in which all participants receive an average price; (iii) Participant will be responsible for all broker’s fees and other costs of sale, and Participant agrees to indemnify and hold the Company harmless from any losses, costs, damages, or expenses relating to any such sale; (iv) to the extent the proceeds of such sale exceed the applicable tax withholding obligation, the Company agrees to pay such excess in cash to Participant as soon as reasonably practicable; (v) Participant acknowledges that the Company or its designee is under no obligation to arrange for such sale at any particular price, and that the proceeds of any such sale may not be sufficient to satisfy the applicable tax withholding obligation; and (vi) in the event the proceeds of such sale are insufficient to satisfy the applicable tax withholding obligation, Participant agrees to pay immediately upon demand to the Company, the Partnership or any Subsidiary with respect to which the withholding obligation arises an amount in cash sufficient to satisfy any remaining portion of the Company’s, the Partnership's or the applicable Subsidiary’s withholding obligation.

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ARTICLE IV
RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS
4.1    Legends.  The certificate or certificates representing the Shares, if any, shall bear the following legend (as well as any legends required by the Company’s charter and applicable state and federal corporate and securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO FORFEITURE IN FAVOR OF THE COMPANY AND MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A RESTRICTED STOCK AWARD AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
4.2    Refusal to Transfer; Stop-Transfer Notices.  The Company shall not be required (a) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (b) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.  Participant agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.
4.3    Removal of Legend.  After such time as the Forfeiture Restriction shall have lapsed with respect to the Shares, and upon Participant’s request, a new certificate or certificates representing such Shares shall be issued without the legend referred to in Section 4.1, and delivered to Participant.  If the Shares are held in book entry form, the Company shall cause any restrictions noted on the book form to be removed.
ARTICLE V
MISCELLANEOUS
5.1    Governing Law.  This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law.
5.2    Entire Agreement; Enforcement of Rights.   This Agreement and the Plan set forth the entire agreement and understanding of the parties relating to the subject matter herein and merge all prior discussions between them.  No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement.  

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5.3    Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith.  In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of the Agreement shall be interpreted as if such provision were so excluded and (c) the balance of the Agreement shall be enforceable in accordance with its terms.
5.4    Notices.  Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by electronic mail (with return receipt requested and received) or fax or forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the party to be notified, if to the Company, at its principal offices, and if to Participant, at Participant’s address, electronic mail address or fax number in the Company’s employee records or as subsequently modified by written notice.
5.5    Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.
5.6    Successors and Assigns.  The rights and benefits of this Agreement shall inure to the benefit of, and be enforceable by the Company’s successors and assigns.  The Company may assign its rights under this Agreement to any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company without the prior written consent of Participant. The rights and obligations of Participant under this Agreement may only be assigned with the prior written consent of the Company.
5.7    Conformity to Securities Laws.  Participant acknowledges that the Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and state securities laws and regulations.  Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Shares are to be issued, only in such a manner as to conform to such laws, rules and regulations.  To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

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5.8    NO RIGHT TO CONTINUED SERVICE.  THE PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE LAPSING OF THE FORFEITURE RESTRICTION PURSUANT TO SECTION 2.1 HEREOF IS EARNED ONLY BY CONTINUING SERVICE TO THE COMPANY, THE PARTNERSHIP OR ONE OF THEIR SUBSIDIARIES AS AN “AT WILL” EMPLOYEE OR CONSULTANT OF THE COMPANY, THE PARTNERSHIP OR ONE OF THEIR SUBSIDIARIES OR AN INDEPENDENT DIRECTOR OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED OR ACQUIRING SHARES HEREUNDER).   THE PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE FORFEITURE RESTRICTION SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE, CONSULTANT OR INDEPENDENT DIRECTOR FOR SUCH PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH THE COMPANY’S, THE PARTNERSHIP’S OR ANY OF THEIR SUBSIDIARIES’ RIGHT TO TERMINATE THE PARTICIPANT’S EMPLOYMENT OR SERVICE TO THE COMPANY AT ANY TIME, WITH OR WITHOUT CAUSE.

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Executive Version

EXHIBIT B
TO RESTRICTED STOCK AWARD GRANT NOTICE
STOCK ASSIGNMENT

FOR VALUE RECEIVED, the undersigned, [__________], hereby sells, assigns and transfers unto AMERICAN ASSETS TRUST, INC., a Maryland corporation, _______ shares of the Common Stock of AMERICAN ASSETS TRUST, INC., a Maryland corporation, standing in its name of the books of said corporation represented by Certificate No. _____ herewith and do hereby irrevocably constitute and appoint ___________________ to transfer the said stock on the books of the within named corporation with full power of substitution in the premises.
This Stock Assignment may be used only in accordance with the Restricted Stock Award Grant Notice and Restricted Stock Award Agreement between AMERICAN ASSETS TRUST, INC. and the undersigned dated March 25, 2014.

	
					
	Dated:
	_______________, ________
	______________________________
	 

	 
	 
	[__________]    
	 
	 

 

INSTRUCTIONS:  Please do not fill in the blanks other than the signature line.  The purpose of this assignment is to enable the Company to enforce the Forfeiture Restriction as set forth in the Restricted Stock Award Grant Notice and Restricted Stock Award Agreement, without requiring additional signatures on the part of the stockholder.

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Executive Version

EXHIBIT C
TO RESTRICTED STOCK AWARD GRANT NOTICE
VESTING SCHEDULE
1.Performance Vesting.  On each Measurement Date (as defined below), up to one-third of the Maximum Shares (as defined in the Grant Notice) subject to this Award shall be eligible to vest based on the Company’s FFO Multiple Rank (as defined below) as of such Measurement Date as follows:  
(a)    Vesting Provisions on Measurement Dates.   With respect to each Measurement Date, such number of Shares shall vest on the Determination Date (as defined below) for such Measurement Date as is determined by multiplying (i) the Target Shares set forth in the Grant Notice, by (ii) one-third, by (iii) the Performance Multiplier (as defined in the chart below) determined pursuant to the chart set forth below as of the Measurement Date (rounded to the nearest whole Share).  Subject to clauses (b), (c) and (d) below, Participant must continue to be an Employee, Independent Director or Consultant on each applicable Measurement Date in order to be eligible for vesting pursuant to this clause (a) with respect to such Measurement Date.
	
		
	

Relative Consensus FFO Ranking Relative to Peer Group on Measurement Date

	

Performance Multiplier

	Above the 85th Percentile 
	125%

	Above the 75th Percentile and At or Below the 85th Percentile 
	100%

	Above the 60th Percentile and At or Below the 75th Percentile 
	75%

	Below the 60th Percentile 
	0%

The Administrator retains the discretion to adjust the Performance Multiplier to address events or circumstances that are extraordinary or unusual in nature or infrequent in occurrence or that otherwise have an unintended effect on the calculation of the Performance Multiplier.

(b)    Effect of a Change in Control Prior to Final Measurement Date.  In the event of a Change in Control prior to the final Measurement Date, the number of Shares in which Participant shall be eligible to vest pursuant to this Award following the date of such Change in Control (the "Vesting Eligible Shares") shall be equal to (i) the Maximum Shares set forth in the Grant Notice, less (ii) any Shares that have previously vested and/or been forfeited under clause (a) above.  The Vesting Eligible Shares will continue to vest in equal installments on each of the Measurement Date(s) following the Change in Control, subject to Participant's continued status as an Employee, Independent Director or Consultant on each applicable Measurement Date; provided, however, that in the event of Participant’s Qualifying Termination (as defined below) or termination as a result of death or Disability (as defined below) following the date of a Change in Control, all of the Vesting Eligible Shares shall vest as of the date of termination.  

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(c)    Effect of Termination Due to Death or Disability Prior to Final Measurement Date and Prior to a Change in Control.  In the event of Participant’s termination of Service as a result of his death or Disability prior to the final Measurement Date and prior to a Change in Control, on the date of Participant's termination of Service, Participant shall vest in such number of Shares as is equal to (i) the Maximum Shares set forth in the Grant Notice, less (ii) any Shares that have previously vested and/or been forfeited under clause (a) above.  
(d)    Effect of a Qualifying Termination Prior to Final Measurement Date and Prior to a Change in Control.  In the event of Participant’s Qualifying Termination prior to the final Measurement Date and prior to a Change in Control, on the date of Participant's termination of Service, Participant shall vest in such number of Shares as is equal to the (i) (A) Maximum Shares set forth in the Grant Notice, less (B) any Shares that have previously vested and/or been forfeited under clause (a) above, multipled by (ii) fifty percent (50%).
2.    Forfeiture.  Any portion of the Award and any Shares which do not vest pursuant to Section 1 above shall automatically and without further action be cancelled and forfeited by Participant, and Participant shall have no further right or interest in or with respect to such portion of the Award or Shares.  For the avoidance of doubt, to the extent that the Performance Multiplier is less than 125% on any Measurement Date, such portion of the Shares as is equal to (a) one-third of the Maximum Shares, less (b) the number of Shares vesting as of such Measurement Date in accordance with clause (a), shall automatically and without further action be cancelled and forfeited by Participant, and Participant shall have no further right or interest in or with respect to such portion of the Award or Shares.  In no event shall a number of Shares greater than the Maximum Shares set forth in the Grant Notice vest pursuant to this Exhibit C.
  
3.    Interaction with Employment Agreement.  Notwithstanding anything to the contrary in the Employment Agreement (as defined below), the accelerated vesting of the Shares in the event of a Change in Control or Participant's termination of Service by reason of death, Disability or a Qualifying Termination shall be governed by the terms of this Agreement and not the provisions of the Employment Agreement.

4.    Definitions.  For purposes of this Exhibit C, the following terms shall have the meanings given below:
(a)    "Consensus FFO" means, for each Measurement Date for each of the Company and the Peer Companies, an average of the estimates of FFO given by institutional analysts covering the company for the calendar year following the applicable Measurement Date.
(b)    “Determination Date” means the date on which the Administrator certifies in writing the Company’s FFO Multiple Rank for the applicable Measurement Date.  The Determination Date will occur within thirty (30) days following the applicable Measurement Date.  
(c)    "Disability" shall have the meaning given to such term in the Employment Agreement.
(d)    “Employment Agreement” means that certain Amended and Restated Employment Agreement between the Company and Participant effective as of January 1, 2014.

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(e)    "FFO" means, for each of the Company and the Peer Companies, net income (loss) (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of depreciable operating property, impairment losses, real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures, as calculated in accordance with the standards established by the National Association of Real Estate Investment Trusts and in a manner generally consistent with the FFO calculations set forth in the company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and/or any supplemental information filed in connection therewith.
(f)    "FFO Multiple" means, for each of the Company and the Peer Companies, (i) the company's Measurement Market Value on the applicable Measurement Date divided by (ii) the company's Consensus FFO per share for such Measurement Date. 

(g)    "FFO Multiple Rank" means the Company's FFO Multiple as compared to the FFO Multiples of the Peer Companies as of the applicable Measurement Date, expressed as a percentile ranking. 
(h)    “Measurement Date” means each of November 30, 2014, 2015 and 2016, or, if any of such dates is not a trading day, the immediately preceding trading day. 
(i)    “Measurement Market Value” means, for each of the Company and the Peer Companies, the closing price per share of the company’s stock on the applicable Measurement Date as reported by the NYSE or such other authoritative source as the Administrator may determine.
(j)    “Peer Companies” means the companies set forth on Attachment 1 attached to this Exhibit C, provided that any listed company that experiences an acquisition, divestiture or other unexpected fundamental change in its business that is material taken as a whole such that is no longer reasonably comparable to the Company shall be eliminated by the Administrator.  

(k)    "Qualifying Termination" means (i) a termination of Participant's employment by the Company without Cause (as defined in the Employment Agreement) (and other than by reason of Participant's death or Disability), or (ii) a termination of Participant's employment by Participant for Good Reason (as defined in the Employment Agreement).

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Executive Version

ATTACHMENT 1 TO EXHIBIT C
TO RESTRICTED STOCK AWARD GRANT NOTICE
PEER COMPANIES
	
		
	Company
	Asset Segment(s)

	 
	 

	Washington Real Estate Investment Trust
	Multifamily, Office and Retail

	Investors Real Estate Trust
	Multifamily, Office and Retail

	 
	 

	Essex Property Trust
	Multifamily

	BRE Properties, Inc.
	Multifamily

	UDR, Inc.
	Multifamily

	Avalon Bay
	Multifamily

	 
	 

	Kilroy Realty Corporation
	Office x

	Hudson Pacific Properties
	Office

	Douglas Emmett Inc.
	Office

	Boston Properties
	Office

	 
	 

	Acadia Realty Trust
	Retail

	Weingarten Realty
	Retail

	Federal Realty Investment Trust
	Retail

	Regency Centers Corporation
	Retail

	DDR Inc.
	Retail

	Kimco Realty
	Retail

	Equity One
	Retail

C-1-1KRFT 10-Q Q1 2014 EX-10.1

EXHIBIT 10.1

KRAFT FOODS GROUP, INC.
2012 PERFORMANCE INCENTIVE PLAN 

GLOBAL STOCK OPTION AWARD AGREEMENT

KRAFT FOODS GROUP, INC., a Virginia corporation (the “Company”), hereby grants to the employee identified in the Award Statement (the “Optionee” identified in the “Award Statement”) attached hereto under the Kraft Foods Group,  Inc. 2012 Performance Incentive Plan (the “Plan”) a non-qualified stock option (the “Option”).  The Option entitles the Optionee to exercise up to the aggregate number of shares set forth in the Award Statement (the “Option Shares”) of the Company’s Common Stock, at the Grant Price per share set forth in the Award Statement (the “Grant Price”). Capitalized terms not otherwise defined in this Global Stock Option Award Agreement, including, as applicable, the non-competition and non-solicitation covenants provided in the attached Appendix A hereto and any country-specific terms set forth in Appendix B hereto (the “Agreement”), shall have the meaning set forth in the Plan.  The Option is subject to the following terms and conditions (including, as applicable, the non-competition and non-solicitation covenants provided in the attached Appendix A hereto and the country-specific terms set forth in Appendix B to the Agreement):

1.Vesting.  Prior to the satisfaction of the Vesting Requirements set forth in the Schedule in the Award Statement (the “Schedule”), the Option Shares may not be exercised except as provided in paragraph 2 below.

2.Vesting Upon Termination of Employment.  In the event of the termination of the Optionee’s employment with the Kraft Foods Group (as defined below in paragraph 14) prior to satisfaction of the Vesting Requirements other than by reason of Early Retirement (as defined below in paragraph 14) occurring after December 31 of the same year as the date of grant of the Option, Normal Retirement (as defined below in paragraph 14), death or Disability (as defined below in paragraph 14), or as otherwise determined by (or pursuant to authority granted by) the Committee administering the Plan, this Option shall not be exercisable with respect to any of the Option Shares set forth in the Award Statement.  If death or Disability of the Optionee occurs prior to satisfaction of the Vesting Requirements, this Option shall become immediately exercisable for 100% of the Option Shares set forth in the Award Statement.  If the Optionee’s employment with the Kraft Foods Group is terminated by reason of Normal Retirement, or by Early Retirement occurring after December 31 of the same year as the date of grant of the Option, the Option Shares shall continue to become exercisable as set forth on the Schedule as if such Optionee’s employment had not terminated.

3.Exercisability Upon Termination of Employment.  During the period commencing on the first date that the Vesting Requirements are satisfied (or, such earlier date determined in accordance with paragraph 2) until and including the Expiration Date set forth in the Schedule, this Option may be exercised in whole or in part with respect to such Option Shares, subject to the following provisions:

(a)    In the event that the Optionee’s employment is terminated by reason of Early Retirement occurring after December 31 of the same year as the date of grant of the Option, Normal Retirement, death or Disability, such Option Shares may be exercised on or prior to the Expiration Date;  

(b)    If employment is terminated by the Optionee (other than by Early Retirement occurring after December 31 of the same year as the date of grant of the Option, death, Disability or Normal Retirement), such Option Shares may be exercised for a period of 30 days from the effective date of termination;  

(c)    If, other than by death, Disability, Normal Retirement, or Early Retirement occurring after December 31 of the same year as the date of grant of the Option, the Optionee’s employment is terminated by the Company, a subsidiary or affiliate without cause for any reason (even if such termination constitutes unfair dismissal under the employment laws of the country where the Optionee resides or if the Optionee’s termination is later determined to be invalid and his or her employment is reinstated) or in the event of any other termination of 

1

employment caused directly or indirectly by the Company or a subsidiary or affiliate, such Option Shares may be exercised for a period of 12 months following such termination; provided, however, if the Optionee shall die within such 12-month period, such Option Shares may be exercised for a period of 12 months from the date of death of the Optionee; and

(d)    If the Optionee’s employment is involuntarily suspended or terminated for Cause, no Option Shares may be exercised during the period of suspension, or following such termination of employment.  

No provision of this paragraph 3 shall permit the exercise of any Option Shares after the Expiration Date. For purposes of this Agreement, the Optionee’s employment shall be deemed to be terminated (i) when he or she is no longer actively employed by the Kraft Foods Group (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Optionee is employed or the terms of the Optionee’s employment agreement, if any), and (ii) when he or she is no longer actively employed by a corporation, or a parent or subsidiary thereof, substituting a new option for this Option (or assuming this Option) in connection with a merger, consolidation, acquisition of property or stock, separation, split-up, reorganization, liquidation or similar transaction.  The Optionee shall not be considered actively employed during any notice period or period of pay in lieu of notice required under any applicable law or during any other period for which he or she is receiving, or is eligible to receive, salary continuation, notice period or garden leave payments, or other benefits under the Kraft Foods Group, Inc. Severance Pay Plan, or any similar plan maintained by the Kraft Foods Group or through other such arrangements that may be entered into that give rise to separation or notice pay, except in any case in which the Optionee is eligible for Normal Retirement or Early Retirement upon the expiration of salary continuation or other benefits.  The Committee shall have the exclusive discretion to determine when the Optionee is no longer actively employed for purposes of the Option.  Unless otherwise determined by the Committee, leaves of absence shall not constitute a termination of employment for purposes of this Agreement.  Notwithstanding the foregoing provisions and unless otherwise determined by the Company, this Option may only be exercised on a day that the NASDAQ Global Select Market (the “Exchange”) is open.  Accordingly, if the Expiration Date is a day the Exchange is closed, the Expiration Date shall be the immediately preceding day on which the Exchange is open.

4.    Exercise of Option and Withholding Taxes.  This Option may be exercised only in accordance with the procedures and limitations (including the country-specific terms set forth in Appendix B to the Agreement) set forth in the Company’s Equity Awards Plan Guide, as amended from time to time (the “Methods of Exercise”).  

The Optionee acknowledges that, regardless of any action taken by the Company or, if different, the Optionee’s employer (the “Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax‐related items related to the Optionee’s participation in the Plan and legally applicable to the Optionee (“Tax-Related Items”), is and remains the Optionee’s responsibility and may exceed the amount actually withheld by the Company or the Employer.  
The Optionee further acknowledges that the Company and/or the Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including the grant, vesting or exercise of the Option, the subsequent sale of Option Shares acquired pursuant to such exercise and the receipt of any dividends; and (b) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate the Optionee’s liability for Tax-Related Items or achieve any particular tax result.  Further if the Optionee becomes subject to any Tax-Related Items in more than one jurisdiction between the date of grant and the date of any relevant taxable event (including jurisdictions outside the United States), the Optionee acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for (including report) Tax-Related Items in more than one jurisdiction.

The Optionee acknowledges and agrees that the Company shall not be required to deliver the Option Shares being exercised upon any exercise of this Option unless it has received payment in a form acceptable to the Company for all applicable Tax-Related Items, as well as amounts due to the Company as “theoretical taxes” pursuant to the then-current international assignment and tax and/or social insurance equalization policies and 

2

procedures of the Kraft Foods Group, or arrangements satisfactory to the Company for the payment thereof have been made.  

In this regard, the Optionee authorizes the Company and/or the Employer, in their sole discretion and without any notice or further authorization by the Optionee, to withhold all applicable Tax-Related Items legally due by the Optionee and any theoretical taxes from the Optionee’s wages or other cash compensation paid by the Company and/or the Employer or from proceeds of the sale of Option Shares acquired at exercise either through a voluntary sale or through a mandatory sale arranged by the Company (on the Optionee’s behalf and at the Optionee’s direction pursuant to this authorization) without further consent.  In addition, unless otherwise determined by the Committee, Tax-Related Items or theoretical taxes may be paid with outstanding shares of the Company’s Common Stock, such shares to be valued at Fair Market Value on the exercise date, or by the Company withholding from Option Shares subject to the exercised Option, provided, however, that withholding in Option Shares shall be subject to approval by the Committee to the extent deemed necessary or advisable by counsel to the Company at the time of any relevant tax withholding event.  Finally, the Optionee agrees to pay to the Company or the Employer any amount of Tax-Related Items and theoretical taxes that the Company or the Employer may be required to withhold or account for as a result of the Optionee’s participation in the Plan that cannot be satisfied by the means previously described.  
To avoid any negative accounting treatment, the Company may withhold or account for Tax-Related Items or theoretical taxes by considering applicable minimum statutory withholding amounts or other applicable withholding rates.  If the obligation for Tax-Related Items and/or theoretical taxes is satisfied by withholding in Option Shares, for tax purposes, the Optionee is deemed to have been issued the full number of Option Shares subject to the exercised Option, notwithstanding that a number of the Option Shares are held back solely for the purpose of paying the Tax-Related Items.
5.    Cash-Out of Option.  The Committee may elect to cash out all or a portion of the Option Shares to be exercised pursuant to any Method of Exercise by paying the Optionee an amount in cash or Common Stock, or both, equal to the Fair Market Value of such shares on the exercise date less the Grant Price for such shares.
 
6.    Transfer Restrictions.  Unless otherwise required by law, this Option is not transferable or assignable by the Optionee in any manner other than by will or the laws of descent and distribution and is exercisable during the Optionee’s lifetime only by the Optionee.  The terms of the Plan and this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.  

7.    Adjustments.  In the event of any merger, share exchange, reorganization, consolidation, recapitalization, reclassification, distribution, stock dividend, stock split, reverse stock split, split-up, spin-off, issuance of rights or warrants or other similar transaction or event affecting the Common Stock after the date of this Award, the Committee shall make adjustments to the terms and provisions of this Award (including, without limiting the generality of the foregoing, terms and provisions relating to the Grant Price and the number and kind of shares subject to this Option) as it deems appropriate, including, but not limited to, the substitution of equity interests in other entities involved in such transactions, to provide for cash payments in lieu of the Option, and to determine whether continued employment with any entity resulting from such transaction or event will or will not be treated as a continued employment with the Kraft Foods Group, in each case, subject to any Committee action specifically addressing any such adjustments, cash payments or continued employment treatment. 

8.    Successors.  Whenever the word “Optionee” is used herein under circumstances such that the provision should logically be construed to apply to the executors, the administrators, or the person or persons to whom this Option may be transferred pursuant to this Agreement, it shall be deemed to include such person or persons.  This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall acquire any rights hereunder in accordance with this Agreement, the Award Statement or the Plan.

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9.    Governing Law.  This Agreement shall be governed by the laws of the Commonwealth of Virginia, U.S.A., without regard to choice of laws principles thereof.

10.    Award Confers No Rights to Continued Employment - Nature of the Grant.  Nothing contained in the Plan or this Agreement (including, as applicable, the appendices) shall give any employee the right to be retained in the employment of any member of the Kraft Foods Group or affect the right of any such employer to terminate any employee. The adoption and maintenance of the Plan shall not constitute an inducement to, or condition of, the employment of any employee.  Further, the Optionee acknowledges and agrees that:

(a)    the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;
(b)    the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted in the past; 
(c)    all decisions with respect to future option or other grants, if any, will be at the sole discretion of the Committee; 
(d)    the Optionee is voluntarily participating in the Plan; 
(e)    the Option and the Option Shares subject to the Option are not intended to replace any pension rights or compensation;
(f)    the Option and the Option Shares subject to the Option and the income and the value of same are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension, retirement or welfare benefits; 
(g)     the future value of the underlying Option Shares is unknown, indeterminable and cannot be predicted with certainty; 
(h)    if the underlying shares of Common Stock do not increase in value, the Option will have no value;
(i)    if the Optionee exercises the Option and obtains shares of Common Stock, the value of those shares of Common Stock acquired upon exercise may increase or decrease in value, even below the Grant Price; 
(j)    no claim or entitlement to compensation or damages shall arise from forfeiture of the Option resulting from the termination of the Optionee’s employment or other service relationship (for any reason whatsoever, whether or not later found to be invalid or in breach of any employment laws in the jurisdiction where the Optionee is employed or the terms of the Optionee’s employment agreement, if any), and in consideration of the grant of the Option to which the Optionee is otherwise not entitled, the Optionee irrevocably agrees never to institute any claim against the Company, any of its subsidiaries or affiliates or the Employer, waives his or her ability, if any, to bring any such claim, and releases the Kraft Foods Group and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Optionee shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim; 
(k)    unless otherwise provided in the Plan or by the Company in its discretion, the Option and the benefits evidenced by this Agreement do not create any entitlement to have the Option or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Common Stock of the Company;

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(l)     the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Optionee’s participation in the Plan, or the Optionee’s acquisition or sale of the underlying shares of Common Stock; 
(m)     the Optionee is hereby advised to consult with the Optionee’s own personal tax, legal and financial advisors regarding the Optionee’s participation in the Plan before taking any action related to the Plan; 
(n)    the Option is designated as not constituting an Incentive Stock Option; this Agreement shall be interpreted and treated consistently with such designation; and
(o)    the following provisions apply only if the Optionee is providing services outside the United States:
(i)    the Option and the Option Shares subject to the Option are not part of normal or expected compensation or salary for any purpose; and

(ii)    The Optionee acknowledges and agrees that neither the Company, the Employer nor any member of the Kraft Foods Group shall be liable for any foreign exchange rate fluctuation between the Optionee’s local currency and the United States Dollar that may affect the value of the Option or any shares of Common Stock delivered to the Optionee upon exercise of the Option or of any proceeds resulting from the Optionee’s sale of such shares.
11.    Data Privacy.  The Optionee explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Optionee’s personal data as described in this Agreement and any other Option grant materials (such information collectively referred to herein as “Data”) by and among, as applicable, the Employer and the Kraft Foods Group for the exclusive purpose of implementing, administering and managing the Optionee’s participation in the Plan.
 
The Optionee understands that the Company and the Employer may hold certain personal information about the Optionee, including, but not limited to, the Optionee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all options or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Optionee’s favor, for the exclusive purpose of implementing, administering and managing the Plan  .

The Optionee understands that Data will be transferred to UBS Financial Services (“UBS”), or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan.  The Optionee understands that Data may also be transferred to the Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP, or such other public accounting firm that may be engaged by the Company in the future.  The Optionee understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Optionee’s country.  The Optionee understands that if he or she resides outside the United States, the Optionee may request a list with the names and addresses of any potential recipients of the Data by contacting the Optionee’s local human resources representative. The Optionee authorizes the Company, UBS and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing the Optionee’s participation in the Plan.  The Optionee understands that Data will be held only as long as is necessary to implement, administer and manage the Optionee’s participation in the Plan. The Optionee understands that if he or she resides outside the United States, the Optionee may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Optionee’s local human resources representative.  Further, the Optionee understands that he or she is providing the consents herein on a purely voluntary basis.  If the Optionee does not consent, or if the Optionee later seeks to revoke his or her consent, his or her employment 

5

status or service and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing the Optionee’s consent is that the Company would not be able to grant the Optionee an Option or other equity awards or administer or maintain such awards.  Therefore, the Optionee understands that refusing or withdrawing his or her consent may affect the Optionee’s ability to participate in the Plan.  For more information on the consequences of the Optionee’s refusal to consent or withdrawal of consent, the Optionee understands that he or she may contact his or her local human resources representative.

12.Interpretation.  The terms and provisions of the Plan (a copy of which will be furnished to the Optionee upon written request to the Office of the Corporate Secretary, Kraft Foods Group, Inc., Three Lakes Drive, Northfield, Illinois, U.S.A. 60093) are incorporated herein by reference.  To the extent any provision in this Agreement is inconsistent or in conflict with any term or provision of the Plan, the Plan shall govern.  The Committee shall have the right to resolve all questions which may arise in connection with the Award or this Agreement, including whether an Optionee is no longer actively employed and any interpretation, determination or other action made or taken by the Committee regarding the Plan or this Agreement shall be final, binding and conclusive.

13.Restrictive Covenants.  If the Optionee is, as of the date of grant of the Option, designated in Salary Band G or above, the Option shall be subject to the non-competition and non-solicitation covenants set forth in the Appendix A to this Agreement.  

14.Miscellaneous Definitions.  For the purposes of this Agreement, the term “Disability” means permanent and total disability as determined under the procedures established by the Company for purposes of the Plan and the term “Normal Retirement” means retirement from active employment under a pension plan of the Kraft Foods Group, or under an employment contract with any member of the Kraft Foods Group, on or after the date specified as normal retirement age in the pension plan or employment contract, if any, under which the Optionee is at that time accruing pension benefits for his or her current service (or, in the absence of a specified normal retirement age, the age at which pension benefits under such plan or contract become payable without reduction for early commencement and without any requirement of a particular period of prior service).  For the purposes of this Agreement, “Early Retirement” means retirement from active employment other than Normal Retirement, as determined by the Committee, in its sole discretion.  As used herein, “Kraft Foods Group” means Kraft Foods Group, Inc. and each of its subsidiaries and affiliates.  For purposes of this Agreement, (x) a “subsidiary” includes only any company in which the applicable entity, directly or indirectly, has a beneficial ownership interest of greater than 50 percent and (y) an “affiliate” includes only any company that (A) has a beneficial ownership interest, directly or indirectly, in the applicable entity of greater than 50 percent or (B) is under common control with the applicable entity through a parent company that, directly or indirectly, has a beneficial ownership interest of greater than 50 percent in both the applicable entity and the affiliate.

15.Language.  If this Agreement or any other document related to the Plan is translated into a language other than English and if the meaning of the translated version is different from the English version, the English version will control.

16.Compliance With Law. Notwithstanding any other provision of the Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the shares of Common Stock, the Company shall not be required to deliver any Option Shares issuable upon exercise of the Option prior to the completion of any registration or qualification of the shares under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the Commission or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or advisable.  The Optionee understands that the Company is under no obligation to register or qualify the shares with the Commission or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the shares.  Further, the Optionee agrees that the Company shall have unilateral authority to amend the Plan and the Agreement without the Optionee’s 

6

consent to the extent necessary to comply with securities or other laws applicable to the issuance of shares of Common Stock.

17.Electronic Delivery and Acceptance.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means or to request the Optionee’s consent to participate in the Plan by electronic means.  The Optionee hereby consents to receive such documents by electronic delivery and, if requested, agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

18.Agreement Severable.  The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

19.Headings.  Headings of paragraphs and sections used in this Agreement are for convenience only and are not part of this Agreement, and must not be used in construing it.

20.Imposition of Other Requirements.  The Company reserves the right to impose other requirements on the Optionee’s participation in the Plan, on the Option, and on any shares of Common Stock acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Optionee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

21.Appendix B.  Notwithstanding any provisions in this Agreement, the Option shall be subject to any special terms set forth in Appendix B to this Agreement for the Optionee’s country.  Moreover, if the Optionee relocates to one of the countries included in Appendix B, the special terms for such country will apply to the Optionee, to the extent the Company determines that the application of such terms is necessary or advisable for legal or administrative reasons.  

22.Waiver.  The Optionee acknowledges that a waiver by the Company of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement or of any subsequent breach by the Optionee or any other participant of the Plan.

IN WITNESS WHEREOF, this Global Stock Option Award Agreement has been granted as of _______________, ______.

KRAFT FOODS GROUP, INC.

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APPENDIX A

NON-COMPETITION AND NON-SOLICITATION COVENANTS 
APPLICABLE TO CERTAIN EMPLOYEES 

		
	I.
	APPLICATION

    
This Appendix A includes additional terms and conditions that govern the Option Shares granted to the Optionee under the Plan if the Optionee is, as of the date of grant of the Option, designated in Salary Band G or above.  Therefore, by accepting the Option, a Salary Band G or above Participant will be agreeing to comply with the restrictive covenants and other provisions set forth below.

		
	II.
	RESTRICTIVE COVENANTS 

a.Acknowledgements. In exchange for receiving the Option, the Optionee acknowledges and agrees that the services to be rendered by Optionee to the Company will be of a special character having a unique value to the Company, and that, as a result of the Optionee’s role and position within the Company, the Optionee will be provided with specialized training and given access to, or be responsible for the development of, some of the Company’s most sensitive confidential information, the disclosure and use of which would be harmful if used for the benefit of the Company’s competitors. Optionee recognizes that the Company’s relationships with the customers, suppliers, licensees, licensors, vendors, consultants, and independent contractors (collectively, “Partners”) with which the Optionee serves or has contact, and with other employees, is special and unique, based upon the development and maintenance of goodwill resulting from the Partners’, and other employees’ contacts with the Company and its employees, including the Optionee. Optionee also recognizes that the Company’s relationship with other employees, is special and unique, based upon the development, maintenance, and provision of training, opportunities, and goodwill by the Company and its employees, including the Optionee. The Optionee further acknowledges the Company’s ongoing substantial investment of time, money, and other resources to recruit, train, equip, and retain talented individuals, including the Optionee, promotes the business goodwill of the Company by fostering productive, long-term relationships between the Company and its employees. As a result of the Optionee’s position and the Optionee’s Partners, and employee contacts, the Optionee recognizes that the Optionee will gain valuable information about (i) the Company’s most sensitive and valuable confidential information, (ii) the Company’s business habits, needs, pricing policies, purchasing policies, profit structures, and margins, (iii) the Company’s relationships with its customers, their buying habits, special needs, and purchasing policies, (iv) the Company’s relationships with its suppliers, their pricing habits, and purchasing policies, (v) the Company’s pricing policies, purchasing policies, profit structures, and margin needs, (vi) the skills, capabilities and other employment-related information relating to the Company employees, and (vii) and other matters of which the Optionee would not otherwise know and that is not otherwise readily available. Such knowledge is essential to the business of the Company and the Optionee recognizes that it would be harmful if used for the benefit of the Company’s competitors. Optionee acknowledges and agrees that any injury to the Company’s Partner, or employee relationships, the loss of those relationships, or the inevitable disclosure of Company confidential information to a competitor would cause irreparable harm to the Company. Optionee recognizes that during a period following termination of the Optionee’s employment, the Company is entitled to protection from the Optionee’s use of Company confidential information and the Partner, and employee relationships with which the Optionee has been entrusted by the Company during the Optionee’s employment. Optionee acknowledges and agrees that due to the nature of the Optionee’s role within the Company and the Company confidential information to which the Optionee will have access, the Optionee’s employment with a competitor in the same or substantially the same capacity in which the Optionee was employed by the Company will inevitably result in the disclosure of the Company’s most sensitive confidential information. Optionee also recognizes that if the Optionee’s employment terminates, the Company will be required to rebuild the Partner, and employee relationships with which the Optionee has been entrusted by the Company during the Optionee’s employment. Optionee also recognizes that merely limiting the Partners, and employees the Optionee can solicit after termination will not be sufficient to protect the Company’s legitimate business interests. 

8

b.Non-Competition and Non-Solicitation Obligations. Therefore, in exchange for receiving the Option, the Optionee hereby explicitly agrees that, during the Optionee’s employment and for a period of 12 months following the termination of the Optionee’s employment with the Company for any reason, including termination by the Company with or without cause, the Optionee will not, either as an employee, employer, consultant, agent, principal, partner, stockholder, officer, director, or in any other individual or representative capacity, directly or indirectly:

i.Engage in any business activities within the same line or lines of business for which the Optionee performed services for the Company and in a capacity that is similar to the capacity in which the Optionee was employed by the Company with any person or entity that competes with the Company in the consumer packaged food and beverage industry anywhere within North America.

ii.Solicit, assist in the solicitation of, or accept any business (other than on behalf of the Company) from any customer who, during the two (2) years immediately preceding the Optionee's termination, had been assigned to the Optionee by the Company, or any customer with which the Optionee had contact on behalf of the Company while an employee of the Company, or any customer about which the Optionee had access to confidential information by virtue of the Optionee's employment with the Company; or disclose to any person, firm, association, corporation or business entity of any kind the names or addresses of any such customer; or directly or indirectly in any way request, suggest or advise any such customer or any suppliers, licensees, licensors, vendors, consultants, and independent contractors with which the Optionee had contact on behalf of the Company to withdraw or cancel any of their business or refuse to continue to do business with the Company. This paragraph shall apply only where the customer is solicited to purchase a service or product that competes with the services or products offered by the Company.
 
iii.Cause, solicit, induce, or encourage any individual who was an employee of the Company at the time of, or within 6 months prior to, the Optionee’s termination, to terminate or reject their employment with the Company or to seek or accept employment with any other entity, including but not limited to a competitor, supplier, customer or client of the Company, nor shall the Optionee cooperate with any others in doing or attempting to do so. As used herein, the term “solicit, induce, or encourage” includes, but is not limited to, (i) initiating communications with a Company employee relating to possible employment, (ii) offering bonuses or other compensation to encourage a Company employee to terminate his or her employment with the Company and accept employment with any entity, (iii) recommending a Company employee to any entity, and (iv) aiding an entity in recruitment of a Company employee.

c.Reasonableness of Restrictions. The Optionee acknowledges and agrees that, given the Company’s operations, the geographic restrictions contained in the above restrictions are reasonable to protect the Company’s interests. The Optionee acknowledges and agrees that the length of the time periods applicable to the restrictive covenants set forth in this Section are appropriate and reasonable, in view of the nature of the Company’s business and Optionee’s employment with the Company and knowledge of its business. The Optionee acknowledges and agrees that the Optionee carefully considered the terms of this Agreement, including the covenants set forth in this Section II , and acknowledges that if this Agreement is enforced according to its terms, the Optionee will be able to earn a reasonable living in commercial activities unrelated to the Company in locations satisfactory to the Optionee. The Optionee also acknowledges that the restrictive covenants set forth in this Section II  are a vital part of and intrinsic to the ongoing operations of the Company, in light of the nature of the business and the Optionee’s unique position, skills, and knowledge with and of the Company. Notwithstanding the foregoing, if any provision or portion of this Section II  or its subparts is held to be unenforceable because of the scope, duration, territory, or terms thereof, the Optionee agrees that the court making such determination shall have the power to reduce the scope, duration, territory and/or terms of such provision, and to delete specific words or phrases in such provision, so that the provision is enforceable by the court, and such provision as amended shall be enforced by the court. 

d.Direct or Indirect Violations. The Optionee acknowledges and agrees that the Optionee will be in violation of Section II  if the Optionee engages in any or all of the activities set forth in this Section II directly as an individual, or indirectly for, through, or with assistance from, any other person or entity, whether as partner, joint venturer, employee, agent, salesperson, employee, officer, manager and/or director of any person or entity, or as an equity holder of any person or entity in which the Optionee or the Optionee’s spouse, child, or parent owns, directly or indirectly, any of the outstanding equity interests.

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e.Tolling of Covenants. The Optionee acknowledges and agrees that that if it is judicially determined that the Optionee has violated any of the Optionee’s obligations under Section II, then the period applicable to each obligation that the Optionee has been determined to have violated shall automatically toll from the date of the first breach, and all subsequent breaches, until the resolution of the breach through private settlement, judicial or other action, including all appeals.

f.Remedies. The Optionee acknowledges and agrees that, in the event of a breach or threatened breach of the Optionee’s obligations under this Section II (including all subparts), irreparable injury would be caused to the Company, for which the Company would have an inadequate remedy at law. The Optionee therefore agrees that, in addition to and without limitation of any rights that the Company may otherwise have, at law or in equity, the Company shall have the right to temporary, preliminary, and permanent injunctive relief against the Optionee in the event of such breach, or threatened breach, in addition to any other equitable relief (including without limitation an accounting and/or disgorgement) and/or any other damages as a matter of law. The Optionee also agrees that the Company is entitled to its reasonable attorneys’ fees and costs incurred in enforcing the restrictive covenants contained in this Agreement or successfully prosecuting or defending any action under this Agreement. Furthermore, no bond need be posted in conjunction with the application for, or issuance of, an injunction (which requirement the Optionee hereby specifically and expressly waives).

		
	III.
	RECOUPMENT OF PROCEEDS

If the Optionee violates any agreement between the Optionee and the Company or its Affiliates with respect to non-competition, non-solicitation, confidentiality, or protection of trade secrets (or similar provision regarding intellectual property), including Section II of this Appendix A: (i) the Company shall have the right, at its discretion, to recoup or terminate any Option Shares that vested in the 12 months preceding either (A) the date on which the Company first became aware of such violation or (B) the date of the Optionee’s termination of employment; and (ii) if the Optionee has exercised any portion of the Option Shares that vested in the 12 months either (A) preceding the date on which the Company first became aware of such violation or (B) the date of Optionee’s termination of employment, the Optionee shall immediately remit a cash payment to the Company up to (but not in excess to) the difference between the Grant Price and the market price of each Option Share on the date of exercise. The remedy provided by this Section III shall be in addition to and not in lieu of any rights or remedies which the Company may have against the Optionee under any statute, regulation or Company policy, as in effect from time to time, relating to the forfeiture or recoupment of compensation.  

The Optionee further agrees that by accepting the Option, the Optionee authorizes the Company and its affiliates to deduct any amount or amounts owed by the Optionee pursuant to this Section III from any amounts payable by or on behalf of the Company or any Affiliate to the Optionee, including, without limitation, any amount payable to the Optionee as salary, wages, vacation pay, bonus or the settlement of any exercised Option Shares or any stock-based award. This right of setoff shall not be an exclusive remedy and the Company’s or an affiliate’s election not to exercise this right of setoff with respect to any amount payable to the Optionee shall not constitute a waiver of this right of setoff with respect to any other amount payable to the Optionee or any other remedy.

 

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