Document:

ex_106312.htm

Exhibit 10.1

 

Asset Purchase Agreement

 

This Asset Purchase Agreement (“Agreement”) is made effective as of February 28, 2018 (“Effective Date”), by and among Buderim Group Limited, an Australian corporation (“Buderim Parent”); MacFarms, LLC, a Hawaii limited liability company and wholly owned subsidiary of Buderim Parent (“Buyer”), and Royal Hawaiian Macadamia Nut, Inc., a Hawaii corporation (“Seller”). In this Agreement, Buderim Parent, Buyer and Seller may sometimes collectively be referred to as the “Parties” and individually as a “Party.”

 

Seller is in the business of marketing, and selling macadamia nuts. A portion of Seller’s business consists of the sale and marketing of macadamia nuts and products containing macadamia nuts to customers for retail sale (“Marketing/Retail Business”), most of with most of such business being conducted in the continental United States.

 

Seller wishes to sell to Buyer, and Buyer wishes to purchase from Seller, substantially all of Seller’s right, title, and interest in and to the Marketing/Retail Business according to the terms of this Agreement.

 

Therefore, the Parties agree as follows:

 

1.            Purchase and Sale; Definition of “Assets”.

 

(a)          On the Closing Date, Seller will sell, deliver, transfer, assign, and convey to Buyer, and Buyer will purchase from Seller, all of Seller’s right, title, and interest in and to all of the Assets (defined below).

 

(b)          “Assets” means, except for the Excluded Assets (defined below), and subject to Buyer’s election regarding the Assumed Contracts set forth in Section 11 Buyer’s Election Regarding Assumed Contracts, all of Seller’s assets, of every kind, nature, and description and wherever situated, tangible and intangible, which are currently owned by Seller and used in the Marketing/Retail Business, including without limitation the following:

 

(i)     Seller’s right, title and interest in and to Seller’s leasehold interest in the office located at 2491 Dana Point Harbor Drive, #B-200, Dana Point, California and all improvements located thereon (“Marketing/Retail Office”);

 

(ii)     Seller’s right, title and interest in and to all of the tangible personal property owned or leased by Seller, including all inventory, packaging, furniture, fixtures, equipment, computers, office supplies, machinery, parts and the items listed on listed on Schedule 1(b) attached to this Agreement;

 

(iii)    Seller’s right, title and interest in and to all contracts, options, leases (whether of realty or personally), open purchase orders, bids in process, commitments, licenses to use software, and other agreements (all of such contracts, agreements, options, leases or commitments are sometimes referred to herein collectively as the “Contracts”), including the items identified on Schedule 1(b) attached hereto (which schedule identifies separately (i) each Contract that is material to Seller’s Marketing/Retail Business and (ii) each Contract that requires the consent of a third party in order to assign such contract to Buyer);

 

Page 1

 

 

(iv)     All customer, supplier and advertiser contacts, lists and records of Seller related to the Marketing/Retail Business, including credit information and correspondence;

 

(v)     All marketing files of Seller related to the Marketing/Retail Business identifying contacts, dates of most recent client contact and other information customarily contained therein;

 

(vi)     All personnel files of Seller pertaining to the three current employees or independent contractors of Seller (“Marketing/Retail Employees”), together with any and all information customarily contained therein, including, but not limited to, W-2’s, W-4’s, I-9’s, 1099’s, employment agreements, consulting agreements, personnel reviews, commission and/or bonus arrangements and salary history; provided however, that Seller may retain a copy of such files in order to comply with all tax, workers compensation, insurance and other obligations of Seller related to its engagement of such employees on or prior to the Closing Date;

 

(vii)     Seller’s right, title and interest in and to all intellectual property owned by Seller and used in connection with the Marketing/Retail Business or the Assets, including but not limited to all patents and patent applications, trade names, logos, trademarks, copyrights, trade secrets, formulas, flavors, recipes, know-how, and any registrations (issued or pending) for any of the foregoing intellectual property (including the federally registered trademarks listed on Schedule 1(b) attached hereto) which is used or held for use in connection with the conduct of Marketing/Retail Business (“Intellectual Property”) and the goodwill associated therewith;

 

(viii)     All customer deposits;

 

(ix)     The website www.royalhawaiianorchards.com except that all links to the website www.rholp.com must be removed and all references to Seller’s sole shareholder Royal Hawaiian Orchards, L.P. must be removed;

 

(x)     Deposit for Marketing/Retail Office lease;

 

(xi)     All books and records of Seller relating to Seller’s operation of the Marketing/Retail Business, including sales records and reports; provided however, that Seller may retain a copy of such files in order to comply with all tax other obligations of Seller related to its activities on or prior to the Closing Date; and

 

(xii)     All licenses and permits specific to the Marketing/Retail Business, but excluding licenses and permits that are specific to Seller as a corporation or to Seller’s state and federal tax identification numbers such as sales and use tax permits and state qualifications to do business.

 

Page 2

 

 

(c)          Anything herein to the contrary notwithstanding, Seller shall retain and shall not sell or deliver to Buyer, and Assets do not include, any assets related to the Seller’s bulk kernel sales business, any other asset which Buyer informs Seller before Closing that Buyer does not wish to accept or assume, and the following assets (together, the “Excluded Assets”):

 

(i)     Cash and bank accounts (other than customer deposits), marketable securities and investments;

 

(ii)     Accounts and notes receivable arising out of sales delivered on or prior to the Closing Date;

 

(iii)     Accounting software and accounting records of Seller, including those records of the Marketing/Retail Business through the Closing Date required by Seller to prepare consolidated financial statements and prepare tax returns;

 

(iv)     The Agreement for the Sale of Macadamia Kernel made effective January 1, 2013, between Seller and Royal Hawaiian Orchards, L.P.;

 

(v)     All bulk kernel inventory;

 

(vi)     Claims or rights against third parties relating to liabilities or obligations not assumed by Buyer hereunder;

 

(vii)     Claims or rights against third parties relating to obligations under any Contract, lease, instrument or agreement transferred to Buyer pursuant to this Agreement, which claims or rights arose prior the Closing Date;

 

(viii)     Seller’s insurance policies;

 

(ix)     Seller’s corporate minute books, shareholder record books, and related corporate documents and records; 

 

(x)     Any agreements with employees and independent contractors who do not become employees or independent contractors of Buyer at the Closing Date;

 

(xi)     Any and all rights of Seller under this Agreement; and

 

(xii)     The assets of Seller listed on Schedule 1(c) attached to this Agreement.

 

2.            Assumption of Liabilities. Upon the terms and subject to the conditions set forth in this Agreement, at Closing, Buyer shall assume and undertake to discharge in full the obligations and liabilities listed below (“Liabilities”):

 

(a)          All of the obligations and liabilities of Seller under the Assumed Contracts arising with respect to periods after the Closing Date;

 

(b)          All obligations and liabilities arising with respect to periods after the Closing Date related to the ownership, operation or control of the Assets; and

 

Page 3

 

 

(c)     All obligations and liabilities with respect to returns or reclamation of finished goods inventory up to the amount listed as reclamations in the operating plan provided as due diligence and none after a period of twelve (12) months.

 

Other than the Liabilities, Buyer shall not assume or be bound by any obligations of Seller of any kind or nature, contingent or otherwise.  Without limiting the generality of the foregoing, Schedule 2 provides a partial list of liabilities for which Buyer is not expressly or impliedly assuming or becoming responsible.

 

3.            Share Issuance.

 

(a)          On the Closing Date, in consideration for the sale and transfer of the Assets, Buderim Parent shall issue 11,220,242 fully paid ordinary shares (“Shares”) in Buderim Parent to Buyer pursuant to a Subscription Agreement substantially in form attached this Agreement as Exhibit 3(a) (“Subscription Agreement”).

 

(b)          Within ninety (90) days following the Closing Date, Buyer will propose a schedule for the allocation of the consideration paid pursuant to this Agreement among the Assets pursuant to Section 1060 of the Internal Revenue Code of 1986, as amended (“Code”) the (“Proposed Purchase Price Allocation”). Seller shall provide Buyer with any comments that it may have on the Proposed Purchase Price allocation within twenty (20) days after receiving the Proposed Purchase Price Allocation. Seller and Buyer shall endeavor in good faith to resolve any disagreement that they may have concerning the Proposed Purchase Price Allocation. If they are unable to resolve any such dispute within forty (40) days after Buyer has provided Seller with the Proposed Purchase Price Allocation, the matters in dispute shall be resolved by an independent accounting firm acceptable to Buyer and Seller, in which event the provisions of Section 20(n) shall be applicable. The decision of such accounting firm as to the matters in dispute shall be final and binding on the Parties hereto. Seller and Buyer agree to report the federal, state and local income and other tax consequences of the transactions contemplated hereby, and in particular to report the information required by Section 1060(b) of the Code, in a manner consistent with the allocations as finally determined under this Section 3(b) (the “Purchase Price Allocation”), and to file all other applicable tax returns and forms to reflect the Purchase Price Allocation. None of the Parties will take any position inconsistent with the Purchase Price Allocation upon examination of any tax return, in any refund claim, in any litigation, investigation or otherwise; provided, however, that that nothing contained herein shall prevent any party from settling, or require any party to litigate before any court, any challenge, proposed deficiency or adjustment by any taxing authority based upon or arising out of the Purchase Price Allocation. 

 

Page 4

 

 

4.            Supply Agreement. The Parties acknowledge and agree that pursuant to and conditioned upon the terms and conditions of a Supply Agreement to be executed and delivered by Buyer and parent of Seller, Royal Hawaiian Orchards, L.P. (“RH Parent”), at Closing, substantially in the form attached to this Agreement as Exhibit 3(b) (“Supply Agreement”), RH Parent will sell and Buyer will agree to purchase a minimum annual volume of macadamia nuts of acceptable quality standards and specifications at market rates after Closing.

 

5.            Processing Agreement. The Parties acknowledge and agree that pursuant to and conditioned upon the terms and conditions of a Processing Agreement to be executed and delivered by Buyer and RH Parent at Closing, substantially in the form attached to this Agreement as Exhibit 5 (“Processing Agreement”), the Buyer and RH Parent will coordinate and perform various processing functions of each other’s macadamia nuts. 

 

6.            Representations and Warranties of Seller. Seller makes the following representations and warranties to Buyer effective as of the Effective Date and the Closing Date:

 

(a)          Organization. Seller is a corporation duly organized, validly existing, and in good standing under the laws of the State of Hawaii, has the power and authority to carry on its business as now conducted, is duly qualified to conduct business, and is in good standing in each jurisdiction in which such qualification is necessary under the applicable laws of that jurisdiction. 

 

(b)          Authority. Seller has all necessary corporate power and authority to execute, deliver, and perform this Agreement and to consummate Closing. Seller’s executing, delivering, and performing this Agreement and consummating Closing does not and will not violate the terms or conditions of Seller’s organizational documents, any judicial or administrative order or process, any law applicable to Seller or by which any property or asset of Seller is bound or affected, or any agreement or instrument to which Seller is a party or otherwise bound. This Agreement and the consummation of Closing have been duly and effectively authorized by all necessary corporate actions, including approval by the shareholder and director of Seller. This Agreement is a valid and binding obligation of Seller, enforceable in accordance with its terms.

 

(c)          Documents. Seller has provided Buyer with complete originals or true, correct, and complete copies of all Contracts listed on Schedule 1(a) and such other materials described in this Agreement as having been delivered by Seller. All information contained in the documents prepared and delivered to Buyer by Seller under this Agreement are accurate in all material respects, unless otherwise disclosed to Buyer in writing. Seller has not withheld or failed to disclose any documents or information, which a reasonable buyer would consider material or relevant to a decision to purchase the Assets or Marketing/Retail Business. 

 

(d)          Financial Statements. Seller has delivered to Buyer copies of unaudited financial statements of Seller (“Seller Financial Statements”). The Seller Financial Statements (i) have been prepared based on information derived from the books and records of Seller and fairly represent the financial condition, results of operations, and changes in financial position of Seller at the dates and for the periods indicated; and (ii) do not contain any untrue statements or omit to state any material fact necessary to make the statement contained in this Section or therein not misleading. All items of inventory included in the Assets are valued on the Seller Financial Statements in accordance with generally-accepted accounting principles.

 

Page 5

 

 

(e)          Title to Assets; Completeness of Transfer. Seller has good, marketable, and valid title to the Assets, free and clear of any mortgage, security interest, lease, pledge, hypothecation, lien, or other encumbrance, except a UCC security interest held by American AgCredit, PCA, on all of the assets of Seller, which security interest shall be released with respect to the Assets at or prior to Closing. Except for any Excluded Assets, the Assets constitute all the material properties of any nature with which the Marketing/Retail Business has been conducted during the 12-month period before the Effective Date, subject to sales of inventory and additions and deletions of other assets in the ordinary course of business.

 

(f)          Assumed Contracts. All contracts and agreements which the Buyer may elect to be Assumed Contracts (as defined in Section 11) are set forth on Schedule 6(f) and are legally valid and binding and in full force and effect, and neither Seller nor any other party is in default or has breached any term of the Assumed Contracts. All the Assumed Contracts may be assigned to Buyer as contemplated by this Agreement without penalty or fee, subject to obtaining any consents identified on Schedule 1(a). Subject to obtaining any consents identified on Schedule 1(a), none of the Assumed Contracts rights will be impaired in any material respect by the consummation of Closing, and all of the rights of Seller under the Assumed Contracts will be enforceable by Buyer after Closing without any other party’s consent or agreement.

 

(g)          Condition of Assets at Closing. At Closing, all the physical Assets will be in substantially the same physical condition as they were in on the Effective Date.

 

(h)          Compliance with Laws; Litigation. Seller has operated the Marketing/Retail Business in conformity with all applicable federal, state, and local laws, ordinances, and regulations, except for violations and failures to comply that are not, individually or in the aggregate, reasonably expect to have a material adverse effect on the Marketing/Retail Business. Seller has not received any notice of alleged noncompliance during the past two fiscal years. There is no litigation pending or to Seller’s knowledge threatened (whether or not covered by insurance), nor is there any order, injunction, decree, proceeding, or governmental investigation existing or pending against Seller, the Assets, or the Marketing/Retail Business, nor, to Seller’s knowledge, is there any basis for any such litigation.

 

(i)          Licenses and Rights. Seller possesses all franchises, licenses, permits, and other authorizations from governmental, regulatory authorities, and all other persons and entities necessary to permit Seller to engage in the Marketing/Retail Business as presently conducted in and at all locations and places where they are presently operating (collectively, “Authorizations”), other than such Authorizations which if not obtained are not, individually or in the aggregate, reasonably expect to have a material adverse effect on the Marketing/Retail Business. To Seller’s knowledge, Seller has not received any notice that any governmental or regulatory authority is considering or intends to cancel, terminate, modify, or not renew any Authorizations.

 

Page 6

 

 

(j)          Absence of Changes. During the two years preceding the Effective Date, there has not been any material adverse change in the condition (financial or otherwise) of, or material damage, destruction, or loss affecting, the Marketing/Retail Business or the Assets, and Seller has not:

 

(i)     entered into or engaged in any transaction pertaining to the Marketing/Retail Business, other than in the ordinary course of business and consistent with past practices, including but not limited to any transaction relating to: (A) borrowing money; (B) purchasing, leasing (as lessor or lessee), selling, or encumbering its assets or properties; (C) cancelling, terminating, amending, or waiving of any of the Assumed Contracts or any rights or claims arising under the Assumed Contracts; or (D) increasing the rate of compensation or fringe benefits payable to or for the benefit of any officer, director, employee, agent, or independent contractor of Seller; or

 

(ii)     become aware of any potential material loss of customers, suppliers, or volume or profitability of the Marketing/Retail Business.

 

(k)          Taxes; Contributions. All federal, state, local, and foreign tax returns required to be filed by Seller have been filed on a timely basis, all of which returns are correct and complete, and all taxes due and payable on or before the Effective Date (including but not limited to any general-excise taxes and surcharges) by Seller have been paid. There are no threatened claims or claims pending against Seller for past-due taxes, and there are not now any matters under discussion with federal, state, local, or foreign authorities relating to any additional taxes or assessments against Seller. All taxes and other assessments and levies which Seller is or has been required by law to withhold or to collect have been duly withheld and collected, and have been timely paid to the proper governmental authorities. All contributions and payments for workers’ compensation, unemployment compensation, and the like which Seller has been required by law to make or pay have been duly made or paid.

 

(l)           Employee Benefit Plans. With respect to the Marketing/Retail Business, except as listed on Schedule 6(l), Seller has no written or oral union contracts, employment contracts, consulting agreements, severance agreements, or any other binding agreements relating to the employment of any of its employees, or any pension, “ERISA”, retirement, profit-sharing, incentive-compensation, bonus, option, or other benefit plans. 

 

(m)         Union Activity. During the seven years preceding the Effective Date, there has not been any union activity, attempted union organization, or the threats of the same with respect to the Marketing/Retail Business.

 

(n)          Overtime, Back Wages, Vacation, and Minimum Wages. To Seller’s knowledge, no present or former employee of Seller has any valid and enforceable claim (whether under federal or state law) under any employment agreement, or otherwise, with respect to the Marketing/Retail Business, for: (i) overtime pay, other than overtime pay for the current payroll period; (ii) wages or salary for any period other than the current payroll period; (iii) vacation or time off (or pay in lieu thereof), other than that earned in respect of the previous twelve (12) months; or (iv) any violation of any statute, ordinance, or regulation relating to minimum wages or maximum hours of work.

 

Page 7

 

 

(o)         Discrimination, Occupational Safety, and Other Statutes and Regulations. To Seller’s knowledge, no person or party (including but not limited to governmental agencies of any kind) has asserted any claim or has any basis for any valid and enforceable action or proceeding against Seller, with respect to the Marketing/Retail Business, arising out of any breach or violation by Seller of any statute, ordinance, or regulation relating to discrimination in employment or employment practices of occupational safety and health standards (including but not limited to The Occupational Safety and Health Act, The Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, and the Americans With Disabilities Act of 1990, as amended).

 

(p)         Workers’ Compensation. Except as otherwise disclosed to Buyer in writing, with respect to the Marketing/Retail Business, Seller has not received any workers’ compensation claims in the past five (5) years.

 

(q)         WARN Act. Closing under this Agreement and Seller’s terminating employment of the Marketing/Retail Employees at Closing will not trigger any notice requirements under the Worker Adjustment and Retraining Notification Act (WARN) or any other similar state law, rule, or regulation.

 

(r)          Patents, Trade Names, and Trademarks. None of the past or present employees, officers, directors or shareholders of Seller have any rights in any Intellectual Property that is currently used by Seller for the Marketing/Retail Business. Seller has not granted any outstanding license or other rights to Intellectual Property owned by or licensed to it, and is not liable, and has not made any contract or arrangement whereby it may become liable, to any person for any royalty or other compensation for the use of any Intellectual Property. The Intellectual Property does not infringe, and Seller has received no notice that it infringes, on any intellectual-property rights of others. Seller has the unrestricted right to use all Intellectual Property listed on Schedule 1(a) in connection with the Marketing/Retail Business.

 

(s)          Finders’ Fee. Except as otherwise disclosed to Buyer in writing, Seller has not dealt with any broker, agent, or finder (as applicable, “Broker”) or incurred any liability for brokerage fees, finders’ fees, agents’ commissions, or other similar forms of compensation in connection with this Agreement.

 

(t)          Business Relations. Seller has not received any oral or written notification, and is not otherwise aware of any circumstances, which would cause Seller to believe that the Marketing/Retail Business’ business relationships with any customer, sales representative, employee, dealer, or supplier would be adversely affected by this Agreement or the consummation of Closing.

 

(u)          Disclosure. No representation or warranty made by Seller in this Agreement contains any untrue statement of material fact or omits to state a material fact required to make the statements made in this Agreement inaccurate or misleading.

 

7.            Survival. The representations and warranties of the Parties contained in this Agreement or in any certificate or document delivered in connection with this Agreement will survive the execution of this Agreement, Closing, and any investigation made by the Parties and shall remain in effect for two years following the Closing Date.

 

Page 8

 

 

8.            Knowledge of Inaccurate Representations or Warranties. If Buyer or Buderim Parent has actual knowledge that any representation or warranty made by Seller in this Agreement is not true before Closing, or if Seller has actual knowledge that any representation or warranty made by Buyer or Buderim Parent in this Agreement is not true before Closing, then Perty with such actual knowledge may:

 

(a)          elect to proceed with Closing with an equitable adjustment to the Shares; or

 

(b)          terminate this Agreement by giving written notice of such termination to the other Party or Parties, as applicable, whereupon: (i) if the falsity of a Party’s representation or warranty was due to the Party’s fraud, intentional misrepresentation, or bad faith, then such Party will reimburse the other Party or Parties for its or their due-diligence costs and expenses and reasonable attorneys’ fees incurred in the negotiation of this Agreement; and (ii) the Parties will be released from all of their respective obligations under this Agreement, except for those obligations which by the express terms of this Agreement are intended to survive.

 

9.            Covenants of Seller. Seller covenants and agrees with Buyer as follows:

 

(a)          Access to Information. From the Effective Date until Closing, Seller will provide Buyer and Buyer’s representatives (including legal counsel, accountants, and lenders) with full access during normal business hours, upon reasonable request, to all of Seller’s books and records (financial or otherwise), contracts, and properties. Before Closing, Buyer may from time to time conduct any inspections, reviews, and interviews regarding the Assets, Marketing/Retail Business, Marketing/Retail Office, and Marketing/Retail Employees in Buyer’s sole discretion. Seller will provide Buyer with all other documents, materials, and information which a reasonable purchaser would consider relevant or material to a decision to purchase the Assets or the Marketing/Retail Business.

 

(b)          Conduct of the Marketing/Retail Business until Closing. From the Effective Date until Closing, except for actions taken with the prior written consent of Buyer (which consent Buyer may withhold, delay, or condition in Buyer’s reasonable discretion), Seller will conduct the Marketing/Retail Business in the ordinary course, and will use its best efforts to keep the Marketing/Retail Business operations intact, to keep available the services of its present employees, and to preserve the goodwill of the Marketing/Retail Business’ customers, suppliers, and other business contacts. Seller will not take any action, or fail to take any action, that would reasonably be expected to materially or adversely affect the ongoing operation of the Marketing/Retail Business.

 

(c)          Maintenance of the Assets. From the Effective Date until Closing, Seller will maintain the physical Assets in customary repair, order, and condition.

 

Page 9

 

 

(d)          Creation of Liabilities, Obligations, and Liens. From the Effective Date until Closing, without Buyer’s prior written consent (which Buyer may withhold, delay, or condition in Buyer’s sole and absolute discretion), Seller will not, with respect to the Marketing/Retail Business: (i) create, incur, assume, guarantee, or otherwise become liable with respect to any indebtedness for any reason whatsoever, except in the ordinary course of business; or (ii) incur or suffer the incurrence of any lien or other encumbrance on any Asset.

 

(e)          No Solicitation. From the Effective Date until Closing, Seller will not solicit or accept from any other person or entity any offer or expression of interest in or with respect to an acquisition, combination, or similar transaction involving the Marketing/Retail Business or the Assets, subject to any fiduciary obligations of the directors to consider any unsolicited offer.

 

(f)          Notification of Buyer. From the Effective Date until Closing, Seller will promptly notify Buyer, in writing, of: (i) any new, or changed information regarding or pertaining to the Assets; and (ii) any threatened lawsuit or claim against Seller; and (iii) any adverse change, or any projected or threatened adverse change, in the Assets or the Marketing/Retail Business.

 

(g)          Name Change. On the Closing Date, Buyer will grant Seller and its affiliates, including RH Parent, a non-exclusive license to use the trademarks and trade names “Royal Hawaiian Orchards” and “Royal Hawaiian Macadamia” in connection with the remaining business of Seller and the businesses of Seller’s affiliates for a transition period not to exceed one year from the Closing Date. Seller and its affiliates, including RH Parent, will change their names to names that are not likely to cause any confusion with and are dissimilar to “Royal Hawaiian Orchards.”

 

(h)          Further Assurances. Seller will execute and deliver to Buyer any and all documents, instruments, and agreements reasonably requested by Buyer in addition to those expressly provided for in this Agreement that may be necessary or appropriate to effectuate the provisions of this Agreement and the other documents to be delivered in connection with this Agreement, whether on or after the Closing Date.

 

10.           Representations and Warranties of Buyer and Buderim Parent. Buyer and Buderim Parent, as applicable, make the following representations and warranties to Seller effective as of the Effective Date and the Closing Date:

 

(a)          Organization. Buyer is a limited liability company duly organized, validly existing, and in good standing under the laws of Hawaii. Buderim Parent is a corporation duly organized, validly existing, and in good standing under the laws of Australia.

 

(b)          Authority. Each of Buyer and Buderim Parent has all necessary limited liability company or corporate power and authority to execute, deliver, and perform this Agreement and to consummate Closing. The execution, delivery, and performance of this Agreement by each of Buyer and Buderim Parent and the consummation by each of Buyer and Buderim Parent of the Closing does not violate the terms or conditions of organizational documents of either Buyer or Buderim Parent or any amendments thereto, any judicial or administrative order or process, law, rule or regulation applicable to Buyer or Buderim Parent or any of their properties or assets, or any agreement or instrument to which Buyer or Buderim Parent is a party or by which Buyer or Buderim or any of their properties or assets is bound. This Agreement and the consummation of Closing have been duly and effectively authorized by all necessary limited liability or corporate actions, as applicable. This Agreement is a valid and binding obligation of each of Buyer and Buderim Parent, enforceable in accordance with its terms.

 

Page 10

 

 

(c)          No consents. No consents, approvals, orders, registrations, declarations, filings or authorizations are required on the part of Buyer of Buderim Parent for or in connection with the execution and delivery of this Agreement or the consummation of Closing by Buyer or Buderim Parent.

 

(d)          Capitalization.

 

At February 28, 2018:

 

(i)      Buderim Parent’s authorized capital stock consisted of 74,801,618 ordinary shares issued;

 

(ii)     There were outstanding options to purchase an aggregate of approximately 3,000,000 ordinary shares;

 

(iii)    There was convertible debt outstanding which can be converted into 37,500,000 ordinary shares;

 

(iv)    All ownership interests of Buyer are owned by Buderim Parent and there are no options or rights to purchase ownership interests of Buyer outstanding;

 

(v)     When issued to Seller in accordance with this Agreement, the Shares will be duly authorized, validly issued, fully paid and non-assessable.

 

(e)          ASX Reports and Financial Statements. Since December 31, 2015, Buderim Parent has filed all forms, reports and other documents (“Buderim Parent Reports”) required to be filed by Buderim Parent, pursuant to the Corporations Act 2001 (the “Corporations Act”) and other relevant laws, with the Australian Securities Exchange (“ASX”). As of their respective dates, the Buderim Parent Reports complied in all material respects with the applicable requirements of the Australian securities laws and the rules and regulations promulgated thereunder and the rules and regulations of ASX applicable to such Buderim Parent Reports and, except to the extent that information contained in any Buderim Parent Report has been revised or superseded by a later Buderim Parent Report filed and publicly available prior to the date of this Agreement, none of the Buderim Parent Reports contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of Buderim Parent included in the Buderim Parent Reports complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the ASX and the Corporations Act with respect thereto, were prepared in accordance with generally accepted accounting principles (except, in the case of unaudited statements, as permitted by the Corporations Act) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and presented fairly in all material respects the consolidated financial position of Buderim Parent and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the Buderim Parent Reports, neither Buderim Parent nor any of the Buderim Parent subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by generally accepted accounting principles to be set forth on a consolidated balance sheet of Buderim Parent and its consolidated subsidiaries or in the notes thereto and which, individually or in the aggregate, would reasonably be expected to have a material adverse effect on the financial condition, results of operations or business of Buderim Parent.

 

Page 11

 

 

(f)          Absence of Certain Changes. Except as set forth in the Buderim Parent Reports filed with ASX prior to the date hereof, since June 30, 2017, there has not been any material adverse change in the financial condition, results of operations or business of Buderim Parent.

 

(g)          Finders’ Fee. Except as otherwise disclosed to Seller in writing, Buyer has not dealt with any Broker or incurred any liability for brokerage fees, finders’ fees, agents’ commissions, or other similar forms of compensation in connection with this Agreement.

 

(h)          Disclosure. No representation or warranty made by Buyer or Buderim Parent in this Agreement contains any untrue statement of material fact or omits to state a material fact required to make the statements made in this Agreement inaccurate or misleading.

 

11.           Buyer’s Election Regarding Assumed Contracts. Buyer will give written notice to Seller before Closing of all the contracts and agreements which Buyer wishes to assume under this Agreement at Closing (collectively, “Assumed Contracts”). Buyer may elect to assume none, any number, or all of Seller’s contracts in Buyer’s sole and absolute discretion. If Buyer does not provide the written election of Assumed Contracts, Buyer will be deemed to have elected to assume all of Seller’s contracts and agreements (except for any Excluded Assets).

 

12.           Conditions Precedent to Closing.

 

(a)          Conditions to Obligations of Buyer and Buderim Parent. The obligation of Buyer and Buderim Parent to proceed with Closing is subject to the satisfaction at or before the Closing Date of the following conditions:

 

(i)      The landlord of the Marketing/Retail Office lease has consented in writing to the assignment by Seller to Buyer of the Marketing/Retail Office lease with a form of consent and upon terms satisfactory to Buyer in Buyer’s reasonable discretion.

 

(ii)     The Marketing/Retail Employees have each entered into written employment agreements with Buyer on terms acceptable to Buyer in Buyer’s reasonable discretion.

 

(iii)     Seller has performed and provided all Seller’s Closing Deliveries (defined below).

 

Page 12

 

 

(iv)     All representations and warranties of Seller in this Agreement are true at and as of the Closing Date with the same effect as though such representations and warranties were made at and as of the Closing Date.

 

(v)      There have been no adverse or negative changes or updates to the Assets or Marketing/Retail Business since the Effective Date.

 

(vi)     No action, suit, or proceeding before any court or any governmental body or authority pertaining to this Agreement, the Assets, or the transactions contemplated by this Agreement has been instituted or threatened on or before Closing.

 

(vii)     Seller has secured consents of all third parties necessary for Seller to execute, deliver, and perform this Agreement.

 

(viii)    Seller has performed and complied, in all material respects, with all other obligations and covenants required by this Agreement to have been performed or complied with by Seller before or on the Closing Date.

 

(b)          Conditions to Seller’s Obligations. Seller’s obligation to proceed with Closing is subject to the satisfaction at or before the Closing Date of the following conditions:

 

(i)      Buyer and Buderim Parent have performed and provided all Buyer’s Closing Deliveries (defined below).

 

(ii)     All representations and warranties of Buyer and Buderim Parent in this Agreement are true at and as of the Closing Date with the same effect as though such representations and warranties were made at and as of the Closing Date.

 

(iii)     There have been no adverse or negative changes or updates to the business of Buderim Parent affecting the value of the Shares since the Effective Date.

 

(iv)     No action, suit, or proceeding before any court or any governmental body or authority pertaining to this Agreement, the Assets, or the transactions contemplated by this Agreement has been instituted or threatened on or before Closing.

 

(v)      Buyer and Buderim Parent have performed and complied, in all material respects with all obligations and covenants required by this Agreement to have been performed or complied with by Buyer before or on the Closing Date.

 

(vi)     American AgCredit, PCA has consented to the sale of the Assets pursuant to this Agreement and the release of the Assets from it’s UCC security interest.

 

(c)          Failure of Condition Precedent. If any condition precedent set forth in this Section 12 Conditions Precedent to Closing is not satisfied by the final deadline for Closing under this Agreement, the Party whose condition was not met may terminate this Agreement by giving written notice to the other Party, in which case, no Party will have any further rights or obligations under this Agreement (except for those rights and obligations which are intended to survive termination of this Agreement).

 

Page 13

 

 

13.           Prorations and Adjustments.

 

(a)          Generally. All items of revenue and expense with respect to the Assets and the Marketing/Retail Business applicable to the period of time before and after the Closing Date, will be allocated between Seller and Buyer on an accrual basis. Seller will be entitled to all revenue and will be responsible for all expenses for the period of time up to 11:59 P.M. Hawaii Standard Time on the day immediately preceding the Closing Date (“Adjustment Point”), and Buyer will be entitled to all revenue and will be responsible for all expenses for the period of time after the Adjustment Point. All prorations will be made on the basis of the actual number of days in the year and month in which the Closing occurs or in the period of computation.

 

(b)          Post-Closing Adjustments. As soon as reasonably practicable after Closing, but in no event later than 180 days after Closing (“True-Up Period”), Seller and Buyer, acting reasonably and in good faith, will reconcile between themselves the amounts to be prorated pursuant to this Agreement, using any updated information with respect to matters then available. During the True-Up Period each Party will provide the other with reasonable access to the books, records, computer runs, and other documents relating to the Assets and the Marketing/Retail Business which contain information relevant to completing the reconciliation. The Party in whose favor any original incorrect adjustment or error was made will pay to the other Party the sum necessary to correct such previous incorrect adjustment or error within 10 Business Days of notice from the other Party. “Business Day” means any day other than Saturday, Sunday, federal holiday, or Hawaii State holiday (as defined in Hawaii Revised Statutes § 8-1). This Section will survive Closing.

 

(c)          Inventory Adjustments. If the net value of the inventory included in the Assets at the Closing Date, determined as if a balance sheet of the Marketing/Retail Business were prepared on that date is (i) less than $900,000, then Seller shall convey an amount of bulk kernel to Buyer in an amount equal in value to the net difference between $900,000 and the net value of the inventory conveyed at Closing; (ii) greater than $1,000,000, then Buyer shall assume an account payable from Seller to RH Parent for bulk kernel in an amount equal to the difference between $1,000,000 and the net value of the inventory conveyed at Closing, and (iii) equal to or greater than $900,000 and equal to or less than $1,000,000, then no adjustment shall be made with respect to inventory.

 

14.           Seller’s Closing Deliveries. In this Agreement, “Seller’s Closing Deliveries” means Seller’s obligations under this Section.

 

(a)          At least two Business Days before Closing, Seller will deliver the following to Seller’s attorney, all in executed or other final form, as applicable:

 

(i)      The Subscription Agreement.

 

(ii)     The Supply Agreement.

 

(iii)     The Processing Agreement.

 

(iv)     A Bill of Sale for the physical Assets substantially in the form attached to this Agreement as Exhibit 14(a)(iv) (“Bill of Sale”).

 

Page 14

 

 

(v)      An Assignment and Assumption of Intangible Property transferring title to the intangible Assets substantially in the form attached to this Agreement as Exhibit 14(a)(v) (“Assignment/Assumption”).

 

(vi)     All instruments, documents, and forms required by the proper licensing authority to transfer and assign all of the Marketing/Retail Business’ Intellectual Property to Buyer (collectively, “Intellectual-Property Transfer Documents”).

 

(vii)     A certificate from Seller, dated as of the Closing Date, certifying that: (A) all of the representations and warranties of Seller made in this Agreement are true and correct as of the Closing Date; and (B) Seller has performed and complied, in all material respects, with all of its obligations and covenants under this Agreement.

 

(viii)    Certificates of Good Standing from the Secretary of State of Delaware, Department of Commerce and Consumer Affairs of the State of Hawaii, and each other state in which Seller is required to be qualified to do business as a result of the operations of the Marketing/Retail Business, all dated no earlier than ten (10) days before the Closing Date.

 

(b)         On the Closing Date, Seller will deliver possession of all the physical Assets to Buyer, at the locations requested by Buyer and at the times requested by Buyer.

 

(c)          On the Closing Date, Seller will terminate the Marketing/Retail Employees in accordance with all applicable laws and regulations.

 

15.           Buyer’s Closing Deliveries. In this Agreement, “Buyer’s Closing Deliveries” means the obligations of Buyer and Buderim Parent under this Section. At least two Business Days before Closing, Buyer will deliver the following to Buyer’s attorney, all in executed or other final form, as applicable:

 

(a)          The Subscription Agreement.

 

(b)          The Supply Agreement.

 

(c)          The Processing Agreement.

 

(d)          The Assignment/Assumption.

 

16.           Closing.

 

(a)          “Closing” means the consummation of the transactions contemplated by this Agreement. “Closing Date” means the date that Closing occurs, which will be no later than ten (10) Business Days after the Effective Date.

 

(b)          At Closing, each Party’s attorney will deliver to the other Party’s attorney the fully executed and compiled Closing documents held by such attorney, and Buyer’s attorney shall file the Intellectual-Property Transfer Documents with the proper agencies.

 

Page 15

 

 

17.           Post-Closing.

 

(a)          Payment of Liabilities. To preserve for Buyer the opportunity to maintain good relations with Seller’s creditors and prevent the assertion of claims for nonpayment against Buyer, Seller will pay or otherwise satisfy and discharge promptly within 10 Business Days after the Closing Date (or earlier, if due earlier), all accounts payable and other liabilities owed to Seller’s creditors with respect to the Marketing/Retail Business.

 

(b)          Collection of Receivables. Seller will be responsible for collecting Seller’s own accounts receivable after Closing, and Buyer will have no obligation to participate in Seller’s efforts to do so. Seller will collect its accounts receivable in a manner that will not (i) cause or result in a claim against Buyer or the Assets; (ii) cause or result in a third party’s declaring a default under, or threatening termination of, any Assumed Contract; and (iii) will not damage or negatively affect the reputation or customer relations of the Marketing/Retail Business, Buyer, or Buyer’s affiliates.

 

(c)          Notice to Seller’s Creditors. If, following the Closing Date, Seller incurs liabilities to creditors with whom Seller conducted business before the Closing Date (for example, utility companies and credit-card companies), Seller will promptly after the Closing Date inform such creditors of a mailing address, other than an address of the Marketing/Retail Business, to which invoices should be sent. Seller will promptly pay such creditors all amounts properly due.

 

(d)          Noncompetition.

 

(i)     For a period of three years after the Effective Date of this Agreement, Seller will not itself, and will not permit any entity in which Seller directly or indirectly has any ownership interest or management right of any kind to, directly or indirectly:

 

(A)     advertise, market, or sell macadamia nuts to retail consumers;

 

(B)     own, manage, operate, control, conduct, promote, be employed by, solicit sales for, invest in (other than an investment of less than 5% in a public company), participate in, advise, consult with, or be otherwise connected with, in whole or in part, a business that is similar to or in competition with the Marketing/Retail Business (a “Competing Business”); provided, however, that a Competing Business shall not the sale of nuts to or processing of nuts for third parties include a business that is engaged in the snack food industry which does not market macadamia nuts or macadamia nut based products;

 

(C)     have any ownership or management interest in, or provide consulting or similar services to, a Competing Business, directly or through a corporate body, trust, partnership, joint venture, or any other entity, as a trustee, principal, agent, shareholder, unit holder, independent contractor, consultant, indirect financing or advisor, or in any other capacity;

 

(D)     provide any person or entity with direct or other assistance which assists that person or entity to engage in a Competing Business;

 

Page 16

 

 

(E)     divert or attempt to divert from Buyer’s operation of the Marketing/Retail Business any customers, clients, vendors, suppliers, contractors, employees, or business; or

 

(F)     take any action that could potentially or actually does adversely affect Buyer’s operation of the Marketing/Retail Business.

 

Notwithstanding the foregoing, nothing in this Agreement or this Section shall preclude Seller or RH Parent from selling nuts to or processing nuts for a third party on an arm’s length basis, whether or not such third party is engaged in a Competing Business.

 

(ii)     Seller acknowledges and agrees that if Seller engages in or permits activities reserved for Seller in the Noncompetition Section of this Agreement, Buyer will not receive the benefit of the bargain in this Agreement and that Buyer will suffer irreparable injury. Seller represents that Seller’s other businesses are such that observing the obligations in the Noncompetition Section of this Agreement will not cause Seller any undue hardship or unreasonably interfere with Seller’s ability to operate a profitable business. 

 

(e)          Indemnification.

 

(i)     Indemnification of Buyer. Seller will indemnify, defend (with counsel of Buyer’s choosing), and hold harmless Buyer against any Buyer’s Damages. “Buyer’s Damages” means any claims, actions, demands, losses (including but not limited to any diminution in value), costs, expenses (including but not limited to attorneys’ fees), liabilities, penalties, and damages, including counsel fees incurred in attempting to avoid the same or oppose the imposition thereof, resulting to Buyer from: (A) any inaccurate representation made by Seller in this Agreement or in any certificate or document delivered in connection this Agreement; (B) the breach of any warranty made by Seller in this Agreement or in any certificate or document delivered in connection this Agreement; (C) a breach or default in the performance by Seller of any of the covenants to be performed by it under this Agreement; (D) the ownership, operation or control of the Assets at or prior to the Closing Date; (E) the imposition of any and all federal, state, or local taxes arising out of, resulting from, or relating to Seller’s operation of the Marketing/Retail Business on or before the Closing Date; (F) the imposition of any and all federal, state, or local taxes based on the income of Seller relating to Seller’s sale of the Assets; and (G) claims relating to Seller’s or Seller’s predecessors’ release, generation, treatment, transport, recycling, or storage of any hazardous substance or arising out of or attributable to Seller’s or Seller’s predecessors’ arrangements for any of the foregoing; provided, however, that in no event will the aggregate liability of Seller exceed the aggregate consideration payable hereunder.

 

Page 17

 

 

(ii)     Indemnification of Seller. Buyer and Buderim Parent, as applicable, will indemnify, defend (with counsel of Seller’s choosing) and hold harmless Seller at all times from and after the Closing Date, against Seller’s Damages. “Seller’s Damages” means any claims, actions, demands, losses (including but not limited to any diminution in value), costs, expenses, liabilities, penalties, and damages, including counsel fees incurred in attempting to avoid the same or oppose the imposition thereof, resulting to Seller from: (A) any inaccurate representation made by such Party in this Agreement or in any certificate or document delivered in connection this Agreement; (B) the breach of any warranty made by such Party in this Agreement or in any certificate or document delivered in connection this Agreement; (C) a breach or default in the performance by such Party of any of the covenants to be performed by it under this Agreement; (D) the ownership, operation or control of the Assets at or prior to the Closing Date; and (E) the imposition of any and all federal, state, or local taxes arising out of, resulting from, or relating to Seller’s operation of the Marketing/Retail Business from and after the Closing Date; provided, however, that in no event will the aggregate liability of such Parties exceed the aggregate consideration payable hereunder.

 

(f)          Books and Records. 

 

(i)     Following the Closing Date until the fourth anniversary of the Closing Date, each Party will afford to the other Party, its counsel and its accountants, during normal business hours, reasonable access to the books, records and other data in its possession relating to Seller, the Assets or the Liabilities with respect to periods prior to the Closing Date and the right to make copies and extracts therefrom, to the extent that such access may be reasonably required by the requesting Party (i) to prepare any tax return or to respond to any audit or other examination by any taxing authority, (ii) to financial statements, (iii) to facilitate the investigation, litigation and final disposition of any claims which may have been or may be made by or against any Party or its affiliates and (iv) for any other reasonable business purpose.

 

(ii)     Each Party agrees that for a period of not less than four (4) years following the Closing Date, it shall not destroy or otherwise dispose of any of the books and records in its possession relating to Seller, the Assets or the Liabilities with respect to periods prior to the Closing Date. Each Party shall have the right to destroy all or part of such books and records after the fourth anniversary of the Closing Date or, at any earlier time, by giving each other Parties hereto thirty (30) days’ prior written notice of such intended disposition and by offering to deliver to the other Parties, at the other Parties’ expense, custody of such books and records as such Party may intend to destroy.

 

(g)          Sales Taxes. Buyer shall be responsible for any and all sales, use and other similar taxes payable with respect to the purchase of the Assets.

 

(h)          Survival. The Parties’ respective rights and obligations set forth in this Post-Closing Section will survive Closing.

 

18.           Confidentiality.

 

(a)          Except as otherwise deemed necessary or advisable to comply with applicable law:

 

(i)     the Parties will keep the contents of this Agreement confidential;

 

(ii)     no Party will make a publicity or press release to the general public with respect to this Agreement without the prior written consent of the other Party; and

 

Page 18

 

 

(iii)     after Closing, the foregoing prohibition as to publicity will not apply to the simple fact that Closing has occurred, but will continue to apply to all other aspects of this Agreement.

 

(b)          The Parties’ respective rights and obligations under this Confidentiality Section will survive Closing or earlier termination of this Agreement.

 

19.           Damage of Assets. If any material portion of the Assets are substantially damaged or destroyed or their value decreases in a material manner before Closing, then Buyer may, at Buyer’s option: (a) elect to continue this Agreement in full force and effect, in which case Seller will assign to Buyer all rights of Seller’s insurance recovery due by reason of said damage, destruction, or other reduction in value, and pay to Buyer the cost of any deductible (which obligation will survive Closing); or (b) elect to terminate this Agreement, in which case no Party will have any further rights or obligations under this Agreement except as otherwise expressly provided in this Agreement.

 

20.           Miscellaneous.

 

(a)          Notices.

 

(i)     Unless otherwise stated in this Agreement, notices must be in writing and delivered in person or sent by email, facsimile, or certified or registered mail with postage prepaid and return receipt requested, to the person entitled to receive the notice at the last mailing address, fax number, or email address provided in writing by that person. As of the Effective Date, the last contact information provided by the Parties is below their signatures at the end of this Agreement.

 

(ii)     Notices given by personal delivery will be deemed given on the date of delivery. Notices given by email will be deemed given when sent unless the sending Party is notified that the email was not received or the email or address is invalid. Notices given by facsimile will be deemed given as stated on the sender’s fax receipt. Notices given by certified or registered mail will be deemed given on the date of delivery as established by U.S. Post Office return receipt.

 

(b)          Headings and Sections. All section headings in this Agreement are for convenience only. They are not a part of this Agreement and do not define, limit, extend, or describe the scope or intent of any provisions.

 

(c)          Definitions. The bolding, capitalizing of initial letters, and enclosing of a word or phrase in quotation marks in this Agreement means that word or phrase is defined by the surrounding text, as suggested by the context (each a “Defined Term”). Unless otherwise stated or logically required by the context, each use of a Defined Term with capitalized initial letters but without bolding and quotation marks incorporates the corresponding definition. An uncapitalized word or phrase is not a Defined Term and retains its common or legal term-of-art meaning, as applicable, notwithstanding that the word or phrase may contain the same text as a Defined Term.

 

Page 19

 

 

(d)          Pronouns and Plurals. Whenever the context may require, any pronoun used in this Agreement includes the corresponding masculine, feminine, or neuter forms. The singular form of Defined Terms, nouns, pronouns, and verbs includes the plural, and vice versa.

 

(e)          Further Action. The Parties will execute and deliver all documents, provide all information, and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.

 

(f)          Assignment and Delegation. Seller may not assign this Agreement, delegate any duty under this Agreement, or assign any right under this Agreement, and any attempt to do so will be void. Buyer may freely assign this Agreement, delegate any duty under this Agreement, or assign any right under this Agreement to any one or more affiliates of Buyer, with or without notice to Seller.

 

(g)          Binding Effect. This Agreement binds and inures to the benefit of the Parties and their successors, legal representatives, and permitted assignees.

 

(h)          Integration of Entire Agreement. This Agreement is the final, entire agreement among the Parties pertaining to the subject matter of this Agreement, and supersedes all previous agreements and understandings pertaining to this Agreement or its subject matter (including but not limited to any term sheets exchanged between the Parties). The recitals (i.e., the background information provided after the opening paragraph of this Agreement), Exhibits, and Schedules referenced in this Agreement are a part of this Agreement. 

 

(i)           No Waiver. A failure by a Party to require strict performance of any provision of this Agreement, or to exercise any right or remedy arising because of a breach, is not a waiver of that breach or any other covenant, duty, agreement, or condition. Any extension or waiver by any Party of any provision in this Agreement will be valid only if set forth in writing signed by that Party.

 

(j)            Amendment. This Agreement may not be amended or modified except by a written instrument executed by all of the Parties.

 

(k)          Severability. If any provision of this Agreement is determined to be invalid, illegal, or unenforceable in any respect for any reason, the validity, legality, and enforceability of that provision in every other respect and the remaining provisions of this Agreement will not, at the election of the Party for whose benefit the provision exists, be in any way affected or impaired.

 

(l)            Applicable Law. This Agreement will be governed by the laws of the State of Hawaii without regard to the choice of law or principles of conflict of law.

 

(m)          Jurisdiction. The Parties will bring all actions in law, equity, or otherwise arising under this Agreement (or related to the transactions contemplated in this Agreement), exclusively in the federal or state courts sitting in Honolulu, Hawaii, and in no other jurisdiction or venue. Each Party consents to the jurisdiction of such courts. Each Party further agrees that personal jurisdiction over that Party may be effected by service of process by registered or certified mail addressed to the last address that Party provided to the other Parties, and that when so made will be as if served upon that Party personally within the State of Hawaii.

 

Page 20

 

 

(n)          Attorneys’ Fees and Costs. If any Party institutes an arbitration, lawsuit, action, or other proceeding of any nature in connection with any controversy arising out of this Agreement, or to interpret or enforce any rights under this Agreement, the prevailing Party may recover all expenses the prevailing Party incurs in enforcing this Agreement, including but not limited to attorneys’ fees, costs, and expenses of the arbitration, suit, action, or other proceeding. Any judgment or order entered in such action will contain a specific provision providing for the recovery of attorneys’ fees and costs incurred in enforcing such judgment and an award of prejudgment interest from the date of the breach at the maximum rate of interest allowed by law. The prevailing Party will be determined by the court, arbiter, or other decision maker based on an assessment of which Party’s major arguments made or positions taken in the proceedings could fairly be said to have prevailed over the other Party’s major arguments or positions on major disputed issues. 

 

(o)          Survival. In addition to any provisions of this Agreement specifically designated to survive Closing or termination of this Agreement, the Parties acknowledge and agreement their respective rights and obligations under the following Sections of this Agreement will survive Closing or earlier termination of this Agreement: Sections 2, 6, 7, 9(g),9(h), 10, 13(b), 17, 18, 19, and 19.

 

(p)          Legal Representation. Each Party acknowledges and represents that it was represented by its own legal counsel in the negotiation and execution of this Agreement and had the opportunity to seek advice regarding its legal rights from such counsel.

 

(q)          Drafting. This Agreement is the result of negotiation between sophisticated parties. No provision of this Agreement may be interpreted for or against any Party on the basis that it drafted such provision, and no presumption or burden of proof may arise disfavoring or favoring any Party because of the authorship of any of the provisions of this Agreement.

 

(r)           Counterparts. This Agreement may be executed in counterparts. Signature pages may be delivered personally, by mail, or electronically.

 

Signature page follows.

 

Page 21

 

 

Each Party is executing this Agreement effective as of the Effective Date.

 

	
			BUYER:

			 

			MacFarms, LLC,

			By Buderim Ginger America, Inc., 

			its Sole Member

				 	
			SELLER:

			 

			Royal Hawaiian Macadamia Nut, Inc.

				 
	 	 	 	By:	  /s/ Brad Nelson	 
	 	 	 	Printed Name:  Brad Nelson	 
	By:	/s/ Dennis Lin	 	As:  President	 
	
			Printed Name:  Dennis Lin

			Its:  Director

				 	
			Address for Notice Purposes:

				 

 

	
			BUDERIM PARENT

			 

			Buderim Group Limited

				 	
			Royal Hawaiian Macadamia Nut, Inc.

			c/o Royal Hawaiian Resources, Inc.

			Attn: Brad Nelson

			390 Interlocken Crescent, Suite 350

			Broomfield, Colorado 80021

			
	By:	/s/ Dennis Lin	 	Email: bnelson@rhrnut.com
	Printed Name:	Dennis Lin	 	 
	As:	Director	 	With copy to:
	 	 	 	Wanda J. Abel
	 	 	 	Davis Graham & Stubbs LLP
	By:	/s/ Albert Tse	 	1550 Seventeenth Street, Suite 500
	Printed Name:	Albert Tse	 	Denver, Colorado 80202
	As:	Director	 	Email: wanda.abel@dgslaw.com

 

	
			Address for Notice Purposes:

			 

			MacFarms, LLC

			Attn: Andrew Bond

			Level 5, 303 Coronation Drive

			Milton QLD 4064

			AUSTRALIA 

			Email: abond@buderimginger.com

			 

			With copy to:

			Bart W. Howk, Esq.

			Bays Lung Rose & Holma

			700 Bishop St., Ste. 900

			Honolulu, HI 96813

			Email: bhowk@legalhawaii.com

				
			 

			 

			 

			 

			

			

			

			 

			 

			 

			 

			

 

Signature Page to Asset Purchase Agreement

 

 

 

List of Schedules and Exhibits

 

Schedules

 

Schedule 1(b):  Partial List of Assets

Schedule 1(c):  Excluded Assets

Schedule 2:  Partial List of Liabilities Buyer is Not Assuming

Schedule 6(f):  Contracts that Buyer May Elect to Assume

Schedule 6(l):  Agreements with Marketing/Retail Employees

 

 

Exhibits

 

Exhibit 3(a):  Form of Subscription Agreement

Exhibit 4:  Form of Supply Agreement

Exhibit 5:  Form of Processing Agreement

Exhibit 14(a)(iv):  Form of Bill of Sale

Exhibit 14(a)(v):  Form of Assignment and Assumption of Intangible Property

 

 

 

 

Schedule 1(b)

to Asset Purchase Agreement

 

Partial List of Assets

 

 

	 	
			●

				
			Material Contracts

			

	 	
			o

				
			Marketing/Retail Office lease is a material contract that requires consent to be assigned to Buyer

			

	 	
			o

				
			Agreements with Brokers for key customers – Costco, Walmart

			

	 	
			o

				
			Distribution Warehouse Agreement

			

	 	
			●

				
			All Customers

			

	 	
			●

				
			Trademark

			

	 	
			o

				
			Royal Hawaiian Orchards

			

	 	
			o

				
			Live Long. Live Well. Live Aloha.

			

	 	
			o

				
			Royal Hawaiian Macadamias

			

	 	
			●

				
			Inventory

			

	 	
			o

				
			Ingredients

			

	 	
			o

				
			Packaging

			

	 	
			o

				
			Shipping and Cartons

			

	 	
			o

				
			Shipping Supplies

			

	 	
			o

				
			Finished Goods Savory

			

	 	
			o

				
			Finished Goods Crunch

			

	 	
			o

				
			Finished Goods Dark Chocolate

			

	 	
			o

				
			Finished Goods Macadamia Butter

			

	 	
			o

				
			Finished Goods Singles

			

	 	
			●

				
			All print plates and dyes, assembly

			

 

 

 

 

Schedule 1(c)

to Asset Purchase Agreement

 

Excluded Assets

 

 

	 	
			●

				
			Packaging related to bulk shipments

			

 

 

 

 

Schedule 2

to Asset Purchase Agreement

 

Partial List of Liabilities Buyer is Not Assuming

 

 

 

 

Schedule 6(f)

to Asset Purchase Agreement

 

Contracts that Buyer May Elect to Assume

 

 

 

 

Schedule 6(l) 

to Asset Purchase Agreement

 

Agreements with Marketing/Retail Employees

 

Letter Agreement with Scott Wallace

Consulting Agreement with Claude Weiller

 

 

 

 

Exhibit 3(a)

to Asset Purchase Agreement

 

Form of Subscription Agreement

 

(attached)

 

 

 

 

	Subscription Agreement	
	 	 
	between	
			Level 16, Waterfront Place

			1 Eagle Street

			Brisbane QLD 4000 Australia

			 

			T  +61 7 3338 7500  |  F  +61 7 3338 7599

			

 

 

Buderim Group Limited

ACN 010 978 800 

(Company)

 

 

and

 

 

Royal Hawaiian Orchards, L.P.

(Subscriber)

 

 

 

 

Draft dated __ March 2018

 

 

 

 

Table of contents

 

	
			List of Schedules and Exhibits

				
			23

			
	
			Schedule 1(b):  Partial List of Assets

				
			23

			
	
			Schedule 1(c):  Excluded Assets

				
			23

			
	
			Schedule 1(b)

				
			24

			
	
			Schedule 1(c)

				
			25

			
	
			1

				
			Definitions and interpretation

				
			2

			
	 	
			1.1

				
			Definitions

				
			2

			
	 	
			1.2

				
			Interpretation

				
			3

			
	
			2

				
			Subscription and issue

				
			4

			
	 	
			2.1

				
			Subscription Shares

				
			4

			
	 	
			2.2

				
			Rights and ranking

				
			4

			
	
			3

				
			Completion

				
			4

			
	 	
			3.1

				
			Time and place

				
			4

			
	 	
			3.2

				
			Actions by the Company

				
			4

			
	 	
			3.3

				
			Actions by the Subscriber

				
			5

			
	 	
			3.4

				
			Interdependency

				
			5

			
	 	
			3.5

				
			Termination

				
			5

			
	
			4

				
			Top-Up Right

				
			5

			
	 	
			4.1

				
			Grant

				
			5

			
	 	
			4.2

				
			Top-Up Shares

				
			5

			
	 	
			4.3

				
			Top-Up Price

				
			5

			
	 	
			4.4

				
			Diluting Event

				
			5

			
	 	
			4.5

				
			Lapse of Top-Up Right

				
			5

			
	 	
			4.6

				
			Compliance with terms of ASX Waiver

				
			6

			
	
			5

				
			Warranties

				
			6

			
	 	
			5.1

				
			Mutual representations and Warranties

				
			6

			
	 	
			5.2

				
			Company Warranty

				
			6

			
	
			6

				
			Notices

				
			6

			
	 	
			6.1

				
			Service of notices

				
			6

			
	 	
			6.2

				
			Effect of receipt

				
			6

			
	
			7

				
			General

				
			7

			
	 	
			7.1

				
			Legal costs

				
			7

			
	 	
			7.2

				
			Governing law and jurisdiction

				
			7

			
	 	
			7.3

				
			Severability

				
			7

			
	 	
			7.4

				
			Further steps

				
			7

			
	 	
			7.5

				
			Consents

				
			8

			
	 	
			7.6

				
			Rights cumulative

				
			8

			
	 	
			7.7

				
			Waiver and exercise of rights

				
			8

			
	 	
			7.8

				
			Amendment

				
			8

			
	 	
			7.9

				
			Assignment

				
			8

			
	 	
			7.1

				
			Counterparts

				
			8

			
	 	
			7.11

				
			Entire understanding

				
			8

			

 

 

Page 2

 

	This agreement is made on	2018

 

	
			between

				
			Buderim Group Limited ACN 010 978 800 of Level 5, 303 Coronation Drive, Milton, Queensland 4064 Australia (Company)

			
	 	 
	
			and

				
			Royal Hawaiian Orchards, L.P. 688 Kinoole Street, Suite 121, Hilo, Hawaii 96720 (Subscriber)

			

 

Recitals

 

	
			A

				
			Under the Asset Purchase Agreement, the Company agreed to purchase the marketing and retail business owned by an affiliate of the Subscriber (Acquisition). 

			

 

	
			B

				
			As consideration of the Acquisition, the Company has agreed to issue the Subscription Shares to the Subscriber on the terms and conditions of this agreement.

			

 

Now it is agreed as follows:

 

	1	Definitions and interpretation

 

	
			1.1

				
			Definitions

			

 

In this agreement:

 

Asset Purchase Agreement means an agreement dated 28 February 2018 between the Company and the Subscriber in relation to the Acquisition.

 

ASX Waiver means a waiver from ASX Listing Rule 6.18 in relation to the grant of the Top-Up Right on terms and conditions acceptable to the parties acting reasonably.

 

Business Day means:

 

	 	
			(a)

				
			for the purposes of receiving a Notice, a day which is not a Saturday, Sunday, public holiday or bank holiday in the city in which the Notice is to be received; and

			

 

	 	
			(b)

				
			for any other purposes, a day on which the banks are open for business in Brisbane, Queensland other than a Saturday, Sunday or public holiday in Brisbane, Queensland.

			

 

Closing has the meaning given to that expression in the Asset Purchase Agreement.

 

Completion means the issue of the Subscription Shares to the Subscriber under this Agreement.

 

Completion Date means the Closing Date as defined in the Asset Purchase Agreement.

 

Corporations Act means the Corporations Act 2001 (Cth).

 

 

Page 3

 

Encumbrance includes a security interest (within the meaning of PPSA), mortgage, charge, lien, restriction against transfer, encumbrance and other third party interest.

 

PPSA means the Personal Property Securities Act 2009 (Cth);

 

Relevant Percentage means 13.04348%.

 

Shares means ordinary fully paid shares in the capital of the Company.

 

Subscription Shares means 11,220,242 fully paid ordinary shares in the Company.

 

Top-Up Rights means the top-up right described in clause 4.1.

 

Warranties means each of the representations and warranties given under clause 5.

 

	
			1.2

				
			Interpretation

			
	 	 
	 	In this agreement, unless the context otherwise requires:

 

	 	
			(a)

				
			a reference to:

			

 

	 	
			(i)

				
			one gender includes the others;

			

 

	 	
			(ii)

				
			the singular includes the plural and the plural includes the singular;

			

 

	 	
			(iii)

				
			a recital, clause, schedule or annexure is a reference to a clause of or recital, schedule or annexure to this agreement and references to this agreement include any recital, schedule or annexure;

			

 

	 	
			(iv)

				
			any contract (including this agreement) or other instrument includes any variation or replacement of it and as it may be assigned or novated;

			

 

	 	
			(v)

				
			a statute, ordinance, code or other law includes subordinate legislation (including regulations) and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them;

			

 

	 	
			(vi)

				
			a person or entity includes an individual, a firm, a body corporate, a trust, an unincorporated association or an authority;

			

 

	 	
			(vii)

				
			time is a reference to legal time in Brisbane, Queensland;

			

 

	 	
			(viii)

				
			a reference to a day or a month means a calendar day or calendar month;

			

 

	 	
			(ix)

				
			money (including ‘$’, ‘AUD’ or ‘dollars’) is to Australian currency; 

			

 

	 	
			(b)

				
			the meaning of any general language is not restricted by any accompanying example, and the words ‘includes’, ‘including’, ‘such as’, ‘for example’ or similar words are not words of limitation;

			

 

	 	
			(c)

				
			headings and the table of contents are for convenience only and do not form part of this agreement or affect its interpretation;

			

 

 

Page 4

 

	 	
			(d)

				
			any agreement, representation, warranty or indemnity by two or more parties (including where two or more persons are included in the same defined term) binds them jointly and severally;

			

 

	 	
			(e)

				
			if a period of time is specified and dates from a given day or the day of an act or event, it is to be calculated exclusive of that day;

			

 

	 	
			(f)

				
			the time between two days, acts or events includes the day of occurrence or performance of the second but not the first day act or event;

			

 

	 	
			(g)

				
			if the last day for doing an act is not a Business Day, the act must be done instead on the next Business Day.

			

 

	2	Subscription and issue

 

	
			2.1

				
			Subscription Shares

			

 

Subject to the Subscriber complying with its obligations under the Asset Purchase Agreement, at Closing, the Company must issue and allot to the Subscriber and the Subscriber must subscribe for the Subscription Shares as consideration for the Acquisition.

 

	
			2.2

				
			Rights and ranking

			

 

On issue and allotment, each of the Subscription Shares will:

 

	 	
			(a)

				
			be free from Encumbrances;

			

 

	 	
			(b)

				
			be credited as fully paid;

			

 

	 	
			(c)

				
			rank equally in all respects with all ordinary shares in the Company on the date of issue and have the same rights as the ordinary shares on issue in the Company as at the date of issue; and

			

 

	 	
			(d)

				
			entitle the Subscriber to participate in full in all dividends or other distributions paid or made on ordinary shares after the date of issue.

			

 

	3	Completion

 

	
			3.1

				
			Time and place

			

 

Completion of the issue and allotment of the Subscription Shares will occur at Closing.

 

	
			3.2

				
			Actions by the Company

			

 

At Closing, contemporaneously with all actions required under the Asset Purchase Agreement at Closing, the Company will:

 

	 	
			(a)

				
			issue and allot the Subscription Shares to the Subscriber; and

			

 

	 	
			(b)

				
			enter the Subscriber in the register of members of the Company as the holder of the Subscription Shares.

			

 

 

Page 5

 

	
			3.3

				
			Actions by the Subscriber

			

 

At Closing, contemporaneously with all actions required under the Asset Purchase Agreement at Closing, the Subscriber will subscribe for and accept the issue of the Subscription Shares.

 

	
			3.4

				
			Interdependency 

			

 

The parties’ obligations at Closing are interdependent so that a thing done at Closing by a party is conditional on, and not taken as done until all things required on Completion are done.

 

	
			3.5

				
			Termination

			

 

Either party may terminate this agreement, if it becomes entitled to terminate the Asset Purchase Agreement.

 

	4	Top-Up Right

 

	
			4.1

				
			Grant 

			

 

Subject to the grant to the Company of the ASX Waiver, and subject to clause 4.4, the Company agrees not to cause any Diluting Event unless at the same time as the Diluting Event, it issues to the Subscriber the Top-Up Shares for the Top-Up Price.

 

	
			4.2

				
			Top-Up Shares

			

 

Top-Up Shares means such a number of Shares which, when taken with Shares held by the Subscriber immediately before the Diluting Event, equals the Relevant Percentage of the expanded share capital of the Company immediately after the issue of the Top-Up Shares and any other Shares issued under a Diluting Event.

 

	
			4.3

				
			Top-Up Price

			

 

Top-Up Price means the same Share issue price as the issue price under the Diluting Event.

 

	
			4.4

				
			Diluting Event

			

 

Diluting Event means the issue of any Shares except for an issue in the following circumstances:

 

	 	
			(a)

				
			under an employee incentive scheme provided that the total number of outstanding Shares is less than 10% of the Company issued share capital from time to time, including any securities issued on or before the date of this Agreement; 

			

 

	 	
			(b)

				
			shares issued by way of bona fide remuneration to external service providers;

			

 

	 	
			(c)

				
			rights issues;

			

 

	 	
			(d)

				
			share issued in consideration for any acquisition or corporate transaction; or

			

 

	 	
			(e)

				
			any share reorganisation including bonus shares or capital subdivision or consolidation. 

			

 

	
			4.5

				
			Lapse of Top-Up Right

			

 

The Top-Up Right automatically lapses on the earlier of:

 

	 	
			(a)

				
			the date that is 2 years from Closing; and

			

 

 

Page 6

 

	 	
			(b)

				
			in the circumstances and at the times set out in the ASX Waiver.

			

 

	
			4.6

				
			Compliance with terms of ASX Waiver

			

 

The parties must comply with the terms and conditions of the ASX Waiver.

 

	
			5

				
			Warranties

			

 

	
			5.1

				
			Mutual representations and Warranties

			

 

Each of the parties represents and warrants for the benefit of the other that:

 

	 	
			(a)

				
			It has the requisite power and authority to enter into and perform its obligations under this agreement.

			

 

	 	
			(b)

				
			This agreement constitutes binding obligations on it in accordance with its terms.

			

 

	 	
			(c)

				
			Compliance with the terms of this agreement does not and will not conflict with or constitute a default under any provision of the following:

			

 

	 	
			(i)

				
			any agreement or instrument to which it is a party.

			

 

	 	
			(ii)

				
			its constitution.

			

 

	 	
			(iii)

				
			any lien, lease, order, judgment, award, injunction, decree, ordinance or regulation or any other restriction of any kind or character.

			

 

	
			5.2

				
			Company Warranty

			

 

The Company represents and warrants to the Subscriber that the Company has complied with its obligations under ASX Listing Rule 3.1.

 

	
			6

				
			Notices

			

 

	
			6.1

				
			Service of notices

			

 

A notice, consent, approval or other communication under this agreement (Notice) must be:

 

	 	
			(a)

				
			in writing and signed by the sender or its duly authorised representative, addressed to the recipient and sent to the recipient’s address specified in Schedule 1; and

			

 

	 	
			(b)

				
			delivered by personal service, sent by pre-paid mail or transmitted by facsimile or email, or any other lawful means.

			

 

	
			6.2

				
			Effect of receipt

			

 

	 	
			(a)

				
			A Notice given in accordance with this clause 6 is treated as having been given and received:

			

 

	 	
			(i)

				
			if personally delivered, on delivery;

			

 

	 	
			(ii)

				
			if sent by pre-paid mail, on the fifth clear Business Day after the date of posting (or the seventh Business Day after the date of posting if sent to or from an address outside Australia);

			

 

 

Page 7

 

	 	
			(iii)

				
			if sent by facsimile, when the sender's fax machine produces a transmission report stating that the transmission of the entire Notice was complete; and

			

 

	 	
			(iv)

				
			if sent by email, on the date and time shown at which it enters the addressee's information system (as shown in a confirmation delivery report from the sender's information system which indicates the email was sent to the email address of the addressee notified for the purposes of this clause);

			

 

except that, if the delivery, receipt or transmission is after 5.00pm in the place of receipt or on a day which is not a Business Day, it is taken to have been received at 9.00am on the next Business Day.

 

	 	
			(b)

				
			The particulars for delivery of Notices for each party are initially those set out in Schedule 1.

			

 

	 	
			(c)

				
			A party may change its address for the delivery of Notices by notifying that change to each other party. The notification is effective on the later of the date specified in the Notice or five Business Days after the Notice is given.

			

 

	
			7

				General

 

	
			7.1

				
			Legal costs

			

 

Except as expressly stated otherwise in this agreement, each party must pay its own legal and other costs and expenses of negotiating, preparing, executing and performing its obligations under this agreement.

 

	
			7.2

				
			Governing law and jurisdiction

			

 

This agreement is governed by and is to be construed in accordance with the laws applicable in Queensland, Australia. Each party irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of Queensland, Australia and any courts which have jurisdiction to hear appeals from any of those courts and waives any right to object to any proceedings being brought in those courts.

 

	
			7.3

				
			Severability

			

 

	 	
			(a)

				
			Subject to clause 7.3(b), if a provision of this agreement is illegal or unenforceable in any relevant jurisdiction, it may be severed for the purposes of that jurisdiction without affecting the enforceability of the other provisions of this agreement.

			

 

	 	
			(b)

				
			Clause 7.3(a) does not apply if severing the provision materially alters the scope and nature of this agreement or the relative commercial or financial positions of the parties or would be contrary to public policy.

			

 

	
			7.4

				
			Further steps

			

 

Each party must promptly do whatever any other party reasonably requires of it to give effect to this agreement and to perform its obligations under it.

 

 

Page 8

 

	
			7.5

				
			Consents

			

 

Except as expressly stated otherwise in this agreement, a party may conditionally or unconditionally give or withhold consent to be given under this agreement and is not obliged to give reasons for doing so.

 

	
			7.6

				
			Rights cumulative

			

 

Except as expressly stated otherwise in this agreement, the rights of a party under this agreement are cumulative and are in addition to any other rights of that party.

 

	
			7.7

				
			Waiver and exercise of rights

			

 

A single or partial exercise or waiver by a party of a right relating to this agreement does not prevent any other exercise of that right or the exercise of any other right. A party is not liable for any loss, cost or expense of any other party caused or contributed to by the waiver, exercise, attempted exercise, failure to exercise or delay in the exercise of a right.

 

	
			7.8

				
			Amendment

			

 

This agreement may only be varied or replaced by an agreement executed by the parties.

 

	
			7.9

				
			Assignment

			

 

A party must not assign its interest in this agreement without the prior written consent of the other parties. Any purported dealing in breach of this clause is of no effect.

 

	
			7.10

				
			Counterparts

			

 

This agreement may consist of a number of counterparts and, if so, the counterparts taken together constitute one agreement.

 

	
			7.11

				
			Entire understanding

			

 

	 	
			(a)

				
			This agreement contains the entire understanding between the parties as to the subject matter of this agreement.

			

 

	 	
			(b)

				
			All previous negotiations, understandings, representations, warranties, memoranda or commitments concerning the subject matter of this agreement are merged in and superseded by this agreement and are of no effect. No party is liable to any other party in respect of those matters.

			

 

	 	
			(c)

				
			No oral explanation or information provided by any party to another:

			

 

	 	
			(i)

				
			affects the meaning or interpretation of this agreement; or

			

 

	 	
			(ii)

				
			constitutes any collateral agreement, warranty or understanding between any of the parties.

			

 

 

Page 9

 

Schedule 1

 

Address Details

 

Company

 

	
			Name:

				
			Buderim Group Limited

			
	 	 
	
			Attention:

				
			Chief Executive Officer

			
	 	 
	
			Address:

				
			Level 5, 303 Coronation Drive, Milton, Queensland 4074 Australia

			
	 	 
	
			Facsimile no:

				 
	 	 
	
			Email address:

				
			abond@buderimginger.com.au

			

 

 

 

Subscriber

 

	
			Name:

				
			Royal Hawaiian Orchards, L.P.

			
	 	 
	
			Attention:

				
			Bradford C. Nelson

			
	 	 
	
			Address:

				
			c/o Royal Hawaiian Resources, Inc.

			390 Interlocken Crescent, Suite 350

			Broomfield, CO 80021, USA

			
	 	 
	
			Facsimile no:

				 
	 	 
	
			Email address:

				
			bnelson@rhrnut.com

			

 

 

Page 10

 

Executed as an agreement

 

	
			Executed by Buderim Group Limited ACN 010 978 800 in accordance with section 127 of the Corporations Act 2001 (Cth):

				 	 
	 	 	 
	 	 	 
	
			Director

				 	
			*Director/*Company Secretary

			
	 	 	 
	 	 	 
	
			Name of Director

			BLOCK LETTERS

				 	
			Name of *Director/*Company Secretary

			BLOCK LETTERS

			*please strike out as appropriate

			

 

 

	
			Executed by Royal Hawaiian Orchards, L.P, in accordance with its constituent documents and the laws of its country and state of incorporation:

				 	 
	 	 	 
	 	 	 
	
			Bradford C. Nelson

			President of Royal Hawaiian Resources, Inc., Managing General Partner of Royal Hawiian Orchards, L.P.

				 	 

 

 

 

 

Exhibit 4

to Asset Purchase Agreement

 

Form of Supply Agreement

 

(attached)

 

 

 

 

AGREEMENT FOR THE SALE OF MACADAMIA KERNEL

 

This AGREEMENT for the Sale of Macadamia Kernel (this “Agreement”) is made effective [____________], 2018 (the “Effective Date”), by and between ROYAL HAWAIIAN ORCHARDS, LP, a Delaware limited liability company (“Seller”), and MacFarms, LLC, a Hawaii limited liability company (“Buyer”). Seller and Buyer are each referred to herein as “Party” and together as “Parties.”

 

Recitals

 

A.           Seller processes macadamia nuts into raw saleable macadamia kernel (“Macadamia Kernel”) and markets it through its subsidiary Royal Hawaiian Macadamia Nut, Inc.

 

B.           Seller wishes to sell and Buyer wishes to purchase Macadamia Kernel for use in snack products.

 

Agreement

 

1.           Term. The term of this Agreement shall be five (5) years, beginning the Effective Date through [____________], 2023 (“Initial Term”), unless earlier terminated pursuant to the terms of this Agreement. Upon the completion of the Initial Term, the Agreement will automatically continue for an additional one-year period (“Extended Term”), unless either Party notifies the other in writing that it does not wish to renew this Agreement at least 60 days before expiration of the Initial Term. Upon the expiration of the initial Extended Term, this Agreement will automatically continue from year to year (each an “Extended Term”) unless either Party notifies the other in writing at least 60 days before the expiration of the then-current Extended Term that it does not wish to renew this Agreement. In this Agreement, “Term” means the Initial Term and Extended Term(s) (if any) collectively. 

 

2.           Quantity. On or before the first day of the calendar month of each anniversary of the Effective Date, the Parties will agree on a minimum quantity of Macadamia Kernel that Seller will sell to Buyer and Buyer will purchase from Seller for the following year (“Purchase Commitment”). The Purchase Commitment of any particular year will not be less than the amount of the immediately preceding year. If the Parties do not agree on a Purchase Commitment for a given year, the Purchase Commitment for that year will be the same as the previous year. The Purchase Commitment for the first year of the Term will be 780,000 pounds of Macadamia Kernel. The Parties may from time to time agree to sell and purchase wet-in-shell macadamia nuts and will agree in writing at those times whether the amounts will be in addition to or part of the Purchase Commitment.

 

3.           Sorting and Packaging.

 

(a)     Seller will inspect, weigh, grade and sort the Macadamia Kernel by style according to the specifications set forth on Exhibit A, which are subject to change as reasonably requested from time to time by written notice from Buyer to Seller at least 60 days in advance of an anticipated Delivery Date (defined below). Any change in specifications that requires Seller to make equipment changes will obligate Buyer to pay for Seller’s cost of making such equipment changes (not to exceed $5,000) promptly following Seller’s invoicing of Buyer for such cost.

 

 

 

 

(b)     Seller shall package the Macadamia Kernel in shrink-packaging made out of laminated foil (or equivalent material based on permeability) with maximum barriers of gas transmission and residual oxygen of less than 1%. Further, the Macadamia Kernel shall be packaged in 25 pound, 25 kilogram, 50 pound or 50 kilogram cases, each of which shall clearly state that the product’s origin is from the United States. 

 

4.           Delivery; Title and Risk of Loss. Delivery shall be made following processing, roasting, sorting and packaging and shall be FCA (Free Carrier) the Seller’s processing facility (owned or contracted by Seller) – Incoterms 2010. Seller will generate invoices and title will pass from Seller to Buyer when Seller delivers the Macadamia Kernel for shipment as specified above (the “Delivery Point”), subject to Buyer’s right to inspect and reject the Macadamia Kernel delivered. If Seller desires to ship less than a full shipping container, Seller will pay any additional freight costs incurred for shipment to the West Coast of the United States, unless Buyer agrees to pay some or all of this cost in advance. Seller shall provide Buyer with __ days’ advance notice of the anticipated date of delivery (each, a “Delivery Date”). Buyer shall be responsible for arranging carriage of the Macadamia Kernel and making contracts for insurance for the shipment of the Macadamia Kernel and providing Seller with shipper, loading berth and departure date.

 

5.           Quality. Seller warrants that the Macadamia Kernel will be commercial (choice) grade or higher and will meet the specifications and requirements set forth on Exhibit B. Seller shall deliver a Certificate of Analysis to Buyer in the form attached hereto as Exhibit C with each container of Macadamia Kernel delivered to Buyer. Buyer may reject any container of Macadamia Kernel that does not meet the specifications and requirements contained in this Section 5 and in Exhibit B. Seller further warrants that it will comply with all applicable laws in Seller’s performance of this Agreement, including but not limited to the provisions of the U.S. Federal Food, Drug and Cosmetic Act, as amended, and the pure food and drug laws and other present or future laws of the State of Hawaii. Other than as expressly stated in this agreement, seller makes no representations, guarantees or warranties, express or implied, of any kind. Without limiting the generality of the foregoing, seller expressly disclaims any warranty of merchantability, fitness, or suitability for a particular purpose or use notwithstanding any course of performance, usage of trade or lack thereof inconsistent with this section.  Claims regarding the quality of the Macadamia Kernel shall be made by written notice from Buyer to Seller within ninety (90) days following delivery of the Macadamia Kernel to the Delivery Point. Any warranty claims regarding the quality not asserted within this time period shall be deemed to have been waived. 

 

2

 

 

6.           Limitation of Liability. For Macadamia Kernel that fails to meet the warranty obligation set forth in Section 5, Seller shall, at Buyer’s option, (i) replace the nonconforming Macadamia Kernel with conforming Macadamia Kernel, or (ii) refund, or provide a credit to Buyer of the invoiced and paid portion of the Purchase Price for the defective Macadamia Kernel. Notwithstanding anything in this Agreement to the contrary, neither Party shall be liable to the other Party for special, indirect, consequential, incidental, punitive or exemplary damages resulting from or arising out of this Agreement, or from any loss of use, loss of data, loss of assets, loss of business, loss of profit or business interruptions, however same may be caused and regardless of the sole or concurrent negligence of the Party, even if such Party has been advised of, or otherwise could have anticipated the possibility of, such damages or liabilities in advance and even if the remedies provided above fail of their essential purpose or for any other reason.

 

7.           Purchase Price. 

 

(a)     Buyer will pay market prices based on the international market for macadamia nuts determined by an average of Macadamia Kernel prices for the respective styles of kernel sold by Seller for the prior six months less any adjustments for quantity, or as agreed upon by the Parties from time to time (the “Purchase Price”). The purchase price of wet-in-shell or dry-in-shell will be determined by adjusting the international market prices for kernel by processing and transportation charges or at prices agreed upon by the Parties. 

 

(b)     The Purchase Price is exclusive of any and all federal, state, local and foreign excise, sales, use and similar taxes (including but not limited to the Hawaii General Excise Tax), duties, assessments and other governmental impositions of any nature whatsoever applicable to the sale and processing of Macadamia Kernel hereunder. Any such taxes and charges paid or collected by Seller will appear as separate items on Seller’s invoice to Buyer, and Buyer shall pay all such taxes and charges. In addition, if a subsidiary of Seller or third party processor agrees to roast the Macadamia Kernel on behalf of Buyer, such party’s charges for roasting shall be set forth in a separate invoice to be sent by such third party to Buyer, and Buyer shall promptly pay such invoice.

 

8.           Payment. Payment shall be due from Buyer to Seller within sixty (60) days of the invoice date. If Buyer in good faith disputes any invoice in whole or in part, Buyer shall advise Seller of the amount in dispute and shall pay all undisputed amounts owed by Buyer within the time period forth in this Section 8. Payment by Buyer of an invoice shall be without prejudice to Buyer’s rights to subsequently challenge the correctness thereof pursuant to Sections 5 and 20. Buyer acknowledges that time is of the essence related to payment and that Seller may assess a late fee on any past due balance (including amounts that are disputed by Buyer but are found to be due and owing) of 1.0% per month or the maximum interest allowable by applicable state or federal laws, if such laws limit interest to a lesser amount.

 

9.           Termination. Either Party may terminate this Agreement upon 30 days’ prior written notice to the other Party if the other Party:

 

(a)     materially breaches this Agreement and such breach is not cured within 45 days (and, in the case of a breach by Buyer of its payment obligations under this Agreement (a “Payment Breach”), such breach is not cured within ten business days) from receipt of written notice of such breach to the defaulting Party; provided that, if a breach (other than a Payment Breach) is incapable of being cured within such 45-day period, then the non-defaulting Party may terminate this Agreement if the defaulting party does not commence curing the breach within such 45-day period and work diligently to pursue such cure to completion as soon as reasonably practicable;

 

3

 

 

(b)     files any voluntary proceeding for dissolution or under any federal or state bankruptcy, insolvency, receivership or similar law or has commenced against it such proceeding involuntarily that is not dismissed within 60 days; or

 

(c)     makes any assignment for the benefit of its creditors.

 

10.           Assignment. Neither Party may assign any of its rights or interests or delegate any of its obligations under this Agreement, including an assignment or delegation by operation of law, change of control or merger (but excluding transactions which are merely to change the legal form or the domicile of a party), without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed, except that Seller may (a) utilize third party processors to process and (b) assign its rights but not its obligations hereunder in order to provide security in connection with a financing. When this Agreement is assigned or delegated in accordance with this Section 10 (other than an assignment to provide security in connection with any financing), the assignee shall assume responsibility for all of assignor’s obligations contained in this Agreement, and the assignor shall be relieved of all obligations provided for in this Agreement. Any assignment or delegation that is in violation of this Section 10 is void.

 

11.           Representations and Warranties of Seller. Seller represents and warrants to Buyer as follows:

 

(a)     Good Standing. Seller is a limited partnership, duly formed and in good standing in its state of formation, and that it is qualified to do business and is in good standing in those states where necessary in order to carry out the purposes of this Agreement;

 

(b)     Performance. Seller has the capacity to enter into and perform this Agreement and all transactions contemplated herein, and all partnership and other actions required to authorize it to enter into and perform this Agreement have been properly taken;

 

(c)     No Breach. Seller will not breach any other agreement or arrangement by entering into or performing this Agreement; 

 

(d)     Due Execution and Delivery. This Agreement has been duly executed and delivered by Seller; and 

 

(e)     Fair Labor Standards Act. The Macadamia Kernel delivered pursuant to this Agreement has been produced in compliance with all applicable provisions of the Fair Labor Standards Act of 1938, and, upon the reasonable request of Buyer, Seller will provide a certificate of its chief executive officer or chief financial officer certifying such compliance.

 

4

 

 

12.           Representations and Warranties of Buyer. Buyer represents and warrants to Seller as follows:

 

(a)     Good Standing. Buyer is a corporation, duly formed and in good standing in its state of incorporation and is qualified to do business and in good standing in those states where necessary in order to carry out the purposes of this Agreement;

 

(b)     Performance. Buyer has the corporate capacity to enter into and perform this Agreement and all transactions contemplated herein and that all corporate and other actions required to authorize it to enter into and perform this Agreement have been properly taken;

 

(c)     No Breach. Buyer will not breach any other agreement or arrangement by entering into or performing this Agreement; and

 

(d)     Due Execution and Delivery. This Agreement has been duly executed and delivered by Buyer.

 

13.           Force Majeure. A delay in or failure to perform by either Buyer or Seller will not constitute a default under this Agreement that exposes a Party to liability to the other Party for breach if, and to the extent that, the delay or failure to perform is caused by a Force Majeure Event. A “Force Majeure Event” shall include, but is not limited to, an act of God or the public enemy; expropriation or confiscation of facilities, materials, equipment, tools or instruments; compliance with any new order or requirement of any governmental authority; act of war, terrorism, insurrection, rebellion or sabotage or damage resulting therefrom; earthquake, fire, flood, hurricane, tsunami, mudslide, explosion or accident; and riots or strikes or other concerted acts of workers; in any case, whether direct or indirect, and whether or not of the same class or kind as those specifically above named, that is not within the control of the Party claiming the Force Majeure Event and that, by the exercise of reasonable diligence, the claiming Party is unable to prevent or remedy. Prompt notice of a Force Majeure Event shall be given by the Party invoking it to the other Party, setting out the nature and full details thereof, the extent of the interruption and the anticipated duration of the interruption. This Section 13 is not intended to (a) provide relief from economic conditions such as, but not limited to, market situations that provide lower or higher prices than in effect under this Agreement or (b) require the settlement of strikes or lockouts by acceding to the demands of the opposing parties when such course is inadvisable at the discretion of the Party hereto experiencing the strike or lockout. 

 

14.           Notices. Unless otherwise stated in this Agreement, notices must be in writing and delivered in person or sent by email, facsimile, or certified or registered mail with postage prepaid and return receipt requested, to the person entitled to receive the notice at the last mailing address, fax number, or email address provided in writing by that person. Notices given by personal delivery will be deemed given on the date of delivery. Notices given by email will be deemed given when sent unless the sending Party is notified that the email was not received or the email or address is invalid. Notices given by facsimile will be deemed given as stated on the sender’s fax receipt. Notices given by certified or registered mail will be deemed given on the date of delivery as established by U.S. Post Office return receipt. As of the Effective Date, the last contact information provided by the Parties is set forth belows:

 

 

	 	
			To Seller:

				
			Royal Hawaiian Orchards, L.P.

			
	 	 	
			c/o Royal Hawaiian Resources, Inc.

			390 Interlocken Crescent, Suite 350

			Broomfield, CO 80021 USA

			Email: bnelson@rhrnut.com

			
	 	 	 
	 	 	
			With copy to:

			Wanda J. Abel     

			Davis Graham & Stubbs LLP

			1550 Seventeenth Street, Suite 500

			Denver, Colorado 80202

			Email: wanda.abel@dgslaw.com

			

 

	 	
			To Buyer:

				
			MacFarms, LLC

			
	 	 	
			Attn: Andrew Bond

			Level 5, 303 Coronation Drive

			Milton QLD 4064

			Australia

			Email: abond@buderimginger.com

			
	 	 	 
	 	 	
			With copy to:

			Bart W. Howk, Esq.

			Bays Lung Rose & Holma

			700 Bishop St., Ste. 900

			Honolulu, HI 96813

			Email: bhowk@legalhawaii.com

			

 

 

Either Party may change its address for the purpose of this Section 14 by giving written notice of the change to the other Party in the manner provided in this Section 14.

 

15.           Remedies. The remedies herein provided shall be cumulative and may be exercised concurrently. In the event Buyer defaults in its obligations under this Agreement and without limiting Seller’s right to pursue all legal and equitable remedies available to it, including other remedies specified herein, Seller may recover for each shipment of Macadamia Kernel hereunder as a separate transaction without reference to any other shipment.

 

16.           Confidentiality. Each Party agrees to keep confidential all information obtained from the other Party relating to this Agreement that is not publicly available (other than due to a breach by a third party of its confidentiality obligations). Notwithstanding the foregoing, disclosures of confidential information may be made by either Party (i) to the extent necessary for such Party to enforce its rights hereunder against the other Party; (ii) only to the extent to which a Party is required to disclose such information by a statute or by the order or rule of a court, agency, or other governmental body exercising jurisdiction over the subject matter hereof (including, but not limited to, deposition, subpoena, interrogatory, or request for production of documents), provided that the disclosing Party provides notice to the other Party and takes all reasonable efforts to disclose only what is required by law to be disclosed; (iii) to the extent required by the applicable rules and regulations of the Securities and Exchange Commission or a securities or commodities exchange; (iv) to a third party in connection with a proposed sale or other transfer of a Party’s assets, provided such third party agrees in writing to be bound by the terms of this Section 16; (v) to its lenders or potential lenders in connection with an existing or potential financing; (vi) to its own general partners, members, managers, directors, officers, employees, agents and representatives, provided that they have been advised of the confidential nature of the information and are bound by a written confidentiality or nondisclosure agreement to keep any such information confidential; or (vii) to an affiliate.

 

5

 

 

17.           Amendments to Agreement; Conflicting Terms. This Agreement may be amended only by a writing signed by both Parties. All deliveries of Macadamia Kernel shall be governed by the provisions hereof and none of the provisions of any purchase order, invoice, delivery ticket, confirmation or other notice (except those specifying the quantity of the Macadamia Kernel shipped and applicable invoice information) shall be applicable to the purchase and sale of Macadamia Kernel under this Agreement to the extent they conflict with or add to the terms of this Agreement.

 

18.           Grant of Security Interest. Buyer hereby grants to Seller a purchase money security interest in the Macadamia Kernel (and proceeds thereof) delivered under this Agreement as security for payment of the Purchase Price. A copy of this Agreement may be filed as a financing statement with the appropriate state and local authorities to perfect Seller’s security interest. Upon request of Seller, Buyer shall execute and deliver to Seller such financing statements and other instruments and agreements as Seller deems necessary or desirable to perfect or protect its security interest in the Macadamia Kernel and to enable Seller to exercise its rights and remedies under this Agreement. Seller’s repossession of any Macadamia Kernel pursuant to its security interest shall be without prejudice to any other remedies Seller may have. 

 

19.           Saving Clause. If any term or provision of this Agreement or any application hereof to any person or circumstance shall be held invalid, illegal or unenforceable by any rule of law or public policy, the remainder of this Agreement and any application of its terms and provisions to other persons or circumstances shall not be affected thereby and shall be valid and enforceable, and the Parties shall negotiate in good faith to modify this Agreement so as to effect their original intent as closely as possible in an acceptable manner to the end that the provisions of this Agreement are fulfilled to the extent possible.

 

20.           Dispute Resolution.   Prior to submitting any dispute for resolution by a mediator, arbitrator or court, a Party shall provide written notice to the other of the occurrence of such dispute. Promptly following receipt of such notice, the Parties shall meet within 15 business days to seek to resolve the dispute in Las Vegas, Nevada, by face-to-face negotiation between senior executive officers of each Party. If the dispute is not resolved within 25 business days after such notice was given, then the Parties shall be free to pursue other legal remedies available at law or equity. 

 

6

 

 

21.           Governing Law and Venue. The validity, construction, interpretation and enforcement of this Agreement shall be governed by the laws of the State of Hawaii (other than its rules of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby). The PARTIES irrevocably submit, in any legal action, suit or proceeding arising out of or relating to this Agreement, to the united states district court for the district of hawaii or the courts of the State of hawaii located in honolulu, hawaii, and hereby waive, and agree not to assert, as a defense in any such action, suit or proceeding, any claim that it is not subject personally to the jurisdiction of such courts, that the action, suit or proceeding is brought in an inconvenient forum, that the venue of the action, suit or proceeding is improper or that this Agreement or the transactions provided for herein may not be enforced in or by such courts. By execution of this Agreement, each Party waives personal service and consents to the service of process in any suit, action, or proceeding in any of the aforesaid courts by the mailing of copies of process to it by certified or registered mail at the address for notices set forth in this Agreement.

 

22.           Waiver. The waiver of any breach of the provisions of this Agreement by either Party shall not constitute a continuing waiver or a waiver of any subsequent breach of the same or any other provision of this Agreement.

 

23.           Construction of Agreement. The parties hereto expressly agree that this Agreement shall not be deemed prepared or drafted by any one Party, and any rule of construction that a contract be construed against the drafter shall not apply to the interpretation or construction of this Agreement.

 

24.           No Third Party Beneficiaries. This Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns, and will not inure to the benefit of any other person or party whomsoever or whatsoever, it being the intention of the Parties that no other person or party will be deemed a third party beneficiary of this Agreement

 

25.           Survival. The provisions of Sections 14, 15, 16, 18, 19, 20, 21, 22 and 23 will survive any termination or expiration of this Agreement.

 

26.           Execution in Counterparts. This Agreement may be executed in counterparts. Each such counterpart shall be deemed an original, but all such executed counterparts together shall constitute one and the same instrument. Telecopied signatures shall be as effective as original signatures although the parties shall endeavor to execute and circulate a sufficient number of original Agreements so that each of the parties hereto and their undersigned attorneys has a fully executed duplicate original of the Agreement.

 

[Signature page follows.]

 

7

 

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement to be effective as of the Effective Date. 

 

	 	
			SELLER

			 

			ROYAL HAWAIIAN ORCHARDS, L.P.

			 

			By:Royal Hawaiian Resources, Inc., General Partner

				 	
			BUYER

			 

			MACFARMS LLC

			
	 	
			By:

				__________________________________________	 	By:	
			__________________________________________

			
	 	
			Name:

			Title:

				 	
			Name:

			Title: 

			

 

8

 

 

Exhibit A

Style Specifications

 

 

	
			STYLE NOS.

				
			STYLE NAME

				
			STYLE DESCRIPTION

				
			REQUIRED PERCENTAGE OF ANNUAL POUNDS

			
	 	 	 	 
	
			0

				
			Wholes

				
			Extra-large whole kernels

				
			Not less than 34%

			
	
			1

				
			Wholes

				
			large whole kernels

				 
	
			2

				
			Wholes & Halves

				
			small whole & half kernels

				
			Not less than 62% 

			
	
			3

				
			Cocktail

				
			min. 90% half and larger

				 
	
			4

				
			Halves & Pieces

				
			min. 80% half kernels, max. 5% wholes (size min. 10 mm)

				 
	
			5

				
			Large diced

				
			industrial roasted product (size 8-12 mm)

				
			Cannot exceed 4%  

			
	
			6

				
			Chips

				
			suitable for industrial use (size min. 6-9 mm)

				 
	
			7

				
			Bits & Diced

				
			Bits industrial roasted product (size 3.5-6.3 mm)

				 
	
			8

				
			Fines

				
			suitable for industrial use (size smaller than 3 mm)

				 

 

A-1

 

 

Exhibit B

Micro-biological and Chemistry Testing Specifications

 

	Characteristic:	 	 
	Sample Size	500 grams	 
	Foreign Material	Less than 0.02%	 
	Total Serious Defects	1.0% Maximum	 
	Moisture	1.5% Maximum	 
	Color	Uniform, typical roasted &	 
	 	free of dark pieces	 
	Flavor	Clean, fresh, typical	 
	 	macadamia flavor	 
	 	 	 
	Bacteriological	 	 
	Std Plate Count	Less than 30,000 cfu per gram	 
	Yeast and Mold	Less than 20,000 cfu per gram	 
	Coliform	Less than 350 cfu per gram	 
	E. Coli	Negative	 
	Salmonella	Negative	 
	 	 	 
	Aflatoxin	<5 ppb	 
	Aflatoxin B1	<2 ppb	 
	Peroxide Value 	5.0 meq/kg Maximum	 
	Free Fatty Acid, as oleic	0.5% maximum	 
	 	 	 
	Roasted Defects	Less than 5% dark brown	 
	 	colors (Exception: This does not include	 
	 	the dark basal cap which is genetic)	 

     

Product complies with the U.S. Federal Food, Drug and Cosmetic Act, as amended.

 

500 gram Sample Collection Method

 

Collect two 250-gram samples (one from the beginning of the pallet load and one from the end) from every pallet produced regardless of product code. The 250-gram samples will then be combined into one 500 gram composite sample. This sample will be labeled with the corresponding pallet number and date code.

 

B-1

 

 

Exhibit C

Form of Certificate of Analysis

 

 

C-1

 

 

Exhibit 5

to Asset Purchase Agreement

 

Form of Processing Agreement

 

(attached)

 

 

 

 

macadamia nut Processing Agreement

 

This Macadamia Nut Processing Agreement (“Agreement”) is made effective as of ________________, 2018 (“Effective Date”) by and between MacFarms, LLC, a Hawaii limited liability company (“MacFarms”), and Royal Hawaiian Orchards, L.P., a Delaware limited partnership (“RHO”). In this Agreement, MacFarms and RHO may sometimes collectively be referred to as the “Parties” and individually as a “Party.”

 

The Parties each own and operate various macadamia-nut orchards and macadamia-nut processing facilities in the State of Hawaii.

 

MacFarms harvests most of its macadamia nuts from its Hawaii orchards by hand, but intends to begin harvesting macadamia nuts with mechanical methods. RHO harvests most of its macadamia nuts from its Hawaii orchards using mechanical methods, but also harvests some macadamia nuts by hand.

 

MacFarms’ processing facility is designed to process (husk, dry and crack) macadamia nuts and is most efficient at processing hand-harvested macadamia nuts. RHO’s processing facility is designed to husk and dry macadamia nuts and is most efficient at husking and drying mechanically harvested macadamia nuts.

 

MacFarms wishes to have its mechanically harvested macadamia nuts processed by RHO at RHO’s processing facility, and RHO wishes to have its hand-harvested macadamia nuts processed by MacFarms at MacFarms’ processing facility, according to the terms and conditions set forth in this Agreement.

 

Therefore, the Parties agree as follows:

 

1.           Processing of Macadamia Nuts. Commencing on the Effective Date and continuing through the end of the Term (defined below): (a) RHO will husk and dry all mechanically harvested macadamia nuts from MacFarm’s Hawaii orchards that MacFarms requests RHO to process, and (b) MacFarms will process all macadamia nuts (whether or not hand-harvested) from RHO’s Hawaii orchards which RHO requests MacFarms to process. The Parties will agree on minimum quality standards prior to each requested processing run.

 

2.           Term. This Agreement will commence on the Effective Date and will remain effective for [five years] after the Effective Date (“Initial Term”). Upon the expiration of the Initial Term, this Agreement will automatically continue from year to year (each an “Extended Term”) unless either Party notifies the other in writing at least sixty (60) days before the expiration of the then-current Extended Term that it does not wish to renew this Agreement. In this Agreement, “Term” means the Initial Term and Extended Term(s) (if any) collectively.

 

3.           Processing Fee. The processing fees for the Parties’ processing of nuts under this Agreement will be at market rate, as determined by mutual agreement of the Parties from time to time.

 

4.           Shipping. Each Party will coordinate shipping and retain ownership and risk of loss of its own macadamia nuts while in transit to and from the other Party’s processing facility. 

 

Page 1

 

 

5.           Force Majeure. Neither Party will be in default of its obligations in this Agreement if that Party is prevented from fulfilling its obligations due to conditions beyond its reasonable control, including but not limited to employee strikes, acts of God or nature, war, acts of terrorists, riots, changes in state or federal law, or any other causes of any kind whatsoever which are beyond the reasonable control of that Party.

 

6.           Cross Default. The Parties acknowledge and agree that they have also entered into a Macadamia Nut Supply Agreement and Feasibility-Study Agreement, both dated as of or about the Effective Date of this Agreement (collectively, “Other Agreements”). A default by either Party under either of the Other Agreements will be deemed a default of this Agreement and will entitle the nondefaulting Party to terminate this Agreement.

 

7.           Miscellaneous.

 

(s)     Headings and Sections. All section headings in this Agreement are for convenience only. They are not a part of this Agreement and do not define, limit, extend, or describe the scope or intent of any provisions.

 

(t)     Definitions. The bolding, capitalizing of initial letters, and enclosing of a word or phrase in quotation marks in this Agreement means that word or phrase is defined by the surrounding text, as suggested by the context (each a “Defined Term”). Unless otherwise stated or logically required by the context, each use of a Defined Term with capitalized initial letters but without bolding and quotation marks incorporates the corresponding definition. An uncapitalized word or phrase is not a Defined Term and retains its common or legal term-of-art meaning, as applicable, notwithstanding that the word or phrase may contain the same text as a Defined Term.

 

(u)     Assignment and Delegation. Neither Party may assign this Agreement, delegate any duty under this Agreement, or assign any right under this Agreement. Any attempt to do so will be void.

 

(v)     Binding Effect. This Agreement binds and inures to the benefit of the Parties and their successors, legal representatives, and permitted assignees.

 

(w)     Integration of Entire Agreement. This Agreement is the final, entire agreement among the Parties pertaining to the subject matter of this Agreement, and supersedes all previous agreements and understandings pertaining to this Agreement or its subject matter (including but not limited to any term sheets exchanged between the Parties). The recitals (i.e., the background information provided after the opening paragraph of this Agreement) referenced in this Agreement are a part of this Agreement. This Agreement will control over any conflicting terms in either Party’s order or confirmation forms.

 

(x)     No Waiver. A failure by a Party to require strict performance of any provision of this Agreement, or to exercise any right or remedy arising because of a breach, is not a waiver of that breach or any other covenant, duty, agreement, or condition. Any extension or waiver by any Party of any provision in this Agreement will be valid only if set forth in writing signed by that Party.

 

Page 2

 

 

(y)     Amendment. This Agreement may not be amended or modified except by a written instrument executed by all of the Parties.

 

(z)     Applicable Law. This Agreement will be governed by the laws of the State of Hawaii without regard to the choice of law or principles of conflict of law.

 

(aa)     Jurisdiction. The Parties will bring all actions in law, equity, or otherwise arising under this Agreement (or related to the transactions contemplated in this Agreement), exclusively in the federal or state courts sitting in Honolulu, Hawaii, and in no other jurisdiction or venue. Each Party consents to the jurisdiction of such courts. Each Party further agrees that personal jurisdiction over that Party may be effected by service of process by registered or certified mail addressed to the last address that Party provided to the other Parties, and that when so made will be as if served upon that Party personally within the State of Hawaii.

 

(bb)     Indemnification. Each Party (as applicable, “Indemnitor”) will indemnify, defend, and hold harmless the other Party (as applicable, “Indemnitee”) and Indemnitee’s Affiliates (defined below) from and against any and all demands, causes of action, claims, losses, liabilities, expenses (including reasonable attorneys’ fees and costs), and damages to persons or property based on, arising out of, caused by, connected to, or related to Indemnitor’s negligence, willful misconduct, or breach of this Agreement occurring during the Term of this Agreement. “Affiliates” means a party’s directors, officers, shareholders, managers, members, partners, incorporators, organizers, agents, employees, attorneys, consultants, advisors, lenders, representatives, and affiliates. This Subsection will survive termination of this Agreement.

 

(cc)     Attorneys’ Fees and Costs. If any Party institutes an arbitration, lawsuit, action, or other proceeding of any nature in connection with any controversy arising out of this Agreement, or to interpret or enforce any rights under this Agreement, the prevailing Party may recover all expenses the prevailing Party incurs in enforcing this Agreement, including but not limited to attorneys’ fees, costs, and expenses of the arbitration, suit, action, or other proceeding. Any judgment or order entered in such action will contain a specific provision providing for the recovery of attorneys’ fees and costs incurred in enforcing such judgment and an award of prejudgment interest from the date of the breach at the maximum rate of interest allowed by law. The prevailing Party will be determined by the court, arbiter, or other decision maker based on an assessment of which Party’s major arguments made or positions taken in the proceedings could fairly be said to have prevailed over the other Party’s major arguments or positions on major disputed issues. 

 

(dd)     Legal Representation. Each Party acknowledges and represents that it was represented by its own legal counsel in the negotiation and execution of this Agreement and had the opportunity to seek advice regarding its legal rights from such counsel.

 

(ee)     Drafting. This Agreement is the result of negotiation between sophisticated parties. No provision of this Agreement may be interpreted for or against any Party on the basis that it drafted such provision, and no presumption or burden of proof may arise disfavoring or favoring any Party because of the authorship of any of the provisions of this Agreement.

 

(ff)     Counterparts. This Agreement may be executed in counterparts. Signature pages may be delivered personally, by mail, or electronically.

 

Signature page follows.

 

Page 3

 

 

Each Party is executing this Agreement effective as of the Effective Date.

 

	 	
			MACFARMS:

				 	
			RHO:

			
	 	 	 	 
	 	MacFarms, LLC	 	Royal Hawaiian Orchards, L.P.
	 	 	 	 
	 	 	 	By:  Royal Hawaiian Resources, Inc. 
	 	 	 	General Partner
	 	 	 	 

 

	 	
			By:

				 	 	 	By:	 	
			 

			
	 	Printed Name:	 	 	Printed Name:	 
	 	As:	 	 	 	As:	 	 

 

Page 4

 

 

Exhibit 14(a)(iv)

to Asset Purchase Agreement

 

Form of Bill of Sale

 

(attached)

 

 

 

 

BILL OF SALE

 

This Bill of Sale is executed and delivered as of ____________________, 2018 (“Effective Date”) by Royal Hawaiian Macadamia Nut, Inc., a Hawaii corporation (“Seller”) to MacFarms, LLC, a Hawaii limited liability company (“Buyer”). Capitalized but undefined terms in this Bill of Sale have the definitions set forth in the Asset Purchase Agreement dated ____________________, 2018 between Seller and Buyer (“Agreement”).

 

Seller is making this Bill of Sale pursuant to its obligation to do so under the Agreement.

 

Therefore, for good and adequate consideration, the receipt and sufficiency of which Seller acknowledges, Seller agrees as follows:

 

1.           Sale and Conveyance. Seller sells, transfers, and conveys to Buyer all of Seller’s right, title, and interest in and to all the tangible personal property which comprises a portion of the Assets (collectively, “Tangible Personal Property”). Without limiting the foregoing definition of “Tangible Personal Property” or the definition of “Assets” in the Agreement, the Tangible Personal Property includes the property listed on Schedule 1 attached to this Bill of Sale. The Tangible Personal Property does not include the items listed on Schedule 2 attached to this Bill of Sale.

 

2.           Assumption of Liabilities. Effective as of the Closing, subject to the terms and conditions set forth in the Agreement, Buyer does hereby assume all of the future liabilities associated with the Tangible Personal Property and Assets purchased by Buyer (“Assumed Liabilities”). The assumption by Buyer of the Assumed Liabilities shall not enlarge any rights or remedies of any third parties under any contracts or arrangements with Seller. Nothing herein shall prevent Buyer from contesting with a third party in good faith any of the Assumed Liabilities. Except for the Assumed Liabilities and as set forth in the Assignment and Assumption of Intangible Property of even date herewith between Seller and Buyer, Buyer shall not assume or be bound by any obligations of Seller of any kind or nature, contingent or otherwise.

 

3.           Representations, Warranties, and Covenants. Seller represents, warrants, and covenants to and with Buyer that:

 

a.     the Tangible Personal Property is free and clear of financing statements, chattel, mortgages, security agreements, title retention agreements, liens, and other encumbrances; and

 

b.     Seller has the right, power, and authority to sell the Tangible Personal Property to Buyer without obtaining the consent of any third party whose consent has not been obtained and written evidence thereof furnished to Buyer.

 

4.           Conflicts. To the extent there is a conflict between the terms and conditions of this Bill of Sale and the Agreement, the terms and conditions of the Agreement will govern. 

 

5.           Governing Law. This Bill of Sale will be construed and enforced in accordance with and governed by the laws of the State of Hawaii.

 

6.           Binding Effect. This Bill of Sale binds and inures to the benefit of Seller and Buyer and each of their respective heirs, executors, personal representatives, successors, and assigns.

 

Signature page follows.

 

 

 

 

Seller is executing this Bill of Sale to be effective as of the Effective Date.

 

	 	 	 	 	Royal Hawaiian Macadamia Nut, Inc.
	 	 	 	 	 
	 	 	 	 	 	 	 
	 	
			 

				 	 	By:	 	
			 

			
	 	 	 	 	Printed Name:	 
	 	 	 	 	As:	 	 

 

Signature page to Bill of Sale

 

 

 

[Schedules to be attached]

 

 

 

 

Exhibit 14(a)(v)

to Asset Purchase Agreement

 

Form of Assignment/Assumption

 

(attached)

 

 

 

 

Assignment and Assumption of Intangible Property

 

This Assignment and Assumption of Intangible Property (“Assignment”) is made as of ____________________, 2018 (“Effective Date”) by Royal Hawaiian Macadamia Nut, Inc., a Hawaii corporation (“Assignor”), and MacFarms, LLC, a Hawaii limited liability company (“Assignee”). Capitalized but undefined terms in this Assignment have the definitions set forth in the Asset Purchase Agreement dated Februart 28, 2018 between Assignor and Assignee (“Agreement”).

 

Assignor is making this Assignment pursuant to its obligation to do so under the Agreement.

 

Therefore, for good and valuable consideration, the receipt and sufficiency of which Assignor acknowledges, Assignor and Assignee agree as follows:

 

1.           Assignment. Assignor assigns and delegates to Assignee, and Assignee assumes and accepts, all of Assignor’s right, title, and interest in all the intangible personal property which comprises a portion of the Assets (collectively, “Intangible Property”). Without limiting the foregoing definition of “Intangible Property” or the definition of “Assets” in the Agreement, the Intangible Property includes the property, contracts, and rights listed on Schedule 1 attached to this Assignment. The Intangible Property does not include the items listed on Schedule 2 attached to this Assignment (if any).

 

2.           Right to Assign. Assignor represents, warrants, and covenants to and with Assignee that Assignor has the right to assign the Intangible Property to Assignee. 

 

3.           Assumption of Liabilities. Upon the terms and subject to the conditions set forth in this Agreement, at Closing, Buyer shall assume and undertake to discharge in full the obligations and liabilities listed below (“Liabilities”):

 

(gg)     All of the obligations and liabilities of Seller under the Assumed Contracts arising with respect to periods after the Closing Date;

 

(hh)     All obligations and liabilities arising with respect to periods after the Closing Date related to the ownership, operation or control of the Assets; and

 

(ii)     All obligations and liabilities with respect to returns or reclamation of finished goods inventory up to the amount listed as reclamations in the operating plan provided as due diligence and none after a period of twelve (12) months.

 

Other than the Liabilities and as set forth in the Bill of Sale of even date herewith delivered by Seller to Buyer, Buyer shall not assume or be bound by any obligations of Seller of any kind or nature, contingent or otherwise.

 

4.           Conflicts. To the extent there is a conflict between the terms and conditions of this Assignment and the Agreement, the terms and conditions of the Agreement will govern. 

 

 

 

 

5.           Governing Law. This Assignment will be construed and enforced in accordance with and governed by the laws of the State of Hawaii.

 

6.           Binding Effect. This Assignment binds and inures to the benefit of Assignor and Assignee and each of their respective heirs, executors, personal representatives, successors, and assigns.

 

7.           Counterparts. This Assignment may be executed in counterparts, all of which will constitute a single document. Signature pages may be delivered personally, by mail, or electronically.

 

Signature page follows.

 

 

 

 

Assignor and Assignee are executing this Assignment effective as of the Effective Date.

 

	 	ASSIGNOR:	 	ASSIGNEE:
	 	 	 	 
	 	Royal Hawaiian Macadamia Nut, Inc.	 	MacFarms, LLC
	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	
			By:

				 	 	 	By:	 	
			 

			
	 	Printed Name:	 	 	Printed Name:	 
	 	As:	 	 	 	As:	 	 

 

Signature page to Assignment and Assumption of Intangible Property

 

 

 

[Schedules to be attached]Exhibit

EXHIBIT 10.3

SERVICENOW, INC.
2012 EQUITY INCENTIVE PLAN 

1.PURPOSE.  The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, and any Parents and Subsidiaries that exist now or in the future, by offering them an opportunity to participate in the Company’s future performance through the grant of Awards.  Capitalized terms not defined elsewhere in the text are defined in Section 27.

2.SHARES SUBJECT TO THE PLAN. 

21.1Number of Shares Available.   Subject to Sections 2.6 and 21 and any other applicable provisions hereof, the total number of Shares reserved and available for grant and issuance pursuant to this Plan as of the date of adoption of the Plan by the Board, is 9,600,000 Shares plus (i) any reserved shares not issued or subject to outstanding grants under the Company’s 2005 Stock Plan (the “Prior Plan”) on the Effective Date (as defined below), (ii) shares that are subject to stock options or other awards granted under the Prior Plan that cease to be subject to such stock options or other awards by forfeiture or otherwise after the Effective Date, (iii) shares issued under the Prior Plan before or after the Effective Date pursuant to the exercise of stock options that are, after the Effective Date, forfeited, (iv) shares issued under the Prior Plan that are repurchased by the Company at the original issue price and (v) shares that are subject to stock options or other awards under the Prior Plan that are used to pay the exercise price of an option or withheld to satisfy the tax withholding obligations related to any award.  

21.2Lapsed, Returned Awards.  Shares subject to Awards, and Shares issued under the Plan under any Award, will again be available for grant and issuance in connection with subsequent Awards under this Plan to the extent such Shares:  (a) are subject to issuance upon exercise of an Option or SAR granted under this Plan but which cease to be subject to the Option or SAR for any reason other than exercise of the Option or SAR; (b) are subject to Awards granted under this Plan that are forfeited or are repurchased by the Company at the original issue price; (c) are subject to Awards granted under this Plan that otherwise terminate without such Shares being issued; or (d) are surrendered pursuant to an Exchange Program.  To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan.  Shares used to pay the exercise price of an Award or withheld to satisfy the tax withholding obligations related to an Award will become available for future grant or sale under the Plan.  For the avoidance of doubt, Shares that otherwise become available for grant and issuance because of the provisions of this Section 2.2 shall not include Shares subject to Awards that initially became available because of the substitution clause in Section 21.2 hereof.

21.3Minimum Share Reserve.  At all times the Company shall reserve and keep available a sufficient number of Shares as shall be required to satisfy the requirements of all outstanding Awards granted under this Plan.  

21.4Automatic Share Reserve Increase.  The number of Shares available for grant and issuance under the Plan shall be increased on January 1, of each of the ten (10) calendar years during the term of the Plan, by the lesser of (i) five percent (5%) of the number of Shares issued and outstanding on each December 31 immediately prior to the date of increase or (ii) such number of Shares determined by the Board.  

21.5Limitations.  No more than fifty million (50,000,000) Shares shall be issued pursuant to the exercise of ISOs.  

21.6Adjustment of Shares.  If the number of outstanding Shares is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company, without consideration, then (a) the number of Shares reserved for issuance and future grant under the Plan set forth in Section 2.1, (b) the Exercise Prices of and number of Shares subject to outstanding Options and SARs, (c) the number of Shares subject to other outstanding Awards, (d) the maximum number of shares that may be issued as ISOs set forth in Section 2.5, (e) the maximum number of Shares that may be issued to an individual or to a new Employee in any one calendar year set forth in Section 3 and (f) the number of Shares that are granted as Awards to Non-Employee Directors as set forth in Section 12, shall be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and in compliance with applicable securities laws; provided that fractions of a Share will not be issued.

3.ELIGIBILITY.  ISOs may be granted only to Employees.  All other Awards may be granted to Employees, Consultants, Directors and Non-Employee Directors of the Company or any Parent or Subsidiary of the Company; provided such Consultants, Directors and Non-Employee Directors render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction.  No Participant will be eligible to receive more than three million (3,000,00) Shares in any calendar year under this Plan pursuant to the grant of Awards except that new Employees of the Company or of a Parent or Subsidiary of the Company (including new Employees who are also officers and directors of the Company or any Parent or Subsidiary of the Company) are eligible to receive up to a maximum of six million (6,000,000) Shares in the calendar year in which they commence their employment.

4.ADMINISTRATION.

21.1Committee Composition; Authority.  This Plan will be administered by the Committee or by the Board acting as the Committee.  Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan, except, however, the Board shall establish the terms for the grant of an Award to Non-Employee Directors.  The Committee will have the authority to:
(a)construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan; 

(b)prescribe, amend and rescind rules and regulations relating to this Plan or any Award; 

(c)select persons to receive Awards;

(d)determine the form and terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may vest and be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Committee will determine;

(e)determine the number of Shares or other consideration subject to Awards;

(f)determine the Fair Market Value in good faith and interpret the applicable provisions of this Plan and the definition of Fair Market Value in connection with circumstances that impact the Fair Market Value, if necessary;

(g)determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under this Plan or any other incentive or compensation plan of the Company or any Parent or Subsidiary of the Company;

(h)grant waivers of Plan or Award conditions;

(i)determine the vesting, exercisability and payment of Awards;

(j)correct any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or any Award Agreement; 

(k)determine whether an Award has been earned; 

(l)determine the terms and conditions of any, and to institute any Exchange Program; 

(m)reduce or waive any criteria with respect to Performance Factors;

(n)adjust Performance Factors to take into account changes in law and accounting or tax rules as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships; 

(o)adopt rules and/or procedures (including the adoption of any subplan under this Plan) relating to the operation and administration of the Plan to accommodate requirements of local law and procedures outside of the United States;

(p)make all other determinations necessary or advisable for the administration of this Plan; and

(q)    delegate any of the foregoing to a subcommittee consisting of one or more executive officers pursuant to a specific delegation.
21.2Committee Interpretation and Discretion.  Any determination made by the Committee with respect to any Award shall be made in its sole discretion at the time of grant of the Award or, unless in contravention of any express term of the Plan or Award, at any later time, and such determination shall be final and binding on the Company and all persons having an interest in any Award under the Plan.  Any dispute regarding the interpretation of the Plan or any Award Agreement shall be submitted by the Participant or Company to the Committee for review.  The resolution of such a dispute by the Committee shall be final and binding on the Company and the Participant.  The Committee may delegate to one or more executive officers the authority to review and resolve disputes with respect to Awards held by Participants who are not Insiders, and such resolution shall be final and binding on the Company and the Participant.

21.3Section 16 of the Exchange Act. Awards granted to Participants who are subject to Section 16 of the Exchange Act must be approved by two or more “non-employee directors” (as defined in the regulations promulgated under Section 16 of the Exchange Act). 

4.4    Documentation.  The Award Agreement for a given Award, the Plan and any other documents may be delivered to, and accepted by, a Participant or any other person in any manner (including electronic distribution or posting) that meets applicable legal requirements.  
5.OPTIONS.  The Committee may grant Options to Participants and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ISOs”) or Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may vest and be exercised, and all other terms and conditions of the Option, subject to the following: 

21.1Option Grant.  Each Option granted under this Plan will identify the Option as an ISO or an NQSO.  An Option may be, but need not be, awarded upon satisfaction of such Performance Factors during any Performance Period as are set out in advance in the Participant’s individual Award Agreement.  If the Option is being earned upon the satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each Option; and (y) select from among the Performance Factors to be used to measure the performance, if any.  Performance Periods may overlap and Participants may participate simultaneously with respect to Options that are subject to different performance goals and other criteria.

21.2Date of Grant.  The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, or a specified future date.  The Award Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time after the granting of the Option.

21.3Exercise Period.  Options may be vested and exercisable within the times or upon the conditions as set forth in the Award Agreement governing such Option; provided, however, that no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted; and provided further that no ISO granted to a person who, at the time the ISO is granted, directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary of the Company (“Ten Percent Stockholder”) will be exercisable after the expiration of five (5) years from the date the ISO is granted.  The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines.

21.4Exercise Price.  The Exercise Price of an Option will be determined by the Committee when the Option is granted; provided that: (i) the Exercise Price of an Option will be not less than one hundred percent (100%) of the Fair Market Value of the Shares on the date of grant and (ii) the Exercise Price of any ISO granted to a Ten Percent Stockholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant.  Payment for the Shares purchased may be made in accordance with Section 11 and the Award Agreement and in accordance with any procedures established by the Company.  

21.5Method of Exercise.  Any Option granted hereunder will be vested and exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Committee and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share.  An Option will be deemed exercised when the Company receives: (i) notice of exercise (in such form as the Committee may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Committee and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised.  No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 2.6 of the Plan. Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

21.6Termination.  The exercise of an Option will be subject to the following (except as may be otherwise provided in an Award Agreement): 

(a)If the Participant is Terminated for any reason except for Cause or the Participant’s death or Disability, then the Participant may exercise such Participant’s Options only to the extent that such Options would have been exercisable by the Participant on the Termination Date no later than ninety (90) days after the Termination Date (or such shorter time period or longer time period not exceeding five (5) years as may be determined by the Committee, with any exercise beyond three (3) months after the Termination Date deemed to be the exercise of an NQSO), but in any event no later than the expiration date of the Options.

(b)If the Participant is Terminated because of the Participant’s death (or the Participant dies within ninety (90) days after a Termination other than for Cause or because of the Participant’s Disability), then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the Termination Date and must be exercised by the Participant’s legal representative, or authorized assignee, no later than twelve (12) months after the Termination Date (or such shorter time period not less than six (6) months or longer time period not exceeding five (5) years as may be determined by the Committee), but in any event no later than the expiration date of the Options. 

(c)If the Participant is Terminated because of the Participant’s Disability, then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the Termination Date and must be exercised by the Participant (or the Participant’s legal representative or authorized assignee) no later than twelve (12) months after the Termination Date (with any exercise beyond (a) three (3) months after the Termination Date when the Termination is for a Disability that is not a “permanent and total disability” as defined in Section 22(e)(3) of the Code, or (b) twelve (12) months after the Termination Date when the Termination is for a Disability that is a “permanent and total disability” as defined in Section 22(e)(3) of the Code, deemed to be exercise of an NQSO), but in any event no later than the expiration date of the Options. 

(d)If the Participant is terminated for Cause, then Participant’s Options shall expire on such Participant’s Termination Date, or at such later time and on such conditions as are determined by the Committee, but in any no event later than the expiration date of the Options.  Unless otherwise provided in the Award Agreement, Cause will have the meaning set forth in the Plan.

21.7Limitations on Exercise.  The Committee may specify a minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent any Participant from exercising the Option for the full number of Shares for which it is then exercisable.

21.8Limitations on ISOs.  With respect to Awards granted as ISOs, to the extent that the aggregate Fair Market Value of the Shares with respect to which such ISOs are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as NQSOs. For purposes of this Section 5.8, ISOs will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted.  In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.

21.9Modification, Extension or Renewal.  The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted.  Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code.  Subject to Section 18 of this Plan, by written notice to affected Participants, the Committee may reduce the Exercise Price of outstanding Options without the consent of such Participants; provided, however, that the Exercise Price may not be reduced below the Fair Market Value on the date the action is taken to reduce the Exercise Price.

21.10No Disqualification.  Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422 of the Code.

6.RESTRICTED STOCK AWARDS.

21.1Awards of Restricted Stock.  A Restricted Stock Award is an offer by the Company to sell to a Participant Shares that are subject to restrictions (“Restricted Stock”).  The Committee will determine to whom an offer will be made, the number of Shares the Participant may purchase, the Purchase Price, the restrictions under which the Shares will be subject and all other terms and conditions of the Restricted Stock Award, subject to the Plan.  

21.2Restricted Stock Purchase Agreement.  All purchases under a Restricted Stock Award will be evidenced by an Award Agreement.  Except as may otherwise be provided in an Award Agreement, a Participant accepts a Restricted Stock Award by signing and delivering to the Company an Award Agreement with full payment of the Purchase Price, within thirty (30) days from the date the Award Agreement was delivered to the Participant.  If the Participant does not accept such Award within thirty (30) days, then the offer of such Restricted Stock Award will terminate, unless the Committee determines otherwise.  

21.3Purchase Price.  The Purchase Price for a Restricted Stock Award will be determined by the Committee and may be less than Fair Market Value on the date the Restricted Stock Award is granted.  Payment of the Purchase Price must be made in accordance with Section 11 of the Plan, and the Award Agreement and in accordance with any procedures established by the Company.

21.4Terms of Restricted Stock Awards.  Restricted Stock Awards will be subject to such restrictions as the Committee may impose or are required by law.  These restrictions may be based on completion of a specified number of years of service with the Company or upon completion of Performance Factors, if any, during any Performance Period as set out in advance in the Participant’s Award Agreement.  Prior to the grant of a Restricted Stock Award, the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Restricted Stock Award; (b) select from among the Performance Factors to be used to measure performance goals, if any; and (c) determine the number of Shares that may be awarded to the Participant.  Performance Periods may overlap and a Participant may participate simultaneously with respect to Restricted Stock Awards that are subject to different Performance Periods and having different performance goals and other criteria.

21.5Termination of Participant.  Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee). 

7.STOCK BONUS AWARDS.

21.1Awards of Stock Bonuses.  A Stock Bonus Award is an award to an eligible person of Shares for services to be rendered or for past services already rendered to the Company or any Parent or Subsidiary.  All Stock Bonus Awards shall be made pursuant to an Award Agreement.  No payment from the Participant will be required for Shares awarded pursuant to a Stock Bonus Award.  

21.2Terms of Stock Bonus Awards.  The Committee will determine the number of Shares to be awarded to the Participant under a Stock Bonus Award and any restrictions thereon.  These restrictions may be based upon completion of a specified number of years of service with the Company or upon satisfaction of performance goals based on Performance Factors during any Performance Period as set out in advance in the Participant’s Stock Bonus Agreement.  Prior to the grant of any Stock Bonus Award the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Stock Bonus Award; (b) select from among the Performance Factors to be used to measure performance goals; and (c) determine the number of Shares that may be awarded to the Participant.  Performance Periods may overlap and a Participant may participate simultaneously with respect to Stock Bonus Awards that are subject to different Performance Periods and different performance goals and other criteria.  

21.3Form of Payment to Participant.  Payment may be made in the form of cash, whole Shares, or a combination thereof, based on the Fair Market Value of the Shares earned under a Stock Bonus Award on the date of payment, as determined in the sole discretion of the Committee.  

21.4Termination of Participation.  Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee). 

8.STOCK APPRECIATION RIGHTS.

21.1Awards of SARs.  A Stock Appreciation Right (“SAR”) is an award to a Participant that may be settled in cash, or Shares (which may consist of Restricted Stock), having a value equal to (a) the difference between the Fair Market Value on the date of exercise over the Exercise Price multiplied by (b) the number of Shares with respect to which the SAR is being settled (subject to any maximum number of Shares that may be issuable as specified in an Award Agreement).  All SARs shall be made pursuant to an Award Agreement. 

21.2Terms of SARs.  The Committee will determine the terms of each SAR including, without limitation: (a) the number of Shares subject to the SAR; (b) the Exercise Price and the time or times during which the SAR may be settled; (c) the consideration to be distributed on settlement of the SAR; and (d) the effect of the Participant’s Termination on each SAR.  The Exercise Price of the SAR will be determined by the Committee when the SAR is granted, and may not be less than Fair Market Value.  A SAR may be awarded upon satisfaction of Performance Factors, if any, during any Performance Period as are set out in advance in the Participant’s individual Award Agreement.  If the SAR is being earned upon the satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each SAR; and (y) select from among the Performance Factors to be used to measure the performance, if any.  Performance Periods may overlap and Participants may participate simultaneously with respect to SARs that are subject to different Performance Factors and other criteria.

21.3Exercise Period and Expiration Date.  A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth in the Award Agreement governing such SAR.  The SAR Agreement shall set forth the expiration date; provided that no SAR will be exercisable after the expiration of ten (10) years from the date the SAR is granted.  The Committee may also provide for SARs to become exercisable at one time or from time to time, periodically or otherwise (including, without limitation, upon the attainment during a Performance Period of performance goals based on Performance Factors), in such number of Shares or percentage of the Shares subject to the SAR as the Committee determines.  Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).  Notwithstanding the foregoing, the rules of Section 5.6 also will apply to SARs.

21.4Form of Settlement.  Upon exercise of a SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying (i) the difference between the Fair Market Value of a Share on the date of exercise over the Exercise Price; times (ii) the number of Shares with respect to which the SAR is exercised. At the discretion of the Committee, the payment from the Company for the SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof.  The portion of a SAR being settled may be paid currently or on a deferred basis with such interest or dividend equivalent, if any, as the Committee determines, provided that the terms of the SAR and any deferral satisfy the requirements of Section 409A of the Code.

21.5Termination of Participation.  Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

9.RESTRICTED STOCK UNITS.

21.1Awards of Restricted Stock Units.  A Restricted Stock Unit (“RSU”) is an award to a Participant covering a number of Shares that may be settled in cash, or by issuance of those Shares (which may consist of Restricted Stock).  All RSUs shall be made pursuant to an Award Agreement.

21.2Terms of RSUs.  The Committee will determine the terms of an RSU including, without limitation: (a) the number of Shares subject to the RSU; (b) the time or times during which the RSU may be settled; (c) the consideration to be distributed on settlement; and (d) the effect of the Participant’s Termination on each RSU.  An RSU may be awarded upon satisfaction of such performance goals based on Performance Factors during any Performance Period as are set out in advance in the Participant’s Award Agreement.  If the RSU is being earned upon satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for the RSU; (y) select from among the Performance Factors to be used to measure the performance, if any; and (z) determine the number of Shares deemed subject to the RSU.  Performance Periods may overlap and participants may participate simultaneously with respect to RSUs that are subject to different Performance Periods and different performance goals and other criteria.  

21.3Form and Timing of Settlement.  Payment of earned RSUs shall be made as soon as practicable after the date(s) determined by the Committee and set forth in the Award Agreement. The Committee, in its sole discretion, may settle earned RSUs in cash, Shares, or a combination of both.  The Committee may also permit a Participant to defer payment under a RSU to a date or dates after the RSU is earned provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code.

21.4Termination of Participant.  Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

10.PERFORMANCE AWARDS.

21.1Performance Awards.  A Performance Award is an award to a Participant of a cash bonus or a Performance Share bonus.  Grants of Performance Awards shall be made pursuant to an Award Agreement.

21.2Terms of Performance Awards. The Committee will determine, and each Award Agreement shall set forth, the terms of each award of Performance Award including, without limitation: (a) the amount of any cash bonus; (b) the number of Shares deemed subject to a Performance Share bonus; (c) the Performance Factors and Performance Period that shall determine the time and extent to which each Performance Award shall be settled; (d) the consideration to be distributed on settlement; and (e) the effect of the Participant’s Termination on each Performance Award.  In establishing Performance Factors and the Performance Period the Committee will: (x) determine the nature, length and starting date of any Performance Period; and (y) select from among the Performance Factors to be used.  Prior to settlement the Committee shall determine the extent to which Performance Awards have been earned.  Performance Periods may overlap and Participants may participate simultaneously with respect to Performance Awards that are subject to different Performance Periods and different performance goals and other criteria.  No Participant will be eligible to receive more than $[Number] in Performance Awards in any calendar year under this Plan.

21.3Value, Earning and Timing of Performance Shares.  Any Performance Share bonus will have an initial value equal to the Fair Market Value of a Share on the date of grant.  After the applicable Performance Period has ended, the holder of a Performance Share bonus will be entitled to receive a payout of the number of Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Factors or other vesting provisions have been achieved. The Committee, in its sole discretion, may pay an earned Performance Share bonus in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Shares at the close of the applicable Performance Period) or in a combination thereof.  Performance Share bonuses may also be settled in Restricted Stock.

21.4Termination of Participant.  Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

11.PAYMENT FOR SHARE PURCHASES.

Payment from a Participant for Shares purchased pursuant to this Plan may be made in cash or by check or, where expressly approved for the Participant by the Committee and where permitted by law (and to the extent not otherwise set forth in the applicable Award Agreement): 
(a)by cancellation of indebtedness of the Company to the Participant;

(b)by surrender of shares of the Company held by the Participant that have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Award will be exercised or settled;

(c)by waiver of compensation due or accrued to the Participant for services rendered or to be rendered to the Company or a Parent or Subsidiary of the Company;

(d)by consideration received by the Company pursuant to a broker-assisted or other form of cashless exercise program implemented by the Company in connection with the Plan; 

(e)by any combination of the foregoing; or

(f)by any other method of payment as is permitted by applicable law.

12.GRANTS to Non-Employee directors.

21.1Types of Awards.  Non-Employee Directors are eligible to receive any type of Award offered under this Plan except ISOs.  Awards pursuant to this Section 12 may be automatically made pursuant to policy adopted by the Board, or made from time to time as determined in the discretion of the Board.  

21.2Eligibility.  Awards pursuant to this Section 12 shall be granted only to Non-Employee Directors.  A Non-Employee Director who is elected or re-elected as a member of the Board will be eligible to receive an Award under this Section 12.

21.3Vesting, Exercisability and Settlement.  Except as set forth in Section 21, Awards shall vest, become exercisable and be settled as determined by the Board.  With respect to Options and SARs, the exercise price granted to Non-Employee Directors shall not be less than the Fair Market Value of the Shares at the time that such Option or SAR is granted.

12.4    Election to receive Awards in Lieu of Cash.  A Non-Employee Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash or Awards or a combination thereof, as determined by the Committee.  Such Awards shall be issued under the Plan.  An election under this Section 12.4 shall be filed with the Company on the form prescribed by the Company.
13.WITHHOLDING TAXES.

21.1Withholding Generally.  Whenever Shares are to be issued in satisfaction of Awards granted under this Plan, the Company may require the Participant to remit to the Company, or to the Parent or Subsidiary employing the Participant, an amount sufficient to satisfy applicable U.S. federal, state, local and international withholding tax requirements or any other tax liability legally due from the Participant prior to the delivery of Shares pursuant to exercise or settlement of any Award.  Whenever payments in satisfaction of Awards granted under this Plan are to be made in cash, such payment will be net of an amount sufficient to satisfy applicable U.S. federal, state, local and international withholding tax requirements or any other tax liability legally due from the Participant.

21.2Stock Withholding.  The Committee, in its sole discretion and pursuant to such procedures as it may specify from time to time and to limitations of local law, may require or permit a Participant to satisfy such tax withholding obligation or any other tax liability legally due from the Participant, in whole or in part by (without limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld, or (iii) delivering to the Company already-owned Shares having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld. 

14.TRANSFERABILITY.  

21.1Transfer Generally.  Unless determined otherwise by the Committee or pursuant to Section 14.2, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution.  If the Committee makes an Award transferable, including, without limitation, by instrument to an inter vivos or testamentary trust in which the Awards are to be passed to beneficiaries upon the death of the trustor (settlor) or by gift to a Permitted Transferee, such Award will contain such additional terms and conditions as the Committee deems appropriate.  All Awards shall be exercisable: (i) during the Participant’s lifetime only by (A) the Participant, or (B) the Participant’s guardian or legal representative; (ii) after the Participant’s death, by the legal representative of the Participant’s heirs or legatees; and (iii) in the case of all awards except ISOs, by a Permitted Transferee.

21.2Award Transfer Program.  Notwithstanding any contrary provision of the Plan, the Committee shall have all discretion and authority to determine and implement the terms and conditions of any Award Transfer Program instituted pursuant to this Section 14.2 and shall have the authority to amend the terms of any Award participating, or otherwise eligible to participate in, the Award Transfer Program, including (but not limited to) the authority to (i) amend (including to extend) the expiration date, post-termination exercise period and/or forfeiture conditions of any such Award, (ii) amend or remove any provisions of the Award relating to the Award holder’s continued service to the Company, (iii) amend the permissible payment methods with respect to the exercise or purchase of any such Award, (iv) amend the adjustments to be implemented in the event of changes in the capitalization and other similar events with respect to such Award, and (v) make such other changes to the terms of such Award as the Committee deems necessary or appropriate in its sole discretion.

15.PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES.

21.1Voting and Dividends.  No Participant will have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Participant, except for any dividend equivalent rights permitted by an applicable Award Agreement.  After Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock; provided, further, that the Participant will have no right to retain such stock dividends or stock distributions with respect to Shares that are repurchased at the Participant’s Purchase Price or Exercise Price, as the case may be, pursuant to Section 15.2.

21.2Restrictions on Shares.  At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) a right to repurchase (a “Right of Repurchase”) a portion of any or all Unvested Shares held by a Participant following such Participant’s Termination at any time within ninety (90) days after the later of the Participant’s Termination Date and the date the Participant purchases Shares under this Plan, for cash and/or cancellation of purchase money indebtedness, at the Participant’s Purchase Price or Exercise Price, as the case may be.

16.CERTIFICATES.  All Shares or other securities whether or not certificated, delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable U.S. federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted and any non-U.S. exchange controls or securities law restrictions to which the Shares are subject.

17.ESCROW; PLEDGE OF SHARES.  To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates.  Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of the Participant’s obligation to the Company under the promissory note; provided, however, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral.  In connection with any pledge of the Shares, the Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time to time approve.  The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid.

18.REPRICING; EXCHANGE AND BUYOUT OF AWARDS.  Without prior stockholder approval the Committee may (i) reprice Options or SARS (and where such repricing is a reduction in the Exercise Price of outstanding Options or SARS, the consent of the affected Participants is not required provided written notice is provided to them, notwithstanding any adverse tax consequences to them arising from the repricing), and (ii) with the consent of the respective Participants (unless not required pursuant to Section 5.9 of the Plan), pay cash or issue new Awards in exchange for the surrender and cancellation of any, or all, outstanding Awards.

19.SECURITIES LAW AND OTHER REGULATORY COMPLIANCE.  An Award will not be effective unless such Award is in compliance with all applicable U.S. and foreign federal and state securities laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance.  Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and/or (b) completion of any registration or other qualification of such Shares under any state or federal or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.  The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the registration, qualification or listing requirements of any foreign or state securities laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so.

20.NO OBLIGATION TO EMPLOY.  Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent or Subsidiary of the Company or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Participant’s employment or other relationship at any time.

21.CORPORATE TRANSACTIONS.
    
21.1Assumption or Replacement of Awards by Successor.  In the event of a Corporate Transaction any or all outstanding Awards may be assumed or replaced by the successor corporation, which assumption or replacement shall be binding on all Participants.  In the alternative, the successor corporation may substitute equivalent Awards or provide substantially similar consideration to Participants as was provided to stockholders (after taking into account the existing provisions of the Awards).  The successor corporation may also issue, in place of outstanding Shares of the Company held by the Participant, substantially similar shares or other property subject to repurchase restrictions no less favorable to the Participant.  In the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, then notwithstanding any other provision in this Plan to the contrary, such Awards shall have their vesting accelerate as to all shares subject to such Award (and any applicable right of repurchase fully lapse) immediately prior to the Corporate Transaction and then such Awards will terminate.  In addition, in the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, the Committee will notify the Participant in writing or electronically that such Award will be exercisable for a period of time determined by the Committee in its sole discretion, and such Award will terminate upon the expiration of such period.  Awards need not be treated similarly in a Corporate Transaction.

21.2Assumption of Awards by the Company.  The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in substitution of such other company’s award; or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan.  Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other company had applied the rules of this Plan to such grant.  In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged (except that the Purchase Price or the Exercise Price, as the case may be, and the number and nature of Shares issuable upon exercise or settlement of any such Award will be adjusted appropriately pursuant to Section 424(a) of the Code).  In the event the Company elects to grant a new Option in substitution rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price.  Substitute Awards shall not reduce the number of Shares authorized for grant under the Plan or authorized for grant to a Participant in any calendar year.

21.3Non-Employee Directors’ Awards.  Notwithstanding any provision to the contrary herein, in the event of a Corporate Transaction, the vesting of all Awards granted to Non-Employee Directors shall accelerate and such Awards shall become exercisable (as applicable) in full prior to the consummation of such event at such times and on such conditions as the Committee determines.

22.ADOPTION AND STOCKHOLDER APPROVAL.  This Plan shall be submitted for the approval of the Company’s stockholders, consistent with applicable laws, within twelve (12) months before or after the date this Plan is adopted by the Board.  

23.TERM OF PLAN/GOVERNING LAW.  Unless earlier terminated as provided herein, this Plan will become effective on the Effective Date and will terminate ten (10) years from the date this Plan is adopted by the Board.  This Plan and all Awards granted hereunder shall be governed by and construed in accordance with the laws of the State of Delaware.

24.AMENDMENT OR TERMINATION OF PLAN.  The Board may at any time terminate or amend this Plan in any respect, including, without limitation, amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan; provided, however, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval; provided further, that a Participant’s Award shall be governed by the version of this Plan then in effect at the time such Award was granted.  

25.NONEXCLUSIVITY OF THE PLAN.  Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of stock awards and bonuses otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

26.INSIDER TRADING POLICY.  Each Participant who receives an Award shall comply with any policy adopted by the Company from time to time covering transactions in the Company’s securities by Employees, officers and/or directors of the Company.

27.DEFINITIONS.  As used in this Plan, and except as elsewhere defined herein, the following terms will have the following meanings:

“Award” means any award under the Plan, including any Option, Restricted Stock, Stock Bonus, Stock Appreciation Right, Restricted Stock Unit or award of Performance Shares.
“Award Agreement” means, with respect to each Award, the written or electronic agreement between the Company and the Participant setting forth the terms and conditions of the Award, which shall be in substantially a form (which need not be the same for each Participant) that the Committee has from time to time approved, and will comply with and be subject to the terms and conditions of this Plan.
“Award Transfer Program” means any program instituted by the Committee which would permit Participants the opportunity to transfer any outstanding Awards to a financial institution or other person or entity approved by the Committee.
“Board” means the Board of Directors of the Company.
“Cause” means (i) embezzlement or misappropriation of funds; (ii) conviction of, or entry of a plea of nolo contendre to, a felony involving moral turpitude; (iii) commission of material acts of dishonesty, fraud, or deceit; (iv) breach of any material provisions of any employment agreement; (v) habitual or willful neglect of duties; (vi) breach of fiduciary duty; or (vii) material violation of any other duty whether imposed by law or the Board. 
“Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.
 “Committee” means the Compensation Committee of the Board or those persons to whom administration of the Plan, or part of the Plan, has been delegated as permitted by law.  
“Common Stock” means the common stock of the Company.
“Company” means ServiceNow, Inc., or any successor corporation.
“Consultant” means any person, including an advisor or independent contractor, engaged by the Company or a Parent or Subsidiary to render services to such entity.

“Corporate Transaction” means the occurrence of any of the following events: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then-outstanding voting securities; (ii) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; (iii) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation or (iv) any other transaction which qualifies as a “corporate transaction” under Section 424(a) of the Code wherein the stockholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the Company).
“Director” means a member of the Board. 
“Disability” means in the case of incentive stock options, total and permanent disability as defined in Section 22(e)(3) of the Code and in the case of other Awards, that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.  
“Effective Date” means the day immediately prior to the date of the underwritten initial public offering of the Company’s Common Stock pursuant to a registration statement that is declared effective by the SEC.
“Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.
“Exchange Program” means a program pursuant to which (i) outstanding Awards are surrendered, cancelled or exchanged for cash, the same type of Award or a different Award (or combination thereof) or (ii) the exercise price of an outstanding Award is increased or reduced.
“Exercise Price” means, with respect to an Option, the price at which a holder may purchase the Shares issuable upon exercise of an Option and with respect to a SAR, the price at which the SAR is granted to the holder thereof.
“Fair Market Value” means, as of any date, the value of a share of the Company’s Common Stock determined as follows:
(a)if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal or such other source as the Committee deems reliable;

(b)if such Common Stock is publicly traded but is neither listed nor admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal or such other source as the Committee deems reliable;

(c)in the case of an Option or SAR grant made on the Effective Date, the price per share at which shares of the Company’s Common Stock are initially offered for sale to the public by the Company’s underwriters in the initial public offering of the Company’s Common Stock pursuant to a registration statement filed with the SEC under the Securities Act; or

(d)if none of the foregoing is applicable, by the Board or the Committee in good faith.
“Insider” means an officer or director of the Company or any other person whose transactions in the Company’s Common Stock are subject to Section 16 of the Exchange Act.
“Non-Employee Director” means a Director who is not an Employee of the Company or any Parent or Subsidiary.
“Option” means an award of an option to purchase Shares pursuant to Section 5.
“Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
“Participant” means a person who holds an Award under this Plan.  
“Performance Award” means cash or stock granted pursuant to Section 10 or Section 12 of the Plan.
“Performance Factors” means any of the factors selected by the Committee and specified in an Award Agreement, from among the following objective measures, either individually, alternatively or in any combination, applied to the Company as a whole or any business unit or Subsidiary, either individually, alternatively, or in any combination, on a GAAP or non-GAAP basis, and measured, to the extent applicable on an absolute basis or relative to a pre-established target, to determine whether the performance goals established by the Committee with respect to applicable Awards have been satisfied: 
(a)    Profit Before Tax;
(b)    Billings;
(c)    Revenue; 
(d)    Net revenue; 
(e)    Earnings (which may include earnings before interest and taxes, earnings before  taxes, and net earnings); 
(f)    Operating income; 
(g)    Operating margin; 
(h)    Operating profit; 
(i)    Controllable operating profit, or net operating profit; 
(j)    Net Profit; 
(k)    Gross margin; 
(l)    Operating expenses or operating expenses as a percentage of revenue; 
(m)    Net income; 
(n)    Earnings per share; 
(o)    Total stockholder return; 

(p)    Market share; 
(q)    Return on assets or net assets; 
(r)    The Company’s stock price; 
(s)    Growth in stockholder value relative to a pre-determined index; 
(t)    Return on equity; 
(u)    Return on invested capital; 
(v)    Cash Flow (including free cash flow or operating cash flows) 
(w)    Cash conversion cycle; 
(x)    Economic value added;  
(y)    Individual confidential business objectives; 
(z)    Contract awards or backlog; 
(aa)    Overhead or other expense reduction; 
(bb)    Credit rating; 
(cc)    Strategic plan development and implementation; 
(dd)    Succession plan development and implementation; 
(ee)    Improvement in workforce diversity; 
(ff)    Customer indicators; 
(gg)    New product invention or innovation; 
(hh)    Attainment of research and development milestones; 
(ii)    Improvements in productivity; 
(jj)    Bookings; and
(kk)    Attainment of objective operating goals and employee metrics; and 
The Committee may, in recognition of unusual or non-recurring items such as acquisition-related activities or changes in applicable accounting rules, provide for one or more equitable adjustments (based on objective standards) to the Performance Factors to preserve the Committee’s original intent regarding the Performance Factors at the time of the initial award grant. It is within the sole discretion of the Committee to make or not make any such equitable adjustments.
“Performance Period” means the period of service determined by the Committee, during which years of service or performance is to be measured for the Award.
“Performance Share” means a performance share bonus granted as a Performance Award. 

“Permitted Transferee” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships) of the Employee, any person sharing the Employee’s household (other than a tenant or employee), a trust in which these persons (or the Employee) have more than 50% of the beneficial interest, a foundation in which these persons (or the Employee) control the management of assets, and any other entity in which these persons (or the Employee) own more than 50% of the voting interests.
“Plan” means this ServiceNow, Inc. 2012 Equity Incentive Plan.
“Purchase Price” means the price to be paid for Shares acquired under the Plan, other than Shares acquired upon exercise of an Option or SAR. 
“Restricted Stock Award” means an award of Shares pursuant to Section 6 or Section 12 of the Plan, or issued pursuant to the early exercise of an Option. 
“Restricted Stock Unit” means an Award granted pursuant to Section 9 or Section 12 of the Plan. 
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the United States Securities Act of 1933, as amended.
“Shares” means shares of the Company’s Common Stock and the common stock of any successor security.
“Stock Appreciation Right” means an Award granted pursuant to Section 8 or Section 12 of the Plan.  
“Stock Bonus” means an Award granted pursuant to Section 7 or Section 12 of the Plan. 
“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
“Termination” or “Terminated” means, for purposes of this Plan with respect to a Participant, that the Participant has for any reason ceased to provide services as an employee, officer, director, consultant, independent contractor or advisor to the Company or a Parent or Subsidiary of the Company.  An employee will not be deemed to have ceased to provide services in the case of any leave of absence approved by the Company.  In the case of any employee on an approved leave of absence, the Committee may make such provisions respecting suspension of vesting of the Award while on leave from the employ of the Company or a Parent or Subsidiary of the Company as it may deem appropriate, except that in no event may an Award be exercised after the expiration of the term set forth in the applicable Award Agreement.  In the event of military leave, if required by applicable laws, vesting shall continue for the longest period that vesting continues under any other statutory or Company approved leave of absence and, upon a Participant’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment Rights Act), he or she shall be given vesting credit with respect to Awards to the same extent as would have applied had the Participant continued to provide services to the Company throughout the leave on the same terms as he or she was providing services immediately prior to such leave.  An employee shall have terminated employment as of the date he or she ceases to be employed (regardless of whether the termination is in breach of local laws or is later found to be invalid) and employment shall not be extended by any notice period or garden leave mandated by local law.  The Committee will have sole discretion to determine whether a Participant has ceased to provide services for purposes of the Plan and the effective date on which the Participant ceased to provide services (the “Termination Date”).
“Unvested Shares” means Shares that have not yet vested or are subject to a right of repurchase in favor of the Company (or any successor thereto).

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00280-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00280-of-00352.parquet"}]]