Document:

Exhibit
4.1

 

 

DUKE  REALTY  LIMITED
PARTNERSHIP

ISSUER

 

TO

 

THE BANK OF NEW YORK TRUST
COMPANY, N.A.

TRUSTEE

 

 

FOURTH SUPPLEMENTAL INDENTURE

 

DATED AS OF MAY 8, 2008

 

 

$325,000,000 6.25% SENIOR NOTES
DUE 2013

 

 

SUPPLEMENT TO INDENTURE,

DATED AS OF JULY 28, 2006, BETWEEN

DUKE REALTY LIMITED PARTNERSHIP AND

THE BANK OF NEW YORK TRUST
COMPANY N.A. (AS SUCCESSOR TO

J.P. MORGAN TRUST COMPANY,
NATIONAL ASSOCIATION)

 

 

 

FOURTH SUPPLEMENTAL
INDENTURE, dated as of May 8, 2008, between DUKE REALTY
LIMITED PARTNERSHIP, an Indiana limited partnership (the “Issuer”), having its
principal offices at 600 East 96th Street, Suite 100,
Indianapolis, IN  46240 and THE BANK OF
NEW YORK TRUST COMPANY, N.A. (as successor to J.P.
MORGAN TRUST COMPANY, National Association), a national banking
association organized under the laws of the United States of America, as
trustee (the “Trustee”), having its Corporate Trust Office at 2 N. LaSalle
Street, Suite 1020, Chicago, Illinois 
60602.

 

RECITALS

 

WHEREAS, the Issuer
executed and delivered its Indenture (the “Original Indenture”), dated as of July 28,
2006, to the Trustee to issue from time to time for its lawful purposes debt
securities evidencing its unsecured indebtedness.

 

WHEREAS, the Original
Indenture provides that by means of a supplemental indenture, the Issuer may
create one or more series of its debt securities and establish the form and
terms and conditions thereof.

 

WHEREAS, the Issuer intends
by this Fourth Supplemental Indenture to (i) create a series of debt
securities, in an initial aggregate principal amount of $325,000,000, entitled “Duke
Realty Limited Partnership 6.25% Senior Notes due 2013” (the “Notes”); and (ii) establish
the form and the terms and conditions of such Notes.

 

WHEREAS, the Board of
Directors of Duke Realty Corporation, the general partner of the Issuer, acting
through authority delegated to certain of its executive officers, has approved
the creation of the Notes and the form, terms and conditions thereof.

 

WHEREAS, the consent of
Holders to the execution and delivery of this Fourth Supplemental Indenture is
not required, and all other actions required to be taken under the Original
Indenture with respect to this Fourth Supplemental Indenture have been taken.

 

NOW, THEREFORE IT IS AGREED:

 

ARTICLE ONE

Definitions, Creation, Form and Terms and Conditions of the Debt
Securities

 

SECTION 1.01.    Definitions.  Capitalized
terms used in this Fourth Supplemental Indenture and not otherwise defined
shall have the meanings ascribed to them in the Original Indenture.  In addition, the following terms shall have
the following meanings to be equally applicable to both the singular and the
plural forms of the terms defined:

 

“DTC” means The
Depository Trust Company.

 

“Global Note” means a single
fully-registered global note in book-entry form, without coupons, substantially
in the form of Exhibit A attached hereto.

 

 

“Indenture” means the Original
Indenture as supplemented by this Fourth Supplemental Indenture.

 

“Make-Whole Amount” means, in
connection with any optional redemption or accelerated payment of any Note, the
excess, if any, of (i) the aggregate present value as of the date of such
redemption or accelerated payment of each dollar of principal being redeemed or
paid and the amount of interest (exclusive of interest accrued to the date of
redemption or accelerated payment) that would have been payable in respect of
each such dollar if such redemption or accelerated payment had not been made,
determined by discounting, on a semi-annual basis, such principal and interest
at the Reinvestment Rate (determined on the third Business Day preceding the
date such notice of redemption is given or declaration of acceleration is made)
from the respective dates on which such principal and interest would have been
payable if such redemption or accelerated payment had not been made, over (ii) the
aggregate principal amount of the Notes being redeemed or paid.

 

“Notes” means the Issuer’s
6.25% Senior Notes due May 15, 2013, a form of which is attached hereto as
Exhibit A.

 

“Redemption Price” means the sum of (i) the
principal amount of the Notes being redeemed plus accrued interest thereon to
the Redemption Date and (ii) the Make-Whole Amount, if any, with respect
to such Notes.

 

“Reinvestment Rate” means 0.50% plus
the arithmetic mean of the yields under the respective heading “Week Ending”
published in the most recent Statistical Release under the caption “Treasury Constant
Maturities” for the maturity (rounded to the nearest month) corresponding to
the remaining life to maturity, as of the payment date of the principal being
redeemed or paid.  If no maturity exactly
corresponds to such maturity, yields for the two published maturities most
closely corresponding to such maturity shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment Rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding in each of
such relevant periods to the nearest month. 
For the purposes of calculating the Reinvestment Rate, the most recent
Statistical Release published prior to the date of determination of the
Make-Whole Amount shall be used.

 

“Statistical Release” means the
statistical release designated “H.15” or any successor publication which is
published weekly by the Federal Reserve System and which establishes yields on
actively traded United States government securities adjusted to constant
maturities, or, if such statistical release is not published at the time of any
determination under the Indenture, then such other reasonably comparable index
which shall be designated by the Issuer.

 

SECTION 1.02.    Creation of the Debt Securities. 
In accordance with Section 301 of the Original Indenture, the
Issuer hereby creates the Notes as a separate series of its debt securities
issued pursuant to the Indenture.  The
Notes shall be issued in an aggregate principal amount initially limited to $325,000,000.

 

The Issuer may issue, in addition to the Notes originally issued on the
date hereof, additional Notes.  The Notes
originally issued on the date hereof and any additional Notes originally issued
subsequent to the date hereof shall be a single series for all purposes under
the Original Indenture.

 

 

SECTION 1.03.    Form of the Debt Securities. 
The Notes will be represented by a single fully-registered global note
in book-entry form, without coupons, registered in the name of the nominee of
DTC. The Notes shall be in the form of Exhibit A attached hereto.  So long as DTC, or its nominee, is the
registered owner of a Global Note, DTC or its nominee, as the case may be, will
be considered the sole owner or holder of the notes represented by such Global
Note for all purposes under the Indenture. 
Ownership of beneficial interests in the Global Note will be shown on,
and transfers thereof will be effected only through, records maintained by DTC
(with respect to beneficial interests of participants) or by participants or
persons that hold interests through participants (with respect to beneficial
interests of beneficial owners).

 

SECTION 1.04.    Terms and Conditions of the Debt Securities. 
The Notes shall be governed by all the terms and conditions of the
Original Indenture, as supplemented and modified by this Fourth Supplemental
Indenture, and in particular, the following provisions shall be terms of the
Notes:

 

(a)   Optional Redemption.  The Issuer may redeem the Notes at any time
at the option of the Issuer, in whole or from time to time in part, at a
redemption price equal to the Redemption Price.

 

If notice has been given as
provided in the Original Indenture and funds for the redemption of any Notes
called for redemption shall have been made available on the Redemption Date
referred to in such notice, such Notes will cease to bear interest on the date
fixed for such redemption specified in such notice and the only right of the
Holders of the Notes will be to receive payment of the Redemption Price.

 

Notice of any optional
redemption of any Notes will be given to Holders at their addresses, as shown
in the Security Register, not more than 60 nor
less than 30 days prior to the date fixed for redemption.  The notice of redemption will specify, among
other items, the Redemption Price and the principal amount of the Notes held by
such Holder to be redeemed.

 

If less than all the Notes are
to be redeemed at the option of the Issuer, the Issuer will notify the Trustee
at least 45 days prior to giving notice of redemption (or such shorter period
as is satisfactory to the Trustee) of the aggregate principal amount of Notes
to be redeemed and their Redemption Date. 
The Trustee shall select, in such manner as it shall deem fair and
appropriate, Notes to be redeemed in whole or in part.

 

(b)   Payment of Principal and Interest.  Principal and interest payments on interests
represented by a Global Note will be made to DTC or its nominee, as the case
may be, as the registered owner of such Global Note.  All payments of principal and interest in
respect of the Notes will be made by the Issuer in immediately available funds.

 

(c)   Applicability of Defeasance or Covenant Defeasance.  The provisions of Article 14 of the
Original Indenture shall apply to the Notes.

 

 

ARTICLE TWO

Trustee

 

SECTION 2.01.    Trustee.  The Trustee
shall not be responsible in any manner whatsoever for or in respect of the
validity or sufficiency of this Fourth Supplemental Indenture or the due
execution thereof by the Issuer.  The
recitals of fact contained herein shall be taken as the statements solely of
the Issuer, and the Trustee assumes no responsibility for the correctness thereof.

 

ARTICLE THREE

Miscellaneous Provisions

 

SECTION 3.01.    Ratification of Original Indenture. 
This Fourth Supplemental Indenture is executed and shall be construed as
an indenture supplemental to the Original Indenture, and as supplemented and
modified hereby, the Original Indenture is in all respects ratified and
confirmed, and the Original Indenture and this Fourth Supplemental Indenture
shall be read, taken and construed as one and the same instrument.  Notwithstanding anything herein to the
contrary, to the extent any provision of this Fourth Supplemental Indenture is
inconsistent with any provision of the Original Indenture, the terms of this Fourth
Supplemental Indenture shall govern and apply to the Notes.

 

SECTION 3.02.    Effect of Headings. 
The Article and Section headings herein are for convenience
only and shall not affect the construction hereof.

 

SECTION 3.03.    Successors and Assigns. 
All covenants and agreements in this Fourth Supplemental Indenture by
the Issuer shall bind its successors and assigns, whether so expressed or not.

 

SECTION 3.04.    Separability Clause. 
In case any one or more of the provisions contained in this Fourth
Supplemental Indenture shall for any reason be held to be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.

 

SECTION 3.05.    Governing Law.  This Fourth
Supplemental Indenture shall be governed by and construed in accordance with
the laws of the State of New York.  This Fourth
Supplemental Indenture is subject to the provisions of the Trust Indenture Act
of 1939, as amended, that are required to be part of this Fourth Supplemental
Indenture and shall, to the extent applicable, be governed by such provisions.

 

SECTION 3.06.    Counterparts.  This Fourth
Supplemental Indenture may be executed in any number of counterparts, and each
of such counterparts shall for all purposes be deemed to be an original, but
all such counterparts shall together constitute one and the same instrument.

 

 

IN WITNESS WHEREOF, the parties
hereto have caused this Fourth
Supplemental Indenture to be duly executed,
and their respective corporate seals
to be hereunto affixed and attested, all as of the date first above written.

 

 

	
   

  	
   

  	
  DUKE REALTY LIMITED
  PARTNERSHIP

  
	
   

  	
   

  	
  as
  Issuer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  DUKE REALTY
  CORPORATION,

  
	
   

  	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Howard L. Feinsand

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   Howard L. Feinsand

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President, General

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Counsel and Corporate Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/
  Dennis D. Oklak

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Dennis
  D. Oklak

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Chairman
  and Chief Executive Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE
  BANK OF NEW YORK TRUST COMPANY,

  N.A., as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Janice Ott Rotunno

  
	
   

  	
   

  	
   

  	
  Name: Janice Ott
  Rotunno

  
	
   

  	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/
  Benita A. Vaughn

  	
   

  	
   

  	
   

  
	
  Name:
  Benita A Vaughn

  	
   

  	
   

  	
   

  
	
  Title:
  Vice Presdient

  	
   

  	
   

  	
   

  

 

 

EXHIBIT A

 

[FACE OF NOTE]

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”),
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

 

UNLESS AND UNTIL THIS CERTIFICATE IS EXCHANGED IN
WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS CERTIFICATE MAY NOT
BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE THEREOF OR BY A NOMINEE
THEREOF TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A
SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR.

 

	
  REGISTERED

  	
   

  	
  REGISTERED

  	
   

  
	
  NO. 1

  	
   

  	
  PRINCIPAL AMOUNT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  CUSIP
  NO. 26441YAR8

  	
   

  	
  $

  	
  325,000,000

  	
   

  
					

 

DUKE REALTY LIMITED PARTNERSHIP

 

6.25% Senior Notes due 2013

 

Duke Realty Limited Partnership,
an Indiana limited partnership (the “Issuer,” which term includes any successor
under the Indenture hereinafter referred to), for value received, hereby
promises to pay to Cede & Co. or its registered assigns, the principal
sum of Three Hundred Twenty-Five Million Dollars on May 15, 2013 (the “Maturity
Date”), and to pay interest thereon from May 8, 2008 (or from the most
recent interest payment date to which interest has been paid or duly provided
for) in U.S. dollars semi-annually in arrears on May 15 and November 15
of each year, each, an “Interest Payment Date”, commencing on November 15,
2008, and on the Maturity Date, at the rate of 6.25% per annum, until payment
of said principal sum has been made or duly provided for.

 

 

The interest so payable and
punctually paid or duly provided for on any Interest Payment Date and on the
Maturity Date will be paid to the Holder in whose name this Note (or one or
more predecessor Notes) is registered at the close of business on the “Record
Date” for such payment, which will be 15 days (regardless of whether such day
is a Business Day (as defined below)) prior to such payment date or the
Maturity Date, as the case may be.  Any
interest not so punctually paid or duly provided for shall forthwith cease to
be payable to the Holder on such record date, and shall be paid to the Holder
in whose name this Note (or one or more predecessor Notes) is registered at the
close of business on a subsequent record date for the payment of such defaulted
interest (which shall be not less than five Business Days (as defined below)
prior to the date of the payment of such defaulted interest) established by
notice given by mail by or on behalf of the Issuer to the Holders of the Notes
not less than 15 days preceding such subsequent record date. Interest on this
Note will be computed on the basis of a 360-day year of twelve 30-day months.

 

The principal of this Note
payable on the Maturity Date will be paid against presentation and surrender of
this Note at the office or agency of the Issuer maintained for that purpose in
The Borough of Manhattan, The City of New York. 
The Issuer hereby initially designates the Corporate Trust Office of the
Trustee in the City of New York as the office to be maintained by it where
Notes may be presented for payment, registration of transfer, or exchange and
where notices or demands to or upon the Issuer in respect of the Notes or the
Indenture referred to on the reverse hereof may be served.

 

Interest payable on this Note on
any Interest Payment Date and on the Maturity Date, as the case may be, will be
the amount of interest accrued from and including the immediately preceding
Interest Payment Date (or from and including May 8, 2008 in the case of
the initial Interest Payment Date) to but excluding the applicable Interest
Payment Date or the Maturity Date, as the case may be.  If any Interest Payment Date or the Maturity
Date falls on a day that is not a Business Day (as defined below), the required
payment of interest or principal or both, as the case may be, will be made on
the next Business Day with the same force and effect as if it were made on the
date such payment was due and no interest will accrue on the amount so payable
for the period from and after such Interest Payment Date or the Maturity Date,
as the case may be.  “Business Day” means
any day, other than a Saturday or a Sunday, on which banking institutions in
The City of New York are open for business.

 

Payments of principal and
interest  in respect of this Note will be made by wire
transfer of immediately available funds in such coin or currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debts.

 

Reference is made to the further
provisions of this Note set forth on the reverse hereof.  Such further provisions shall for all
purposes have the same effect as though fully set forth at this place.

 

This Note shall not be entitled
to the benefits of the Indenture referred to on the reverse hereof or be valid
or become obligatory for any purpose until the certificate of
authentication hereon shall have been signed by the Trustee under such
Indenture.

 

 

IN WITNESS WHEREOF, the Issuer
has caused this instrument to be signed manually or by facsimile by its
authorized officers.

 

Dated as of:  May 8, 2008

 

 

	
   

  	
   

  	
  DUKE
  REALTY LIMITED PARTNERSHIP,

  
	
   

  	
   

  	
   

  	
  as Issuer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  DUKE
  REALTY CORPORATION,

  
	
   

  	
   

  	
   

  	
  its
  General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  

 

 

TRUSTEE’S CERTIFICATE OF
AUTHENTICATION

 

This is one of the Securities of
the series designated herein referred to in the
within-mentioned Indenture.

 

 

	
   

  	
   

  	
  THE
  BANK OF NEW YORK TRUST COMPANY,

  N.A., as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Authorized Officer

  

 

 

[REVERSE OF NOTE]

 

DUKE REALTY LIMITED PARTNERSHIP

 

6.25% Senior Notes due 2013

 

This security is one of a duly
authorized issue of debentures, notes, bonds, or other evidences of
indebtedness of the Issuer (hereinafter called the “Securities”) of the series
hereinafter specified, all issued or to be issued under and pursuant to an
Indenture dated as of July 28, 2006 (hereinafter called the “Indenture”),
duly executed and delivered by the Issuer to The Bank of New York Trust
Company, N.A. (as successor to J.P. Morgan Trust Company, National Association),
as Trustee (hereinafter called the “Trustee,” which term includes any successor
trustee under the Indenture with respect to the series of Securities of which
this Note is a part), to which the Indenture and all indentures supplemental
thereto relating to this security reference is hereby made for a description of
the rights, limitations of rights, obligations, duties, and immunities
thereunder of the Trustee, the Issuer, and the Holders of the Securities, and
of the terms upon which the Securities are, and are to be, authenticated and
delivered.  The Securities may be issued
in one or more series, which different series may be issued in various
aggregate principal amounts, may mature at different times, may bear interest
(if any) at different rates, may be subject to different redemption provisions
(if any), and may otherwise vary as provided in the Indenture or any indenture
supplemental thereto.  This security is
one of a series designated as the 6.25% Senior Notes due May 15, 2013 of
the Issuer, initially limited in aggregate principal amount to $325,000,000.

 

In case an Event of Default with
respect to this security shall have occurred and be continuing, the principal
hereof and Make-Whole Amount, if any, may be declared, and upon such
declaration shall become, due and payable, in the manner, with the effect, and
subject to the conditions provided in the Indenture.

 

The Issuer may redeem this
security at any time at the option of the Issuer, in whole or in part, at a
redemption price equal to the sum of (i) the principal amount of this
security being redeemed plus accrued interest thereon to the Redemption Date
and (ii) the Make-Whole Amount, if any, with respect to this security
(the “Redemption Price”).  Notice of any
optional redemption of any Securities will be given to Holders at their
addresses, as shown in the Security Register, not more than 60 nor less than 30
days prior to the date fixed for redemption. 
The notice of redemption will specify, among other items, the Redemption
Price and the principal amount of the Securities held by such Holder to be
redeemed.

 

The Indenture contains
provisions permitting the Issuer and the Trustee, with the consent of the
Holders of not less than a majority of the aggregate principal amount of the
Securities at the time outstanding of all series to be affected (voting as one
class), evidenced as provided in the Indenture, to execute supplemental
indentures adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or
modifying in any manner the rights of the Holders of the Securities of each
series; provided, however, that no such supplemental indenture shall, without
the consent of the Holder of each Security so affected, (i) change the
Stated Maturity of the principal of (or premium, if any, on) or any installment
of principal of or interest on, any Security, or reduce the principal amount
thereof or the rate or amount of interest thereon or any premium payable upon
the redemption thereof, or adversely affect any right of repayment at the
option of the Holder of any Security, or change any Place of Payment where, or
the 

 

 

currency
or currencies, currency unit or units or composite currency or currencies in
which, any Security or any premium or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment on
or after the Stated Maturity thereof, or (ii) reduce the aforesaid
percentage of Securities, the Holders of which are required to consent to any
such supplemental indenture, or (iii) reduce the percentage of Securities,
the Holders of which are required to consent to any waiver of compliance with
certain provisions of the Indenture or any waiver of certain defaults
thereunder.  It is also provided in the
Indenture that, with respect to certain defaults or Events of Default regarding
the Securities of any series, the Holders of a majority in aggregate principal
amount outstanding of the Securities of such series (or, in the
case of certain defaults or Events of Default, all series of Securities) may on
behalf of the Holders of all the Securities of such series (or all of the
Securities, as the case may be) waive any such past default or Event of Default
and its consequences, prior to any declaration accelerating the maturity of
such Securities, or, subject to certain conditions, may rescind a declaration
of acceleration and its consequences with respect to such Securities. Any such
consent or waiver by the Holder of this security (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such Holder and upon all
future Holders and owners of the security and any securities that may be issued
in exchange or substitution herefor, irrespective of whether or not any
notation thereof is made upon this security or such other securities.

 

No reference herein to the
Indenture and no provision of this security or of the Indenture shall alter or
impair the obligation of the Issuer, which is absolute and unconditional, to
pay the principal of and any Make-Whole Amount and
interest on this security in the manner, at the respective times, at the rate
and in the coin or currency herein prescribed.

 

This security is issuable only
in registered form without coupons in denominations of $1,000 and integral
multiples thereof.  Securities may be exchanged for a like aggregate principal amount of securities
of this series of other authorized denominations at the office or agency of the
Issuer in The Borough of Manhattan,  The
City of New York, in the manner and subject to the limitations provided in the
Indenture, but without the payment of any service charge except for any tax or
other governmental charge imposed in connection therewith.

 

Upon due presentment for
registration of transfer of Securities at the office or agency of the Issuer in
The Borough of Manhattan, The City of New York, one or more new Securities of
the same series of authorized denominations in an equal aggregate principal
amount will be issued to the transferee in exchange therefor, subject to the
limitations provided in the Indenture, without charge except for any tax or
other governmental charge imposed in connection therewith.

 

The Issuer, the Trustee or any
authorized agent of the Issuer or the Trustee may deem and treat the Person in
whose name this security is registered as the absolute owner of this security
(whether or not this security shall be overdue and notwithstanding any
notation of ownership or other writing hereon), for the purpose of receiving
payment of, or on account of, the principal hereof and Make-Whole Amount, if
any, and subject to the provisions on the face hereof, interest hereon, and for
all other purposes, and neither the Issuer nor the Trustee nor any authorized
agent of the Issuer or the Trustee shall be affected by any notice to the
contrary.

 

The Indenture and each
Security shall be deemed to be a contract under the laws of the State of New
York, and for all purposes shall be construed in accordance with the laws of
such state, except as may otherwise be required by mandatory provisions of law.

 

 

Capitalized terms used herein which are not otherwise
defined shall have the respective meanings assigned to them in the Indenture
and all indentures supplemental thereto relating to this security.Exhibit 10.1

 

PAPA JOHN’S
INTERNATIONAL, INC.

2008
OMNIBUS INCENTIVE PLAN

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  Page

  
	
  1.

  	
  PURPOSE

  	
  1

  
	
  2.

  	
  DEFINITIONS

  	
  1

  
	
  3.

  	
  ADMINISTRATION OF THE PLAN

  	
  5

  
	
   

  	
  3.1.     Board

  	
  5

  
	
   

  	
  3.2.     Committee

  	
  5

  
	
   

  	
  3.3.     Terms of Awards

  	
  6

  
	
   

  	
  3.4.     No Repricing

  	
  7

  
	
   

  	
  3.5.     Deferral Arrangement

  	
  7

  
	
   

  	
  3.6.     No Liability

  	
  7

  
	
   

  	
  3.7.     Share Issuance/Book-Entry

  	
  7

  
	
  4.

  	
  STOCK SUBJECT TO THE PLAN

  	
  8

  
	
   

  	
  4.1.     Number of Shares Available for
  Awards

  	
  8

  
	
   

  	
  4.2.     Adjustments in Authorized Shares

  	
  8

  
	
   

  	
  4.3.     Share Usage

  	
  8

  
	
  5.

  	
  EFFECTIVE DATE, DURATION AND AMENDMENTS

  	
  9

  
	
   

  	
  5.1.     Effective Date

  	
  9

  
	
   

  	
  5.2.     Term

  	
  9

  
	
   

  	
  5.3.     Amendment and Termination of the
  Plan

  	
  9

  
	
  6.

  	
  AWARD ELIGIBILITY AND LIMITATIONS

  	
  9

  
	
   

  	
  6.1.     Service Providers and Other Persons

  	
  9

  
	
   

  	
  6.2.     Successive Awards and Substitute
  Awards

  	
  9

  
	
   

  	
  6.3.     Limitation on Shares of Stock
  Subject to Awards and Cash Awards

  	
  10

  
	
  7.

  	
  AWARD AGREEMENT

  	
  10

  
	
  8.

  	
  TERMS AND CONDITIONS OF OPTIONS

  	
  10

  
	
   

  	
  8.1.     Option Price

  	
  10

  
	
   

  	
  8.2.     Vesting

  	
  11

  
	
   

  	
  8.3.     Term

  	
  11

  
	
   

  	
  8.4.     Termination of Service

  	
  11

  
	
   

  	
  8.5.     Limitations on Exercise of Option

  	
  11

  
	
   

  	
  8.6.     Method of Exercise

  	
  11

  
	
   

  	
  8.7.     Rights of Holders of Options

  	
  12

  
	
   

  	
  8.8.     Delivery of Stock Certificates

  	
  12

  

 

 

1

 

	
   

  	
  8.9.     Transferability of Options

  	
  12

  
	
   

  	
  8.10.   Family Transfers

  	
  12

  
	
   

  	
  8.11.   Limitations on Incentive Stock Options

  	
  13

  
	
   

  	
  8.12.   Notice of Disqualifying Disposition

  	
  13

  
	
  9.

  	
  TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS

  	
  13

  
	
   

  	
  9.1.     Right to Payment and Grant Price

  	
  13

  
	
   

  	
  9.2.     Other Terms

  	
  13

  
	
   

  	
  9.3.     Term

  	
  13

  
	
   

  	
  9.4.     Transferability of SARS

  	
  14

  
	
   

  	
  9.5.     Family Transfers

  	
  14

  
	
  10.

  	
  TERMS AND CONDITIONS OF RESTRICTED STOCK AND STOCK UNITS

  	
  14

  
	
   

  	
  10.1.   Grant of Restricted Stock or Stock Units

  	
  14

  
	
   

  	
  10.2.   Restrictions

  	
  14

  
	
   

  	
  10.3.   Restricted Stock Certificates

  	
  15

  
	
   

  	
  10.4.   Rights of Holders of Restricted Stock

  	
  15

  
	
   

  	
  10.5.   Rights of Holders of Stock Units

  	
  15

  
	
   

  	
             10.5.1.     Voting
  and Dividend Rights

  	
  15

  
	
   

  	
             10.5.2.     Creditor’s
  Rights

  	
  15

  
	
   

  	
  10.6.   Termination of Service

  	
  16

  
	
   

  	
  10.7.   Purchase of Restricted Stock and Shares
  Subject to Stock Units

  	
  16

  
	
   

  	
  10.8.   Delivery of Stock

  	
  16

  
	
  11.

  	
  TERMS AND CONDITIONS OF UNRESTRICTED STOCK AWARDS

  	
  16

  
	
  12.

  	
  FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK

  	
  17

  
	
   

  	
  12.1.   General Rule

  	
  17

  
	
   

  	
  12.2.   Surrender of Stock

  	
  17

  
	
   

  	
  12.3.   Cashless Exercise

  	
  17

  
	
   

  	
  12.4.   Other Forms of Payment

  	
  17

  
	
  13.

  	
  TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS

  	
  17

  
	
   

  	
  13.1.   Dividend Equivalent Rights

  	
  17

  
	
   

  	
  13.2.   Termination of Service

  	
  18

  
	
  14.

  	
  TERMS AND CONDITIONS OF PERFORMANCE SHARES, PERFORMANCE UNITS,
  PERFORMANCE AWARDS AND ANNUAL INCENTIVE AWARDS

  	
  18

  
	
   

  	
  14.1.   Grant of Performance Units/Performance Shares

  	
  18

  
	
   

  	
  14.2.   Value of Performance Units/Performance Shares

  	
  18

  
	
   

  	
  14.3.   Earning of Performance Units/Performance
  Shares

  	
  18

  
	
   

  	
  14.4.   Form and Timing of Payment of Performance
  Units/Performance Shares

  	
  18

  
	
   

  	
  14.5.   Performance Conditions

  	
  19

  
	
   

  	
  14.6.   Performance Awards or Annual Incentive Awards
  Granted to Designated Covered Employees

  	
  19

  
	
   

  	
             14.6.1.     Performance
  Goals Generally

  	
  19

  
	
   

  	
             14.6.2.     Timing
  For Establishing Performance Goals

  	
  19

  
	
   

  	
             14.6.3.     Settlement
  of Awards; Other Terms

  	
  19

  
	
   

  	
             14.6.4.     Performance
  Measures

  	
  20

  
	
   

  	
             14.6.5.     Evaluation
  of Performance

  	
  21

  
	
   

  	
             14.6.6.     Adjustment
  of Performance-Based Compensation

  	
  21

  
	
   

  	
             14.6.7.     Board
  Discretion

  	
  21

  

 

 

2

 

	
   

  	
  14.7.   Status of Section Awards Under Code Section 162(m)

  	
  22

  
	
  15.

  	
  PARACHUTE LIMITATIONS

  	
  22

  
	
  16.

  	
  REQUIREMENTS OF LAW

  	
  23

  
	
   

  	
  16.1.   General

  	
  23

  
	
   

  	
  16.2.   Rule 16b-3

  	
  23

  
	
  17.

  	
  EFFECT OF CHANGES IN CAPITALIZATION

  	
  24

  
	
   

  	
  17.1.   Changes in Stock

  	
  24

  
	
   

  	
  17.2.   Reorganization in Which the Company Is the
  Surviving Entity Which does not Constitute a Corporate Transaction

  	
  24

  
	
   

  	
  17.3.   Corporate Transaction in which Awards are not
  Assumed

  	
  25

  
	
   

  	
  17.4.   Corporation Transaction in which Awards are
  Assumed

  	
  26

  
	
   

  	
  17.5.   Adjustments

  	
  26

  
	
   

  	
  17.6.   No Limitations on Company

  	
  26

  
	
  18.

  	
  GENERAL PROVISIONS

  	
  27

  
	
   

  	
  18.1.   Disclaimer of Rights

  	
  27

  
	
   

  	
  18.2.   Nonexclusivity of the Plan

  	
  27

  
	
   

  	
  18.3.   Withholding Taxes

  	
  27

  
	
   

  	
  18.4.   Captions

  	
  28

  
	
   

  	
  18.5.   Other Provisions

  	
  28

  
	
   

  	
  18.6.   Number and Gender

  	
  28

  
	
   

  	
  18.7.   Severability

  	
  28

  
	
   

  	
  18.8.   Governing Law

  	
  28

  
	
   

  	
  18.9.   Section 409A of the Code

  	
  28

  

 

 

3

 

PAPA JOHN’S INTERNATIONAL, INC

 

2008 OMNIBUS INCENTIVE PLAN

 

Papa John’s International, Inc.,
a Delaware corporation (the “Company”), sets forth herein the terms of its 2008
Omnibus Incentive Plan (the “Plan”), as follows:

 

1.             PURPOSE

 

The Plan is intended to
enhance the Company’s and its Affiliates’ (as defined herein) ability to
attract and retain highly qualified officers, directors, key employees, and
other persons, and to motivate such persons to serve the Company and its
Affiliates and to expend maximum effort to improve the business results and
earnings of the Company, by providing to such persons an opportunity to acquire
or increase a direct proprietary interest in the operations and future success
of the Company. To this end, the Plan provides for the grant of stock options,
stock appreciation rights, restricted stock, stock units (including deferred
stock units), unrestricted stock, dividend equivalent rights, and cash bonus
awards. Any of these awards may, but need not, be made as performance incentives
to reward attainment of annual or long-term performance goals in accordance
with the terms hereof. Stock options granted under the Plan may be
non-qualified stock options or incentive stock options, as provided herein,
except that stock options granted to outside directors and any consultants or
advisers providing services to the Company or an Affiliate shall in all cases
be non-qualified stock options.

 

2.             DEFINITIONS

 

For purposes of interpreting
the Plan and related documents (including Award Agreements), the following
definitions shall apply:

 

2.1  “Affiliate”
means, with respect to the Company, any company or other trade or business that
controls, is controlled by or is under common control with the Company within
the meaning of Rule 405 of Regulation C under the Securities Act,
including, without limitation, any Subsidiary. For purposes of granting stock
options or stock appreciation rights, an entity may not be considered an
Affiliate unless the Company holds a “controlling interest” in such entity,
where the term “controlling interest” has the same meaning as provided in
Treasury Regulation 1.414(c)-2(b)(2)(i), provided that the language “at
least 50 percent” is used instead of “at least 80 percent” and,
provided further, that where granting of stock options or stock appreciation
rights is based upon a legitimate business criteria, the language “at least
20 percent” is used instead of “at least 80 percent” each place it
appears in Treasury Regulation 1.414(c)-2(b)(2)(i).

 

2.2  “Annual
Incentive Award” means an Award made subject to attainment of
performance goals (as described in Section 14)
generally over a one-year performance period (the Company’s fiscal year, unless
otherwise specified by the Committee).

 

2.3  “Award”
means a grant of an Option, Stock Appreciation Right, Restricted Stock,
Unrestricted Stock, Stock Unit, Dividend Equivalent Right, Performance Share,
Performance Unit or cash award under the Plan.

 

2.4  “Award
Agreement” means the agreement between the Company and a Grantee
that evidences and sets out the terms and conditions of an Award.

 

2.5  “Benefit
Arrangement” shall have the meaning set forth in Section 15 hereof.

 

2.6  “Board”
means the Board of Directors of the Company.

 

 

2.7  “Cause”
means, as determined by the Board and unless otherwise provided in an
applicable agreement with the Company or an Affiliate, (i) gross
negligence or willful misconduct in connection with the performance of duties; (ii) conviction
of a criminal offense (other than minor traffic offenses); or (iii) material
breach of any term of any employment, consulting or other services,
confidentiality, intellectual property or non-competition agreements, if any,
between the Service Provider and the Company or an Affiliate.

 

2.8  “Code”
means the Internal Revenue Code of 1986, as now in effect or as hereafter
amended.

 

2.9  “Committee”
means a committee of, and designated from time to time by resolution of, the
Board, which shall be constituted as provided in Section 3.2.

 

2.10  “Company”
means Papa John’s International, Inc.

 

2.11  “Corporate
Transaction” means (i) the dissolution or liquidation of the
Company or a merger, consolidation, or reorganization of the Company with one
or more other entities in which the Company is not the surviving entity, (ii) a
sale of substantially all of the assets of the Company to another person or
entity, or (iii) any transaction (including without limitation a merger or
reorganization in which the Company is the surviving entity) which results in
any person or entity owning 50% or more of the combined voting power of all
classes of stock of the Company.

 

2.12  “Covered
Employee” means a Grantee who is a covered employee within the
meaning of Section 162(m)(3) of the Code.

 

2.13  “Disability”
means, with respect to rules regarding expiration of an Incentive Stock
Option following termination of the Grantee’s Service, the Grantee is unable to
engage in any substantial gainful activity by reason of a medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months.

 

2.14  “Dividend
Equivalent Right” means a right, granted to a Grantee under Section 13 hereof, to receive cash,
Stock, other Awards or other property equal in value to dividends paid with
respect to a specified number of shares of Stock, or other periodic payments.

 

2.15  “Effective
Date” means March 12, 2008, the date the Plan was approved by
the Board.

 

2.16  “Exchange
Act” means the Securities Exchange Act of 1934, as now in effect or
as hereafter amended.

 

2.17  “Fair
Market Value” means the value of a share of Stock, determined as
follows: if on the Grant Date or other determination date the Stock is listed
on an established national or regional stock exchange, or is publicly traded on
an established securities market, the Fair Market Value of a share of Stock
shall be the closing price of the Stock on such exchange or in such market (if
there is more than one such exchange or market the Board shall determine the
appropriate exchange or market) on the Grant Date or such other determination
date (or if there is no such reported closing price, the Fair Market Value
shall be the mean between the highest bid and lowest asked prices or 

 

2

 

between the high and low sale prices on such
trading day) or, if no sale of Stock is reported for such trading day, on the
next preceding day on which any sale shall have been reported. If the Stock is
not listed on such an exchange or traded on such a market, Fair Market Value
shall be the value of the Stock as determined by the Board by the reasonable
application of a reasonable valuation method, in a manner consistent with Code Section 409A.

 

2.18  “Family Member”
means a person who is a spouse, former spouse, child, stepchild, grandchild,
parent, stepparent, grandparent, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law,
including adoptive relationships, of the Grantee, any person sharing the
Grantee’s household (other than a tenant or employee), a trust in which any one
or more of these persons have more than fifty percent of the beneficial
interest, a foundation in which any one or more of these persons (or the
Grantee) control the management of assets, and any other entity in which one or
more of these persons (or the Grantee) own more than fifty percent of the
voting interests.

 

2.19  “Grant Date”
means, as determined by the Board, the latest to occur of (i) the date as
of which the Board approves an Award, (ii) the date on which the recipient
of an Award first becomes eligible to receive an Award under Section 6 hereof, or (iii) such
other date as may be specified by the Board.

 

2.20  “Grantee”
means a person who receives or holds an Award under the Plan.

 

2.21  “Incentive
Stock Option” means an “incentive stock option” within the meaning
of Section 422 of the Code, or the corresponding provision of any
subsequently enacted tax statute, as amended from time to time.

 

2.22  “Non-qualified
Stock Option” means an Option that is not an Incentive Stock Option.

 

2.23  “Option”
means an option to purchase one or more shares of Stock pursuant to the Plan.

 

2.24  “Option
Price” means the exercise price for each share of Stock subject to
an Option.

 

2.25  “Other
Agreement” shall have the meaning set forth in Section 15 hereof.

 

2.26  “Outside
Director” means a member of the Board who is not an officer or
employee of the Company.

 

2.27  “Performance
Award” means an Award made subject to the attainment of performance
goals (as described in Section 14)
over a performance period of up to ten (10) years.

 

2.28  “Performance-Based
Compensation” means compensation under an Award that is intended to
satisfy the requirements of Code Section 162(m) for certain
performance-based compensation paid to Covered Employees. Notwithstanding the
foregoing, nothing in this Plan shall be construed to mean that an Award which
does not satisfy the requirements for performance- based compensation under
Code Section 162(m) does not constitute performance- based
compensation for other purposes, including Code Section 409A.

 

3

 

2.29  “Performance
Measures” means measures as described in Section 14 on which the performance goals are based and
which are approved by the Company’s shareholders pursuant to this Plan in order
to qualify Awards as Performance-Based Compensation.

 

2.30  “Performance
Period” means the period of time during which the performance goals
must be met in order to determine the degree of payout and/or vesting with
respect to an Award.

 

2.31  “Performance
Share” means an Award under Section 14
herein and subject to the terms of this Plan, denominated in Shares, the value
of which at the time it is payable is determined as a function of the extent to
which corresponding performance criteria have been achieved.

 

2.32  “Performance
Unit” means an Award under Section 14
herein and subject to the terms of this Plan, denominated in units, the value
of which at the time it is payable is determined as a function of the extent to
which corresponding performance criteria have been achieved.

 

2.33  “Plan”
means this Papa John’s International, Inc. 2008 Omnibus Incentive Plan.

 

2.34  “Prior
Plans” means the 1999 Team Member Stock Ownership Plan and the 2003
Stock Option Plan for Non-Employee Directors.

 

2.35  “Purchase
Price” means the purchase price for each share of Stock pursuant to
a grant of Restricted Stock or Unrestricted Stock.

 

2.36  “Reporting
Person” means a person who is required to file reports under Section 16(a) of
the Exchange Act.

 

2.37  “Restricted
Stock” means shares of Stock, awarded to a Grantee pursuant to Section 10 hereof.

 

2.38  “SAR
Exercise Price” means the per share exercise price of a SAR granted
to a Grantee under Section 9
hereof.

 

2.39  “Securities
Act” means the Securities Act of 1933, as now in effect or as
hereafter amended.

 

2.40  “Service”
means service as a Service Provider to the Company or an Affiliate. Unless
otherwise stated in the applicable Award Agreement, a Grantee’s change in
position or duties shall not result in interrupted or terminated Service, so
long as such Grantee continues to be a Service Provider to the Company or an
Affiliate. Subject to the preceding sentence, whether a termination of Service
shall have occurred for purposes of the Plan shall be determined by the Board,
which determination shall be final, binding and conclusive.

 

2.41  “Service
Provider” means an employee, officer or director of the Company or
an Affiliate, or a consultant or adviser (who is a natural person) currently
providing services to the Company or an Affiliate.

 

2.42  “Stock”
means the common stock, par value $.01 per share, of the Company.

 

4

 

2.43  “Stock
Appreciation Right” or “SAR”
means a right granted to a Grantee under Section 9
hereof.

 

2.44  “Stock Unit”
means a bookkeeping entry representing the equivalent of one share of Stock
awarded to a Grantee pursuant to Section 10
hereof.

 

2.45  “Subsidiary”
means any “subsidiary corporation” of the Company within the meaning of Section 424(f) of
the Code.

 

2.46  “Substitute
Awards” means Awards granted upon assumption of, or in substitution
for, outstanding awards previously granted by a company or other entity
acquired by the Company or any Affiliate or with which the Company or any
Affiliate combines.

 

2.47  “Ten
Percent Stockholder” means an individual who owns more than ten
percent (10%) of the total combined voting power of all classes of outstanding
stock of the Company, its parent or any of its Subsidiaries. In determining
stock ownership, the attribution rules of Section 424(d) of the
Code shall be applied.

 

2.48  “Unrestricted
Stock” means an Award pursuant to Section 11
hereof.

 

3.             ADMINISTRATION OF THE PLAN

 

3.1.  Board

 

The Board shall have such
powers and authorities related to the administration of the Plan as are
consistent with the Company’s certificate of incorporation and by-laws and
applicable law. The Board shall have full power and authority to take all
actions and to make all determinations required or provided for under the Plan,
any Award or any Award Agreement, and shall have full power and authority to
take all such other actions and make all such other determinations not
inconsistent with the specific terms and provisions of the Plan that the Board
deems to be necessary or appropriate to the administration of the Plan, any
Award or any Award Agreement. All such actions and determinations shall be by
the affirmative vote of a majority of the members of the Board present at a
meeting or by unanimous consent of the Board executed in writing in accordance
with the Company’s certificate of incorporation and by-laws and applicable law.
The interpretation and construction by the Board of any provision of the Plan,
any Award or any Award Agreement shall be final, binding and conclusive.

 

3.2.  Committee

 

The Board from time to time
may delegate to the Committee such powers and authorities related to the
administration and implementation of the Plan, as set forth in Section 3.1 above and other applicable
provisions, as the Board shall determine, consistent with the certificate of
incorporation and by-laws of the Company and applicable law.

 

(i)            Except as provided in
Subsection (ii) and except as the Board may otherwise determine, the
Committee, if any, appointed by the Board to administer the Plan shall consist
of two or more Outside Directors of the Company who: (a) qualify as “outside
directors” within the meaning of Section 162(m) of the Code and who (b) meet
such other requirements as may be established from time to time by the
Securities and 

 

5

 

Exchange Commission for
plans intended to qualify for exemption under Rule 16b-3 (or its
successor) under the Exchange Act and who (c) comply with the independence
requirements of the stock exchange on which the Common Stock is listed.

 

(ii)           The Board may also appoint one or
more separate committees of the Board, each composed of one or more directors
of the Company who need not be Outside Directors, who may administer the Plan
with respect to employees or other Service Providers who are not officers or
directors of the Company, may grant Awards under the Plan to such employees or
other Service Providers, and may determine all terms of such Awards.

 

In the event that the Plan, any Award or any
Award Agreement entered into hereunder provides for any action to be taken by
or determination to be made by the Board, such action may be taken or such
determination may be made by the Committee if the power and authority to do so
has been delegated to the Committee by the Board as provided for in this
Section. Unless otherwise expressly determined by the Board, any such action or
determination by the Committee shall be final, binding and conclusive. To the
extent permitted by law, the Committee may delegate its authority under the
Plan to a member of the Board.

 

3.3.  Terms of
Awards

 

Subject to the other terms
and conditions of the Plan, the Board shall have full and final authority to:

 

(i)    designate Grantees,

 

(ii)   determine the type or types of Awards to be
made to a Grantee,

 

(iii)  determine the number of shares of Stock to be
subject to an Award,

 

(iv)  establish the terms and conditions of each
Award (including, but not limited to, the exercise price of any Option, the
nature and duration of any restriction or condition (or provision for lapse
thereof) relating to the vesting, exercise, transfer, or forfeiture of an Award
or the shares of Stock subject thereto, the treatment of an Award in the event
of a change of control, and any terms or conditions that may be necessary to
qualify Options as Incentive Stock Options),

 

(v)   prescribe the form of each Award Agreement
evidencing an Award, and

 

(vi)  amend, modify, or supplement the terms of any
outstanding Award. Such authority specifically includes the authority, in order
to effectuate the purposes of the Plan but without amending the Plan, to make
or modify Awards to eligible individuals who are foreign nationals or are
individuals who are employed outside the United States to recognize differences
in local law, tax policy, or custom. Notwithstanding the foregoing, no
amendment, modification or supplement of any Award shall, without the consent
of the Grantee, impair the Grantee’s rights under such Award.

 

The Company may retain the
right in an Award Agreement to cause a forfeiture of the gain realized by a
Grantee on account of actions taken by the Grantee in violation or breach of or
in conflict with any employment agreement, non-competition agreement, any
agreement prohibiting solicitation of employees or clients of the Company or
any Affiliate thereof or any confidentiality obligation with respect to the
Company or any Affiliate 

 

6

 

thereof or otherwise in competition with the
Company or any Affiliate thereof, to the extent specified in such Award
Agreement applicable to the Grantee. In addition, the Company may annul an
Award if the Grantee is an employee of the Company or an Affiliate thereof and
is terminated for Cause as defined in the applicable Award Agreement or the
Plan, as applicable.

 

Furthermore, if the Company
is required to prepare an accounting restatement due to the material
noncompliance of the Company, as a result of misconduct, with any financial
reporting requirement under the securities laws, the individuals subject to
automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002
and any Grantee who knowingly engaged in the misconduct, was grossly negligent
in engaging in the misconduct, knowingly failed to prevent the misconduct or
was grossly negligent in failing to prevent the misconduct, shall reimburse the
Company the amount of any payment in settlement of an Award earned or accrued
during the twelve-(12)month period following the first public issuance or
filing with the United States Securities and Exchange Commission (whichever
first occurred) of the financial document that contained such material
noncompliance.

 

3.4.  No
Repricing

 

Notwithstanding anything in
this Plan to the contrary, no amendment or modification may be made to an
outstanding Option or SAR, including, without limitation, by replacement of
Options or SARs with cash or other award type, that would be treated as a
repricing under the rules of the stock exchange on which the Stock is
listed, in each case, without the approval of the stockholders of the Company,
provided, that, appropriate adjustments may be made to outstanding Options and
SARs pursuant to Section 17
or Section 5.3 and may be
made to make changes to achieve compliance with applicable law, including
Internal Revenue Code Section 409A.

 

3.5.  Deferral
Arrangement

 

The Board may permit or
require the deferral of any award payment into a deferred compensation
arrangement, subject to such rules and procedures as it may establish,
which may include provisions for the payment or crediting of interest or
dividend equivalents, including converting such credits into deferred Stock
equivalents. Any such deferrals shall be made in a manner that complies with
Code Section 409A.

 

3.6.  No
Liability

 

No member of the Board or
the Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any Award or Award Agreement.

 

3.7.  Share Issuance/Book-Entry

 

Notwithstanding
any provision of this Plan to the contrary, the issuance of the Stock under the
Plan may be evidenced in such a manner as the Board, in its discretion, deems
appropriate, including, without limitation, book-entry registration or issuance
of one or more Stock certificates.

 

7

 

4.             STOCK SUBJECT TO THE PLAN

 

4.1.  Number of
Shares Available for Awards

 

Subject to adjustment as
provided in Section 17
hereof, the number of shares of Stock available for issuance under the Plan
shall be one million eight hundred thousand (1,800,000) plus all shares of
Stock available for issuance under the Prior Plans as of the date of
stockholder approval of the Plan, increased by shares of Stock covered by
awards granted under a Prior Plan that are not purchased or are forfeited or
expire, or otherwise terminate without delivery of any Stock subject thereto
after the date of stockholder approval of the Plan, to the extent such shares
would again be available for issuance under such Prior Plan. Subject to
adjustment as provided in Section 17
hereof, the number of shares of Stock available for issuance as Incentive Stock
Options shall be one million eight hundred thousand (1,800,000). Stock issued
or to be issued under the Plan shall be authorized but unissued shares; or, to
the extent permitted by applicable law, issued shares that have been reacquired
by the Company.

 

4.2. 
Adjustments in Authorized Shares

 

The Board shall have the
right to substitute or assume Awards in connection with mergers,
reorganizations, separations, or other transactions to which Section 424(a) of
the Code applies. The number of shares of Stock reserved pursuant to Section 4 shall be increased by the
corresponding number of Awards assumed and, in the case of a substitution, by
the net increase in the number of shares of Stock subject to Awards before and
after the substitution.

 

4.3.  Share
Usage

 

Shares covered by an Award shall
be counted as used as of the Grant Date. Any shares of Stock that are subject
to Awards of Options shall be counted against the limit set forth in Section 4.1
as one (1) share for every one (1) share subject to an Award of
Options. With respect to SARs, the number of shares subject to an award of SARs
will be counted against the aggregate number of shares available for issuance
under the Plan regardless of the number of shares actually issued to settle the
SAR upon exercise. Any shares that are subject to Awards other than Options or
Stock Appreciation Rights shall be counted against the limit set forth in Section 4.1 as 1.9 shares for every
one (1) share granted. If any shares covered by an Award granted under the
Plan or a Prior Plan are not purchased or are forfeited or expire, or if an
Award otherwise terminates without delivery of any Stock subject thereto or is
settled in cash in lieu of shares, then the number of shares of Stock counted
against the aggregate number of shares available under the Plan with respect to
such Award shall, to the extent of any such forfeiture, termination or
expiration, again be available for making Awards under the Plan in the same
amount as such shares were counted against the limit set forth in Section 4.1, provided that any shares
covered by an Award granted under a Prior Plan will again be available for
making Awards under the Plan in the same amount as such shares were counted
against the limits set forth in the applicable Prior Plan. The number of shares
of Stock available for issuance under the Plan shall not be increased by (i) any
shares of Stock tendered or withheld or Award surrendered in connection with
the purchase of shares of Stock upon exercise of an Option as described in Section 12.2, or (ii) any shares
of Stock deducted or delivered from an Award payment in connection with the
Company’s tax withholding obligations as described in Section 18.3.

 

8

 

5.                                      EFFECTIVE DATE, DURATION AND AMENDMENTS

 

5.1.  Effective
Date

 

The Plan shall be effective
as of the Effective Date, subject to approval of the Plan by the Company’s
stockholders within one year of the Effective Date. Upon approval of the Plan
by the stockholders of the Company as set forth above, all Awards made under
the Plan on or after the Effective Date shall be fully effective as if the
stockholders of the Company had approved the Plan on the Effective Date and no
further awards will be made under the Prior Plans. If the stockholders fail to
approve the Plan within one year of the Effective Date, any Awards made
hereunder shall be null and void and of no effect.

 

5.2.  Term

 

The
Plan shall terminate automatically on the second business day after the annual
meeting of the Company’s stockholders in 2011 and may be terminated on any
earlier date as provided in Section 5.3.

 

5.3.  Amendment
and Termination of the Plan

 

The Board may, at any time
and from time to time, amend, suspend, or terminate the Plan as to any shares
of Stock as to which Awards have not been made. An amendment shall be
contingent on approval of the Company’s stockholders to the extent stated by
the Board, required by applicable law or required by applicable stock exchange
listing requirements. In addition, an amendment will be contingent on approval
of the Company’s stockholders if the amendment would: (i) materially
increase the benefits accruing to participants under the Plan, (ii) materially
increase the aggregate number of shares of Stock that may be issued under the
Plan, or (iii) materially modify the requirements as to eligibility for
participation in the Plan. No Awards shall be made after termination of the
Plan. No amendment, suspension, or termination of the Plan shall, without the
consent of the Grantee, impair rights or obligations under any Award
theretofore awarded under the Plan.

 

6.                                      AWARD ELIGIBILITY AND LIMITATIONS

 

6.1.  Service
Providers and Other Persons

 

Subject to this Section 6, Awards may be made under
the Plan to: (i) any Service Provider to the Company or of any Affiliate,
including any Service Provider who is an officer or director of the Company, or
of any Affiliate, as the Board shall determine and designate from time to time
and (ii) any other individual whose participation in the Plan is
determined to be in the best interests of the Company by the Board.

 

6.2.  Successive
Awards and Substitute Awards

 

An eligible person may
receive more than one Award, subject to such restrictions as are provided
herein. Notwithstanding Sections 8.1
and 9.1, the Option Price of an
Option or the grant price of a SAR that is a Substitute Award may be less than
100% of the Fair Market Value of a share of Common Stock on the original date
of grant; provided, that, the Option Price or grant price is determined in
accordance with the principles of Code 

 

9

 

Section 424 and the regulations
thereunder; as modified by Code Section 409A and the regulations
thereunder as to Options that are non-qualified stock options and SARs.

 

6.3.  Limitation
on Shares of Stock Subject to Awards and Cash Awards

 

During any time when the
Company has a class of equity security registered under Section 12 of the
Exchange Act:

 

(i)    the maximum number of shares of Stock
subject to Options or SARs that can be granted under the Plan to any person
eligible for an Award under Section 6
hereof is three hundred fifty thousand (350,000) per 12 month period;
provided, however, the maximum number of shares of Stock subject to Options or
SARs that can be granted under the Plan to any person eligible for an Award
under Section 6 in the year
that the person is first employed by the Company is five hundred thousand
(500,000);

 

(ii)   the maximum number of shares that can be
granted under the Plan, other than pursuant to an Option or SARs, to any person
eligible for an Award under Section 6
hereof is one hundred seventy five thousand (175,000) per 12 month period;
provided, however, the maximum number of shares of Stock subject to Awards
other than Options or SARs that can be granted under the Plan to any person
eligible for an Award under Section 6 in the year that the person is first
employed by the Company is two hundred fifty thousand (250,000); and

 

(iii)  the maximum amount that may be paid as an
Annual Incentive Award or other cash Award in any 12 month period to any
person eligible for an Award shall be $2 million and the maximum amount
that may be paid as a Performance Award or other cash Award in respect of a
performance period to any person eligible for an Award shall be
$6 million.

 

The preceding limitations in
this Section 6.3 are subject
to adjustment as provided in Section 17
hereof.

 

 

7.                                      AWARD AGREEMENT

 

Each
Award granted pursuant to the Plan shall be evidenced by an Award Agreement, in
such form or forms as the Board shall from time to time determine. Award
Agreements granted from time to time or at the same time need not contain
similar provisions but shall be consistent with the terms of the Plan. Each
Award Agreement evidencing an Award of Options shall specify whether such
Options are intended to be Non-qualified Stock Options or Incentive Stock
Options, and in the absence of such specification such options shall be deemed
Non-qualified Stock Options.

 

8.                                      TERMS AND CONDITIONS OF OPTIONS

 

8.1.  Option
Price

 

The Option Price of each
Option shall be fixed by the Board and stated in the Award Agreement evidencing
such Option. Except in the case of Substitute Awards, the Option Price of each
Option shall be at least the Fair Market Value on the Grant Date of a share of
Stock; provided, however, that in the event that a Grantee
is a Ten Percent Stockholder, the Option Price of an Option granted to such
Grantee that is intended to be an Incentive 

 

10

 

Stock Option shall be not less than
110 percent of the Fair Market Value of a share of Stock on the Grant
Date. In no case shall the Option Price of any Option be less than the par
value of a share of Stock.

 

8.2.  Vesting

 

Subject to Sections 8.3 and 17.3 hereof, each
Option granted under the Plan shall become exercisable at such times and under
such conditions as shall be determined by the Board and stated in the Award
Agreement. For purposes of this Section 8.2,
fractional numbers of shares of Stock subject to an Option shall be rounded
down to the next nearest whole number.

 

8.3.  Term

 

Each Option granted under
the Plan shall terminate, and all rights to purchase shares of Stock thereunder
shall cease, upon the expiration of ten years from the date such Option is
granted, or under such circumstances and on such date prior thereto as is set
forth in the Plan or as may be fixed by the Board and stated in the Award
Agreement relating to such Option; provided,
however, that in the event that
the Grantee is a Ten Percent Stockholder, an Option granted to such Grantee
that is intended to be an Incentive Stock Option shall not be exercisable after
the expiration of five years from its Grant Date. If on the day preceding the date
on which a Grantee’s Options would otherwise terminate, the Fair Market Value
of shares of Stock underlying a Grantee’s Options is greater than the Option
Price of such Options, the Company shall, prior to the termination of such
Options and without any action being taken on the part of the Grantee, consider
such Options to have been exercised by the Grantee. The Company shall deduct
from the shares of Stock deliverable to the Grantee upon such exercise the
number of shares of Stock necessary to satisfy payment of the Option Price and
all withholding obligations.

 

8.4. 
Termination of Service

 

Each Award Agreement shall
set forth the extent to which the Grantee shall have the right to exercise the
Option following termination of the Grantee’s Service. Such provisions shall be
determined in the sole discretion of the Board, need not be uniform among all
Options issued pursuant to the Plan, and may reflect distinctions based on the
reasons for termination of Service.

 

8.5. 
Limitations on Exercise of Option

 

Notwithstanding any other
provision of the Plan, in no event may any Option be exercised, in whole or in
part, prior to the date the Plan is approved by the stockholders of the Company
as provided herein or after the occurrence of an event referred to in Section 17 hereof which results in
termination of the Option.

 

8.6.  Method of
Exercise

 

Subject to the terms of Article 12 and Section 18.3, an Option that is
exercisable may be exercised by the Grantee’s delivery to the Company of notice
of exercise on any business day, at the Company’s principal office, on the form
specified by the Company. 

 

11

 

Such notice shall specify the number of
shares of Stock with respect to which the Option is being exercised and shall
be accompanied by payment in full of the Option Price of the shares for which
the Option is being exercised plus the amount (if any) of federal and/or other
taxes which the Company may, in its judgment, be required to withhold with
respect to an Award.

 

8.7.  Rights of
Holders of Options

 

Unless otherwise stated in
the applicable Award Agreement, an individual holding or exercising an Option
shall have none of the rights of a stockholder (for example, the right to
receive cash or dividend payments or distributions attributable to the subject
shares of Stock or to direct the voting of the subject shares of Stock) until
the shares of Stock covered thereby are fully paid and issued to him. Except as
provided in Section 17
hereof, no adjustment shall be made for dividends, distributions or other
rights for which the record date is prior to the date of such issuance.

 

8.8.  Delivery
of Stock Certificates

 

Promptly after the exercise
of an Option by a Grantee and the payment in full of the Option Price, such Grantee
shall be entitled to the issuance of a stock certificate or certificates
evidencing his or her ownership of the shares of Stock subject to the Option.

 

8.9. 
Transferability of Options

 

Except as provided in Section 8.10, during the lifetime of a
Grantee, only the Grantee (or, in the event of legal incapacity or
incompetency, the Grantee’s guardian or legal representative) may exercise an
Option. Except as provided in Section 8.10,
no Option shall be assignable or transferable by the Grantee to whom it is
granted, other than by will or the laws of descent and distribution.

 

8.10.  Family
Transfers

 

If authorized in the
applicable Award Agreement, a Grantee may transfer, not for value, all or part
of an Option which is not an Incentive Stock Option to any Family Member. For
the purpose of this Section 8.10,
a “not for value” transfer is a transfer which is (i) a gift, (ii) a
transfer under a domestic relations order in settlement of marital property
rights; or (iii) a transfer to an entity in which more than fifty percent
of the voting interests are owned by Family Members (or the Grantee) in
exchange for an interest in that entity. Following a transfer under this Section 8.10, any such Option shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer. Subsequent transfers of transferred Options are
prohibited except to Family Members of the original Grantee in accordance with
this Section 8.10 or by will
or the laws of descent and distribution. The events of termination of Service
of Section 8.4 hereof shall
continue to be applied with respect to the original Grantee, following which
the Option shall be exercisable by the transferee only to the extent, and for
the periods specified, in Section 8.4.

 

12

 

8.11. 
Limitations on Incentive Stock Options

 

An Option shall constitute
an Incentive Stock Option only (i) if the Grantee of such Option is an
employee of the Company or any Subsidiary of the Company; (ii) to the
extent specifically provided in the related Award Agreement; and (iii) to
the extent that the aggregate Fair Market Value (determined at the time the
Option is granted) of the shares of Stock with respect to which all Incentive
Stock Options held by such Grantee become exercisable for the first time during
any calendar year (under the Plan and all other plans of the Grantee’s employer
and its Affiliates) does not exceed $100,000. This limitation shall be applied
by taking Options into account in the order in which they were granted.

 

8.12.  Notice of
Disqualifying Disposition

 

If any Grantee shall make
any disposition of shares of Stock issued pursuant to the exercise of an
Incentive Stock Option under the circumstances described in Code Section 421(b) (relating
to certain disqualifying dispositions), such Grantee shall notify the Company
of such disposition within ten (10) days thereof.

 

9.                                      TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS

 

9.1.  Right to
Payment and Grant Price

 

A SAR shall confer on the
Grantee to whom it is granted a right to receive, upon exercise thereof, the
excess of (A) the Fair Market Value of one share of Stock on the date of
exercise over (B) the SAR Exercise Price as determined by the Board. The
Award Agreement for a SAR shall specify the SAR Exercise Price, which shall be
at least the Fair Market Value of a share of Stock on the date of grant. SARs
may be granted in conjunction with all or part of an Option granted under the
Plan or at any subsequent time during the term of such Option, in conjunction
with all or part of any other Award or without regard to any Option or other
Award; provided that a SAR that is granted subsequent to the Grant Date of a
related Option must have a SAR Exercise Price that is no less than the Fair
Market Value of one share of Stock on the SAR Grant Date.

 

9.2.  Other
Terms

 

The Board shall determine at
the date of grant or thereafter, the time or times at which and the
circumstances under which a SAR may be exercised in whole or in part (including
based on achievement of performance goals and/or future service requirements),
the time or times at which SARs shall cease to be or become exercisable
following termination of Service or upon other conditions, the method of
exercise, method of settlement, form of consideration payable in settlement,
method by or forms in which Stock will be delivered or deemed to be delivered
to Grantees, whether or not a SAR shall be in tandem or in combination with any
other Award, and any other terms and conditions of any SAR.

 

9.3.  Term

 

Each SAR granted under the
Plan shall terminate, and all rights thereunder shall cease, upon the
expiration of ten years from the date such SAR is granted, or under such
circumstances and on such date prior thereto as is set forth in the Plan or as
may be fixed by the Board and stated in the Award Agreement relating to such
SAR. If on the day 

 

13

 

preceding the date on which a Grantee’s SAR
would otherwise terminate, the Fair Market Value of shares of Stock underlying
a Grantee’s SAR is greater than the SAR Exercise Price, the Company shall,
prior to the termination of such SAR and without any action being taken on the
part of the Grantee, consider such SAR to have been exercised by the Grantee.

 

9.4. 
Transferability of SARS

 

Except as provided in Section 9.5, during the lifetime of a
Grantee, only the Grantee (or, in the event of legal incapacity or
incompetency, the Grantee’s guardian or legal representative) may exercise a
SAR. Except as provided in Section 9.5,
no SAR shall be assignable or transferable by the Grantee to whom it is
granted, other than by will or the laws of descent and distribution.

 

9.5.  Family
Transfers

 

If authorized in the
applicable Award Agreement, a Grantee may transfer, not for value, all or part
of a SAR to any Family Member. For the purpose of this Section 9.5, a “not for value”
transfer is a transfer which is (i) a gift, (ii) a transfer under a
domestic relations order in settlement of marital property rights; or (iii) a
transfer to an entity in which more than fifty percent of the voting interests
are owned by Family Members (or the Grantee) in exchange for an interest in
that entity. Following a transfer under this Section 9.5,
any such SAR shall continue to be subject to the same terms and conditions as
were applicable immediately prior to transfer. Subsequent transfers of
transferred SARs are prohibited except to Family Members of the original
Grantee in accordance with this Section 9.5
or by will or the laws of descent and distribution.

 

10.                               TERMS AND
CONDITIONS OF RESTRICTED STOCK AND STOCK UNITS

 

10.1.  Grant of
Restricted Stock or Stock Units

 

Awards of Restricted Stock
or Stock Units may be made for no consideration (other than par value of the
shares which is deemed paid by Services already rendered).

 

10.2. 
Restrictions

 

At the time a grant of
Restricted Stock or Stock Units is made, the Board may, in its sole discretion,
establish a period of time (a “restricted period”) applicable to such Restricted
Stock or Stock Units. Each Award of Restricted Stock or Stock Units may be
subject to a different restricted period. The Board may, in its sole
discretion, at the time a grant of Restricted Stock or Stock Units is made,
prescribe restrictions in addition to or other than the expiration of the
restricted period, including the satisfaction of corporate or individual
performance objectives, which may be applicable to all or any portion of the
Restricted Stock or Stock Units as described in Article 14. Notwithstanding the foregoing, (i) Restricted
Stock and Stock Units that vest solely by the passage of time shall not vest in
full in less than three (3) years from the Grant Date, and (ii) Restricted
Stock and Stock Units for which vesting may be accelerated by achieving
performance targets shall not vest in full in less than one (1) year from
the Grant Date; provided, however, up to five percent of the shares
reserved for issuance under this Plan may be granted pursuant to this Section 10 or the other provisions of
this Plan without being subject to the foregoing 

 

14

 

restrictions. Neither Restricted Stock nor
Stock Units may be sold, transferred, assigned, pledged or otherwise encumbered
or disposed of during the restricted period or prior to the satisfaction of any
other restrictions prescribed by the Board with respect to such Restricted
Stock or Stock Units.

 

10.3. 
Restricted Stock Certificates

 

The Company shall issue, in
the name of each Grantee to whom Restricted Stock has been granted, stock
certificates representing the total number of shares of Restricted Stock
granted to the Grantee, as soon as reasonably practicable after the Grant Date.
The Board may provide in an Award Agreement that either (i) the Secretary
of the Company shall hold such certificates for the Grantee’s benefit until
such time as the Restricted Stock is forfeited to the Company or the
restrictions lapse, or (ii) such certificates shall be delivered to the
Grantee, provided, however, that such certificates shall bear
a legend or legends that comply with the applicable securities laws and
regulations and makes appropriate reference to the restrictions imposed under
the Plan and the Award Agreement.

 

10.4.  Rights of
Holders of Restricted Stock

 

Unless the Board otherwise
provides in an Award Agreement, holders of Restricted Stock shall have the
right to vote such Stock and the right to receive any dividends declared or
paid with respect to such Stock. The Board may provide that any dividends paid
on Restricted Stock must be reinvested in shares of Stock, which may or may not
be subject to the same vesting conditions and restrictions applicable to such
Restricted Stock. All distributions, if any, received by a Grantee with respect
to Restricted Stock as a result of any stock split, stock dividend, combination
of shares, or other similar transaction shall be subject to the restrictions
applicable to the original Grant.

 

10.5.  Rights of
Holders of Stock Units

 

10.5.1.  Voting and
Dividend Rights

 

Holders
of Stock Units shall have no rights as stockholders of the Company. The Board
may provide in an Award Agreement evidencing a grant of Stock Units that the
holder of such Stock Units shall be entitled to receive, upon the Company’s
payment of a cash dividend on its outstanding Stock, a cash payment for each
Stock Unit held equal to the per-share dividend paid on the Stock. Such Award
Agreement may also provide that such cash payment will be deemed reinvested in
additional Stock Units at a price per unit equal to the Fair Market Value of a
share of Stock on the date that such dividend is paid.

 

10.5.2.  Creditor’s
Rights

 

A
holder of Stock Units shall have no rights other than those of a general
creditor of the Company. Stock Units represent an unfunded and unsecured
obligation of the Company, subject to the terms and conditions of the
applicable Award Agreement.

 

15

 

10.6. 
Termination of Service

 

Unless the Board otherwise
provides in an Award Agreement or in writing after the Award Agreement is
issued, upon the termination of a Grantee’s Service, any Restricted Stock or
Stock Units held by such Grantee that have not vested, or with respect to which
all applicable restrictions and conditions have not lapsed, shall immediately
be deemed forfeited. Upon forfeiture of Restricted Stock or Stock Units, the
Grantee shall have no further rights with respect to such Award, including but
not limited to any right to vote Restricted Stock or any right to receive dividends
with respect to shares of Restricted Stock or Stock Units. Notwithstanding the
terms of this Section 10.6,
but subject to the five percent limitation set forth in Section 10.2, the Board may not waive
restrictions or conditions applicable to Restricted Stock or Stock Units except
in the case of a Grantee’s death or disability or as specified in Section 17.3. If the Board waives
restrictions or conditions applicable to Restricted Stock or Stock Units, the
shares subject to such Restricted Stock or Stock Units shall be deducted from
the five percent limitation set forth in Section 10.2.

 

10.7.  Purchase
of Restricted Stock and Shares Subject to Stock Units

 

The Grantee shall be
required, to the extent required by applicable law, to purchase the Restricted
Stock or Shares subject to vested Stock Units from the Company at a Purchase
Price equal to the greater of (i) the aggregate par value of the shares of
Stock represented by such Restricted Stock or Stock Units (ii) the
Purchase Price, if any, specified in the Award Agreement relating to such
Restricted Stock or Stock Units. The Purchase Price shall be payable in a form
described in Section 12 or,
in the discretion of the Board, in consideration for past or future Services
rendered to the Company or an Affiliate.

 

10.8.  Delivery
of Stock

 

Upon the expiration or
termination of any restricted period and the satisfaction of any other
conditions prescribed by the Board, the restrictions applicable to shares of
Restricted Stock or Stock Units settled in Stock shall lapse, and, unless
otherwise provided in the Award Agreement, a stock certificate for such shares
shall be delivered, free of all such restrictions, to the Grantee or the
Grantee’s beneficiary or estate, as the case may be. Neither the Grantee, nor
the Grantee’s beneficiary or estate, shall have any further rights with regard
to a Stock Unit once the share of Stock represented by the Stock Unit has been
delivered.

 

11.                               TERMS AND
CONDITIONS OF UNRESTRICTED STOCK AWARDS

 

The Board may, in its sole
discretion, grant (or sell at par value or such other higher purchase price
determined by the Board) an Unrestricted Stock Award to any Grantee pursuant to
which such Grantee may receive shares of Stock free of any restrictions (“Unrestricted
Stock”) under the Plan; provided,
however, that, in the aggregate,
no more than five percent of the shares reserved for issuance under this Plan
may be granted pursuant to this Section 11
and the exceptions set forth in Section 10.2
and Section 10.6.
Unrestricted Stock Awards may be granted or sold as described in the 

 

16

 

preceding sentence in respect of past
services and other valid consideration, or in lieu of, or in addition to, any
cash compensation due to such Grantee.

 

12.                               FORM OF
PAYMENT FOR OPTIONS AND RESTRICTED STOCK

 

12.1.  General
Rule

 

Payment of the Option Price
for the shares purchased pursuant to the exercise of an Option or the Purchase
Price for Restricted Stock shall be made in cash or in cash equivalents acceptable
to the Company.

 

12.2.  Surrender
of Stock

 

To the extent the Award
Agreement so provides, payment of the Option Price for shares purchased
pursuant to the exercise of an Option or the Purchase Price for Restricted
Stock may be made all or in part through the tender or attestation to the
Company of shares of Stock, which shall be valued, for purposes of determining
the extent to which the Option Price or Purchase Price has been paid thereby,
at their Fair Market Value on the date of exercise or surrender.

 

12.3.  Cashless
Exercise

 

With respect to an Option
only (and not with respect to Restricted Stock), to the extent permitted by law
and to the extent the Award Agreement so provides, payment of the Option Price
for shares purchased pursuant to the exercise of an Option may be made all or
in part by delivery (on a form acceptable to the Board) of an irrevocable
direction to a licensed securities broker acceptable to the Company to sell
shares of Stock and to deliver all or part of the sales proceeds to the Company
in payment of the Option Price and any withholding taxes described in Section 18.3.

 

12.4.  Other
Forms of Payment

 

To the extent the Award
Agreement so provides, payment of the Option Price for shares purchased
pursuant to exercise of an Option or the Purchase Price for Restricted Stock
may be made in any other form that is consistent with applicable laws,
regulations and rules, including, without limitation, Service.

 

13.                               TERMS AND
CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS

 

13.1.  Dividend
Equivalent Rights

 

A Dividend Equivalent Right
is an Award entitling the recipient to receive credits based on cash
distributions that would have been paid on the shares of Stock specified in the
Dividend Equivalent Right (or other award to which it relates) if such shares
had been issued to and held by the recipient. A Dividend Equivalent Right may
be granted hereunder to any Grantee. The terms and conditions of Dividend
Equivalent Rights shall be specified in the grant. Dividend equivalents
credited to the holder of a Dividend Equivalent Right may be paid currently or
may be deemed to be reinvested in additional shares of Stock, which may
thereafter accrue additional equivalents. Any such reinvestment shall be at
Fair Market Value on the date of reinvestment. Dividend Equivalent Rights may
be settled in cash or Stock or a combination thereof, in a single installment
or

 

17

 

installments, all determined in the sole
discretion of the Board. A Dividend Equivalent Right granted as a component of
another Award may provide that such Dividend Equivalent Right shall be settled
upon exercise, settlement, or payment of, or lapse of restrictions on, such
other award, and that such Dividend Equivalent Right shall expire or be
forfeited or annulled under the same conditions as such other award. A Dividend
Equivalent Right granted as a component of another Award may also contain terms
and conditions different from such other award.

 

13.2. 
Termination of Service

 

Except as may otherwise be
provided by the Board either in the Award Agreement or in writing after the
Award Agreement is issued, a Grantee’s rights in all Dividend Equivalent Rights
or interest equivalents shall automatically terminate upon the Grantee’s
termination of Service for any reason.

 

14.                               TERMS AND CONDITIONS OF PERFORMANCE SHARES, PERFORMANCE UNITS,
PERFORMANCE AWARDS AND ANNUAL INCENTIVE AWARDS

 

14.1.  Grant of
Performance Units/Performance Shares

 

Subject to the terms and
provisions of this Plan, the Board, at any time and from time to time, may
grant Performance Units and/or Performance Shares to Participants in such
amounts and upon such terms as the Committee shall determine.

 

14.2.  Value of
Performance Units/Performance Shares

 

Each Performance Unit shall
have an initial value that is established by the Board at the time of grant.
The Board shall set performance goals in its discretion which, depending on the
extent to which they are met, will determine the value and/or number of
Performance Units/Performance Shares that will be paid out to the Participant.

 

14.3.  Earning
of Performance Units/Performance Shares

 

Subject to the terms of this
Plan, after the applicable Performance Period has ended, the holder of
Performance Units/Performance Shares shall be entitled to receive payout on the
value and number of Performance Units/Performance Shares earned by the
Participant over the Performance Period, to be determined as a function of the
extent to which the corresponding performance goals have been achieved.

 

14.4.  Form and
Timing of Payment of Performance Units/Performance Shares

 

Payment of earned
Performance Units/Performance Shares shall be as determined by the Board and as
evidenced in the Award Agreement. Subject to the terms of this Plan, the Board,
in its sole discretion, may pay earned Performance Units/Performance Shares in
the form of cash or in shares (or in a combination thereof) equal to the value
of the earned Performance Units/Performance Shares at the close of the
applicable Performance Period, or as soon as practicable after the end of the
Performance Period. Any Shares may be granted subject to any restrictions
deemed appropriate by the Committee. The determination of the Committee with
respect to the form of payout of such Awards shall be set forth in the Award
Agreement pertaining to the grant of the Award.

 

18

 

14.5. 
Performance Conditions

 

The right of a Grantee to
exercise or receive a grant or settlement of any Award, and the timing thereof,
may be subject to such performance conditions as may be specified by the Board.
The Board may use such business criteria and other measures of performance as
it may deem appropriate in establishing any performance conditions. If and to
the extent required under Code Section 162(m), any power or authority
relating to an Award intended to qualify under Code Section 162(m), shall
be exercised by the Committee and not the Board.

 

14.6. 
Performance Awards or Annual Incentive Awards Granted to Designated
Covered Employees

 

If and to the extent that
the Board determines that an Award to be granted to a Grantee who is designated
by the Board as likely to be a Covered Employee should qualify as “performance-based
compensation” for purposes of Code Section 162(m), the grant, exercise
and/or settlement of such Award shall be contingent upon achievement of
pre-established performance goals and other terms set forth in this Section 14.6.

 

14.6.1.  Performance
Goals Generally

 

The
performance goals for such Awards shall consist of one or more business
criteria and a targeted level or levels of performance with respect to each of
such criteria, as specified by the Committee consistent with this Section 14.6. Performance goals shall
be objective and shall otherwise meet the requirements of Code Section 162(m) and
regulations thereunder including the requirement that the level or levels of performance
targeted by the Committee result in the achievement of performance goals being “substantially
uncertain.” The Committee may determine that such Awards shall be granted,
exercised and/or settled upon achievement of any one performance goal or that
two or more of the performance goals must be achieved as a condition to grant,
exercise and/or settlement of such Awards. Performance goals may differ for
Awards granted to any one Grantee or to different Grantees.

 

14.6.2.  Timing For
Establishing Performance Goals

 

Performance
goals shall be established not later than the earlier of (i) 90 days
after the beginning of any performance period applicable to such Awards and (ii) the
day on which 25% of any performance period applicable to such Awards has expired,
or at such other date as may be required or permitted for “performance-based
compensation” under Code Section 162(m).

 

14.6.3.  Settlement of
Awards; Other Terms

 

Settlement
of such Awards shall be in cash, Stock, other Awards or other property, in the
discretion of the Committee. The Committee may, in its discretion, reduce the
amount of a settlement otherwise to be made in connection with such Awards. The
Committee shall specify the circumstances in which such Performance or Annual
Incentive Awards shall be paid or forfeited in the event of termination of
Service by the Grantee prior to the end of a performance period or settlement
of Awards.

 

19

 

14.6.4.  Performance
Measures

 

The
performance goals upon which the payment or vesting of an Award to a Covered
Employee that is intended to qualify as Performance-Based Compensation shall be
limited to the following Performance Measures:

 

(a)               net earnings or net income;

 

(b)              operating earnings or
income, including consolidated corporate operating income excluding the impact
of consolidation of the franchisee-owned BIBP Commodities, Inc. cheese
purchasing entity (BIBP);

 

(c)               pretax earnings;

 

(d)              earnings per share;

 

(e)               share price, including
growth and capitalization measures and total stockholder return;

 

(f)                 earnings before interest and
taxes;

 

(g)              earnings before interest,
taxes, depreciation and/or amortization;

 

(h)              sales or revenue growth,
whether in general or by store, category of store or product, including
system-wide comparable sales (average same-store, year-over-year sales);

 

(i)                  gross or operating margins
(including food, labor and mileage);

 

(j)                  return measures, including
return on assets, capital, investment, equity, sales or revenue;

 

(k)               cash flow, including
operating cash flow, free cash flow, cash flow return on equity and cash flow
return on investment;

 

(l)                  productivity ratios;

 

(m)            expense targets;

 

(n)              market share;

 

(o)              financial ratios as provided
in credit agreements or indentures of the Company and its subsidiaries;

 

(p)              debt rating targets;

 

(q)              working capital targets;

 

(r)                 completion of acquisitions
or divestitures of businesses, assets, companies or stores;

 

(s)               store unit counts or similar
store metrics, including franchise and/or company-store openings and/or
closings;

 

(t)                 system-wide, corporate,
franchisee or store comparable transactions;

 

(u)              profits from restaurant
operations;

 

20

 

(v)              product quality and customer
service metrics, including consumer, customer, or franchisee perception
targets;

 

(w)            employee retention and
recruiting metrics, including turnover; and

 

(x)                any combination of any of
the foregoing business criteria.

 

Any
Performance Measure(s) may be used to measure the performance of the
Company, Subsidiary, and/or Affiliate as a whole or any business unit of the
Company, Subsidiary, and/or Affiliate or any individual or group of stores or
franchises or any combination of the foregoing as the Committee may deem appropriate,
or any of the above Performance Measures as compared to the performance of a
group of comparator companies, or published or special index that the
Committee, in its sole discretion, deems appropriate, or the Company may select
Performance Measure (e) above as compared to various stock market indices.
The Committee also has the authority to provide for accelerated vesting of any
Award based on the achievement of performance goals pursuant to the Performance
Measures specified in this Section 14.

 

14.6.5.  Evaluation of
Performance

 

The
Committee may provide in any such Award that any evaluation of performance may
include or exclude any of the following events that occur during a Performance
Period: (a) asset write-downs; (b) litigation or claim judgments or
settlements; (c) the effect of changes in tax laws, accounting principles,
or other laws or provisions affecting reported results; (d) any
reorganization and restructuring programs; (e) extraordinary nonrecurring
items as described in Accounting Principles Board Opinion No. 30 and/or in
management’s discussion and analysis of financial condition and results of
operations appearing in the Company’s annual report to shareholders for the
applicable year; (f) acquisitions or divestitures; and (g) foreign
exchange gains and losses. To the extent such inclusions or exclusions affect
Awards to Covered Employees, they shall be prescribed in a form that meets the
requirements of Code Section 162(m) for deductibility.

 

14.6.6.  Adjustment of
Performance-Based Compensation

 

Awards
that are intended to qualify as Performance-Based Compensation may not be
adjusted upward. The Board shall retain the discretion to adjust such Awards
downward, either on a formula or discretionary basis, or any combination as the
Committee determines.

 

14.6.7.  Board Discretion

 

In the event that applicable tax and/or
securities laws change to permit Board discretion to alter the governing
Performance Measures without obtaining shareholder approval of such changes,
the Board shall have sole discretion to make such changes without obtaining
shareholder approval provided the exercise of such discretion does not violate
Code Section 409A. In addition, in the event that the Committee determines
that it is advisable to grant Awards that shall not qualify as
Performance-Based Compensation, the Committee may make such grants without
satisfying the requirements of Code Section 162(m) and base vesting
on Performance Measures other than those set forth in Section 14.6.4.

 

21

 

14.7.  Status of
Section Awards Under Code Section 162(m)

 

It is the intent of the
Company that Awards under Section 14.6
hereof granted to persons who are designated by the Committee as likely to be
Covered Employees within the meaning of Code Section 162(m) and
regulations thereunder shall, if so designated by the Committee, constitute “qualified
performance-based compensation” within the meaning of Code Section 162(m) and
regulations thereunder. Accordingly, the terms of Section 14.6, including the definitions of Covered
Employee and other terms used therein, shall be interpreted in a manner
consistent with Code Section 162(m) and regulations thereunder. The
foregoing notwithstanding, because the Committee cannot determine with certainty
whether a given Grantee will be a Covered Employee with respect to a fiscal
year that has not yet been completed, the term Covered Employee as used herein
shall mean only a person designated by the Committee, at the time of grant of
an Award, as likely to be a Covered Employee with respect to that fiscal year.
If any provision of the Plan or any agreement relating to such Awards does not
comply or is inconsistent with the requirements of Code Section 162(m) or
regulations thereunder, such provision shall be construed or deemed amended to
the extent necessary to conform to such requirements.

 

15.                               PARACHUTE
LIMITATIONS

 

Notwithstanding any other
provision of this Plan or of any other agreement, contract, or understanding
heretofore or hereafter entered into by a Grantee with the Company or any
Affiliate, except an agreement, contract, or understanding that expressly
addresses Section 280G or Section 4999 of the Code (an “Other
Agreement”), and notwithstanding any formal or informal plan or other arrangement
for the direct or indirect provision of compensation to the Grantee (including
groups or classes of Grantees or beneficiaries of which the Grantee is a
member), whether or not such compensation is deferred, is in cash, or is in the
form of a benefit to or for the Grantee (a “Benefit Arrangement”), if the
Grantee is a “disqualified individual,” as defined in Section 280G(c) of
the Code, any Option, Restricted Stock, Stock Unit, Performance Share or
Performance Unit held by that Grantee and any right to receive any payment or
other benefit under this Plan shall not become exercisable or vested (i) to
the extent that such right to exercise, vesting, payment, or benefit, taking
into account all other rights, payments, or benefits to or for the Grantee under
this Plan, all Other Agreements, and all Benefit Arrangements, would cause any
payment or benefit to the Grantee under this Plan to be considered a “parachute
payment” within the meaning of Section 280G(b)(2) of the Code as then
in effect (a “Parachute Payment”) and
(ii) if, as a result of receiving a Parachute Payment, the aggregate
after-tax amounts received by the Grantee from the Company under this Plan, all
Other Agreements, and all Benefit Arrangements would be less than the maximum
after-tax amount that could be received by the Grantee without causing any such
payment or benefit to be considered a Parachute Payment. In the event that the
receipt of any such right to exercise, vesting, payment, or benefit under this
Plan, in conjunction with all other rights, payments, or benefits to or for the
Grantee under any Other Agreement or any Benefit Arrangement would cause the
Grantee to be considered to have received a Parachute Payment under this Plan
that would have the effect of decreasing the after-tax amount received by the
Grantee as described in clause (ii) of the preceding sentence, then
the Grantee shall have the right, in the Grantee’s sole discretion, to
designate those rights, payments, or benefits under this Plan, any Other
Agreements, and any Benefit 

 

22

 

Arrangements that should be reduced or
eliminated so as to avoid having the payment or benefit to the Grantee under
this Plan be deemed to be a Parachute Payment; provided,
however, that in order to comply
with Section 409A of the Code, the reduction or elimination will be
performed in the order in which each dollar of value subject to an Award
reduces the Parachute Payment to the greatest extent.

 

16.                               REQUIREMENTS
OF LAW

 

16.1.  General

 

The Company shall not be
required to sell or issue any shares of Stock under any Award if the sale or
issuance of such shares would constitute a violation by the Grantee, any other
individual exercising an Option, or the Company of any provision of any law or
regulation of any governmental authority, including without limitation any
federal or state securities laws or regulations. If at any time the Company
shall determine, in its discretion, that the listing, registration or
qualification of any shares subject to an Award upon any securities exchange or
under any governmental regulatory body is necessary or desirable as a condition
of, or in connection with, the issuance or purchase of shares hereunder, no
shares of Stock may be issued or sold to the Grantee or any other individual
exercising an Option pursuant to such Award unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Company, and any delay caused thereby shall
in no way affect the date of termination of the Award. Without limiting the
generality of the foregoing, in connection with the Securities Act, upon the
exercise of any Option or any SAR that may be settled in shares of Stock or the
delivery of any shares of Stock underlying an Award, unless a registration
statement under such Act is in effect with respect to the shares of Stock
covered by such Award, the Company shall not be required to sell or issue such
shares unless the Board has received evidence satisfactory to it that the
Grantee or any other individual exercising an Option may acquire such shares
pursuant to an exemption from registration under the Securities Act. Any
determination in this connection by the Board shall be final, binding, and conclusive.
The Company may, but shall in no event be obligated to, register any securities
covered hereby pursuant to the Securities Act. The Company shall not be
obligated to take any affirmative action in order to cause the exercise of an
Option or a SAR or the issuance of shares of Stock pursuant to the Plan to
comply with any law or regulation of any governmental authority. As to any
jurisdiction that expressly imposes the requirement that an Option (or SAR that
may be settled in shares of Stock) shall not be exercisable until the shares of
Stock covered by such Option (or SAR) are registered or are exempt from
registration, the exercise of such Option (or SAR) under circumstances in which
the laws of such jurisdiction apply shall be deemed conditioned upon the
effectiveness of such registration or the availability of such an exemption.

 

16.2.  Rule 16b-3

 

During any time when the
Company has a class of equity security registered under Section 12 of the
Exchange Act, it is the intent of the Company that Awards pursuant to the Plan
and the exercise of Options and SARs granted hereunder will qualify for the
exemption provided by Rule 16b-3 under the Exchange Act. To the extent
that any provision of the Plan or action by the Board does not comply with the
requirements of Rule 16b-3, it shall be deemed inoperative to the extent
permitted by law and deemed 

 

23

 

advisable by the Board, and shall not affect
the validity of the Plan. In the event that Rule 16b-3 is revised or
replaced, the Board may exercise its discretion to modify this Plan in any
respect necessary to satisfy the requirements of, or to take advantage of any
features of, the revised exemption or its replacement.

 

17.                               EFFECT OF
CHANGES IN CAPITALIZATION

 

17.1.  Changes
in Stock

 

If the number of outstanding
shares of Stock is increased or decreased or the shares of Stock are changed
into or exchanged for a different number or kind of shares or other securities
of the Company on account of any recapitalization, reclassification, stock
split, reverse split, combination of shares, exchange of shares, stock dividend
or other distribution payable in capital stock, or other increase or decrease
in such shares effected without receipt of consideration by the Company
occurring after the Effective Date, the number and kinds of shares for which
grants of Options and other Awards may be made under the Plan, including,
without limitation, the limits set forth in Section 6.3,
shall be adjusted proportionately and accordingly by the Company. In addition,
the number and kind of shares for which Awards are outstanding shall be
adjusted proportionately and accordingly so that the proportionate interest of
the Grantee immediately following such event shall, to the extent practicable,
be the same as immediately before such event. Any such adjustment in
outstanding Options or SARs shall not change the aggregate Option Price or SAR
Exercise Price payable with respect to shares that are subject to the
unexercised portion of an outstanding Option or SAR, as applicable, but shall
include a corresponding proportionate adjustment in the Option Price or SAR
Exercise Price per share. The conversion of any convertible securities of the
Company shall not be treated as an increase in shares effected without receipt
of consideration. Notwithstanding the foregoing, in the event of any
distribution to the Company’s stockholders of securities of any other entity or
other assets (including an extraordinary cash dividend but excluding a
non-extraordinary dividend of the Company) without receipt of consideration by
the Company, the Company shall, in such manner as the Company deems
appropriate, adjust (i) the number and kind of shares subject to
outstanding Awards and/or (ii) the exercise price of outstanding Options
and Stock Appreciation Rights to reflect such distribution.

 

17.2.                     Reorganization in Which the Company Is the Surviving Entity Which does
not Constitute a Corporate Transaction

 

Subject to Section 17.3 hereof, if the Company
shall be the surviving entity in any reorganization, merger, or consolidation
of the Company with one or more other entities which does not constitute a
Corporate Transaction, any Option or SAR theretofore granted pursuant to the
Plan shall pertain to and apply to the securities to which a holder of the
number of shares of Stock subject to such Option or SAR would have been
entitled immediately following such reorganization, merger, or consolidation,
with a corresponding proportionate adjustment of the Option Price or SAR
Exercise Price per share so that the aggregate Option Price or SAR Exercise
Price thereafter shall be the same as the aggregate Option Price or SAR
Exercise Price of the shares remaining subject to the Option or SAR immediately
prior to such reorganization, merger, or consolidation. Subject to any contrary
language in an Award Agreement evidencing an Award, any restrictions applicable
to such Award shall apply as well to any replacement shares received by the 

 

24

 

Grantee as a result of the reorganization,
merger or consolidation. In the event of a transaction described in this Section 17.2,
Stock Units shall be adjusted so as to apply to the securities that a holder of
the number of shares of Stock subject to the Stock Units would have been
entitled to receive immediately following such transaction.

 

17.3.  Corporate
Transaction in which Awards are not Assumed

 

Upon the occurrence of a
Corporate Transaction in which outstanding Options, SARs, Stock Units and
Restricted Stock are not being assumed or continued:

 

(i)    all Grantees of shares of Restricted Stock
and Stock Units shall be credited with an additional 12 months of Service
from the Grant Date for purposes of vesting in such shares of Restricted Stock and
Stock Units immediately prior to the occurrence of a Corporate Transaction and
any shares of Stock subject to Stock Units that become vested pursuant to the
operation of this Section 17.3(i) shall be delivered, immediately
prior to the occurrence of such Corporate Transaction;

 

(ii)   all Grantees of Options and SARs shall be
credited with an additional 12 months of Service from the Grant Date for
purposes of vesting in such Options and SARs immediately prior to the
occurrence of a Corporate Transaction; and

 

(iii)  either of the following two actions shall be
taken:

 

(A)          fifteen days prior to the scheduled
consummation of a Corporate Transaction, notice shall be given to all Grantees
of vested Options and SARs outstanding hereunder (including Options and SARs
that become vested pursuant to the operation of Section 17.3(ii)) that
such Options and SARs shall remain exercisable for a period of fifteen days and
shall thereafter be terminated, or

 

(B)           the Board may elect, in its sole
discretion, to cancel any outstanding Awards of Options, Restricted Stock,
Stock Units, and/or SARs and pay or deliver, or cause to be paid or delivered,
to the holder of vested Options, Restricted Stock, Stock Units, and/or SARs an
amount in cash or securities having a value (as determined by the Board acting
in good faith), in the case of Restricted Stock or Stock Units, equal to the
formula or fixed price per share paid to holders of shares of Stock and, in the
case of Options or SARs, equal to the product of the number of shares of Stock
subject to the Option or SAR (the “Award Shares”) multiplied by the amount, if
any, by which (I) the formula or fixed price per share paid to holders of
shares of Stock pursuant to such transaction exceeds (II) the Option Price
or SAR Exercise Price applicable to such Award Shares.

 

With respect to the Company’s
establishment of an exercise window, (i) any exercise of an Option or SAR
during such fifteen-day period shall be conditioned upon the consummation of
the event and shall be effective only immediately before the consummation of
the event, and (ii) upon consummation of any Corporate Transaction, the
Plan and all outstanding but unexercised Options and SARs shall terminate. The
Board shall send notice of an event that will result in such a termination to
all individuals who hold Options and SARs not later than the time at which the
Company gives notice thereof to its stockholders.

 

25

 

17.4. 
Corporation Transaction in which Awards are Assumed

 

The Plan, Options, SARs,
Stock Units and Restricted Stock theretofore granted shall continue in the
manner and under the terms so provided in the event of any Corporate
Transaction to the extent that provision is made in writing in connection with
such Corporate Transaction for the assumption or continuation of the Options,
SARs, Stock Units and Restricted Stock theretofore granted, or for the
substitution for such Options, SARs, Stock Units and Restricted Stock for new
common stock options and stock appreciation rights and new common stock units
and restricted stock relating to the stock of a successor entity, or a parent
or subsidiary thereof, with appropriate adjustments as to the number of shares
(disregarding any consideration that is not common stock) and option and stock
appreciation right exercise prices. In the event a Grantee’s Award is assumed,
continued or substituted upon the consummation of any Corporate Transaction and
his employment is terminated without Cause within one year following the consummation
of such Corporate Transaction, the Grantee shall be credited with an additional
12 months of Service from the date of such termination for purposes of
vesting in the shares subject to such Award and the Grantee’s Award (to the
extent vested) may be exercised, to the extent applicable, beginning on the
date of such termination and for the one-year period immediately following such
termination or for such longer period as the Committee shall determine.

 

17.5. 
Adjustments

 

Adjustments under this Section 17 related to shares of Stock
or securities of the Company shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. No fractional shares or
other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case
by rounding downward to the nearest whole share. The Board shall determine the
effect of a Corporate Transaction upon Awards other than Options, SARs, Stock
Units and Restricted Stock, and such effect shall be set forth in the
appropriate Award Agreement. The Board may provide in the Award Agreements at
the time of grant, or any time thereafter with the consent of the Grantee, for
different provisions to apply to an Award in place of those described in Sections 17.1, 17.2, 17.3 and 17.4 but such different provisions cannot
be less favorable to the Grantee. This Section 17
does not limit the Company’s ability to provide for alternative treatment of
Awards outstanding under the Plan in the event of change of control events that
are not Corporate Transactions.

 

17.6.  No
Limitations on Company

 

The making of Awards
pursuant to the Plan shall not affect or limit in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations, or changes
of its capital or business structure or to merge, consolidate, dissolve, or
liquidate, or to sell or transfer all or any part of its business or assets.

 

26

 

18.                               GENERAL
PROVISIONS

 

18.1. 
Disclaimer of Rights

 

No provision in the Plan or
in any Award or Award Agreement shall be construed to confer upon any
individual the right to remain in the employ or service of the Company or any
Affiliate, or to interfere in any way with any contractual or other right or
authority of the Company either to increase or decrease the compensation or
other payments to any individual at any time, or to terminate any employment or
other relationship between any individual and the Company. In addition,
notwithstanding anything contained in the Plan to the contrary, unless
otherwise stated in the applicable Award Agreement, no Award granted under the
Plan shall be affected by any change of duties or position of the Grantee, so
long as such Grantee continues to be a director, officer, consultant or
employee of the Company or an Affiliate. The obligation of the Company to pay
any benefits pursuant to this Plan shall be interpreted as a contractual
obligation to pay only those amounts described herein, in the manner and under
the conditions prescribed herein. The Plan shall in no way be interpreted to
require the Company to transfer any amounts to a third party trustee or
otherwise hold any amounts in trust or escrow for payment to any Grantee or
beneficiary under the terms of the Plan.

 

18.2. 
Nonexclusivity of the Plan

 

Neither the adoption of the
Plan nor the submission of the Plan to the stockholders of the Company for
approval shall be construed as creating any limitations upon the right and
authority of the Board to adopt such other incentive compensation arrangements
(which arrangements may be applicable either generally to a class or classes of
individuals or specifically to a particular individual or particular
individuals) as the Board in its discretion determines desirable, including,
without limitation, the granting of stock options otherwise than under the
Plan.

 

18.3. 
Withholding Taxes

 

The Company or an Affiliate,
as the case may be, shall have the right to deduct from payments of any kind
otherwise due to a Grantee any federal, state, or local taxes of any kind
required by law to be withheld with respect to the vesting of or other lapse of
restrictions applicable to an Award or upon the issuance of any shares of Stock
upon the exercise of an Option or pursuant to an Award. At the time of such
vesting, lapse, or exercise, the Grantee shall pay to the Company or the
Affiliate, as the case may be, any amount that the Company or the Affiliate may
reasonably determine to be necessary to satisfy such withholding obligation.
Subject to the prior approval of the Company or the Affiliate, which may be
withheld by the Company or the Affiliate, as the case may be, in its sole
discretion, the Grantee may elect to satisfy such obligations, in whole or in
part, (i) by causing the Company or the Affiliate to withhold shares of
Stock otherwise issuable to the Grantee or (ii) by delivering to the
Company or the Affiliate shares of Stock already owned by the Grantee. The
shares of Stock so delivered or withheld shall have an aggregate Fair Market
Value equal to such withholding obligations. The Fair Market Value of the
shares of Stock used to satisfy such withholding obligation shall be determined
by the Company or the Affiliate as of the date that the amount of tax to be
withheld is to be determined. A Grantee who has made an election pursuant to
this Section 18.3 may satisfy
his or her 

 

27

 

withholding obligation only with shares of
Stock that are not subject to any repurchase, forfeiture, unfulfilled vesting,
or other similar requirements. The maximum number of shares of Stock that may
be withheld from any Award to satisfy any federal, state or local tax
withholding requirements upon the exercise, vesting, lapse of restrictions
applicable to such Award or payment of shares pursuant to such Award, as
applicable, cannot exceed such number of shares having a Fair Market Value
equal to the minimum statutory amount required by the Company to be withheld
and paid to any such federal, state or local taxing authority with respect to
such exercise, vesting, lapse of restrictions or payment of shares.

 

18.4.  Captions

 

The use of captions in this
Plan or any Award Agreement is for the convenience of reference only and shall
not affect the meaning of any provision of the Plan or such Award Agreement.

 

18.5.  Other
Provisions

 

Each Award granted under the
Plan may contain such other terms and conditions not inconsistent with the Plan
as may be determined by the Board, in its sole discretion.

 

18.6.  Number
and Gender

 

With respect to words used
in this Plan, the singular form shall include the plural form, the masculine
gender shall include the feminine gender, etc., as the context requires.

 

18.7. 
Severability

 

If any provision of the Plan
or any Award Agreement shall be determined to be illegal or unenforceable by
any court of law in any jurisdiction, the remaining provisions hereof and
thereof shall be severable and enforceable in accordance with their terms, and all
provisions shall remain enforceable in any other jurisdiction.

 

18.8.  Governing
Law

 

The validity and
construction of this Plan and the instruments evidencing the Awards hereunder
shall be governed by the laws of the State of Delaware, other than any conflicts
or choice of law rule or principle that might otherwise refer construction
or interpretation of this Plan and the instruments evidencing the Awards
granted hereunder to the substantive laws of any other jurisdiction.

 

18.9.  Section 409A
of the Code

 

The Board intends to comply
with Section 409A of the Code (“Section 409A”), or an exemption to Section 409A,
with regard to Awards hereunder that constitute nonqualified deferred
compensation within the meaning of Section 409A. To the extent that the Board
determines that a Grantee would be subject to the additional 20% tax imposed on
certain nonqualified deferred compensation plans pursuant to Section 409A
as a result of any provision of any Award granted under this Plan, such
provision shall be deemed amended to the minimum extent necessary to avoid
application of such additional tax. The nature of any such amendment shall be
determined by the Board.

 

*      *     
*

 

28

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