Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of July 8, 2019 (the “Effective Date”), between Diane Young, MD (the “Executive”) and CELLDEX THERAPEUTICS, INC., a Delaware corporation (the “Company”) (collectively, the Executive and the Company shall be referred to as the “Parties”).

 

W I T N E S S E T H:

 

WHEREAS, as of the Effective Date the Company desires to employ the Executive as its Senior Vice President and Chief Medical Officer, and the Executive desires to accept such employment, on the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual promises and agreements contained herein, the Parties agree as follows:

 

1.             PURPOSE.  The Company desires to avail itself of the services of the Executive as Senior Vice President and Chief Medical Officer, and the Executive desires to provide such services in accordance with the terms of this Agreement.  The Parties agree that the duties and obligations expected of the Executive and of the Company are as set forth in this Agreement.

 

2.             EFFECTIVE DATE AND TERM.  This Agreement shall be effective, and its term (the “Term”) shall commence as of the Effective Date.  The Term shall continue through and until December 31, 2019 (the “Initial Term”), unless terminated sooner as provided by this Agreement or extended by the Parties.  The Term shall be automatically renewed for successive periods of one year each (each, a “Renewal Term”), unless either Party gives to the other written notice of intent not to renew at least ninety (90) days prior to the expiration of the Initial Term or any Renewal Term (a “Notice of Non-Renewal”).

 

3.             COMPENSATION.

 

A.            Salary.  During the Term, the Company shall pay or cause to be paid to the Executive, in installments pursuant to the Company’s payroll practices as in effect from time to time, a base salary at a rate of $410,000 per annum or such greater amount as may from time to time be determined by the Company (the “Base Salary”).  The Base Salary shall be reviewed annually in accordance with the Company’s compensation and review policies and, in the sole discretion of the Company, may be increased.

 

B.            Annual Bonus.  With respect to each fiscal year of the Company that ends during the Term, the Executive shall be eligible to receive an annual bonus having a target of 35% of the Executive’s then Base Salary (the “Annual Bonus”) based upon the Executive’s overall performance of the Services on behalf of the Company during such fiscal year.  The attainment of any applicable performance goals and the amount to be paid in respect of the Annual Bonus shall be determined by the Chief Executive Officer (“CEO”) in good faith and in accordance with such written goals and policies as may be established from time to time by the Company.  The Annual Bonus shall be deemed to have been earned and accrued only upon the formal approval of the CEO of the amount of the Annual Bonus following such determination.  The Annual Bonus, if any, shall be payable as a lump-sum payment within sixty (60) days immediately following the last day of the applicable fiscal year.  The Board may delegate all or any of its obligations under this Agreement to the Compensation Committee of the Board.

 

C.            Signing Bonus. The Company shall pay the Executive a lump sum cash signing bonus of $50,000 (the “Signing Bonus”) less standard withholding taxes within 30 days following the Effective Date; provided that, the Executive shall repay the gross amount of the Signing Bonus if, prior to twelve months from the Effective Date, the Executive terminates her employment without Good Reason (as defined below) or is terminated by the Company for Cause (as defined below).

 

 

D.            Expenses.  The Company shall reimburse the Executive for any travel, hotel, entertainment and other expenses reasonably incurred by the Executive in furtherance of the Executive’s duties under this Agreement subject to and in accordance with the Company’s applicable travel and expense reimbursement policies.

 

E.            Employee Benefits.  The Executive shall be entitled to participate in any and all employee benefit plans in effect from time to time that are provided generally to employees of the Company (excluding severance plans, if any), and in any executive perquisite programs in effect from time to time that provide benefits to other executives of the Company of comparable stature and with comparable duties and responsibilities, in each case to the extent permissible under the general terms and provisions of such plans or programs and in accordance with the provisions thereof.  The Company may amend, modify or rescind any employee benefit plan or program and/or change employee contribution amounts to benefit costs without notice in its discretion.  The Executive shall, during the Term, be entitled to paid time off in accordance with applicable Company policies in effect from time to time, in addition to public holidays observed by the Company.  The Executive shall be entitled to twenty (20) business days of vacation each year (increasing to twenty five (25) business days after ten (10) years of service as an employee of the Company (including employment with any subsidiary of the Company)).  The Executive shall be entitled to carry any unused vacation days over to the next calendar year.  However, in no event will Executive’s accrued but unused vacation exceed 40 days.

 

F.            Directors’ and Officers’ Liability Insurance.  The Company shall indemnify the Executive to the fullest extent permitted under its by-laws.  During the Term, the Company shall acquire and pay for directors’ and officers’ liability insurance coverage for its senior executive officers  and the Executive shall be named as a covered officer under such policy during the Term.

 

4.             DUTIES OF THE EXECUTIVE.

 

A.            Duties.  During the Term, the Executive shall hold the title of Senior Vice President and Chief Medical Officer and shall perform such duties as the Company may reasonably require and shall use her best efforts to carry into effect the directions of Company senior management.  The Executive shall report to the CEO or any other officer of the Company that the CEO or the Board of Directors (the “Board”) shall designate from time to time.  During the Term, the Executive shall be bound by, and comply fully with, all of the Company’s policies and procedures in place from time to time for employees and, to the extent applicable, officers.

 

B.            Representation.  During the Term, the Executive shall well and faithfully serve the Company and use the Executive’s best efforts to promote the interests of the Company.  The Executive shall at all times give the Company the full benefit of her knowledge, expertise, technical skill and ingenuity in the performance of her duties and exercise of her powers and authority in the capacity or capacities described in Section 4(A) hereof, as the case may be.

 

C.            Time Devoted by Executive.  The Executive agrees to devote substantially all of the Executive’s time and attention during business hours and such additional time and attention as may reasonably be required to perform his duties hereunder.

 

5.             RESTRICTIONS ON THE EXECUTIVE.

 

A.            Non-Disclosure of Confidential Information.  All information learned or developed by the Executive during the course of the Executive’s employment by the Company or any subsidiary thereof will be deemed “Confidential Information” under the terms of this Agreement.  Examples of Confidential Information include, but are not limited to, business, scientific and technical information owned or controlled by the Company, including the Company’s business plans and strategies; business operations and systems; information concerning employees, customers, partners and/or licensees; patent applications; trade secrets; inventions; ideas; procedures;

 

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formulations; processes; formulae; data and all other information of any nature whatsoever which relate to the Company’s business, science, technology and/or products.  In addition, Confidential Information shall include, but not be limited to, all information which the Company may receive from third parties.  The Executive will not disclose to any person at any time or use in any way, except as directed by the Company, either during or after the employment of the Executive by the Company, any Confidential Information.  The foregoing restrictions shall not apply to information which is or becomes part of the public domain though no act or failure to act by the Executive.  In addition to the foregoing, in the process of the Executive’s employment with the Company, or thereafter, under no condition is the Executive to use or disclose to the Company, or incorporate or use in any of her work for the Company, any confidential information imparted to the Executive or with which she may have come into contact while in the employ of her former employer(s).

 

Executive acknowledges receipt of the following notice under the Defend Trade Secrets Act:  An individual will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret if he/she (i) makes such disclosure in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney and such disclosure is made solely for the purpose of reporting or investigating a suspected violation of law; or (ii) such disclosure was made in a complaint or other document filed in a lawsuit or other proceeding if such filing is made under seal.

 

B.            Inventions.  The term “Invention” means any invention, discovery, improvement, apparatus, implement, process, compound, composition or formula, whether or not patentable, conceived or reduced to practice, in whole or in part, by the Executive (alone, or jointly with others) during any term of her employment by the Company and twelve (12) months thereafter which directly or indirectly relates to the business, science, technology or products of the Company and/or any Confidential Information.  The Executive will keep, on behalf of the Company, complete, accurate, and authentic accounts, notes, data, and records (“Records”) of each and every Invention, which Records will, at all times, be the property of the Company.  The Executive will comply with the directions of the Company with respect to the manner and form of keeping or surrendering Records and will surrender to the Company all Records at the end of the Executive’s term of employment by the Company.

 

Each Invention will be the sole and exclusive property of the Company. The Executive will, at the request of the Company, make application in due form for United States letters patent and foreign letters patent (each, a “Patent”) on any Invention and execute any necessary documents in connection with the Patents.  The Executive will assign and transfer to the Company all right, title, and interest of the Executive in any Patents or Patent applications.  The Executive agrees to cooperate with any actions necessary to continue, renew or retain the Patents.  The Company will bear the entire expense of applying for and obtaining the Patents.

 

For one year after the termination of the term of the Executive’s employment by the Company, the Executive will not file any applications for Patents on any Invention other than those filed at the request of and on behalf of the Company.

 

The Executive, as a condition of her employment, hereby represents that, to the best of her knowledge, there is not as of the date of this Agreement any agreement or obligation outstanding with or to any of her former employers or other party, which would restrict, limit or in any way prohibit all or any portion of her work or employment, nor is there in her possession any confidential information used by any of her former employers or any other party (except as may have been revealed in generally available publications or otherwise made publicly available).

 

C.            Non-Competition; Non-Solicitation.

 

(1)  Non-Competition.  During the Term, without the consent of the Board, and thereafter as specifically provided in Subsection 6.A.(2), 6.B.(4) or 6.C.(2), the Executive may not directly or indirectly engage in, or have any interest in, any business (whether as employee, officer, director, agent, security holder, creditor, consultant, or otherwise) that competes with the vaccine and/or antibody business of the Company or any subsidiary thereof (as such business may exist during the Term).

 

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(2)  Non-Solicitation of Employees.  During the Term, and thereafter as specifically provided in Subsection 6.A.(2), 6.B.(4) or 6.C.(2), the Executive shall not, directly or indirectly induce or solicit any employee or independent contractor of the Company or any subsidiary thereof to terminate his or her employment with the Company for the purpose of  joining another company in which the Executive has an interest (whether as an employee, officer, director, agent, security holder, creditor, consultant, or otherwise).

 

D.            Breach.  The Executive acknowledges that there may be circumstances in which her breach of any covenant set forth in this Section 5 could cause substantial harm to the Company which may not be compensable by monetary damages alone, and which could potentially entitle the Company to injunctive relief.  However, by acknowledging this possibility, the Executive is not agreeing to waive her right to require the Company to meet its evidentiary burdens as required by law in any cause of action brought by the Company seeking such injunctive relief.  The restrictions contained in Subsection 5.C. above shall not prohibit Executive from owning (beneficially or of record) less than 5% of any class of equity or debt security issued by a publicly-held company, regardless of whether that publicly-held company is otherwise a competitor of the Company.

 

6.             TERMINATION.

 

A.            Termination for Cause by the Company.

 

(1)  This Agreement and the Term may be terminated “for cause” by the Company pursuant to the provisions of this Subsection 6.A.  If the Company determines that “cause” exists for termination of the Executive’s employment, written notice thereof must be given to the Executive describing the state of affairs or facts deemed by the Company to constitute such cause.  Unless the Company determines that the conduct constituting cause is not curable, the Executive shall have thirty (30) days after receipt of such notice to cure the reason constituting cause and if the Executive does so to the reasonable satisfaction of the Company, the Term shall not be terminated for the cause specified in the notice.  During such thirty (30) day period, the Term shall continue and the Executive shall continue to receive her full Base Salary, expenses and benefits pursuant to this Agreement.  If such cause is not cured to the Company’s reasonable satisfaction within such thirty (30) day period, the Executive may then be immediately terminated by the Company.  For purposes of this Agreement, the words “for cause” or “cause” means (i) dishonest statements or acts of the Executive with respect to the Company or any subsidiary or other affiliate of the Company; (ii) the commission by or indictment of the Executive for (A) a felony or (B) any misdemeanor involving moral turpitude, deceit, dishonesty or fraud (indictment, for these purposes, meaning an indictment, probable cause hearing or any other procedure pursuant to which an initial determination of probable or reasonable cause with respect to such offense is made); or (iii) gross negligence, willful misconduct or insubordination of the Executive with respect to the Company or any subsidiary or other affiliate of the Company.

 

(2)  In the event the Term is terminated by the Company for cause, the provisions of Subsections 5.C.(1) and 5.C.(2) shall continue to apply for one year after the conclusion of the Term.

 

(3)  In the event the Term is terminated by the Company for cause, the Executive’s entire right to salary and benefits hereunder (with the exception of Base Salary and Annual Bonus (if any) earned and accrued prior to termination) shall cease upon such termination.

 

B.            Termination Without Cause by the Company or for Good Reason by the Executive.

 

(1)  The Company shall have the right to terminate the Term, at any time, without cause upon ninety (90) days’ written notice to the Executive.

 

(2)  The Executive shall have the right to terminate the Term for good reason on thirty (30) days written notice to the Company.  For purposes of this Agreement, the words “for good reason” or “good reason” shall be limited to the following actions by the Company without the Executive’s consent:  (a) the assignment to the Executive of any duties or responsibilities that results in a material diminution in the Executive’s position or function; provided, however, that a change in the Executive’s title or reporting relationships shall not provide the basis for a termination with good reason; (b) a relocation of the Executive’s business office to a location more than fifty (50) miles from the location in Hampton, New Jersey at which the Executive is working as of the Effective Date, except for required travel by the Executive on the Company’s business to an extent substantially

 

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consistent with the Executive’s business travel obligations as of the Effective Date; or (c) a material breach by the Company of any provision of this Agreement or any other material agreement between the Executive and the Company concerning the terms and conditions of the Executive’s employment.  Such a termination by the Executive for good reason shall not be considered a resignation pursuant to Subsection 6.C.(1).

 

(3)  In the event the Term is terminated pursuant to Subsection 6.B.(1) or 6.B.(2), or in the event that the Term is terminated at the end of the Initial Term or a Renewal Term in connection with the Company providing the Executive with a Notice of Non-Renewal effective in connection with the expiration of the Initial Term or a Renewal Term, the Company shall pay the Executive as a severance benefit a lump sum cash severance payment in an amount equal to 100% of the Executive’s then existing annual Base Salary (i.e., twelve (12) months of Base Salary) (the “Severance Payment”) plus Base Salary and Annual Bonus (if any) earned and accrued prior to termination.  In addition, if and to the extent the Executive timely elects to continue her health insurance employee benefits pursuant to COBRA, then the Company will pay the Executive for a period of 18 months, commencing with the payroll date on or following the 63rd day after the last day of her employment with the Company, subject to the effectiveness of the Release (as defined below) a monthly amount, payable in accordance with the Company’s regular payroll practices, equal to the applicable COBRA costs, subject to applicable tax withholdings (the “Supplemental Payments”).  The Severance Payment shall be paid within 10 days following the effectiveness of the Release (as defined below); provided, however, that if necessary to comply with the restriction in Section 409A(a)(2)(B) of the Internal Revenue Code of 1986, as amended (the “Code”) concerning payments to “specified employees,” to the extent applicable, such payment shall be delayed until the first business day of the seventh month following the Executive’s termination of employment and “separation from service” (within the meaning of Section 409A of the Code).  Notwithstanding any provisions of the stock option plan or stock option agreement pursuant to which any stock options were granted to the Executive, the Executive shall be entitled to exercise her vested equity awards until one year from the date of termination of employment or the expiration of the stated period of the vested equity award, whichever period is the shorter.

 

(4)  In the event the Term is terminated or the Executive’s employment with the Company terminates in a manner described in this Section 6.B., the provisions of Subsection 5.C.(2) shall continue to apply for one year after the conclusion of the Term.

 

(5)  Notwithstanding any provision to the contrary contained herein, the Executive shall not be eligible or entitled to receive the Severance Payment, Supplemental Payments or Change in Control Payment (as defined below), as applicable, unless she executes (and does not revoke during any applicable revocation period) and delivers to the Company a separation agreement and release of claims, in such form prepared in good faith by the Company and provided to the Executive to review no later than 10 days following the last day of her employment with the Company, within 55 days following her last day of employment with the Company (the “Release”).  Notwithstanding anything to the contrary contained herein, in the event such 55-day period covers more than one calendar year, the Severance Payment shall be paid in the second calendar year (on the first regular pay date of such calendar year following the date that the Release becomes effective and is no longer subject to revocation, unless a later date is required by Section 6.B.(3) above), regardless of whether the Executive executes and delivers the Release in the first or the second calendar year encompassed in such 55-day period.

 

C.            Resignation by the Executive.

 

(1)  The Executive shall have the right to terminate the Term, by way of resignation, upon ninety (90) days’ written notice to the Company.  A termination by the Executive for good reason pursuant to Subsection 6.B.(2) shall not be considered a resignation pursuant to this Subsection 6.C.(1).

 

(2)  In the event the Term is terminated pursuant to Subsection 6.C.(1), the provisions of Subsections 5.C.(1) and 5.C.(2) shall continue to apply for one year after the conclusion of the Term.

 

(3)  In the event the Term is terminated pursuant to Subsection 6.C.(1), the Executive’s entire right to salary and benefits hereunder (with the exception of Base Salary and Annual Bonus earned and accrued prior to termination) shall cease upon such termination.

 

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D.            Termination Upon Change in Control.

 

(1)  For the purposes of this Agreement, a “Change in Control” shall mean any of the following events that occurs following the Effective Date:

 

(a)           An acquisition (other than directly from the Company) of any voting securities of the Company (the “Voting Securities”) other than in a “Non-Control Acquisition” (as defined below) by any “Person” (as the term “person” is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, (the “1934 Act”)) which results in such Person first attaining “Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifty-one percent (51%) or more of the combined voting power of the Company’s then outstanding Voting Securities.  For purposes of the foregoing, a “Non-Control Acquisition” shall mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by (x) the Company or (y) any corporation or other Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company (a “Subsidiary”), or (ii) the Company or any Subsidiary.

 

(b)           The individuals who, as of the date of this Agreement, were members of the Board (the “Incumbent Board”) cease for any reason to constitute at least 66 2/3% of the Board; provided, however, that if the election, or a nomination for election by the Company’s shareholders, of any new director was approved by a vote of at least 66 2/3% of the Incumbent Board, such new director shall be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened “Election Contest” (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of the proxies or consents by or on behalf of a Person other than the Board (a “Proxy Contest”) including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or

 

(c)           The consummation of a transaction approved by the Company’s shareholders and involving:  (1) a merger, consolidation or reorganization in which the Company is a constituent corporation, unless (i) the shareholders of the Company, immediately  before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least a majority of the combined voting power of the outstanding voting securities of the corporation resulting from such merger, consolidation or reorganization (the “Surviving Corporation”) in substantially  the same proportion as their ownership of the voting securities immediately before such merger, consolidation or reorganization, (ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least a majority of the members of the board of directors of the Surviving Corporation, and (iii) no Person other than (w) the Company, (x) any Subsidiary, (y) any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation or any Subsidiary, or (z) any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of fifty-one percent (51%) or more of the then outstanding Voting Securities, has Beneficial Ownership of fifty-one percent (51%) or more of the combined voting power of the Surviving Corporation’s then outstanding voting securities (a transaction described in clauses (i) and (ii) shall herein be referred to as a “Non-Control Transaction”); (2) a complete liquidation or dissolution of the Company; or (3) an agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary).

 

(d)           Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because the level of Beneficial Ownership held by any Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding Voting Securities as a result of a repurchase or other acquisition of Voting Securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person over the designated percentage threshold, then a Change in Control shall occur.

 

(2)  In the event of a termination of the Term pursuant to an event described in Section 6.B. above, that occurs within a period of one year immediately following a Change in Control, then this

 

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Section 6.D. shall apply instead of Section 6.B., and the Company shall provide the Executive the following benefits:

 

(a)           Amount:  In addition to all compensation for services rendered by Executive to the Company up to the date of termination, the Company shall pay to Executive a single lump-sum payment in an amount equal to (i) twenty-four (24) times Executive’s highest monthly base compensation paid hereunder during the preceding twenty-four month period, plus (ii) 150% of the highest one-year Annual Bonus actually received by the Executive during the preceding two full fiscal years prior to the date of termination (such aggregate amount the “Change in Control Payment”).  The Change in Control Payment shall be paid within 10 days following the effectiveness of the Release; provided, however, that if necessary to comply with the restriction in Section 409A(a)(2)(B) of the Code concerning payments to “specified employees,” to the extent applicable, such payment shall be delayed until the first business day of the seventh month following the Executive’s termination of employment and “separation from service” (within the meaning of Section 409A of the Code).

 

(b)           Benefits:  In addition to the payment described above, the Company shall provide the Executive with the Supplemental Payments.

 

(c)           Acceleration of Options:  One hundred (100%) percent of the Executive’s outstanding, unvested options, restricted stock and/or equity awards (“Equity Awards”) shall, immediately prior to the consummation of the Change in Control, become fully and immediately vested to the extent not already so provided under the terms of such Equity Awards; provided, however, that if the acquirer in a Change in Control grants Equity Awards having (in the reasonable opinion of the Board) a value at least equal to the value of Executive’s then-unvested Company Equity Awards, then 50% of the Executive’s outstanding, unvested Company Equity Awards shall become fully and immediately vested immediately prior to the consummation of the Change in Control (and the remaining 50% shall terminate upon the consummation of the Change in Control).  Notwithstanding any provisions of the stock option plan or stock option agreement pursuant to which any stock options subject to the preceding sentence were granted, the Executive shall be entitled to exercise such Equity Awards until three years from the date of termination of employment or the expiration of the stated period of the Equity Award, whichever period is the shorter.

 

(d)           Golden Parachute Payment Provisions:  If any payment or benefit the Executive would receive pursuant to a Change in Control from the Company or otherwise (including, without limitation, the acceleration of any Company Equity Awards) (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be reduced to the Reduced Amount.  The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Executive’s receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following order: reduction of cash payments; cancellation of accelerated vesting of stock options or equity awards; reduction of employee benefits.  In the event that acceleration of vesting of stock option or equity award compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of the Executive’s stock options or equity awards.

 

The accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the Change in Control shall perform the foregoing calculations and shall make all determinations relating to the reduction of parachute payments described in the foregoing paragraph.  If the accounting firm so engaged by the Company is also serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Company shall appoint a nationally recognized accounting firm to make the determinations required hereunder.  The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder.

 

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The accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the Company and the Executive within fifteen (15) calendar days after the date on which the Executive’s right to a Payment is triggered (if requested at that time by the Company or the Executive) or such other time as requested by the Company or the Executive.  If the accounting firm determines that no Excise Tax is payable with respect to a Payment, either before or after the application of the Reduced Amount, it shall furnish the Company and the Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to such Payment.  Any good faith determinations of the accounting firm made hereunder shall be final, binding and conclusive upon the Company and the Executive.

 

E.            Termination for Disability.

 

(1)  Should the Executive be absent from work as a result of personal injury, sickness or other disability for any continuous period of time exceeding one hundred eighty (180) days, the Term may be terminated by the Company, upon written notice given to the Executive, because of the Executive’s disability.

 

(2)  In the event the Term is terminated pursuant to Subsection 6.E.(1), the Company shall have no further obligation to the Executive except to pay to the Executive any Base Salary or Annual Bonus earned and accrued but remaining unpaid prior to termination of the Term (and to provide the Executive with the benefits under any disability insurance or disability benefits plan then-maintained by the Company for the Executive’s benefit, in accordance with the terms and conditions of such plan).  In addition, notwithstanding any provisions of the stock option plan or stock option agreement pursuant to which any stock options were granted, the Executive shall be entitled to exercise any of Executive’s stock options vested as of the final day of the Term until eighteen months from the final day of the Term or the expiration of the stated period of the option, whichever period is the shorter.

 

F.            Termination Upon Death.  The Term shall terminate upon the death of the Executive and the Company shall have no further obligation to the Executive or his estate except to pay the Executive’s estate any Base Salary or Annual Bonus earned and accrued but remaining unpaid prior to his death.  In addition, notwithstanding any provisions of the stock option plan or stock option agreement pursuant to which any stock options were granted, the Executive’s estate shall be entitled to exercise any of Executive’s stock options vested as of the final day of the Term until eighteen months from the final day of the Term or the expiration of the stated period of the option, whichever period is the shorter.

 

7.             MISCELLANEOUS.

 

A.            Notice.  Any notice to be given hereunder shall either be delivered personally, sent by nationally recognized overnight courier service (with next business day delivery requested) and/or sent by first class certified mail and regular mail.  The address for service on the Company shall be its registered office, and the address for service on the Executive shall be his last known place of residence.  A notice shall be deemed to have been served as follows:

 

(1)  if personally delivered, at the time of delivery;

 

(2)  if sent by overnight courier service, at the end of the next business day; and/or

 

(3)  if posted, at the expiration of 48 hours (10 days if international) after the envelope containing the same was delivered into the custody of the postal authorities.

 

B.            Taxes.  Any payments made pursuant to this Agreement shall be subject to any tax or similar withholding requirements under applicable federal, state or local employment or income tax laws or similar statutes or other provisions of law then in effect.  This Agreement is intended to comply with the requirements of Section 409A (“Section 409A”) of the Code and the regulations thereunder (including, as applicable, the exemptions and exceptions set forth therein).  The payments provided for herein are intended to be exempt from Section 409A and to not constitute “nonqualified deferred compensation” as defined in Section 409A.  To the extent that any provision in this Agreement is ambiguous as to its compliance with Section 409A, the provision shall be interpreted in a manner so that no payment due to the Executive shall be deemed subject to an “additional tax” within the

 

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meaning of Section 409A(a)(1)(B) of the Code.  For purposes of Section 409A, each payment made under this Agreement shall be treated as a separate payment. Notwithstanding anything contained herein to the contrary, to the extent any payment under Section 6 hereof is determined to constitute “nonqualified deferred compensation” as defined in Section 409A, the Executive shall not be considered to have terminated employment with the Company for purposes of Section 6 hereof unless the Executive has incurred a “termination of employment” from the Company within the meaning of Treasury Regulation §1.409A-1(h)(1)(ii) promulgated under Section 409A of the Code. Notwithstanding the foregoing, if necessary to comply with the restriction in Section 409A(a)(2)(B) of the Code concerning payments to “specified employees,” any payment made to the Executive pursuant to this Agreement on account of the Executive’s separation from service that would otherwise be due hereunder within six months after such separation from service shall nonetheless be delayed until the first business day of the seventh month following the Executive’s separation from service.  In no event may the Executive, directly or indirectly, designate the calendar year of any payment.  All reimbursements provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the Executive’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement is not subject to liquidation or exchange for another benefit.  The Executive further acknowledges that, while this Agreement is intended to comply with Section 409A, any tax liability incurred by the Executive under Section 409A is solely the responsibility of the Executive.

 

C.            Clawback.  Any incentive-based or other compensation paid to the Executive under this Agreement or any other agreement or arrangement with the Company which is subject to recovery under any law, government regulation or stock exchange listing requirement will be subject to such deductions and/or clawback as may be required by such law, government regulation or stock exchange listing requirement.  In addition, if the Executive is or becomes an executive officer subject to the incentive compensation repayment requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Acts (the “Dodd-Frank Act”), then if required by the Dodd-Frank Act or any of its regulations he will enter into an amendment to this Agreement or a separate written agreement with the Company to comply with the Dodd-Frank Act and any of its regulations.

 

D.            Binding Effect.  This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, personal representatives, successors and assigns, provided that neither Party shall assign any of its rights or privileges hereunder without the prior written consent of the other Party except that the Company may assign its rights hereunder to a successor in ownership of all or substantially all the assets of the Company.

 

E.            Severability.  Should any part or provision of this Agreement be held unenforceable by a court of competent jurisdiction, the validity of the remaining parts or provisions shall not be affected by such holding, unless such enforceability substantially impairs the benefit of the remaining portions of the Agreement.

 

F.            Waiver.  No failure or delay on the part of either Party in the exercise of any right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or privilege preclude other or further exercise thereof or of any other right of privilege.

 

G.            Captions.  The captions used in this Agreement are for convenience only and are not to be used in interpreting the obligations of the Parties under this Agreement.

 

H.            Choice of Law; Jury Trial Waiver.  The validity, construction and performance of this Agreement and all matters directly or indirectly arising hereunder shall be governed by the laws of the State of Delaware, without regard to choice of laws provisions, and the Company and the Executive irrevocably consent to the exclusive jurisdiction and venue of the federal and state courts located within Delaware, and courts with appellate jurisdiction therefrom, in connection with any matter based upon or arising out of this Agreement.  THE COMPANY AND THE EXECUTIVE HEREBY WAIVE THEIR RESPECTIVE RIGHT TO TRIAL BY JURY IN ANY ACTION CONCERNING THIS AGREEMENT OR ANY AND ALL MATTERS ARISING DIRECTLY OR INDIRECTLY HEREFROM AND REPRESENT THAT THEY HAVE CONSULTED WITH COUNSEL OF

 

9

 

THEIR CHOICE OR HAVE CHOSEN VOLUNTARILY NOT TO DO SO SPECIFICALLY WITH RESPECT TO THIS WAIVER.

 

I.             Entire Agreement.  This Agreement embodies the entire understanding of the Parties as it relates to the subject matter contained herein and as such, supersedes any prior agreement or understanding between the Parties relating to the terms of employment of the Executive (but not any option grant agreement issued by the Company to the Executive).  No amendment or modification of this Agreement shall be valid or binding upon the Parties unless in writing executed by the Parties.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first written above.

 

	
 
    	
CELLDEX   THERAPEUTICS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Anthony S. Marucci
    
	
 
    	
 
    	
Anthony S. Marucci
    
	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ Diane Young
    
	
 
    	
Diane Young, MD
    

 

10THIS
WARRANT (AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED,
SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH
LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THE ISSUER, IS AVAILABLE.

 

FAT
BRANDS INC.

 

WARRANT
AGREEMENT

(Common
Stock)

 

Warrant
No. 7

 

This
Warrant Agreement (this “Warrant”) is dated as of June 19, 2019 (the “Issue Date”) and entered
into by and between FAT Brands Inc., a company organized under the laws of State of Delaware (the “Company”),
and the undersigned, (together with its successors and assigns, the “Warrant Holder”).

 

WHEREAS,
concurrently with the execution of this Warrant, the Company, the Warrant Holder, AH-HA Holdings, LLC and Hans Hess, in his capacity
as the Sellers’ Representative and individually, have entered into that certain Membership Interest Purchase Agreement (the
“Purchase Agreement”), pursuant to which this Warrant is being issued.

 

WHEREAS,
all of the terms and conditions of such Purchase Agreement are incorporated herein by this reference, and all capitalized terms
not separately defined in this Warrant, shall have the same meanings as defined in the Purchase Agreement.

 

NOW,
THEREFORE, in consideration of the mutual covenants set forth in this Warrant, and for other good and valuable consideration,
the parties agree as follows:

 

1.
Grant of Warrant.
This Warrant entitles the Warrant Holder, upon the terms and subject to the conditions set forth herein, to purchase from the
Company up to forty-six thousand eight hundred seventy-five (46,875) shares of the Company’s common stock, par value $0.0001
per share (the “Common Stock”) (subject to adjustment as provided in Section 6, the “Warrant
Shares”).

 

2.
Term and Termination of Warrant.
The Warrant shall be exercisable for a period of five (5) years commencing on the second (2nd) Business Day following the merger
of Company and FCCG (the “Date First Exercisable”) and ending on the five (5) year anniversary of the Date
First Exercisable, at which time this Warrant shall terminate.

 

3.
Exercise of the Warrant.

 

(a)
Exercise Price. For the purposes of this Warrant, the exercise price shall be Eight Dollars ($8.00) per share of Common
Stock (the “Exercise Price”), subject to adjustment as provided in Section 6.

 

(b)
Exercise and Payment. The purchase rights represented by this Warrant may be exercised in round lots only by the Warrant
Holder, in whole or in part, by the surrender of the Warrant (together with a duly executed notice of exercise in the form attached
hereto as Exhibit A (the “Exercise Notice”) at the principal office of the Company and by the payment
to the Company by check or wire transfer of immediately available funds of an amount equal to (i) the number of shares of Common
Stock being purchased upon exercise of the Warrant multiplied by (ii) the Exercise Price (the “Warrant Price”).

 

    	 

     

    

 

(c)
Cashless Exercise. If at any time after the date hereof, there is no effective registration or offering statement effective
or qualified in connection with, or no current prospectus or offering circular available for, the public resale of the Warrant
Shares by the Warrant Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless
exercise” by instructing the Company to issue Warrant Shares then issuable upon exercise of all or any part of this Warrant
on a net basis such that, without payment of any cash consideration or other immediately available funds, the Warrant Holder shall
surrender this Warrant in exchange for the number of Warrant Shares as is computed using the following formula X = Y(A - B) ÷
A:

 

Where:

 

X
= the number of Warrant Shares to be issued to the Warrant Holder.

 

Y
= the total number of Warrant Shares for which the Holder has elected to exercise this Warrant

 

A
= the Fair Market Value of one Warrant Share as of the applicable Exercise Date.

 

B
= the Exercise Price in effect under this Warrant as of the applicable Exercise Date.

 

For
purposes of this Warrant, “Fair Market Value” of a Warrant Share shall mean the arithmetic average of the last
trade price of the Common Stock (as reported by Bloomberg Financial Markets) for the five (5) consecutive days on which the Nasdaq
Stock Market is open for trading, ending on the date immediately preceding the Exercise Date, on the principal trading market
on which the Common Stock is quoted or listed for trading. If the Fair Market Value cannot be calculated on a particular date
on the foregoing basis, the Fair Market Value shall be determined in good faith by the Board of Directors of the Company. All
such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction
during the applicable calculation period.

 

(d)
Warrant Shares. Subject to the other provisions of this Warrant, on or before the fifth (5th) day following
the date on which the Company has received an Exercise Notice, so long as the Warrant Holder delivers the Warrant Price, the Company
shall issue and deliver to the Warrant Holder or, at the Warrant Holder’s instruction pursuant to the Exercise Notice, the
Warrant Holder’s agent or designee, in each case, sent by reputable overnight courier to the address as specified in the
applicable Exercise Notice, a certificate, registered in the Company’s share register in the name of the Warrant Holder
or its designee (as indicated in the applicable Exercise Notice), for the number of shares of Common Stock to which the Warrant
Holder is entitled pursuant to such exercise. The Company shall be responsible for all fees and expenses of its transfer agent
and all fees and expenses with respect to the issuance of shares of Common Stock via DTC, if available. Upon delivery of an Exercise
Notice, the Warrant Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares
with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the Warrant
Holder’s DTC account or the date of delivery of the certificates evidencing such Warrant Shares (as the case may be). If
this Warrant is submitted in connection with any exercise pursuant to this Section 3 and the number of Warrant Shares represented
by this Warrant submitted for exercise is for a greater number of Warrant Shares than the number of Warrant Shares being acquired
upon an exercise, then, at the request of the Warrant Holder, the Company shall as soon as practicable and in no event later than
three (3) business days after any exercise and at its own expense, issue and deliver to the Warrant Holder (or its designee) a
new Warrant (in accordance with Section 9(d)) representing the right to purchase the number of Warrant Shares purchasable immediately
prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.
No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of Warrant Shares
to be issued shall be rounded up to the nearest whole number.

 

    	2

     

    

 

(e)
Legends. The Warrant Shares to be acquired by the Warrant Holder pursuant hereto, may not be sold or transferred unless
(i) such shares are sold pursuant to an effective registration or offering statement under the Securities Act, or (ii) the Company
or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions and from an attorney who regularly practices securities law) to the
effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration. Except
as otherwise provided in this Warrant (and subject to the removal provisions set forth below), until such time as the Warrant
Shares issuable upon exercise of the Warrant have been registered under the Act or otherwise may be sold pursuant to Rule 144
without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate
for Warrant Shares that has not been so included in an effective registration statement or that has not been sold pursuant to
an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the
following form, as appropriate:

 

THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH
TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

The
legend set forth above shall be removed and the Company shall issue to the Warrant Holder a new certificate therefor free of any
transfer legend if (i) the Company shall have received an opinion of counsel, in form, substance and scope customary for opinions
of counsel in comparable transactions, to the effect that a public sale or transfer of such Securities may be made without registration
under the Act and the shares are so sold or transferred, or (ii) such security is registered for sale by the Warrant Holder under
an effective registration statement filed under the Act.

 

(f)
Limitation on Exercise. Notwithstanding anything contained herein, this Warrant shall not be exercisable to the extent
that (A) the aggregate shares of Common Stock issued by the Company to holders of Preferred Stock upon conversion into Common
Stock pursuant to Section 5(b)(i) of the Company’s Certificate of Designation, dated July 3, 2018, for Series A-1 Fixed
Rate Cumulative Preferred Stock, plus (B) the aggregate shares of Common Stock issued or issuable by the Company pursuant to the
exercise of all warrants issued by the Company under the Purchase Agreement, would exceed 19.99% of all shares of Common Stock
issued and outstanding on the Issue Date, subject to pro rata adjustment in connection with any stock splits, stock dividends,
or similar changes to the Company’s capitalization occurring after the Issue Date (the “20% Cap”), unless
the Company receives stockholder approval to exceed the 20% Cap. If applicable, the restrictions and redemption obligations set
forth in this Section 3(f) shall cease to apply if (1) the Company obtains stockholder approval to issue Common Stock in excess
of the 20% Cap pursuant to the rules and regulations of The Nasdaq Stock Market (or such other principal trading market on which
the Common Stock is quoted or listed for trading), or (2) the Company provides the Holder with irrevocable written notice, based
upon the written advice of its counsel, that any such issuance of Common Stock is not subject to the 20% Cap pursuant to the rules
and regulations of The Nasdaq Stock Market LLC. The Company will use its best efforts promptly to obtain either the stockholder
approval or the irrevocable notice described in the preceding sentence and to provide the Holder with a copy of same. The term
for which this Warrant is exercisable pursuant to Section 2 shall be extended by a period equal to the duration, if any, during
which this Warrant is not exercisable as a result of the 20% Cap.

 

    	3

     

    

 

(g)
Delivery of Cash in Lieu of Warrant Shares. If the Warrant Holder delivers an Exercise Notice and Warrant Price, the Company
may, in lieu of delivering all of the Warrant Shares upon such exercise, instead deliver less than the requested number of Warrant
Shares (the “Withheld Shares”) plus an amount of cash that is equal to the Fair Market Value of the Warrant
Shares that would be deliverable to the Holder had the Holder elected a “cashless exercise” under Section 3(c) for
the number of Withheld Shares. Such cash payment shall be made within twenty (20) business days of the Exercise Notice.

 

4.
Stock Fully Paid; Reservation of Warrant
Shares.

 

(a)
Stock Fully Paid. All of the Warrant Shares issuable upon the exercise of the Warrant will, upon issuance and receipt of
the Warrant Price for such Warrant Shares, be duly authorized, validly issued, fully paid and nonassessable, and will be free
and clear of all taxes, liens, encumbrances and charges with respect to the issue.

 

(b)
Reservation. For so long as any of the Warrants are outstanding, the Company shall take all action necessary to reserve
and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the exercise of the Warrants,
100% of the number of shares of Common Stock as shall from time to time be necessary to effect the exercise of all Warrants then
outstanding (the “Required Reserve Amount”).

 

(c)
Insufficient Authorized Shares. If at any time the Company does not have a sufficient number of authorized and unreserved
shares of Common Stock to satisfy its obligation to reserve for issuance upon exercise of the Warrants at least a number of shares
of Common Stock equal to the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall
use its reasonable best efforts immediately to take all action necessary to increase the Company’s authorized shares of
Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Warrants then outstanding.
Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized
Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall
use its reasonable best efforts to either (x) obtain the written consent of its stockholders for the approval of an increase in
the number of authorized shares of Common Stock or (y) hold a special meeting of its stockholders for the approval of an increase
in the number of authorized shares of Common Stock; provided, that if the Company is then subject to review of any such
related documents by the Securities and Exchange Commission, the time frame above shall be extended by an additional thirty (30)
days. In connection with such meeting, the Company shall use its best efforts to solicit its stockholders’ approval of such
increase in authorized shares of Common Stock, to cause its Board of Directors to recommend to the stockholders that they approve
such proposal and to cause its management to vote in favor of such proposal.

 

5.
Rights of the Warrant Holder.
The Warrant Holder shall have no voting rights as a stockholder or rights to dividends or other distributions with respect to
Warrant Shares subject to this Warrant until payment in full of the Warrant Price for Warrant Shares being issued.

 

6.
Adjustment of Exercise Price and Number
of Warrant Shares. In order to prevent dilution of the purchase
rights granted under this Warrant, the Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant
shall be subject to adjustment from time to time as provided in this Section 6 (in each case, after taking into consideration
any prior adjustments pursuant to this Section 6).

 

(a)
Stock Dividend, Subdivision or Combination. If the Company shall, at any time or from time to time after the original Issue
Date, (i) pay a dividend or make any other distribution upon the Common Stock or any other capital stock of the Company payable
in shares of Common Stock, or (ii) subdivide (by any stock split, recapitalization or otherwise) its outstanding shares of Common
Stock into a greater number of shares, the Exercise Price in effect immediately prior to any such dividend, distribution or subdivision
shall be proportionately reduced and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately
increased. If the Company at any time combines (by combination, reverse stock split or otherwise) its outstanding shares of Common
Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately
increased and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately decreased. Any adjustment
under this Section 6(a) shall become effective at the close of business on the date the dividend, subdivision or combination becomes
effective.

 

    	4

     

    

 

(b)
Reorganization, Reclassification, Consolidation or Merger. In the event of any (i) capital reorganization of the Company,
(ii) reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from
no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), (iii) consolidation
or merger of the Company with or into another Person, (iv) sale of all or substantially all of the Company’s assets to another
Person or (v) other similar transaction, in each case which entitles the holders of Common Stock to receive (either directly or
upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, each Warrant shall,
immediately after such reorganization, reclassification, consolidation, merger, sale or similar transaction, remain outstanding
and shall thereafter, in lieu of or in addition to (as the case may be) the number of Warrant Shares then exercisable under this
Warrant, be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor
Person resulting from such transaction to which the Warrant Holder would have been entitled upon such reorganization, reclassification,
consolidation, merger, sale or similar transaction if the Warrant Holder had exercised this Warrant in full immediately prior
to the time of such reorganization, reclassification, consolidation, merger, sale or similar transaction and acquired the applicable
number of Warrant Shares then issuable hereunder as a result of such exercise (without taking into account any limitations or
restrictions on the exercisability of this Warrant); and, in such case, appropriate adjustment shall be made with respect to the
Warrant Holder’s rights under this Warrant to insure that the provisions of this Section 6 hereof shall thereafter
be applicable, as nearly as possible, to this Warrant in relation to any shares of stock, securities or assets thereafter acquirable
upon exercise of this Warrant (including, in the case of any consolidation, merger, sale or similar transaction in which the successor
or purchasing Person is other than the Company, an immediate adjustment in the Exercise Price to the value per share for the Common
Stock reflected by the terms of such consolidation, merger, sale or similar transaction, and a corresponding immediate adjustment
to the number of Warrant Shares acquirable upon exercise of this Warrant without regard to any limitations or restrictions on
exercise, if the value so reflected is less than the Exercise Price in effect immediately prior to such consolidation, merger,
sale or similar transaction). The provisions of this Section 6(b) shall similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales or similar transactions.

 

(c)
Certificate as to Adjustment.

 

(i)
As promptly as reasonably practicable following any adjustment of the Exercise Price, but in any event not later ten (10) days
thereafter, the Company shall furnish to the Warrant Holder a certificate of an executive officer setting forth in reasonable
detail such adjustment and the facts upon which it is based and certifying the calculation thereof.

 

(ii)
As promptly as reasonably practicable following the receipt by the Company of a written request by the Warrant Holder, but in
any event not later than ten (10) thereafter, the Company shall furnish to the Warrant Holder a certificate of an executive officer
certifying the Exercise Price then in effect and the number of Warrant Shares or the amount, if any, of other shares of stock,
securities or assets then issuable upon exercise of the Warrant.

 

(iii)
All calculations under this Section 6 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
No adjustment shall be made to the Exercise Price unless such adjustment would require a change of at least 1% in the Exercise
Price. Any adjustment that would otherwise be required to be made shall be carried forward and taken into account in any subsequent
adjustment or in connection with any exercise of the Warrant. For purposes of this Section 6, the number of shares of Common Stock
deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any
treasury shares of the Company) issued and outstanding.

 

    	5

     

    

 

7.
Representations and Warranties.
The representations and warranties of the Warrant Holder set forth in the Purchase Agreement shall be true and correct as of the
Issue Date and are incorporated by reference herein.

 

8.
Noncircumvention.
The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation or Bylaws,
or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect
the rights of the Warrant Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase the par
value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect and (ii)
shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant.

 

9.
Reissuance of Warrants.

 

(a)
Transfer of Warrant. If this Warrant is to be transferred, the Warrant Holder shall surrender this Warrant to the Company,
together with an opinion of counsel in form and substance satisfactory to the Company from an attorney regularly engaged in the
practice of securities law, whereupon the Company will forthwith issue and deliver upon the order of the Warrant Holder a new
Warrant (in accordance with Section 9(d)), registered as the Warrant Holder may request, representing the right to purchase the
number of Warrant Shares being transferred by the Warrant Holder and, if less than the total number of Warrant Shares then underlying
this Warrant is being transferred, a new Warrant (in accordance with Section 9(d)) to the Warrant Holder representing the right
to purchase the number of Warrant Shares not being transferred.

 

(b)
Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification
and payment of any required bond undertaking by the Warrant Holder to the Company in customary form and, in the case of mutilation,
upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Warrant Holder a new Warrant (in
accordance with Section 9(d)) representing the right to purchase the Warrant Shares then underlying this Warrant.

 

(c)
Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Warrant Holder at the
principal office of the Company, for a new Warrant or Warrants (in accordance with Section 9(d)) representing in the aggregate
the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the
right to purchase such portion of such Warrant Shares as is designated by the Warrant Holder at the time of such surrender; provided,
however, that no Warrants for fractional shares of Common Stock shall be given.

 

(d)
Issuance of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant,
such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant,
the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to
Section 9(a) or Section 9(c), the Warrant Shares designated by the Warrant Holder which, when added to the number of shares of
Common Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant
Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is
the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.

 

    	6

     

    

 

10.
Amendment And Waiver.
Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent
of the Warrant Holder.

 

11.
Transfer.
This Warrant may not be offered for sale, sold, transferred or assigned without the consent of the Company.

 

12.
Severability.
If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity
or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s),
the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

13.
Choice of Law and Jurisdiction.
All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance
with the provisions of the Purchase Agreement.

 

14.
Notices.
Any notice, request or other document required or permitted to be given or delivered to the Warrant Holder by the Company shall
be delivered in accordance with the notice provisions of the Purchase Agreement.

 

[signatures
on following page]

 

    	7

     

    

 

IN
WITNESS WHEREOF, the undersigned hereby execute this Warrant Agreement as of the day and year first above written.

 

	THE
    COMPANY:	 
	 	 	 
	FAT
    BRANDS INC.	 
	 	 	 
	By:	/s/
    Andrew A. Wiederhorn	 
	Name:	Andrew
    A. Wiederhorn	 
	Title:	Chief
    Executive Officer	 
	 	 	 
	ACCEPTED AND AGREED:	 
	 	 	 
	WARRANT
    HOLDER	 
	 	 	 
	Elevation
    Franchise Ventures, LLC	 
	 	 	 
	By:	/s/
    Hans Hess	 
	Name:	Hans
    Hess	 
	Title:	Chairman
    of the Board	 

 

[Signature
Page to Warrant]

 

    	 

     

    

 

EXHIBIT
A

 

NOTICE
OF EXERCISE

 

The
undersigned holder hereby exercises the right to purchase _________________ shares of Common Stock (“Warrant Shares”)
of FAT Brands Inc., a Delaware corporation (the “Company”), evidenced by the attached Warrant No. ____ (the
“Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set
forth in the Warrant.

 

	 	1.	_____
    Check if Applicable. The undersigned, pursuant to the provisions set forth in the within Warrant, hereby agrees
    to purchase ________ shares of Common Stock covered by such Warrant, and makes payment herewith in full therefore at the price
    per share provided by such Warrant in cash or by certified or official bank check or by wired funds in the amount of $_______.
	 	 	 
	 	2.	_____
    Check if Applicable. The undersigned, pursuant to the provisions set forth in the within Warrant, hereby elects
    to exercise the cashless exercise provisions of the within warrant with respect to ________ shares of Common Stock covered
    by such Warrant, and requests that the Company issue to the undersigned an aggregate of _______ Warrant Shares based on the
    application of the formula set forth in Section 3(c) of such Warrant.

 

	Date: 	_______________ __, ______	 

 

	 	 
	Name
    of Registered Holder	 

 

	By:	 	 
	Name:	 	 
	Title:

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