Document:

Exhibit

Exhibit 10.1

EXECUTION VERSION

	
	
	Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

TECHNOLOGY LICENSE AGREEMENT

This Technology License Agreement (this “Agreement”) is entered into as of January 21, 2019 (“Effective Date”) by and between Mellanox Technologies Ltd., an Israeli company, with its principal place of business at 26 HaKidma St., Ofer Industrial Park, Yokneam 2069200, Israel (“Mellanox”) and H3C Technologies Co., Limited, a Hong Kong company, with its principal place of business at Room 2301, Caroline Ctr Lee Gardens Two, 28 Yun Ping Road Causeway Bay, Hong Kong (“H3C”).  Mellanox and H3C may be referred to in this Agreement, individually, as a “Party,” and collectively, as the “Parties”. 
RECITALS
WHEREAS, Mellanox is an Israeli company engaged in the development and supply of end-to-end interconnect solutions for data center servers and storage systems;
WHEREAS, H3C is a leading provider of digital telecommunications equipment;
WHEREAS, H3C desires to license from Mellanox certain intellectual property owned by Mellanox and relating to Mellanox's [****] for H3C’s use in the design and manufacture of semiconductor integrated circuit products proprietary to H3C; 
WHEREAS, in connection with such license, the Parties desire for Mellanox to provide to H3C certain technical support and other services related to H3C’s development of such integrated circuit products, all in accordance with the terms and conditions of this Agreement; and 
WHEREAS, in connection with license and this Agreement, the Parties desire to enter into a strategic supply arrangement, pursuant to which H3C will commit to purchase from certain minimum volumes of Mellanox products.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, the Parties hereby agree as follows:
AGREEMENT
1.DEFINITIONS.
Section 1.1.    For purposes of this Agreement the following capitalized terms will have the meanings set forth below: 
“Affiliate(s)” means, as to any entity, any other entity which is (i) directly or indirectly controlling such first entity; (ii) under the same direct or indirect control as such first entity; or (iii) which is directly or indirectly controlled by such first entity (such controlled entity being a 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

“Subsidiary”). For purpose of this definition, “control” means direct or indirect ownership of more than fifty percent (50%) of the outstanding voting stock or other voting interests in an entity, or the ability to direct the affairs and/or to control the composition of the board of directors or equivalent body of an entity.  An entity will be deemed an Affiliate (or Subsidiary) only for so long as such control exists during the term of this Agreement.  
“Background Technology” means, with respect to a Party, all Technology developed, authored, created or acquired by or for such Party or its Affiliates either (i) prior to the commencement of this Agreement or (ii) independently of its activities under this Agreement and without any use of any information, data or other materials provided by the other Party under this Agreement. For the avoidance of doubt, all Licensed Technology constitutes Mellanox Background Technology.
“Change in Control” means any of the following transactions: (a) the sale or other transfer to any person of more than fifty percent (50%) of the total combined voting power of a Party’s outstanding voting capital stock in one or more related transactions; or (b) the sale or other transfer of all or substantially all of the assets of a Party in one or more related transactions; (c) a merger, consolidation or acquisition of a Party with, by or into another corporation (or series of related transactions culminating in such merger, consolidation or acquisition), except for a transaction the principal purpose of which is to change such Party’s state of domicile, or (d) any merger, consolidation or acquisition or series of related transactions culminating in such merger, consolidation or acquisition in which a Party is the surviving entity but in which more than fifty percent (50%) of the total combined voting power of such Party’s outstanding voting capital stock are transferred to a person or persons different from those who held such voting capital stock immediately prior to such event.
“Confidential Information” means any and all information and materials which a Party or any of its Affiliates (the “Disclosing Party”) has disclosed or otherwise made available to the other Party or its Affiliate (the “Recipient”) or which the Recipient has observed or otherwise obtained from the Disclosing Party, whether made available in writing, orally or in graphic or electronic form, that are marked in writing as confidential or proprietary or, if disclosed orally or in other intangible form that is not so marked, that are identified as confidential or proprietary at the time of such disclosure and summarized in writing and transmitted to the Recipient within 30 days of such disclosure, and any portions, extracts, copies and derivatives of the foregoing.  For the avoidance of doubt, Confidential Information includes information and materials of third parties that is in the Disclosing Party’s possession and otherwise meets the requirements set forth above.  Without limiting the generality of the foregoing, all of the Licensed Technology will be deemed Confidential Information of Mellanox.  
“Development and Support Fee” has the meaning set forth in ‎ ‎Section 5.1. 
“Development and Support Services” has the meaning set forth in ‎‎Section 3.1.
“Fees” means, collectively, the License Fees and Development and Support Fees. 
“[****]” means the [****] containing Licensed Technology delivered in [****] and in [****] that has been or is intended to be mass-produced.

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

“H3C Personnel” means H3C and its Affiliates’ employees and consultants, including any third party contractors retained by H3C or its Affiliates.
“Intellectual Property Rights” means any or all rights in, arising out of, or associated therewith: (i) patents and patent applications in any country or jurisdiction, and all reissues, divisionals, renewals, extensions, provisionals, continuations and continuations-in-part thereof; (ii) inventions (whether patentable or not), invention disclosures, improvements, trade secrets, proprietary information, know how, technology, technical data, non-public information and all documentation related to any of the foregoing; (iii) all copyrights, copyright registrations and applications, and all other rights corresponding thereto throughout the world; and (iv) all mask works, mask work registrations and applications throughout the world. 
“License” has the meaning set forth in ‎ ‎Section 2.1(a). 
“License Fee” has the meaning set forth in ‎‎Section 5.1. 
“Licensed Technology” means Mellanox’s proprietary know-how, data and other technology related to its [****] that are owned by Mellanox or any of its Affiliates and are necessary or useful for or related to the development, design, manufacturing, testing, verification, support and commercialization by or for H3C of the [****], including as specified in Exhibit A hereto. 
“Mellanox Dedicated Personnel” has the meaning set forth in ‎‎Section 3.1(a).
“Mellanox Intellectual Property Rights” means any and all Intellectual Property Rights which are (i) owned or controlled by Mellanox during the Term, and (ii) embodied in or which would be infringed by the use of the Licensed Technology or Updates delivered to H3C under this Agreement.
“Mellanox Competitors” means the entities listed on Exhibit C, including their Affiliates, as such list may be updated from time to time in good faith upon the mutual agreement of the Parties.
“Mellanox Products” means Mellanox Ethernet and InfiniBand portfolio: Ethernet switches, Ethernet NICs, InfiniBand HCAs, system-on-a-chip (SOC), LinkX products: optical AOC/transceivers, DACs, VOAs, InfiniBand switches, NPUs and any other products and materials.
“[****]” means integrated circuit products developed by or for H3C that are based on or incorporate all or a part of the Licensed Technology and are designed to be embedded in H3C [****], and which are identified by H3C with a unique H3C part number, including [****]. 
“[****] Technology” means all (i) Technology invented, discovered, conceived, developed or created by or for H3C to the extent relating to [****]; (ii) Technology invented, discovered, conceived, developed or created jointly by H3C Personnel and Mellanox Dedicated Personnel in the course of performing this Agreement, solely to the extent relating to [****] (“Jointly Developed [****] Technology”); (iii) Project Deliverables; and (iv) any modifications, improvements or derivative works of any of the foregoing (but expressly excluding, in each of the foregoing cases, any underlying Background Technology).

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

“Project Deliverables” means any items developed by or for Mellanox for delivery to H3C as part of the performance of the Development and Support Services, in each case that are related to [****], as specified in a written statement of work executed by the Parties, including those identified therein as project deliverables to be owned by H3C (such items, excluding, for the avoidance of doubt, any Licensed Technology and Updates).
“Quarterly Purchase Commitment” has the meaning set forth in ‎Section 8.2.
“[****]” has the meaning set forth in ‎Section 5.2(a). 
“Sell” means to sell, lease or otherwise distribute, transfer or dispose of a product on a commercial basis (whether as a standalone product or as integrated, incorporated or included as part of any other products or services) to an independent, unrelated third party (“Sold,” “Sale” and other forms of “Sell” shall have the same meaning).  For purposes of payment and accounting to Mellanox for [****], a “Sale” of a [****] will be deemed to have occurred upon the earlier of (i) the date of shipment of the [****] (or a product incorporating or integrating the [****]) to the third party buyer, and (ii) the date of dispatch of a bill or invoice for such [****].
“Service Plan” means the support services plan attached hereto as Exhibit B, which sets forth the details of the Development and Support Services, including, without limitation, the number of Mellanox Dedicated Personnel and their expertise and qualifications, and the duration and frequency of the respective Development and Support Services (on-site support and off-site support), as such plan may be amended upon the mutual written agreement of the Parties.
“Supply Agreement” means, as applicable, (i) those certain Mellanox Standard Terms and Conditions of Sale, or (ii) such other supply agreement as the Parties may enter into setting forth terms and conditions under which H3C will order from Mellanox, and Mellanox will supply to H3C, Mellanox Products. The Parties will use their best efforts to enter into the supply agreement within [****] following the Effective Date.
“Subcontractor” means a third party contractor or service provider engaged by H3C to provide services to H3C in connection with the design, development, manufacturing or distribution of [****].
“Support Period” means the period commencing on the Effective Date and ending upon the earlier of (i) [****] following the Effective Date; and (ii) [****].
“Technology” means information, know-how, data and other technology, including, without limitation, works of authorship, inventions, creations, ideas, computer programs (in source code, object code or any other format), firmware, IP blocks, documentation, developments, technical information, specifications, designs, drawings, writings, schematics, methods, procedures, concepts, techniques, protocols, hardware and products.
“Term” has the meaning set forth in ‎Section 10.1.
“Total Purchase Commitment” has the meaning set forth in ‎‎Section 8.2.

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

“Update” means any error correction, bug fixes or revision to the Licensed Technology made by or for Mellanox and provided to H3C pursuant to this Agreement.
Section 1.2.    Language; Interpretation.  This Agreement is in the English language only, which language will be controlling in all respects, and all versions hereof in any other language will not be binding upon the parties hereto.  All notices to be made or given pursuant to this Agreement will be in the English language.  The terms “this Agreement,” “hereof,” “hereunder” and any similar expressions refer to this Agreement and not to any particular article or other portion hereof.  As used in this Agreement, the words “include” and “including,” and variations thereof, will be deemed to be followed by the words “without limitation,” and “discretion” means sole discretion.
2.TECHNOLOGY LICENSE 
Section 2.1.    License Grant.
(a)    License Grant. Subject to the terms and conditions set forth in this Agreement, including payment of any License Fees [****] that are due and payable under the terms and conditions of this Agreement, Mellanox hereby grants to H3C a non-exclusive, worldwide, non-transferable (except to the extent permitted under the assignment provision in this Agreement), non-sublicensable (except to Subcontractors or Affiliates as set forth below), perpetual, irrevocable (except as set forth in this Agreement), royalty- and license fee-bearing, limited license, under the Mellanox Intellectual Property Rights, to use, reproduce, create derivative works of and otherwise modify, display, perform (publicly or otherwise) the Licensed Technology and Updates solely for the purpose of designing and developing (including having designed or developed subject to ‎Section 2.1‎(b) below), making (including having made, tested and verified subject to ‎Section 2.1‎(b) below), using, selling, offering to sell, importing, distributing (including having distributed subject to ‎Section 2.1‎(b) below) or otherwise disposing of and commercializing [****], whether on a standalone basis or as integrated, incorporated or included as part of any other products or services of H3C or any of its Affiliates (the “License”).  For the avoidance of doubt, the License excludes the use of or other exercise of rights to any Technology and Intellectual Property Rights therein owned by any third party, including any third party Technology that may be included or incorporated into or used with the Licensed Technology or Updates, and H3C acknowledges and agrees that it may have to enter into separate agreements with the applicable third parties to license or sublicense such Technology and Intellectual Property Rights therein.
(b)    Subcontactors. Pursuant to the License, H3C has the right to subcontract (and grant corresponding sublicenses under its rights in the License for) the design, development, manufacturing, testing, verification and distribution of the [****] to its Subcontractors under the “have designed or developed,” “have made, tested and verified” or “have distributed” rights granted to H3C in the License; provided that (i) H3C may in no event grant any such sublicense or disclose or provide any Licensed Technology to any Mellanox Competitor; (ii) each Subcontractor agrees in writing not to use any Licensed Technology for any purpose other than designing, developing, manufacturing, testing, verifying or distributing the [****], as applicable, in accordance with all of the terms and conditions of this Agreement, including confidentiality obligations, and to return to H3C all Licensed Technology and other Confidential Information provided to the Subcontractor upon the completion or termination of Subcontractor’s work (or upon H3C’s request); and (iii) H3C 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

will be responsible for any unauthorized disclosure or misuse of any Licensed Technology by any such Subcontractor.  H3C may disclose Licensed Technology to a Subcontractor only to the extent necessary for such Subcontractor to carry out its subcontracting services for H3C. Nothing herein will be deemed to grant any Subcontractor any license under any Mellanox Intellectual Property Rights.  H3C also agrees that Mellanox is an intended third-party beneficiary with respect to the enforcement of the confidentiality provisions against each Subcontractor that is provided with Licensed Technology or other Confidential Information.
(c)    Sublicensing to Affiliates.  In addition to and not in lieu or limitation of H3C’s right to sublicense Subcontractors pursuant to ‎Section 2.1‎(b) above, H3C will have the right to sublicense the rights granted to it under the License to its Affiliates (with the right to further sublicense to its subcontractors pursuant to the terms and conditions as stated in ‎Section 2.1‎(b)); provided that (i) each such Affiliate agrees to be bound by all of the terms and conditions set forth in this Agreement, and (ii) any act or omission of any Affiliate in violation of this Agreement will be deemed an act or omission of H3C hereunder.
Section 2.2.    Technology Transfer.  Mellanox will deliver to H3C or an Affiliate designated by H3C copies of (i) all Licensed Technology set forth in Exhibit A that in the possession or control of Mellanox (as of the applicable delivery date), in accordance with the stages, delivery schedule, format and manner set forth in Exhibit A, and (ii) the function testing report of [****] (“Testing Report”) which will be verified by H3C and attached hereto as Exhibit E upon verification. Mellanox will deliver to H3C or an Affiliate designated by H3C all Project Deliverables required pursuant to a statement of work in accordance with the stages, delivery schedule, format and manner specified therein. 
Section 2.3.    Limitations. 
(a)    License Restrictions. Except as expressly permitted in this Agreement or by law, H3C will not (i) disassemble, decompile or otherwise reverse engineer the Licensed Technology, any Updates, or any part thereof, or otherwise attempt to learn the source code or algorithms underlying the Licensed Technology or any Update (unless originally provided in source code to H3C); or (ii) use, transfer, sublicense, distribute, modify, create derivative works of or reproduce any Licensed Technology or Update.
(b)    Restricted Use. H3C acknowledges and agrees that the Licensed Technology is not designed or certified for use in components of systems intended for, or in relation to the operation of, weapons, weapons systems, nuclear installations, means of mass transportation, aviation, life-support computers or equipment, hazardous substance management, or for any other application in which the failure of the [****] could create a situation where personal injury or death is reasonably likely to occur (“Restricted Uses”).  
(c)    Back Up Copies. H3C may make copies of the Licensed Technology and Updates as necessary for the exercise of its rights under the License or for archival or back-up purposes; and such copies may only be used for such purposes. All such copies are and will remain the exclusive property of Mellanox.

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

(d)    Ownership Notices. H3C shall not remove, obscure or alter Mellanox copyright notices, patent notices, trademarks or other proprietary rights notices affixed to or contained within the Licensed Technology (or any copies thereof). 
(e)    Disclaimer.  Nothing contained in this Agreement may be construed as: a warranty or representation by Mellanox as to the validity, enforceability or sufficiency of any Mellanox Intellectual Property Right or Licensed Technology; or imposing upon Mellanox any obligation to institute any suit or action for infringement of any Mellanox Intellectual Property Right, or to defend any suit or action brought by a third party which challenges or concerns the validity, enforceability, or right to use any Mellanox Intellectual Property Right or Licensed Technology; or imposing on Mellanox any obligation to file any patent application or other intellectual property right application or registration or to secure or maintain in force any patent or other Mellanox Intellectual Property Right; or a warranty or representation by Mellanox as to the use, performance, operation or maintenance of any Licensed Technology (except as expressly set forth in this Agreement) or [****] used, manufactured or Sold pursuant to this Agreement.
(f)    No Implied Licenses. Except for the expressly granted License, no license or other right is granted to H3C hereunder by implication, estoppel or otherwise, under any Licensed Technology or Intellectual Property Rights of Mellanox.  Any use by H3C of any Licensed Technology or Intellectual Property Rights of Mellanox, except as expressly and specifically authorized in this Agreement, constitutes a material breach of this Agreement and may constitute infringement of such Intellectual Property Rights. 
3.DEVELOPMENT AND SUPPORT SERVICES
Section 3.1.    Development and Support Services.  During the Support Period, Mellanox shall provide to H3C reasonable consulting, training and technical support services that are necessary or useful to enable H3C to independently perform the design, development,  manufacturing (if applicable) and support of the [****], as set forth in more detail in this Agreement and the Service Plan (“Development and Support Services”). The Development and Support Services will generally include:
(a)    a number of dedicated Mellanox experts and technical support teams (whether Mellanox employees or third party contractors or service providers engaged by Mellanox to provide these services), as set forth in the Service Plan, to support H3C’s front-end design and back-end design of the [****] (“Mellanox Dedicated Personnel”);
(b)    training sessions designed to assist the H3C team to understand and obtain the necessary or useful knowledge, skills and expertise to use and otherwise exercise its license in and to the Licensed Technology throughout the Support Period;
(c)    development and delivery by Mellanox of certain Updates and Project Deliverables as expressly agreed by the Parties in this Agreement, a statement of work or other writing mutually executed by the Parties;

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

(d)    advising H3C with respect to physical implementation using [****] processes for the [****];
(e)    responding to H3C’s questions related to [****] manufacturing rules, processes and IP, to the extent relating to the [****], to the best of Mellanox’s knowledge and ability; and
(f)    advising H3C on the qualification and test services, including but not limited to the manufacturing of test wafers and chips to the extent relating to the [****]; and
(g)    providing other related services in connection with the [****], as may be requested by H3C and agreed to by Mellanox from time to time.
Section 3.2.    Project Coordinators.  Each Party will assign at least one technically qualified individual as a liaison for delivery and receipt of the Licensed Technology or any exchange or delivery of Confidential Information (“Project Coordinators”).  The initial Project Coordinators are specified in Exhibit A.  Each Party shall notify the other Party of any change in the identity of its Project Coordinator(s).
Section 3.3.    Assistance with Foundries.  In the event H3C elects to have the [****] manufactured by [****], then upon H3C’s request, Mellanox will provide reasonable consulting and advising assistance to H3C, during the Support Period, in connection with the manufacturing of the [****] and solely to the extent such assistance is within Mellanox’s existing capabilities.  H3C acknowledges that Mellanox’s ability to provide such assistance will be significantly limited should H3C decide to use [****].
Section 3.4.    Additional Services.  The Parties may from time to time agree to expand the Development and Support Services or that Mellanox will provide additional related services, in which case the scope and cost of such expanded or additional services will be detailed in statement(s) of work mutually executed by the Parties.
4.PROPRIETARY RIGHTS
Section 4.1.    Background Technology.  Each Party retains and will continue to own all right, title and interest, including all Intellectual Property Rights, in and to all of its Background Technology.
Section 4.2.    Licensed Technology. Subject to the grant of the License, Mellanox retains and will continue to own all right, title and interest in and to all Licensed Technology, Mellanox Intellectual Property Rights and Updates. 
Section 4.3.    [****] Technology.  Subject to Mellanox’s ownership of any underlying Licensed Technology, Background Technology and Updates, H3C shall exclusively own all [****Technology, and Mellanox hereby irrevocably assigns and agrees to assign to H3C or an Affiliate designated by H3C all right, title and interest in and to any and all Project Deliverables and Jointly Developed [****] Technology. To the extent that any Project Deliverables and Jointly 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

Developed [****] Technology, or any Intellectual Property Rights therein, are not assignable as provided in this Section or that Mellanox retains any right, title or interest in or to any Project Deliverables or Jointly Developed [****] Technology, Mellanox hereby unconditionally and irrevocably waives any and all claims and causes of action of any kind against H3C, its Affiliates, and its licensees (through multiple tiers) with respect to such rights, and agrees, at H3C’s request and expense, to consent to and join in any action to enforce such rights, and hereby grants to H3C or an Affiliate designated by H3C an unrestricted, perpetual, irrevocable, fully paid-up, royalty-free, fully transferable, sublicensable (through multiple levels of sublicensees), exclusive (even as to Mellanox, but subject to ‎Section 4.4) right and license, throughout the world, free from any liens or encumbrances, to design, develop, implement, make, have made, assemble, test, use, sell, offer to sell, import, distribute, reproduce, modify, support, repair, refurbish, display and perform (whether publicly or otherwise), disclose and create derivative works and other improvements of, and otherwise commercialize, exploit, or dispose of (and have others exercise such rights on behalf of H3C) all or any portion of the Project Deliverables and Jointly Developed [****] Technology (or any Intellectual Property Rights therein or thereto), in any form or media (now known or later developed). In addition to the foregoing, upon H3C’s request, Mellanox will grant H3C or an Affiliate designated by H3C a power of attorney with the full right and authority in all applicable jurisdictions, to act on Mellanox’s behalf to implement the foregoing assignment.
Section 4.4.    License Back to Mellanox.  Subject to the terms and conditions set forth in this Agreement, and Mellanox’s compliance with its obligations under Section 2.2, 3.1 and 3.3 in material respect, H3C ,on behalf of itself and its Affiliates, hereby grants and agrees to grant to Mellanox a perpetual, irrevocable, worldwide, non-exclusive, royalty-free, fully paid-up license, sublicensable to its Affiliates and subcontractors, under all Intellectual Property Rights which are owned or controlled by H3C or any of its Affiliates and embodied in or which would be infringed by the use of any Jointly Developed [****] Technology and Project Deliverables, to use, commercialize and otherwise exploit in any manner any and all Jointly Developed [****] Technology and Project Deliverables in connection with the development, design, having designed, manufacture, having manufactured, testing, verification, use, import, offer to Sell, Sale and otherwise commercialization of any products or services of Mellanox or its Affiliates, other than any [****] that are substantially similar to or competitive with the [****]. For the avoidance of doubt, the foregoing license to such Jointly Developed [****] Technology and Project Deliverables excludes the use of or other exercise of rights to any Technology or Intellectual Property Rights owned by any third party, including any third party Technology that may be included or incorporated into or used with such Jointly Developed [****] Technology or Project Deliverable, and Mellanox acknowledges and agrees that it may have to enter into separate agreements with the applicable third parties to license or sublicense such Technology or Intellectual Property Rights.
5.FEES[****]
Section 5.1.    License Fees; Development and Support Fees.  In consideration for the License and the Development and Support Services performed by Mellanox under this Agreement, H3C will pay Mellanox the license fees and development and support fees set forth in Exhibit A (respectively, “License Fee” and “Development and Support Fees”) in accordance with the corresponding schedule or milestones therein.  

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

Section 5.2.    [****].
(a)    [****]. In addition to the License Fee and Development and Support Fees, H3C will pay [****].
(b)    Payment; Reports. [****]. All [****] on [****] and due [****].  For so long as [****], within [****], H3C will deliver to Mellanox a written report containing the following information: (i) the total number of units of each [****] Sold during [****], (ii) an itemized list (including quantities) of each [****] Sold, either as a standalone product or included as part of any other products (and identifying such other products, if applicable), (iii) an itemized list of the third party buyers and their location (including quantities of each [****] purchased by each buyer), and (iv) a calculation of the [****] and any other information reasonably requested by Mellanox relevant to verifying the calculation and accuracy of the payment due to Mellanox.
Section 5.3.    Payment Terms 
(a)    Payments.  Unless otherwise set forth in this Agreement, all Fees due pursuant to this Agreement will be due and payable [****] from H3C’s receipt of the applicable invoice.  All payments made to Mellanox for the applicable Fees [****] under this Agreement will be in U.S. dollars. 
(b)    Taxes.  Any and all amounts payable by H3C to Mellanox hereunder[****] are [****] and [****]. 
Section 5.4.    Records and Audits.  H3C shall keep complete and accurate books of account and records with respect to any transaction giving rise to H3C’s obligation to pay any amount due to Mellanox hereunder[****].  H3C shall retain such books and records for a period of [****] from the date of any such transaction, notwithstanding any termination of this Agreement.  H3C will permit an independent accounting firm designated by Mellanox (and reasonably acceptable to H3C) to examine and audit, at Mellanox’s cost, no more than once each calendar year, during normal business hours, all books and records as may contain, under recognized accounting practices, information bearing upon the amounts payable to Mellanox[****], under this Agreement.  Such auditors will be subject to appropriate measures to protect H3C’s and third parties’ confidential information.  Prompt adjustment shall be made by H3C to compensate for any errors or omissions disclosed by such examination or audit which result in an underpayment of any amounts due to Mellanox, together with interest thereon [****].  If any such examination discloses a payment obligation greater than [****] of the applicable period being audited, then H3C, in addition to paying such payment then due, shall pay the reasonable cost of the audit.
6.REPRESENTATIONS AND WARRANTIES
Section 6.1.    Representations and Warranties of H3C.  H3C represents and warrants to Mellanox as of the Effective Date that:
(a)    it is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of formation;

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

(b)    it has full corporate power and authority to execute, deliver and perform this Agreement, and has taken all corporate action required by law and its organizational documents to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement; and
(c)    all consents, approvals and authorizations from all governmental authorities required to be obtained by it in connection with this Agreement have been obtained.
Section 6.2.    Representations and Warranties of Mellanox. Mellanox represents and warrants to H3C as of the Effective Date that:
(a)    it is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of formation;
(b)    it has full corporate power and authority to execute, deliver and perform this Agreement, and has taken all corporate action required by law and its organizational documents to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement;
(c)    all consents, approvals and authorizations from all governmental authorities required to be obtained by it in connection with this Agreement have been obtained;
(d)    Mellanox’s execution of and performance under this Agreement shall not breach any agreement with any third party or any obligation owed by Mellanox to any third party to keep any information or materials in confidence or in trust;
(e)    Mellanox has all necessary rights to grant the licenses, assignments and rights herein to H3C without the need for any assignments, releases, consents, approvals, immunities or other rights not yet obtained, other than with respect to the third party intellectual property set forth in Exhibit D;
(f)    the Development and Support Services furnished by Mellanox will be performed in a professional and workmanlike manner;
(g)    the Licensed Technology includes files that accurately reflect the [****] available in production as of the date hereof.
(h)    the Licensed Technology will conform to the Testing Report, and in the event of a breach of this warranty, H3C shall notify Mellanox promptly in writing of such breach, and Mellanox shall use its reasonable best efforts to promptly (and not later than [****] after receiving the notice) provide an Update or alternative mechanism that conforms the affected Licensed Technology to the Testing Report. In the event of a breach of this warranty [****], if Mellanox fails to do the foregoing, H3C will be entitled to [****];
(i)    to Mellanox’s knowledge, the third party intellectual property set forth in Exhibit D is the complete list of third party intellectual property required for use of the Licensed 

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[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

Technology in the same manner that Mellanox uses such Licensed Technology immediately prior to the Effective Date;
(j)    to Mellanox’s knowledge, the  Licensed Technology, Updates and Project Deliverables, and the use or exercise of rights in connection with any of the foregoing as contemplated by this Agreement, do not and will not infringe, violate or misappropriate the Intellectual Property Rights of any person or entity anywhere in the world (the Parties agree that the sole remedy for breach of this representation and warranty is through Mellanox indemnification  obligation in ‎Section 9.2); and
(k)    there are no pending or, to Mellanox’s best knowledge, threatened claims alleging that the Licensed Technology infringes or misappropriates any Intellectual Property Rights of third parties.
Section 6.3.    Disclaimer.  EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES PROVIDED IN THIS AGREEMENT, THE LICENSED TECHNOLOGY, PROJECT DELIVERABLES, UPDATES AND CONFIDENTIAL INFORMATION PROVIDED BY MELLANOX TO H3C ARE PROVIDED ON AN “AS-IS” BASIS WITHOUT WARRANTY OF ANY KIND, AND NEITHER PARTY MAKES (AND EACH PARTY HEREBY EXPRESSLY DISCLAIMS) ANY OTHER REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE OR NON-INFRINGEMENT OF THIRD PARTY RIGHTS. 
7.CONFIDENTIALITY
Section 7.1.    Confidentiality Obligations.  During the term of this Agreement and a period of [****] thereafter, each Recipient agrees shall (a) preserve in strict confidence and secure against accidental loss any and all Confidential Information of the Disclosing Party received or obtained by the Recipient; (b) not disclose any of the Disclosing Party’s Confidential Information except as permitted in ‎‎Section 7.2 below, and (c) not use any of the Disclosing Party’s Confidential Information except for the purpose of fulfilling Recipient’s obligations and exercising Recipient’s rights under this Agreement.  In preserving the Disclosing Party’s Confidential Information, Recipient shall use the same standard of care it would use to secure and safeguard its own confidential information of similar importance, but in no event less than reasonable care.  Without limiting the generality of the foregoing, Recipient shall secure and safeguard any and all information, documents, items of work-in-process and other tangible materials that embody Disclosing Party’s Confidential Information in areas providing restricted access to prevent unauthorized disclosure or use.  Any permitted reproduction of Disclosing Party’s Confidential Information by Recipient must contain all confidential or proprietary legends which appear on the original information.

12

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

Section 7.2.    Non-Disclosure Agreements. The Parties acknowledge and agree that any other non-disclosure agreements or confidentiality obligations other than those provided in this Section ‎7 or otherwise this Agreement shall not apply to anything under this Agreement and that this Section ‎7 shall prevail over and supersede any terms in any such non-disclosure agreements to the extent applicable. For the avoidance of doubt, no information or materials provided under this Agreement will constitute confidential information under or otherwise be governed by such non-disclosure agreements, regardless of whether such materials are considered confidential information under such non-disclosure agreements.
Section 7.3.    Permitted Disclosures.  Recipient shall permit access to Disclosing Party’s Confidential Information solely to its employees and contractors who (a) have a need to know such information in furtherance of the purposes of this Agreement; and (b) have signed confidentiality agreements containing terms at least as restrictive as those contained in this Agreement.  Recipient shall not disclose or transfer any Confidential Information of the Disclosing Party to any other third party, without the specific prior written approval of the Disclosing Party, except to the extent required by governmental or court order, provided, however, that the Recipient (i) provides prompt notice thereof to the Disclosing Party, and (ii) uses all commercially reasonable efforts to obtain a protective order or otherwise prevent or minimize public disclosure of such Confidential Information.  
Section 7.4.    Additional Obligations.  Recipient shall: (a) notify the Disclosing Party promptly of the loss of or any material unauthorized disclosure, possession, use or knowledge, or attempt thereof, of the Disclosing Party’s Confidential Information by any person or entity which may become known to Recipient; (b) promptly furnish to the Disclosing Party full details of the loss, unauthorized possession, use or knowledge, or attempt thereof, and use reasonable efforts to assist the Disclosing Party in recovering such Confidential Information or in investigating or preventing the recurrence of any unauthorized possession, use or knowledge, or attempt thereof, of such Confidential Information; (c) use commercially reasonable efforts to cooperate with the Disclosing Party in any litigation and investigation against third parties deemed necessary by the Disclosing Party to protect its proprietary rights; and (d) promptly use all commercially reasonable efforts to prevent a recurrence of any unauthorized possession, use or knowledge of such Confidential Information.  Each Party shall bear its own costs incurred in complying with this ‎Section 7.4.
Section 7.5.    Return of Confidential Information.  Recipient acknowledges that Disclosing Party retains ownership of all Confidential Information disclosed or made available to Recipient.  Upon any termination of this Agreement and/or upon written request by the Disclosing Party, then, except to the extent that: (a) the retention of certain Confidential Information is required for the Recipient’s enjoyment of those of its rights and benefits hereunder that survive the termination of this Agreement; or (b) the erasure or deletion of archival or backup copies on a Recipient Party’s computer or email systems containing Confidential Information would be prohibited by applicable law or regulation or not in compliance with such party’s data retention policies, the Recipient shall either destroy or return to Disclosing Party the original and all copies of any written documents, materials or other tangible items containing or embodying Confidential Information of the Disclosing Party.  It being understood that the Recipient may elect to either return or destroy (or cause to be destroyed) any of the foregoing; provided, however, that if such Confidential Information 

13

is destroyed or caused to be destroyed, by the Recipient, the Recipient shall promptly deliver to the Disclosing Party a certificate executed by a duly authorized officer of the Recipient certifying to the Disclosing Party that any and all such Confidential Information has been destroyed.
Section 7.6.    Exceptions.  Notwithstanding ‎Section 7.1 above, neither Party, as Recipient, will have any obligation to maintain the confidentiality of any information which it can establish (a) was publicly known at the time of its disclosure to it by the Disclosing Party or, through no violation of this Agreement, becomes publicly known; (b) was in the possession of Recipient, without confidentiality restrictions, at the time of disclosure by Disclosing Party as shown by Recipient’s files and records existing immediately prior to the time of disclosure; or (c) is hereafter furnished to Recipient by a third party without an obligation of confidentiality.
Section 7.7.    Remedies.  Recipient acknowledges that any unauthorized disclosure or use by a Recipient of the Disclosing Party’s Confidential Information may diminish the value of such information.  Therefore, if a Recipient breaches any of its obligations with respect to confidentiality or the use of a Disclosing Party’s Confidential Information hereunder, the

14

Disclosing Party shall be entitled to seek equitable relief to protect its interests herein, including injunctive relief, as well as monetary damages. 
Section 7.8.    Publicity.  Neither Party will disclose to any third party the relationship between Mellanox and H3C, the existence of this Agreement or the terms and conditions of this Agreement, without the prior written consent of the other Party, and no public announcement or response to any inquiries regarding this Agreement will be made by either Party without the prior written consent of the other Party as to the timing, form and contents of any such announcement or response.  Notwithstanding the foregoing, each Party may disclose the terms and conditions of this Agreement (a) in confidence, to its external auditors, attorneys and advisors; (b) as required or advisable by its securities counsel in connection with the requirements of a public offering, securities filing, securities exchange rules or other applicable securities laws or regulations, with confidential treatment or other confidentiality protection to the extent reasonably available and advisable by its securities counsel; (c) to the competent courts or arbitration bodies in connection with the enforcement or defense of its rights under this Agreement, under confidentiality protection to the extent available, and (d) in confidence, to a third party conducting a due diligence investigation (and its legal or financial representatives or advisors) in connection with a merger or acquisition or proposed merger or acquisition of such Party or a financing, license or the acquisition or disposition of the business or assets of such Party relating to this Agreement.
8.STRATEGIC SUPPLY RELATIONSHIP
Section 8.1.    Continued Supply of [****].  Mellanox will continue to have manufactured and supply to H3C its [****], until Mellanox announces the discontinuation or end of life of each such product, in accordance with the pricing and other terms agreed by the Parties in the Supply Agreement.  Any such announcement will be made no later than [****].
Section 8.2.    Purchase Commitment of Mellanox Products.  H3C agrees to (i) purchase from Mellanox [****] of Mellanox Products in each calendar quarter from [****] (the “Quarterly Purchase Commitment”), and (ii) purchase from Mellanox a total of [****] of Mellanox Products from [****] (the “Total Purchasing Commitment”) in accordance with the terms of the Supply Agreement.  The details of such purchase commitment and the supply of Mellanox Products will be set out in the Supply Agreement, including a commitment from Mellanox to provide market competitive prices and specifications for the Mellanox Products.  Should H3C not meet the Quarterly Purchasing Commitment or the Total Purchasing Commitment and fail to make up the shortfall in the immediately subsequent calendar quarter, Mellanox will have the right to: (a) suspend the License and/or the Development and Support Services with [****] prior written notice to H3C (provided that such failure has not been cured during the [****] period) until such time as H3C meets the Quarterly Purchasing Commitment, and/or (b) terminate this Agreement as provided in ‎Section 10.2(c).  Subject to the terms and conditions of the Supply Agreement, should H3C fail to meet the Quarterly Purchasing Commitment or the Total Purchasing Commitment and fail to make up the shortfall in the immediately subsequent calendar quarter and such failures are the direct result of, and solely attributable to, Mellanox’s failure or inability to supply Mellanox Products in accordance with the Supply Agreement, provided that H3C has in fact timely submitted (in accordance with the applicable agreed upon lead times) binding purchase orders for the quantities required to meet 

15

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

the Quarterly Purchasing Commitment or the Total Purchasing Commitment, as applicable, the Quarterly Purchasing Commitment or Total Purchasing Commitment will be deemed to have been met for the respective period. 
Section 8.3.    Development and Commercialization of [****].  H3C agrees to use commercially reasonable efforts to: (a) develop [****] using Mellanox’s [****] and [****] by [****], and (b) commence sales of such [****] in [****] from [****].  Mellanox will sell to H3C [****] of such [****] and H3C will provide [****] for the [****] as well as [****] as part of the general offering. 
9.INDEMNIFICATION; LIMITATION OF LIABILITY
Section 9.1.    Indemnification of Mellanox.  H3C will, at its expense, defend (upon Mellanox’s request), indemnify and hold harmless, Mellanox and its Affiliates, their officers, employees and agents from and against any claims, demands, causes of action, damage, liability, cost or expense (including reasonable attorneys’ fees and court costs) caused by, arising out of, or resulting from: (a) the exercise or practice of the rights and licenses granted to H3C under this Agreement, including the Sale of [****]; (b) any third party claim alleging that the [****] infringe or misappropriate the Intellectual Property Rights of such third party but only to the extent such claim does not result directly from the Licensed Technology or Updates; (c) personal injury or property damage arising from the production, manufacture, use, Sale or other commercialization of the [****], except to the extent that any such injury or damage arose solely as a result of Mellanox’s gross negligence or willful misconduct; or (d) any claim to the extent resulting from use of the Licensed Technology in connection with any Restricted Uses.  In the event of any claim indemnifiable under this clause, Mellanox will: (i) promptly notify H3C, in writing, of the claim; (ii) provide H3C with all reasonable information and assistance, at H3C’s expense, to defend or settle such claim; and (iii) grant H3C with the authority and control of the defense or settlement of such claim.  H3C shall not enter into any settlement of such a claim without Mellanox’ prior written consent, except if such settlement is only for monetary damages (to be paid by H3C) and contains a full release of Mellanox from the claim. 
Section 9.2.    Indemnification of H3C.  Mellanox will, at its expense, defend (upon H3C’s request), indemnify and hold harmless, H3C and its Affiliates, their officers, employees and agents from and against any claims, demands, causes of action, damage, liability, cost or expense (including reasonable attorneys’ fees and court costs) caused by, arising out of, or resulting from: (a) any third party claim alleging that the Licensed Technology or Updates or the use thereof or exercise of rights with respect thereto in accordance with this Agreement infringe, violate or misappropriate the Intellectual Property Rights of such third party in any of the following jurisdictions: the U.S., Canada, EU, UK, China (including Hong Kong, Taiwan and Macau), Japan, Korea, Indonesia, Malaysia, Singapore and India; or (b) gross negligence, recklessness or willful misconduct by any Mellanox Personnel, except to the extent that any such injury or damage arose solely as a result of H3C’s gross negligence or willful misconduct.  In the event of any claim indemnifiable under this clause, H3C will: (i) promptly notify Mellanox, in writing, of the claim; (ii) provide Mellanox with all reasonable information and assistance, at Mellanox’s expense, to defend or settle such claim; and (iii) grant Mellanox with the authority and control of the defense or settlement of such claim.  

16

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

Mellanox shall not enter into any settlement of such a claim without H3C’s prior written consent, except if such settlement is only for monetary damages (to be paid by Mellanox) and contains a full release of H3C from the claim. THIS ‎SECTION 9.2 SETS FORTH MELLANOX’S ENTIRE OBLIGATION AND LIABILITY AND H3C’S SOLE REMEDY WITH RESPECT TO THIRD PARTY INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS.
THE FOREGOING AND ANY OTHER INDEMNIFICATION OBLIGATIONS EXPRESSLY AND SPECIFICALLY SET FORTH IN THIS AGREEMENT CONSTITUTE THE SOLE INDEMNIFICATION OBLIGATIONS OF THE PARTIES IN CONNECTION WITH THIS AGREEMENT.
Section 9.3.    Limitation of Liability. EXCEPT FOR BREACHES ‎SECTION 2.3(A) (LICENSE RESTRICTIONS), ‎SECTION 2.3(B) (PROHIBITED USE) OR SECTION ‎7 (CONFIDENTIALITY) AND LIABILITY ARISING UNDER ‎SECTION 9.1 (INDEMNIFICATION), IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT OR INCIDENTAL DAMAGES, HOWEVER CAUSED, ON ANY THEORY OF LIABILITY AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, ARISING IN ANY WAY OUT OF THIS AGREEMENT, THE LICENSED TECHNOLOGY OR [****], EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 
10.TERM AND TERMINATION 
Section 10.1.    Term.  The term of this Agreement will commence on the Effective Date and remain in force and effect unless earlier terminated as provided for herein (the “Term”). 
Section 10.2.    Termination.  
(a)    Material Breach.  If either Party defaults in the performance of a material obligation under this Agreement (except as specified in paragraph (b) and (c) below), and such default is not cured within [****] after written notice is received by the defaulting Party specifying in reasonable detail the nature of the default, the non-defaulting Party may, upon further written notice to the defaulting Party, terminate this Agreement as of the date specified in such termination, provided that with respect to H3C’s obligations to make payment and meet purchase commitments under this Agreement, only such breach described under ‎‎Section 10.2(b) and ‎Section 10.2‎(c) shall be considered a material breach of H3C under this Agreement and if any such breach occurs, ‎‎Section 10.2(b) and/or ‎Section 10.2‎(c) shall apply, as the case may be. 
(b)    Failure to Make Payment.  If H3C fails to pay Mellanox any amounts due and payable under this Agreement on the date such payment is due in excess of [****], and such default is not cured within [****] after H3C’s receipt of written notice from Mellanox of such default, then Mellanox may terminate this Agreement and all of H3C’s license rights in the Licensed Technology immediately upon written notice. 
(c)    Failure to Meet Purchase Commitments.  If (i) H3C fails to meet the Quarterly Purchasing Commitment or the Total Purchasing Commitment and such shortfall is in excess of 

17

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

[****] and (ii) H3C fails to cure such default by making up the shortfall in [****] immediately following the period to which the commitment applied, then Mellanox may terminate this Agreement and all of H3C’s license rights in the Licensed Technology immediately upon written notice. 
(d)    Change in Control. In the event of any Change in Control by Mellanox, H3C may terminate this Agreement solely pursuant to ‎Section 11.10.
(e)    Insolvency.  Either Party may, by giving written notice, terminate this Agreement with immediate effect:  (i) if the other Party avails itself or becomes subject to any proceeding under applicable national, federal or state statute relating to bankruptcy, insolvency, reorganization, receivership, arrangement, adjustment of debts, dissolution or liquidation, which proceeding is not dismissed within [****] of commencement thereof; (ii) if the other Party petitions, applies for, suffers or permits with or without its consent the appointment of a custodian, receiver, trustee in bankruptcy or similar officer for all or any substantial part of its business or assets; (iii) if the other Party makes a general assignment for the benefit of its creditors; (iv) if the other Party ceases conducting business in the normal course; or (v) if the other Party becomes insolvent.
(f)    Survival.  The provisions of ‎ ‎Section 2.1, ‎‎Section 2.3, Section ‎4 (provided Section 4.4 is subject to Section 10.3(a)(ii)) , ‎‎Section 5.2, ‎‎Section 5.3, ‎‎Section 5.4, ‎‎Section 6.2, Section ‎‎7, Section ‎‎9, ‎‎Section 10.2‎(f), ‎Section 10.3, Section ‎‎11 will survive the termination of this Agreement for any reason and will continue in perpetuity, unless such provisions terminate by their terms. 
Section 10.3.    Effect of Termination. Upon the termination of this Agreement for any reason: (a) all rights and licenses granted under this Agreement to either Party will terminate, except that (i) if H3C is not in material breach of this Agreement, then the right to manufacture and sell [****] developed prior to the date of termination of this Agreement[****] shall survive, and (ii) if Mellanox is not in material breach of this Agreement, its right to use Jointly Developed [****] Technology and Project Deliverables in accordance with ‎Section 4.4 shall survive; (b) upon written request, Recipient shall return all Confidential Information pursuant to ‎Section 7.5 above to Disclosing Party; and (c) all amounts due and payable to Mellanox as a result of events prior to the date of termination will become due immediately.
11.MISCELLANEOUS 

18

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

Section 11.1.    Governing Law and Dispute Resolution. This Agreement will be governed by and interpreted in accordance with the laws of the State of New York, U.S.A., without reference to its conflict of laws principles.  Any and all claims or disputes between the Parties in connection with, arising out of or related to this Agreement or the breach or termination hereof, which the Parties are unable to resolve between themselves, shall be resolved exclusively by litigation in the New York state courts or the federal court located in the Southern District of New York, USA.  Each Party hereby irrevocably consents to the exclusive personal and subject matter jurisdiction of such courts for such purposes.  In any such litigation between the Parties, the prevailing Party will be entitled to recover its attorneys’ and experts’ fees and costs in addition to any other relief to which it may be entitled.
Section 11.2.    Assignments.  Except as set forth in this Agreement, no rights under this Agreement may be transferred, whether by assignment, sublicense, merger, operation of law or otherwise, without the prior written approval of the other Party or its successors in its or their sole and absolute discretion, except that no approval will be required for (a) either Party to assign any or all of its rights and obligations hereunder to its Affiliates in accordance with the terms and conditions herein; and (b) Mellanox to assign the Agreement in connection with a merger, acquisition or the sale of all or substantially all of its assets, provided that such assignee shall be bound by the terms and conditions of this Agreement. Any attempt by a Party to assign or sublicense in contravention of this Agreement will be null and void and shall constitute a material breach of this Agreement.  In the event that a Party assigns this Agreement to an Affiliate pursuant to the terms and conditions of this Agreement, the assigning Party agrees to cause such Affiliate to comply with and perform all duties and obligations of such Party under this Agreement and such Party will be responsible for the operations of its Affiliate hereunder as if such operations were carried out by such Party, including any payment of all applicable Fees [****] due to Mellanox (in case of H3C as the assigning Party) under the terms and conditions of this Agreement. 
Section 11.3.    Relationship of Parties.  The Parties hereto are independent contractors.  Nothing contained herein or done in pursuance of this Agreement constitutes either Party as the agent of the other Party for any purpose or in any sense whatsoever or constitutes the Parties as partners or joint venturers. 
Section 11.4.    Notices.  All notices and consents required to be given or made by the Parties must be in writing and will be deemed validly given if delivered by hand or sent by certified mail or facsimile to the following addresses: 
	
		
	To Mellanox:
	To H3C:

	Mellanox Technologies Ltd.
	H3C Technologies Co., Limited

	26 HaKidma St., Ofer Industrial Park
	LSH Center, Building 1, No.8

	Yokneam 2069200
	Guangshun South Street, Chaoyang District

	Israel
	Beijing, China 100102

	Attention: General Counsel
	Attention: General Counsel

	Facsimile: N/A
	Facsimile: N/A

	Email:  legal_notices@mellanox.com
	Email: legal@h3c.com

19

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

Notice sent as provided herein will be deemed to have been received on the earlier of (i) the date when actually received or (ii) if by facsimile, when the sending party receives a facsimile confirmation that the message has been received by the Party’s facsimile machine. 
Section 11.5.    Severability.  The illegality or unenforceability of the whole or any part of the provisions of this Agreement will not affect the continued operation of the remaining provisions of this Agreement and the Parties shall negotiate, in good faith, a substitute, valid and enforceable provision which most nearly affects the Parties’ intent in entering into this Agreement. 
Section 11.6.    Waiver.  The failure by either Party at any time to insist upon strict performance of any of the terms and conditions in this Agreement will not be deemed a waiver of its right at any time thereafter to insist upon strict performance. 
Section 11.7.    Export Controls.  Each Party shall comply with all U.S. and foreign export laws and regulations in connection with the transactions contemplated by this Agreement to the extent applicable to it, and shall furnish to the other Party such evidence or written undertakings to comply or written assurances of compliance as the other Party may reasonably request. H3C shall use commercially reasonable efforts to refrain from exporting or re-exporting the Licensed Technology and [****] or any technical data or other materials received from Mellanox or its suppliers to any country, individual or organization proscribed by the United States government, unless properly authorized by the appropriate agency of the United States government.  Without limiting the generality of the foregoing, Mellanox shall be responsible, at its sole cost and expense, for: (a) the preparation and filing of any and all reports, notices or other documents or materials required by any agency of the United States government or any other country or jurisdiction having authority over the conduct of Mellanox’s business or the export or re-export of the Licensed Technology from Israel, and (b) obtaining the appropriate licenses and permits necessary to export or re-export the Licensed Technology from Israel.  H3C shall be responsible for obtaining, at its sole cost and expense, the appropriate licenses and permits necessary to import the Licensed Technology or to import or export any [****] in which the Licensed Technology is integrated or enabled. If a Party is unable to perform its obligations under this Agreement due to any export or import controls, such Party will promptly notify the other Party and the Parties will promptly meet and consult with each other to resolve the issue in good faith for a period of [****] (or such longer period of time as the Parties may agree upon writing). In the event such issue cannot be resolved with the aforementioned time frame, such issue shall be treated as a “Force Majeure” under Section 11.9.  
Section 11.8.    Counterparts.  This Agreement may be executed in two (2) or more counterparts, each of which will be considered as an original, but all of which, taken together, are to be regarded as one and the same agreement. 
Section 11.9.    Force Majeure.  Neither Party will be considered in default of performance of its obligations under this Agreement to the extent that performance of such obligations is delayed or prevented by Force Majeure.  For purposes of this Agreement, “Force Majeure” means an event that delays or renders performance impossible by acts of governmental, civil or military authority, natural disaster, strikes, hostilities, riot, acts of terrorism or the effects thereof, sabotage, vandalism or intentional damage of any kind, or any event or circumstance beyond the reasonable control of 

20

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

a Party.  In the event of such Force Majeure, the time for performance will be extended by a period necessary to overcome the effects of the Force Majeure.  The Party affected by such events or circumstances shall advise the other as soon as practicable of the same and when such events or circumstances no longer prevail.  Should the Force Majeure be expected to extend beyond thirty (30) days, either Party may at its option terminate this Agreement.
Section 11.10.    Change in Control.  In the event of any Change in Control of Mellanox, Mellanox shall, to the extent possible, notify H3C in writing with sufficient details prior to such Change in Control event occurs and shall provide necessary information as reasonably requested by H3C to enable H3C to determine whether such Change in Control event would result in certain adverse effect on Mellanox’s ability to perform this Agreement.  If H3C in its sole discretion determines that any such Change in Control event would result in certain adverse effect on Mellanox’s ability to perform this Agreement in any way, Mellanox and H3C shall consult with each other and Mellanox shall take all necessary actions to prevent or rectify such adverse effect to H3C’s satisfaction.  If such adverse effect cannot be prevented or rectified within [****] after the initial consultation between the Parties takes place pursuant to this ‎Section 11.10, H3C may unilaterally terminate this Agreement. For the avoidance of doubt, without prejudice to ‎Section 10.3, upon such termination of this Agreement, all rights and licenses granted under this Agreement to H3C will terminate and all amounts due and payable to Mellanox up to the effective date of termination will become due immediately, and H3C will not be entitled to any refund as a result of such termination.  
Section 11.11.    Entire Agreement.  This Agreement and the Exhibits hereto are the complete agreement of the Parties relating to the subject matter hereof.  This Agreement supersedes and governs any other prior or collateral agreements with respect to the subject matter hereof, including prior unsigned versions of this Agreement and any proposals related thereto.  Any amendment to this Agreement or any modification of any term of this Agreement must be in writing and must be executed by an authorized representative of each Party.  Without limiting the generality of the foregoing, no term or condition of, or any provision in, any purchase order, invoice, order acknowledgement or similar or other document submitted by either Party to the other Party in connection with the transaction envisioned by this Agreement shall be binding on either Party unless contained in a writing actually signed by a duly authorized representative of each Party. 
Section 11.12.    No Solicitation. During the Term of the Agreement and for a period of [****] following the termination thereof for any reason, neither Party shall solicit to hire or otherwise employ any of the executive officers, technical personnel or other employees of the other Party or of the other Party’s subcontractors, except by the prior written consent of the other Party.  This Section shall not prohibit general solicitations made through newspapers, trade publications, or Internet advertisements, nor to the hiring of individuals who respond to such solicitations provided that: (a) the employees first approached the hiring Party in response to the hiring Party’s solicitation published in a newspaper, trade publication or on the Internet, which solicitation was directed solely to the public and not specifically targeted or directed to the other Party’s employees; or (b) the employees first approached the hiring Party in search of employment on their own initiative without any direct or indirect prompting from the hiring Party, or any person or entity acting on the hiring Party’s behalf, other than a public solicitation as stated in subsection (a).  

21

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

In addition, this Section shall not prohibit the soliciting, recruiting or hiring of any individual who has left his or her position with the other Party at least three years prior to the time the hiring party solicits, recruits, or hires such individual.     

22

IN WITNESS WHEREOF, EACH PARTY HAS CAUSED THIS AGREEMENT TO BE SIGNED BY ITS DULY AUTHORIZED OFFICER OR REPRESENTATIVE EFFECTIVE AS OF THE EFFECTIVE DATE.     

	
		
	MELLANOX TECHNOLOGIES, LTD.
By:   /s/ Amir Prescher   
Name:   Amir Prescher   _
Title:   SVP Sales & BD   _
Date:   January 17, 2019      _
	H3C TECHNOLOGIES CO., LIMITED
By:   /s/ Tony YU   
Name:   Tony YU   _
Title:    President & CEO   
Date:   January 21, 2019   

23

EXHIBIT A

I.    LICENSED TECHNOLOGY 
[*****]
Training Plan
[****]
[****]
II.    FEES [****]
1.License Fees:
[****]

2.Development and Support Fees:
[****], payable over [****] following the Effective Date, based on the milestones set forth in the table below.  Each payment will be due and payable upon the earlier of either the respective milestone being met or the respective Estimated Target Date in the table.
[****]

[****]:
[****].
[****].

III.    PROJECT COORDINATORS
[****]

24
[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
[*****] = Two pages of confidential information, marked by brackets, have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed.

EXHIBIT B
 
SERVICE PLAN
The table below lists the number of Mellanox Dedicated Personnel during the Support Period. Those individuals are fully allocated to support H3C’s [****] development. If the need arises, Mellanox will add others on a per need basis and in accordance to the expertise and knowledge required.

Mellanox Dedicated Personnel will be located in Israel. Based on mutually agreed requirements, Mellanox will send the relevant experts to H3C sites and/or H3C will send engineers to Mellanox sites.

The Mellanox Dedicated Personnel resource schedule aligns to an assumed H3C [****] development schedule, starting with the Effective Date:

[****]

[****]

25

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

EXHIBIT C
 
MELLANOX’S COMPETITORS
[****]

26

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

 EXHIBIT D

THIRD PARTY INTELLECTUAL PROPERTY

[****]

27

[****] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

EXHIBIT E
 
TESTING REPORT
[*****]

28

[*****] = Nine pages of confidential information, marked by brackets, have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed.ex_143603.htm

Exhibit 10.1

 

PRIMO WATER CORPORATION

 

2019 OMNIBUS LONG-TERM INCENTIVE PLAN

 

Primo Water Corporation, a Delaware corporation (the “Company”), sets forth herein the terms of its 2019 Omnibus Long-Term Incentive Plan (the “Plan”), as follows:

 

	
			1.

				
			PURPOSE 

			

 

The Plan is intended to enhance the Company’s and its Affiliates’ (as defined herein) ability to attract and retain highly qualified officers, non-employee members of the Board, key employees, consultants and advisors, and to motivate such officers, non-employee members of the Board, key employees, consultants and advisors to serve the Company and its Affiliates and to expend maximum effort to improve the business results and earnings of the Company, by providing to such persons an opportunity to acquire or increase a direct proprietary interest in the operations and future success of the Company. To this end, the Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, other stock-based awards and cash awards. Any of these awards may, but need not, be made as performance incentives to reward attainment of performance goals in accordance with the terms hereof. Stock options granted under the Plan may be non-qualified stock options or incentive stock options, as provided herein. Upon becoming effective, the Plan replaces, and no further awards shall be made under the Primo Water Corporation 2010 Omnibus Long-Term Incentive Plan.

 

	
			2.

				
			DEFINITIONS 

			

 

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

 

	
			2.1.

				
			“Affiliate” means any company or other trade or business that “controls,” is “controlled by” or is “under common control” with the Company within the meaning of Rule 405 of Regulation C under the Securities Act, including, without limitation, any Subsidiary.

			 

			
	
			2.2.

				
			“Award” means a grant of an Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, other Stock-based Award or cash award under the Plan.

			 

			
	
			2.3.

				
			“Award Agreement” means a written agreement between the Company and a Grantee, or notice from the Company or an Affiliate to a Grantee that evidences and sets out the terms and conditions of an Award.

			 

			
	
			2.4.

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

			 

			

 

 

 

 

	
			2.5.

				
			“Cause” shall be defined as that term is defined in a Grantee’s offer letter or other applicable employment agreement; or, if there is no such definition “Cause” means, as determined by the Company and unless otherwise provided in an applicable Award Agreement with the Company or an Affiliate: (i) engaging in any act, or failing to act, or misconduct that in any such case is injurious to the Company or its Affiliates; (ii) gross negligence or willful misconduct in connection with the performance of duties; (iii) conviction of (or entering a plea of guilty or nolo contendere to) a criminal offense (other than a minor traffic offense); (iv) fraud, embezzlement or misappropriation of funds or property of the Company or an Affiliate; (v) material breach of any term of any employment, consulting or other services, confidentiality, intellectual property or non-competition agreement, if any, between the Service Provider and the Company or an Affiliate; (vi) the entry of an order duly issued by any regulatory agency (including federal, state and local regulatory agencies and self-regulatory bodies) having jurisdiction over the Company or an Affiliate requiring the removal from any office held by the Service Provider with the Company or prohibiting or materially limiting a Service Provider from participating in the business or affairs of the Company or any Affiliate; or (vii) the revocation or threatened revocation of any of the Company’s or any Affiliate’s government licenses, permits or approvals, which is primarily due to the Service Provider’s action or inaction and such revocation or threatened revocation would be alleviated or mitigated in any material respect by the termination of the Service Provider’s Services.

			 

			
	
			2.6.

				
			“Change in Control” shall have the meaning set forth in Section 15.2.

			 

			
	
			2.7.

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

			 

			
	
			2.8.

				
			“Committee” means the Compensation Committee of the Board, or such other committee as determined by the Board. The Compensation Committee of the Board may, in its discretion, designate a subcommittee of its members to serve as the Committee (to the extent the Board has not designated another person, committee or entity as the Committee). The Board will cause the Committee to satisfy the applicable requirements of any stock exchange on which the Common Stock may then be listed. For purposes of Awards to Grantees who are subject to Section 16 of the Exchange Act, Committee means all of the members of the Compensation Committee who are “non-employee directors” within the meaning of Rule 16b-3 adopted under the Exchange Act.

			 

			
	
			2.9.

				
			“Company” means Primo Water Corporation, a Delaware corporation, or any successor corporation.

			 

			
	
			2.10.

				
			“Common Stock” or “Stock” means a share of common stock of the Company, par value $.001 per share.

			 

			
	
			2.11.

				
			“Disability” means as determined by the Company and unless otherwise provided in an applicable Award Agreement with the Company or an Affiliate, the Grantee is unable to perform each of the essential duties of such Grantee’s position by reason of a medically determinable physical or mental impairment which is potentially permanent in character or which can be expected to last for a continuous period of not less than 12 months; provided, however, that, with respect to rules regarding expiration of an Incentive Stock Option following termination of the Grantee’s Service, “Disability” means “permanent and total disability” as set forth in Section 22(e)(3) of the Code.

			 

			
	
			2.12.

				
			“Effective Date” means May 2, 2019.

			 

			

	
			2.13.

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

			 

			

	
			2.14.

				
			“Fair Market Value” of a share of Common Stock as of a particular date shall mean (1) if the Common Stock is listed on a national securities exchange, the closing or last price of the Common Stock on the composite tape or other comparable reporting system for the applicable date, or if the applicable date is not a trading day, the trading day immediately preceding the applicable date, or (2) if the shares of Common Stock are not then listed on a national securities exchange, or the value of such shares is not otherwise determinable, such value as determined by the Board in good faith in its sole discretion (but in any event not less than fair market value within the meaning of Section 409A).

			 

			
	
			2.15.

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

			 

			

 

 

 

 

	
			2.16.

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

			 

			

	
			2.17.

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

			 

			

	
			2.18.

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

			 

			

	
			2.19.

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

			 

			

	
			2.20.

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

			 

			

	
			2.21.

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

			 

			

	
			2.22.

				
			“Performance Award” means an Award made subject to the attainment of performance goals (as described in Section 12) over a performance period determined by the Board.

			 

			

	
			2.23.

				
			“Predecessor Plan” means each of (i) the Primo Water Corporation 2010 Omnibus Long-Term Incentive Plan and (ii) the Primo Water Corporation (formerly, Primier Corporation) 2004 Stock Plan.

			 

			

	
			2.24.

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

			 

			

	
			2.25.

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

			 

			
	2.26.	
			“Restricted Stock” means shares of Stock, awarded to a Grantee pursuant to Section 10 hereof.

			 

			

	
			2.27.

				
			“Restricted Stock Unit” means a bookkeeping entry representing the equivalent of shares of Stock, awarded to a Grantee pursuant to Section 10 hereof.

			 

			

	
			2.28.

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

			 

			

	
			2.29.

				
			“SEC” means the United States Securities and Exchange Commission.

			 

			

	
			2.30.

				
			“Section 409A” shall mean Section 409A of the Code and all formal guidance and regulations promulgated thereunder.

			 

			

	
			2.31.

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

			 

			

	
			2.32.

				
			“Separation from Service” means a termination of Service by a Service Provider, as determined by the Board, which determination shall be final, binding and conclusive; provided if any Award governed by Section 409A is to be distributed on a Separation from Service, then the definition of Separation from Service for such purposes shall comply with the definition provided in Section 409A.

			 

			

 

 

 

 

	
			2.33.

				
			“Service” means service as a Service Provider to the Company or an Affiliate. Unless otherwise stated in the applicable Award Agreement, a Grantee’s change in position or duties shall not result in interrupted or terminated Service, so long as such Grantee continues to be a Service Provider to the Company or an Affiliate.

			 

			

	
			2.34.

				
			“Service Provider” means an employee, officer, non-employee member of the Board, consultant or advisor of the Company or an Affiliate.

			 

			

	
			2.35.

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

			 

			

	
			2.36.

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

			 

			

	
			2.37.

				
			“Substitute Award” means any Award granted in assumption of or in substitution for an award of a company or business acquired by the Company or a Subsidiary or with which the Company or an Affiliate combines, shares issued or issuable.

			 

			

	
			2.38.

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

			 

			

	
			2.39.

				
			“Termination Date” means the date that is ten (10) years after the Original Effective Date, unless the Plan is earlier terminated by the Board under Section 5.2 hereof.

			 

			

	
			2.40.

				
			“Transaction” shall have the meaning set forth in Section 15.2.

			

 

 

 

 

	
			3.

				
			ADMINISTRATION OF THE PLAN 

			

 

	
			3.1.

				
			General.

			

 

The Board shall have such powers and authorities related to the administration of the Plan as are consistent with the Company’s certificate of incorporation and bylaws and applicable law. The Board shall have the power and authority to delegate its responsibilities hereunder to the Committee, which shall have full authority to act in accordance with its charter, and with respect to the authority of the Board to act hereunder, all references to the Board shall be deemed to include a reference to the Committee, to the extent such power or responsibilities have been delegated. Except as specifically provided in Section 14 or as otherwise may be required by applicable law, regulatory requirement or the certificate of incorporation or the bylaws of the Company, the Board shall have full power and authority to take all actions and to make all determinations required or provided for under the Plan, any Award or any Award Agreement, and shall have full power and authority to take all such other actions and make all such other determinations not inconsistent with the specific terms and provisions of the Plan that the Board deems to be necessary or appropriate to the administration of the Plan. The Committee shall administer the Plan; provided that, the Board shall retain the right to exercise the authority of the Committee to the extent consistent with applicable law and the applicable requirements of any securities exchange on which the Common Stock may then be listed. The interpretation and construction by the Board of any provision of the Plan, any Award or any Award Agreement shall be final, binding and conclusive. Without limitation, the Board shall have full and final authority, subject to the other terms and conditions of the Plan, to:

 

	
			(i)

				
			designate Grantees;

			 

			
	
			(ii)

				
			determine the type or types of Awards to be made to a Grantee;

			 

			
	
			(iii)

				
			determine the number of shares of Stock to be subject to an Award;

			 

			
	
			(iv)

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

			 

			
	
			(v)

				
			prescribe the form of each Award Agreement; and

			 

			
	
			(vi)

				
			amend, modify, or supplement the terms of any outstanding Award including the authority, in order to effectuate the purposes of the Plan, to modify Awards to foreign nationals or individuals who are employed outside the United States to recognize differences in local law, tax policy, or custom.

			

 

To the extent permitted by applicable law, the Board may delegate its authority as identified herein to any individual or committee of individuals (who need not be directors), including without limitation the authority to make Awards to Grantees who are not subject to Section 16 of the Exchange Act or who are not Covered Employees. To the extent that the Board delegates its authority to make Awards as provided by this Section 3.1, all references in the Plan to the Board’s authority to make Awards and determinations with respect thereto shall be deemed to include the Board’s delegate. Any such delegate shall serve at the pleasure of, and may be removed at any time by the Board.

 

	
			3.2.

				
			Restrictions; No Repricing.

			

 

Notwithstanding the foregoing, no amendment or modification may be made to an outstanding Option or SAR that causes the Option or SAR to become subject to Section 409A, without the Grantee’s written prior approval. Notwithstanding any provision herein to the contrary, the repricing of Options or SARs is prohibited without prior approval of the Company’s stockholders. For this purpose, a “repricing” means any of the following (or any other action that has the same effect as any of the following): (A) changing the terms of an Option or SAR to lower its Option Price or SAR Exercise Price; (B) any other action that is treated as a “repricing” under generally accepted accounting principles; and (C) repurchasing for cash or canceling an Option or SAR at a time when its Option Price or SAR Exercise Price is greater than the Fair Market Value of the underlying shares in exchange for another Award, unless the cancellation and exchange occurs in connection with a change in capitalization or similar change under Section 15. A cancellation and exchange under clause (C) would be considered a “repricing” regardless of whether it is treated as a “repricing” under generally accepted accounting principles and regardless of whether it is voluntary on the part of the Grantee.

  

 

 

 

	
			3.3.

				
			Award Agreements; Breach of Covenants; Cause.

			

 

The grant of any Award may be contingent upon the Grantee executing the appropriate Award Agreement. The Company may retain the right in an Award Agreement to cause a forfeiture of the gain realized by a Grantee on account of actions taken by the Grantee in violation or breach of or in conflict with any employment agreement, non-competition agreement, any agreement prohibiting solicitation of employees or clients of the Company or any Affiliate thereof or any confidentiality obligation with respect to the Company or any Affiliate thereof or otherwise in competition with the Company or any Affiliate thereof, to the extent specified in such Award Agreement applicable to the Grantee. Furthermore, the Company may annul an Award if the Grantee is terminated for Cause as defined in the applicable Award Agreement or the Plan, as applicable.

 

	
			3.4.

				
			Minimum Vesting.

			

 

Notwithstanding any other provision of the Plan to the contrary, equity-based Awards granted under the Plan shall vest no earlier than the first anniversary of the date the Award is granted, excluding, for this purpose, any (i) Substitute Awards, (ii) shares delivered in lieu of fully vested cash Awards, and (iii) Awards to non-employee members of the Board that vest on the earlier of the one year anniversary of the date of grant or the next annual meeting of stockholders (provided that such vesting period under this clause (iii) may not be less than 50 weeks after grant); provided that the Board may grant equity-based Awards without regard to the foregoing minimum vesting requirement with respect to a maximum of five percent (5%) of the available share reserve authorized for issuance under the Plan pursuant to Section 4 (subject to adjustment under Section 15); and, provided further, for the avoidance of doubt, that the foregoing restriction does not apply to the Committee’s discretion to provide for accelerated exercisability or vesting of any Award, including in cases of retirement, death, disability or a Change in Control, in the terms of the Award or otherwise.

 

	
			3.5.

				
			Clawbacks.

			

 

If any of the Company’s financial statements are required to be restated, the Company may recover all or a portion of any Award made to any Grantee with respect to any fiscal year of the Company the financial results of which are negatively affected by such restatement. The amount to be recovered shall be the amount, as determined by the Committee, by which the affected Award exceeds the amount that would have been payable had the financial statements been initially filed as restated. In no event shall the amount to be recovered by the Company be less than the amount required to be repaid or recovered as a matter of law.

 

	
			3.6.

				
			Deferral Arrangement. 

			

 

The Board may permit or require the deferral of any Award payment into a deferred compensation arrangement, subject to such rules and procedures as it may establish and in accordance with Section 409A, which may include provisions for the payment or crediting of interest or dividend equivalents, including converting such credits into deferred Stock units.

 

	
			3.7.

				
			No Liability. 

			

 

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

 

	
			3.8.

				
			Book Entry. 

			

 

Notwithstanding any other provision of this Plan to the contrary, the Company may elect to satisfy any requirement under this Plan for the delivery of stock certificates through the use of book-entry.

 

 

 

 

	
			4.

				
			STOCK SUBJECT TO THE PLAN 

			

 

Subject to adjustment as provided in Section 15 hereof, the maximum number of shares of Stock available for issuance under the Plan shall be 1,500,000. In addition, shares of Stock underlying any outstanding award granted under a Predecessor Plan shall be available for the grant of new Awards under this Plan to the extent that, following the Effective Date, either: (i) the award expires, or is terminated, surrendered or forfeited for any reason without issuance of such shares, or (ii) shares of Stock are tendered (by either actual delivery or by attestation) or withheld from the award to cover any tax withholding requirement with respect to the award (not in excess of maximum statutory rates). As provided in Section 1, no new awards shall be granted under the Primo Water Corporation 2010 Omnibus Long-Term Incentive Plan following the Effective Date. Stock issued or to be issued under the Plan shall be authorized but unissued shares; or, to the extent permitted by applicable law, issued shares that have been reacquired by the Company.

 

Subject to adjustments in accordance with Section 15 hereof, 1,500,000 of such shares of Stock available for issuance under the Plan shall be available for issuance pursuant to Incentive Stock Options.

 

The Board may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or Substitute Awards) and make adjustments in accordance with Section 15. To the extent that an Award is canceled, expired, forfeited, settled in cash, settled by issuance of fewer shares than the number underlying the Award, or otherwise terminated without delivery of shares to the Grantee, the shares retained by or returned to the Company will be available under the Plan. If the Option Price of any Option, or if pursuant to Section 17.3 the withholding obligation of any Grantee with respect to an Option or other Award, is satisfied by tendering shares of Stock to the Company (by either actual delivery or by attestation) or by withholding shares of Stock, the number of shares of Stock issued net of the shares of Stock tendered or withheld shall be deemed delivered for purposes of determining the maximum number of shares of Stock available for delivery under the Plan, and shares that are withheld from such an Award or separately surrendered by the Grantee in payment of any Option Price or taxes relating to such an Award shall be deemed to constitute shares not delivered to the Grantee and will be available under the Plan. In addition, in the case of any Substitute Award, such Substitute Award shall not be counted against the number of shares reserved under the Plan.

 

The maximum value of Awards granted during any calendar year to any nonemployee member of the Board or the board of directors of an Affiliate (“Nonemployee Director”), taken together with any cash fees paid to such Nonemployee Director during the calendar year and the value of awards granted to the Nonemployee Director under any other equity compensation plan of the Company or an Affiliate during the calendar year, shall not exceed the following in total value (calculating the value of any Awards or other equity compensation plan awards based on the grant date fair value for financial reporting purposes): (i) $900,000 for the Chair of the Board and (ii) $600,000 for each Nonemployee Director other than the Chair of the Board; provided, however, that awards granted to Nonemployee Directors upon their initial election to the Board or the board of directors of an affiliate shall not be counted towards the limit under this paragraph.

 

	
			5.

				
			EFFECTIVE DATE, DURATION AND AMENDMENTS 

			

 

	
			5.1.

				
			Term. 

			

 

The Plan shall become effective as of the Effective Date. The Plan shall terminate automatically on the 5-year anniversary of the Effective Date and may be terminated on any earlier date as provided in Section 5.2.

 

 

 

 

	
			5.2.

				
			Amendment and Termination of the Plan. 

			

 

The Board may, at any time and from time to time, amend, suspend, or terminate the Plan as to any Awards which have not been made. An amendment shall be contingent on approval of the Company’s stockholders to the extent stated by the Board, required by applicable law or required by applicable stock exchange listing requirements. Notwithstanding the foregoing, any amendment to Section 3.2 shall be contingent upon the approval of the Company’s stockholders. No Awards shall be made after the Termination Date. The applicable terms of the Plan, and any terms and conditions applicable to Awards granted prior to the Termination Date shall survive the termination of the Plan and continue to apply to such Awards. No amendment, suspension, or termination of the Plan shall, without the consent of the Grantee, materially impair rights or obligations under any Award theretofore awarded.

 

	
			6.

				
			AWARD ELIGIBILITY AND LIMITATIONS 

			

 

	
			6.1.

				
			Service Providers. 

			

 

Subject to this Section 6, Awards may be made to any Service Provider, including any Service Provider who is an officer, Non-employee member of the Board, consultant or advisor of the Company or of any Affiliate, as the Board shall determine and designate from time to time in its discretion.

 

	
			6.2.

				
			Successive Awards. 

			

 

An eligible person may receive more than one Award, subject to such restrictions as are provided herein.

 

	
			6.3.

				
			Stand-Alone, Additional, Tandem, and Substitute Awards. 

			

 

Awards may, in the discretion of the Board, be granted either alone or in addition to, in tandem with, or in substitution or exchange for, any other Award or any award granted under another plan of the Company, any Affiliate, or any business entity to be acquired by the Company or an Affiliate, or any other right of a Grantee to receive payment from the Company or any Affiliate. Such additional, tandem, and substitute or exchange Awards may be granted at any time. If an Award is granted in substitution or exchange for another Award, the Board shall have the right to require the surrender of such other Award in consideration for the grant of the new Award. The Board shall have the right, in its discretion, to make Awards in substitution or exchange for any other award under another plan of the Company, any Affiliate, or any business entity to be acquired by the Company or an Affiliate. In addition, Awards may be granted in lieu of cash compensation, including in lieu of cash amounts payable under other plans of the Company or any Affiliate, in which the value of Stock subject to the Award is equivalent in value to the cash compensation (for example, Restricted Stock Units or Restricted Stock).

 

	
			7.

				
			AWARD AGREEMENT 

			

 

Each Award shall be evidenced by an Award Agreement, in such form or forms as the Board shall from time to time determine. Without limiting the foregoing, an Award Agreement may be provided in the form of a notice which provides that acceptance of the Award constitutes acceptance of all terms of the Plan and the notice. Award Agreements granted from time to time or at the same time need not contain similar provisions but shall be consistent with the terms of the Plan. Each Award Agreement evidencing an Award of Options shall specify whether such Options are intended to be Non-qualified Stock Options or Incentive Stock Options, and in the absence of such specification such options shall be deemed Non-qualified Stock Options.

 

 

 

 

 

	
			8.

				
			TERMS AND CONDITIONS OF OPTIONS 

			

 

	
			8.1.

				
			Option Price. 

			

 

The Option Price of each Option shall be fixed by the Board and stated in the related Award Agreement. The Option Price of each Option (except those that constitute Substitute Awards) shall be at least the Fair Market Value on the Grant Date of a share of Stock; provided, however, that in the event that a Grantee is a Ten Percent Stockholder as of the Grant Date, the Option Price of an Option granted to such Grantee that is intended to be an Incentive Stock Option shall be not less than 110 percent of the Fair Market Value of a share of Stock on the Grant Date. In no case shall the Option Price of any Option be less than the par value of a share of Stock.

 

	
			8.2.

				
			Vesting. 

			

 

Subject to Section 8.3 hereof, each Option shall become exercisable at such times and under such conditions (including, without limitation, performance requirements) as shall be determined by the Board and stated in the Award Agreement.

 

	
			8.3.

				
			Term. 

			

 

Each Option shall terminate, and all rights to purchase shares of Stock thereunder shall cease, upon the expiration of ten (10) years from the Grant Date, or under such circumstances and on such date prior thereto as is set forth in the Plan or as may be fixed by the Board and stated in the related Award Agreement; provided, however, that in the event that the Grantee is a Ten Percent Stockholder, an Option granted to such Grantee that is intended to be an Incentive Stock Option at the Grant Date shall not be exercisable after the expiration of five (5) years from its Grant Date.

 

	
			8.4.

				
			Limitations on Exercise of Option. 

			

 

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

 

	
			8.5.

				
			Method of Exercise. 

			

 

An Option that is exercisable may be exercised by the Grantee’s delivery of a notice of exercise to the Company, setting forth the number of shares of Stock with respect to which the Option is to be exercised, accompanied by full payment for the shares. To be effective, notice of exercise must be made in accordance with procedures established by the Company from time to time.

 

 

 

 

	
			8.6.

				
			Rights of Holders of Options. 

			

 

Unless otherwise stated in the related Award Agreement, an individual holding or exercising an Option shall have none of the rights of a stockholder (for example, the right to receive cash or dividend payments or distributions attributable to the subject shares of Stock or to direct the voting of the subject shares of Stock ) until the shares of Stock covered thereby are fully paid and issued to him. Except as provided in Section 15 hereof or the related Award Agreement, no adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date of such issuance.

 

	
			8.7.

				
			Delivery of Stock Certificates. 

			

 

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

 

	
			8.8.

				
			Limitations on Incentive Stock Options. 

			

 

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

 

	
			9.

				
			TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS 

			

 

	
			9.1.

				
			Right to Payment. 

			

 

A SAR shall confer on the Grantee a right to receive, upon exercise thereof, the excess of (i) the Fair Market Value of one share of Stock on the date of exercise over (ii) the SAR Exercise Price, as determined by the Board. The Award Agreement for an SAR shall specify the SAR Exercise Price, which shall be fixed at the Fair Market Value of a share of Stock on the Grant Date. SARs may be granted alone or in conjunction with all or part of an Option or at any subsequent time during the term of such Option or in conjunction with all or part of any other Award. A SAR granted in tandem with an outstanding Option following the Grant Date of such Option shall have a grant price that is equal to the Option Price; provided, however, that the SAR’s grant price may not be less than the Fair Market Value of a share of Stock on the Grant Date of the SAR.

 

	
			9.2.

				
			Other Terms. 

			

 

The Board shall determine at the Grant Date or thereafter, the time or times at which and the circumstances under which an SAR may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the time or times at which SARs shall cease to be or become exercisable following Separation from Service or upon other conditions, the method of exercise, whether or not a SAR shall be in tandem or in combination with any other Award, and any other terms and conditions of any SAR.

 

 

 

 

	
			9.3.

				
			Term of SARs. 

			

 

The term of a SAR granted under the Plan shall be determined by the Board, in its sole discretion; provided, however, that such term shall not exceed ten (10) years.

 

	
			9.4.

				
			Payment of SAR Amount. 

			

 

Upon exercise of a SAR, a Grantee shall be entitled to receive payment from the Company (in cash or Stock, as determined by the Board) in an amount determined by multiplying:

 

	
			(i)

				
			the difference between the Fair Market Value of a share of Stock on the date of exercise over the SAR Exercise Price; by

			
	
			(ii)

				
			the number of shares of Stock with respect to which the SAR is exercised.

			

 

 

	
			10.

				
			TERMS AND CONDITIONS OF RESTRICTED STOCK AND RESTRICTED STOCK UNITS 

			

 

	
			10.1.

				
			Restrictions. 

			

 

At the time of grant, the Board may, in its sole discretion, establish a period of time (a “restricted period”) and any additional restrictions including the satisfaction of corporate or individual performance objectives applicable to an Award of Restricted Stock or Restricted Stock Units in accordance with Section 12.1 and 12.2. Each Award of Restricted Stock or Restricted Stock Units may be subject to a different restricted period and additional restrictions. Neither Restricted Stock nor Restricted Stock Units may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of during the restricted period or prior to the satisfaction of any other applicable restrictions.

 

	
			10.2.

				
			Restricted Stock Certificates. 

			

 

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

 

	
			10.3.

				
			Rights of Holders of Restricted Stock. 

			

 

Unless the Board otherwise provides in an Award Agreement, holders of Restricted Stock shall have rights as stockholders of the Company, including voting and dividend rights, subject to the terms of Section 17.12.

 

 

 

 

	
			10.4.

				
			Rights of Holders of Restricted Stock Units. 

			

 

	
			10.4.1.

				
			Settlement of Restricted Stock Units. 

			

 

Restricted Stock Units may be settled in cash or Stock, as determined by the Board and set forth in the Award Agreement. The Award Agreement shall also set forth whether the Restricted Stock Units shall be settled (i) within the time period specified in Section 17.9.1 for short term deferrals or (ii) otherwise within the requirements of Section 409A, in which case the Award Agreement shall specify upon which events such Restricted Stock Units shall be settled.

 

	
			10.4.2.

				
			Voting and Dividend Rights. 

			

 

Unless otherwise stated in the applicable Award Agreement, holders of Restricted Stock Units shall not have rights as stockholders of the Company, including no voting or dividend or dividend equivalents rights.

 

	
			10.4.3.

				
			Creditor’s Rights. 

			

 

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

 

	
			10.5.

				
			Purchase of Restricted Stock. 

			

 

The Grantee shall be required, to the extent required by applicable law, to purchase the Restricted Stock from the Company at a Purchase Price equal to the greater of (i) the aggregate par value of the shares of Stock represented by such Restricted Stock or (ii) the Purchase Price, if any, specified in the related Award Agreement. If specified in the Award Agreement, the Purchase Price may be deemed paid by Services already rendered. The Purchase Price shall be payable in a form described in Section 11 or, in the discretion of the Board, in consideration for past Services rendered.

 

	
			10.6.

				
			Delivery of Stock. 

			

 

Upon the expiration or termination of any restricted period and the satisfaction of any other conditions prescribed by the Board, the restrictions applicable to shares of Restricted Stock or Restricted Stock Units settled in Stock shall lapse, and, unless otherwise provided in the Award Agreement, a stock certificate for such shares shall be delivered, free of all such restrictions, to the Grantee or the Grantee’s beneficiary or estate, as the case may be.

 

	
			11.

				
			FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK 

			

 

	
			11.1.

				
			General Rule. 

			

 

Payment of the Option Price for the shares purchased pursuant to the exercise of an Option or the Purchase Price for Restricted Stock shall be made in cash or in cash equivalents acceptable to the Company, except as provided in this Section 11.

 

 

 

 

	
			11.2.

				
			Surrender of Stock. 

			

 

To the extent the Award Agreement so provides, payment of the Option Price for shares purchased pursuant to the exercise of an Option or the Purchase Price for Restricted Stock may be made all or in part through the tender to the Company of shares of Stock, which shares shall be valued, for purposes of determining the extent to which the Option Price or Purchase Price for Restricted Stock has been paid thereby, at their Fair Market Value on the date of exercise or surrender. Notwithstanding the foregoing, in the case of an Incentive Stock Option, the right to make payment in the form of already owned shares of Stock may be authorized only at the time of grant.

 

	
			11.3.

				
			Cashless Exercise. 

			

 

With respect to an Option only (and not with respect to Restricted Stock), to the extent permitted by law and to the extent the Award Agreement so provides, payment of the Option Price may be made all or in part by delivery (on a form acceptable to the Board) of an irrevocable direction to a licensed securities broker acceptable to the Company to sell shares of Stock and to deliver all or part of the sales proceeds to the Company in payment of the Option Price and any withholding taxes described in Section 17.3.

 

	
			11.4.

				
			Other Forms of Payment. 

			

 

To the extent the Award Agreement so provides, payment of the Option Price or the Purchase Price for Restricted Stock may be made in any other form that is consistent with applicable laws, regulations and rules, including, but not limited to, the Company’s withholding of shares of Stock otherwise due to the exercising Grantee.

 

 

	
			12.

				
			TERMS AND CONDITIONS OF PERFORMANCE AWARDS 

			

 

	
			12.1.

				
			Performance Conditions. 

			

 

The right of a Grantee to exercise or receive a grant or settlement of any Award, and the timing thereof, may be subject to such performance conditions as may be specified by the Committee. The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions. Such Awards are referred to as “Performance Awards.”

 

	
			12.2.

				
			Performance Goals Generally. 

			

 

The performance goals for Performance Awards shall consist of one or more business or other criteria and a targeted level or levels of performance with respect to each of such criteria, as specified by the Committee consistent with this Section 12. The Committee may determine that such Performance Awards shall be granted, exercised and/or settled upon achievement of any one performance goal or that two or more of the performance goals must be achieved as a condition to grant, exercise and/or settlement of such Performance Awards. Performance goals may, in the discretion of the Committee, be established on a Company-wide basis, or with respect to one or more business units, divisions, subsidiaries or business segments, as applicable. Performance goals may be absolute or relative (to the performance of one or more comparable companies or indices). The Committee may determine the extent to which measurement of performance goals may exclude the impact of charges for restructuring, discontinued operations, extraordinary items, debt redemption or retirement, asset write downs, litigation or claim judgments or settlements, acquisitions or divestitures, foreign exchange gains and losses, and other unusual non-recurring items, and the cumulative effects of tax or accounting changes (each as defined by generally accepted accounting principles and as identified in the Company’s financial statements or other SEC filings). Performance goals may differ for Performance Awards granted to any one Grantee or to different Grantees.

 

 

 

 

	
			12.3.

				
			Business Criteria. 

			

 

For purposes of Performance Awards, the Committee may select any business criteria for the Company, on a consolidated basis, and/or specified subsidiaries or business units of the Company (except with respect to the total stockholder return and earnings per share criteria), including any of the following: net sales; revenue; revenue growth or product revenue growth; operating income (before or after taxes); pre-or after-tax income (before or after allocation of corporate overhead and bonuses; net earnings; earnings per share; net income (before or after taxes); return on equity; total shareholder return; return on assets or net assets; appreciation in and/or maintenance of share price; market share; market capitalization; gross profits; earnings (including earnings before taxes, earnings before interest and taxes or earnings before interest, taxes depreciation and amortization); economic value-added models or equivalent metrics; comparisons with various stock market indices; reduction in costs; cash flow or cash flow per share (before or after dividends); return on capital (including return on total capital or return on invested capital; cash flow return on investment; improvement in or attainment of expense levels or working capital levels; operating margins; gross margins or cash margin; year-end cash; debt reductions; shareholder equity; regulatory performance; and implementation, completion or attainment of measurable objectives with respect to research, development, products or projects and recruiting and maintaining personnel.

 

	
			13.

				
			OTHER STOCK-BASED AWARDS

			

 

	
			13.1.

				
			Grant of Other Stock-based Awards.

			

 

Other Stock-based Awards, consisting of Stock units, or other Awards, valued in whole or in part by reference to, or otherwise based on, Common Stock, may be granted either alone or in addition to or in conjunction with other Awards under the Plan. Other Stock-based Awards may be granted in lieu of other cash or other compensation to which a Service Provider is entitled from the Company or may be used in the settlement of amounts payable in shares of Common Stock under any other compensation plan or arrangement of the Company, including without limitation, the Company’s Incentive Compensation Plan. Subject to the provisions of the Plan, the Committee shall have the sole and complete authority to determine the persons to whom and the time or times at which such Awards shall be made, the number of shares of Common Stock to be granted pursuant to such Awards, and all other conditions of such Awards. Unless the Committee determines otherwise, any such Award shall be confirmed by an Award Agreement, which shall contain such provisions as the Committee determines to be necessary or appropriate to carry out the intent of this Plan with respect to such Award.

 

	
			13.2.

				
			Terms of Other Stock-based Awards.

			

 

Any Common Stock subject to Awards made under this Section 13 may not be sold, assigned, transferred, pledged or otherwise encumbered prior to the date on which the shares are issued, or, if later, the date on which any applicable restriction, performance or deferral period lapses.

 

 

 

 

	
			14.

				
			REQUIREMENTS OF LAW 

			

 

	
			14.1.

				
			General. 

			

 

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

 

 

	
			14.2.

				
			Rule 16b-3. 

			

 

During any time when the Company has a class of equity security registered under Section 12 of the Exchange Act, it is the intent of the Company that Awards and the exercise of Options granted to officers and directors hereunder will qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To the extent that any provision of the Plan or action by the Board or Committee does not comply with the requirements of Rule 16b-3, it shall be deemed inoperative to the extent permitted by law and deemed advisable by the Board, and shall not affect the validity of the Plan. In the event that Rule 16b-3 is revised or replaced, the Board may exercise its discretion to modify this Plan in any respect necessary to satisfy the requirements of, or to take advantage of any features of, the revised exemption or its replacement.

 

	
			15.

				
			EFFECT OF CHANGES IN CAPITALIZATION 

			

 

	
			15.1.

				
			Changes in Stock. 

			

 

If (i) the number of outstanding shares of Stock is increased or decreased or the shares of Stock are changed into or exchanged for a different number or kind of shares or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or decrease in such shares effected without receipt of consideration by the Company occurring after the Original Effective Date or (ii) there occurs any spin-off, split-up, extraordinary cash dividend or other distribution of assets by the Company, the number and kinds of shares for which grants of Options and other Stock-based Awards may be made under the Plan (including the per-Grantee maximums set forth in Section 4) shall be equitably adjusted by the Company; provided that any such adjustment shall comply with Section 409A. In addition, in the event of any such increase or decease in the number of outstanding shares or other transaction described in clause (ii) above, the number and kind of shares for which Awards are outstanding and the Option Price per share of outstanding options and SAR Exercise Price per share of outstanding SARs shall be equitably adjusted; provided that any such adjustment shall comply with Section 409A.

 

 

 

 

	
			15.2.

				
			Effect of Certain Transactions.

			

 

Except as otherwise provided in an Award Agreement, in the event of (a) the liquidation or dissolution of the Company or (b) a reorganization, merger, exchange or consolidation of the Company or involving the shares of Common Stock (a “Transaction”), the Plan and the Awards issued hereunder shall continue in effect in accordance with their respective terms, except that following a Transaction either (i) each outstanding Award shall be treated as provided for in the agreement entered into in connection with the Transaction or (ii) if not so provided in such agreement, each Grantee shall be entitled to receive in respect of each share of Common Stock subject to any outstanding Awards, upon exercise or payment or transfer in respect of any Award, the same number and kind of stock, securities, cash, property or other consideration that each holder of a share of Common Stock was entitled to receive in the Transaction in respect of a share of Common stock; provided, however, that, unless otherwise determined by the Committee, such stock, securities, cash, property or other consideration shall remain subject to all of the conditions, restrictions and performance criteria which were applicable to the Awards prior to such Transaction. Without limiting the generality of the foregoing, the treatment of outstanding Options and Stock Appreciation Rights pursuant to this Section 15.1.2 in connection with a Transaction in which the consideration paid or distributed to the Company’s stockholders is not entirely shares of common stock of the acquiring or resulting corporation may include the cancellation of outstanding Options and Stock Appreciation Rights upon consummation of the Transaction as long as, at the election of the Committee, (x) the holders of affected Options and SARs have been given a period of at least fifteen days prior to the date of the consummation of the Transaction to exercise the Options or SARs (whether or not they were otherwise exercisable) or (y) the holders of the affected Options and SARs are paid (in cash or cash equivalents) in respect of each Share covered by the Option or SAR being canceled an amount equal to the excess, if any, of the per share price paid or distributed to stockholders in the transaction (the value of any non-cash consideration to be determined by the Committee in its sole discretion) over the Price Option or SAR Exercise Price, as applicable. For avoidance of doubt, (1) the cancellation of Options and SARs pursuant to clause (y) of the preceding sentence may be effected notwithstanding anything to the contrary contained in this Plan or any Award Agreement and (2) if the amount determined pursuant to clause (y) of the preceding sentence is zero or less, the affected Option or SAR may be cancelled without any payment therefore. The treatment of any Award as provided in this Section 15.1.2 shall be conclusively presumed to be appropriate for purposes of Section 15.1.1.

 

	
			15.3.

				
			Definition of Change in Control. 

			

 

“Change in Control” means:

 

	
			(1)

				
			Any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either (A) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this Section 15.2, the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliated Company, or (iv) any acquisition pursuant to a transaction that complies with Sections 1(d)(3)(A), 1(d)(3)(B) and 1(d)(3)(C).

			 

			

 

 

 

 

 

	
			(2)

				
			Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

			 

			

 

	
			(3)

				
			Consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors (or, for a non-corporate entity, equivalent governing body) of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or

			

 

	
			(4)

				
			Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

			

 

Notwithstanding the foregoing, if it is determined that an Award hereunder is subject to the requirements of Section 409A and is intended to be payable upon a Change in Control, the Company will not be deemed to have undergone a Change in Control for purposes of payment of such Award unless the Company is deemed to have undergone a “change in control event” pursuant to the definition of such term in Section 409A.

 

	
			15.5.

				
			Effect of Change in Control 

			

 

The Board shall determine the effect of a Change in Control upon Awards, and such effect may be set forth in the appropriate Award Agreement. Without limiting the foregoing, the Board may provide in the Award Agreements at the time of grant, or any time thereafter with the consent of the Grantee, the actions that will be taken upon the occurrence of a Change in Control, including, but not limited to, accelerated vesting, termination, cash-out or assumption. The Board may also provide in the Award Agreements at the time of grant, or any time thereafter with the consent of the Grantee, for different provisions to apply to an Award in place of those described in Sections 15.1 and 15.2.

 

 

 

 

	
			15.6.

				
			Reorganization Which Does Not Constitute a Change in Control. 

			

 

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

 

	
			15.7.

				
			Adjustments. 

			

 

Adjustments under this Section 15 related to shares of Stock or securities of the Company shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. No fractional shares or other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole share.

 

	
			 

			16.

				
			NO LIMITATIONS ON COMPANY 

			

 

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

 

	
			17.

				
			TERMS APPLICABLE GENERALLY TO AWARDS GRANTED UNDER THE PLAN

			

 

	
			17.1.

				
			Disclaimer of Rights. 

			

 

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

 

 

 

 

	
			17.2.

				
			Nonexclusivity of the Plan. 

			

 

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

 

	
			17.3.

				
			Withholding Taxes. 

			

 

The Company or an Affiliate, as the case may be, shall have the right to deduct from payments of any kind otherwise due to a Grantee any federal, state, or local taxes of any kind required by law to be withheld (i) with respect to the vesting of or other lapse of restrictions applicable to an Award, (ii) upon the issuance of any shares of Stock upon the exercise of an Option or SAR, or (iii) otherwise due in connection with an Award. At the time of such vesting, lapse, or exercise, the Grantee shall pay to the Company or the Affiliate, as the case may be, any amount that the Company or the Affiliate may reasonably determine to be necessary to satisfy such withholding obligation. Subject to the prior approval of the Company or the Affiliate, which may be withheld by the Company or the Affiliate, as the case may be, in its sole discretion, the Grantee may elect to satisfy such obligations, or the Company may require such obligations (up to maximum statutory rates) to be satisfied, in whole or in part, (i) by causing the Company or the Affiliate to withhold the number of shares of Stock otherwise issuable to the Grantee as may be necessary to satisfy such withholding obligation or (ii) by delivering to the Company or the Affiliate shares of Stock already owned by the Grantee. The shares of Stock so delivered or withheld shall have an aggregate Fair Market Value equal to such withholding obligations (up to maximum statutory rates). The Fair Market Value of the shares of Stock used to satisfy such withholding obligation shall be determined by the Company or the Affiliate as of the date that the amount of tax to be withheld is to be determined. A Grantee who has made an election pursuant to this Section 17.3 may satisfy his or her withholding obligation only with shares of Stock that are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements.

 

	
			17.4.

				
			Captions. 

			

 

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

 

	
			17.5

				
			Other Provisions. 

			

 

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

 

	
			17.6

				
			Number and Gender. 

			

 

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

 

 

 

 

	
			17.7.

				
			Severability. 

			

 

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

 

	
			17.8.

				
			Governing Law. 

			

 

The Plan shall be governed by and construed in accordance with the laws of the Sate of North Carolina without giving effect to the principles of conflicts of law, provided that the provisions set forth herein that are required to be governed by the Delaware General Corporation Law shall be governed by such law.

 

	
			17.9.

				
			Section 409A. 

			

 

	
			17.9.1.

				
			Short-Term Deferrals. 

			

 

For each Award intended to comply with the short-term deferral exception provided for under Section 409A, the related Award Agreement shall provide that such Award shall be paid out by the later of (i) the 15th day of the third month following the Grantee’s first taxable year in which the Award is no longer subject to a substantial risk of forfeiture or (ii) the 15th day of the third month following the end of the Company’s first taxable year in which the Award is no longer subject to a substantial risk of forfeiture.

 

	
			17.9.2.

				
			Adjustments. 

			

 

To the extent that the Board determines that a Grantee would be subject to the additional 20% tax imposed on certain deferred compensation arrangements pursuant to Section 409A as a result of any provision of any Award, to the extent permitted by Section 409A, such provision shall be deemed amended to the minimum extent necessary to avoid application of such additional tax. The Board shall determine the nature and scope of such amendment.

 

	
			17.10.

				
			Separation from Service. 

			

 

The Board shall determine the effect of a Separation from Service upon Awards, and such effect shall be set forth in the appropriate Award Agreement. Without limiting the foregoing, the Board may provide in the Award Agreements at the time of grant, or any time thereafter with the consent of the Grantee, the actions that will be taken upon the occurrence of a Separation from Service, including, but not limited to, accelerated vesting or termination, depending upon the circumstances surrounding the Separation from Service. Notwithstanding the foregoing, following grant of an Award, the Board does not have discretion to accelerate vesting of the Award, except upon a Separation from Service due to death or Disability.

 

	
			17.11.

				
			Transferability of Awards. 

			

 

	
			17.11.1.

				
			Transfers in General.

			

 

Except as provided in Section 17.11.2, no Award shall be assignable or transferable by the Grantee to whom it is granted, other than by will or the laws of descent and distribution, and, during the lifetime of the Grantee, only the Grantee personally (or the Grantee’s personal representative) may exercise rights under the Plan.

 

 

 

 

	
			17.11.2.

				
			Family Transfers. 

			

 

If authorized in the applicable Award Agreement, a Grantee may transfer, not for value, all or part of an Award (other than Incentive Stock Options) to any Family Member. For the purpose of this Section 17.11.2, a “not for value” transfer is a transfer which is (i) a gift, (ii) a transfer under a domestic relations order in settlement of marital property rights; or (iii) a transfer to an entity in which more than fifty percent of the voting interests are owned by Family Members (or the Grantee) in exchange for an interest in that entity. Following a transfer under this Section 17.11.2, any such Award shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer. Subsequent transfers of transferred Awards are prohibited except to Family Members of the original Grantee in accordance with this Section 17.11.2 or by will or the laws of descent and distribution.

 

	
			17.12.

				
			Dividends and Dividend Equivalent Rights. 

			

 

If specified in the Award Agreement, the recipient of an Award under this Plan may be entitled to receive, currently or on a deferred basis, dividends or dividend equivalents with respect to the Common Stock or other securities covered by an Award. The terms and conditions of a dividend equivalent right may be set forth in the Award Agreement. Dividend equivalents credited to a Grantee may be paid currently or may be deemed to be reinvested in additional shares of Stock or other securities of the Company at a price per unit equal to the Fair Market Value of a share of Stock on the date that such dividend was paid to shareholders, as determined in the sole discretion of the Committee. Notwithstanding any provision herein to the contrary, in no event will dividends or dividend equivalents vest or otherwise be paid out prior to the time that the underlying Award (or portion thereof) has vested and, accordingly, will be subject to cancellation and forfeiture if such Award does not vest (including both time-based and performance-based Awards).

 

	
			 

				
			PRIMO WATER CORPORATION

			
	
			 

				
			 

				
			 

			
	
			 

				
			By:

				
			 /s/ Matthew T. Sheehan

			
	
			 

				
			Name:

				
			 Matthew T. Sheehan

			
	
			 

				
			Title:

				
			 CEO

			
	
			 

				
			Date:

				
			 February 28, 2019

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00295-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00295-of-00352.parquet"}]]