EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is made and entered into as of the
18th day of August 2014 (the “Effective Date”), by and between Winston L. Black
III (the “Employee”) and SWK Holdings Corporation, a Delaware corporation (the
“Company”).  The Company and the Employee are collectively referred to as the
Parties and each as a Party.

 

RECITALS

 

WHEREAS, the Employee is currently employed as the Company’s Managing Director
(the “MD”); and

 

WHEREAS, Company desires to continue employ the Employee as, and the Employee
desires to remain, the MD;

 

WHEREAS, the Company and the Employee desire to enter into this Agreement as to
the terms of the Employee’s employment with the Company.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby expressly acknowledged, the parties agree as follows:

 

1.             Employment and Duties. (a) General.  Subject to the terms and
conditions of this Agreement, the Employee shall serve as MD of the Company,
reporting to the Company’s Board of Directors (the “Board”).  The Employee shall
have such duties, responsibilities and reporting obligations as the Board may
from time to time establish.  The Employee’s principal place of employment shall
be Dallas, Texas, subject to such travel as the performance of the Employee’s
duties and the business of the Company may require.  The Employee shall be
appointed as a member of the Board as of the Effective Date.  The Employee shall
remain a member of the Board as long as he retains the title of MD or other
equivalent title.

 

(b)           Exclusive Services.  Except with respect to performance under any
PBS Capital Management contract existing on May 14, 2012, the Employee shall
devote his full business working time to the performance of the Employee’s
duties for so long as the Employee is employed by the Company and the Employee
shall use his best efforts to promote and serve the interests of the
Company.  Further, the Employee shall not, directly or indirectly, render
material services to any other person or organization without the consent of the
Board or otherwise engage in activities that would either (i) interfere
significantly with the performance of the Employee’s duties owed to the Company
under this Agreement or otherwise or (ii) involve either a conflict of interest,
or activities competitive, with either the Company or any other member of the
Company Group (as defined in Section 5(a) below).

 

 

 

2.             Term.  The Employee’s employment pursuant to this Agreement shall
commence on the Effective Date and shall terminate upon the earlier to occur of
(i) the Employee’s termination of employment pursuant to Section 4 of this
Agreement or (ii) December 31, 2018 (the “Term”).  

 

3.             Compensation and Other Benefits.  Subject to the provisions of
this Agreement, the Company shall pay and provide the following compensation and
other benefits to the Employee during the Term as compensation for services
rendered hereunder:

 

(a)           Base Salary.  The Company shall pay to the Employee an annual
salary (the “Base Salary”) at the rate of (i) $212,000 per annum for the period
commencing on the Effective Date and ending on December 31, 2014, and (ii)
$240,000 per annum for the period commencing on January 1, 2015, and ending on
December 31, 2018, payable in substantially equal installments at such intervals
as may be determined by the Company in accordance with its ordinary payroll
practices as established from time to time.

 

(b)           Bonus.  (i) Employee shall be eligible to participate in the bonus
pool described in Exhibit A attached to this Agreement.

 

(ii)          Any bonus pursuant to Section 3(b) that is otherwise payable,
shall be paid on the earlier of (1) March 31 following the end of the fiscal
year upon which such bonus was calculated and (2) the date two weeks after the
completion of the Company’s audited financial statements for such fiscal year;
provided that, in no event shall such bonus be paid earlier than thirty (30)
days prior to the March 31 date described herein.  The payment of such bonus is
subject to the Employee’s continued employment with the Company at the time of
payment of the bonus, unless the Employee is employed by the Company as of the
last date of the period during which the achievement of the bonus is measured
and the Employee’s employment is thereafter terminated pursuant to death or
Disability (as defined in Section 4(a) below), by the Employee for Good Reason
(as defined in Section 4(b)(iii) below), by the Company without Cause (as
defined in Section 4(b)(ii) below), due to the expiration of the Term, or if the
Employee is still employed by the Company (but not subject to this Agreement)
and prior to the payment of the bonus, the Employee has not breached any
obligations or duties owed to the Company.

 

 

 

(iii)         In the event that any bonus payable pursuant to Section 3(b)
exceeds $500,000, the Employee shall have the right to elect to receive up to
50% of such amount (the “Stock Bonus Portion”) over $500,000 in fully vested
shares of the Company’s common stock, subject to the reasonable approval of the
Company to insure its ability to maintain its net operating loss carryforwards.
The number of fully vested shares the Employee shall receive following such
election shall be equal to the Stock Bonus Portion less the Gross Up Payment
(described below) divided by the fair market value of the Company’s common stock
for the ten (10) trading day period ending on the last trading day prior to the
bonus payment date, with fractional shares rounded up to the nearest whole
share. The Employee shall be entitled to receive an additional payment (a “Gross
Up Payment”) in an amount such that, after payment (whether through withholding
at the source or otherwise) by the Employee of all taxes, including, without
limitation, any income taxes and employment taxes imposed upon the Gross Up
Payment, the Employee retains an amount of the Gross Up Payment equal to the
taxes, including, without limitation, any income taxes and employment taxes,
imposed on the Stock Bonus Portion of the bonus payable pursuant to this Section
3(b). For the avoidance of doubt, the election to receive the Stock Bonus
Portion will not result in the aggregate payment of the Stock Bonus Payment plus
the Gross Up Payment being in excess of the expected net pre-tax amount should
such amount have been paid only in cash.

 

(c)           Benefit Plans.  The Employee shall be eligible to participate in
all employee benefit plans, programs and policies of the Company as are
generally available to employees of the Company in accordance with the terms and
conditions of such plans, programs and policies, as may be amended from time to
time.

 

(d)           Expenses.  The Company shall reimburse the Employee for reasonable
travel and other business-related expenses incurred by him in the fulfillment of
his duties hereunder upon presentation of written documentation thereof, in
accordance with the business expense reimbursement policies and procedures of
the Company as in effect from time to time.

 

(e)           Option Grant.  On the date hereof, the Company and the Employee
shall enter into a stock option award agreement in the form attached as Exhibit
B to this Agreement.

 

(f)           Retirement Plans.  The Company shall implement a defined
contribution retirement plan for the benefit of all employees on such terms as
determined by the Compensation Committee. Employee shall be eligible to
participate in such plan in accordance with the terms and conditions of such
plan, as may be amended from time to time. Effective for calendar year 2015, the
Company shall match the Employee’s contributions to such plan dollar for dollar
up to 6% of the Employee’s base salary. Employee shall be fully vested in such
contribution.

 

 

 

(4)           Termination of Employment.  Subject to this Section 4, the Company
shall have the right to terminate the Employee’s employment at any time, with or
without Cause (as defined below), and the Employee shall have the right to
resign his employment at any time, provided that the Employee shall: (i) provide
the Company with at least 60 days written notice prior to the resignation date;
(ii) not make any public announcements concerning the Employee’s resignation
prior to the resignation date without the written consent of the Company; and
(iii) continue to perform faithfully the duties assigned to the Employee under
the Agreement (or such other duties as the Board may assign to the Employee)
from the date of such notice until the date of the Employee’s termination of
employment.

 

(a)           Termination Due to Death or Disability.  Unless otherwise
terminated earlier pursuant to the terms of this Agreement, the Employee’s
employment under this Agreement shall terminate upon either the Employee’s death
or Disability.  In the event of the Employee’s death or Disability, the Company
shall pay to the Employee (or his estate, as applicable) (i) the Employee’s
earned but unpaid Base Salary through and including the date of termination and
any other amounts or benefits required to be paid or provided by law or under
any plan, program or policy of the Company (the “Other Accrued Compensation and
Benefits”), within thirty (30) days of termination of the Employee’s employment
and (ii) any bonus otherwise payable for a fiscal year, prorated based upon the
number of days elapsed from the beginning of that fiscal year relative to the
number of days in the full fiscal year.  Such bonus will be payable on the
earlier of (1) March 31 following the end of the fiscal year upon which such
bonus was calculated and (2) the date two weeks after the completion of the
Company’s audited financial statements for such fiscal year; provided that, in
no event shall such bonus be paid earlier than thirty (30) days prior to the
March 31 date described herein. Such bonus will be subject to downward
adjustment if the asset value upon which the bonus was calculated is greater
than the asset value reflected in the Company’s audited financial statements for
such fiscal year.  For purposes of this Agreement, “Disability” means that the
Employee, because of physical or mental disability or incapacity, is unable to
perform the Employee’s duties for an aggregate of 180 working days during any
twelve (12) month period.  All questions arising under this Agreement regarding
the Employee’s disability or incapacity shall be determined by a reputable
physician mutually selected by the Company and the Employee at the time such
question arises.  The determination of the physician selected pursuant to the
above provisions of this Section 4(a) as to such matters shall be conclusively
binding upon the Parties.

 

 

 

(b)           Termination for Cause; Resignation Without Good Reason, Expiration
of Term.  (i) If (1) prior to the expiration of the Term, the Company terminates
the Employee’s employment for Cause or the Employee resigns without Good Reason,
or (2) the Employee’s employment terminates upon the Term expiring, the Employee
shall be entitled only to payment of the Employee’s earned but unpaid Base
Salary through and including the date of termination and Other Accrued
Compensation and Benefits, payable in accordance with Company policies and
practices and in no event later than thirty (30) days after the Employee’s
employment terminates.  The Employee shall have no further right to receive any
other compensation or benefits, and the Company shall have no further obligation
to Employee under this Agreement, after such termination or resignation of
employment.

 

(ii)           Termination for “Cause” shall mean termination of the Employee’s
employment for any of the following reasons:

 

(A)          the Employee entering a plea of no-contest with respect to, or
being convicted (including by a plea of guilty) by a court of competent
jurisdiction of, any felony, whether or not involving any member of the Company
Group (as defined in Section 5(a) below);

 

(B)           any willful misconduct by the Employee that is injurious to the
financial condition or business reputation of any member of the Company Group;

 

(C)           the Employee materially breaches a duty of loyalty owed to any
member of the Company Group or, as a result of the Employee’s gross negligence,
breaches a duty of care owed to any member of the Company Group; or

 

(D)           the Employee materially breaches this Agreement or fails or
refuses to perform any of the Employee’s material duties as required by this
Agreement in any respect, after the Employee being given written notice by the
Company of such breach, failure or refusal, and the Employee fails to cure the
same within thirty (30) calendar days of receipt of such notice.

 

(iii)           Resignation with Good Reason shall mean the occurrence of any of
the following events, without the express written consent of the Employee,
unless such events are fully corrected in all material respects by the Company
within twenty (20) business days (sixty (60) business days in the case of (E)
below) following written notification by the Employee to the Company of the
occurrence of one of the reasons set forth below:

 

 

 

(A)          Material diminution in the Employee’s Base Salary, material duties,
authorities or responsibilities (other than temporarily while physically or
mentally incapacitated or as required by applicable law);

 

(B)           Permanent relocation of the Employee’s primary work location by
more than thirty (30) miles from the Dallas, Texas metropolitan area;

 

(C)           The Company pursues, either by Board action or as announced to the
public, a strategy of using a substantial portion of the Company’s assets to
engage in a business that is substantially different from pharmaceutical or
medical technology financing; or

 

(D)           (1) the transfer (in one transaction or a series of transactions)
of all or substantially all of the assets of the Company to any unaffiliated
third party; (2) the liquidation or dissolution of the Company or the adoption
of a plan by the stockholders of the Company relating to the dissolution or
liquidation of the Company; or (3)  the acquisition by any unaffiliated third
party of beneficial ownership, directly or indirectly, of a majority of the
voting power of the total outstanding capital stock of the Company; or,

 

(E) Material diminution of the Employee’s ability to earn bonus payment set
forth in Section 3(b) and Exhibit A and with reference to the approved business
plan with respect to a given fiscal year due to actions taken by the Board or
the Board’s failure to act and not by the Employee’s lack of performance.

 

The Employee shall provide each member of the Board with a written notice
detailing the specific circumstances alleged to constitute Good Reason within
ten (10) days after the first occurrence of such circumstances, and actually
terminate employment within thirty (30) days following the expiration of the
Company’s twenty (20) or sixty (60) business day period described
above.  Otherwise, any claim of such circumstances as Good Reason shall be
deemed irrevocably waived by the Employee.

 

(c)           Termination Without Cause; Resignation with Good Reason.  If,
prior to the expiration of the Term, the Company terminates the Employee’s
employment without Cause, or the Employee resigns with Good Reason, the Employee
shall only be entitled to payment of the Employee’s earned but unpaid Base
Salary through and including the date of termination and the Other Accrued
Compensation and Benefits and, subject to Section 4(d), shall be entitled to
receive the Severance Benefits.  For purposes of this Agreement, “Severance
Benefits” mean:

 

 

 

(i)            Base Salary (at the rate in effect on the date the Employee’s
employment is terminated), payable in substantially equal monthly installments
over a period of six (6) months following the Company’s termination of the
Employee’s employment without Cause or the Employee’s resignation with Good
Reason (the “Severance Period”);

 

(ii)           The Company shall reimburse the Employee, on a monthly basis, in
arrears, for the premium cost of COBRA continuation coverage under the Company’s
group medical insurance plan during the Severance Period (only to the extent of
the employer portion of the premium cost for similarly situated active employees
in the Company’s group medical insurance plan) until the earlier of (x) the date
the Employee becomes eligible for group medical insurance coverage as the result
of the Employee accepting another position with a new employer or (y) the
termination of the Severance Period, whichever shall occur first; provided, that
the Employee agrees to notify the Company by registered mail, return receipt
requested, within five (5) business days of becoming eligible for group medical
insurance coverage as the result of his accepting another position with a new
employer.  The Employee shall be solely responsible for the remainder of the
premium cost of COBRA continuation coverage; and

 

(iii)          Any bonus otherwise payable for the fiscal year during which the
Employee’s employment is terminated pursuant to this Section 4(c), prorated
based upon the number of days elapsed from the beginning of that fiscal year
relative to the number of days in the full fiscal year.  Such bonus will be
payable on the earlier of (1) March 31 following the end of the fiscal year upon
which such bonus was calculated and (2) the date two weeks after the completion
of the Company’s audited financial statements for such fiscal year; provided,
that in no event shall such bonus be paid earlier than thirty (30) days prior to
the March 31 date described herein.  Such bonus will be subject to downward
adjustment if the asset value upon which the bonus was calculated is greater
than the asset value reflected in the Company’s audited financial statements for
such fiscal year.

 

(d)           Execution and Delivery of Release.  In the event the Employee
fails or refuses to execute and deliver to the Company, within twenty-one days
following Employee’s Termination Date, a general waiver and release of claims in
a form substantially similar to Exhibit C attached to this Agreement (the
“Release”) or otherwise revokes the Release during the applicable revocation
period, the Employee shall forfeit the Severance Benefits, and no Severance
Benefits will be paid to the Employee.

 

(e)           Notice of Termination.  Any termination of employment by the
Company or the Employee shall be communicated by a written “Notice of
Termination” to the other Party given in accordance with Section 23 of this
Agreement, except that the Company may waive in writing the requirement for such
Notice of Termination by the Employee.  In the event of the Employee’s
resignation of employment for any reason other than Good Reason, the Notice of
Termination shall specify the date of termination, which date shall not be less
than sixty (60) days after the giving of such notice, unless the Company agrees
in writing to waive any notice period by the Employee.

 

 

 

(f)           Resignation of Officerships.  The termination of the Employee’s
employment for any reason shall constitute the Employee’s resignation from any
officer, employee, directorship or fiduciary position the Employee has with the
Company Group.  The Employee agrees that this Agreement shall serve as written
notice of resignation in this circumstance.

 

5.             Confidentiality.

 

(a)           Confidential Information.  (i)  For purposes of this Agreement,
Company Group means the Company and any subsidiaries or Affiliates of the
Company.  Affiliates means any entity that directly or indirectly controls, is
controlled by, or is under common control with, the Company.  The Employee
agrees that during his employment with the Company and indefinitely after the
Employee’s employment terminates for any reason, the Employee will not at any
time, except with the prior written consent of the Company or as required by
law, directly or indirectly, reveal to any person, entity or other organization
(other than any member of the Company Group or its respective employees,
officers, directors, shareholders or agents) or use for the Employee’s own
benefit any information deemed to be confidential by any member of the Company
Group relating to the assets, liabilities, employees, goodwill, business or
affairs of any member of the Company Group, including, without limitation, any
information concerning customers, business plans, marketing data, or other
confidential information known to the Employee by reason of the Employee’s
employment by, shareholdings in or other association with any member of the
Company Group (“Confidential Information”); provided, that such Confidential
Information does not include any information which (x) is available to the
general public or is generally available within the relevant business or
industry other than as a result of the Employee’s action, or (y) is or becomes
available to the Employee after his employment terminates on a non-confidential
basis from a third-party source provided that such third-party source is not
bound by a confidentiality agreement or any other obligation of
confidentiality.  Confidential Information may be in any medium or form,
including, without limitation, physical documents, computer files or disks,
videotapes, audiotapes, and oral communications.

 

 

 

(ii)           In the event that the Employee becomes legally compelled to
disclose any Confidential Information, the Employee shall provide the Company
with prompt written notice so that the Company may seek a protective order or
other appropriate remedy.  In the event that such protective order or other
remedy is not obtained, the Employee shall furnish only that portion of such
Confidential Information or take only such action as is legally required by
binding order and shall exercise his reasonable efforts to obtain reliable
assurance that confidential treatment shall be accorded any such Confidential
Information.  The Company shall promptly pay (upon receipt of invoices and any
other documentation as may be requested by the Company) all reasonable expenses
and fees incurred by the Employee, including attorneys’ fees, in connection with
the Employee’s compliance with the immediately preceding sentence.

 

(iii)          The Employee understands that the Company may receive from third
parties confidential or proprietary information subject to a duty on the
Company’s part to maintain the confidentiality (the “Third Party Information”)
and to use the Third Party Information only for certain limited purposes.  The
Employee shall hold any Third Party Information the Employee gains access to
based on his employment with the Company in the strictest confidence and will
disclose the Third Party Information only as needed to perform the Employee’s
duties and then only to others who have a need to know.

 

(b)           Exclusive Property.  The Employee confirms that all Confidential
Information is and shall remain the exclusive property of the Company
Group.  All business records, papers and documents kept or made by the Employee
relating to the business of the Company Group shall be and remain the property
of the Company Group.  Upon the request and at the expense of the Company Group,
the Employee shall promptly make all disclosures, execute all instruments and
papers and perform all acts reasonably necessary to vest and confirm in the
Company Group, fully and completely, all rights created or contemplated by this
Section 5.

 

(c)           Return of Confidential Information.  At the request of the
Company, the Employee shall immediately return to the Company any Confidential
Information, whether received from the Company or contained in materials
prepared or developed by the Employee in the course of the Employee’s
employment.  The Employee shall not retain any copies, summaries or notes of the
Confidential Information, unless expressly approved in writing by the Board.

 

(d)           Corporate Opportunities.  Unless approved in advance by the Board,
the Employee shall not, directly or indirectly, accept or pursue, for his own
benefit, any business, commercial or investment opportunities or offers which
relate to the Company’s business.

 

 

 

6.             Restrictive Covenants Agreement.  Contemporaneously with the
execution of this Agreement, the Employee shall execute and deliver to the
Company the Restrictive Covenants Agreement attached hereto as Exhibit
D.  During the Term of this Agreement, in the event of any conflict between the
Employee’s obligations under Section 5 of this Agreement and the Restrictive
Covenants Agreement, Section 5 of this Agreement shall control.  The Employee
understands that the Restrictive Covenants Agreement applies during and after
both the Term of this Agreement and the Employee’s employment with the Company.

 

7.             Injunctive Relief.  Without intending to limit the remedies
available to the Company or other members of the Company Group, the Employee
agrees that a breach of any of the covenants contained in Sections 5 of this
Agreement may result in material and irreparable injury to the Company or other
members of the Company Group for which there is no adequate remedy at law, that
it will not be possible to measure damages for such injuries precisely and that,
in the event of such a breach or threat thereof, any member of the Company Group
shall be entitled to seek a temporary restraining order or a preliminary or
permanent injunction, or both, without bond or other security, restraining the
Employee from engaging in activities prohibited by the covenants contained in
Sections 5 of this Agreement or such other relief as may be required
specifically to enforce any of the covenants contained in this Agreement.  Such
injunctive relief in any court shall be available to the Company or other member
of the Company Group in aid of, in lieu of, prior to or pending determination
in, any arbitration proceeding, without such action constituting a waiver of the
agreement to arbitrate contained in Section 16 of this Agreement.

 

8.             Section 409A.

 

(a)           General.  This Agreement is intended to meet the requirements of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and
shall be interpreted and construed consistent with that intent.  For purposes of
this Agreement, “termination of employment” means a “Separation from Service”
under Treasury Regulation Section 1.409A-1(h).

 

(b)           Deferred Compensation.  Notwithstanding any other provision of
this Agreement, to the extent that the right to any payment (including the
provision of benefits) hereunder provides for the “deferral of compensation”
within the meaning of Section 409A(d)(1) of the Code, the payment shall be paid
(or provided) in accordance with the following:

 

 

 

(i)         If the Employee is a “Specified Employee” within the meaning of
Section 409A(a)(2)(B)(i) of the Code on the date of the Employee’s “Separation
from Service” within the meaning of Section 409A(a)(2)(A)(i) of the Code, then
no such payment shall be made or commence during the period beginning on the
date of the Employee’s Separation from Service and ending on the date that is
six months following the Employee’s Separation from Service or, if earlier, on
the date of the Employee’s death.  The amount of any payment that would
otherwise be paid to the Employee during this period shall instead be paid to
the Employee on the fifteenth day of the first calendar month following the end
of the period (the “Delayed Payment Date”).  If payment of an amount is delayed
as a result of this Section 10(b)(i), such amount shall be increased with
interest from the date on which such amount would otherwise have been paid to
the Employee but for this Section 10(b)(i) to the day prior to the Delayed
Payment Date.  The rate of interest shall be compounded monthly, at the prime
rate as published by Citibank NA for the month in which occurs the date of the
Employee’s Separation from Service.  Such interest shall be paid on the Delayed
Payment Date.

 

(ii)           Payments with respect to reimbursements of expenses shall be made
in accordance with Company policy and in no event later than the last day of the
calendar year following the calendar year in which the relevant expense is
incurred.  All reimbursements or provision of in-kind benefits pursuant to this
Agreement shall be made in accordance with Treasury Regulation §
1.409A-3(i)(1)(iv) such that the reimbursement or provision will be deemed
payable at a specified time or on a fixed schedule relative to a permissible
payment event. Specifically, the amount reimbursed or in-kind benefits provided
under this Agreement during the Employee’s taxable year may not affect the
amounts reimbursed or provided in any other taxable year (except that total
reimbursements may be limited by a lifetime maximum under a group health plan),
the reimbursement of an eligible expense shall be made on or before the last day
of the Employee’s taxable year following the taxable year in which the expense
was incurred, and the right to reimbursement or provision of in-kind benefit is
not subject to liquidation or exchange for another benefit.

 

(iii)            Each payment under this Agreement is intended to be (i)
excepted from Section 409A of the Code, including, but not limited to, by
compliance with the short-term deferral exception as specified in Treasury
Regulation § 1.409A-1(b)(4) and the involuntary separation pay exception within
the meaning of Treasury Regulation § 1.409A-1(b)(9)(iii), or (ii) in the event
any Gross Up Payment is made pursuant to Section 3(b) herein, in compliance with
Section 409A of the Code, including, but not limited to, being paid pursuant to
a fixed schedule or specified date pursuant to Treasury Regulation §
1.409A-3(i)(1)(v), and the provisions of this Agreement will be administered,
interpreted and construed accordingly (or disregarded to the extent such
provision cannot be so administered, interpreted, or construed).

 

 

 

9.             Source of Payments.  All payments provided under this Agreement,
other than payments made pursuant to a plan which provides otherwise, shall be
paid in cash from the general funds of the Company, and no special or separate
fund shall be established, and no other segregation of assets shall be made, to
assure payment.  The Employee shall have no right, title or interest whatsoever
in or to any investments which the Company may make to aid the Company in
meeting its obligations hereunder.  To the extent that any person acquires a
right to receive payments from the Company hereunder, such right shall be no
greater than the right of an unsecured creditor of the Company.

 

10.           Cooperation.  Upon the receipt of reasonable notice from the
Company (including outside counsel), the Employee agrees that while employed by
the Company and thereafter for a period of eighteen (18) months, the Employee
will respond and provide information with regard to matters in which the
Employee has knowledge as a result of the Employee’s employment with the
Company, and will provide reasonable assistance to the Company or any other
member of the Company Group and their respective representatives in defense of
any claims that may be made against the Company or other member of the Company
Group, and will assist the Company or any other member of the Company Group in
the prosecution of any claims that may be made by the Company or other members
of the Company Group, to the extent that such claims may relate to the period of
the Employee’s employment with the Company (collectively, the “Claims”).  The
Employee agrees to promptly inform the Company if the Employee becomes aware of
any lawsuits involving Claims that may be filed or threatened against the
Company or any other member of the Company Group.  The Employee also agrees to
promptly inform the Company (to the extent that the Employee is legally
permitted to do so) if the Employee is asked to assist in any investigation of
the Company or any other member of the Company Group (or their actions) or
another party attempts to obtain information or documents from the Employee
(other than in connection with any litigation or other proceeding in which the
Employee is a party-in-opposition) with respect to matters the Employee believes
in good faith to relate to any investigation of the Company or any other member
of the Company Group, in each case, regardless of whether a lawsuit or other
proceeding has then been filed against the Company or any other member of the
Company Group with respect to such investigation, and shall not do so unless
legally required.  During the pendency of any litigation or other proceeding
involving Claims, the Employee shall not communicate with anyone (other than the
Employee’s attorneys and tax and/or financial advisors and except to the extent
that the Employee determines in good faith is necessary in connection with the
performance of the Employee’s duties hereunder) with respect to the facts or
subject matter of any pending or potential litigation or regulatory or
administrative proceeding involving the Company or any other member of the
Company Group without giving prior written notice to the Company.  The Company
shall compensate the Employee at the rate of $100 per hour for all hours spent
complying with this Section 10 during any calendar month following the
termination of Employee’s employment in which Employee’s compliance with this
Section 10 exceeds ten (10) hours.  Upon presentation of appropriate
documentation, the Company shall pay or reimburse the Employee for all
reasonable out-of-pocket travel, duplicating or telephonic expenses incurred by
the Employee in complying with this Section 10.

 

 

 

11.           Representations and Warranties.  As a condition to, and in
consideration of, the Employee’s employment with the Company, the Employee
represents and warrants to the Company that the Employee:

 

(a)           has the legal capacity to enter into this Agreement and to perform
all of the obligations on the Employee’s part to be performed hereunder in
accordance with its terms;

 

(b)           is not a party to any agreement or understanding, written or oral,
and is not subject to any restriction, which, in either case, could prohibit the
Employee from entering into this Agreement or performing all of the Employee’s
duties and obligations hereunder; and

 

(c)           has complied with any and all notice provisions of any agreement
that the Employee has with his former employers;

 

(d)           understands and acknowledges that the Company respects the
confidential and proprietary information, and trade secrets of other entities
and therefore, does not want, and will not willingly and unlawfully use, any
confidential or proprietary information, and/or trade secrets that are the
property of a third party; and

 

(e)           does not possess any information that belonged to any former
employer, without the permission of such former employer, regardless of whether
such information was ever: (i) in his possession as a hard copy document; (ii)
on a computer; (iii) on a blackberry, PDA or cell phone; or (iv) on an external
hard drive, thumb drive, or any other piece of external media that permits the
storage of electronic or hard copy information.

 

 

 

12.           Statement of Direction.  The Company hereby directs the Employee
to:

 

(a)           not disclose to the Company any confidential, proprietary or trade
secret information of other entities, including any former employers, without
the permission of such entity;

 

(b)           neither bring on the premises of, nor provide to, the Company,
copies of any documents, electronic media or tangible items that contain or
refer to confidential, proprietary or trade secret information that is the
property of any other party, including any former employers, without the
permission of such entity; and

 

(c)           not provide any information to the Company that belongs or
belonged to any prior employer, regardless of the medium in which such
information is contained, without the permission of such prior employer.

 

13.           Arbitration.  Any dispute or controversy arising under or in
connection with this Agreement or otherwise in connection with the Employee’s
employment by the Company that cannot be mutually resolved by the Parties to
this Agreement and their respective advisors and representatives shall be
settled exclusively by arbitration in Dallas County, Texas, in accordance with
the Commercial Arbitration Rules of the American Arbitration Association before
one arbitrator of exemplary qualifications and stature, who shall be selected
jointly by an individual to be designated by the Company and an individual to be
selected by the Employee, or if such two individuals cannot agree on the
selection of the arbitrator, who shall be selected by the American Arbitration
Association.  The Parties also agree that the American Arbitration Association’s
Optional Rules for Emergency Measures of Protection shall apply to all
arbitrations conducted pursuant to this Agreement.  The Employee understands and
represents that the Employee is waiving the right to adjudicate claims,
including employment-based claims, in a judicial forum and opting instead to
arbitrate such claims.  The arbitrator shall issue a written award containing
findings of fact and conclusions of law.  All substantive rights and remedies
under any law shall be preserved.  The Company shall reimburse the Employee for
any filing fee the Employee paid and pay (i) any remaining filing fee balance,
(ii) the arbitrator’s compensation and any chargeable expenses, (iii) the daily
hearing fees and (iv) any fees associated with renting a hearing room.  The
award of the arbitrator shall be final and binding with respect to the subject
matter of the arbitration and a judgment of any circuit court, or other court of
competent jurisdiction, may be rendered upon the arbitration award.

 

14.           Nonassignability; Binding Agreement

 

(a)           By the Employee.  This Agreement and any and all rights, duties,
obligations or interests hereunder shall not be assignable or delegable by the
Employee.

 

 

 

(b)           By the Company.  This Agreement and all of the Company’s rights
and obligations hereunder shall not be assignable by the Company except as
incident to a reorganization, merger or consolidation, or transfer of all or
substantially all of the Company’s assets.  If the Company shall be merged or
consolidated with another entity, the provisions of this Agreement shall be
binding upon and inure to the benefit of the entity surviving such merger or
resulting from such consolidation.  The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company, by
agreement in form and substance satisfactory to the Employee, to expressly
assume and agree to perform this Agreement in the same manner that the Company
would be required to perform it if no such succession had taken plan.  The
provisions of this Section 14 shall continue to apply to each subsequent
employer of the Employee hereunder in the event of any subsequent merger,
consolidation, transfer of assets of such subsequent employer or otherwise.

 

(c)           Binding Effect.  This Agreement shall be binding upon, and inure
to the benefit of, the Parties hereto, any successors to or assigns of the
Company and the Employee’s heirs and the personal representatives of the
Employee’s estate.

 

15.           Withholding.  Any payments made or benefits provided to the
Employee under this Agreement shall be reduced by any applicable withholding
taxes or other amounts required to be withheld by law or contract.

 

16.           Amendment; Waiver.  This Agreement may not be modified, amended or
waived in any manner, except by an instrument in writing signed by the
Parties.  The waiver by either Party of compliance with any provision of this
Agreement by the other Party shall not operate or be construed as a waiver of
any other provision of this Agreement, or of any subsequent breach by such Party
of a provision of this Agreement.

 

17.           Other Severance Benefits.  In consideration for the payments to be
made to the Employee under the Agreement, the Employee agrees to waive any and
all rights to any payments or benefits under any other severance plan, program
or arrangement of the Company Group, except where such waiver would result in an
impermissible substitution of benefits under Section 409A or any guidance issued
thereunder.

 

18.           Governing Law and Choice of Forum.  All matters affecting this
Agreement, including the validity thereof, are to be subject to, and interpreted
and construed in accordance with, the laws of the State of Texas without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Texas or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Texas.  Any lawsuit brought
pursuant to Section 7 of this Agreement shall be brought only in either any
state court located in Dallas County or the United States District Court for the
Northern District of Texas.

 

 

 

19.           Survival of Certain Provisions.  The rights and obligations set
forth in this Agreement that, by their terms, extend beyond the Term shall
survive the Term.

 

20.           Entire Agreement.  This Agreement and its exhibits contain the
entire agreement and understanding of the Parties with respect to the matters
covered herein, and supersede all prior or contemporaneous negotiations,
commitments, representations, warranties, agreements and writings with respect
to the subject matter hereof, all such other negotiations, commitments,
agreements and writings shall have no further force or effect, and the parties
to any such other negotiation, commitment, agreement or writing shall have no
further rights or obligations thereunder.

 

21.           Counterparts.  This Agreement may be executed by either of the
Parties hereto in counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same
instrument.  A facsimile signature, whether by fax or other electronic form,
shall be deemed an original and shall bind the signing Party.

 

22.           Headings.  The headings of sections herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

 

23.           Notices.  All notices or communications hereunder shall be in
writing, addressed as follows:

 

To the Company:

 

SWK Holdings Corporation

15770 North Dallas Parkway; Suite 1290

Dallas, TX 75248

(972) 687-7250

Attention:  Parth S. Munshi, Esq

Email:  pmunshi@swkhold.com

 

 

 

To the Employee:

 

Winston L. Black III

5951 Beacon Hill Drive

Frisco, TX 75034

Email: wlblack3@yahoo.com

 

With a copy to:

 

Baker Botts L.L.P.

2001 Ross Avenue, Suite 600

Dallas, TX 75201

(214) 953-6500

Attention: Jennifer M. Trulock

Email: jennifer.trulock@bakerbotts.com

Facsimile: (214) 661-4642

 

All such notices shall be conclusively deemed to be received and shall be
effective (i) if sent by hand delivery, upon receipt or (ii) if sent by
electronic mail or facsimile, upon receipt by the sender of confirmation of such
transmission; provided, however, that any electronic mail or facsimile will be
deemed received and effective only if followed, within 48 hours, by a hard copy
sent by certified United States mail.

 

[Remainder of Page Intentionally Left Blank]

 

 

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be signed pursuant
to the authority of its Board, and the Employee has executed this Agreement, as
of the date set forth above.

 

  SWK Holdings Corporation                   By:   /s/ J. Brett Pope       J.
Brett Pope       CEO                     /s/ Winston L. Black III     Winston L.
Black III  

 

 

 

EXHIBIT A 

 

BONUS POOL DESCRIPTION

 

The Bonus Pool, calculated as described below, will represent the aggregate
potential bonus award for the Company’s entire executive team. The allocation of
the Bonus Pool among the executive team will be determined by the Company’s
Chief Executive Officer and will be subject to approval by the Board’s
Compensation Committee.

 

Definitions

 

“Pre-Tax Profit” shall be the Company’s pre-tax profit in a particular fiscal
year as determined in accordance with GAAP, but including paid state taxes,
Board stock compensation and any mark-down of the Company’s investment portfolio
and excluding deal related expenses, other income/loss from unrealized warrants,
net operating loss GAAP accounting adjustments, capital raising related expenses
realized by the Company in 2014 and non-cash adjustments for old warrant/option
liability.

 

“Return on Equity” means Pre-Tax Profit (as defined above) for a particular
fiscal year, divided by the Company’s tangible book value for such fiscal year.

 

Bonus Pool Formulas*

 

FY 2014 - The Bonus Pool will equal (i) 10.5% of the average Pre-Tax Profit for
fiscal years 2013 and 2014, multiplied by (ii) one (1) plus 50% of the Return on
Equity for fiscal year 2014.

 

FY 2015 and thereafter - The Bonus Pool will equal (i) 11% of the average
Pre-Tax Profit for fiscal year of the bonus calculation and the immediately
prior fiscal year , multiplied by (ii) one (1) plus 50% of the Return on Equity
for fiscal year of the bonus calculation.

 

___________

* All Bonus Pool formulas are subject to review and equitable adjustment by the
Board’s Compensation Committee to take into account unusual items.