Document:

EX-10.1

January 22, 2007

Daniel S. Falter

7041 SW 5th Street

Plantation, Florida 33317

Dear Dan,

This purpose of this letter is to memorialize our agreement relating to your Income Continuation
Protection as stated in your employment offer letter dated December 6, 2006:

Income Continuation Protection:

In the event that your employment is terminated by Home Diagnostics at anytime
without “Cause” you shall be entitled to receive:

	 	I.	 	6 months salary continuation at your highest base salary
during the past 12 months; and

	 	II.	 	Health benefits for you and your family during the salary
continuation period.

In the event that, during the 12-month period after a Change of Control of Home
Diagnostics, your employment is terminated by the Company or any successor entity
without “Cause”, or reassignment within the first three (3) years following a
Change of Control with Home Diagnostics or any successor entity to an office 25
miles or more from your current office location, in addition to the benefits listed
above you shall also be entitled to receive accelerated vesting of all outstanding
stock options.

The income continuation benefits detailed above are subject to the limitation that
if you become employed full-time with equivalent benefits following termination,
all income continuation and medical benefits shall cease.

For purposes of this letter:

“Change of Control” shall mean: (i) any ‘person’ (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the ‘beneficial owner’ (as
defined in Rule 13(d) under the Exchange Act, directly or indirectly, of securities
representing fifty percent (50%) or more of the combined voting power of the then
outstanding securities, (ii) a merger, consolidation, share exchange, business
combination, joint venture or similar transaction, as a result of which the
stockholders of the Company prior to such transaction hold less than fifty percent
(50%) of the combined voting power of the then outstanding securities after giving
effect to such transaction, (iii) any sale, lease, exchange, transfer or other
disposition of all or substantially all of the assets of Company, or (iv) where the
Company has filed a Current Report on Form 8 -K reporting under current Item 5.01
(or other Item if subsequently renumbered or subsequent Item) that a change of
control of the Company has occurred;

“Cause” shall mean (1) the indictment of, or the bringing of formal charges against
you by a governmental authority for charges involving fraud, embezzlement,
dishonesty, violence or moral turpitude; (2) your commission of any criminal act;
(3) willful misconduct, gross negligence, gross malfeasance, gross misfeasance, or
gross misconduct by you in the performance of your job; (4) actions by you which
cause (company)’s reputation or image to materially suffer; (5) a breach by you of
your Confidentiality and Non-Competition agreement; and (6) other events or matters
relating to your job performance or conduct that would ordinarily cause an employer
to seriously consider the termination of an employee’s employment.

If you agree, please sign where indicated and return to Kim Zeltwanger, Director, Human Resources.

Sincerely,

/s/ J. Richard Damron, Jr.

J. Richard Damron, Jr.

President/CEO

Agreed:

/s/ Daniel Falter

     

Daniel Falter

Dated: 1/22/07EX-10.1

SEPARATION AND GENERAL RELEASE AGREEMENT

This Separation and General Release Agreement (this “Agreement”) is being entered into by and
between Encore Credit Corp. (“Encore”, “Employer” or the “Company”) and Troy Gotschall (“Employee”)
(collectively, the “Parties”) as of the date of Employee’s execution of this Agreement (the “Date
of this Agreement”).

WHEREAS, Employee was employed by Employer pursuant to an Employment Agreement dated as of
July 1, 2005 (the “Employment Agreement”);

WHEREAS, the Parties wish to terminate their employment relationship and the Employment
Agreement on mutually acceptable terms and conditions effective as of January 15, 2007; and

WHEREFORE in consideration of the foregoing premises and the terms and conditions set forth
below, the Parties agree as follows:

1. Resignation. Employee hereby resigns from any and all positions within the Company
or any of its affiliates, as an employee, officer and/or director effective as of January 15, 2007
(the “Resignation Date”). Employee understands that he is giving up any right or claim to
compensation or benefits of employment with the Company beyond the Resignation Date, except as set
forth herein. Employee acknowledges that on or prior to the Date of this Agreement, he was paid
all unpaid, earned wages, including without limitation, any accrued, unused vacation pay and any
earned, but unpaid bonus. Employee further acknowledges that the Employment Agreement is
terminated as of January 15, 2007, and that he is not entitled to any further payments or benefits
under the Employment Agreement, including without limitation, the Severance Payments, Vesting and
Severance Benefits provided for in Section 5.7 of the Employment Agreement.

2. Payments to Employee. Provided that Employee timely signs and delivers, and does
not revoke, this Agreement, the Company shall provide Employee the following payment and benefits:

a. Severance Pay. The Company shall pay to Employee a total of Eight Hundred
Ten Thousand Dollars ($810,000) (the “Separation Payment”), less applicable withholding.
The Separation Payment shall be paid by the Company to Employee on the eighth day after the
Date of this Agreement.

b. Vesting of Restricted Stock. In addition to the Separation Pay, one
hundred percent (100%) of Employee’s outstanding unvested shares of restricted stock grants
shall immediately vest as of the Resignation Date.

Employee shall not receive any other compensation or benefits from the Company.

3. Consulting by Employee. Until such time as Employee becomes employed by a new
employer, without further payment from the Company to Employee, Employee shall be available upon
reasonable request at reasonable times to consult with the Company or its successor in interest on
matters of Company business with which he is familiar due to his service as an employee of the
Company. Employee shall not be required to perform more than twenty (20) hours of service in any
month, and shall be reimbursed for any out of pocket expenses actually incurred in providing his
consulting services, provided that he obtains the Company’s advance approval to incur such
expenses.

4. Release by Employee.

a. General Release. In exchange for the Separation Payment and the other consideration
set forth in this Agreement, Employee does hereby release and forever discharge the “Company
Releasees” herein, consisting of Employer, its parent, subsidiary and affiliate corporations, and
each of their respective past and present parents, subsidiaries, affiliates, associates, owners,
members, stockholders, predecessors, successors, assigns, employees, agents, directors, officers,
partners, representatives, lawyers, and all persons acting by, through, under, or in concert with
them, or any of them, of and from any and all manner of claims or causes of action, in law or in
equity, of any nature whatsoever, known or unknown, fixed or contingent (hereinafter called
“Claims”), that Employee now has or may hereafter have against Releasees by reason of any and all
acts, omissions, events or facts occurring or existing prior to the date hereof. The Claims
released hereunder include, without limitation, any alleged breach of any express or implied
employment agreement; any alleged torts or other alleged legal restrictions relating to the
Employee’s employment and the termination thereof; and any alleged violation of any federal, state
or local statute or ordinance including, without limitation, Title VII of the Civil Rights Act of
1964, as amended, 42 USC § 2000, et seq.; Americans with Disabilities Act, as
amended, 42 U.S.C. § 12101 et seq.; Age Discrimination in Employment Act of 1967,
as amended, 29 U.S.C. § 621, et seq.; the Rehabilitation Act of 1973, as amended,
29 U.S.C. § 701 et seq.; Civil Rights Act of 1866, and Civil Rights Act of 1991; 42
USC § 1981, et seq.; Equal Pay Act, as amended, 29 USC § 206(d); regulations of the
Office of Federal Contract Compliance, 41 CFR § 60, et seq.; The Family and Medical
Leave Act, as amended, 29 U.S.C. § 2601 et seq.; the Fair Labor Standards Act of
1938, as amended, 29 U.S.C. § 201 et seq.; the Employee Retirement Income Security
Act, as amended, 29 U.S.C. § 1001 et seq.; the Worker Adjustment and Retraining
Notification Act, as amended, 29 U.S.C. § 2101 et seq.; the California Fair
Employment and Housing Act, California Government Code § 12940, et seq.; the
California Labor Code § 1400 et seq. (concerning relocations, terminations and mass
layoffs); and any state or local laws of similar effect. This release shall not apply to the
Company’s obligations hereunder, to any vested retirement plan benefits or any right to
indemnification under applicable law (including without limitation, California Labor Code § 2802,
if applicable) with respect to claims asserted against him.

b. Unknown Claims.

Employee acknowledges that Employee is familiar with the provisions of California Civil Code
Section 1542, which provides as follows:

“A general release does not extend to claims which the creditor does not
know or suspect to exist in his or her favor at the time of executing the
release, which, if known by him or her must have materially affected his or
her settlement with the debtor.”

Employee being aware of said code section, hereby expressly waives any rights Employee may have
thereunder, as well as under any other statutes or common law principles of similar effect.

c. Older Worker’s Benefit Protection Act.

Employee agrees and expressly acknowledges that this Agreement includes a waiver and release
of all claims which he has or may have under the Age Discrimination in Employment Act of 1967, as
amended, 29 U.S.C. § 621, et seq. (“ADEA”). The following terms and conditions
apply to and are part of the waiver and release of the ADEA claims under this Agreement:

(1) This paragraph and this Agreement are written in a manner calculated to be
understood by him.

(2) The waiver and release of claims under the ADEA contained in this Agreement does
not cover rights or claims that may arise after the date on which he signs this Agreement.

(3) This Agreement provides for consideration in addition to anything of value to which
he is already entitled.

(4) Employee has been advised to consult an attorney before signing this Agreement.

(5) Employee has been granted twenty-one (21) days after he is presented with this
Agreement to decide whether or not to sign this Agreement. If he executes this Agreement
prior to the expiration of such period, he does so voluntarily and after having had the
opportunity to consult with an attorney, and hereby waives the remainder of the twenty-one
(21) day period.

(6) Employee has the right to revoke this general release within seven (7) days of
signing this Agreement. In the event this general release is revoked, this Agreement will
be null and void in its entirety.

If he wishes to revoke this agreement, Employee shall deliver written notice stating his
intent to revoke this Agreement to the Director of Human Resources at the offices of Employer on or
before 5:00 p.m. on the Seventh (7th) Day after the date on which he signs this
Agreement.

d. No Assignment. Employee represents and warrants to the Company Releasees
that there has been no assignment or other transfer of any interest in any Claim that the
Employee may have against the Company Releasees, or any of them. Employee agrees to
indemnify and hold harmless the Company Releasees from any liability, claims, demands,
damages, costs, expenses and attorneys’ fees incurred as a result of any person asserting
such assignment or transfer of any right or claims under any such assignment or transfer
from Employee.

e. No Actions. Employee represents and warrants that he is not presently
aware of any injury for which he may be eligible for workers’ compensation benefits.
Employee agrees that if Employee hereafter commences, joins in, or in any manner seeks
relief through any suit arising out of, based upon, or relating to any of the Claims
released hereunder or in any manner asserts against the Company Releasees any of the Claims
released hereunder, then Employee will pay to the Company Releasees against whom such
claim(s) is asserted, in addition to any other damages caused thereby, all attorneys’ fees
incurred by such Company Releasees in defending or otherwise responding to said suit or
Claim. Provided, however, that Employee shall not be obligated to pay the Company
Releasees’ attorneys’ fees to the extent such fees are attributable to claims under the Age
Discrimination in Employment Act or a challenge to the validity of the release of claims
under the Age Discrimination in Employment Act

5. No Admission. Employee and the Company further understand and agree that neither
the payment of money nor the execution of this Release shall constitute or be construed as an
admission of any liability whatsoever by the Company Releasees.

6. Severability. The provisions of this Agreement are severable, and if any part of
this Agreement is found to be unenforceable, the other paragraphs (or portions thereof) shall
remain fully valid and enforceable.

7. No Encouragement of Actions Against the Company. Employee agrees that except to
the extent required by law, Employee will not assist any person in bringing or pursuing legal
action against the Company, its agents, successors, representatives, employees and related and/or
affiliated companies, based on events occurring prior to the Date of this Agreement.

8. No Disparagement/Professional Conduct. Employee further agrees, as a condition to
receipt of the Separation Benefits: (a) not to disparage the Company, its employees or products
and (b) not to engage in actions contrary to the interests of the Company.

9. Confidential Information. During Employee’s employment with the Company, Employee
has been provided with, or had access to, trade secrets, confidential communications, private
information concerning the Company, its employees, officers, directors and stockholders, and
material non-public information (collectively, Confidential Information”). Employee understands
that he was provided with or had access to such information solely in his capacity as an employee
of the Company, and that such information was provided to him subject to his obligation to retain
such information in confidence and not to make any use of such information except as authorized to
do so in the course and scope of his employment with the Company. Employee understands and agrees
that his obligations to maintain that information in confidence remain in effect after the
termination of his employment with the Company, and he agrees to continue to honor that obligation.
This provision is meant to supplement, not supersede any existing agreements concerning
confidentiality, trade secrets, assignment or ownership of intellectual property, or solicitation
of employees or customers. To the extent of any conflict between any provision of this paragraph
and that or any other such agreement, the provision providing the greatest protection to the
Company shall control.

10. Solicitation of Employees. Employee agrees that through the first anniversary of
the Resignation Date, neither Employee nor anyone under Employee’s supervision or control, shall,
directly or indirectly, whether in an individual capacity or as an agent for or representative of
another person or entity, (a) solicit any person employed by the Company or an affiliate of the
Company to leave his/her employment with the Company or an affiliate of the Company, or any
successor thereto; (b) solicit any person who Employee knows to be an applicant or a candidate for
employment with the Company or an affiliate of the Company to seek employment with any person or
entity other than the Company or an affiliate of the Company; or (c) solicit any person who
Employee knows to be a potential or actual contractor with the Company or an affiliate of the
Company to provide his, her or its consulting services to any person or entity, such that it
results in a diminishment of services to the Company or an affiliate of the Company.

11. Solicitation of Customers. During Employee’s employment with the Company,
Employee has been provided with Confidential Information as set forth above for the purpose of
performing his job duties for the Company. Consequently, in order to prevent the misuse of such
information, Employee agrees that neither Employee nor anyone under Employee’s supervision or
control, shall, directly or indirectly, whether in an individual capacity or as an agent for or
representative of another person or entity, use Confidential Information to solicit any customer,
broker, referral source, supplier, licensee, licensor or other party which Employee knows to have a
contractual or business relationship with, or to be receiving services by the Company or an
affiliate of the Company, to cease doing business with the Company, or an affiliate of the Company.

12. Remedies. In the event that Employee is in material breach of Sections 9, 10, 11
or 12 of this Agreement, the Company shall be entitled to terminate the Separation Benefits in
addition to any other remedies to which it may be entitled.

13. Encore Property. Employee agrees to search his home, office and all other storage
areas for all property owned by the Company (“Encore Property”). Employee will return all Encore
Property within 72 hours of the execution of this Agreement, to the Human Resources Department of
Employer.

14. Choice of Law and Venue. The Parties acknowledge and agree that this Agreement
shall be interpreted in accordance with California law. Any actions arising out of or relating to
this Agreement or Employee’s employment with Employer shall be filed in either the Superior Court
of the State of California for the County of Orange, or the Federal District Court for the Central
District of California, unless subject to arbitration, in which case they shall be filed in
accordance with the Parties’ arbitration agreement. 

15. Sole and Entire Agreement. This Agreement represents the sole and entire
agreement among the Parties and supersedes all prior agreements, negotiations, and discussions
between the Parties hereto and/or their respective counsel, excluding any agreements concerning
arbitration of disputes, confidentiality, trade secret information, or assignment of intellectual
property rights. Any agreement amending or superseding this Agreement must be in writing, signed
by duly authorized representatives of the Parties, specifically reference this Agreement; and state
the intent of the Parties to amend or supersede this Agreement.

16. Arbitration. The Parties hereby agree to submit any claim or dispute arising out
of or relating to the terms of this Agreement as to Employee’s employment or the termination
thereof to private and confidential arbitration by a single neutral arbitrator. Subject to the
terms of this Section, the arbitration proceedings shall be governed by the rules of the Judicial
Arbitration and Mediation Service (“JAMS”) applicable to employment disputes as they may be in
effect from time to time, and shall take place in Orange County, California. The arbitrator shall
be appointed by agreement of the Parties hereto or, if no agreement can be reached, by JAMS
pursuant to its rules. The decision of the arbitrator shall be rendered in writing and be final
and binding on all Parties to this Agreement, and judgment thereon may be entered in any court
having jurisdiction. The arbitrator’s fees and/or any other fees payable to JAMS shall be shared
in accordance with the rules of JAMS; provided, however, that Employee shall not be required to pay
any such fees that are unique to arbitration and/or would exceed the cost of filing the same
claim(s) in a court of competent jurisdiction, and any shortfall shall be borne by the Company. The
Parties shall each bear their own attorneys’ fees, witness expenses, expert fees and other costs,
except to the extent they may be awarded otherwise by the arbitrator in accordance with applicable
law. This arbitration procedure is intended to be the sole and exclusive method of resolving any
claim between the Parties, and each of the Parties hereby waives any right to a jury trial with
respect to such claims.

17. Headings. The headings in this Agreement are provided solely for the Parties’
convenience, and are not intended to be part of, nor to affect or alter the interpretation or
meaning of this Agreement.

18. Construction of Agreement. Both Parties have been represented by, or had the
opportunity to be represented by counsel in connection with this Agreement. Any rule of
construction to the effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.

19. Counterparts. For the convenience of the Parties hereto, this Agreement may be
executed in any number of counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same agreement.

1

Date: January 17, 2007

ENCORE CREDIT CORP., as a Seller

By: /s/ Shahid Asghar

Name: Shahid Asghar

Title: Co-CEO and President

Date: January 17, 2007

EMPLOYEE

/s/ Troy Gotschall

Troy Gotschall

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