Document:

ex10-1.htm

Exhibit 10.1

 

 

GulfSlope Energy, Inc.

2014 Omnibus Incentive Plan

 

Effective May 29, 2014

 

 

 

 

 

 

 

 

 

  

  

  

Contents

 

 

	
Article 1. Establishment, Purpose and Duration

	
1

	
Article 2. Definitions

	
1

	
Article 3. Administration

	
6

	
Article 4. Shares Subject to This Plan and Maximum Awards

	
7

	
Article 5. Eligibility and Participation

	
8

	
Article 6. Stock Options

	
8

	
Article 7. Stock Appreciation Rights

	
10

	
Article 8. Restricted Stock

	
11

	
Article 9. Restricted Stock Units

	
12

	
Article 10. Performance Shares

	
13

	
Article 11. Performance Units

	
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Article 12. Other Stock-Based Awards and Cash-Based Awards

	
13

	
Article 13. Restrictions on Transferability of Awards of Shares

	
14

	
Article 14. Performance-Based Compensation and Compliance with Code Section 162(m)

	
14

	
Article 15. Nonemployee Director Awards

	
16

	
Article 16. Effect of a Change in Control

	
17

	
Article 17. Dividend Equivalents

	
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Article 18. Beneficiary Designation

	
17

	
Article 19. Rights of Participants

	
18

	
Article 20. Amendment and Termination

	
18

	
Article 21. Tax Withholding

	
19

	
Article 22. General Provisions

	
19

 

  

  

  

 

GulfSlope Energy, Inc.

2014 Omnibus Incentive Plan

Article 1. Establishment, Purpose and Duration

1.1           Establishment. GulfSlope Energy, Inc., a Delaware corporation, establishes an incentive compensation plan to be known as GulfSlope Energy, Inc. 2014 Omnibus Incentive Plan, as set forth in this document. This Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards and Other Stock-Based Awards. This Plan shall become effective upon shareholder approval (the “Effective Date”) and shall remain in effect as provided in Section 1.3.

 

1.2           Purpose of this Plan. The purpose of the Plan is to foster and promote the long-term financial success of the Company and materially increase shareholder value by (a) motivating superior performance by means of performance-related incentives, (b) encouraging and providing for the acquisition of an ownership interest in the Company by Employees as well as Non-Employee Directors, and (c) enabling the Company to attract and retain qualified and competent persons to serve as members of an outstanding management team and the Board of Directors of the Company upon whose judgment, interest, and performance are required for the successful and sustained operations of the Company.

 

1.3           Duration of this Plan. Unless sooner terminated as provided herein, this Plan shall terminate ten (10) years from the Effective Date. After this Plan is terminated, no Awards may be granted but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and this Plan’s terms and conditions.

 

Article 2. Definitions

Whenever used in this Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized.

 

2.1           “Annual Award Limit” or “Annual Award Limits” have the meaning set forth in Section 4.3.

 

2.2           “Award” means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards or Other Stock-Based Awards, in each case subject to the terms of this Plan.

 

2.3           “Award Agreement” means either (i) a written or electronic agreement entered into by the Company and a Participant setting forth the terms and provisions applicable to an Award granted under this Plan, including any amendment or modification thereof, or (ii) a written or electronic statement issued by the Company to a Participant describing the terms and provisions of such Award, including any amendment or modification thereof. The Committee may provide for the use of electronic, Internet or other non-paper Award Agreements, and the use of electronic, Internet or other non-paper means for the acceptance thereof and actions thereunder by a Participant. The Committee shall have the exclusive authority to determine the terms of an Award Agreement evidencing an Award granted under this Plan, subject to the provisions herein. The terms of an Award Agreement need not be uniform among all Participants or among similar types of Awards.

 

2.4           “Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

 

2.5           “Board” or “Board of Directors” means the Board of Directors of the Company.

2.6           “Cash-Based Award” means an Award, denominated in cash, granted to a Participant as described in Article 12.

 

  

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2.7           “Cause” means, unless otherwise specified in an Award Agreement or in an applicable employment agreement between the Company and a Participant, any one of the following:

 

(a)         willful and material misconduct of the Participant;

 

(b)         willful and continued failure of the Participant to substantially perform his job duties;

 

(c)         the conviction of the Participant by a court of competent jurisdiction of a felony or entering the plea of nolo contendere  to a felony by the Participant;

 

(d)         the commission by the Participant of an act of theft, fraud, or dishonesty against the Company or any Subsidiary; or

 

(e)         a material breach by the Participant of any material written policy of the Company.

 

The existence of Cause under this Section 2.7 shall be determined in good faith by the Committee.

 

2.8           A “Change in Control” means the occurrence of one or more of the following events:

 

(a)         The acquisition by any Person of Beneficial Ownership of more than 50% of either (A) the then-outstanding Shares (“Outstanding Company Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this Section 2.8(a) the following acquisitions shall not constitute a Change in Control:

 

(i)         any acquisition by the Company,

 

(ii)         any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company,

 

(iii)         any entity controlled by the Company, or

 

(iv)         any acquisition by any entity pursuant to a transaction that complies with Sections 2.8(c)(i), (ii) and (iii).

 

(b)         If during any period of two consecutive calendar years, the “Incumbent Board” (as defined below) , shall cease for any reason to constitute a majority of the Board.  The “Incumbent Board” for purposes of this section, shall mean the Directors holding office at the beginning of the calendar year two years prior to the event in question; provided, however, that any individual becoming a Director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the Directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.

 

(c)         Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company and/or any entity controlled by the Company, or a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any entity controlled by the Company (each, a “Business Combination”), in each case, provided, however, that, for purposes of this Section 2.8(c) a Business Combination shall not constitute a Change in Control if following such Business Combination:

(i)         all or substantially all of the individuals and entities that were the Beneficial Owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and more than 50% of the combined voting power of the then-outstanding voting securities entitled 

 

  

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to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; and

 

(ii)         no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination; and

 

(iii)         at least a majority of the members of the board of directors of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination .

 

(d)         The complete liquidation or dissolution of the Company.

 

Notwithstanding anything in this Plan or any Agreement to the contrary, to the extent any provision of this Plan or an Agreement would cause a payment of an Award that is not exempt from the requirements of Code Section 409A to be made because of the occurrence of a Change in Control, then such payment shall not be made unless such Change in Control also constitutes a “change in ownership”, “change in effective control” or “change in ownership of a substantial portion of the Company’s assets” within the meaning of Code section 409A.  Any payment that would have been made except for the application of the preceding sentence shall be made in accordance with the payment schedule that would have applied in the absence of a Change in Control (and other Participant rights that are tied to a Change in Control, such as vesting, shall not be affected by this paragraph).

 

2.9           “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time. For purposes of this Plan, references to sections of the Code shall be deemed to include references to any applicable regulations thereunder and any successor or similar provision.

 

2.10           “Commission” means the Securities and Exchange Commission.

 

2.11           “Committee” means the Compensation Committee of the Board or a subcommittee thereof or any other committee designated by the Board to administer this Plan. The members of the Committee shall be appointed from time to time by and shall serve at the discretion of the Board. If the Committee does not exist or cannot function for any reason, the Board may take any action under the Plan that would otherwise be the responsibility of the Committee. The Committee shall be constituted to comply with the requirements of Rule 16b-3 promulgated by the Commission under the Securities Exchange Act of 1934, or such rule or any successor rule thereto which is in effect from time to time, Section 162(m) of the Code and any applicable listing or governance requirements of any securities exchange on which the Company’s common shares are listed.

 

2.12           “Company” means GulfSlope Energy, Inc., and any successor thereto as provided in Section 22.21.

2.13           “Covered Employee” means any Employee who is or may become a “Covered Employee,” as defined in Code Section 162(m), and who is designated, either as an individual Employee or class of Employees, by the Committee within the shorter of (i) 90 days after the beginning of the Performance Period, or (ii) 25% of the Performance Period has elapsed, as a “Covered Employee” under this Plan for such applicable Performance Period.

 

2.14           “Director” means any individual who is a member of the Board of Directors of the Company.

 

2.15           “Disability” means a Participant’s eligibility to receive group long-term disability benefits under a plan sponsored by the Company or a Subsidiary, or if no such plan is applicable, a Participant’s inability to perform the essential functions of his or her duties due to a medically determinable physical or mental impairment, 

 

  

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illness or injury, which can be expected to result in death or to be of long-continued and indefinite duration as determined in the sole discretion of the Committee, except in the case of any Option that is an Incentive Stock Option, if and to the extent required in order for the Option to satisfy the requirements of Section 422 of the Code, the term “Disability” means disabled within the meaning of Section 22(e)(3) of the Code. Notwithstanding the preceding provisions of this Section 2.15 or anything in any Award Agreement to the contrary, to the extent any provision of this Plan or an Award Agreement would cause a payment not to be exempt from Code Section 409A to be made because of the Participant’s Disability, then there shall not be a Disability that triggers payment until the date (if any) that the Participant is disabled within the meaning of Code section 409A(a)(2)(C).  Any payment that would have been made except for the application of the preceding sentence shall be made in accordance with the payment schedule that would have applied in the absence of a Disability (and other Participant rights that are tied to a Disability, such as vesting, shall not be affected by the prior sentence).

 

2.16           “Dividend Equivalent” has the meaning set forth in Section 18.

 

2.17           “Effective Date” has the meaning set forth in Section 1.1.

 

2.18           “Employee” means any individual performing services for the Company or a Subsidiary and designated as an employee of the Company or the Subsidiary on its payroll records. An Employee shall not include any individual during any period he or she is classified or treated by the Company or Subsidiary as an independent contractor, a consultant or an employee of an employment, consulting or temporary agency or any other entity other than the Company or Subsidiary, without regard to whether such individual is subsequently determined to have been, or is subsequently retroactively reclassified, as a common-law employee of the Company or Subsidiary during such period. An individual shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company and any Subsidiaries. For purposes of Incentive Stock Options, no such leave may exceed 90 days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three months following the 91st day of such leave, any Incentive Stock Option held by a Participant shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonqualified Stock Option. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

 

2.19           “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

 

2.20           “Fair Market Value” means, on any given date (i) if the Shares are listed on a national or regional securities exchange on the given date or traded on an over-the-counter exchange, Fair Market Value on such date shall be the closing price for a Share on such securities exchange on the immediately preceding day on which sales were made on such exchange; or (ii) if Shares are not listed on such an exchange, the fair market value of a Share on that date shall be determined in good faith by the Committee; provided, however, the Committee, in its discretion, may use an alternative definition of Fair Market Value including, but not limited to, a price that is based on the opening, actual, high, low, or average selling prices of a Share on the securities exchange on which Shares are listed or traded on the given date, the trading date preceding the given date, the trading date next succeeding the given date, or an average of trading days. Notwithstanding the foregoing, (i) in the case of an Option or SAR, Fair Market Value shall be determined in accordance with a definition of fair market value that permits the Award to be exempt from Code section 409A; and (ii) in the case of an Option that is intended to qualify as an ISO under Code section 422 or an Award that is intended to qualify as performance-based compensation under Code section 162(m), Fair Market Value shall be determined by the Committee in accordance with the requirements of Code section 422 or Code section 162(m), as applicable.

2.21           “Grant Date” means the date an Award is granted to a Participant pursuant to the Plan.

 

2.22           “Grant Price” means the price established at the time of grant of an SAR pursuant to Article 7.

 

2.23           “Incentive Stock Option” or “ISO” means an Award granted pursuant Article 6 that is designated as an Incentive Stock Option and that is intended to meet the requirements of Code Section 422 or any successor provision.

 

  

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2.24           “Insider” shall mean an individual who is, on the relevant date, an officer (as defined in Rule 16a-1(f) (or any successor provision) promulgated by the Commission under the Exchange Act) or Director of the Company, or a more than 10% Beneficial Owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Board in accordance with Section 16 of the Exchange Act.

 

2.25           “Nonemployee Director” means a Director who is not an Employee.

 

2.26           “Nonqualified Stock Option” or “NQSO” means an Award granted pursuant to Article 6 that is not intended to meet the requirements of Code Section 422, or that otherwise does not meet such requirements.

 

2.27           “Option” means an Award granted to a Participant pursuant to Article 6, which Award may be an Incentive Stock Option or a Nonqualified Stock Option.

 

2.28           “Option Price” means the price at which a Share may be purchased by a Participant pursuant to an Option.

 

2.29           “Other Stock-Based Award” means an equity-based or equity-related Award not otherwise described by the terms of this Plan that is granted pursuant to Article 12.

 

2.30           “Participant” means any eligible individual as set forth in Article 5 to whom an Award is granted.

 

2.31           “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 that 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.

 

2.32           “Performance Measures” means measures, as described in Article 14, upon which performance goals are based and that are approved by the Company’s shareholders pursuant to this Plan to qualify Awards as Performance-Based Compensation.

 

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

 

2.34           “Performance Share” means an Award granted pursuant to Article 10.

2.35           “Performance Unit” means an Award granted pursuant to Article 11.

 

2.36           “Period of Restriction” means the period when Restricted Stock or Restricted Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of performance goals or upon the occurrence of other events as determined by the Committee, in its discretion) as provided in Articles 8 and 9.

 

2.37           “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.

 

2.38           “Plan” means GulfSlope Energy, Inc. 2014 Omnibus Incentive Plan, as the same may be amended from time to time.

 

2.39           “Restricted Stock” means an Award granted pursuant to Article 8.

 

2.40           “Restricted Stock Unit” means an Award granted pursuant to Article 9.

  

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2.41           “Share” means a share of common stock of the Company.

 

2.42           “Stock Appreciation Right” or “SAR” means an Award granted pursuant to Article 7.

 

2.43           “Subsidiary” means any corporation or other entity, whether domestic or foreign, in which the Company has or obtains, directly or indirectly, an interest of more than 50% by reason of stock ownership or otherwise.

 

2.44           “Third-Party Service Provider” means any consultant, agent, advisor or independent contractor who renders bona fide services to the Company or a Subsidiary that (a) are not in connection with the offer and sale of the Company’s securities in a capital raising transaction, (b) do not directly or indirectly promote or maintain a market for the Company’s securities, and (c) are provided by a natural person who has contracted directly with the Company or Subsidiary to render such services.

 

Article 3. Administration

3.1           General. The Committee shall be responsible for administering this Plan, subject to this Article 3 and the other provisions of this Plan. The Committee may employ attorneys, consultants, accountants, agents and other individuals, any of whom may be an Employee, and the Committee, the Company, and its officers and Directors shall be entitled to rely upon the advice, opinions or valuations of any such individuals. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participants, the Company or Subsidiary, and all other interested individuals.

 

3.2           Authority of the Committee. Subject to any express limitations set forth in the Plan, the Committee shall have full and exclusive discretionary power and authority to take such actions as it deems necessary and advisable with respect to the administration of the Plan including, but not limited to, the following:

 

(a)           To determine from time to time which of the persons eligible under the Plan shall be granted Awards, when and how each Award shall be granted, what type or combination of types of Awards shall be granted, the provisions of each Award granted (which need not be identical), including the time or times when a person shall be permitted to receive Shares pursuant to an Award and the number of Shares subject to an Award;

 

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

(c)           To approve forms of Award Agreements for use under the Plan;

 

(d)           To determine Fair Market Value of a Share in accordance with Section 2.20 of the Plan;

 

(e)           To amend the Plan or any Award Agreement as provided in the Plan;

 

(f)           To adopt sub-plans and/or special provisions applicable to stock awards regulated by the laws of a jurisdiction other than and outside of the United States. Such sub-plans and/or special provisions may take precedence over other provisions of the Plan, but unless otherwise superseded by the terms of such sub-plans and/or special provisions, the provisions of the Plan shall govern;

 

(g)           To authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Board;

 

(h)           To determine whether Awards will be settled in shares of common stock, cash or in any combination thereof;

 

(i)           To determine whether Awards will provide for Dividend Equivalents;

 

  

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(j)           To establish a program whereby Participants designated by the Committee may reduce compensation otherwise payable in cash in exchange for Awards under the Plan;

 

(k)           To authorize a program permitting eligible Participants to surrender outstanding Awards in exchange for newly granted Awards subject to any applicable shareholder approval requirements set forth in Section 21.1 of the Plan;

 

(l)           To impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant or other subsequent transfers by a Participant of any Shares, including, without limitation, restrictions under an insider trading policy and restrictions as to the use of a specified brokerage firm for such resales or other transfers; and

 

(m)           To provide, either at the time an Award is granted or by subsequent action, that an Award shall contain as a term thereof, a right, either in tandem with the other rights under the Award or as an alternative thereto, of the Participant to receive, without payment to the Company, a number of Shares, cash or a combination thereof, the amount of which is determined by reference to the value of Shares.

 

3.3           Delegation. The Committee may delegate to one or more of its members or to one or more officers of the Company or any Subsidiary or to one or more agents or advisors such administrative duties or powers as it may deem advisable, and the Committee or any individuals to whom it has delegated duties or powers as aforesaid may employ one or more individuals to render advice with respect to any responsibility the Committee or such individuals may have under this Plan. To the extent permitted by applicable law, the Committee may, by resolution, authorize one or more officers of the Company to do one or both of the following on the same basis as can the Committee: (a) designate Employees to be recipients of Awards; and (b)   determine the size of any such Awards;  provided ,  however , (i) the Committee shall not delegate such responsibilities to any such officer for Awards granted to an Employee who is considered an Insider; (ii) the resolution providing such authorization sets forth the total number of Awards such officer(s) may grant; and (iii) the officer(s) shall report periodically to the Committee regarding the nature and scope of the Awards granted pursuant to the authority delegated.

 

Article 4. Shares Subject to This Plan and Maximum Awards

4.1           Number of Shares Authorized and Available for Awards. Subject to adjustment as provided under the Plan, the total number of Shares that are available for Awards under the Plan shall be 37,500,000 Shares. Such Shares may be authorized and unissued Shares, treasury Shares, Shares purchased in the open market or in private transactions, or any combination of the foregoing, as may be determined from time to time by the Board or by the Committee. Any of the authorized Shares may be used for any type of Award under the Plan, and any or all of the Shares may be allocated to Incentive Stock Options.

4.2           Share Usage. The Committee shall determine the appropriate method for determining the number of Shares available for grant under the Plan, subject to the following:

 

(a)           Any Shares related to an Award granted under this Plan that terminates by expiration, forfeiture, cancellation or otherwise without the issuance of the Shares, are settled in cash in lieu of Shares, or are exchanged with the Committee’s permission, prior to the issuance of Shares, for Awards not involving Shares shall be available again for grant under this Plan.

 

(b)           Any Shares tendered (by either actual delivery or attestation) (i) to pay the Option Price of an Option granted under this Plan or Prior Plan or (ii) to satisfy tax withholding obligations associated with an Award granted under this Plan, shall become available again for grant under this Plan.

 

(c)           Any Shares that were subject to an SAR granted under this Plan that were not issued upon the exercise of such SAR shall become available again for grant under this Plan.

 

4.3           Annual Award Limits. Subject to Section 4.4, the maximum number of Shares for which Options or SARs may be granted to any Participant in any calendar year shall be 3,750,000 Shares and the maximum number of Shares that may be paid to any Participant in any calendar year under an Award of Restricted Stock, Restricted 

 

  

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Stock Units, Performance Shares or Other Stock Based Awards, in each case that are Performance-Based Compensation, shall be 3,750,000 Shares, in the aggregate. The maximum amount that may be paid to any Participant in any calendar year under an Award of Performance Units, Cash-Based Awards or any other Award that is payable in cash, in each case that are Performance-Based Compensation, shall be $750,000, in the aggregate.

 

4.4           Adjustments in Authorized Shares. Adjustment in authorized Shares available for issuance under the Plan or under an outstanding Award and adjustments in Annual Award Limits shall be subject to the following provisions:

 

(a)           In the event of any corporate event or transaction such as a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up, spin-off, distribution of stock or property of the Company, combination of Shares, exchange of Shares, dividend in kind, extraordinary cash dividend or any other similar corporate event or transaction (“Corporate Transactions”), the Committee, in order to prevent dilution or enlargement of Participants’ rights under this Plan, shall substitute or adjust, as applicable, (1) the number and kind of Shares that may be issued under this Plan or under particular forms of Awards, (2) the number and kind of Shares subject to outstanding Awards, (3) the Option Price or Grant Price applicable to outstanding Awards, and (4) the Annual Award Limits and other value determinations applicable to outstanding Awards. The Committee, in its discretion, shall determine the methodology or manner of making such substitution or adjustment.

 

(b)           In addition to the adjustments permitted under paragraph (a) above, the Committee, in its sole discretion, may make such other adjustments or modifications in the terms of any Awards that it deems appropriate to reflect any Corporate Transaction, including, but not limited to, modifications of performance goals and changes in the length of Performance Periods, subject to the limitations set forth in Section 14.4.

 

(c)           The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under this Plan.

Article 5. Eligibility and Participation

5.1           Eligibility to Receive Awards. Individuals eligible to participate in this Plan include all Employees, Directors and Third-Party Service Providers.

 

5.2           Participation in the Plan. Subject to the provisions of this Plan, the Committee may, from time to time, select from all individuals eligible to participate in the Plan, those individuals to whom Awards shall be granted and shall determine, in its sole discretion, the nature of any and all terms permissible by law and the amount of each Award.

 

Article 6. Stock Options

6.1           Grant of Options. Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion. Each grant of an Option shall be evidenced by an Award Agreement which shall specify whether the Option is in the form of a Nonqualified Stock Option or an Incentive Stock Option.

 

6.2           Option Price. The Option Price for each grant of an Option shall be determined by the Committee in its sole discretion and shall be specified in the Award Agreement evidencing such Option;  provided ,  however , the Option Price must be at least equal to 100% of the Fair Market Value of a Share as of the Option’s Grant Date, subject to adjustment as provided for under Section 4.4.

 

6.3           Term of Option. The term of an Option granted to a Participant shall be determined by the Committee, in its sole discretion; provided, however, no Option shall be exercisable later than the tenth anniversary date of its grant. Notwithstanding the foregoing, for Nonqualified Stock Options granted to Participants outside the United States, the Committee has the authority to grant Nonqualified Stock Options that have a term greater than ten years.

 

  

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6.4           Exercise of Option. An Option shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which terms and restrictions need not be the same for each grant or for each Participant.

 

6.5           Payment of Option Price. An Option shall be exercised by the delivery of a notice of exercise to the Company or an agent designated by the Company in a form specified or accepted by the Committee, or by complying with any alternative procedures that may be authorized by the Committee, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares. A condition of the issuance of the Shares as to which an Option shall be exercised shall be the payment of the Option Price. The Option Price of any exercised Option shall be payable to the Company in accordance with one of the following methods:

 

(a)           In cash or its equivalent;

 

(b)           By tendering (either by actual delivery or attestation) previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the Option Price;

 

(c)           By a cashless (broker-assisted) exercise;

 

(d)           By “net settlement” (i.e., the Company withholds Shares with a Fair Market Value equal to the aggregate Option Price in respect of the portion of the Option to be exercised from any Shares that would have otherwise been received by the Participant).

 

(e)           By any combination of (a), (b), (c) and (d); or

(f)           Any other method approved or accepted by the Committee in its sole discretion.

 

Unless otherwise determined by the Committee, all payments under all of the methods indicated above shall be paid in United States dollars or Shares, as applicable.

 

6.6           Special Rules Regarding ISOs. Notwithstanding any provision of the Plan to the contrary, an Option granted in the form of an ISO to a Participant shall be subject to the following rules:

 

(a)           Special ISO definitions:

 

(i)           “Parent Corporation” shall mean as of any applicable date a corporation in respect of the Company that is a parent corporation within the meaning of Code Section 424(e).

 

(ii)           “ISO Subsidiary” shall mean as of any applicable date any corporation in respect of the Company that is a subsidiary corporation within the meaning of Code Section 424(f).

 

(iii)           A “10% Owner” is an individual who owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or its Parent Corporation or any ISO Subsidiary.

 

(b)           Eligible employees. An ISO may be granted solely to eligible Employees of the Company, Parent Corporation, or ISO Subsidiary.

 

(c)           Specified as an ISO. An Award Agreement evidencing the grant of an ISO shall specify that such grant is intended to be an ISO.

 

(d)           Option price. The Option Price for each grant of an ISO shall be determined by the Committee in its sole discretion and shall be specified in the Award Agreement; provided, however, the Option Price must be at least equal 100% of the Fair Market Value of a Share as of the ISO’s Grant Date (in the case of 

 

  

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10% owners, the Option Price may not be not less than 110% of such Fair Market Value), subject to adjustment provided for under Section 4.4.

 

(e)           Right to exercise. Any ISO granted to a Participant shall be exercisable during his or her lifetime solely by such Participant.

 

(f)           Exercise period. The period during which a Participant may exercise an ISO shall not exceed ten years (five years in the case of a Participant who is a 10% owner) from the date on which the ISO was granted.

 

(g)           Termination of employment. In the event a Participant terminates employment due to death or Disability, the Participant (or, in the case of death, the person(s) to whom the Option is transferred by will or the laws of descent and distribution) shall have the right to exercise the Participant’s ISO award during the period specified in the applicable Award Agreement solely to the extent the Participant had the right to exercise the ISO on the date of his death or Disability; as applicable, provided, however, that such period may not exceed one year from the date of such termination of employment or if shorter, the remaining term of the ISO. In the event a Participant terminates employment for reasons other than death or disability, the Participant shall have the right to exercise the Participant’s ISO during the period specified in the applicable Award Agreement solely to the extent the Participant had the right to exercise the ISO on the date of such termination of employment; provided, however, that such period may not exceed three months from the date of such termination of employment or if shorter, the remaining term of the ISO.

(h)           Dollar limitation. To the extent that the aggregate Fair Market Value of (a) the Shares with respect to which Options designated as Incentive Stock Options plus (b) the shares of stock of the Company, Parent Corporation and any ISO Subsidiary with respect to which other Incentive Stock Options are exercisable for the first time by a holder of such Incentive Stock Options during any calendar year under all plans of the Company and ISO Subsidiary exceeds $100,000, such Options shall be treated as Nonqualified Stock Options. For purposes of the preceding sentence, (a) Options shall be taken into account in the order in which they were granted, and (b) the Fair Market Value of the Shares shall be determined as of the time the Option or other incentive stock option is granted.

 

(i)           Duration of plan. No ISO may be granted more than ten years after the earlier of (a) adoption of this Plan by the Board and (b) the Effective Date.

 

(j)           Notification of disqualifying disposition. If any Participant shall make any disposition of Shares issued pursuant to the exercise of an ISO, such Participant shall notify the Company of such disposition within 30 days thereof. The Company shall use such information to determine whether a disqualifying disposition as described in Code section 421(b) has occurred.

 

(k)           Transferability. No ISO may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution;  provided ,  however , that at the discretion of the Committee, an ISO may be transferred to a grantor trust under which Participant making the transfer is the sole beneficiary.

 

Article 7. Stock Appreciation Rights

7.1           Grant of SARs. SARs may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion. Each grant of SARs shall be evidenced by an Award Agreement.

 

7.2           Grant Price. The Grant Price for each grant of an SAR shall be determined by the Committee and shall be specified in the Award Agreement evidencing the SAR;  provided ,  however , the Grant Price must be at least equal to 100% of the FAIR MARKET VALUE of a Share as of the Grant Date, subject to adjustment as provided for under Section 4.4.

 

  

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7.3           Term of SAR. The term of an SAR granted to a Participant shall be determined by the Committee, in its sole discretion; provided, however, no SAR shall be exercisable later than the tenth anniversary date of its grant. Notwithstanding the foregoing, for SARs granted to Participants outside the United States, the Committee has the authority to grant SARs that have a term greater than ten years.

 

7.4           Exercise of SAR. An SAR shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which terms and restrictions need not be the same for each grant or for each Participant.

 

7.5           Notice of Exercise. An SAR shall be exercised by the delivery of a notice of exercise to the Company or an agent designated by the Company in a form specified or accepted by the Committee, or by complying with any alternative procedures that may be authorized by the Committee, setting forth the number of Shares with respect to which the SAR is to be exercised.

 

7.6           Settlement of SARs. Upon the exercise of an SAR, pursuant to a notice of exercise properly completed and submitted to the Company in accordance with Section 7.5, a Participant shall be entitled to receive payment from the Company in an amount equal to the product of (a) and (b) below:

 

(a)           The excess of the Fair Market Value of a Share on the date of exercise over the Grant Price.

 

(b)           The number of Shares with respect to which the SAR is exercised.

 

Payment shall be made in cash, Shares or a combination thereof as provided for under the applicable Award Agreement.

Article 8. Restricted Stock

8.1           Grant of Restricted Stock. Restricted Stock may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion. Each grant of Restricted Stock shall be evidenced by an Award Agreement.

 

8.2           Nature of Restrictions. Each grant of Restricted Stock shall be subject to a Restriction Period that shall lapse upon the satisfaction of such conditions and restrictions as are determined by the Committee in its sole discretion and set forth in an applicable Award Agreement. Such conditions or restrictions may include, without limitation, one or more of the following:

 

(a)           Restrictions based upon the achievement of specific performance goals;

 

(b)           Time-based restrictions on vesting following the attainment of the performance goals;

 

(c)           Time-based restrictions;

 

(d)           Restrictions under applicable laws and restrictions under the requirements of any stock exchange or market on which such Shares are listed or traded; and

 

(e)           A requirement that a Participant pay a stipulated purchase price for each Share of Restricted Stock.

 

8.3           Issuance of Shares. To the extent deemed appropriate by the Committee, the Company may retain the certificates representing Shares of Restricted Stock in the Company’s possession until such time as all conditions or restrictions applicable to such Shares have been satisfied or lapse. Shares of Restricted Stock covered by each Restricted Stock grant shall become freely transferable by the Participant after all conditions and restrictions applicable to such Shares have been satisfied or lapsed (including satisfaction of any applicable tax withholding obligations).

 

  

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8.4           Certificate Legend. In addition to any legends placed on certificates pursuant to Section 8.2, each certificate representing Shares of Restricted Stock granted pursuant to this Plan may bear a legend such as the following or as otherwise determined by the Committee in its sole discretion:  The sale or transfer of Shares of stock represented by this certificate, whether voluntary, involuntary or by operation of law, is subject to certain restrictions on transfer as set forth in the GulfSlope Energy, Inc 2014 Omnibus Incentive Plan, and in the associated Award Agreement. A copy of this Plan and such Award Agreement may be obtained from GulfSlope Energy, Inc.

 

8.5           Voting and Dividend Rights. Unless otherwise determined by the Committee and set forth in a Participant’s applicable Award Agreement, to the extent permitted or required by law, as determined by the Committee, a Participant holding Shares of Restricted Stock granted hereunder shall be granted the right to exercise full voting rights with respect to those Shares and the right to receive dividends declared on those Shares during the Period of Restriction. Notwithstanding the foregoing, the Committee may require that any dividends on such Shares of Restricted Stock shall be automatically deferred and reinvested in additional Restricted Stock subject to the same restrictions on vesting as the underlying Award, or may require that dividends and other distributions on Restricted Stock shall be paid to the Company for the account of the Participant and held pending and subject to the same restrictions on vesting as the underlying Award; provided, however, that to the extent that any dividends are deferred, reinvested or otherwise not paid when such dividends would otherwise normally be paid, (i) all terms and conditions for such delayed payment shall be included in the Agreement, and (ii) such deferral, reinvestment or delay in payment of the dividends shall only be allowed to the extent it complies with, or is exempt from, the requirements of Code section 409A.

Article 9. Restricted Stock Units

9.1           Grant of Restricted Stock Units. Restricted Stock Units may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion. A grant of a Restricted Stock Unit or Restricted Stock Units shall not represent the grant of Shares but shall represent a promise to deliver a corresponding number of Shares or the value of each Share based upon the completion of service, performance conditions, or such other terms and conditions as specified in the applicable Award Agreement over the Restriction Period. Each grant of Restricted Stock Units shall be evidenced by an Award Agreement.

 

9.2           Nature of Restrictions. Each grant of Restricted Stock Units shall be subject to a Restriction Period that shall lapse upon the satisfaction of such conditions and restrictions as are determined by the Committee in its sole discretion and set forth in an applicable Award Agreement. Such conditions or restrictions may include, without limitation, one or more of the following:

 

(a)           Restrictions based upon the achievement of specific performance goals;

 

(b)           Time-based restrictions on vesting following the attainment of the performance goals;

 

(c)           Time-based restrictions;

 

(d)           Restrictions under applicable laws and restrictions under the requirements of any stock exchange or market on which such Shares underlying the Restricted Stock Unit are listed or traded; and

 

(e)           A requirement that a Participant pay a stipulated purchase price for each Restricted Stock Unit.

 

9.3           Voting Rights. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder or the Shares corresponding to any Restricted Stock Units granted hereunder.

 

9.4           Settlement and Payment Restricted Stock Units. Unless otherwise elected by the Participant or otherwise provided for in the Award Agreement, Restricted Stock Units shall be settled upon the date such Restricted Stock Units vest. Such settlement may be made in Shares, cash or a combination thereof, as specified in the Award Agreement.

 

  

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Article 10. Performance Shares

10.1           Grant of Performance Shares. Performance Shares may be granted to Participants in such number, and upon such terms and at any time and from time to time as shall be determined by the Committee, in its sole discretion. Each grant of Performance Shares shall be evidenced by an Award Agreement.

 

10.2           Value of Performance Shares. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the Grant Date. The Committee shall set performance goals in its discretion that, depending on the extent to which they are met over the specified Performance Period, shall determine the number of Performance Shares that shall be paid to a Participant.

 

10.3           Earning of Performance Shares. After the applicable Performance Period has ended, the number of Performance Shares earned by the Participant over the Performance Period shall be determined as a function of the extent to which the applicable corresponding performance goals have been achieved. This determination shall be made solely by the Committee.

10.4           Form and Timing of Payment of Performance Shares. The Committee shall pay at the close of the applicable Performance Period, or as soon as practicable thereafter, any earned Performance Shares in the form of cash or in Shares or in a combination thereof, as specified in a Participant’s applicable Award Agreement. Any Shares paid to a Participant under this Section 10.4 may be subject to any restrictions deemed appropriate by the Committee.

 

Article 11. Performance Units

11.1           Grant of Performance Units. Subject to the terms and provisions of this Plan, Performance Units may be granted to a Participant in such number, and upon such terms and at any time and from time to time as shall be determined by the Committee, in its sole discretion. Each grant of Performance Units shall be evidenced by an Award Agreement.

 

11.2           Value of Performance Units. Each Performance Unit shall have an initial notional value equal to a dollar amount determined by the Committee, in its sole discretion. The Committee shall set performance goals in its discretion that, depending on the extent to which they are met over the specified Performance Period, will determine the number of Performance Units that shall be settled and paid to the Participant.

 

11.3           Earning of Performance Units. After the applicable Performance Period has ended, the number of Performance Units earned by the Participant over the Performance Period shall be determined as a function of the extent to which the applicable corresponding performance goals have been achieved. This determination shall be made solely by the Committee.

 

11.4           Form and Timing of Payment of Performance Units. The Committee shall pay at the close of the applicable Performance Period, or as soon as practicable thereafter, any earned Performance Units in the form of cash or in Shares or in a combination thereof, as specified in a Participant’s applicable Award Agreement. Any Shares paid to a Participant under this Section 11.4 may be subject to any restrictions deemed appropriate by the Committee.

 

Article 12. Other Stock-Based Awards and Cash-Based Awards

12.1           Grant of Other Stock-Based Awards and Cash-Based Awards.

 

(a)           The Committee may grant Other Stock-Based Awards not otherwise described by the terms of this Plan, including, but not limited to, the grant or offer for sale of unrestricted Shares and the grant of deferred Shares or deferred Share units, in such amounts and subject to such terms and conditions, as the Committee shall determine, in its sole discretion. Such Awards may involve the transfer of actual Shares to Participants, or payment in cash or otherwise of amounts based on the value of Shares.

 

  

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(b)           The Committee, at any time and from time to time, may grant Cash-Based Awards to a Participant in such amounts and upon such terms as the Committee shall determine, in its sole discretion.

 

(c)           Each grant of Other Stock-Based Awards and Cash-Based Awards shall be evidenced by an Award Agreement.

 

12.2           Value of Other Stock-Based Awards and Cash-Based Awards.

 

(a)           Each Other Stock-Based Award shall be expressed in terms of Shares or units based on Shares, as determined by the Committee, in its sole discretion.

 

(b)           Each Cash-Based Award shall specify a payment amount or payment range as determined by the Committee, in its sole discretion. If the Committee exercises its discretion to establish performance goals, the value of Cash-Based Awards that shall be paid to the Participant will depend on the extent to which such performance goals are met.

12.3           Payment of Other Stock-Based Awards and Cash-Based Awards. Payment, if any, with respect to Cash-Based Awards and Other Stock-Based Award shall be made in accordance with the terms of the applicable Award Agreement, in cash, Shares or a combination of both as determined by the Committee in its sole discretion.

 

Article 13. Restrictions on Transferability of Awards and Shares

13.1           Transferability of Awards. Except as provided in Section 13.2, during a Participant’s lifetime, Options and SARs shall be exercisable only by the Participant. Awards shall not be transferable other than by will or the laws of descent and distribution or, subject to the consent of the Committee, pursuant to a domestic relations order entered into by a court of competent jurisdiction; no Awards shall be subject, in whole or in part, to attachment, execution or levy of any kind; and any purported transfer in violation of this Section 13.1 shall be null and void. The Committee may establish such procedures as it deems appropriate for a Participant to designate a beneficiary to whom any amounts payable or Shares deliverable in the event of, or following, the Participant’s death may be provided.

 

13.2           Committee Action. Except as provided in Section 6.6(k), the Committee may, in its discretion, determine that notwithstanding Section 13.1, any or all Awards shall be transferable, without compensation to the transferor, to and exercisable by such transferees, and subject to such terms and conditions, as the Committee may deem appropriate;  provided ,  however , no Award may be transferred for value without shareholder approval.

 

13.3           Restrictions on Share Transferability. The Committee may impose such restrictions on any Shares acquired by a Participant under the Plan as it may deem advisable, including, without limitation, minimum holding period requirements, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed or traded or under any blue sky or state securities laws applicable to such Shares.

 

Article 14. Performance-Based Compensation and Compliance with Code Section 162(m)

14.1           Compliance with Section 162(m). The provisions of the Plan are intended to ensure that all Options and SARs granted hereunder to any Participant who is or may be a Covered Employee at the time of exercise of such Option or SAR qualify for exemption from the limitation on deductibility imposed by Section 162(m) of the Code that is set forth in Section 162(m)(4)(c) of the Code and that such Options and SARs shall therefore be considered Performance-Based Compensation and this Plan shall be interpreted and operated consistent with that intention. The Committee may designate any Award (other than an Option or SAR) as Performance-Based Compensation upon grant, in each case based upon a determination that (i) the Participant is or may be a Covered Employee with respect to such Award, and (ii) the Committee wishes such award to qualify for exemption from the limitation on deductibility imposed by Section 162(m) of the Code that is set forth in Section 162(m)(4)(c). The 

 

  

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Committee shall have the sole authority to specify which Awards are to be granted in compliance with Section 162(m) and treated as Performance-Based Compensation.

 

14.2           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 one or a combination of two or more of the following:

 

(a)           Book value;

 

(b)           Cash flow (including funds from operations and cash available for distribution);

(c)           Debt;

 

(d)           Earnings (either in aggregate or on a per-share basis);

 

(e)           Earnings before or after either, or any combination of, interest, taxes, depreciation, or amortization (“EBITDA”);

 

(f)           Economic value added;

 

(g)           Expenses/costs (including any combination of: finding costs, development costs, acquisition costs, production costs, operating costs, transportation costs, selling expenses, general and administrative expenses);

 

(h)           Gross or net income;

 

(i)           Gross or net operating margins;

 

(j)           Gross or net profits;

 

(k)           Gross or net revenues;

 

(l)           Market share;

 

(m)           Net asset value (NAV);

 

(n)           Net income;

 

(o)           Operating income;

 

(p)           Operational performance measures;

 

(q)           Pre-tax Income;

 

(r)           Production levels;

 

(s)           Profitability ratios;

 

(t)           Reserves (including the volumes of, or the discounted present value of, proved, probable and/or possible reserve levels and/or additions to reserves);

 

(u)           Return measures (including return on assets, return on equity, return on investment, return on capital, return on capital employed, return on invested capital, gross profit return on investment, gross margin return on investment);

 

(v)           Revenue;

 

  

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(w)           Share price (including growth in share price and total shareholder return);

 

(x)           Strategic business objectives (including, but not limited to, objective project milestones, development and refinement of exploration prospect portfolio, and partnering success);

 

(y)           Transactions relating to acquisitions or divestitures; or

 

(z)           Working capital.

Any Performance Measure(s) may, as the Committee, in its sole discretion deems appropriate, (i) be expressed in absolute amounts or on a per unit basis (e.g., per share, per barrel, per MCF), (ii) relate to the performance of the Company or any Subsidiary as a whole or any business unit or division of the Company or any Subsidiary or any combination thereof, (iii) be compared to the performance of a group of comparator companies, or published or special index, (iv) be based on change in the Performance Measure over a specified period of time and such change may be measured based on an arithmetic change over the specified period (e.g., cumulative change or average change), or percentage change over the specified period (e.g., cumulative percentage change, average percentage change or compounded percentage change), (v) relate to or be compared to one or more other Performance Measures, or (vi) any combination of the foregoing. 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 Article 14.

 

14.3           Evaluation of Performance. The Committee may provide in any Award intended to qualify as Performance-Based Compensation that any evaluation of performance may include or exclude the impact, if any, on reported financial results of any of the following events that occurs during a Performance Period: (a) asset write-downs, (b) litigation or claim judgments or settlements, (c) changes in tax laws, accounting principles or other laws or provisions, (d) reorganization or restructuring programs, (e) acquisitions or divestitures, (f) foreign exchange gains and losses, and (g) gains and losses that are treated as extraordinary items under Financial Accounting Standard No. 145 (Accounting Standards Codification Topic 225-20). 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.

 

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

 

14.5           Committee Discretion. In the event that applicable tax or securities laws change to permit Committee discretion to alter the governing Performance Measures or permit flexibility with respect to the terms of any Award or Awards to be treated as Performance-Based Compensation without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval. 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 14.2.

 

Article 15. Nonemployee Director Awards

15.1           Awards to Nonemployee Directors. The Board or Committee shall determine and approve all Awards to Nonemployee Directors. The terms and conditions of any grant of any Award to a Nonemployee Director shall be set forth in an Award Agreement.

 

15.2           Awards in Lieu of Fees. The Board or Committee may permit a Nonemployee Director the opportunity to receive an Award in lieu of payment of all or a portion of future director fees (including but not limited to cash retainer fees and meeting fees) or other type of Awards pursuant to such terms and conditions as the Board or Committee may prescribe and set forth in an applicable sub-plan or Award Agreement.

 

  

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Article 16. Effect of a Change in Control

 

Notwithstanding any other provision of this Plan to the contrary, the provisions of this Article 16 shall apply in the event of a Change in Control, unless otherwise determined by the Committee in its sole discretion, and set forth in the applicable Award Agreement:

(a)           Outstanding Options and SARs. Upon a Change in Control, a Participant’s then-outstanding Options and SARs that are not vested shall immediately become fully vested (and, to the extent applicable, all performance conditions shall be deemed satisfied) and exercisable over the exercise period set forth in the applicable Award Agreement.

 

(b)           Outstanding Awards, other than Options and SARs, Subject Solely to a Service Condition. Upon a Change in Control, a Participant’s then-outstanding Awards, other than Options and SARs, that are not vested and as to which vesting depends solely on the satisfaction of a service obligation by the Participant to the Company or any Subsidiary shall become fully vested and shall be settled in cash, Shares or a combination thereof as provided for under the applicable Award Agreement as soon as practicable following such Change in Control.

 

(c)           Outstanding Awards, other than Options and SARs, Subject to a Performance Condition. Upon a Change in Control, a Participant’s then-outstanding Awards, other than Options and SARs, that are not vested and as to which vesting depends upon the satisfaction of one or more performance conditions shall immediately vest and all performance conditions shall be deemed satisfied as if target performance was achieved and shall be settled in cash, Shares or a combination thereof as provided for under the applicable Award Agreement as soon as practicable following such Change in Control; notwithstanding that the applicable performance period, retention period or other restrictions and conditions have not been completed or satisfied.

 

(d)           Other Awards. Upon a Change in Control, the treatment of a Participant’s then-outstanding Awards that are not vested and that are not subject to paragraphs (a), (b) or (c) above shall be determined in accordance with the applicable Award Agreements or, if not specified in the Award Agreements, shall be determined by the Committee.

 

Article 17. Dividend Equivalents

The Committee may grant Dividend Equivalents to a Participant based on the dividends declared on Shares that are subject to any Award granted to the Participant, except for Options, SARs and Restricted Stock, with such Dividend Equivalents credited to the Participant as of the applicable dividend payment dates that occur during a period determined by the Committee. Such Dividend Equivalents shall be converted to and paid in cash or additional Shares or Awards by such formula and at such time and subject to such limitations as may be determined by the Committee; provided that in the case of an Award as to which vesting depends upon the satisfaction of one or more performance conditions, the right to Dividend Equivalents shall be subject to the same restrictions on vesting and payout as the underlying Award.

 

Article 18. Beneficiary Designation

Each Participant under this Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under this Plan is to be paid in case of his death before he receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such beneficiary designation, benefits remaining unpaid or rights remaining unexercised at the Participant’s death shall be paid to or exercised by the Participant’s executor, administrator or legal representative.

 

  

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Article 19. Rights of Participants

19.1           Employment. Nothing in this Plan or an Award Agreement shall (a) interfere with or limit in any way the right of the Company or any Subsidiary to terminate any Participant’s employment with the Company or any Subsidiary at any time or for any reason not prohibited by law or (b) confer upon any Participant any right to continue his employment or service as a Director or Third-Party Service Provider for any specified period of time. Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company or any Subsidiary and, accordingly, subject to Articles 3 and 20, this Plan and the benefits hereunder may be amended or terminated at any time in the sole and exclusive discretion of the Board without giving rise to any liability on the part of the Company, any Subsidiary, the Committee or the Board.

19.2           Participation. No individual shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.

 

19.3           Rights as a Shareholder. Except as otherwise provided herein, a Participant shall have none of the rights of a shareholder with respect to Shares covered by any Award until the Participant becomes the record holder of such Shares.

 

Article 20. Amendment and Termination

20.1           Amendment and Termination of the Plan and Awards.

 

(a)           Subject to subparagraphs (b) and (c) of this Section 20.1 and Section 20.3 of the Plan, the Board may at any time amend or terminate the Plan or amend or terminate any outstanding Award.

 

(b)           Except as provided for in Section 4.4, the terms of an outstanding Award may not be amended, without prior shareholder approval, to:

 

(i)           reduce the Option Price of an outstanding Option or to reduce the Grant Price of an outstanding SAR,

 

(ii)           cancel an outstanding Option or SAR in exchange for other Options or SARs with an Option Price or Grant Price, as applicable, that is less than the Option Price of the cancelled Option or the Grant Price of the cancelled SAR, as applicable, or

 

(iii)           cancel an outstanding Option with an Option Price that is less than the Fair Market Value of a Share on the date of cancellation or cancel an outstanding SAR with a Grant Price that is less than the Fair Market Value of a Share on the date of cancellation in exchange for cash or another Award.

 

(c)           Notwithstanding the foregoing, no amendment of this Plan shall be made without shareholder approval if shareholder approval is required pursuant to rules promulgated by any stock exchange or quotation system on which Shares are listed or quoted or by applicable U.S. state corporate laws or regulations, applicable U.S. federal laws or regulations and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan.

 

20.2           Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. Subject to Section 14.4, the Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.4) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent unintended dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under this Plan. By accepting an Award under this Plan, a Participant agrees to any adjustment to the Award made pursuant to this Section 20.2 without further consideration or action.

 

  

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20.3           Awards Previously Granted. Notwithstanding any other provision of this Plan to the contrary, other than Sections 20.2, 20.4 and 22.14, no termination or amendment of this Plan or an Award Agreement shall adversely affect in any material way any Award previously granted under this Plan, without the written consent of the Participant holding such Award.

20.4           Amendment to Conform to Law. Notwithstanding any other provision of this Plan to the contrary, the Committee may amend the Plan or an Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming the Plan or an Award Agreement to any law relating to plans of this or similar nature, and to the administrative regulations and rulings promulgated thereunder. By accepting an Award under this Plan, a Participant agrees to any amendment made pursuant to this Section 20.4 to the Plan and any Award without further consideration or action.

 

Article 21. Tax Withholding

21.1           Minimum Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, the minimum statutory amount to satisfy applicable federal, state and local tax withholding requirements, domestic or foreign, with respect to any taxable event arising as a result of this Plan but in no event shall such deduction or withholding or remittance exceed the minimum statutory withholding requirements.

 

21.2           Share Withholding. With respect to withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock, upon the settlement of Restricted Stock Units, or upon the achievement of performance goals related to Performance Shares, or any other taxable event arising as a result of an Award granted hereunder (collectively and individually referred to as a “Share Payment”), a Participant may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold from a Share Payment the number of Shares having a Fair Market Value on the date the withholding is to be determined equal to the minimum statutory withholding requirement but in no event shall such withholding exceed the minimum statutory withholding requirement. All such elections shall be irrevocable, made in writing, and signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

 

Article 22. General Provisions

22.1           Forfeiture Events.

 

(a)           In addition to the forfeiture events specified in Section 22.1(b), the Committee may specify in an Award Agreement that the Participant’s rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting of an Award.

 

(b)           A Participant’s termination of employment for Cause shall result in the forfeiture of the Participant’s outstanding Awards in accordance with the following:

 

(i)           Any outstanding and nonvested Options, SARs, Restricted Stock, RSUs, Performance Shares, Performance Units, Cash-Based Awards and Other Stock-Based Awards granted to the Participant shall be forfeited as of the date immediately preceding the Participant’s Termination of Employment; and

 

(ii)           Any vested and unexercised Options and SARs, vested but not settled RSUs, earned but not settled Performance Shares or Performance Units, and earned and/or vested Cash-Based Awards and Other Stock-Based Awards granted to the Participant shall be forfeited as of the date immediately preceding the Participant’s Termination of Employment.

 

22.2           Legend. The certificates for Shares may include any legend that the Committee deems appropriate to reflect any restrictions on transfer of such Shares.

  

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22.3           Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural.

 

22.4           Severability. In the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

 

22.5           Requirements of Law. The granting of Awards and the issuance of Shares under this Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

 

22.6           Delivery of Title. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under this Plan prior to:

 

(a)           Obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and

 

(b)           Completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.

 

22.7           Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

22.8           Investment Representations. The Committee may require any individual receiving Shares pursuant to an Award under this Plan to represent and warrant in writing that the individual is acquiring the Shares for investment and without any present intention to sell or distribute such Shares.

 

22.9           Employees Based Outside of the United States. Notwithstanding any provision of this Plan to the contrary, in order to comply with the laws in other countries in which the Company or any Subsidiaries operate or have Employees, Directors or Third-Party Service Providers, the Committee, in its sole discretion, shall have the power and authority to:

 

(a)           Determine which Subsidiaries shall be covered by this Plan;

 

(b)           Determine which Employees, Directors or Third-Party Service Providers outside the United States are eligible to participate in this Plan;

 

(c)           Modify the terms and conditions of any Award granted to Employees, Directors or Third-Party Service Providers outside the United States to comply with applicable foreign laws;

 

(d)           Establish sub-plans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable. Any sub-plans and modifications to Plan terms and procedures established under this Section 22.9 by the Committee shall be attached to this Plan document as appendices; and

 

(e)           Take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local government regulatory exemptions or approvals.

 

Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate applicable law.

  

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22.10           Uncertificated Shares. To the extent that this Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.

 

22.11           Unfunded Plan. Participants shall have no right, title or interest whatsoever in or to any investments that the Company or any Subsidiaries may make to aid it in meeting its obligations under this Plan. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative or any other individual. To the extent that any individual acquires a right to receive payments from the Company or any Subsidiary under this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company or the Subsidiary, as the case may be. All payments to be made hereunder shall be paid from the general funds of the Company, or the Subsidiary, as the case may be, and no special or separate fund shall be established, and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in this Plan.

 

22.12           No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine whether cash, Awards or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

 

22.13           Retirement and Welfare Plans. Neither Awards made under this Plan nor Shares or cash paid pursuant to such Awards may be included as “compensation” for purposes of computing the benefits payable to any Participant under the Company’s or any Subsidiary’s retirement plans (both qualified and nonqualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in computing a Participant’s benefit.

 

22.14           Deferred Compensation. To the extent applicable, this Plan and all Awards granted hereunder are intended to comply with or be exempt from Code section 409A and will be interpreted in a manner intended to comply with Code section 409A. To the extent there is a conflict between the provisions of the Plan relating to compliance with Code section 409A and the provisions of any Agreement issued under the Plan, the provisions of the Plan control.  Moreover, any discretionary authority that the Committee may have pursuant to the Plan shall not be applicable to an Award not exempt from Code Section 409A to the extent such discretionary authority would conflict with Code section 409A.  In addition, to the extent required to avoid a violation of the applicable rules under Code section 409A by reason of Code section 409A(a)(2)(B)(i), any payment under an Award shall be delayed until the earliest date of payment that will result in compliance with the rules of Code section 409A(a)(2)(B)(i) (regarding the required six-month delay for distributions to specified employees that are related to a separation from service).  To the extent that an Award not exempt from Code Section 409A provides for payment upon the recipient’s termination of employment as an employee or cessation of service as a Non-Employee Director or Third-Party Service Provider, such Award shall be deemed to require payment upon the individual’s “separation from service” within the meaning of Code section 409A.  In the event that an Award shall be deemed not to comply with Code section 409A, then neither the Company, the Board of Directors, the Committee nor its or their designees or agents, nor any of  their affiliates, assigns or successors (each a “protected party”) shall be liable to any Award recipient or other person for actions, inactions, decisions, indecisions or any other role in relation to the Plan by a protected party if made or undertaken in good faith or in reliance on the advice of counsel (who may be counsel for the Company), or made or undertaken by someone other than a protected party.

22.15           Nonexclusivity of this Plan. The adoption of this Plan shall not be construed as creating any limitations on the power of the Board or Committee to adopt such other compensation arrangements as it may deem desirable for any Participant.

 

22.16           No Constraint on Corporate Action. Nothing in this Plan shall be construed to: (i) limit, impair, or otherwise affect the Company’s or a Subsidiary’s right or power to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell or transfer all or any part of its business or assets; or, (ii) limit the right or power of the Company or a Subsidiary to take any action that such entity deems to be necessary or appropriate.

  

21

  

22.17           Governing Law. The Plan and each Award Agreement shall be governed by the laws of the state of Delaware excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Plan to the substantive law of another jurisdiction.

 

22.18           Delivery and Execution of Electronic Documents. To the extent permitted by applicable law, the Company may (i) deliver by email or other electronic means (including posting on a website maintained by the Company or by a third party under contract with the Company) all documents relating to the Plan or any Award thereunder (including without limitation, prospectuses required by the Commission) and all other documents that the Company is required to deliver to its security holders (including without limitation, annual reports and proxy statements) and (ii) permit Participant’s to electronically execute applicable Plan documents (including, but not limited to, Award Agreements) in a manner prescribed to the Committee.

 

22.19           No Representations or Warranties Regarding Tax Effect. Notwithstanding any provision of the Plan to the contrary, the Company, Subsidiaries, the Board and the Committee neither represent nor warrant the tax treatment under any federal, state, local or foreign laws and regulations thereunder (individually and collectively referred to as the “Tax Laws”) of any Award granted or any amounts paid to any Participant under the Plan including, but not limited to, when and to what extent such Awards or amounts may be subject to tax, penalties and interest under the Tax Laws.

 

22.20           Indemnification. Subject to requirements of the laws of the state of Delaware, each individual who is or shall have been a member of the Board, or a Committee appointed by the Board, or an officer of the Company to whom authority was delegated in accordance with Article 3, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under this Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his/her own behalf, unless such loss, cost, liability or expense is a result of his/her own willful misconduct or except as expressly provided by statute. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such individuals may be entitled under the Company’s Articles of Incorporation or Bylaws, as a matter of law or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

 

22.21           Successors. All obligations of the Company under this Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company

 

 

 

22ex10-1.htm

Exhibit 10.1

 

AMENDED AND RESTATED LICENSE AGREEMENT

 

THIS AGREEMENT is dated the 20th day of May, 2014,

 

B E T W E E N:

 

MOTHER PARKER'S TEA & COFFEE INC., a corporation organized and existing under the laws of the Province of Ontario, Canada and its Affiliates (hereinafter referred to as "MP")

 

- and -

 

JAMMIN JAVA CORP., a corporation organized and existing under the laws of state of Nevada (hereinafter referred to as "JJ") (MP and JJ may hereinafter be referred to individually as a “Party” and collectively as the “Parties”)

 

WHEREAS:

 

	
  

	
A.

	
MP is engaged in, inter alia, the manufacture, distribution and sale of single serve beverage capsules;

 

	
  

	
B.

	
MP and JJ entered into a License Agreement dated October 13, 2011 (as amended, modified and revised from time to time, hereinafter referred to as the “Prior Trademark License Agreement”), which is amended, restated and superseded in its entirety by this Amended and Restated License Agreement dated May [ ], 2014 (the “Agreement”), whereby JJ is among other things, granting to MP the right and license to use the Trademarks as hereinafter defined in connection with the manufacture, distribution, processing, packaging and sale of the Products as hereinafter defined, using the Trademarks in accordance with the terms and conditions contained herein;

 

	
  

	
C.

	
JJ is the registered owner or licensee of the Trademarks and has full right and authority to enter into this Agreement with MP;

 

	
  

	
D.

	
MP and JJ have entered into a non-disclosure agreement dated June 24, 2011, a copy of which is attached hereto as Schedule "A"; and

 

	
  

	
E.

	
The Parties have agreed to amend and expand their business relationship and wish to define their respective rights and obligations and other terms and conditions concerning their relationship in this Agreement, which shall substitute for and supersede the Prior Trademark License Agreement.

 

IN CONSIDERATION of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

  

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ARTICLE 1

 

INTERPRETATION AND SCHEDULES

 

	
1.1

	
Definitions.

 

Unless the context shall otherwise require, in this Agreement the following terms have the following meanings:

 

	
  

	
(a)

	
"Affiliate" means, with respect to any Person, any other Person who directly or indirectly controls, is controlled by, or is under direct or indirect common control with, such Person. A Person shall be deemed to control a Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise;

 

	
  

	
(b)

	
"Business Day" means any day other than a Saturday, a Sunday or any other day on which the principal commercial banks located in the City of Toronto are not open for business during normal business hours;

 

	
  

	
(c)

	
"Change of Control" means the transfer or issue by sale, assignment, subscription, transmission on death, mortgage, charge, security interest, operation of law or otherwise, of any shares, acting rights or interest which would result in any change in the effective Control of a corporation or the sale of all or substantially all of the assets of a corporation.

 

	
  

	
(d)

	
"Claim" means claim, demand, action, cause of action, damage, loss, cost, liability or expense (excluding indirect, special, consequential and incidental damages and loss of profits), and all legal and other professional fees and disbursements, interest, penalties and amounts paid in settlement.

 

	
  

	
(e)

	
"Confidential Information" shall mean financial, business, operational and other information pertaining to each Party and its business and its directors, officers, shareholders, employees and agents which is confidential or proprietary in nature, whether in written form, on computer disks or other forms of electronic storage, containing or based on, in whole or in part, such information whether marked “Confidential” or otherwise reasonably constituting confidential or proprietary information of the other Party.   Notwithstanding anything to the contrary contained in this definition, Confidential Information shall not include (i) information which is within the public domain at the date of its disclosure to the receiving Party or which thereafter enters the public domain through no fault of the receiving Party (but only after it becomes part of the public domain), (ii) information which becomes available to the receiving Party on a non-confidential basis from a source other than the disclosing Party provided that such source is not bound by a confidentiality agreement or other confidentiality obligations, and(iii) information which the receiving Party is required by law to disclose provided, however, that the receiving Party shall notify the disclosing

 

  

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Party before any such disclosure and shall give the disclosing Party a reasonable opportunity to obtain a protective order or other form of protection prior to disclosure;

 

	
  

	
(f)

	
"Control" of a corporation or other entity is held by a Person where securities of the corporation or other entity to which are attached more than 50% of the votes that may be cast to elect directors or persons acting in a similar capacity of the corporation or other entity are held, other than by way of security only, by or for the benefit of such Person;

 

	
  

	
(g)

	
"Governmental Authority" means any national, multi-national, federal, provincial, state, municipal, local or other government, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government;

 

	
  

	
(h)

	
"License" means the license granted by JJ to MP permitting MP to use the Trademarks and other rights in accordance with the terms and conditions contained herein;

 

	
  

	
(i)

	
"License Fee" means the fee payable to JJ for granting the license hereunder to MP to use the Trademarks;

 

	
  

	
(j)

	
"Licensed Trademarks" means those Trademarks that are used by JJ but owned by another party and which are necessary to the operation of the business of JJ as presently conducted and is intended to be conducted throughout the Term of this Agreement, particulars of which are set out in Schedule "B";

 

	
  

	
(k)

	
"Person" means any natural person, corporation, division of a corporation, partnership, joint venture (which includes a co-ownership), association, company, estate, unincorporated organization, trust, government or Governmental Authority;

 

	
  

	
(l)

	
"Product" means single serve hard capsules (which, for greater certainty excludes single serve soft pods);

 

	
  

	
(m)

	
"Term" shall have the meaning attributed thereto in Section 6.1;

 

	
  

	
(n)

	
"Territory" means the geographic territory for which JJ has granted the License and in which MP may sell the Product, being Canada, the United States of America and Mexico; and

 

	
  

	
(o)

	
"Trademarks" means the trademarks owned by JJ, the Licensed Trademarks and any trademark or trademarks owned by or licensed to JJ which may be added to Schedule B from time to time in accordance with this Agreement.

 

  

3

  

1.2           Construction.

 

In this Agreement, except as otherwise expressly provided:

 

	
  

	
(a)

	
all words and personal pronouns relating thereto shall be read and construed as the number and gender of the party or parties referred to in each case require, and the verb shall be read and construed as agreeing with the required word and pronoun;

 

	
  

	
(b)

	
the division of this Agreement into Articles and Sections is for convenience of reference only and shall not modify or affect the interpretation or construction of this Agreement and all references to Articles or Sections are references to Articles or Sections of this Agreement;

 

	
  

	
(c)

	
when calculating the period of time within which or following which any act is to be done or step taken pursuant to this Agreement, the date which is the reference day in calculating such period shall be excluded. If the last day is not a Business Day, the period in question shall end on the next Business Day;

 

	
  

	
(d)

	
all dollar amounts are expressed in United States funds unless otherwise specifically noted; and

 

	
  

	
(e)

	
the words "including" shall be interpreted to mean "including without limitation".

 

1.3           Schedules. The following are the schedules to this Agreement and form a part hereof;

 

Schedule A       Non-Disclosure Agreement

 

        Schedule B      Trademarks (listed separately for owned, licensed and sublicensed Trademarks)

 

        Schedule C        Letter of Intent (“LOI”) between MP and JJ. Notwithstanding that the LOI is a non-binding agreement, both Parties hereby acknowledge and agree that the terms and conditions as set out in the LOI are now firm and binding, as set forth herein and in the Subscription Agreement between the Parties.

 

ARTICLE 2

 

LICENSE

 

2.1           License.

 

Upon and subject to the terms of this Agreement, JJ hereby grants to MP the sole and exclusive right to manufacture, create, develop, process, package, label, distribute, market and directly or indirectly sell the Product, or to cause any of its Affiliates to do

 

  

4

  

any of the same, within the Territory under the License. JJ has agreed to License the Trademarks to MP and to grant the rights hereunder to MP in consideration for the Licensing Fee. JJ shall cause all of its Affiliates and related entities and persons to comply with the exclusivity provisions of this Agreement.  MP shall not sell or distribute Product by any direct marketing methods, including, without limitation, television, infomercials (DRTV) or direct mail, without the prior written approval of JJ (and where applicable its licensor). Notwithstanding the foregoing, JJ hereby confirms and acknowledges that MP has the right to directly or indirectly sell or distribute the Product through retail channels, including but not limited to, Amazon, ECS, etc.  The rights granted herein do not include the rights in or to any images, persona, photographs or other copyrighted works of or relating to Robert Marley, aka Bob Marley. MP understands that JJ has not authorized MP to use any musical composition, song lyrics, song titles, master recording, audio-visual recording, video and/or motion picture in connection with Product and/or in connection with any advertising or promotional material used to advertise or promote the sale of Product. Notwithstanding the foregoing or anything to the contrary set out in this Agreement, JJ hereby acknowledges and agrees that MP has the right to use any copyrighted work or portion thereof, including but not limited to, images, song lyrics, song titles, etc., in connection with materials used to advertise or promote the sale of Product to the extent that such copyrighted work or portion thereof is incorporated in the Product, and JJ has authorized its use by MP.  All Product shall bear at least one Trademark and, save and except for co-branding with MP’s capsule trademarks, no Product shall be sub-branded, co-branded or sold or otherwise distributed under any marks other than the Trademarks. All rights in and to the Trademarks not specifically granted and licensed to MP hereunder are hereby reserved by JJ (or its licensor) and JJ (or its licensor) may exercise such rights at any time.

 

2.2           Use of the Trademarks.

 

MP shall display the Trademarks with notices or legends, reasonably prescribed from time to time by JJ or as otherwise may be necessary, to identify JJ (or its licensor) as the owner of the Trademarks, MP as a licensee of the Trademarks, and the use thereof as a licensed use.

 

JJ shall promptly notify MP in the event that JJ creates or obtains new trademarks, logos or designs that relate to or are developed in connection with the Product, and the same shall be immediately incorporated by reference into the definition of Trademarks and corresponding Schedule to this Agreement and the Agreement shall be amended accordingly.

 

2.3           Infringement or Unfair Competition.

 

Each of MP and JJ covenants and agrees to give notice to the other of any claim or demand made to it alleging an infringement or conflict with JJ's rights, and MP's rights hereunder, in connection with any of the Trademarks.

 

JJ (or its licensor) may take whatever action if deems necessary or desirable to protect the validity and strength of its Trademarks at its sole expense. MP agrees to comply with

 

  

5

  

reasonable requests made by JJ (or its licensor) for assistance in connection with any action with respect to the Trademarks.

 

2.4           Interest in the Trademarks.

 

MP acknowledges and agrees that:

 

	
  

	
(a)

	
nothing in this Agreement conveys to or confers on MP any right, title or interest in any of the Trademarks, except the right to use the Trademarks in accordance with and upon and subject to the terms of this Agreement;

 

	
  

	
(b)

	
the Trademarks are and remain and shall remain the sole property of JJ or where applicable, its licensor;

 

	
  

	
(c)

	
any and all use by MP of the Trademarks shall accrue and ensure to the benefit of JJ and where applicable, its licensor; and

 

	
  

	
(d)

	
without JJ's prior written consent (and where applicable, the consent of JJ’s licensor), MP shall not, nor shall it cause any appointed agent, to effect any registration of any of the Trademarks or any of JJ's rights under this Agreement, in any public or governmental office.

 

2.5           No Contest.

 

MP agrees that it will not, during the term of this Agreement or thereafter, dispute or contest, directly or indirectly, the validity or enforceability of the Trademarks, nor counsel, procure or assist anyone else to do any of the foregoing.

 

2.6           JJ's Representations and Warranties Regarding Trademarks.

 

JJ represents, warrants and covenants to MP that as of the date hereof and throughout the Term:

 

	
  

	
(a)

	
except for the Licensed Trademarks, JJ holds the entire right, title and interest in and to all of the Trademarks;

 

	
  

	
(b)

	
with respect to the Licensed Trademarks, JJ has a written contract with the person who owns or controls the right, title and interest in and to such Licensed Trademarks (“Owner”) wherein such Owner has agreed to license them to JJ upon such terms and conditions as will enable JJ to perform and abide by all of its obligations under this Agreement;

 

	
  

	
(c)

	
except for the Licensed Trademarks, JJ has the exclusive and unfettered right to use the Trademarks except to the extent JJ has licensed or sublicensed others to use the Trademarks, which licenses and sublicenses are listed in Schedule B which in each case constitute non-exclusive licenses or sublicenses and do not infringe upon the License and rights granted to MP hereunder;

 

  

6

  

	
  

	
(d)

	
except for the Licensed Trademarks, the Trademarks have been duly registered or applications to register the same have been filed in the national or regional intellectual property offices, as the case may be, for all jurisdictions in which sale and/or distribution of products making use of the Trademarks has been authorized by JJ, and any such applications or registrations are in good standing;

 

	
  

	
(e)

	
with respect to the Licensed Trademarks, JJ has a written contract with the Owner that provides that the Licensed Trademarks have been duly registered or applications to register the same have been filed in the national or regional intellectual property offices, as the case may be, for all jurisdictions in which the sale and/or distribution of products making use of the Licensed Trademarks has been authorized by JJ, and any such applications or registrations are in good standing;

 

	
  

	
(f)

	
except for the Licensed Trademarks, JJ has the exclusive right to use and sub-license the Licensed Trademarks except to the extent the rights are identified in Schedule B as being non­exclusive;

 

	
  

	
(g)

	
with respect to the Licensed Trademarks, JJ has the exclusive right to use and sub-license the Licensed Trademarks in connection with the Product to the extent that JJ has granted to MP in this Agreement;

 

	
  

	
(h)

	
no consents of third parties are required in order for the granting of the License, or for Licensed Trademarks to be licensed or sub-licensed to a third party. JJ is not a party to or bound by any contract, agreement or other commitment that limits or impairs its ability to use, reproduce, distribute, transfer, display, assign, convey, encumber, sell, offer to sell or license all or any portion of the Trademarks;

 

	
  

	
(i)

	
to the best of JJ’s knowledge, neither the use of the Trademarks nor the conduct of the business of JJ infringes or otherwise violates the intellectual property rights of any other person. JJ has not received any notice, claim or threat to that effect. To the best of JJ”s knowledge, there is no actual or threatened claim by any Person that any Trademark is, or may be, invalid or unenforceable or non-distinctive. No infringement, misuse or misappropriation of the Trademarks has occurred or is occurring;

 

	
  

	
(j)

	
the Trademarks are valid and the rights of JJ in the Trademarks are enforceable;

 

	
  

	
(k)

	
to the best of JJ”s knowledge, none of the Trademarks are subject to any outstanding order, award, decision, injunction, judgment, decree, stipulation or agreement materially restricting the transfer, use, enforcement or licensing thereof by JJ in the operation of the business of JJ as now conducted or as intended to be conducted; and

 

	
  

	
(l)

	
to the knowledge of JJ, there is no actual or threatened challenge to the ownership, validity, use, scope or enforceability of any of the Trademarks.

 

  

7

  

2.7           MP's General Representations and Warranties.

 

MP represents, warrants, and covenants to JJ that

 

	
  

	
(a)

	
MP is a corporation duly formed and validly existing under the laws of the Province of Ontario, Canada, and holds all required licenses and qualifications required to carry on business in all applicable jurisdictions to fulfill its obligations hereunder;

 

	
  

	
(b)

	
the execution, delivery and performance of this Agreement are within its power and capacity and have been duly authorized by all proper and required proceedings;

 

	
  

	
(c)

	
MP has full power and authority to execute this Agreement, which has been duly executed and delivered by MP and constitutes the legal, valid and binding obligation of MP, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency and other laws of general application limiting the enforceability of creditors' rights and to the fact that specific performance and injunction are equitable remedies available only in the discretion of the court;

 

	
  

	
(d)

	
there are no actions, suits or proceedings pending or to the knowledge of MP threatened against or adversely affecting MP in any court or before any federal, state, provincial, municipal, or other governmental department, commission, board, bureau or agency which materially affect the performance of its obligations under this Agreement;

 

	
  

	
(e)

	
neither the execution and delivery of this Agreement nor compliance with the terms hereof

 

(i)  has resulted or shall result in a violation of the terms of the articles, by-laws or resolutions of MP or of any applicable laws applicable to it,

 

(ii)  has resulted or shall result in a breach of, or constitute a default under, any instrument or agreement to which MP is a party or by which it is bound, or

 

(iii) requires the approval or any consent of any Governmental Authority except such as has been obtained or may be obtained in the ordinary course of business; and

 

	
  

	
(f)

	
MP holds all material licenses, permits, approvals, authorizations and consents from any Person which are required to perform its duties and obligations pursuant to the terms hereof. MP is in good standing with respect to all such permits, approvals, authorizations and consents and none of the same contains any term, provision, condition or limitation which would have a material adverse effect on or materially adversely restrict the performance by the MP of its duties and obligations pursuant to the terms hereof.

 

  

8

  

2.8           JJ's General Representations and Warranties.

 

JJ represents, warrants, and covenants to MP that:

 

	
  

	
(a)

	
JJ is a corporation duly formed and validly existing under the laws of Nevada and holds all required licenses and qualifications required to carry on business in all applicable jurisdictions to fulfill its obligations under this Agreement;

 

	
  

	
(b)

	
the execution, delivery and performance of this Agreement are within its power and capacity and have been duly authorized by all proper and required proceedings;

 

	
  

	
(c)

	
JJ has full power and authority to execute this Agreement, which has been duly executed and delivered by JJ and constitutes the legal, valid and binding obligation of JJ, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency and other laws of general application limiting the enforceability of creditors' rights and to the fact that specific performance and injunction are equitable remedies available only in the discretion of the court;

 

	
  

	
(d)

	
there are no actions, suits or proceedings pending or to the knowledge of JJ threatened against or adversely affecting JJ in any court or before any federal, state, provincial, municipal, or other governmental department, commission, board, bureau or agency which materially affect the performance of its obligations under this Agreement;

 

	
  

	
(e)

	
neither the execution and delivery of this Agreement nor compliance with the terms hereof (i) has resulted or shall result in a violation of the terms of the articles, by-laws or resolutions of JJ or of any applicable laws applicable to it, (ii) has resulted or shall result in a breach of, or constitute a default under, any instrument or agreement to which JJ is a party or by which it is bound, or (iii) requires the approval or any consent of any Governmental Authority except such as has been obtained or may be obtained in the ordinary course of business; and

 

	
  

	
(f)

	
JJ holds all material licenses, permits, approvals, authorizations and consents from any Person which are required to perform its duties and obligations pursuant to the terms hereof. JJ is in good standing with respect to all such permits, approvals, authorizations and consents and none of the same contains any term, provision, condition or limitation which would have a material adverse effect on or materially adversely restrict the performance by JJ of its duties and obligations pursuant to the terms hereof.

 

2.9           MP's Obligations

 

MP covenants and agrees that:

 

  

9

  

	
  

	
(a)

	
it shall supply all the ingredients and materials, and all labour, manufacturing equipment and other resources necessary to manufacture and package the Product in its discretion and in accordance with its customary practices;

 

	
  

	
(b)

	
it shall develop Product blends that follow the JJ coffee taste profile as set out in the specifications and guidelines provided to MP by JJ from time to time;

 

	
  

	
(c)

	
it shall procure coffee beans on the open market with the exception of Jamaican blue beans which will be sourced from JJ’s designee on a basis to be agreed by the Parties at a favourable price (closed nation status);

 

	
  

	
(d)

	
MP will set prices of the Product in its discretion, but in a manner that is competitive in the market place within the range of pricing of competitive products per channel;

	
  

	
(e)

	
it will not to act or omit to act in any manner which may reasonably adversely affect the goodwill attached to and symbolized by any of the Trademarks; and

 

	
  

	
(f)

	
it will deliver Product logo/brand designs to JJ for approval, provided that if JJ does not respond to MP within 72 (seventy two) hours of receipt of such material, JJ is deemed to have not given its approval for such logo/brand designs.

 

2.10           JJ's Obligations.

 

JJ covenants and agrees that:

 

	
  

	
(a)

	
it shall continuously provide MP with any non-confidential information in its possession or to which it becomes aware that may assist MP in the creation, promotion and sale of the Product within the Territory including, without limitation, specific target markets and areas of avoidance and it shall promptly notify MP of any change to such information;

 

	
  

	
(b)

	
to provide and cross-promote the Product on all brand communication vehicles including, but not limited to its corporate and related websites, social media outlets and celebrity appearances;

 

	
  

	
(c)

	
it will use Product images and copy provided by MP in its promotion of the Product;

 

	
  

	
(d)

	
it will provide a minimum of five (5) Marley family-member appearances (i.e., appearances of Rohan Marley, the Chairman of JJ), per year at locations to be agreed upon by the Parties, at the sole cost and expense of JJ; and

 

	
  

	
(e)

	
it will provide MP with Product logo and brand design guidelines from time to time.

 

  

10

  

2.11           No Minimum Volume.

 

MP is under no obligation to deliver minimum sales volumes or minimum Licensing Fees and there shall be no such similar requirements relating to the manufacture, processing, packaging or sale of the Product.

 

2.12           No Exclusivity.

 

Notwithstanding any other provision herein contained, the Parties agree that MP shall have the right and freedom to negotiate and contract from time to time and in its sole discretion and for greater certainty, the Parties agree that there shall be no exclusivity granted by MP to JJ with respect to the subject matter of this Agreement or its conducting similar business in the Territory under the terms and conditions of this Agreement or otherwise. Notwithstanding the foregoing, JJ shall grant exclusivity to MP with respect to the subject matter of this Agreement and, for greater certainty, shall not enter into any arrangements that are similar to or have the potential to compete with, the terms and conditions contained herein.

 

ARTICLE 3

 

FEES

 

	
3.1

	
License Fee.

 

There shall be no License Fee for Product sold by MP to JJ and its Affiliates.  MP shall pay to JJ a License Fee for Product sold to parties other than JJ and its Affiliates calculated as follows:

 

	
  

	
(a)

	
$0.06 per capsule for Talkin' Blues products; and

 

	
  

	
(b)

	
$0.04 per capsule for all other products.

 

	
3.2

	
Payments.

 

The License Fee shall be paid in monthly instalments. MP shall prepare statements setting out its calculation of the License Fee in reasonable detail, which shall be prima facie correct absent manifest error.  JJ shall have the right to audit the statements prepared by MP once per year with reasonable notice to MP, and MP shall provide reasonable assistance to JJ in connection with such audits.  JJ shall bear the sole cost of such audits unless the audited License Fee is more than 5% different (higher) than the License Fee as determined by MP, and under such situation MP shall bear all reasonable auditing costs.

 

  

11

  

ARTICLE 4

 

CONFIDENTIALITY AND PROPRIETARY INFORMATION

 

	
4.1

	
Confidentiality.

 

The Parties acknowledge that prior to the date hereof and during the Term of this Agreement, they may have had/will have access to and may have been/be entrusted with Confidential Information, the use by, or the disclosure of which to the general public could be detrimental to the best interests of the Parties. Each Party further acknowledges that the right to maintain the confidentiality of the Confidential Information constitutes a proprietary right which each Party is entitled to protect. Accordingly, each Party covenants and agrees that it will not disclose, reveal or make known any Confidential Information at any time to any partnership, unincorporated association, organization, syndicate, corporation, trust and a trustee, executor, administrator or other legal or personal representative, nor shall any Party use the Confidential Information for any purpose without the prior written consent of the other Party. The covenants and agreements contained in this section shall survive without limitation the termination of this Agreement. JJ expressly acknowledges and agrees that to the extent it is required to disclose information to the public with respect to its relationship with MP under applicable securities laws, JJ will use commercially reasonable efforts to request confidential treatment for such information as MP may request in writing, subject in all cases to applicable securities laws.

 

	
4.2

	
No Rights.

 

	
  

	
(a)

	
JJ hereby acknowledges and agrees that all formula, recipe, process and ingredient information of the Product, as well as all technical and quality assurance information, sales data, promotion and marketing plans developed by MP in connection with this Agreement are the sole and exclusive property of MP and JJ acquires no rights to use any such data or information for any purpose.

 

	
  

	
(b)

	
All rights, title and interest in and to all intellectual property rights regarding the Product and to any improvement or enhancement thereof, whether or not protectable and whether or not conceived of or made in the course of or as a result of this Agreement, are, will be and will remain the sole and exclusive property of MP.

 

	
  

	
(c)

	
JJ hereby assigns all intellectual property rights MP may have or develop with respect to the Product in the course of or as a result of this Agreement to MP and will cause all employees to waive all moral rights they may have or develop in any intellectual property rights directly associated with the Product.

 

	
  

	
(d)

	
MP agrees and confirms that it shall have no right to ownership or use of JJ’s Intellectual Property, other than as a result of this Agreement.  "Intellectual Property" means all patents, inventions, patent applications, patent rights (whether patented or not), trademarks, trademark registrations, trade names,

 

  

12

  

brand names, all other names and slogans embodying business or product goodwill (or both), copyright registrations, copyrights (including those in computer programs, software, including all source code and object code, development documentation, programming tools, drawings, specifications and data), software, trade secrets, know-how, mask works, industrial designs, formulae, processes and technical information, including confidential and proprietary information, whether or not subject to statutory registration or protection. MP may not remove, obscure or modify any copyright or other notices included in the Products.  MP shall use reasonable efforts to protect JJ’s Intellectual Property from any use that is not permitted under this Agreement.

 

ARTICLE 5

 

INDEMNIFICATION

 

	
5.1

	
Indemnity by JJ.

 

JJ (in this Section 5.1 the "Indemnifying Party") hereby agrees to indemnify and hold MP, its shareholders, directors, officers, employees, agents, representatives and Affiliates and their respective shareholders, directors, officers and employees (in this Section 5.1, the "Indemnified Party") harmless in respect of any Claim which may be made or brought against an Indemnified Party or which an Indemnified Party may suffer or incur directly or indirectly as a result of, in respect of or arising out of:

 

	
  

	
(a)

	
any incorrectness in or breach of any representation or warranty of JJ contained in this Agreement or in any other agreement, certificate or instrument executed and delivered pursuant to this Agreement;

 

	
  

	
(b)

	
any breach of or any non-fulfilment of any covenant or agreement on the part of JJ under this Agreement or under any other agreement, certificate or instrument executed and delivered pursuant to this Agreement; and

 

	
  

	
(c)

	
the use by MP of the Trademarks in accordance with the terms and conditions herein.

 

	
5.2

	
Indemnity by MP.

 

MP (in this Section 5.2 the "Indemnifying Party") hereby agrees to indemnify and hold JJ, its shareholders, directors, officers, employees, agents, representatives and Affiliates and their respective shareholders, directors, officers and employees (in this Section 5.2, the "Indemnified Party") harmless in respect of any Claim which may be made or brought against an Indemnified Party or which an Indemnified Party may suffer or incur directly or indirectly as a result of in respect of or arising out of:

 

	
  

	
(a)

	
any incorrectness in or breach of any representation or warranty of MP contained in this Agreement or in any other agreement, certificate or instrument executed and delivered pursuant to this Agreement;

 

  

13

  

	
  

	
(b)

	
any breach of or any non-fulfilment of any covenant or agreement on the part of MP under this Agreement or under any other agreement, certificate or instrument executed and delivered pursuant to this Agreement; and

 

	
  

	
(c)

	
the use by MP of the Trademarks other than in accordance with the terms and conditions herein.

 

	
5.3

	
Notice of Claim.

 

If an Indemnified Party becomes aware of a Claim in respect of which indemnification is provided for pursuant to either of Section 5.1 or 5.2, as the case may be, the Indemnified Party shall promptly give written notice of the Claim to the Indemnifying Party; provided that the failure of any Party entitled to indemnification hereunder to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under Section 5.1 or 5.2, as applicable, except to the extent that the Indemnifying Party is actually prejudiced by such failure to give timely notice. Such notice shall specify whether the Claim arises as a result of a claim by a Person against the Indemnified Party (a "Third Party Claim") or whether the Claim does not so arise (a "Direct Claim"), and shall also specify with reasonable particularity (to the extent that the information is available):

 

	
  

	
(i)

	
the factual basis for the Claim; and

 

	
  

	
(ii)

	
the amount of the Claim, if known.

 

	
5.4

	
DirectClaims.

 

In the case of a Direct Claim, the Indemnifying Party shall have 60 days from receipt of notice of the Claim within which to make such investigation of the Claim as the Indemnifying Party considers necessary or desirable. For the purpose of such investigation, the Indemnified Party shall make available to the Indemnifying Party the information relied upon by the Indemnified Party to substantiate the Claim, together with all such other information as the Indemnifying Party may reasonably request. If both parties agree at or before the expiration of such 60 day period (or any mutually agreed upon extension thereof) to the validity and amount of such Claim, the Indemnifying Party shall immediately pay to the Indemnified Party the full agreed upon amount of the Claim, failing which the matter shall be referred to binding arbitration in accordance with this Agreement.

 

	
5.5

	
Third Party Claims.

 

In the case of a Third Party Claim, the Indemnifying Party shall have the right, at its expense, to participate in or assume control of the negotiation, settlement or defense of the Claim. If the Indemnifying Party elects to assume such control, the Indemnifying Party shall reimburse the Indemnified Party for all of the Indemnified Party's out-of­ pocket expenses incurred as a result of such participation or assumption. The Indemnified Party shall have the right to participate in the negotiation, settlement or

 

  

14

  

defense of such Third Party Claim and to retain counsel to act on its behalf, provided that the fees and disbursements of such counsel shall be paid by the Indemnified Party unless the Indemnifying Party consents to the retention of such counsel at its expense or unless the named parties to any action or proceeding include both the Indemnifying Party and the Indemnified Party and a representation of both the Indemnifying Party and the Indemnified Party by the same counsel would be inappropriate due to the actual or potential differing interests between them (such as the availability of different defenses). The Indemnified Party shall cooperate in a reasonable manner with the Indemnifying Party so as to permit the Indemnifying Party to conduct such negotiation, settlement and defense and for this purpose shall preserve all relevant documents in relation to the Third Party Claim, allow the Indemnifying Party access on reasonable notice to inspect and take copies of all such documents and require its personnel to provide such statements as the Indemnifying Party may reasonably require and to attend and give evidence at any trial or hearing in respect of the Third Party Claim. If, having elected to assume control of the negotiation, settlement or defense of the Third Party Claim, the Indemnifying Party thereafter fails to conduct such negotiation, settlement or defense with reasonable diligence, then the Indemnified Party shall be entitled to assume such control at the cost of the Indemnifying Party and the Indemnifying Party shall be bound by the results obtained by the Indemnified Party with respect to such Third Party Claim. If any Third Party Claim is of a nature such that (i) the Indemnified Party is required by applicable law or the order of any court, tribunal or regulatory body having jurisdiction, or (ii) it is necessary in the reasonable view of the Indemnified Party acting in good faith and in a manner consistent with reasonable commercial practices, in respect of (A) a Third Party Claim by a customer relating to a material amount of products or services or (B) a Third Party Claim relating to any contract which is necessary to the ongoing operations of a material portion of the Indemnified Party’s business operations or any material part thereof in order to avoid material damage to the relationship between the Indemnified Party and any of its major customers or to preserve the rights of the Indemnified Party under such an essential contract, to make a payment to any Person (a "Third Party") with respect to the Third Party Claim before the completion of settlement negotiations or related legal proceedings, as the case may be, then the Indemnified Party may make such payment and the Indemnifying Party shall, promptly after demand by the Indemnified Party, reimburse the Indemnified Party for such payment. If the amount of any liability of the Indemnified Party under the Third Party Claim in respect of which such a payment was made, as finally determined, is less than the amount which was paid by the Indemnifying Party to the Indemnified Party, the Indemnified Party shall, promptly after receipt of the difference from the Third Party, pay the amount of such difference to the Indemnifying Party. If such a payment, by resulting in settlement of the Third Party Claim, precludes a final determination of the merits of the Third Party Claim and the Indemnified Party and the Indemnifying Party are unable to agree whether such payment was unreasonable in the circumstances having regard to the amount and merits of the Third Party Claim, then such dispute shall be referred to and finally settled by binding arbitration from which there shall be no appeal.

 

  

15

  

	
5.6

	
Settlement of Third Party Claims.

 

If the Indemnifying Party fails to assume control of the defense of any Third Party Claim, the Indemnified Party shall have the exclusive right to contest, settle or pay the amount claimed. Whether or not the Indemnifying Party assumes control of the negotiation, settlement or defense of any Third Party Claim, the Indemnifying Party shall not settle any Third Party Claim without the written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed; provided, however, that the liability of the Indemnifying Party shall be limited to the proposed settlement amount if any such consent is not obtained for any reason within a reasonable time after the request therefore.

 

	
5.7

	
Interest on Claims.

 

The amount of any Claim submitted under Section 5.1, Section 5.2 or Section 5.3 as damages or by way of indemnification shall bear interest from and including the date any Indemnified Party is required to make payment in respect thereof at the prime rate calculated from and including such date to but excluding the date reimbursement of such Claim by the Indemnifying Party is made, and the amount of such interest shall be deemed to be part of such Claim.

 

ARTICLE 6

 

TERM AND REVIEW

 

	
6.1

	
Term.

 

The term ("Term") of this Agreement shall commence on the date first written above and, unless terminated earlier pursuant to the provisions of this Agreement, shall continue for a period of five (5) years. The Term of this Agreement shall automatically renew for successive one (1) year periods subject to termination provisions contained herein, provided that:

 

	
  

	
a.

	
JJ shall notify MP if conversations occur with KGM over the life of the License Agreement.

 

	
  

	
b.

	
JJ shall not take any action to terminate the Agreement during a standstill period of 12 months from the date of this Agreement.

 

	
  

	
c.

	
Should JJ terminate this Agreement or take any action that lessens or diminishes MP’s exclusive license to use the Trademarks within 24 months of the end of the standstill period, JJ shall pay MP $600,000 and shall reimburse MP for any out of pocket costs incurred by MP for inventory or other materials that remain with MP and are unsalable or unusable.  In addition, should JJ terminate this Agreement or take any action that lessens or diminishes MP’s exclusive license to use the Trademarks within 24 months of the end of the standstill period, MP shall have the right, in its sole and absolute discretion, to terminate this Agreement immediately upon written notice to JJ.

 

  

16

  

The Term shall automatically expire without any required payment pursuant to Section 6.1(c) above (a) upon the mutual written consent of the Parties or (b) in the event of the occurrence of any other act which, by law, would require that the License be terminated.

 

	
6.2

	
Review

 

The Parties agree to undertake a review of the initiative contemplated by the terms and conditions of this Agreement on an annual basis commencing on or about its first anniversary date.

 

ARTICLE 7

 

TERMINATION

 

	
7.1

	
Termination on Default.

 

Notwithstanding anything contained in this Agreement, if either Party shall default in any material respect in fulfilling any covenant or agreement on its part to be performed hereunder and such default shall not have been cured within thirty (30) days after written notice given by the non-defaulting Party specifying the nature of such default (except in the case of non-payment of License Fees due which shall have a ten (10) day cure period)(or, if such default shall be of such a nature that it cannot be remedied or cured within such thirty (30) day period, such period shall be extended to such time not more than forty-five (45) days after written notice as may be necessary, provided the non-defaulting Party is proceeding with reasonable diligence and good faith to remedy or cure such default) then, in such case, in addition to the non-defaulting Party's other rights and remedies, such Party shall have the right to cancel this Agreement by giving written notice of termination to the defaulting Party to such effect at the end of such period (or extended period, as the case may be) and such notice shall take effect upon receipt.

 

	
7.2

	
AutomaticTermination.

 

Notwithstanding anything contained in this Agreement, either Party may terminate this Agreement (without the payment of any penalties under Section 6.1(c), except for Section 7.2(d), below) forthwith upon written notice to the other upon the happening of any of the following events:

 

	
  

	
(a)

	
the bankruptcy or insolvency or similar proceeding of the other Party whether voluntary or involuntary, that is, the other Party becomes insolvent, makes any assignment for the benefit of its creditors, is adjudged bankrupt, or if a receiver or a trustee of the other Party's property or undertaking is appointed;

 

	
  

	
(b)

	
the winding-up, dissolution or liquidation of the other Party, whether voluntary or involuntary;

 

	
  

	
(c)

	
the seizure or attachment of a substantial portion of the property, assets or undertaking of the other Party; or

 

  

17

  

	
  

	
(d)

	
the commencement of litigation proceedings involving MP's use of the Trademarks, as a result of the granting of the License or in connection with any of the terms and conditions contained herein (which shall be a terminating right in favour of MP only).

 

	
7.3

	
Termination Without Cause

 

Notwithstanding anything contained herein, MP shall have the right to terminate this Agreement for any reason upon ninety (90) days written notice to JJ.  Upon such termination under this Section, no payments under Section 6.1(c) shall be due.

 

	
7.4

	
Return of Confidential Information.

 

Upon the termination of this Agreement, each Party shall, within thirty (30) days from the effective date of termination, return to the possession of the other Party all Confidential Information of the other Party and all copies, notes or compilations of such information. The Parties shall not copy nor reproduce, in whole or in part, such data, studies or other material without the prior written consent of the other Party; provided that either Party may make one copy of all of the foregoing and deliver the same to the custody of its legal advisors who shall be instructed only to disclose the contents thereof in the context of legal proceedings or dealings with any Governmental Authority.

 

	
7.5

	
Purchase of Product

 

In the event of termination of this Agreement for any reason, JJ shall be obligated to purchase any unsold Product including, without limitation, any raw or packaged materials at a cost as mutually determined by the Parties acting reasonably.

 

ARTICLE 8

 

RECALLS

 

	
8.1

	
Recalls and Withdrawals.

 

If MP determines, in its sole discretion, or based on a bona fide recommendation from a Governmental Authority, that consideration shall be given to undertake a market withdrawal or recall of a Product, MP shall have the right to carry out such action in its sole discretion and the Parties agree to cooperate fully in connection with any such withdrawal or recall. In the event that such action results from an act or omission by JJ, JJ shall be obligated to pay all costs and expenses relating to such market withdrawal or recall. Subject to carrying out its obligations under this Section 8.1, MP shall have no obligation to pay other costs, expenses or other amounts claimed by JJ or any other Indemnified Party hereunder related to JJ.

 

In the event of a recall, no press release, interview or statement shall be made in connection with such recall, without the prior written consent of the other Party, which consent will not be unreasonably withheld.

 

  

18

  

ARTICLE 9

 

GENERAL

 

	
9.1

	
Restriction on Assignment.

 

Neither Party may assign this Agreement or any of its rights or obligations under this Agreement without the prior written consent of the other Party, provided that MP may assign or subcontract all or any part of this Agreement to any Affiliate or to any successor to its business without the consent of JJ. This Agreement shall endure to the benefit of the Parties and their respective successors and permitted assigns and shall be binding upon the Parties and their respective successors and assigns. A Change of Control (whether in law or in fact) of JJ shall be deemed an assignment by JJ for the purposes of this section.

 

	
9.2

	
Non-Publicity

 

[Intentionally removed.]

 

	
9.3

	
Governing Law.

 

This Agreement shall be governed by and interpreted in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

 

	
9.4

	
Notices.

 

All notices required or permitted hereunder shall be in writing and shall be deemed to be sufficiently given if mailed by registered or certified mail, postage prepaid, or delivered by hand or sent by email, or sent by facsimile, and addressed

 

if to MP, at:

 

Tom Prychitka

2531 Stanfield Road

Mississauga, Ontario

L4Y 1S4

tprychitka@mother-parkers.com

 

if to JJ, at:

 

Brent Toevs

4730 Tejon St., Denver,

Colorado 80211

brent@marleycoffee.com

Either Party may give notice to the other Party in the manner herein provided of a change in its address for notice. Any notice or other written matter shall be deemed to have been given and received: if mailed, on the fifth (5th) Business Day following the

 

  

19

  

date of mailing; if delivered by hand, on the date of delivery; and, if sent by facsimile and email, on the Business Day following the sending of the notice; provided that during an interruption in regular postal service in Canada, all such notices or other written matters shall be delivered by hand or sent by facsimile and by email.

 

	
9.5

	
Marketing Support

 

MP shall allocate, annually (every 12 months), $100,000.00. These funds will be used for marketing activities mutually agreed to by MP and JJ.

 

	
9.6

	
Non-Waiver and Remedies Cumulative.

 

Any waiver or condoning by one Party of any breach of this Agreement by the other Party shall not operate as a waiver or condoning of any subsequent breach of this Agreement by the other Party. No delay or omission by either Party in exercising any right or power hereunder will impair such right or power or be construed to be a waiver thereof. A waiver by either Party of any provision hereof or of any breach hereunder must be in writing signed by the waiving Party. Except as otherwise provided in this Agreement, all remedies provided for in this Agreement will be cumulative and in addition to and not in lieu of any other remedies available to either Party at law, in equity, or otherwise.

 

	
9.7

	
Entire Agreement.

 

This Agreement constitutes the entire agreement between the Parties relative to the subject matter hereof and supersedes all earlier agreements, arrangements or understandings in that regard, written or oral. This Agreement may not be amended except by an instrument in writing duly executed by the Party against whom the amendment is sought to be enforced.

 

	
9.7

	
Relationship Among Parties

 

The Parties are entering into this Agreement as independent contractors, in accordance with and subject to the terms of this Agreement. Nothing in this Agreement constitutes either Party to be an agent or partner of the other Party in any respect, and neither Party shall have any authority whatsoever with respect to the property or business of the other except as expressly provided in this Agreement.

 

	
9.8

	
Severability.

 

If any provision of this Agreement is adjudicated to be invalid or unenforceable, in whole or in part, then such provision, or part thereof, shall be deemed amended to delete therefrom the objectionable portion and the remaining portions of this Agreement shall continue to remain in full force and effect.

 

  

20

  

	
9.9

	
Counterparts

 

This Agreement may be signed in counterparts (including by facsimile counterparts) and each counterpart 'shall constitute an original document, and all counterparts, taken together, shall constitute an original document.

 

	
9.10

	
Costs

 

The Parties each agree to bear their own costs associated with the preparation and execution of this Agreement.

 

	
9.11

	
No Consequential Damages

 

MP shall not be liable for any incidental, consequential, indirect, special or punitive damages, or loss of profits, as a consequence of the performance or non-performance of this Agreement.

 

	
9.12

	
Equitable Remedies. The Parties acknowledge and agree that, in the event a Party breaches any of its obligations under this Agreement (a) the other Party may suffer substantial, immediate and irreparable harm, (b) the other Party shall not have an adequate remedy at law for money damages in the event of any such failure and (c) that in the event of any such failure, the other Party may be entitled to (i) specific performance, injunctive and other equitable relief to compel the breaching Party to comply with its obligations in accordance with the terms and conditions of this Agreement and (ii) any other remedy to which the other Party may be entitled at law or in equity (without the necessity of posting of a bond).

 

	
9.13

	
Form and Construction. The headings used in this Agreement are for convenience of reference only and do not constitute substantive matter to be considered in construing the terms of this Agreement. As used in this Agreement, the masculine gender shall include the feminine and the singular form of words shall include the plural, or vice versa, as necessary in order that this Agreement may be interpreted so as to conform to the subject matter actually existing. The language of this Agreement shall be construed as a whole and not strictly for or against any of the Parties regardless of who drafted or was principally responsible for drafting this Agreement or any of its specific terms or conditions.

 

	
9.14

	
Further Assurances

 

The Parties agree to do or cause to be done all acts or things necessary to implement and carry this Agreement into effect to its full extent.

 

[Signatures on next page]

 

 

  

21

  

 

IN WITNESS WHEREOF the Parties have caused this Agreement to be executed as of the date first written above.

 

 

MOTHER PARKER'S TEA & COFFEE INC.

 

Per: /s/ Tom Prychitka

 

Name: Tom Prychitka

 

Title: CFO & Vice President Shared Services

 

 

JAMMIN JAVA CORP.

 

Per: /s/ Brent Toevs

 

Name: Brent Toevs

 

Title: CEO

 

 

 

  

22

  

 

SCHEDULE A

 

NON-DISCLOSURE AGREEMENT

 

[Provided separately.]

 

 

 

 

  

 

  

 

SCHEDULE B

 

TRADEMARKS

 

Owned Trademarks

 

None.

 

Licensed Trademarks

 

	  	
1.

	
MARLEY COFFEE

	  	  	  
	  	
2.

	
MARLEY COFFEE STIR IT UP

	  	  	  
	  	
3.

	

	  	  	  
	  	
4.

	

 

Licenses or Sublicenses of Trademarks by JJ to others

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