Document:

EXHIBIT 10.1

 

SETTLEMENT AGREEMENT

 

This SETTLEMENT AGREEMENT
is made and entered into as of January 12, 2015 (the “Agreement”) by and among Jamba, Inc., a Delaware
corporation (the “Company”), and each of the parties listed on Exhibit A hereto (each, an “Investor”
and collectively, the “Investors”). The Company and the Investors are referred to herein as the “Parties.”

 

WHEREAS, each of the
Investors beneficially own the number of shares of the Company’s common stock, par value $0.001 per share (the “Common
Stock”) listed on Exhibit A hereto;

 

WHEREAS, on November
24, 2014, JCP Investment Partnership, LP and certain of its affiliates (“JCP”) delivered a letter (the “Nomination
Letter”) nominating six individuals for election to the Company’s Board of Directors (the “Board”)
at the Company’s 2015 annual meeting of stockholders (the “2015 Annual Meeting”);

 

WHEREAS, Engaged Capital,
LLC and certain of its affiliates (“Engaged Capital”) own approximately 8.2% of the outstanding shares of Common
Stock of the Company; and

 

WHEREAS, the Company
has reached an agreement with each of JCP and Engaged Capital with respect to certain matters related to the Company’s board
composition and certain other matters, as provided in this Agreement.

 

NOW, THEREFORE, in consideration
of the premises and mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:

 

Section 1.                
Settlement Covenants.

 

(a)               
Board Matters. The Company agrees that the Board and all applicable committees of the Board shall take all necessary
actions to: (i) cause one current member of the Board to no longer serve on the Board after the 2015 Annual Meeting by not nominating
such individual as a director of the Company for election as an incumbent director at the 2015 Annual Meeting, and (ii) appoint,
immediately after execution of this Agreement, each of James C. Pappas and Glenn W. Welling (each a “New Director”
and collectively the “New Directors”) as directors of the Company with terms expiring at the 2015 Annual Meeting.
The Company will take all necessary actions to nominate each New Director for election as an incumbent director at the 2015 Annual
Meeting for a term expiring at the 2016 annual meeting of stockholders (the “2016 Annual Meeting”). The Company
further agrees that without the unanimous approval of the Board, including each New Director, the size of the Board shall not exceed
nine members following the 2015 Annual Meeting and prior to the 2016 Annual Meeting.

 

(b)              
Replacements. The Company agrees that if a New Director resigns for any reason or is otherwise unable to serve as
a director of the Company prior to the 2015 Annual Meeting, the Board will consider an alternative substitute individual(s) to
recommend to the Nominating and Corporate Governance Committee of the Board, and will consider in good faith and consistent with
its fiduciary duties any individual(s) recommended by JCP or Engaged Capital, as the case may be, who qualify as an “independent
director” for purposes of the listing qualification rules of the Nasdaq Stock Market.

 

(c)               
Committees of the Board. The Company agrees that, concurrent with their appointment to the Board, (i) Mr. Pappas
shall be appointed as a member of the Nominating and Corporate Governance Committee of the Board and as a member of the Audit Committee
of the Board, (ii) Mr. Welling shall be appointed as a member of the Compensation and Executive Development Committee of the Board,
and (iii) at least one New Director shall be appointed to any new committee of the Board established after the date of this Agreement,
so long as such individual is eligible to serve in such capacity pursuant to applicable law and the rules of the Nasdaq Stock Market.

 

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(d)              
Board Policies and Procedures. Each New Director understands and acknowledges that all members of the Board, including
the New Directors, are required to comply with all policies, procedures, processes, codes, rules, standards and guidelines applicable
to Board members, including the Company’s code of business conduct and ethics, securities trading policies, director confidentiality
policies, and corporate governance guidelines, and agrees to preserve the confidentiality of Company business and information,
including discussions of matters considered in meetings of the Board or Board committees. Each New Director and Investor shall
provide the Company with such information concerning such New Director or Investor, as the case may be, as is required to be disclosed
under applicable law or stock exchange regulations, in each case as promptly as necessary to enable timely filing of the Company’s
proxy statement.

 

Section 2.                
2015 Annual Meeting.

 

(a)               
The Company agrees to use its commercially reasonable efforts to hold the 2015 Annual Meeting no later than May 29, 2015.

 

(b)              
Withdrawal of Nomination Letter. Effective immediately, JCP hereby irrevocably withdraws the Nomination Letter and
agrees not to bring any other business or proposals before or at the 2015 Annual Meeting. Engaged Capital agrees not to bring any
business or proposals before or at the 2015 Annual Meeting.

 

(c)               
At the 2015 Annual Meeting, each of the Investors agree to vote by proxy and vote all shares of Common Stock beneficially
owned by each Investor and its Affiliates (as defined below) in favor of (i) the election of directors nominated by the Board,
and (ii) otherwise in accordance with the Board’s recommendation, including in favor of all other matters recommended for
stockholder approval by the Board; provided, however, in the event that Institutional Shareholders Services (ISS)
recommends otherwise with respect to any proposals (other than the election of directors), each of the Investors shall be permitted
to vote in accordance with the ISS recommendation.

 

Section 3.                
Standstill.

 

(a)               
JCP agrees that, from the date of this Agreement until the expiration of the Standstill Period (as defined below), neither
it nor any of its Affiliates or Associates will, and it will cause each of its Affiliates and Associates (as defined below) not
to, directly or indirectly, in any manner, acting alone or in concert with others:

 

(i)                
submit any stockholder proposal (pursuant to Rule 14a-8 promulgated by the Securities and Exchange Commission (the “SEC”)
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise) or any notice of nomination
or other business for consideration, or nominate any candidate for election to the Board (including by way of Rule 14a-11 of Regulation
14A), other than as expressly permitted by this Agreement;

 

(ii)              
engage in, directly or indirectly, any “solicitation” (as defined in Rule 14a-1 of Regulation 14A) of proxies
(or written consents) or otherwise become a “participant in a solicitation” (as such term is defined in Instruction
3 of Schedule 14A of Regulation 14A under the Exchange Act) in opposition to the recommendation or proposal of the Board, or recommend
or request or induce or attempt to induce any other person to take any such actions, or seek to advise, encourage or influence
any other person with respect to the voting of the Common Stock (including any withholding from voting) or grant a proxy with respect
to the voting of the Common Stock or other voting securities to any person other than to the Board or persons appointed as proxies
by the Board;

 

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(iii)            
seek to call, or to request the call of, a special meeting of the Company’s stockholders, or make a request for a
list of the Company’s stockholders or for any books and records of the Company;

 

(iv)            
form, join in or in any other way participate in a “partnership, limited partnership, syndicate or other group”
within the meaning of Section 13(d)(3) of the Exchange Act with respect to the Common Stock or deposit any shares of Common Stock
in a voting trust or similar arrangement or subject any shares of Common Stock to any voting agreement or pooling arrangement,
other to the extent such a group may be deemed to result with the Company or any of its Affiliates or Associates as a result of
this Agreement;

 

(v)              
vote for any nominee or nominees for election to the Board, other than those nominated or supported by the Board;

 

(vi)            
except as specifically provided in Section 1 and Section 2 of this Agreement, seek to place a representative
or other Affiliate, Associate or nominee on the Board or seek the removal of any member of the Board or a change in the size or
composition of the Board;

 

(vii)          
acquire or agree, offer, seek or propose to acquire, or cause to be acquired, ownership (including beneficial ownership)
of any of the assets or business of the Company or any rights or options to acquire any such assets or business from any person;

 

(viii)        
other than at the direction of the Board or any committee thereof and except in connection with an Opposition Matter (as
defined below), seek, propose, or make any statement with respect to, or solicit, negotiate with, or provide any information to
any person with respect to, a merger, consolidation, acquisition of control or other business combination, tender or exchange offer,
purchase, sale or transfer of assets or securities, dissolution, liquidation, reorganization, change in structure or composition
of the Board, change in the executive officers of the Company, change in capital structure, recapitalization, dividend, share repurchase
or similar transaction involving the Company, its subsidiaries or its business, whether or not any such transaction involves a
change of control of the Company;

 

(ix)            
acquire, announce an intention to acquire, offer or propose to acquire, or agree to acquire, directly or indirectly, by
purchase or otherwise, beneficial ownership of any (A) interests in any of the Company’s indebtedness or (B) Common Stock
of the Company representing in the aggregate (amongst JCP and its Affiliates and Associates) in excess of 9.9% of the Company’s
outstanding Common Stock; provided, however, nothing herein shall prevent JCP from confidentially seeking a waiver to acquire in
excess of 9.9% of the Company’s outstanding Common Stock;

 

(x)              
disclose publicly, or privately in a manner that could reasonably be expected to become public, any intention, plan or arrangement
inconsistent with the foregoing;

 

(xi)            
take any action challenging the validity or enforceability of any provisions of this Section 3; or

 

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(xii)          
enter into any agreement, arrangement or understanding concerning any of the foregoing (other than this Agreement) or encourage
or solicit any person to undertake any of the foregoing activities.

 

(b)              
As used in this Agreement:

 

(i)                
the terms “Affiliate” and “Associate” shall have the respective meanings set forth
in Rule 12b-2 promulgated by the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”);

 

(ii)              
the terms “beneficial owner” and “beneficial ownership” shall have the same meanings
as set forth in Rule 13d-3 promulgated by the SEC under the Exchange Act; and

 

(iii)            
the terms “person” or “persons” shall mean any individual, corporation (including
not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization
or other entity of any kind or nature.

 

(iv)            
the term “Opposition Matter” shall mean any of the following transactions, but only to the extent required
by the Delaware General Corporation Law (or, exclusively in the case of the issuance of more than twenty (20%) of the Company’s
then outstanding shares of Common Stock, the rules of the Nasdaq Stock Market), to be submitted by the Board to the Company’s
stockholders for approval: the sale or transfer of all or substantially all of the Company’s assets in one or a series of
transactions, the sale or transfer of a majority of the outstanding shares of the Company’s Common Stock (through a merger,
stock purchase or otherwise), any merger, consolidation, acquisition of control or other business combination, tender or exchange
offer, dissolution, liquidation, reorganization, or change in capital structure (including issuance in the aggregate of more than
twenty (20%) percent of the Company’s then outstanding shares of Common Stock), in each case that has been approved by the
Board but voted against by either New Director.

 

(v)              
the term “Standstill Period” shall mean the period commencing on the date of this Agreement and ending
on the day that is 45 days prior to the expiration of the Company’s advance notice period for the nomination of directors
at the Company’s 2016 Annual Meeting.

 

Section 4.                
Representations and Warranties of the Company. The Company represents and warrants to the Investors that (a) the
Company has the corporate power and authority to execute the Agreement and to bind it thereto, (b) this Agreement has been duly
and validly authorized, executed and delivered by the Company, constitutes a valid and binding obligation and agreement of the
Company, and is enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights of creditors
and subject to general equity principles and (c) the execution, delivery and performance of this Agreement by the Company does
not and will not violate or conflict with (i) any law, rule, regulation, order, judgment or decree applicable to it, or (ii) result
in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both could become a default)
under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration
or cancellation of, any organizational document, or any material agreement, contract, commitment, understanding or arrangement
to which the Company is a party or by which it is bound.

 

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Section 5.                
Representations and Warranties of the Investors. Each Investor, on behalf of itself, severally represents and warrants
to the Company that (a) as of the date hereof, such Investor beneficially owns only the number of shares of Common Stock as described
opposite its name on Exhibit A and Exhibit A includes all Affiliates of any Investors that own any securities of
the Company beneficially or of record, (b) this Agreement has been duly and validly authorized, executed and delivered by such
Investor, and constitutes a valid and binding obligation and agreement of such Investor, enforceable against such Investor in accordance
with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or similar laws generally affecting the rights of creditors and subject to general equity principles, (c)
such Investor has the authority to execute the Agreement on behalf of itself and the applicable Investor associated with that signatory’s
name, and to bind such Investor to the terms hereof and (d) the execution, delivery and performance of this Agreement by such Investor
does not and will not violate or conflict with (i) any law, rule, regulation, order, judgment or decree applicable to it, or (ii)
result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both could become
a default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment,
acceleration or cancellation of, any organizational document, agreement, contract, commitment, understanding or arrangement to
which such member is a party or by which it is bound.

 

Section 6.                
Mutual Non-Disparagement. 

 

(a)               
Each Investor agrees that, during the Standstill Period, neither it nor any of its Affiliates or Associates will, and it
will cause each of its Affiliates and Associates not to, directly or indirectly, in any capacity or manner, make, express, transmit
speak, write, verbalize or otherwise communicate in any way (or cause, further, assist, solicit, encourage, support or participate
in any of the foregoing), any remark, comment, message, information, declaration, communication or other statement of any kind,
whether verbal, in writing, electronically transferred or otherwise, that might reasonably be construed to be derogatory or critical
of, or negative toward, the Company or any of its directors, officers, Affiliates, subsidiaries, employees, agents or representatives
(collectively, the “Company Representatives”), or that reveals, discloses, incorporates, is based upon, discusses,
includes or otherwise involves any confidential or proprietary information of the Company or its subsidiaries or Affiliates, or
to malign, harm, disparage, defame or damage the reputation or good name of the Company, its business or any of the Company Representatives.

 

(b)              
The Company hereby agrees that, during the Standstill Period, neither it nor any of its Affiliates will, and it will cause
each of its Affiliates not to, directly or indirectly, in any capacity or manner, make, express, transmit, speak, write, verbalize
or otherwise communicate in any way (or cause, further, assist, solicit, encourage, support or participate in any of the foregoing),
any remark, comment, message, information, declaration, communication or other statement of any kind, whether verbal, in writing,
electronically transferred or otherwise, that might reasonably be construed to be derogatory or critical of, or negative toward,
any Investor or any of its agents or representatives (collectively, the “Investor Representatives”), or that
reveals, discloses, incorporates, is based upon, discusses, includes or otherwise involves any confidential or proprietary information
of any Investor or its subsidiaries or Affiliates, or to malign, harm, disparage, defame or damage the reputation or good name
of any Investor or Investor Representatives.

 

(c)               
Notwithstanding the foregoing, nothing in this Section 6 or elsewhere in this Agreement shall prohibit any Party
from making any statement or disclosure required under the federal securities laws or other applicable laws; provided, that
such Party must provide written notice to the other Parties at least two business days prior to making any such statement or disclosure
required by under the federal securities laws or other applicable laws that would otherwise be prohibited the provisions of this
Section 6, and reasonably consider any comments of such other Parties.

 

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Section 7.                
Public Announcements. Promptly following the execution of this Agreement, the Company shall issue a press release
(the “Press Release”) announcing this Agreement, substantially in the form attached hereto as Exhibit B.
Prior to the issuance of the Press Release, neither the Company nor any of the Investors shall issue any press release or public
announcement regarding this Agreement or take any action that would require public disclosure thereof without the prior written
consent of the other Party. No Party or any of its Affiliates shall make any public statement (including, without limitation, in
any filing required under the Exchange Act) concerning the subject matter of this Agreement inconsistent with the Press Release.

 

Section 8.                
Expenses. Each Party shall be responsible for its own fees and expenses incurred in connection with the negotiation,
execution and effectuation of this Agreement and the transactions contemplated hereby; provided, however, that the Company shall
reimburse JCP for its reasonable related fees and expenses, including fees and expenses of counsel for JCP, in an amount not to
exceed in the aggregate $10,000.

 

Section 9.                
Specific Performance. Each of the Investors, on the one hand, and the Company, on the other hand, acknowledges and
agrees that irreparable injury to the other Party hereto may occur in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or are otherwise breached and that such injury would not be adequately compensable
in monetary damages. It is accordingly agreed that the Investors or any Investor, on the one hand, and the Company, on the other
hand (the “Moving Party”), shall each be entitled to specific enforcement of, and injunctive or other equitable
relief to prevent any violation of, the terms hereof, and the other party hereto will not take action, directly or indirectly,
in opposition to the Moving Party seeking such relief on the grounds that any other remedy or relief is available.

 

Section 10.            
Notice. Any notices, consents, determinations, waivers or other communications required or permitted to be given
under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one (1) business day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such
communications shall be:

 

To the Company:

 

 

Jamba, Inc.

6475 Christie Avenue, Suite 150

Emeryville, CA 94608

Fax No.: (510) 653-0643

Attention: James White

 

with a copy to (which shall not constitute notice):

 

DLA Piper LLP (US)

2000 University Avenue

East Palo Alto, California 94303

Fax No.: (650) 687-1205

E-mail: eric.wang@dlapiper.com

Attention: Eric H. Wang

 

 

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To JCP:

 

JCP Investment Management, LLC

1177 West Loop South, Suite 1650

Houston, TX 77027

Attention: James C. Pappas

Facsimile: (713) 333-5540

Email: jcp@jcpinv.com

 

To Engaged Capital:

 

Engaged Capital, LLC

610 Newport Center Drive, Suite 250

Newport Beach, CA 92660

Attention: Glenn Welling

Facsimile: (949) 734-7901

Email: Glenn@engagedcapital.com

 

Section 11.            
Governing Law. This Agreement shall be governed by, and construed in accordance with, the Law of the State of Delaware,
without regard to conflict of law principles thereof. 

 

Section 12.            
Entire Agreement. This Agreement constitutes the full and entire understanding and agreement among the Parties with
regard to the subject matter hereof, and supersedes all prior agreements with respect to the subject matter hereof.

 

Section 13.            
Receipt of Adequate Information; No Reliance; Representation by Counsel.  Each Party acknowledges that it has
received adequate information to enter into this Agreement, that is has not relied on any promise, representation or warranty,
express or implied not contained in this Agreement and that it has been represented by counsel in connection with this Agreement. 
Accordingly, any rule of law or any legal decision that would provide any party with a defense to the enforcement of the terms
of this Agreement against such party shall have no application and is expressly waived.  The provisions of the Agreement shall
be interpreted in a reasonable manner to effect the intent of the Parties.

 

Section 14.            
Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction,
the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement held invalid or unenforceable
only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable. The Parties further
agree to replace such invalid or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve,
to the extent possible, the purposes of such invalid or unenforceable provision.

 

Section 15.            
Amendment. This Agreement may be modified, amended or otherwise changed only in a writing signed by all of the Parties.

 

Section 16.            
Successors and Assigns; No Third Party Beneficiaries. This Agreement shall bind the successors and permitted assigns
of the Parties, and inure to the benefit of any successor or permitted assign of any of the parties; provided, however,
that no party may assign this Agreement without the prior written consent of the other Parties. No provision of this Agreement
is intended to confer any rights, benefits, remedies, obligations, or liabilities hereunder upon any person other than the Parties
hereto and their respective successors and assigns.

 

Section 17.            
Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when
each Party hereto shall have received a counterpart hereof signed by the other Parties hereto. Counterparts delivered by electronic
transmission shall be deemed to be originally signed counterparts.

 

 

(Signature
page follows)

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IN WITNESS WHEREOF, the Parties hereto have
duly executed and delivered this Agreement as of the date first above written.

 

Jamba,
Inc.

 

 

 

By:
/s/ James D. White

Name:
James D. White

Title:
Chairman, President and Chief Executive Officer

 

    	 

    	 

    

 

INVESTORS:

 

	 	Engaged Capital Master Feeder I, LP
	 	 
	 	By:	Engaged Capital, LLC

General Partner
	 	 
	 	By:	/s/ Glenn W. Welling
	 	 	Name:	Glenn W. Welling
	 	 	Title:	Managing Member and Chief Investment Officer
	 	 	 	 	 	 

 

	 	Engaged Capital Master Feeder II, LP
	 	 
	 	By:	Engaged Capital, LLC

General Partner
	 	 
	 	By:	/s/ Glenn W. Welling
	 	 	Name:	Glenn W. Welling
	 	 	Title:	Managing Member and Chief Investment Officer

 

	 	Engaged Capital I, LP
	 	 	 
	 	By:	Engaged Capital, LLC

General Partner
	 	 
	 	By:	/s/ Glenn W. Welling
	 	 	Name:	Glenn W. Welling
	
         

         
	 	Title:	Managing Member and Chief Investment Officer
	 	 	 	 	 

 

	 	Engaged Capital I Offshore, Ltd.
	 	 	 
	 	By:	/s/ Glenn W. Welling
	 	 	Name:	Glenn W. Welling
	 	 	Title:	Director
	 	 	 	 	 

 

	 	Engaged Capital II, LP
	 	 	 
	 	By:	Engaged Capital, LLC

General Partner
	 	 
	 	By:	/s/ Glenn W. Welling
	 	 	Name:	Glenn W. Welling
	
         

         
	 	Title:	Managing Member and Chief Investment Officer
	 	 	 	 	 

 

 

    	 

    	 

    

 

 

	 	Engaged Capital II Offshore, Ltd.
	 	 	 
	 	By:	/s/ Glenn W. Welling
	 	 	Name:	Glenn W. Welling
	 	 	Title:	Director
	 	 	 	 	 

 

 

	 	Engaged Capital, LLC         
	 	 
	 	By:	/s/ Glenn W. Welling
	 	 	Name:	Glenn W. Welling
	
         

         
	 	Title:	Managing Member and Chief Investment Officer
	 	 	 	 	 

 

 

	 	Engaged Capital Holdings, LLC         
	 	 
	 	By:	/s/ Glenn W. Welling
	 	 	Name:	Glenn W. Welling
	 	 	Title:	Sole Member
	 	 	 	 	 

 

 

	 	/s/ Glenn W. Welling
	 	Glenn W. Welling

 

 

    	 

    	 

    

 

 

	 	JCP Investment Partnership, LP
	 	 
	 	By:	JCP Investment Management, LLC

Investment Manager
	 	 
	 	By:	/s/ James C. Pappas
	 	 	Name:	James C. Pappas
	 	 	Title:	Managing Member
	 	 	 	 	 	 

 

 

	 	JCP Investment Partners, LP
	 	 
	 	By:	JCP Investment Holdings, LLC
	 	General Partner
	 	 
	 	By:	/s/ James C. Pappas
	 	 	Name:	James C. Pappas
	 	 	Title:	Sole Member

 

 

	 	JCP Investment Holdings, LLC
	 	 
	 	By:	/s/ James C. Pappas
	 	 	Name:	James C. Pappas
	 	 	Title:	Sole Member
	 	 	 	 	 

 

 

	 	JCP Investment Management, LLC
	 	 
	 	By:	/s/ James C. Pappas
	 	 	Name:	James C. Pappas
	 	 	Title:	Managing Member
	 	 	 	 	 

 

 

	 	/s/ James C. Pappas
	 	James C. Pappas

 

 

    	 

    	 

    

 

EXHIBIT A

 

 

 

	Investor	 	Shares of Common Stock
 Beneficially Owned	 
	Engaged Capital Master Feeder I, LP	 	 	610,465	 
	Engaged Capital Master Feeder II, LP	 	 	821,424	 
	Engaged Capital I, LP	 	 	610,465	 
	Engaged Capital I Offshore, Ltd.	 	 	610,465	 
	Engaged Capital II, LP	 	 	821,424	 
	Engaged Capital II Offshore Ltd.	 	 	821,424	 
	Engaged Capital, LLC	 	 	1,431,889	 
	Engaged Capital Holdings, LLC	 	 	1,431,889	 
	Glenn W. Welling	 	 	1,431,889	 
	JCP Investment Partnership, LP	 	 	407,133	 
	JCP Investment Partners, LP	 	 	407,133	 
	JCP Investment Holdings, LLC	 	 	407,133	 
	JCP Investment Management, LLC	 	 	407,133	 
	James C. Pappas	 	 	407,133	 
	 	 	 	 	 
	Aggregate total owned by Engaged Capital and JCP:	 	 	1,839,022	 

 

 

    	 

    	 

    

 

 

EXHIBIT B

 

Press Release attachedExhibit 10.3

 

BELLEROPHON THERAPEUTICS LLC

 

2014 EQUITY INCENTIVE PLAN

 

1.                                      Purpose

 

Bellerophon Therapeutics LLC, a Delaware limited liability company (together with any successor entity that assumes this Plan, the “Company”), has adopted this 2014 Equity Incentive Plan (the “Plan”) for the benefit of its eligible Employees, Directors and Consultants.  The purpose of this Plan is to provide such eligible Employees, Directors and Consultants with an opportunity to participate in the Company’s future appreciation by offering them incentive compensation linked to the increase in value of the Company’s Non-Voting Units (as defined below), so as to enhance the Company’s ability to attract, retain and motivate individuals of exceptional talent to contribute to the sustained progress, growth and profitability of the Company.

 

2.                                      Definitions

 

The following capitalized terms shall have the meanings set forth below:

 

(a)                                               “Acquisition Price” shall have the meaning provided in Section 7(b)(1)(iv).

 

(b)                                               “Board” means the Board of Directors of the Company.

 

(c)                                                “Code” means the Internal Revenue Code of 1986, as amended, or any successor statue or statutes thereto.  Reference to any particular Code section shall include any successor section, and any regulations promulgated thereunder.

 

(d)                                               “Committee” shall have the meaning provided in Section 3(b) hereof.

 

(e)                                                “Company” shall have the meaning provided in Section 1 hereof; provided, however, that unless the context otherwise requires, “Company” shall include any of the Company’s present or future subsidiary corporations as defined in Section 424(f) of the Code and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling interest, in each case as determined by the Board; provided further, however, that such other business ventures shall be limited to entities that, where required by Section 409A, are eligible issuers of service recipient stock (as defined in Treas. Reg. Section 1.409A-1(b)(5)(iii)(E), or applicable successor regulation).

 

(f)                                                 “Consultant” means a consultant or advisor to the Company, as such terms are defined and interpreted for purposes of Form S-8 under the Securities Act or any successor form.

 

(g)                                                “Director” means any member of the Board, as such term is defined and interpreted for purposes of Form S-8 under the Securities Act or any successor form.

 

(h)                                               “Employee” means any officer or other employee of the Company, as such term is defined and interpreted for purposes of Form S-8 under the Securities Act or any successor form.

 

(i)                                                   “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto.  Reference to any particular Exchange Act section shall include any successor section.

 

1

 

(j)                                                  “Fair Market Value” means the fair market value of a Non-Voting Unit, as determined by (or in a manner approved by) the Board in good faith in accordance with Section 409A.

 

(k)                                               “Interests” means the interests as defined in the LLC Agreement.

 

(l)                                                   “IPO” means the initial public offering of the securities of the Company pursuant to an effective registration statement filed pursuant to the Securities Act or other similar transaction in which securities of the Company are offered for sale to the general public.

 

(m)                                           “LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of Bellerophon Therapeutics LLC, dated as of February 9, 2014.

 

(n)                                               “Member” shall have the meaning set forth in the LLC Agreement

 

(o)                                               “New Payment Date” shall have the meaning provided in Section 9(f) hereof.

 

(p)                                               “Non-Voting Unit” shall mean the Non-Voting Units of the Company as defined in the LLC Agreement.

 

(q)                                               “Option” shall have meaning provided in Section 6(a) hereof.

 

(r)                                                  “Participant” means each Employee, Consultant or Director to whom an Option is granted.

 

(s)                                                 “Person” means any individual, general partnership, limited partnership, limited liability partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative or association and the heirs, executors, administrators, legal representative, successors and assigns of such Person where the context so permits.

 

(t)                                                  “Plan” has the meaning provided in Section 1 hereof.

 

(u)                                               “Reorganization Event” means:  (a) any merger or consolidation of the Company with or into another entity as a result of which all of the Non-Voting Units are converted into or exchanged for the right to receive cash, securities or other property or are cancelled, (b) any transfer or disposition of all of the Non-Voting Units for cash, securities or other property pursuant to a Unit exchange or other transaction or (c) any liquidation or dissolution of the Company.

 

(v)                                               “Securities Act” means the Securities Act of 1933, as amended, or any successor statute or statutes thereto.  Reference to any particular Securities Act section shall include any successor section.

 

(w)                                             “Section 409A” means Section 409A of the Code and the Department of Treasury Regulations and other interpretive guidance thereunder.

 

3.                                      Administration and Delegation

 

(a)                                               Administration.  The Plan will be administered by the Board.  It shall be the duty of the Board to conduct the general administration of this Plan in accordance with its provisions.  The Board shall have the power to interpret this Plan and the agreements pursuant to which Options are issued, and to adopt such rules for the administration, interpretation, and application of this Plan as are consistent therewith and to interpret, amend or revoke any such rules.  By way of example and not limitation, but subject to the terms of the Plan, the Board shall have the exclusive power and authority to (i) select the Employees, Consultants or Directors to be granted

 

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Options, (ii) determine the number of Options to be granted to each Employee, Consultant or Director, the time or times when Options are to be granted, and the terms and conditions that shall apply to Options which have been granted, (iii) amend the Plan and any Option agreements, and (iv) exercise such powers and perform such acts as the Board deems necessary or expedient to promote the best interests of the Company which are not in conflict with the provisions of the Plan.  All decisions and determinations by the Board and any action taken by the Board in respect of the Plan and within the powers granted to the Board herein shall be conclusive and binding on all Persons having or claiming any interest in the Plan or any award made under the Plan.

 

(b)                                               Delegation.  To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a “Committee”).  All references in the Plan to the “Board” shall mean, to the extent that the Board’s powers or authority under the Plan have been delegated to a Committee, the Board or such Committee of the Board.  Notwithstanding the foregoing, the Board shall have the power to re-vest in itself at any time any powers delegated to the Committee.

 

4.                                      Eligibility.  All Employees, Directors and Consultants shall be eligible for the grant of Options.

 

5.                                      Shares Available for Option Awards.  Subject to adjustment under Section 7, Options may be made under the Plan for up to (i) 7,000,000 Non-Voting Units of the Company.  If any Option expires or is terminated, surrendered or canceled without having been fully exercised, or is forfeited in whole or in part, the unused Non-Voting Units covered by such Option shall again be available for the grant of Options under the Plan.

 

6.                                      Stock Options

 

(a)                                 General.  All awards under the Plan shall be in the form of options to purchase a fixed number of Non-Voting Units (each, an “Option”).  The Board shall determine the number of Non-Voting Units to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable.  Any Options granted under this Plan need not be the same with respect to each Participant.

 

(b)                                 Exercise Price.  The Board shall establish the exercise price of each Option and specify the exercise price in the applicable Option agreement. The exercise price shall be not less than 100% of the Fair Market Value per Non-Voting Unit on the date the Option is granted; provided, that if the Board approves the grant of an Option with an exercise price to be determined on a future date, the exercise price shall be not less than 100% of the Fair Market Value on such future date.

 

(c)                                  Duration of Options.  Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable option agreement; provided, however, that no Option will be granted with a term in excess of 10 years.

 

(d)                                 Exercise of Options.  Once exercisable, Options may be exercised by delivery to the Company of a notice of exercise in a form of notice (which may be electronic) approved by

 

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the Board, together with payment in full (in a manner specified in Section 5(e)) of the exercise price for the number of Non-Voting Units for which the Option is exercised.  The Non-Voting Units for which the Option was exercised will be delivered by the Company to the Participant as soon as practicable following exercise.  Prior to the exercise of any Option, the Board may, at any time and in its sole discretion, cancel the vested portion of any outstanding Options granted under this Plan in exchange for a cash payment equal to the excess of the Fair Market Value of Non-Voting Units underlying such vested portion of the Option over its exercise price.

 

(e)                                  Payment Upon Exercise.  Non-Voting Units purchased upon the exercise of an Option granted under the Plan shall be paid for as follows:

 

(1)                                 in cash or by check, payable to the order of the Company;

 

(2)                                 when the Non-Voting Units are registered under the Exchange Act, except as may otherwise be provided in the applicable Option agreement or approved by the Board, in its sole discretion, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding;

 

(3)                                 when the Non-Voting Units are registered under the Exchange Act and to the extent provided for in the applicable Option agreement or approved by the Board, in its sole discretion, by delivery (either by actual delivery or attestation) of Non-Voting Units owned by the Participant valued at their Fair Market Value, provided (i) such method of payment is then permitted under applicable law, (ii) such shares, if acquired directly from the Company, were owned by the Participant for such minimum period of time, if any, as may be established by the Board in its discretion and (iii) such shares were not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements;

 

(4)                                 to the extent provided for in the applicable Option agreement or approved by the Board in its sole discretion, by delivery of a notice of “net exercise” to the Company, as a result of which the Participant would receive (i) the number of units underlying the portion of the Option being exercised less (ii) such number of units as is equal to (A) the aggregate exercise price for the portion of the Option being exercised divided by (B) the Fair Market Value on the date of exercise;

 

(5)                                 to the extent permitted by applicable law and provided for in the applicable Option agreement or approved by the Board, in its sole discretion, by payment of such other lawful consideration as the Board may determine; or

 

(6)                                 by any combination of the above permitted forms of payment.

 

7.                                      Adjustments for Changes in Capitalization and Certain Other Events

 

(a)                                 Certain Transactions.  In the event of any split, reverse split, dividend, recapitalization, combination or reclassification of Company Interests, any spin-off or similar

 

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change in capitalization, a conversion of the Company under applicable law into a corporation or other entity or any distribution to holders of Company Interests other than an ordinary cash dividend, (i) the number and class of securities available under the Plan, (ii) the number and class of securities and exercise price per share of each outstanding Option and (iii) such other terms and provisions of the Plan and each outstanding Option to the extent determined by the Board to prevent dilution or enlargement of benefits intended to be provided under the Plan and the Options, shall be equitably adjusted by the Company (or substituted Awards may be made, if applicable) in the manner determined by the Board.  Without limiting the generality of the foregoing, in the event the Company effects a split of the Non-Voting Units by means of a dividend of Non-Voting Units and the exercise price of and the number of Non-Voting Units subject to an outstanding Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such dividend shall be entitled to receive, on the distribution date, the dividend with respect to the Non-Voting Units acquired upon such Option exercise, notwithstanding the fact that such Non-Voting Units were not outstanding as of the close of business on the record date for such dividend.

 

(b)                                 Reorganization Events.

 

(1)                                 In connection with a Reorganization Event, the Board may take any one or more of the following actions as to all or any (or any portion of) outstanding Options on such terms as the Board determines (except to the extent specifically provided otherwise in an applicable Option agreement or another agreement between the Company and the Participant):  (i) provide that such Options shall be assumed, or substantially equivalent Options shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to a Participant, provide that all of the Participant’s unexercised and/or unvested Options will terminate immediately prior to the consummation of such Reorganization Event unless exercised by the Participant (to the extent then exercisable) within a specified period following the date of such notice, (iii) provide that outstanding Options shall become exercisable, realizable, or deliverable, or restrictions applicable to an Option shall lapse, in whole or in part prior to or upon such Reorganization Event, (iv) in the event of a Reorganization Event under the terms of which holders of Non-Voting Units will receive upon consummation thereof a cash payment for each share surrendered in the Reorganization Event (the “Acquisition Price”), make or provide for a cash payment to Participants with respect to each Option held by a Participant equal to (A) the number of Non-Voting Units subject to the vested portion of the Option (after giving effect to any acceleration of vesting that occurs upon or immediately prior to such Reorganization Event) multiplied by (B) the excess, if any, of (x) the Acquisition Price over (y) the exercise price of such Option and any applicable tax withholdings, in exchange for the termination of such Option, (v) provide that, in connection with a liquidation or dissolution of the Company, Options shall convert into the right to receive liquidation proceeds (if applicable, net of the exercise price thereof and any applicable tax withholdings) and (vi) any combination of the foregoing.  In taking any of the actions permitted under this Section 7(b)(1), the Board shall not be obligated by the Plan to treat all Options or all Options held by a Participant, identically.

 

(2)                                 For purposes of Section 7(b)(1)(i), an Option shall be considered assumed if, following consummation of the Reorganization Event, such Option confers the right to

 

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purchase or receive pursuant to the terms of such Option, for each Non-Voting Unit subject to the Option immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Non-Voting Units for each Non-Voting Unit held immediately prior to the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Non-Voting Units); provided, however, that if the consideration received as a result of the Reorganization Event is not solely common equity securities of the acquiring or succeeding entity (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding entity, provide for the consideration to be received upon the exercise or settlement of the Option to consist solely of such number of shares of common equity securities of the acquiring or succeeding entity (or an affiliate thereof) that the Board determined to be equivalent in value (as of the date of such determination or another date specified by the Board) to the per unit consideration received by holders of outstanding Non-Voting Units as a result of the Reorganization Event.

 

(c)                                  Limitations. Notwithstanding anything in this Section 7 of the Plan to the contrary, any adjustment or other action to be taken with respect to any Option under this Section 7 shall be structured to the extent reasonably practicable in a manner that will not cause any Option to be subject to a penalty tax under Section 409A but that preserves to the maximum extent possible the benefits intended to be made available under the Plan or with respect to the Options; provided, that no adjustment or other action to be taken with respect to any Option under this Section 7 shall be made or taken to the extent that any such adjustment or other action would result in a violation of Section 409A.

 

8.                                      General Provisions Applicable to Options

 

(a)                                 Transferability of Options.  Options (or any interest in an Option, including, prior to exercise, any interest in Non-Voting Units issuable upon exercise of an Option) shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order, and, during the life of the Participant, shall be exercisable only by the Participant; provided, however, that the Board may permit or provide in an Option for the gratuitous transfer of the Option by the Participant to or for the benefit of any immediate family member, family trust or other entity established for the benefit of the Participant and/or an immediate family member thereof if the Company would be eligible to use a Form S-8 under the Securities Act for the registration of the sale of the Non-Voting Unit subject to such Option to such proposed transferee.  The Company shall not be required to recognize any such permitted transfer until such time as such permitted transferee shall deliver to the Company a written instrument, as a condition to such transfer, in form and substance satisfactory to the Company confirming that such transferee shall be bound by all of the terms and conditions of the Option.  References to a Participant, to the extent relevant in the context, shall include references to authorized transferees.  For the avoidance of doubt, nothing contained in this Section 8(a) shall be deemed to restrict a transfer to the Company.

 

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(b)                                 Documentation.  Each Option shall be evidenced in such form (written, electronic or otherwise) as the Board shall determine.  Each Option may contain terms and conditions in addition to those set forth in the Plan.

 

(c)                                  Termination of Status.  The Board shall determine the effect on an Option of the disability, death, termination or other cessation of employment, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, or the Participant’s legal representative, conservator, guardian or designated beneficiary, may exercise rights under the Option.

 

(d)                                 Withholding.  The Participant must satisfy all applicable federal, state, and local or other income and employment tax withholding obligations before the Company will deliver share certificates or otherwise recognize ownership of Non-Voting Units under an Option.  The Company may decide to satisfy the withholding obligations through additional withholding on salary or wages.  If the Company elects not to or cannot withhold from other compensation, the Participant must pay the Company the full amount, if any, required for withholding or have a broker tender to the Company cash equal to the withholding obligations.  Payment of withholding obligations is due before the Company will issue any shares on exercise of an Option or at the same time as payment of the exercise price unless the Company determines otherwise.  If provided for in an Option agreement or approved by the Board in its sole discretion, a Participant may satisfy such tax obligations in whole or in part by delivery (either by actual delivery or attestation) of Non-Voting Units, including shares retained from the Option creating the tax obligation, valued at their Fair Market Value; provided, however, except as otherwise provided by the Board, that the total tax withholding where shares are being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income).  Shares used to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.

 

(e)                                  Amendment of Option.  The Board may amend, modify or terminate any outstanding Option.  The Participant’s consent to such action shall be required unless (i) the Board determines that the action, taking into account any related action, does not materially and adversely affect the Participant’s rights under the Plan or (ii) the change is permitted under Section 7.

 

(f)                                   Conditions on Delivery of Non-Voting Units.  The Company will not be obligated to deliver any Non-Voting Units pursuant to the Plan or to remove restrictions from units previously issued or delivered under the Plan until (i) all conditions of the Option have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such units have been satisfied, including any applicable securities laws and regulations and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.

 

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(g)                                  Acceleration.  The Board may at any time provide that any Option shall become immediately exercisable in whole or in part, free of some or all restrictions or conditions, or otherwise realizable in whole or in part, as the case may be.

 

9.                                      Miscellaneous

 

(a)                                 No Right To Employment or Other Status.  No Person shall have any claim or right to be granted an Option by virtue of the adoption of the Plan, and the grant of an Option shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company.  The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Option.

 

(b)                                 No Membership Rights.  Subject to the provisions of the applicable Option, no Participant or successor in interest shall be deemed to be a Member, an assignee or other equity holder of the Company with respect to any Non-Voting Units to be acquired with respect to an Option until becoming the record holder of such Non-Voting Units.

 

(c)                                  Effective Date and Term of Plan.  The Plan shall become effective on the date on which it is adopted by the Board.  No Options shall be granted under the Plan after the expiration of 10 years from the earlier of (i) the date on which the Plan was adopted by the Board and (ii) the date the Plan was approved by the holders of the Company’s outstanding voting Interests, but Options previously granted may extend beyond that date.

 

(d)                                 Amendment of Plan.  Except as otherwise provided in this Section 9(d), this Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time and from time to time by the Board; provided, however, that any amendment to the Plan that requires approval of the Company’s Members under the LLC Agreement, applicable law or the applicable requirements of a stock exchange shall be subject to such approval to the extent required.  No amendment, suspension or termination of this Plan shall, without the consent of the holder of an Option, materially adversely affect any rights or interests under such Option theretofore granted or awarded, unless the Option itself otherwise expressly so provides.  No Option may be granted or awarded during any period of suspension or after termination of this Plan.

 

(e)                                  Compliance with Laws.  This Plan, the granting and vesting of Options under this Plan and any payment in respect of Options are subject to compliance with all applicable federal and state laws, rules and regulations (including, but not limited to, state and federal securities law, federal margin requirements and Section 409A) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith.  Any Non-Voting Units that may become deliverable under this Plan shall be subject to such restrictions, and the Person acquiring such Non-Voting Units shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all applicable legal requirements.  To the extent permitted by applicable law, the Plan and any Options awarded hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

 

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(f)                                   Compliance with Section 409A of the Code.  Except as provided in individual Option agreements initially or by amendment, if and to the extent (i) any portion of any payment, compensation or other benefit provided to a Participant pursuant to the Plan in connection with his or her employment termination constitutes “nonqualified deferred compensation” within the meaning of Section 409A of the Code and (ii) the Participant is a specified employee as defined in Section 409A(a)(2)(B)(i) of the Code, in each case as determined by the Company in accordance with its procedures, by which determinations the Participant (through accepting the Option) agrees that he or she is bound, such portion of the payment, compensation or other benefit shall not be paid before the day that is six months plus one day after the date of “separation from service” (as determined under Section 409A of the Code) (the “New Payment Date”), except as Section 409A of the Code may then permit.  The aggregate of any payments that otherwise would have been paid to the Participant during the period between the date of separation from service and the New Payment Date shall be paid to the Participant in a lump sum on such New Payment Date, and any remaining payments will be paid on their original schedule.  The Company makes no representations or warranty and shall have no liability to the Participant or any other Person if any provisions of or payments, compensation or other benefits under the Plan are determined to constitute nonqualified deferred compensation subject to Section 409A of the Code but do not to satisfy the conditions of that section.

 

(g)                                  Limitations on Liability.  Notwithstanding any other provisions of the Plan, no individual acting as a member of the Board, or as an officer, other employee, or agent of the Company, will be liable to any Participant, former Participant, spouse, beneficiary, or any other Person for any claim, loss, liability, or expense incurred in connection with the Plan, nor will such individual be personally liable with respect to the Plan because of any contract or other instrument he or she executes in his or her capacity as a director, officer, other employee, or agent of the Company.  The Company will indemnify and hold harmless each director, officer, other employee, or agent of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been or will be delegated, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Board’s approval) arising out of any act or omission to act concerning the Plan unless arising out of such Person’s own fraud or bad faith.

 

(h)                                 Authorization of Sub-Plans (including Grants to non-U.S. Employees).  The Board may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable securities, tax or other laws of various jurisdictions.  The Board shall establish such sub-plans by adopting supplements to the Plan containing (i) such limitations on the Board’s discretion under the Plan as the Board deems necessary or desirable or (ii) such additional terms and conditions not otherwise inconsistent with the Plan as the Board shall deem necessary or desirable.  All supplements adopted by the Board shall be deemed to be part of the Plan, but each supplement shall apply only to Participants within the affected jurisdiction and the Company shall not be required to provide copies of any supplement to Participants in any jurisdiction which is not the subject of such supplement.

 

(i)                                     Interpretation.  Whenever the context requires, words of the masculine gender used herein shall include the feminine and neuter, and words used in the singular shall include the plural.  The words “hereof,” “hereunder,” “herein” and other compounds of the word “here” shall refer to the entire Plan and not to any specific section or provision.  Headings of sections, as

 

9

 

used herein, are provided for convenience only and are not to serve as a basis for interpretation or construction of this Plan.  All determinations left to the discretion of the Board under the Plan or any Option Agreement, including without limitation under Section 7 of the Plan, shall be made in the Board’s discretion in good faith.  All cross-references to provisions of the LLC Agreement shall be deemed to refer to any appropriate replacement or successor provisions of the LLC Agreement to the extent that the LLC Agreement is modified in the future.

 

(j)                                    Governing Law; Severability.  This Plan and any Option Agreements hereunder shall be administered, interpreted and enforced under the internal laws of the State of Delaware without regard to principles of conflicts of laws thereof and without regard to principles of conflicts of laws of any other jurisdiction which could cause the application of the laws of any jurisdiction other than the State of Delaware.  In the event that any provision of the Plan shall be held illegal, invalid or unenforceable for any reason, such term or provision shall be fully severable, but shall not affect the remaining terms and provisions of the Plan, and the Plan shall be construed and enforced as if the illegal, invalid, or unenforceable term or provision was not included herein.

 

(k)                                 Not Compensation.  Absent express provisions to the contrary, Options and related benefits or payments shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company and shall not affect any benefits under any other benefit plan of any kind or subsequently in effect under which the availability or amount of benefits is related to level of compensation.

 

(l)                                     Waiver.  No waiver by the Company of a breach of any provision of the Plan, which includes any Option agreement entered into hereunder, by any Participant, or of any obligation to comply with any condition or provision of the Plan to be performed by any Participant, will operate or be construed as a waiver by the Company of any subsequent breach of, or obligation to comply with, any similar or dissimilar provision or condition at the same or any subsequent time.  The failure of the Company to take any action by reason of any such breach will not deprive the Company of the right to take action at any time.

 

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