Document:

novt-ex103_16.htm

 

Exhibit 10.3

 

Employment Agreement

This Employment Agreement (the “Agreement”), entered into on April 21, 2017 (the “Effective Date”), is made by and between Brian Young (the “Executive”) and Novanta Inc., a company organized under the laws of the Province of New Brunswick, Canada (“Novanta” and, together with any of its subsidiaries and Affiliates as may employ the Executive from time to time, and any successor(s) thereto, the “Company”).

 

RECITALS

 

A.The Company desires to assure itself of the services of the Executive by engaging the Executive to perform services under the terms hereof.

 

B.The Executive desires to provide services to the Company on the terms herein provided.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, including the respective covenants and agreements set forth below, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.Certain Definitions

(a)“2010 Incentive Award Plan” shall mean the Company’s 2010 Incentive Award Plan, as amended from time to time.

(b)“2017 PSU Agreement” means, collectively, the Performance Stock Unit Grant Notice and Performance Stock Unit Award Agreement, dated February 28, 2017, by and between the Company and the Executive.

(c)“Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person where “control” shall have the meaning given such term under Rule 405 of the Securities Act of 1933, as amended from time to time. 

(d)“Agreement” shall have the meaning set forth in the preamble hereto.

(e)“Annual Base Salary” shall have the meaning set forth in Section 3(a). 

(f)“Annual Bonus” shall have the meaning set forth in Section 3(b).

(g)“Annual Equity Award” shall have the meaning set forth in Section 3(c).

(h)“Board” shall mean the Board of Directors of Novanta. 

 

 

 

(i)“Bonus Vesting Date” shall have the meaning set forth in Section 3(b).

(j)The Company shall have “Cause” to terminate the Executive’s employment hereunder upon:  (i) the Executive’s willful failure to substantially perform the duties set forth in this Agreement (other than any such failure resulting from the Executive’s Disability or any inability to engage in any substantial gainful activity that could reasonably be expected to result in Disability) which is not remedied within 30 days after receipt of written notice from the Company specifying such failure; (ii) the Executive’s willful failure to carry out, or comply with, in any material respect any lawful and reasonable directive of the Board not inconsistent with the terms of this Agreement, which is not remedied within 30 days after receipt of written notice from the Company specifying such failure; (iii) the Executive’s commission at any time of any act or omission that results in, or may reasonably be expected to result in, a conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any felony or crime involving moral turpitude; or (iv) the Executive’s unlawful use (including being under the influence) or possession of illegal drugs on the Company’s premises or while performing the Executive’s duties and responsibilities under this Agreement.  

(k)“Change in Control” shall mean and includes any of the following which occurs on or following the Effective Date: 

(i)A transaction or series of transactions whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than Novanta, any of its subsidiaries, an employee benefit plan maintained by Novanta or any of its subsidiaries, a “person” or “group” who as of the Effective Date beneficially owns 5% or more of the total combined voting power of Novanta’s securities outstanding, or a “person” that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, Novanta) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of Novanta possessing either (A) more than 40% of the total combined voting power of Novanta’s securities outstanding immediately after such acquisition and, in connection with, and within the twelve-month period immediately following, such acquisition, new directors who constitute at least 40% of the Board (x) are nominated or designated by the acquiring “person” or related “group” of acquiring “persons” and (y) are elected by the Board or Novanta’s shareholders (disregarding, for purposes of this determination, any new directors whose election or nomination is consented to by the Executive) or (B) more than 50% of the total combined voting power of Novanta’s securities outstanding immediately following such acquisition; or

(ii)During any twelve-month period beginning on or following the Effective Date, individuals who, at the beginning of such period, constitute the Board together with any new director(s) (other than a director designated by a person who shall have entered into an agreement with Novanta to effect a transaction described in Section 1(k)(i) or Section 1(k)(iii)) whose election by the Board or nomination for election by Novanta’s stockholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the twelve-month period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or

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(iii)The consummation by Novanta (whether directly involving Novanta or indirectly involving Novanta through one or more intermediaries) of (A) a merger, consolidation, reorganization, or business combination or (B) a sale or other disposition of all or substantially all of Novanta’s assets in any single transaction or series of related transactions or (C) the acquisition of assets or stock of another entity, in each case other than a transaction which results in Novanta’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of Novanta or the person that, as a result of the transaction, controls, directly or indirectly, Novanta or owns, directly or indirectly, all or substantially all of Novanta’s assets or otherwise succeeds to the business of Novanta (Novanta or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction; or 

(iv)Novanta’s stockholders approve a liquidation or dissolution of Novanta.

(l)“COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

(m)“Code” shall mean the Internal Revenue Code of 1986, as amended.

(n)“Committee” shall mean, except as otherwise specified in Section 3(c), the Compensation Committee of the Board, or if no such committee exists, the Board.

(o)“Company” shall, except as otherwise provided in Section 6(j), have the meaning set forth in the preamble hereto.

(p)“Date of Termination” shall mean (i) if the Executive’s employment is terminated due to the Executive’s death, the date of the Executive’s death; (ii) if the Executive’s employment is terminated due to the Executive’s Disability, the date determined pursuant to Section 4(a)(ii); or (iii) if the Executive’s employment is terminated pursuant to Section 4(a)(iii)-(vi) either the date indicated in the Notice of Termination or the date specified by the Company pursuant to Section 4(b), whichever is earlier.

(q)“Disability” shall mean the Executive’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that can be expected to last for (i) a continuous period of not less than ninety days or (ii) at least 180 total calendar days in any 12-month period, in each case as determined by a physician selected by the Company or its insurers and reasonably acceptable to Executive.  The Company will inform the Executive of the selection of the physician so that the Executive may consent to such selection (and the Executive’s consent shall not be unreasonably withheld).  The Executive shall be deemed to have consented to the selection of the physician if the Executive does not provide the Company with written notice objecting to such selection within five business days of the Executive being informed of the physician's selection.  If the Executive objects to such selection (and the Company determines in good faith that such withholding is not unreasonable), then the Company shall select another physician pursuant to the process described in this Section 1(q).  

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(r)“Effective Date” shall have the meaning set forth in the preamble hereto.

(s)“Excise Tax” shall have the meaning set forth in Section 8(a).

(t)“Executive” shall have the meaning set forth in the preamble hereto.

(u)“Extension Term” shall have the meaning set forth in Section 2(b).

(v)The Executive shall have “Good Reason” to terminate the Executive’s employment hereunder within one (1) year after the occurrence of one or more of the following conditions without the Executive’s consent:  (i) a material diminution in the nature or scope of the Executive’s responsibilities, duties or authority, or a material diminution in the Executive’s title; (ii) failure of the Company to make any material payment or provide any material benefit under this Agreement; (iii) the Company’s material breach of this Agreement; or (iv) a material change in the geographic location at which the Executive must perform the Executive’s material services hereunder (which shall in no event include a relocation of the Executive’s principal place of business less than 50 miles from the Bedford, Massachusetts metropolitan area); provided, however, that notwithstanding the foregoing the Executive may not resign his employment for Good Reason unless: (A) the Executive provides the Company with at least 30 days prior written notice of his intent to resign for Good Reason (which notice is provided not later than the 90th day following the Executive’s knowledge of the occurrence of the event constituting Good Reason); and (B) the Company does not remedy the alleged violation(s) within such 30-day period.  

(w)“Initial Term” shall have the meaning set forth in Section 2(b).

(x)“Notice of Termination” shall have the meaning set forth in Section 4(b).

(y)“Payment” shall have the meaning set forth in Section 8(a).

(z)“Person” shall mean any individual, natural person, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any company limited by shares, limited liability company or joint stock company), incorporated or unincorporated association, governmental authority, firm, society or other enterprise, organization or other entity of any nature.

(aa)“Proprietary Information” shall have the meaning set forth in Section 6(d).

(bb)“Release” shall have the meaning set forth in Section 5(b). 

(cc)“Release Expiration Date” shall have the meaning set forth in Section 23(c). 

(dd)“Restricted Period” shall mean the period from the Effective Date through the eighteen (18)-month anniversary of the Date of Termination.

(ee)“Retention RSUs” shall have the meaning set forth in Section 3(g).

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(ff)“Safe Harbor Amount” shall have the meaning set forth in Section 8(a).

(gg)“Section 409A” shall mean Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date.

(hh)“Target Bonus” shall have the meaning set forth in Section 3(b).

(ii)“Tax Advisor” shall have the meaning set forth in Section 8(b).

(jj)“Term” shall have the meaning set forth in Section 2(b).

2.Employment

(a)In General.  The Company shall employ the Executive and the Executive shall enter the employ of the Company, for the period set forth in Section 2(b), in the position set forth in Section 2(c), and upon the other terms and conditions herein provided. 

(b)Term of Employment.  The initial term of employment under this Agreement (the “Initial Term”) shall be for the period beginning on the Effective Date and ending on December 8, 2017, unless earlier terminated as provided in Section 4.  The Initial Term shall automatically be extended for successive one year periods (each, an “Extension Term” and, collectively with the Initial Term, the “Term”), unless either party hereto gives notice of non-extension to the other no later than 90 days prior to the expiration of the then-applicable Term.    

(c)Position and Duties.  During the Term, the Executive: (i) shall serve as Chief Human Resources Officer of the Company, with responsibilities, duties and authority customary for such position, subject to direction by the Company’s Chief Executive Officer; (ii) shall report directly to the Company’s Chief Executive Officer; (iii) shall devote substantially all the Executive’s working time and efforts to the business and affairs of the Company and its subsidiaries; and (iv) agrees to observe and comply with the Company’s rules and policies as adopted by the Company from time to time.  The parties acknowledge and agree that the Executive’s duties, responsibilities and authority may include services for one or more subsidiaries or Affiliates of the Company. Notwithstanding anything herein to the contrary, the Executive may (x) with the consent of the Company’s Chief Executive Officer, serve as a director, trustee or officer or otherwise participate in not-for-profit educational, welfare, social, religious and civic organizations; and (y) with the advanced consent of the Board, serve on the board of directors of other companies, to the extent that such other activities, either individually or in the aggregate, do not inhibit or interfere with the performance of the Executive's duties under this Agreement.

3.Compensation and Related Matters

(a)Annual Base Salary.  During the Term, the Executive shall receive a base salary at a rate of $272,208 per annum, which shall be paid in accordance with the customary payroll practices of the Company, subject to review and upward adjustment by the Board in its sole discretion (the “Annual Base Salary”).

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(b)Annual Bonuses.  With respect to each Company fiscal year that ends during the Term, commencing with fiscal year 2017, the Executive shall be eligible to receive an annual performance-based cash bonus (the “Annual Bonus”) which shall be payable based upon the attainment of individual and Company performance goals established by the Board in consultation with the Executive.  The terms of the Annual Bonus with respect to each fiscal year shall provide that if the Company and/or Executive attains target performance levels for an applicable fiscal year, the Executive’s Annual Bonus shall be payable in an amount equal to 50% of Annual Base Salary (the “Target Bonus”), and may, at the discretion of the Board, provide for a higher amount if performance targets are exceeded.  Each such Annual Bonus shall be payable on, or at such date as is determined by the Board within 90 days following the last day of the fiscal year with respect to which it relates.  Except as provided in Section 5, notwithstanding any other provision of this Section 3(b), no bonus shall be payable with respect to any fiscal year unless the Executive remains continuously employed with the Company during the period beginning on the Effective Date and ending on the first day of the fiscal year following the end of the fiscal year to which the Annual Bonus relates (for each Annual Bonus, the “Bonus Vesting Date”).

(c)Annual Equity Award.  With respect to each Company fiscal year that ends during the Term, the Executive shall be granted an annual equity compensation award with respect to an aggregate target number of shares of Novanta common stock equal to the quotient of (i) a dollar amount determined by the Committee or the Board in its discretion, divided by (ii) the closing price per share of Novanta common stock on the grant date (each such award, an “Annual Equity Award”).  The form of each Annual Equity Award (i.e., options, restricted stock units, performance stock units or other equity-based compensation awards), and the terms and conditions of each Annual Equity Award shall be determined by the Committee or the Board in its discretion and shall be set forth in one or more written award agreements between Novanta and the Executive; provided that each Annual Equity Award shall be granted at the same time as, and, except as set forth in this Agreement, shall be subject to the same vesting schedule (including performance vesting) and other general terms and conditions as, annual equity awards made to other senior executives of the Company.  Notwithstanding the foregoing and anything to the contrary in the 2010 Incentive Award Plan, the Committee (as defined in the 2010 Incentive Award Plan) shall not reduce or eliminate the value of any performance-based portion of an Annual Equity Award to the Executive pursuant to the last sentence of Section 5.4 of the 2010 Incentive Award Plan if the applicable performance vesting targets are attained.

(d)Benefits.  During the Term, the Executive shall be eligible to participate in employee benefit plans, programs and arrangements of the Company in accordance with their terms, as in effect from time to time, and as are generally provided by the Company to its senior executive officers.  

(e)Vacation; Holidays.  During the Term, the Executive shall be entitled to four weeks paid vacation each full calendar year.  Any vacation shall be taken at the reasonable and mutual convenience of the Company and the Executive. Holidays shall be provided in accordance with Company policy, as in effect from time to time.

(f)Business Expenses.  During the Term, the Company shall reimburse the Executive for all reasonable, documented, out-of-pocket travel and other business expenses 

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incurred by the Executive in the performance of the Executive’s duties to the Company in accordance with the Company’s applicable expense reimbursement policies and procedures.

(g)Retention Equity Award.  On August 2, 2016, Novanta granted the Executive 30,000 restricted stock units pursuant to the 2010 Incentive Award Plan (the “Retention RSUs”).  The terms and conditions of the Retention RSUs are set forth in a written award agreement between Novanta and the Executive, which provides that, subject to the Executive’s continued employment with the Company, (i) the Retention RSUs shall vest on August 2, 2021, and (ii) notwithstanding the foregoing Section 3(g)(i), the Retention RSUs shall become fully vested immediately prior to a Change in Control and contain other customary terms and conditions.  Prior to the vesting, the Retention RSUs shall not be transferable and, except as otherwise provided in this Agreement, shall be subject to forfeiture upon the Executive’s termination of employment with the Company.

4.Termination

During the Term, the Executive’s employment hereunder may be terminated by the Company or the Executive, as applicable, without any breach of this Agreement only under the following circumstances:

(a)Circumstances.

(i)Death.  The Executive’s employment hereunder shall terminate upon the Executive’s death.

(ii)Disability.  If the Executive incurs a Disability, the Company may give the Executive written notice of its intention to terminate the Executive’s employment.  In that event, the Executive’s employment with the Company shall terminate, effective on the later of the thirtieth (30th) day after receipt of such notice by the Executive or the date specified in such notice; provided that, within the thirty (30) day period following receipt of such notice, the Executive shall not have returned to full-time performance of the Executive’s duties hereunder.

(iii)Termination for Cause.  The Company may terminate the Executive’s employment for Cause.

(iv)Termination without Cause.  The Company may terminate the Executive’s employment without Cause.

(v)Resignation for Good Reason.  The Executive may resign from the Executive’s employment for Good Reason.

(vi) Resignation without Good Reason.  The Executive may resign from the Executive’s employment without Good Reason.

(b)Notice of Termination.  Any termination of the Executive’s employment by the Company or by the Executive under this Section 4 (other than a termination pursuant to Section 4(a)(i) above) shall be communicated by a written notice to the other party hereto (a “Notice of Termination”): (i) indicating the specific termination provision in this Agreement 

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relied upon, (ii) except with respect to a termination pursuant to Sections 4(a)(iv) or (vi), setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, and (iii) specifying a Date of Termination which, if submitted by the Executive, shall be at least thirty (30) days following the date of such notice; provided, however, that a Notice of Termination delivered by the Company pursuant to Section 4(a)(ii) shall not be required to specify a Date of Termination, in which case the Date of Termination shall be determined pursuant to Section 4(a)(ii); and provided, further, that in the event that the Executive delivers a Notice of Termination to the Company, the Company may, in its sole discretion, accelerate the Date of Termination to any date that occurs following the date of Company’s receipt of such Notice of Termination (even if such date is prior to the date specified in such Notice of Termination).  A Notice of Termination submitted by the Company (other than a Notice of Termination under Section 4(a)(ii) above) may provide for a Date of Termination on the date the Executive receives the Notice of Termination, or any date thereafter elected by the Company in its sole discretion.  The failure by the Company or the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of the Company or the Executive hereunder or preclude the Company or the Executive from asserting such fact or circumstance in enforcing the Company’s or the Executive’s rights hereunder. Notwithstanding the foregoing, a termination pursuant to Section 4(a)(iii) shall be deemed to occur if following Executive’s termination of employment for any reason the Company determines that circumstances existing prior to such termination would have entitled to the Company to terminate Executive’s employment pursuant to Section 4(a)(iii).

5.Company Obligations Upon Termination of Employment

(a)In General.  Upon a termination of the Executive’s employment for any reason, (i) the Executive (or the Executive’s estate) shall be entitled to receive: (A) any portion of the Executive’s Annual Base Salary through the Date of Termination not theretofore paid, (B) any expenses owed to the Executive under Section 3(f), (C) any accrued but unused vacation pay owed to the Executive pursuant to Section 3(e), and (D) any amount arising from the Executive’s participation in, or benefits under, any employee benefit plans, programs or arrangements under Section 3(d), which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans, programs or arrangements, and (ii) unless otherwise determined by the Board, the Executive shall, effective as of the Date of Termination, resign from all positions held at the Company or any of its subsidiaries (including, without limitation, any positions as an officer or director).  Except as otherwise set forth in Section 5(b) or (c) below, the payments and benefits described in this Section 5(a) shall be the only payments and benefits payable in the event of the Executive’s termination of employment for any reason.  

(b)Termination without Cause or for Good Reason.  In the event of the Executive’s termination of employment by the Company without Cause pursuant to Section 4(a)(iv) or by the Executive for Good Reason pursuant to Section 4(a)(v), in addition to the payments and benefits described in Section 5(a) above, the Company shall, subject to Section 23 and Section 5(d) and subject to Executive’s execution and non-revocation of a waiver and release of claims agreement in substantially in the form attached hereto as Exhibit A in accordance with Section 23(c) (a “Release”):

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(i)Pay to the Executive an amount equal to 150% of the sum of (A) Annual Base Salary and (B) Target Bonus, in substantially equal installments during the period beginning on the Date of Termination and ending on the eighteen (18)-month anniversary of the Date of Termination in accordance with the Company’s regular payroll practice as of the Date of Termination; provided that, notwithstanding anything to the contrary in this Section 5(b)(i), if such termination of employment occurs within the twelve (12)-month period immediately following a Change in Control (and such Change in Control constitutes a “change in control event” as defined in Treasury Regulations Section 1.409A-3(i)(5)), then, in lieu of the foregoing payments set forth in this Section 5(b)(i), the Company shall pay to the Executive an aggregate amount equal to 200% of the sum of (A) Annual Base Salary and (B) Target Bonus, in substantially equal installments during the period beginning on the Date of Termination and ending on the twenty-four (24)-month anniversary of the Date of Termination in accordance with the Company’s regular payroll practice as of the Date of Termination;

(ii)Pay to the Executive an amount equal to the product of (A) the amount of the Annual Bonus that would have been payable to the Executive pursuant to Section 3(b) if the Executive was still employed as of the applicable Bonus Vesting Date in respect of the fiscal year in which the Date of Termination occurs based on actual individual and Company performance goals in such year and (B) the ratio of (x) the number of days elapsed during the fiscal year during which such termination of employment occurs on or prior to the Date of Termination, to (y) 365.  Any amount payable pursuant to this Section 5(b)(ii) shall, subject to Section 23 and Section 5(d), be paid to Executive in accordance with Section 3(b) as if the Executive was still employed on the applicable Bonus Vesting Date, but in no event later than the 15th day of the third month of the fiscal year immediately following the fiscal year in which the Date of Termination occurs; 

(iii)Continue to provide, subject to the Executive’s valid election to continue healthcare coverage under COBRA, the Executive and the Executive’s eligible dependents with coverage under its group health plans during the period commencing on the Date of Termination and ending on the earlier of (A) the eighteen (18)-month anniversary of the Date of Termination (if such termination of employment occurs within the twelve (12)-month period immediately following a Change in Control, the twenty-four (24)-month anniversary of the Date of Termination) and (B) the first date on which the Executive is eligible for group health plan coverage from another employer or otherwise at the same levels and the same cost to the Executive as would have applied if the Executive’s employment had not been terminated based on the Executive’s elections in effect on the Date of Termination, provided, however, that (A) if any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the period of continuation coverage to be, exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), or (B) the Company is otherwise unable to continue to cover the Executive under its group health plans without incurring penalties (including without limitation, pursuant to Section 2716 of the Public Health Service Act), then, in either case, an amount equal to each remaining Company subsidy shall thereafter be paid to the Executive in substantially equal monthly installments over the continuation coverage period (or the remaining portion thereof); and

(iv)Notwithstanding any provision to the contrary in any equity plan or award agreement with respect to equity awards, cause (A) with respect to the Retention RSUs 

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and all Annual Equity Awards subject to service-based vesting, each such award to become vested with respect to a prorated portion thereof based on the ratio of the number of days of employment of the Executive during the applicable service-based vesting period to the total number of days of such service-based vesting period, and (B) with respect to all Annual Equity Awards subject to performance-based vesting, each such award to shall continue to be eligible to become vested in accordance with its terms based on actual performance with respect to a prorated portion of such award based on the ratio of the number of days of employment of the Executive during the applicable performance period to the total number of days of such performance period; provided that, notwithstanding anything to the contrary in this Section 5(b)(iv), (x) if such termination of employment occurs during any period when the Executive is unable to engage in substantial gainful activity that may reasonably be expected to result in Disability, the Company shall, on the Date of Termination, cause (I) the Retention RSUs and all Annual Equity Awards subject to service-based vesting, to become fully vested and (II) all Annual Equity Awards subject to performance-based vesting to continue to be eligible to become vested in accordance with their terms based on actual performance, and (y) if such termination of employment occurs within the twelve (12)-month period immediately following a Change in Control, the Company shall, on the Date of Termination, cause all then-outstanding equity awards granted to the Executive (including, without limitation, the Annual Equity Awards) which are not vested as of the Date of Termination to become vested for the purposes of the 2010 Incentive Award Plan or any other applicable equity plan, and any applicable award agreement(s), deeming, for purposes of awards subject to performance-based vesting, that the Company will attain “target” performance levels (or such higher performance level as expressly contemplated by the applicable award agreement in the event of such a termination).  For the avoidance of doubt, in the event of a termination described in subsection (y) that results in accelerated vesting of the performance stock units granted under the 2017 PSU Agreement, (I) the Company will be deemed to have attained the “target” performance level with respect to the EPS Performance Stock Units (as defined in the 2017 PSU Agreement) and (II) the Company will be deemed to have attained the higher of (1) the “target” performance level and (2) the actual performance level calculated under the 2017 PSU Agreement (taking into account the Change in Control and any effects thereof on the calculation of total stockholder return) for purposes of the TSR Performance Stock Units (as defined in the 2017 PSU Agreement). 

(c)Termination due to Death or Disability.  In the event of the Executive’s termination of employment due to death pursuant to Section 4(a)(i) or by the Company due to Disability pursuant to Section 4(a)(ii), in addition to the payments and benefits described in Section 5(a) above, the Company shall, subject to Section 23 and Section 5(d) and subject (except in the case of death or a Disability so severe as to make such execution impossible) to the Executive’s execution and non-revocation of a Release in accordance with Section 23(c): 

(i)Pay to the Executive an amount equal to the product of (A) the amount of the Annual Bonus that would have been payable to the Executive pursuant to Section 3(b) if the Executive was still employed as of the applicable Bonus Vesting Date in respect of the fiscal year in which the Date of Termination occurs based on actual individual and Company performance goals in such year and (B) the ratio of (x) the number of days elapsed during the fiscal year during which such termination of employment occurs on or prior to the Date of Termination, to (y) 365.  Any amount payable pursuant to this Section 5(c)(i) shall, subject to Section 23 and Section 5(d), be paid to the Executive in accordance with Section 3(b) as if the 

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Executive was still employed on the applicable Bonus Vesting Date in respect of the fiscal year in which the Date of Termination occurs, but in no event later than the 15th day of the third month of the fiscal year immediately following the fiscal year in which the Date of Termination occurs; and

(ii)Notwithstanding any provision to the contrary in any equity plan or award agreement with respect to equity awards, cause (A) with respect to the Retention RSUs and all Annual Equity Awards subject to service-based vesting, each such award to become fully vested, and (B) with respect to all Annual Equity Awards subject to performance-based vesting, each such award to shall continue to be eligible to become vested in accordance with its terms based on actual performance.

(d)Notwithstanding any other provision of this Agreement, no payment shall be made, and no acceleration of vesting shall occur, pursuant to Section 5(b) or Section 5(c) following the date the Executive first violates Section 6(a), (b), (d), or (e) if the Executive does not cure such violation within 30 days of written notice thereof.    

(e)The provisions of this Section 5 shall supersede in their entirety any severance payment provisions in any severance plan, policy, program or other arrangement maintained by the Company (including, without limitation, that certain offer letter by and between the Company and the Executive, dated March 9, 2015).

	
 
	
6.
	
Restrictive Covenants

(a)The Executive hereby agrees that the Executive shall not, at any time during the Restricted Period, directly or indirectly engage in, have any interest in (including, without limitation, through the investment of capital or lending of money or property), or manage, operate or otherwise render any services to, any Person (whether on his own or in association with others, as a principal, director, officer, employee, agent, representative, partner, member, security holder, consultant, advisor, independent contractor, owner, investor, participant or in any other capacity) that engages in (either directly or through any subsidiary or Affiliate thereof) the business of marketing or selling any products which directly compete with the products sold by the Company but only if the Executive directly or indirectly engages in, has any interest in (including, without limitation, through the investment of capital or lending of money or property), or manages, operates or otherwise renders any services in connection with, such business (whether on his own or in association with others, as a principal, director, officer, employee, agent, representative, partner, member, security holder, consultant, advisor, independent contractor, owner, investor, participant or in any other capacity).  Notwithstanding the foregoing, the Executive shall be permitted to acquire a passive stock or equity interest in such a Person; provided that such stock or other equity interest acquired is less than five percent (5%) of the outstanding interest in such Person.

(b)The Executive hereby agrees that the Executive shall not, at any time during the Restricted Period, directly or indirectly, either for himself or on behalf of any other Person, (i) recruit or otherwise solicit or induce any employee, customer or supplier of the Company to terminate its employment or arrangement with the Company, or otherwise change its relationship with the Company, or (ii) hire, or cause to be hired, any person who both (A) was 

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employed by the Company at any time during the 180-day period before the Date of Termination and (B) was employed by the Company at the time of recruitment, solicitation, inducement or hire, or (x) with respect to any former employee of the Company who following his termination of employment at the Company becomes employed on a full-time basis with another employer prior to any recruitment, solicitation or inducement by the Executive (and who at the time of commencement of such other employment had no intention of becoming employed by the Executive or any Person affiliated with the Executive), at any time during the 90-day period immediately prior to recruitment, solicitation, inducement or hire thereof, or (y) with respect to any other former employee of the Company, at any time during the 180-day period immediately prior to recruitment, solicitation, inducement or hire thereof; provided, however, that any advertising or solicitation not specifically directed at the Company or any of its employees, clients or customers shall not constitute a breach of this Section 6(b) nor shall the hiring of any person pursuant to such advertising or solicitation whose annual compensation is less than $60,000 per annum.

(c)The provisions contained in Sections 6(a) and (b) may be altered and/or waived to be made less restrictive on the Executive with the prior written consent of the Board or the Committee.

(d)Except as the Executive reasonably and in good faith determines to be desirable in the faithful performance of the Executive’s duties hereunder or required in accordance with Section 6(f), the Executive shall, during the Term and after the Date of Termination, maintain in confidence and shall not directly or indirectly, use, disseminate, disclose or publish, for the Executive’s benefit or the benefit of any other Person, any confidential or proprietary information or trade secrets of or relating to the Company, including, without limitation, information with respect to the Company’s operations, processes, protocols, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, compensation paid to employees or other terms of employment (“Proprietary Information”), or deliver to any Person, any document, record, notebook, computer program or similar repository of or containing any such Proprietary Information.  The Executive’s obligation to maintain and not use, disseminate, disclose or publish, or use for the Executive’s benefit or the benefit of any other Person, any Proprietary Information after the Date of Termination will continue so long as such Proprietary Information is not, or has not by legitimate means become, generally known and in the public domain (other than by means of the Executive’s direct or indirect disclosure of such Proprietary Information) and continues to be maintained as Proprietary Information by the Company.  The parties hereby stipulate and agree that as between them, the Proprietary Information identified herein is important, material and affects the successful conduct of the businesses of the Company (and any successor or assignee of the Company).

(e)Upon termination of the Executive’s employment with the Company for any reason, the Executive will promptly deliver to the Company (i) all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, and any other documents that are Proprietary Information, including all physical and digital copies thereof (the “Materials”), and (ii) all other Company property (including, without 

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limitation, any personal computer or wireless device and related accessories, keys, credit cards and other similar items) which is in his possession, custody or control. 

(f)The Executive may respond to a lawful and valid subpoena or other legal process but shall give the Company prompt notice thereof, and shall use reasonable best efforts, as much in advance of the return date as possible, to make available to the Company and its counsel the documents and other information sought, and shall assist (at the Company’s expense) such counsel in resisting or otherwise responding to such process.  

(g)Except as required in connection with any legal dispute between the parties or as required by applicable law or legal process, during the Term and thereafter: (i) Novanta shall instruct its then-current Board members, executive officers and authorized Novanta representatives speaking on behalf of Novanta to not willfully make (or direct anyone else to make) any Disparaging remarks, comments or statements about the Executive to any other person or entity; and (ii) the Executive shall not willfully make (or direct anyone else to make) any Disparaging remarks, comments or statements about the Company (including, without limitation, its directors, officers, agents, representatives, partners, members, equity holders or Affiliates) to any other person or entity.  For purposes hereof, “Disparaging” written or oral remarks, comments or statements are those that impugn the character, honesty, integrity or morality or business acumen or abilities in connection with any aspect of the operation of business of the individual or entity being disparaged.  Notwithstanding the foregoing, the Executive may make truthful statements about any Company employee to any member of the Board or his legal representatives and each Board member may make truthful statements about the Executive to other Board members or the Company’s legal representatives.

(h)Prior to accepting other employment or any other service relationship during the Restricted Period, the Executive shall provide a copy of this Section 6 to any recruiter who assists the Executive in obtaining other employment or any other service relationship and to any employer or other Person with which the Executive obtains future employment or any other service relationship prior to the commencement of such future employment or other service relationship.

(i)In the event the terms of this Section 6 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action.  Any breach or violation by the Executive of the provisions of this Section 6 shall toll the running of any time periods set forth in this Section 6 for the duration of any such breach or violation.

(j)As used in this Section 6, the term “Company” shall include Novanta and any direct or indirect subsidiary entity thereof.

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7.Injunctive Relief; Defend Trade Secrets Act.  

(a)The Executive recognizes and acknowledges that a breach of the covenants contained in Section 6 will cause irreparable damage to the Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate.  Accordingly, the Executive agrees that in the event of a breach of any of the covenants contained in Section 6, in addition to any other remedy which may be available at law or in equity, the Company will be entitled to specific performance and injunctive relief (without any requirement to post a bond or other security).

(b)The Executive acknowledges that the Company has provided the Executive with the following notice of immunity rights in compliance with the requirements of the Defend Trade Secrets Act of 2016: (i) the Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of Proprietary Information that is made in confidence to a federal, state or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, (ii) the Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of Proprietary Information that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal and (iii) if the Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, the Executive may disclose the Proprietary Information to the Executive’s attorney and use the Proprietary Information in the court proceeding, if the Executive files any document containing the Proprietary Information under seal, and does not disclose the Proprietary Information, except pursuant to court order.

8.Parachute Payments

(a)In the event it shall be determined that (i) any payment or distribution to or for the benefit of the Executive under this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions result in a Change in Control or other change in control or any person affiliated with the Company or such person (the “Payment” and collectively, the “Payments”) would be subject to the excise tax imposed by Section 4999 of the Code (or any similar federal, state or local tax that may hereafter be imposed) or any interest or penalties with respect to such excise tax (collectively, such excise tax, together with any such interest or penalties, the “Excise Tax”) and (ii) the amount of all the Payments that Executive would retain after all federal, state and local income taxes, Executive’s share of employment taxes, and the Excise Tax on the Payments would be less than the amount Executive would retain after all such taxes if the total amount of the Payments were reduced to an amount equal to one dollar less than the minimum amount which would result in the Payments becoming subject to the Excise Tax (such reduced amount, the “Safe Harbor Amount”), then the total amount of the Payments that shall be payable to Executive shall be reduced to an amount equal to the Safe Harbor Amount.  The Payments shall be reduced by the Company in its reasonable discretion in the following order: (A) reduction of any cash severance payments otherwise payable to the Executive that are exempt from Section 409A, (B) reduction of any other cash payments or benefits otherwise payable to the Executive that are exempt from Section 409A, but excluding any payment attributable to the acceleration of vesting or payment with respect to any equity award that is exempt from Section 409A, (C) reduction of any other payments or benefits 

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otherwise payable to the Executive on a pro-rata basis or such other manner that complies with Section 409A, but excluding any payment attributable to the acceleration of vesting and payment with respect to any equity award that is exempt from Section 409A, and (D) reduction of any payments attributable to the acceleration of vesting or payment with respect to any equity award that is exempt from Section 409A, in each case beginning with payments that would otherwise be made last in time.

(b)All determinations required to be made under this Section 8 shall be made in writing by an accounting firm or consulting group with experience in performing calculations regarding the applicability of Section 280G of the Code and the Excise Tax (the “Tax Advisor”) and such determinations shall be final and binding on the Company and the Executive and detailed supporting calculations shall be provided to the Company and the Executive. The Tax Advisor shall be selected by the Company in its good faith discretion, following consultation with its independent auditors and the Executive.  Any fees incurred as a result of work performed by the Tax Advisor pursuant to this Section 8 shall be paid by the Company.

(c)For purposes of any analysis required by this Section 8, (i) the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the determination is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the date of the determination is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes, (ii) no portion of the Payments shall be taken into account which, in the opinion of the Tax Advisor, does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including, without limitation, by reason of Section 280G(b)(4)(A) of the Code), (iii) in calculating the Excise Tax, no portion of the Payments shall be taken into account which, in the opinion of the Tax Advisor, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the “base amount” (as defined in Section 280G(b)(3) of the Code) allocable to such reasonable compensation, and (iv) the value of any non-cash benefit or any deferred payment or benefit included in the Payments shall be determined by the Tax Advisor in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.

9.Assignment and Successors

The Company may (a) assign its rights and obligations under this Agreement to any entity, including any successor to all or substantially all the assets of the Company, by merger or otherwise, and (b) may assign or encumber this Agreement and its rights hereunder as security for indebtedness of the Company and its Affiliates; provided, however, that no assignment or encumbrance pursuant to Section 9(b) shall relieve the Company of any of its obligations hereunder.  The Executive may not assign the Executive’s rights or obligations under this Agreement to any individual or entity.  This Agreement shall be binding upon and inure to the benefit of the Company, the Executive and their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable.

10.Governing Law

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This Agreement shall be governed, construed, interpreted and enforced in accordance with the substantive laws of the Commonwealth of Massachusetts, without giving effect to any principles of conflicts of law, whether of the Commonwealth of Massachusetts or any other jurisdiction, and where applicable, the laws of the United States, that would result in the application of the laws of any other jurisdiction.

11.Validity

The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.  

12.Notices

Any notice, request, claim, demand, document and other communication hereunder to any party hereto shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by telex, telecopy, or certified or registered mail, postage prepaid, to the following address (or at any other address as any party hereto shall have specified by notice in writing to the other party hereto):

(a)If to the Company:

Novanta Inc. 

125 Middlesex Turnpike

Bedford, MA 01730-1409

Attn:  Chief Financial Officer 

Facsimile:  (781) 266-5114

	
(b)
	
If to the Executive, at the Executive’s address set forth in the Company’s then-current records.  

13.Counterparts

This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

14.Entire Agreement

The terms of this Agreement (together with any other agreements and instruments contemplated hereby or referred to herein) is intended by the parties hereto to be the final expression of their agreement with respect to the employment of the Executive by the Company and supersedes and may not be contradicted by evidence of any prior or contemporaneous agreement (including, without limitation, that certain offer letter by and between the Company and the Executive, dated March 9, 2015).  The parties hereto further intend that this Agreement shall constitute the complete and exclusive statement of its terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.

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15.Amendments; Waivers

This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by the Executive and a duly authorized officer of Novanta and approved by the Board, which expressly identifies the amended provision of this Agreement. By an instrument in writing similarly executed and approved by the Board, the Executive or a duly authorized officer of Novanta may waive compliance by the other party or parties hereto with any provision of this Agreement that such other party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure to comply or perform.  No failure to exercise and no delay in exercising any right, remedy, or power hereunder shall preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.

16.No Inconsistent Actions

The parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential intent of this Agreement.  Furthermore, it is the intent of the parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement.

17.Construction

This Agreement shall be deemed drafted equally by both of the parties hereto.  Its language shall be construed as a whole and according to its fair meaning.  Any presumption or principle that the language is to be construed against any party hereto shall not apply.  The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation.  Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary.  Also, unless the context clearly indicates to the contrary, (a) the plural includes the singular and the singular includes the plural; (b) “and” and “or” are each used both conjunctively and disjunctively; (c) “any,” “all,” “each,” or “every” means “any and all,” and “each and every”; (d) “includes” and “including” are each “without limitation”; (e) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (f) all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require.

18.Dispute Resolution

(a)With respect to disputes and claims hereunder, each of the parties irrevocably submits to the exclusive jurisdiction of any court of competent jurisdiction sitting in Middlesex County, Massachusetts, for the purposes of any suit, action or other proceeding arising out of this Agreement, any related agreement or any transaction contemplated hereby or thereby.  Each of the parties hereto further agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s respective address set forth or described in Section 12 shall be effective service of process for any action, suit or proceeding in any court of competent jurisdiction sitting in Middlesex County, Massachusetts with respect to any matters to which it 

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has submitted to jurisdiction in this Section 18.  Each of the parties hereto irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement, any related document or the transactions contemplated hereby and thereby in any court of competent jurisdiction sitting in Middlesex County, Massachusetts, and hereby and thereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.  

(b)As a specifically bargained for inducement for each of the parties hereto to enter into this Agreement (after having the opportunity to consult with counsel), each party hereto expressly waives the right to trial by jury in any lawsuit or proceeding relating to or arising in any way from this Agreement or the matters contemplated hereby.

19.Enforcement

Subject to Section 6(i), if any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement.  Furthermore, without limiting Section 6(i), in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

20.Withholding

The Company shall be entitled to withhold from any amounts payable under this Agreement, any federal, state, local or foreign withholding or other taxes or charges which the Company is required to withhold.  The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.

21.Absence of Conflicts; Executive Acknowledgement

The Executive hereby represents that from and after the Effective Date the performance of the Executive’s duties hereunder will not breach any other agreement to which the Executive is a party.  The Executive acknowledges that the Executive has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on the Executive’s own judgment.  

22.Survival

The expiration or termination of the Term shall not impair the rights or obligations of any party hereto which shall have accrued prior to such expiration or termination (including, without limitation, pursuant to the provisions of Section 6 hereof).

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23.Section 409A.

(a)General.  The parties hereto acknowledge and agree that, to the extent applicable, this Agreement shall be interpreted in accordance with, and incorporate the terms and conditions required by, Section 409A.  Notwithstanding any provision of this Agreement to the contrary, in the event that the Company determines that any amounts payable hereunder will be immediately taxable to the Executive under Section 409A, the Company reserves the right (without any obligation to do so or to indemnify the Executive for failure to do so) to (i) adopt such amendments to this Agreement and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Company determines to be necessary or appropriate to preserve the intended tax treatment of the benefits provided by this Agreement, to preserve the economic benefits of this Agreement and to avoid less favorable accounting or tax consequences for the Company and/or (ii) take such other actions as the Company determines to be necessary or appropriate to exempt the amounts payable hereunder from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder.  No provision of this Agreement shall be interpreted or construed to transfer any liability for failure to comply with the requirements of Section 409A from the Executive or any other individual to the Company or any of its Affiliates, employees or agents.  

(b)Separation from Service under Section 409A.  Notwithstanding any provision to the contrary in this Agreement:  (i) no amount that constitutes “nonqualified deferred compensation” under Section 409A shall be payable pursuant to Section 5(b) or 5(c) unless the termination of the Executive’s employment constitutes a “separation from service” within the meaning of Section 1.409A-1(h) of the Department of Treasury Regulations; (ii) for purposes of Section 409A, the Executive’s right to receive installment payments pursuant to Section 5(b) or 5(c) shall be treated as a right to receive a series of separate and distinct payments; and (iii) to the extent that any reimbursement of expenses or in-kind benefits constitutes “deferred compensation” under Section 409A, such reimbursement or benefit shall be provided no later than December 31 of the year following the year in which the expense was incurred.  The amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year.  The amount of any in-kind benefits provided in one year shall not affect the amount of in-kind benefits provided in any other year. Notwithstanding any provision to the contrary in this Agreement, if the Executive is deemed at the time of his separation from service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of the termination benefits to which the Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of the Executive’s termination benefits shall not be provided to the Executive prior to the earlier of (A) the expiration of the six-month period measured from the date of the Executive’s “separation from service” with the Company (as such term is defined in the Treasury Regulations issued under Section 409A of the Code) or (B) the date of the Executive’s death; upon the earlier of such dates, all payments deferred pursuant to this sentence shall be paid in a lump sum to the Executive, and any remaining payments due under the Agreement shall be paid as otherwise provided herein. 

(c)Release.  Notwithstanding anything to the contrary in this Agreement, to the extent that any payments of “nonqualified deferred compensation” (within the meaning of 

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Section 409A) due under this Agreement as a result of the Executive’s termination of employment are subject to the Executive’s execution and delivery of a Release, (i) the Company shall deliver the Release to the Executive within seven (7) days following the Date of Termination, and (ii) if the Executive fails to execute the Release on or prior to the Release Expiration Date (as defined below) or timely revokes his acceptance of the Release thereafter, the Executive shall not be entitled to any payments or benefits otherwise conditioned on the Release.  For purposes of this Section 23(c), “Release Expiration Date” shall mean the date that is twenty-one (21) days following the date upon which the Company timely delivers the Release to the Executive, or, in the event that the Executive’s termination of employment is “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967), the date that is forty-five (45) days following such delivery date.  To the extent that any payments of nonqualified deferred compensation (within the meaning of Section 409A) due under this Agreement as a result of the Executive’s termination of employment are delayed pursuant to this Section 23(c), such amounts shall be paid in a lump sum on the first payroll date to occur on or after the 60th day following the date of Executive’s termination of employment, provided that Executive executes and does not revoke the Release prior to such 60th day (and any applicable revocation period has expired).  

24.Compensation Recovery Policy.  The Executive acknowledges and agrees that, to the extent the Company adopts any clawback or similar policy in connection with or otherwise as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and any rules and regulations promulgated thereunder (including, without limitation, any listing rules or standards resulting therefrom), he shall, during the Term and thereafter, take all action necessary or appropriate to comply with such policy, as may be amended from time to time in the Company’s sole discretion (including, without limitation, entering into any further agreements, amendments or policies necessary or appropriate to implement and/or enforce such policy). The Executive’s obligations under this Section 24 shall survive the termination of this Agreement. For the avoidance of doubt, other than as provided in this Agreement (including, this Section 24), or as otherwise required by applicable law or by the rules of any securities exchange or automated quotation system on which shares of the Company’s capital stock are listed, quoted or traded, no vested equity award described in this Agreement shall be subject to any payment, termination or forfeiture obligation described in Section 12.5(a) of the 2010 Incentive Award Plan and the Executive shall not be required, and no award under such plan shall be conditioned on requiring Executive, to enter into any other agreement to the contrary.

25.Full Settlement. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others.  In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment.

26.Conflicts. To the extent this Agreement describes equity awards that shall be issued pursuant to the 2010 Incentive Award Plan, such equity awards shall be subject to the 2010 Incentive Award Plan; provided that, in the event of a conflict between any term or 

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provision contained herein and a term or provision of the 2010 Incentive Award Plan, the applicable term or provision of this Agreement will govern and prevail.

[Signature pages follow]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first above written.

 

COMPANY

By:  /s/ Matthijs Glastra__________________________

Name: Matthijs Glastra

Title:Chief Executive Officer

 

 

 

 

EXECUTIVE

By:  /s/ Brian Young_____________________________

Brian Young

 

 

 

 

 

 

 

Exhibit A

RELEASE OF CLAIMS

1.General Release.  

(a)I acknowledge that my employment with Novanta Inc. (f/k/a GSI Group Inc.) (the “Company”) and all subsidiaries and affiliates thereof terminated on .  I further acknowledge that the Company delivered this Release of Claims (the “Release”) to me on .  

(b)In exchange for the payments and benefits described in that certain Employment Agreement by and between the Company and me (the “Employment Agreement”), which I agree I am not otherwise entitled to receive absent execution and non-revocation of the Release, I and my representatives, agents, estate, heirs, successors and assigns  (“Releasors”) voluntarily agree to release and discharge the Company and its parents, affiliates, subsidiaries, predecessors, successors, assigns, plan sponsors and plan fiduciaries (and the current and former trustees, officers, directors, employees, and agents of each of the foregoing, all both individually, in their capacity acting on the Company’s behalf and in their official capacities) (collectively “Releasees”) generally from all claims, demands, actions, suits, damages, debts, judgments and liabilities of every name and nature, whether existing or contingent, known or unknown, suspected or unsuspected, in law or in equity in connection with my employment by or termination of employment with the Company, or any of my dealings, transactions or events involving the Releasees, arising on or before the date of this Release. This Release is intended by me to be all encompassing and to act as a full and total release of any claims that the Releasors may have or have had against the Releasees from the beginning of time to the date of this Release, including but not limited to all claims in contract (whether written or oral, express or implied), tort, equity and common law; any claims for wrongful discharge, breach of contract, or breach of the obligation of good faith and fair dealing; and/or any claims under any local, state or federal constitution, statute, law, ordinance, bylaw, or regulation dealing with either employment, employment discrimination, retaliation, mass layoffs, plant closings, and/or employment benefits and/or those laws, statutes or regulations concerning discrimination on the basis of race, color, creed, religion, age, sex, sexual harassment, sexual orientation, national origin, ancestry, handicap or disability, veteran status or any military service or application for military service or any other category protected by law (including, without limitation, claims under the Massachusetts Fair Employment Practices Act (Mass. Gen. Laws ch. 151B, §§1-10) and the Massachusetts Wage Act (Mass. Gen. Laws ch. 149, §§ 148-150)); and any federal, state or local law or regulation concerning securities, stock, stock options or restricted or performance stock units.  This Release is for any relief, no matter how denominated, including but not limited to wages, back pay, front pay, benefits, compensatory damages, liquidated damages, punitive damages or attorney’s fees.  I also agree not to commence or cooperate in the prosecution or investigation of any lawsuit, administrative action or other claim or complaint against the Releasees, except as required by law.  

 

 

(c)By this Release, I not only release and discharge the Releasees from any and all claims as stated above that the Releasors could make on my own behalf or on the behalf of others, but also those claims that might be made by any other person or organization on my behalf and I specifically waive any right to recover any damage awards as a member of any class in a case in which any claims against the Releasees are made involving any matters arising out of my employment by or termination of employment with the Company, or any of my dealings, transactions or events involving the Releasees

(d)I agree that, except for any payments or benefits set forth in Section 5 of the Employment Agreement that have not yet been paid, as applicable, the payments and benefits the Company previously provided to me are complete payment, settlement, accord and satisfaction with respect to all obligations and liabilities of the Releasees to the Releasors, and with respect to all claims, causes of action and damages that could be asserted by the Releasors against the Releasees regarding my employment or termination of employment with the Company, or any of my dealings, transactions or events involving the Releasees, including, without limitation, all claims for wages, salary, commissions, draws, car allowances, incentive pay, bonuses, business expenses, vacation, stock, stock options, restricted or performance stock units, severance pay, attorneys’ fees, compensatory damages, exemplary damages, or other compensation, benefits, costs or sums. Notwithstanding anything in this Release to the contrary, this Release shall not affect and I do not waive: (i) rights to indemnification I may have under: (A) applicable law, (B) any charter document or bylaws, (C) any agreement between me and the Company or any other Releasee, (D) as an insured under any directors’ and officers’ liability insurance policy now or previously in force, (ii) any right I may have to obtain contribution in the event of  the entry of judgment against me as a result of any act or failure act for which both I and any Releasee are jointly responsible; and (iii) my rights to vested benefits and payments under any stock options, restricted or performance stock units or other incentive plans or any agreements relating thereto or under any retirement plan, welfare benefit plan  or other benefit or deferred compensation plan, all of which shall remain in effect in accordance with the terms and provisions thereof, or my rights as a stockholder or equity holder of the Company. 

(e)I understand and agree that this Release will be binding on me and my heirs, administrators and assigns. I acknowledge that I have not assigned any claims or filed or initiated any legal proceedings against any of the Releasees.

(f)I acknowledge and agree that if any provision of this Release is found, held or deemed by a court of competent jurisdiction to be void, unlawful or unenforceable under any applicable statute or controlling law, the remainder of this Release shall continue in full force and effect.

(g)This Release is deemed made and entered into in the Commonwealth of Massachusetts, and in all respects shall be interpreted, enforced and governed under the internal laws of the Commonwealth of Massachusetts, to the extent not preempted by federal law.

 

 

 

 

(h)Notwithstanding the comprehensive release of claims set forth in the preceding paragraphs of this Section 1, nothing in this Release shall bar or prohibit me from contacting, seeking assistance from or participating in any proceeding before any federal or state administrative agency to the extent permitted by applicable federal, state and/or local law.  However, I nevertheless will be prohibited to the fullest extent authorized by law from obtaining monetary damages in any agency proceeding in which I do so participate.

2.Waiver of Rights and Claims Under the Age Discrimination in Employment Act of 1967.  Since I am 40 years of age or older, I acknowledge and agree that I have been informed that I have or may have specific rights and/or claims under the Age Discrimination in Employment Act of 1967 (the “ADEA”) and I agree that:

(a)in consideration for the payments and benefits described in the Employment Agreement, which I am not otherwise entitled to receive absent execution and non-revocation of the Release, I specifically and voluntarily waive such rights and/or claims under the ADEA that I have or might have against the Releasees to the extent such rights and/or claims arose prior to the date I executed this Release;

(b)I understand that I am not waiving rights or claims under the ADEA which may arise after the date that I execute this Release; 

(c)I have been advised to consult with or seek advice from an attorney of my choice or any other person of my choosing before executing this Release; 

(d)I have been advised that I have twenty-one (21) days from the date I receive this Release (the “Consideration Period”) to review this Release and consider its terms before signing it, and I acknowledge and agree that such Consideration Period will not be affected or extended by any changes, whether material or immaterial, that might be made to this Release;

(e)in entering into this Release I am not relying on any representation, promise or inducement made by the Company or its attorneys with the exception of those promises described in this Release; and

(f)I may revoke this Release for a period of seven (7) days after I sign it and all rights and obligations of both parties under this Release shall not become effective or enforceable until the date upon which the seven (7) day revocation period has expired.  For such a revocation to be effective, the Company must receive it on or before the expiration of the seven (7) day revocation period. 

 

*  *  *  *  *

 

 

 

 

 

 

I acknowledge and agree that this Release is a legally binding document and my signature will commit me to its terms.  I acknowledge and agree that I have carefully read and fully understand all of the provisions of this Release and that I voluntarily enter into this Release by signing below.  Upon execution, I agree to deliver a signed copy of this Release to , of the Company.

 

____________________________________

Brian Young

Date:  _______________________________NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A
LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES, UNLESS OTHERWISE PROHIBITED BY FEDERAL OR STATE SECURITIES LAWS.

 

Original
Issue Date: April 19, 2017

 

$250,000

 

10%
ORIGINAL ISSUE DISCOUNT

CONVERTIBLE
DEBENTURE

DUE
November 19, 2017

 

FOR
VALUE RECEIVED, Pressure BioSciences, Inc. (the “Company”) promises to pay to Bellridge Capital LP or its registered
assigns (the “Holder”), or shall have paid pursuant to the terms hereunder, the principal sum of $250,000 on
or before November 19, 2017 (the “Maturity Date”) or such earlier date as this 10% Original Issued Discount
Convertible Debenture (the “Debenture”) is required or permitted to be repaid as provided hereunder, and to
pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture in accordance
with the provisions hereof. This Debenture is subject to the following additional provisions:

 

Section
1. Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Debenture, (a) capitalized
terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement (as defined below) and (b) the
following terms shall have the following meanings:

 

“Alternate
Consideration” shall have the meaning set forth in Section 5(e).

 

“Bankruptcy
Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in
Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the
Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof
any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary
thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered,
(d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial
part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant
Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof
calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) the Company
or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence
in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

 

    	 

    	 		 

    

 

“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 4(d).

 

“Buy-In”
shall have the meaning set forth in Section 4(c)(v).

 

“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act)
of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise)
of in excess of 50% of the voting securities of the Company (other than by means of conversion or exercise of the Debentures and
the Securities issued together with the Debentures), (b) the Company merges into or consolidates with any other Person, or any
Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company
immediately prior to such transaction own less than 50% of the aggregate voting power of the Company or the successor entity of
such transaction, (c) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders
of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately
after the transaction, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth in clauses (a) through (c) above.

 

“Conversion”
shall have the meaning ascribed to such term in Section 4.

 

“Conversion
Date” shall have the meaning set forth in Section 4(a).

 

“Conversion
Price” shall have the meaning set forth in Section 4(b).

 

“Conversion
Schedule” means the Conversion Schedule in the form of Schedule 1 attached hereto.

 

“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Debenture in accordance with
the terms hereof.

 

“Debenture
Register” shall have the meaning set forth in Section 2(b).

 

“Default
Conversion Price” means 55% of the lowest traded price during the 20 Trading Day-period immediately prior to the applicable
Conversion Date.

 

“DTC”
means the Depository Trust Company.

 

“DWAC”
means Deposit Withdrawal at Custodian as defined by the DTC.

 

“Event
of Default” shall have the meaning set forth in Section 6(a).

 

“Fundamental
Transaction” shall have the meaning set forth in Section 5(e).

 

“Mandatory
Default Amount” means the payment of 130% of the outstanding principal amount of this Debenture and accrued and unpaid
interest hereon, in addition to the payment of all other amounts, costs, expenses and liquidated damages due in respect of this
Debenture.

 

    	 

    	 		 

    

 

“New
York Courts” shall have the meaning set forth in Section 8(e).

 

“Notice
of Conversion” shall have the meaning set forth in Section 4(a).

 

“Original
Issue Date” means the date of the first issuance of the Debentures, regardless of any transfers of the Debentures and
regardless of the number of instruments which may be issued to evidence the Debenture.

 

“Purchase
Agreement” means the Securities Purchase Agreement, dated as of March 14, 2017, among the Company and the original Holders,
as amended, modified or supplemented from time to time in accordance with its terms.

 

“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Share
Delivery Date” shall have the meaning set forth in Section 4(c)(ii).

 

“Successor
Entity” shall have the meaning set forth in Section 5(e).

 

Section
2. Prepayment and Interest.

 

a)
Payment of Interest. The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal
amount of this Debenture at the rate of 10% per annum, which will be due and payable on the sooner to occur of (i) Maturity Date
(ii) except as otherwise set forth in this Debenture or (iii) upon conversion of the Debenture. In addition to the interest payable
under this Section 2(a), this Debenture was issued for an original issue discount of 10% of the principal amount.

 

b)
Interest Calculations. Subject to Section 2(a), interest shall be calculated on the basis of a 365 day year, consisting
of twelve calendar day periods, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding
principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder,
has been made. Interest hereunder will be paid to the Person in whose name this Debenture is registered on the records of the
Company regarding registration and transfers of this Debenture (the “Debenture Register”).

 

c)
Late Fee. Subject to Section 6(b) of this Debenture, all overdue accrued and unpaid interest to be paid hereunder shall
entail a late fee at an annual interest rate equal to 10% in excess of the Interest Rate, plus a one-time 5% penalty on the then-outstanding
balance of the Debenture, which shall accrue daily from the date such interest is due hereunder through and including the date
of actual payment in full.

 

d)
Prepayment. At any time upon ten (10) days written notice to the Holder, the Company may prepay any portion of the principal
amount of this Debenture and any accrued and unpaid interest. If the Company exercises its right to prepay any portion of the
Debenture, the Company shall make payment to the Holder of an amount in cash equal to the sum of the then outstanding principal
amount of this Debenture being prepaid and accrued interest thereon multiplied by 100%. The Holder may continue to convert the
Debenture from the date notice of the prepayment is given until the date of the prepayment.

 

    	 

    	 		 

    

 

Section
3. Registration of Transfers and Exchanges.

 

a)
Different Denominations. This Debenture is exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration
of transfer or exchange.

 

b)
Investment Representations. This Debenture has been issued subject to certain investment representations of the original
Holder set forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement
and applicable federal and state securities laws and regulations.

 

c)
Reliance on Debenture Register. Prior to due presentment for transfer to the Company of this Debenture, the Company and
any agent of the Company may treat the Person in whose name this Debenture is duly registered on the Debenture Register as the
owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture
is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.

 

Section
4. Conversion.

 

a)
Voluntary Conversion. At any time after the sooner to occur of (i) 246 days from March __, 2017 (ii) when the shares issuable
upon conversion of this Debenture have been registered on a registration statement that has been declared effective by the Commission
or (iii) if the Company is in breach or default of any of the Transaction Documents and until this Debenture is no longer outstanding,
subject to the limitations set forth in Section 4(d), this Debenture (including principal and accrued but unpaid interest on any
principal being converted, if any) shall be convertible, in whole or in part, into shares of Common Stock at the option of the
Holder, at any time and from time to time (subject to the conversion limitations set forth in Section 4(d) hereof). The Holder
shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex
A (each, a “Notice of Conversion”), specifying therein the principal amount (and any accrued interest)
of this Debenture to be converted and the date on which such conversion shall be effected (such date, the “Conversion
Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such
Notice of Conversion is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required by the Company. To effect
conversions hereunder, the Holder shall not be required to physically surrender this Debenture to the Company unless the entire
principal amount of this Debenture, plus all accrued and unpaid interest thereon, has been so converted. Conversions hereunder
shall have the effect of lowering the outstanding principal amount of this Debenture (and accrued interest thereon, if applicable)
in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing the principal amount(s)
converted and the date of such conversion(s). The Company may deliver an objection to any Notice of Conversion within one (1)
Business Day of delivery of such Notice of Conversion. In the event of any dispute or discrepancy, the records of the Holder shall
be controlling and determinative in the absence of manifest error. The Holder, and any assignee by acceptance of this Debenture,
acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Debenture,
the unpaid and unconverted principal amount of this Debenture may be less than the amount stated on the face hereof.

 

b)
Conversion Price. The conversion price in effect on any Conversion Date, subject to adjustment herein, shall be equal to
65% of the lowest closing price for the Company’s Common Stock on the Trading Market for the 15 Trading Days prior to the
conversion; provided that or if the shares of Common Stock are not traded on a Trading Market but is quoted on the OTC Pink, then
65% of the lowest closing price for the Company’s Common Stock on the OTC Pink for the 15 Trading Days prior to the conversion
and in all other cases 65% of the fair market value of a share of Common Stock as determined by an independent appraiser selected
in good faith by the Purchaser and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company

 

    	 

    	 		 

    

 

c)
Mechanics of Conversion.

 

i.
Conversion Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a conversion
hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Debenture to be
converted by (y) the Conversion Price.

 

ii.
Delivery of Certificate Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share
Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing
the Conversion Shares which, on or after the date on which such Conversion Shares are eligible to be sold under Rule 144 without
the need for current public information and the Company has received an opinion of counsel to such effect reasonably acceptable
to the Company, shall be free of restrictive legends and trading restrictions (other than those which may then be required by
the Purchase Agreement) representing the number of Conversion Shares being acquired upon the conversion of this Debenture. All
certificate or certificates required to be delivered by the Company under this Section 4(c) shall be delivered electronically
through the Depository Trust Company or another established clearing corporation performing similar functions. If the Conversion
Date is prior to the date on which such Conversion Shares are eligible to be sold under Rule 144 without the need for current
public information, the Conversion Shares shall bear a restrictive legend in substantially the following form, as appropriate:

 

“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES, UNLESS OTHERWISE PROHIBITED BY FEDERAL OR STATE SECURITIES LAWS.”

 

Notwithstanding
the foregoing, commencing on such date that the Conversion Shares are eligible for sale under Rule 144 subject to current public
information requirements, the Company shall obtain at its cost a legal opinion to allow for such sales under Rule 144.

 

iii.
Failure to Deliver Certificates. If, in the case of any Notice of Conversion, such certificate or certificates are not
delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written
notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in
which event the Company shall promptly return to the Holder any original Debenture delivered to the Company and the Holder shall
promptly return to the Company the Common Stock certificates issued to such Holder pursuant to the rescinded Conversion Notice.

 

    	 

    	 		 

    

 

iv.
Obligation Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares
upon conversion of this Debenture in accordance with the terms hereof are absolute and unconditional, irrespective of any action
or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination,
or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged
violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of such Conversion Shares (but subject to Section 4(e)
of this Debenture); provided, however, that such delivery shall not operate as a waiver by the Company of any such
action the Company may have against the Holder. In the event the Holder of this Debenture shall elect to convert any or all of
the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the Holder or anyone associated
or affiliated with the Holder has been engaged in any violation of law, agreement or for any other reason (except as otherwise
provided in the Transaction Documents), unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion
of all or part of this Debenture shall have been sought and obtained, and the Company posts a surety bond for the benefit of the
Holder which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds
of which shall be payable to the Holder to the extent it obtains judgment. In the absence of such injunction, the Company shall
issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion. If the Company fails for any reason to deliver
to the Holder such certificate or certificates pursuant to Section 4(c)(ii) by the Share Delivery Date, the Company shall pay
to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $10 per
Trading Day for each Trading Day after such Share Delivery Date until such certificates are delivered or Holder rescinds such
conversion. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant
to Section 6 hereof for the Company’s failure to deliver Conversion Shares within the period specified herein and the Holder
shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree
of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to
enforce damages pursuant to any other Section hereof or under applicable law.

 

v.
Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available
to the Holder, if the Company fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery
Date pursuant to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase
(in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock
to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the
conversion relating to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to the
Holder (in addition to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s
total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the
aggregate number of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by
(2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage
commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Debenture in a principal amount equal to
the principal amount of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder
the number of shares of Common Stock that would have been issued if the Company had timely complied with its delivery requirements
under Section 4(c)(ii). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of this Debenture with respect to which the actual sale price of the Conversion
Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of
the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence
of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the
Company’s failure to timely deliver certificates representing shares of Common Stock upon conversion of this Debenture as
required pursuant to the terms hereof.

 

    	 

    	 		 

    

 

vi.
Reservation of Shares Issuable Upon Conversion. The Company covenants that, following filing of the Authorized Shares Amendment,
it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock a number of shares of
Common Stock at least equal to 300% of the Required Minimum for the sole purpose of issuance upon conversion of this Debenture
and payment of interest on this Debenture, each as herein provided, free from preemptive rights or any other actual contingent
purchase rights of Persons other than the Holder, not less than such aggregate number of shares of the Common Stock as shall (subject
to the terms and conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions
of Section 5) upon the conversion of the then outstanding principal amount of this Debenture and payment of interest hereunder.
The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly
issued, fully paid and nonassessable.

 

vii.
Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of
this Debenture. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the
Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Conversion Price or round up to the next whole share.

 

viii.
Transfer Taxes and Expenses. The issuance of certificates for shares of the Common Stock on conversion of this Debenture
shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of
the issue or delivery of such certificates, provided that, the Company shall not be required to pay any tax that may be payable
in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than
that of the Holder of this Debenture so converted and the Company shall not be required to issue or deliver such certificates
unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or
shall have established to the satisfaction of the Company that such tax has been paid. The Company shall pay all Transfer Agent
fees required for same-day processing of any Notice of Conversion.

 

    	 

    	 		 

    

 

d)
Holder’s Conversion Limitations.

 

i.
Reserved.

 

ii.
The Company shall not effect any conversion of this Debenture, and a Holder shall not have the right to convert any portion of
this Debenture, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, the
Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of the
Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes
of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include
the number of shares of Common Stock issuable upon conversion of this Debenture with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted
principal amount of this Debenture beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of
the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in
the preceding sentence, for purposes of this Section 4(d), beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in
this Section 4(d) applies, the determination of whether this Debenture is convertible (in relation to other securities owned by
the Holder together with any Affiliates) and of which principal amount of this Debenture is convertible shall be in the sole discretion
of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of whether
this Debenture may be converted (in relation to other securities owned by the Holder together with any Affiliates) and which principal
amount of this Debenture is convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with
this restriction, the Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such
Notice of Conversion has not violated the restrictions set forth in this paragraph and the Company shall have no obligation to
verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above
shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 4(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the
number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Company’s most recent
periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the Company,
or (iii) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares
of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally
and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares
of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including
this Debenture, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was
reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Debenture
held by the Holder. The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial
Ownership Limitation provisions of this Section 4(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99%
of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock
upon conversion of this Debenture held by the Holder and the Beneficial Ownership Limitation provisions of this Section 4(d) shall
continue to apply. Any such increase or decrease will not be effective until the 61st day after such notice is delivered
to the Company. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion hereof) which
may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to
a successor holder of this Debenture.

 

    	 

    	 		 

    

 

Section
5. Certain Adjustments.

 

a)
Stock Dividends and Stock Splits. If the Company, at any time while this Debenture is outstanding: (i) pays a stock dividend
or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock
Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion
of, or payment of interest on, the Debentures), (ii) subdivides outstanding shares of Common Stock into a larger number of shares,
(iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares
or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company,
then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock
(excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall
become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b)
Reserved

 

c)
Subsequent Rights Offerings. If at any time the Company grants, issues or sells any Common Stock Equivalents or rights
to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock
(the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common
Stock acquirable upon complete conversion of this Debenture (without regard to any limitations on exercise hereof, including without
limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock
are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s
right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then
the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares
of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation).

 

d)
Reserved.

 

    	 

    	 		 

    

 

e)
Fundamental Transaction. If, at any time while this Debenture is outstanding, (i) the Company, directly or indirectly,
in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of
the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one
or more related transactions consummates a stock or share purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person
or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent
conversion of this Debenture, the Holder shall have the right to receive, for each Conversion Share that would have been issuable
upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in
Section 4(d) on the conversion of this Debenture), the number of shares of Common Stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Debenture
is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion
of this Debenture). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted
to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of
Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration
in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the
Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Debenture following
such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is
not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under
this Debenture and the other Transaction Documents in accordance with the provisions of this Section 5(e) pursuant to written
agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay)
prior to such Fundamental Transaction and shall, at the option of the holder of this Debenture, deliver to the Holder in exchange
for this Debenture a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance
to this Debenture which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Debenture (without regard
to any limitations on the conversion of this Debenture) prior to such Fundamental Transaction, and with a conversion price which
applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares
of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares
of capital stock and such conversion price being for the purpose of protecting the economic value of this Debenture immediately
prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the
Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for
(so that from and after the date of such Fundamental Transaction, the provisions of this Debenture and the other Transaction Documents
referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of
the Company and shall assume all of the obligations of the Company under this Debenture and the other Transaction Documents with
the same effect as if such Successor Entity had been named as the Company herein.

 

    	 

    	 		 

    

 

f)
Calculations. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be. For purposes of this Section 5, 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.

 

g)
Notice to the Holder.

 

i.
Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5,
the Company shall promptly deliver to the Holder a notice setting forth the Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment.

 

ii.
Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for
or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall
be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby
the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed
at each office or agency maintained for the purpose of conversion of this Debenture, and shall cause to be delivered to the Holder
at its last address as it shall appear upon the Debenture Register, at least twenty (20) calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose
of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders
of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined
or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become
effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange
their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation,
merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery
thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any
notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries,
the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall
remain entitled to convert this Debenture during the 20-day period commencing on the date of such notice through the effective
date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

Section
6. Events of Default.

 

a)
“Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event
and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or
order of any court, or any order, rule or regulation of any administrative or governmental body):

 

i.
any default in the payment of (A) the principal amount of any Debenture or (B) interest, liquidated damages and other amounts
owing to the Holder on the Debenture, as and when the same shall become due and payable (whether on a Conversion Date or by acceleration
or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above, is not cured within
3 Trading Days;

 

    	 

    	 		 

    

 

ii.
the Company shall fail to observe or perform any other material covenant or agreement contained in the Debenture (other than a
breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed
in clause (ix) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) 10- Trading Days after
notice of such failure sent by the Holder or by any other Holder to the Company and (B) 10 Trading Days after the Company has
become or should have become aware of such failure;

 

iii.
a default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument)
shall occur under (A) any of the Transaction Documents or (B) any other material agreement, lease, document or instrument to which
the Company or any Subsidiary is obligated (and not covered by clause (vi) below);

 

iv.
any representation or warranty made in this Debenture, any other Transaction Documents, any written statement pursuant hereto
or thereto or any other report, financial statement or certificate made or delivered to the Holder shall be untrue or incorrect
in any material respect as of the date when made or deemed made;

 

v.
the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy
Event;

 

vi.
the Company or any Subsidiary shall default (subject to any grace or cure period provided in the applicable agreement, document
or instrument) on any of its obligations under any mortgage, credit agreement or other facility, promissory note, indenture agreement,
factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness
for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than
$10,000, whether such indebtedness now exists or shall hereafter be created and (b) results in such indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise become due and payable;

 

vii.
the Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume
listing or quotation for trading thereon within five Trading Days or the transfer of shares of Common Stock through DTC is no
longer available or “chilled”;

 

viii.
the Company shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose
of all or in excess of 50% of its assets in one transaction or a series of related transactions (whether or not such sale would
constitute a Change of Control Transaction);

 

ix.
the Company shall fail for any reason to deliver certificates to the Holder prior to the third Trading Day after a Conversion
Date pursuant to Section 4(c) or the Company shall provide at any time notice to the Holder, including by way of public announcement,
of the Company’s intention to not honor requests for conversions of the Debenture in accordance with the terms hereof;

 

    	 

    	 		 

    

 

x.
the Company fails to file with the Commission any required reports under Section 13 or 15(d) of the Exchange Act such that it
is not in compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable);

 

xi.
Reserved;

 

xii.
if the Company or any Significant Subsidiary shall: (i) apply for or consent to the appointment of a receiver, trustee, custodian
or liquidator of it or any of its properties, (ii) admit in writing its inability to pay its debts as they mature, (iii) make
a general assignment for the benefit of creditors, (iv) be adjudicated bankrupt or insolvent or be the subject of an order for
relief under Title 11 of the United States Code or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution
or liquidation law or statute of any other jurisdiction or foreign country, or (v) file a voluntary petition in bankruptcy, or
a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage or any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of
a petition filed against it in any proceeding under any such law, or (vi) take or permit to be taken any action in furtherance
of or for the purpose of effecting any of the foregoing;

 

xiii.
if any order, judgment or decree shall be entered, without the application, approval or consent of the Company or any Significant
Subsidiary, by any court of competent jurisdiction, approving a petition seeking liquidation or reorganization of the Company
or any Subsidiary, or appointing a receiver, trustee, custodian or liquidator of the Company or any Subsidiary, or of all or any
substantial part of its assets, and such order, judgment or decree shall continue unstayed and in effect for any period of sixty
(60) days;

 

xiv.
the occurrence of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Company
or any Subsidiary having an aggregate fair value or repair cost in excess of $200,000, and any such levy, seizure or attachment
shall not be set aside, bonded or discharged within thirty (30) days after the date thereof;

 

xv.
the Company shall fail to maintain sufficient reserved shares as required by the Purchase Agreement; or

 

xvi.
any monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their
respective property or other assets for more than $100,000, and such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of 45 calendar days.

 

b)
Remedies Upon Event of Default. If any Event of Default occurs, then the outstanding principal amount of this Debenture,
plus accrued but unpaid interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration,
shall become, at the Holder’s election by notice in writing to Company, immediately due and payable in cash at the Mandatory
Default Amount. After the occurrence of any Event of Default that results in the eventual acceleration of this Debenture, the
interest rate on this Debenture shall accrue at an annual interest rate equal to 10% in excess of the Interest Rate, plus a one-time
5% penalty on the then-outstanding balance of the Debenture. Upon the payment in full of the Mandatory Default Amount, the Holder
shall promptly surrender this Debenture to or as directed by the Company. In connection with such acceleration described herein,
the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and
the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder
and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any
time prior to payment hereunder and the Holder shall have all rights as a holder of the Debenture until such time, if any, as
the Holder receives full payment pursuant to this Section 6(b). No such rescission or annulment shall affect any subsequent Event
of Default or impair any right consequent thereon.

 

    	 

    	 		 

    

 

Section
7. Negative Covenants. As long as any portion of this Debenture remains outstanding, unless the holders of a majority
in principal amount of the then outstanding Debentures shall have otherwise given prior written consent, the Company shall not,
and shall not permit any of the Subsidiaries to, directly or indirectly:

 

a)
amend its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially
and adversely affects any rights of the Holder, repay, repurchase or offer to repay, repurchase or otherwise acquire more than
a de minimis number of shares of its Common Stock or Common Stock Equivalents other than as to the Conversion Shares or
Warrant Shares as permitted or required under the Transaction Documents;

 

b)
repay, repurchase or offer to repay, repurchase other than the Debenturess if on a pro-rata basis, other than regularly scheduled
principal and interest payments as such terms are in effect as of the Original Issue Date, provided that such payments shall not
be permitted if, at such time, or after giving effect to such payment, any Event of Default exist or occur provided, however,
this covenant shall not apply with respect to the exercise of any Holder’s conversion under Section 4;

 

c)
pay cash dividends or distributions on any equity securities of the Company;

 

d)
enter into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with
the SEC assuming that the Company is subject to the Securities Act or the Exchange Act, unless such transaction is made on an
arm’s-length basis; or

 

e)
enter into any agreement with respect to any of the foregoing.

 

Section
8. Miscellaneous.

 

a)
Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without
limitation, any Notice of Conversion, shall be in writing and delivered personally, by email or sent by a nationally recognized
overnight courier service, addressed to the Company, at the address (including email address) set forth in the Purchase Agreement
or such other email address or address as the Company may specify for such purposes by notice to the Holder delivered in accordance
with this Section 8(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder shall
be in writing and delivered personally, by email, or sent by a nationally recognized overnight courier service addressed to each
Holder at the facsimile number or address of the Holder as set forth in the Purchase Agreement, or as appearing on the books of
the Company, or such other facsimile number or address as the Holder may specify for such purposes by notice to the Company delivered
in accordance with this Section 8(a). Any notice or other communication or deliveries hereunder shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication is delivered via email to the address set forth
on the signature pages to the Purchase Agreement hereto prior to 12:00 p.m. (New York City time) on any date, (ii) the next Trading
Day after the date of transmission, if such notice or communication is delivered via email to the address set forth on the signature
page to the Purchase Agreement on a day that is not a Trading Day or later than 12:00 p.m. (New York City time) on any Trading
Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service
or (iv) upon actual receipt by the party to whom such notice is required to be given.

 

    	 

    	 		 

    

 

b)
Absolute Obligation. Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation
of the Company to pay the principal of, liquidated damages and accrued interest, as applicable, on this Debenture at the time,
place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct debt obligation of the Company.

 

c)
Assignment/Transferability. The Holder may assign or sell a portion or all of this Debenture upon two (2) Trading Days’
notice to the Company which notice does not require the consent of the Company.

 

d)
Lost or Mutilated Debenture. If this Debenture shall be mutilated, lost, stolen or destroyed, the Company shall execute
and deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution
for a lost, stolen or destroyed Debenture, a new Debenture for the principal amount of this Debenture so mutilated, lost, stolen
or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof,
reasonably satisfactory to the Company.

 

e)
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement
and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its
respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts
sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for
such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under this Debenture and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating
to this Debenture or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any
provisions of this Debenture, then the prevailing party in such action or proceeding shall be reimbursed by the other party for
its attorney’s fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action
or proceeding.

 

f)
Waiver. Any waiver by the Company or the Holder of a breach of any provision of this Debenture shall not operate as or
be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The
failure of the Company or the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall
not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other
term of this Debenture on any other occasion. Any waiver by the Company or the Holder must be in writing.

 

    	 

    	 		 

    

 

g)
Severability. If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall
remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable
to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates
the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the
maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal
of or interest on this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Debenture, and the Company (to the extent it may lawfully do so) hereby expressly
waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though
no such law has been enacted.

 

h)
Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Debenture
shall be cumulative and in addition to all other remedies available under this Debenture and any of the other Transaction Documents
at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit
the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of
this Debenture. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than
as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and
the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein,
be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate.
The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition
to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity
of showing economic loss and without any bond or other security being required. The Company shall provide all information and
documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with
the terms and conditions of this Debenture.

 

i)
Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day.

 

j)
Headings. The headings contained herein are for convenience only, do not constitute a part of this Debenture and shall
not be deemed to limit or affect any of the provisions hereof.

 

*********************

 

(Signature
Pages Follow)

 

    	 

    	 		 

    

 

 

IN
WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by a duly authorized officer as of the date first above
indicated.

 

	PRESSURE BIOSCIENCES, INC.	 
	 	 	 
	By:	 	 
	Name:	Richard
    T. Schumacher	 
	Title:	President
    and CEO	 

 

[Convertible
Debenture Signature Page]

 

    	 

    	 		 

    

 

ANNEX
A

 

NOTICE
OF CONVERSION

 

The
undersigned hereby elects to convert principal under the Original Issue Discount Convertible Debenture due April __, 2017 of Pressure
BioSciences, Inc., a Massachusetts corporation (the “Company”), into shares of common stock (the “Common
Stock”), of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock
are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance
therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

 

By
the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common
Stock does not exceed the amounts specified under Section 4 of this Debenture, as determined in accordance with Section 13(d)
of the Exchange Act.

 

The
undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with
any transfer of the aforesaid shares of Common Stock.

 

Conversion
calculations:

Date
to Effect Conversion:

 

Principal
Amount of Debenture to be Converted:

 

Conversion
Price:

 

Number
of shares of Common Stock to be issued:

 

 

Signature:

 

Name:

 

DWAC
Instructions:

 

Broker
No: ___________________

Account
No: __________________

 

    	 

    	 		 

    

 

Schedule
1

 

CONVERSION
SCHEDULE

 

This
Original Issue Discount Convertible Debenture due on April ____, 2017 in the original principal amount of $_________________ is
issued by Pressure BioSciences, Inc., a Massachusetts corporation. This Conversion Schedule reflects conversions made under Section
4 of the above referenced Debenture.

 

Dated:

 

	Date
                                         of Conversion

        (or
        for first entry,

        riginal Issue Date)
	 	Amount
    of Conversion	 	Aggregate Principal

                                                                                Amount Remaining Subsequent to

                                                                                Conversion (or Original Principal Amount)
	 	Company
    Attest

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