Document:

Exhibit 10.24

 

TACTILE SYSTEMS TECHNOLOGY, INC.

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) is entered into effective             , 2016 (the “Effective Date”) by and between TACTILE SYSTEMS TECHNOLOGY, INC., a Delaware corporation (the “Company”), and BRYAN RISHE, a resident of North Carolina (“Executive”).

 

BACKGROUND

 

A.                                    The Company and Executive have been parties to an Employment Agreement, dated December 15, 2008 (the “Prior Agreement”).

 

B.                                    The Company desires to employ Executive on the terms and conditions set forth in this Agreement.

 

C.                                    The Executive desires to be employed by the Company on the terms and conditions set forth in this Agreement.

 

D.                                    This Agreement shall govern the employment relationship between the Executive and the Company from and after the Effective Date hereof, and supersedes and negates any previous agreements or understandings, whether written or oral, with respect to such relationship, including without limitation the Prior Agreement.

 

AGREEMENT

 

In consideration of the foregoing premises and the respective agreements of the Company and Executive set forth below, the Company and Executive, intending to be legally bound, agree as follows:

 

1.                                      EMPLOYMENT. The term of Executive’s employment under this Agreement shall commence as of the Effective Date and continue until terminated in accordance with Section 10 hereof (the “Term”).

 

2.                                      POSITION AND DUTIES.

 

(a)                                 Position with the Company.  During the Term, Executive will serve as the Company’s VICE PRESIDENT, SALES and will perform such duties and responsibilities as the Company’s Chief Executive Officer will assign to Executive from time to time.

 

(b)                                 Performance of Duties and Responsibilities.  Executive will serve the Company faithfully and to the best of Executive’s ability and will devote Executive’s full time, attention and efforts to the business of the Company during Executive’s employment with the Company.  Executive will report to the Company’s Chief Executive Officer or such other individual or individuals designated by the Chief Executive Officer.  During Executive’s employment hereunder, Executive will not accept other employment or engage in other material business activity, except as approved in writing by the Company’s Board of Directors (the “Board”).

 

 

3.                                      COMPENSATION.  While Executive is employed by the Company during the Term, and in exchange for Executive fulfilling Executive’s duties and responsibilities as set forth in this Agreement, the Company will provide Executive the compensation and benefits set forth in this Section 3.

 

(a)                                 Base Salary.  The Company will pay to Executive an annual base salary of $257,500, less deductions and withholdings, which base salary will be paid in accordance with the Company’s normal payroll policies and procedures.  During each year after the first year of Executive’s employment hereunder, the Compensation Committee of the Board (the “Committee”) may review and increase Executive’s base salary in its sole discretion.

 

(b)                                 Bonus.  For each calendar year Executive is employed by the Company, Executive shall be eligible for an annual target bonus in an amount of 45% of Executive’s base salary earned during such calendar year, based upon and subject to criteria set by the Committee from time to time.  In order to earn and receive payment of an annual bonus, Executive must be an employee of the Company on the date the bonus is paid by the Company, provided, however, that if Executive’s employment is terminated by the Company other than for Cause (as herein defined) or by Executive for Good Reason (as herein defined) and the Termination Date (as defined herein) is after the completion of a calendar year but before the annual bonus for such calendar year has been paid to Executive, then Executive will earn and receive payment of an annual bonus for such prior calendar year in accordance with the bonus plan in effect for such year. In any case, any annual bonus earned under this Section 3(b) will be paid not later than March 15 immediately following the calendar year to which the bonus relates.

 

(c)                                  Equity Awards.  During the Term, Executive shall be eligible to receive one or more equity-based incentive awards at the discretion of the Committee.  The terms of such awards, if any, shall be determined in the sole discretion of the Committee, including the types of awards, the number of securities covered by each award, the vesting conditions applicable to each award, and the manner in which awards are to be paid or settled.  Nothing herein shall obligate the Company to make an equity award to Executive at any time.

 

(d)                                 Employee Benefits.  Executive shall be entitled to participate in all employee benefit plans and programs of the Company to the extent that Executive meets the eligibility requirements for each individual plan or program.  The Company provides no assurance as to the adoption or continuance of any particular employee benefit plan or program, and Executive’s participation in any such plan or program will be subject to the provisions, rules and regulations applicable thereto.

 

(e)                                  Expenses.  The Company will reimburse Executive for all reasonable and necessary out-of-pocket business, travel and entertainment expenses incurred by Executive in the performance of the duties and responsibilities hereunder, subject to the Company’s normal policies and procedures for expense verification and documentation.

 

(f)                                   Paid Time Off.  Executive shall be entitled to paid time off (“PTO”) of 27 days per year.  PTO days shall be taken at such times so as not to disrupt the operations of the Company, as approved by the Company’s Chief Executive Officer.  Any accrued and unused

 

 

PTO upon termination of employment will not be paid out pursuant to the Company’s standard policies addressing PTO.

 

4.                                      AFFILIATED ENTITIES.  As used in this Agreement, “Affiliates” includes the Company and each corporation, partnership, or other entity which controls the Company, is controlled by the Company, OR is under common control with the Company (in each case “control” meaning the direct or indirect ownership of 50% or more of all outstanding equity interests).

 

5.                                      CONFIDENTIAL INFORMATION.  Except as permitted by the Company, Executive will not at any time divulge, furnish or make accessible to anyone or use in any way other than in the ordinary course of the business of the Company or its Affiliates, any confidential, proprietary or secret knowledge or information of the Company or its Affiliates that Executive has acquired or will acquire about the Company or its Affiliates, whether developed by Executive or by others, concerning (i) any trade secrets, (ii) any confidential, proprietary or secret designs, programs, processes, formulae, plans, devices or material (whether or not patented or patentable) directly or indirectly useful in any aspect of the business of the Company or of its Affiliates, (iii) any customer or supplier lists, (iv) any confidential, proprietary or secret development or research work, (v) any strategic or other business, marketing or sales plans, (vi) any financial data or plans, or (viii) any other confidential or proprietary information or secret aspects of the business of the Company or of its Affiliates.  Executive acknowledges that the above-described knowledge and information constitutes a unique and valuable asset of the Company and represents a substantial investment of time and expense by the Company, and that any disclosure or other use of such knowledge or information other than for the sole benefit of the Company or its Affiliates would be wrongful and would cause irreparable harm to the Company.  Executive will refrain from intentionally committing any acts that would materially reduce the value of such knowledge or information to the Company or its Affiliates.  The foregoing obligations of confidentiality shall not apply to any knowledge or information that (i) is now or subsequently becomes generally publicly known, other than as a direct or indirect result of the breach of this Agreement, (ii) is independently made available to Executive in good faith by a third party who has not violated a confidential relationship with the Company or its Affiliates, or (iii) is required to be disclosed by law or legal process.  Executive understands and agrees that Executive’s obligations under this Agreement to maintain the confidentiality of the Company’s confidential information are in addition to any obligations of Executive under applicable statutory or common law.

 

6.                                      VENTURES.  If, during Executive’s employment with the Company, Executive is engaged in or provides input into the planning or implementing of any project, program or venture involving the Company, all rights in such project, program or venture belong to the Company.  Except as approved in writing by the Board, Executive will not be entitled to any interest in any such project, program or venture or to any commission, finder’s fee or other compensation in connection therewith.  Executive will have no interest, direct or indirect, in any customer or supplier that conducts business with the Company.

 

7.                                      NONCOMPETITION AND NONSOLICITATION COVENANTS.

 

(a)                                 Agreement Not to Compete.  During the Restricted Period (defined below), Executive will not, directly or indirectly, engage in any business, in the United States or in any

 

 

other location in which the Company is then doing business, for the development, sale, service, or distribution of medical devices to treat lymphedema patients or any other business that is competitive with the then-current businesses of the Company or its Affiliates, including without limitation as a proprietor, principal, agent, partner, officer, director, stockholder, employee, member of any association, consultant or otherwise.  Ownership by Executive, as a passive investment, of less than 2.5% of the outstanding shares of capital stock of any corporation listed on a national securities exchange or publicly traded in the over-the-counter market shall not constitute a breach of this Section 7(a).  Notwithstanding the foregoing, Executive’s direct or indirect engagement in a business whose sole purpose is the development, sale, service, or distribution of compression garments (but not pumps or other devices) to treat lymphedema patients or other patients shall not constitute a breach of this Section 7(a).

 

(b)                                 Agreement Not to Solicit or Hire Employees or Contractors. During Executive’s employment with the Company or any Affiliates and for a period of twelve (12) consecutive months from and after the termination of Executive’s employment, whether such termination is with or without cause, or whether such termination is at the instance of Executive or the Company, Executive will not, directly or indirectly, solicit, hire or engage any person who is then an employee or contractor of the Company or who was an employee of the Company at any time during the six (6) month period immediately preceding Executive’s termination of employment, in any manner or capacity, including without limitation as a proprietor, principal, agent, partner, officer, director, stockholder, employee, member of any association, consultant or otherwise, or otherwise directly or indirectly request, advise or induce any then current employee or contractor of the Company to terminate or otherwise adversely change its relationship with the Company.

 

(c)                                  Agreement Not to Solicit Others. During Executive’s employment with the Company or any Affiliates and for a period of twelve (12) consecutive months from and after the termination of Executive’s employment, whether such termination is with or without cause, or whether such termination is at the instance of Executive or the Company, Executive will not, directly or indirectly, solicit, request, advise or induce any then current customer, supplier or other business contact of the Company to cancel, curtail or otherwise adversely change its relationship with the Company, in any manner or capacity, including without limitation as a proprietor, principal, agent, partner, officer, director, stockholder, employee, member of any association, consultant or otherwise.

 

(d)                                 Restricted Period.  For purposes of this Agreement “Restricted Period” is defined as follows.

 

(i)                                     If (x) Executive’s employment is terminated by the Company without Cause (as defined below), by Executive for Good Reason (as defined below), by Executive for CIC Reason (as defined below), or if Executive’s employment with the Company is terminated due to Disability (as defined below) and (y) Executive signs a release of claims as provided for in Section 11(i), then the Restricted Period shall be the period during Executive’s employment with the Company or any Affiliates and for a period of nine (9) consecutive months from and after the termination of Executive’s employment; provided that the Company may in its sole

 

 

discretion elect to extend the Restricted Period by an additional six (6) months by providing Executive at least thirty (30) days’ notice of such extension and the payments and reimbursements provided for in Section 11(a)(iv) or 11(b)(iv) of this Agreement (as applicable).

 

(ii)                                  If Executive’s employment is terminated by the Company or by Executive under any conditions other than as provided for in Section 7(d)(i), then the Restricted Period shall be the period during Executive’s employment with the Company or any Affiliates and for a period of twelve (12) consecutive months from and after the termination of Executive’s employment.

 

(e)                                  Acknowledgment.  Executive hereby acknowledges that the provisions of this Section 7 are reasonable and necessary to protect the legitimate interests of the Company and that any violation of this Section 7 by Executive will cause substantial and irreparable harm to the Company to such an extent that monetary damages alone would be an inadequate remedy therefor.  Executive represents and warrants that Executive is not subject to any other agreements prohibiting the performance of Executive’s obligations under this Agreement, including any non-competition agreement.

 

(f)                                   Blue Pencil Doctrine.  If the duration of, the scope of or any business activity covered by any provision of this Section 7 is in excess of what is determined to be valid and enforceable under applicable law, such provision will be construed to cover only that duration, scope or activity that is determined to be valid and enforceable.  Executive hereby acknowledges that this Section 7 will be given the construction which renders its provisions valid and enforceable to the maximum extent, not exceeding its express terms, possible under applicable law.

 

8.                                      PATENTS, COPYRIGHTS AND RELATED MATTERS.

 

(a)                                 Disclosure and Assignment.  Executive must immediately disclose to the Company any and all improvements and inventions that Executive may conceive and/or reduce to practice individually or jointly or commonly with others while Executive is employed with the Company or any of its Affiliates with respect to (i) any methods, processes or apparatus concerned with the development, use or production of any type of products, goods or services sold or used by the Company or its Affiliates, and (ii) any type of products, goods or services sold or used by the Company or its Affiliates.  Any such improvements and inventions will be the sole and exclusive property of the Company and Executive hereby immediately assigns, transfers and sets over to the Company Executive’s entire right, title and interest in and to any and all of such improvement and inventions as are specified in this Section 8(a), and in and to any and all applications for letters patent that may be filed on such inventions, and in and to any and all letters patent that may issue, or be issued, upon such applications.  In connection therewith and for no additional compensation therefor, but at no expense to Executive, Executive will sign any and all instruments deemed necessary by the Company for:

 

(i)                                     the filing and prosecution of any applications for letters patent of the United States or of any foreign country that the Company may desire to file upon such inventions as are specified in this Section 8(a);

 

 

(ii)                                  the filing and prosecution of any divisional, continuation, continuation-in-part or reissue applications that the Company may desire to file upon such applications for letters patent; and

 

(iii)                               the reviving, re-examining or renewing of any of such applications for letters patent.

 

This Section 8(a) will not apply to any invention for which no equipment, supplies, facilities, confidential, proprietary or secret knowledge or information, or other trade secret information of the Company was used and that was developed entirely on Executive’s own time, and (i) that does not relate (A) directly to the business of the Company, or (B) to the Company’s actual or demonstrably anticipated research or development, or (ii) that does not result from any work performed by Executive for the Company.

 

(b)                                 Copyrightable Material.  All right, title and interest in all copyrightable material that Executive shall conceive or originate individually or jointly or commonly with others, and that arise in connection with Executive’s services hereunder or knowledge of confidential and proprietary information of the Company, will be the property of the Company and are hereby assigned by Executive to the Company of its Affiliates, along with ownership of any and all copyrights in the copyrightable material. Where applicable, works of authorship created by Executive relating to the Company or its Affiliates and arising out of Executive’s knowledge of confidential and proprietary information of the Company shall be considered “works made for hire,” as defined in the U.S. Copyright Act, as amended.

 

(c)                                  Remedies.  Executive acknowledges that it would be difficult to fully compensate the Company for monetary damages resulting from any breach by Executive of this Section 8.  Accordingly, in the event of any actual or threatened breach of any such provisions, the Company will, in addition to any other remedies it may have, be entitled to injunctive and other equitable relief to enforce such provisions, and such relief may be granted without the necessity of proving actual monetary damages.

 

9.                                      RETURN OF RECORDS AND PROPERTY.  Upon termination of Executive’s employment or at any time upon the Company’s request, Executive will promptly deliver to the Company any and all Company and Affiliate records and any and all Company and Affiliate property in Executive’s possession or under Executive’s control, including without limitation manuals, books, blank forms, documents, letters, memoranda, notes, notebooks, reports, printouts, computer disks, computer tapes, source codes, data, tables or calculations and all copies thereof, documents that in whole or in part contain any trade secrets or confidential, proprietary or other secret information of the Company or its Affiliates and all copies thereof, and keys, access cards, access codes, passwords, credit cards, personal computers, telephones and other electronic equipment belonging to the Company or its Affiliates.

 

10.                               TERMINATION OF EMPLOYMENT.

 

(a)                                 Executive’s employment with the Company will terminate immediately upon:

 

 

(i)                                     Executive’s receipt of written notice from the Company of the termination of Executive’s employment, effective as of the date indicated in such notice;

 

(ii)                                  the Company’s receipt of Executive’s written resignation from the Company, effective as of the date indicated in such resignation;

 

(iii)                               Executive’s Disability (as defined below); or

 

(iv)                              Executive’s death.

 

(b)                                 The date upon which Executive’s termination of employment with the Company occurs is the “Termination Date.” For purposes of Section 11(a) and 11(b) of this Agreement only, the Termination Date shall mean the date on which a “separation from service” has occurred for purposes of Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance thereunder (the “Code.”)

 

(c)                                  Immediately upon termination of Executive’s employment with the Company for any reason, Executive shall resign all positions then held as an Executive of the Company and any Affiliates of the Company.

 

(d)                                 Following termination of Executive’s employment with the Company for any reason, Executive shall cooperate with the Company in the transition of Executive’s duties and responsibilities hereunder to the extent reasonably requested by the Board; provided that Executive will be fairly compensated to the extent such cooperation requires more than an incidental amount of time and effort on Executive’s part, and further that Executive will not be required to incur any out-of-pocket expenses in doing so.

 

11.                               PAYMENTS UPON TERMINATION OF EMPLOYMENT.

 

(a)                                 Subject to Section 11(i) of this Agreement, if Executive’s employment with the Company is terminated by the Company without Cause or by Executive for Good Reason, then, in addition to paying Executive’s earned and accrued base salary, accrued but unpaid expense reimbursements and benefits through the Termination Date, the Company will provide to Executive the following payments:

 

(i)                                     Separation Pay.  The Company will pay to Executive an amount equal to Executive’s then current base salary for a period of nine (9) months plus an amount equal to 75% of Executive’s then current target bonus, with such sum, less applicable withholdings, payable in equal installments in accordance with the Company’s regular payroll schedule commencing with the first normal payroll date of the Company following the Termination Date and continuing for nine (9) months thereafter, provided that any installments that would have been paid during the sixty (60) day period immediately following the Termination Date shall be held by the Company until the first payroll date occurring more than sixty (60) days after the Termination Date.

 

 

(ii)                                  Value of Accrued and Unused PTO.  The Company will pay to Executive the value of Executive’s accrued and unused PTO as of the Termination Date (based on Executive’s base salary as of the Termination Date), less applicable withholdings, payable in a lump sum on the Company’s first payroll date occurring more than sixty (60) days after the Termination Date.

 

(iii)                               Continued Benefits. If Executive is eligible for and takes all steps necessary to continue Executive’s group health insurance coverage with the Company following the Termination Date, the Company will pay for the portion of the premium costs for such coverage that the Company would pay if Executive remained employed by the Company, at the same level of coverage that was in effect as of the Termination Date, for a period of nine (9) consecutive months after the Termination Date (or until Executive receives group health or dental coverage from another employer, if earlier).

 

(iv)                              Restricted Period Extension Payments.  If the Company elects to extend the Restricted Period for six (6) additional months as provided for in Section 7(d)(i), then the Company will (A) pay to Executive an amount equal to the monthly amount payable to Executive under Section 11(a)(i), with such additional amounts payable to Executive in installments in accordance with the Company’s regular payroll schedule commencing on the first normal payroll date of the Company following the nine (9) month anniversary of the Termination Date and continuing for six (6) months thereafter, and (B) extend for six (6) additional months (after the end of the nine (9) month period identified in Section 11(a)(iii)) the period during which it will pay a portion of the premium costs for group health insurance coverage as provided in, and subject to the same conditions of, Section 11(a)(iii).

 

(v)                                 Accelerated Vesting of Equity.  In addition to the payments identified above in Sections 11(a)(i)-(iv), if Executive’s employment with the Company is terminated by the Company without Cause or by Executive for Good Reason, then, subject to Section 11(i) of this Agreement and notwithstanding any language in any equity plan or applicable equity award agreement to the contrary, upon the expiration of the all rescission periods provided by law with respect to the release of claims described in Section 11(i), any equity awards issued to Executive that have any portion of such award unvested as of the Termination Date (each an “Award”) will vest as to the number of shares, options or other securities (the “Securities”)  calculated as follows (rounded up to the nearest whole share):

 

Additional Securities Vested = (Number of Securities Issued Under Award x ((Number of Days between Date of Grant of Award and Termination Date) / (Number of Days between Date of Grant of Award and Final

 

 

Vesting Date of Award))) — Number of Securities Vested Under Award as of the Termination Date.

 

(b)                                 Subject to Section 11(i) of this Agreement, if Executive’s employment with the Company is terminated by Executive for CIC Reason, or if Executive’s employment with the Company is terminated due to death or Disability, then, in addition to paying Executive’s earned and accrued base salary, accrued but unpaid expense reimbursements and benefits through the Termination Date, the Company will provide to Executive the following payments:

 

(i)                                     Separation Pay.  The Company will pay an amount equal to Executive’s then current base salary for a period of nine (9) months plus an amount equal to 75% of Executive’s then current target bonus, with such sum, less applicable withholdings, payable in equal installments in accordance with the Company’s regular payroll schedule commencing with the first normal payroll date of the Company following the Termination Date and continuing for nine (9) months thereafter, provided that any installments that would have been paid during the sixty (60) day period immediately following the Termination Date shall be held by the Company until the first payroll date occurring more than sixty (60) days after the Termination Date.

 

(ii)                                  Value of Accrued and Unused PTO.  The Company will pay to Executive the value of Executive’s accrued and unused PTO as of the Termination Date (based on Executive’s base salary as of the Termination Date), less applicable withholdings, payable in a lump sum on the Company’s first payroll date occurring more than sixty (60) days after the Termination Date.

 

(iii)                               Continued Benefits. If Executive is eligible for and takes all steps necessary to continue Executive’s group health insurance coverage with the Company following the Termination Date, the Company will pay for the portion of the premium costs for such coverage that the Company would pay if Executive remained employed by the Company, at the same level of coverage that was in effect as of the Termination Date, for a period of nine (9) consecutive months after the Termination Date (or until Executive receives group health or dental coverage from another employer, if earlier).

 

(iv)                              Restricted Period Extension Payments.  If the Company elects to extend the Restricted Period for six (6) additional months as provided for in Section 7(d)(i), then the Company will (A) pay to Executive an amount equal to the monthly amount payable to Executive under Section 11(b)(i), with such additional amounts payable to Executive in installments in accordance with the Company’s regular payroll schedule commencing on the first normal payroll date of the Company following the nine (9) month anniversary of the Termination Date and continuing for six (6) months thereafter, and (B) extend for six (6) additional months (after the end of

 

 

the nine month period identified in Section 11(b)(iii)) the period during which it will pay a portion of the premium costs for group health insurance coverage as provided in, and subject to the same conditions of, Section 11(b)(iii).

 

(c)                                  If Executive’s employment with the Company is terminated for any of the following reasons:

 

(i)                                     Executive’s abandonment of Executive’s employment or Executive’s resignation for any reason other than Good Reason or CIC Reason; or

 

(ii)                                  termination of Executive’s employment by the Company for Cause;

 

then the Company will pay Executive or Executive’s estate, as the case may be, Executive’s earned and accrued base salary, accrued but unpaid expense reimbursements and benefits through the Termination Date.

 

(d)                                 “Cause” hereunder means:

 

(i)                                     an act or acts of dishonesty undertaken by Executive and intended to result in personal gain or enrichment of Executive or others at the expense of the Company;

 

(ii)                                  unlawful conduct or gross misconduct by Executive that, in either event, is injurious to the Company;

 

(iii)                               the conviction of Executive of a felony; or

 

(iv)                              material breach of any terms or conditions of this Agreement by Executive which breach has not been cured by Executive within 15 days after written notice thereof to Executive from the Company.

 

For the purposes of Sections 11(d)(ii) and (iv), no act or failure to act on Executive’s part shall be considered “Cause” if done by Executive pursuant to specific authorization evidenced by a resolution duly adopted by the Board or pursuant to specific advice given by counsel for the Company, unless such specific authorization or advice results in whole or in part from material misrepresentations or omissions of Executive.

 

(e)                                  “Disability” hereunder means the inability of Executive to perform on a full-time basis the duties and responsibilities of Executive’s employment with the Company by reason of Executive’s illness or other physical or mental impairment or condition, if such inability continues for an uninterrupted period of 90 days or more during any 180-day period.  A period of inability is “uninterrupted” unless and until Executive returns to full-time work for a continuous period of at least 30 days.

 

(f)                                   “CIC Reason” hereunder means Executive’s separation from service after a Change in Control (as defined in the Tactile Systems Technology, Inc. 2016 Equity Incentive Plan) occurs, provided that, if requested by the Company or any successor of the Company,

 

 

Executive remains employed by the Company or any successor of the Company for a transition period not to exceed sixty (60) days following such Change in Control and Executive’s Termination Date occurs no later than ten (10) days after the end of any transition period requested by the Company or any successor of the Company.

 

(g)                               “Good Reason” hereunder means the occurrence of any of the following events without Executive’s consent:

 

(i)                                     the assignment of Executive to a position with responsibilities or duties of a materially lesser status or degree than the position specified in Section 2(a);

 

(ii)                                  material breach of any terms or conditions of this Agreement by the Company not caused by Executive;

 

(iii)                               the requirement by the Company that Executive relocate out of the Charlotte, North Carolina Metropolitan area.

 

For the purposes of Section 11(g), “Good Reason” shall not exist unless Executive has first provided written notice to the Company of the occurrence of one or more of the conditions under clauses (i) through (iii) above within ninety (90) days of the condition’s initial occurrence, such condition is not fully remedied by the Company within thirty (30) days after the Company’s receipt of written notice from Executive, and the Termination Date occurs no later than one hundred and thirty (130) days after the condition’s initial occurrence.

 

(h)                                 In the event of termination of Executive’s employment, the sole obligation of the Company to pay post-termination severance and benefits under this Agreement will be its obligation to make the payments called for by Sections 11(a), 11(b) or 11(c) hereof, as the case may be, and the Company will have no other obligation to Executive, except as otherwise provided by law, under the terms of any other applicable agreement between Executive and the Company or under the terms of any employee benefit plans or programs then maintained by the Company in which Executive participates.

 

(i)                                     Notwithstanding the foregoing provisions of this Section 11, the Company will not be obligated to make any payments under Section 11(a) or 11(b) hereof unless Executive has signed a release of claims in favor of the Company and its Affiliates in a form to be prescribed by the Company, all applicable consideration and rescission periods provided by law shall have expired, and Executive is in strict compliance with the terms of this Agreement as of the dates of such payments.

 

12.                               MISCELLANEOUS.

 

(a)                                 Governing Law.  All matters relating to the interpretation, construction, application, validity and enforcement of this Agreement will be governed by the laws of the State of Minnesota without giving effect to any choice or conflict of law provision or rule, whether of the State of Minnesota or any other jurisdiction, that would cause the application of laws of any jurisdiction other than the State of Minnesota.

 

 

(b)                                 Jurisdiction and Venue.  Executive and the Company consent to jurisdiction of the courts of the State of Minnesota and/or the federal courts, District of Minnesota, for the purpose of resolving all issues of law, equity, or fact, arising out of or in connection with this Agreement.  Any action involving claims of a breach of this Agreement must be brought in such courts.  Each party consents to personal jurisdiction over such party in the state and/or federal courts of Minnesota and hereby waives any defense of lack of personal jurisdiction.  Venue, for the purpose of all such suits, will be in Hennepin County, State of Minnesota.

 

(c)                                  Entire Agreement.  This Agreement contains the entire agreement of the parties relating to Executive’s employment with the Company and supersedes all prior agreements and understandings with respect to such subject matter, including without limitation the Prior Agreement, and the parties hereto have made no agreements, representations or warranties relating to the subject matter of this Agreement that are not set forth herein; provided, however, that nothing in this Agreement is intended to supersede, replace or modify the terms of the Company’s 2016 Equity Incentive Plan or any equity award agreements issued to Executive under the Company’s 2016 Equity Incentive Plan, each of which shall remain in full force and effect in accordance with their terms.

 

(d)                                 Code Section 409A.  This Agreement is intended to be exempt from or comply with the requirements of Section 409A(a)(2), (3) and (4) of the Code, including current and future guidance and regulations interpreting such provisions, and should be interpreted accordingly.  To the extent such potential payments or benefits could become subject to additional tax under such Code Section 409A, the parties shall cooperate to amend this Agreement with the goal of giving Executive the economic benefits described herein in a manner that does not result in such tax being imposed.  Each payment or benefit made pursuant to Section 11(a) or 11(b) of this Agreement shall be deemed to be a separate payment for purposes of Code Section 409A.  In addition, payments or benefits pursuant to Section 11(a) or 11(b) shall be exempt from the requirements of Code Section 409A to the maximum extent possible as “short-term deferrals” pursuant to Treasury Regulation Section 1.409A-1(b)(4), as involuntary separation pay pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii), and/or under any other exemption that may be applicable, and this Agreement shall be construed accordingly.  To the extent that any amounts payable under this Agreement are required to be delayed under Code Section 409A, such amounts are intended to be and should be considered for purposes of Code Section 409A as separate payments from the amounts that are not required to be delayed.  Notwithstanding anything herein to the contrary, if Executive is considered a “specified employee” (as defined in Treasury Regulation Section 1.409A-1(i)) as of the Termination Date, then no payments of deferred compensation subject to Code Section 409A and payable due to Executive’s separation from service shall be made under this Agreement before the first business day that is six (6) months after the Termination Date (or upon Executive’s death, if earlier) (the “Specified Period”).  Any deferred compensation payments that would otherwise be required to be made to Executive during the Specified Period will be accumulated by the Company and paid to Executive on the first day after the end of the Specified Period.  The foregoing restriction on the payment of amounts to Executive during the Specified Period will not apply to the payment of employment taxes.  In the event that the interpretation or requirements of Code Section 409A change during the Term, the parties agree to amend this Agreement, only as necessary, to comply with any such change, if and to the extent such an amendment is permitted by Code Section 409A.

 

 

(e)                                  Code Section 280G.  Notwithstanding anything in this Agreement to the contrary, if any payment or other benefit hereunder, together with any other payments or benefits that Executive has the right to receive from the Company or any corporation which is a member of an “affiliated group” (as defined in Section 1504(a) of the Code without regard to Section 1504(b) of the Code) of which the Company is a member, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then, such payments and benefits will be reduced to the largest amount as, in the sole judgment of the Company, will result in no portion of such payments or benefits being subject to the excise tax imposed by Section 4999 of the Code.

 

(f)                                   Amendments.  No amendment or modification of this Agreement will be deemed effective unless made in writing and signed by the parties hereto.

 

(g)                                  No Waiver.  No term or condition of this Agreement will be deemed to have been waived, except by a statement in writing signed by the party against whom enforcement of the waiver is sought.  Any written waiver will not be deemed a continuing waiver unless specifically stated, will operate only as to the specific term or condition waived and will not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

 

(h)                                 Assignment.  This Agreement will not be assignable, in whole or in part, by either party without the prior written consent of the other party, except that the Company may, without the consent of Executive, assign its rights and obligations under this Agreement (1) to an Affiliate or (2) to any corporation or other person or business entity to which the Company may sell or transfer all or substantially all of its assets; provided, however, that the Company’s assignment of rights may only take place if the assignee accepts and agrees to all of the obligations to Executive under this Agreement.  After any such assignment by the Company, the Company will be discharged from all further liability hereunder and such assignee will thereafter be deemed to be “the Company” for purposes of all terms and conditions of this Agreement, including this Section 12. For the avoidance of doubt, in the event of Executive’s death, all payments and obligations to Executive shall be paid to Executive’s estate.

 

(i)                                     Counterparts.  This Agreement may be executed by facsimile signature and in any number of counterparts, and such counterparts executed and delivered, each as an original, will constitute but one and the same instrument.

 

(j)                                    Severability.  Subject to Section 7(f) hereof, to the extent that any portion of any provision of this Agreement is held invalid or unenforceable, it will be considered deleted herefrom and the remainder of such provision and of this Agreement will be unaffected and will continue in full force and effect.

 

(k)                                 Captions and Headings.  The captions and paragraph headings used in this Agreement are for convenience of reference only and will not affect the construction or interpretation of this Agreement or any of the provisions hereof.

 

 

Executive and the Company have executed this Agreement effective as of the Effective Date set forth in the first paragraph.

 

	
 
    	
TACTILE   SYSTEMS TECHNOLOGY, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Gerald   Mattys
    
	
 
    	
 
    	
Chief   Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
BRYAN   RISHEEXHIBIT 10.1

NEITHER THIS SECURED COMMERCIAL PROMISSORY NOTE NOR THE SHARES
OF COMMON STOCK UNDERLYING THIS SECURED COMMERCIAL PROMISSORY NOTE WERE ISSUED
IN A REGISTERED TRANSACTION UNDER THE SECURITIES ACT OF 1933 (AS AMENDED, THE
"SECURITIES ACT"). THE SECURITIES EVIDENCED HEREBY MAY NOT BE
TRANSFERRED WITHOUT (1) AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT
SUCH TRANSFER MAY BE LAWFULLY MADE WITHOUT REGISTRATION UNDER THE SECURITIES
ACT AND ALL APPLICABLE STATE SECURITIES LAW; OR (ii) SUCH REGISTRATION.

 

 CONVERTIBLE
PROMISSORY NOTE

 

$__,000 (the "Principal
Amount")

June
7, 2016

FOR VALUE RECEIVED, CrowdGather, Inc., a Nevada corporation (the
"Company"), promises to pay to _____________ an ____________ (the "Holder"),
the Principal Amount, together with interest as set forth below.  This Note
shall, under certain circumstances, as set forth in 1.7 below, AUTOMATICALLY BE
CONVERTED to common stock of the Company, without an election by the Holder.

This Convertible Promissory Note
(this "Note") is issued by the Company pursuant to a certain
Subscription Agreement by and between the Company and the Holder (the "Subscription
Agreement").  

The following is a statement of
the rights and obligations of the Holder and the Company under this Note, and
the conditions to which this Note is subject, to which the Company, by the
execution and delivery hereof, and the Holder, by the acceptance of this Note,
agree:

1.      Definitions.
As used in this Note, the following terms, unless the context otherwise
requires, have the following meanings:

1.1 "Additional Securities" shall mean all shares of Common Stock issued
(or, pursuant to Subsection 4.6.1 below, deemed to be issued) by the Company
after the Note Issuance Date, other than Exempted Securities. 

1.2  "Company Sale" shall mean (a) a merger or consolidation of the
Company with or into any other Company or other business entity (except one in
which the holders of capital stock of the Company immediately prior to such
merger or consolidation continue to hold at least a majority of the Voting
Securities of the surviving Company); (b) a sale, lease, exchange, exclusive
license or other transfer (in one transaction or a related series of
transactions) of all or substantially all of the Company's assets; or (c) the
acquisition by any person or any group of persons (other than the Company, any
of its direct or indirect subsidiaries) acting together in any transaction or
related series of transactions, of such number of shares of the Company's Voting
Securities as causes such person, or group of persons, to own beneficially,
directly or indirectly, as of the time immediately after such transaction or
series of transactions, fifty percent (50%) or more 

 

of the combined voting power of the Voting Securities of the Company other than
as a result of an acquisition of securities directly from the Company, or solely
as a result of an acquisition of securities by the Company which by reducing the
number of shares of the Voting Securities outstanding increases the
proportionate voting power represented by the Voting Securities owned by any
such person or group of persons to fifty percent (50%) or more of the combined
voting power of such Voting Securities.

1.3
"Common Stock" shall mean the Company's Common Stock, 

1.4 "Conversion Amount" shall mean (a) that part of the outstanding Principal
Amount of this Note which the Holder elects to convert to common shares in the
Company @ $.01 per share (in increments of $1,000.00 up to the entire
outstanding Principal Amount) and, if an election is so made pursuant to
Section 4.1 herein, (b) all accrued and unpaid interest.  In addition to the
common stock, the Holder shall receive warrants in an amount of 50% of the
amount of common shares of the Company converted, such warrants expiring three
years from the date of issuance, at an exercise price of $.03 per share.  In the
event that the closing market price of the common stock falls below $.01 for
five consecutive trading days after the date of this Note, but prior to full
conversion, the conversion price of the remaining principal balance (or
interest) shall be at the ninety day average VWAP per share.

1.5 "Conversion Date" shall mean any date on which the Conversion
Amount shall be converted into Conversion Shares.

1.6 "Conversion Price" shall be each dollar of principal and interest
shall convert at $.01 per share, subject to adjustment as set forth in Subsection
4.6 herein. .  In the event that the closing market price of the common stock
falls below $.01 for five consecutive trading days after the date of this Note,
but prior to full conversion, the conversion price of the remaining principal
balance (or interest) shall be at the preceding ninety day average VWAP per
share.

1.7
"Automatic Conversion" shall mean either (a) Iconic
holdings, LLC, a significant creditor of the Company, converts its balance of
the convertible note issued to it and now outstanding, to common stock at a price
of at least $.01 per share, (b) on the 90th day following the date
of this note.  In the event of either condition, then the balance of this note
and interest accrued, shall be immediately and automatically converted without
the consent of the Holder, to common stock of the Company, at the same price.

1.8 "Convertible Securities" shall mean any evidences of
indebtedness, shares, or other securities directly or indirectly convertible
into or exchangeable for Common Stock, but excluding Options.

1.9 "Conversion Shares" means the shares of the capital stock of the
Company, which may be received upon conversion of this Note pursuant to
conversion under Section 4.1 herein.

1.10 "Exempted Securities" shall mean, collectively, (a) the following
shares of Common Stock and (b) shares of Common Stock deemed issued pursuant to
the following Options and Convertible Securities:

-2- 

(i)  shares of Common Stock, Options, or Convertible Securities issued by
reason of a dividend, stock split, split-up or other distribution on shares of
Common Stock that is covered by Subsection 4.6.8, 4.6.9 or 4.6.10; or

(ii)  shares of Common Stock or Convertible Securities actually issued upon
the exercise of Options or shares of Common Stock actually issued upon the
conversion or exchange of Convertible Securities, in each case provided such
issuance is pursuant to the terms of such Option or Convertible Security.

1.11  "Note Issuance Date" shall mean the date of the issuance of the
Note.

1.12 
"Option" shall mean rights, options or warrants to subscribe for,
purchase or otherwise acquire Common Stock or Convertible Securities.

1.12 "Transaction
Agreements" shall mean the Subscription  Agreement,  and the documents
executed and delivered in connection with the Subscription Agreement. 

1.13 
"Voting Securities" shall mean the outstanding capital stock having the
right to vote in an election of the Board of Directors.

2.         Payments.

2.1 Maturity
Date.  Unless earlier converted pursuant to Section 4 below, or earlier
paid pursuant to Section 5 below, the Principal Amount and all accrued interest
on the Note shall become due and payable ninety (90) days from date of note, or
on demand at the option of Holder (the "Maturity Date") at the Holder's
address as set forth on the signature page hereto with no further notice being
required by the Holder.  Upon the payment in full of the Note, the Holder shall
promptly surrender the Note to or as directed by the Company. 

2.2 Acceleration
on Event of Default.  Notwithstanding Section 2.1 hereof, the entire unpaid
Principal Amount and accrued and unpaid interest on this Note and on all of the
Notes shall be immediately due and payable upon an Event of Default (as defined
in Section 6 hereof).

2.3 Interest.
 This Note shall bear interest at the rate of twelve percent (12.0%) per annum,
computed on a 365-day year basis, and shall accrue daily from the Note Issuance
Date.  Interest shall be due and payable to the Holder with all unpaid
principal on the Maturity Date.  Each payment shall be applied first to any
fees, costs, or expenses of Holder, then to interest, and the balance to the
Principal Amount.  Any interest payments due to the Holder hereunder shall be
paid without withholding of any taxes or relief.

2.4 Default
Interest.  Any amount, whether the Principal Amount, accrued interest, or
fees and expenses, that is not paid when due (whether at the Maturity Date, by
acceleration, or otherwise), shall bear interest daily from the date on which
such Principal Amount, accrued interest, and/or fees and expenses is due until
such Principal Amount, accrued interest, and all fees and expenses of this Note
are paid in full, at the rate of six percent (6%) per annum, paid quarterly.

-3- 

           
3. Security
and Collateral.  The payment obligations of the Company under this Note are
secured by a first priority security interest in certain assets of the Company,
as set forth in the Security Agreement.  

4. Conversion.

4.1 Optional
Conversion.  The Holder shall have no obligation to convert any or all of
the outstanding Principal Amount of the Note into shares as described
hereinabove.   While any amounts under this Note remain unpaid, the Holder
shall have the option to convert the Conversion Amount of this Note into shares
by delivering to the Company the written election (the "Election") in
the form of the Notice of Conversion in the form attached hereto as Exhibit
A, at any time after the date hereof.  Furthermore, the Holder shall have
the option to (i) include all accrued and unpaid interest on this Note as of
the Conversion Date as part of the Conversion Amount, or (ii) receive payment
from the Company for all such accrued and unpaid interest on this Note as of
the Conversion Date, and shall make such election on the Election.  The Holder
of this Note, upon a conversion pursuant to this Section 4.1, will be entitled
to receive that number of shares that an amount equal to the Conversion Amount
as of the Conversion Date could purchase at the Conversion Price in effect on
the Conversion Date.  Such conversion shall occur upon a closing at such time
and on such date as shall be mutually agreeable to the Holder and the Company,
but shall be no later than thirty (30) days after receipt by the Company of the
Election.  In connection with a conversion pursuant to this Section 4.1, the
Holder shall enter into customary stock purchase agreements and related
investment documents that are mutually agreeable to the Holder and the Company.  This Note shall be cancelled effective upon the closing
of such conversion and all rights with respect to payment of principal and
interest under this Note shall immediately cease and terminate effective with
such closing, except only the right of the Holder to receive shares, as
applicable, in exchange for this cancelled Note.  

4.2  Mechanics
of Conversion.  As soon as practicable after a conversion of this Note
pursuant to Section 4.1, the Company at its expense will cause to be issued in
the name of and delivered to the Holder of this Note the Conversion shares to
which the Holder shall be entitled on such conversion (bearing such legends as
may be required by any agreements which may be entered into by the Holder in
connection with such conversion and applicable state and federal securities
laws).  No fractional shares will be issued on conversion of this Note.  If a
fraction of a share would otherwise be issuable on conversion of this Note, the
Company will in lieu of such issuance pay the cash value of that fractional
share.  The Company shall issue certificates evidencing the Conversion shares issuable
upon a conversion when this Note is either delivered to the Company, duly
endorsed, at the office of the Company, or the Holder notifies the Company that
the Note has been lost, stolen, or destroyed and executes an agreement
satisfactory to the Company to indemnify the Company from any loss incurred by
it in connection with the Note.  As soon as practicable after delivery of the
Note, or delivery of an agreement and indemnification in the case of a lost
Note, the 

-4- 

Company shall issue and deliver
to the Holder (a) certificates for the Conversion shares to which the Holders
shall be entitled, and (b) an amount equal to the cash amounts payable as a
result of any fractional share adjustment of such Conversion shares.  The Holder
shall be treated for all purposes as the record holder of such Conversion shares
on the Conversion Date.

4.3 Obligation
Absolute.  The Company's obligations to issue and deliver the Conversion sharesupon
conversion of this Note 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; provided, however, such
delivery shall not operate as a waiver by the Company of any such action the
Company may have against the Holder.  Nothing herein shall limit the Holder's
right to pursue actual damages or declare an Event of Default pursuant to
Section 6 herein and the Holder shall have the right to pursue all remedies
available to her 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.

4.4  Reservation
of Shares and Warrants Issuable Upon Conversion.  The Company covenants
that it shall at all times reserve and keep available out of its authorized and
unissued shares of Common Stock, and Warrants solely for the purpose of
issuance upon conversion of the Note, as herein provided, free from preemptive
rights or any other actual contingent purchase rights of persons other than the
Holder, not less than such number of shares of the Common Stock as shall be
issuable, including shares underlying the Warrants (taking into account the
adjustments of Section 4.6) upon the conversion of the Conversion Amount of the
Note.  The Company covenants that all shares of Common Stock and Warrants that
shall be so issued upon conversion of this Note shall, upon such issue, be duly
and validly authorized, issued and fully paid, and non-assessable. 

4.5       Transfer
Taxes.  The issuance of certificates for Shares of the Common Stock and
Warrants on conversion of the Note shall be made without charge to the Holder
for any documentary stamp or similar taxes that may be payable in respect of
the issue or delivery of such certificate, 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 the Note 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.  If Conversion shares are
to be issued in the name of a person other than the Holder, the Holder 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.

-5- 

            4.6   Certain Adjustments.

4.6.1  Deemed Issue of Additional Shares of Common Stock. 

(a) If
the Company at any time or from time to time after the Note Issuance Date shall
issue any Options or Convertible Securities (excluding Options or Convertible
Securities) or shall fix a record date for the determination of holders of any
class of securities entitled to receive any such Options or Convertible
Securities, then the maximum number of shares of Common Stock (as set forth in
the instrument relating thereto, assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability but without regard to any
provision contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Securities issued as of the time
of such issue or, in case such a record date shall have been fixed, as of the
close of business on such record date.

(b)  If the terms of any Option or Convertible Security, the issuance of
which resulted in an adjustment to the Conversion Price pursuant to the terms
of Subsections 4.6.2, 4.6.3, or 4.6.4 are revised as a result of an amendment
to such terms or any other adjustment pursuant to the provisions of such Option
or Convertible Security (but excluding automatic adjustments to such terms
pursuant to anti-dilution or similar provisions of such Option or Convertible
Security) to provide for either (i) any increase or
decrease in the number of shares of Common Stock issuable upon the exercise,
conversion and/or exchange of any such Option or Convertible Security or (ii)
any increase or decrease in the consideration payable to the Company upon such
exercise, conversion and/or exchange, then, effective upon such increase or
decrease becoming effective, the Conversion Price computed upon the original
issue of such Option or Convertible Security (or upon the occurrence of a
record date with respect thereto) shall be readjusted to such Conversion Price
as would have obtained had such revised terms been in effect upon the original
date of issuance of such Option or Convertible Security.  

(c)  If the terms of any Option or Convertible Security (excluding Options or
Convertible Securities), the issuance of which did not result in an adjustment
to the Conversion Price pursuant to the terms of Subsections
4.6.2, 4.6.3 or 4.6.4, are revised after the Note Issuance Date as a result of
an amendment to such terms or any other adjustment pursuant to the provisions
of such Option or Convertible Security (but excluding automatic adjustments to
such terms pursuant to anti-dilution or similar provisions of such Option or
Convertible Security) to provide for either (i) any
increase in the number of shares of Common Stock issuable upon the exercise,
conversion or exchange of any such Option or Convertible Security or (ii) any
decrease in the consideration payable to the Company upon such exercise,
conversion or exchange, then such Option or Convertible Security, as so amended
or adjusted, and the Additional Securities subject thereto (determined in the
manner provided in Subsection 4.6.1(a) shall be deemed to have been issued
effective upon such increase or decrease becoming effective.

-6- 

(d) Upon the expiration or termination of any unexercised Option or
unconverted or unexchanged Convertible Security (or portion thereof) which
resulted (either upon its original issuance or upon a revision of its terms) in
an adjustment to the Conversion Price pursuant to the terms of
Subsections 4.6.2, 4.6.3 or 4.6.4, the Conversion Price shall be readjusted to
such Conversion Price as would have obtained had such Option or Convertible
Security (or portion thereof) never been issued.  

(e)  If the number of shares of Common Stock issuable upon the exercise, conversion,
and/or exchange of any Option or Convertible Security, or the consideration
payable to the Company upon such exercise, conversion and/or exchange, is
calculable at the time such Option or Convertible Security is issued or amended
but is subject to adjustment based upon subsequent events, any adjustment to
the Conversion Price provided for in this Subsection 4.6 shall be effected at
the time of such issuance or amendment based on such number of shares or amount
of consideration without regard to any provisions for subsequent adjustments
(and any subsequent adjustments shall be treated as provided in clauses (b) and
(c) of this Subsection 4.6.1). 
If the number of shares of Common Stock issuable upon the exercise, conversion
and/or exchange of any Option or Convertible Security, or the consideration
payable to the Company upon such exercise, conversion and/or exchange, cannot
be calculated at all at the time such Option or Convertible Security is issued
or amended, any adjustment to the Conversion Price that would result under the
terms of this Subsection 4.6.1 at the time of such issuance or amendment shall
instead be effected at the time such number of shares and/or amount of
consideration is first calculable (even if subject to subsequent adjustments),
assuming for purposes of calculating such adjustment to the Conversion Price
that such issuance or amendment took place at the time such calculation can
first be made.  

4.6.2 Adjustment
for the Issuance of Additional Shares of Common Stock During Term of the Note. 
If, during the term of the Note, the Company issues
Additional Securities (including Additional Securities deemed to be issued
pursuant to Subsection 4.6.1), for a consideration per share payable to
the Company of less than $.30, in any private or
public transaction that results in the issuance of at least an additional one
percent (1%) of Additional Securities on a fully diluted, as converted to
Common Stock basis, the Conversion Price of this Note shall be adjusted so that
the Conversion Shares that would be owned by the Holder upon conversion of the
Note immediately after such issuance of Additional Securities continue to
represent the same percentage of the outstanding capital stock of the Company
(calculated on a fully diluted, as converted to Common Stock basis) as the
Conversion Shares that would be owned by the Holder upon conversion of the Note
immediately prior to such issuance represented. 

4.6.3    No Adjustment of Conversion Price.  No adjustment
in the Conversion Price shall be made as the result of the issuance or deemed
issuance of Additional Shares of Common Stock if the Company receives written
notice from the Holder agreeing that no such adjustment shall be made as the result
of the issuance or deemed issuance of such Additional Shares of Common Stock.

-7- 

4.6.4    Determination of Consideration.  For purposes of
this Subsection 4.6, the consideration received by the Company for the issue of
any Additional Securities shall be computed as follows:

(a) Cash
and Property:  Such consideration shall:

(i) 
insofar as it consists of cash, be computed at the aggregate amount of
cash received by the Company, excluding amounts paid or payable for accrued
interest;

(ii) 
insofar as it consists of property other than cash, be computed at the
fair market value thereof at the time of such issue, as determined in good
faith by the Board of Directors of the Company; and

(iii) 
in the event Additional Securities are issued together with other shares
or securities or other assets of the Company for consideration which covers both,
be the proportion of such consideration so received, computed as provided in
clauses (i) and (ii) above, as determined in good faith by the Board of
Directors of the Company.

(b)        Options and Convertible Securities.  The
consideration per share received by the Company for Additional Securities
deemed to have been issued pursuant to Subsection 4.6.1, relating to
Options and Convertible Securities, shall be determined by dividing:

(i)  the
total amount, if any, received or receivable by the Company as consideration
for the issue of such Options or Convertible Securities, plus the minimum
aggregate amount of additional consideration (as set forth in the instruments
relating thereto, without regard to any provision contained therein for a
subsequent adjustment of such consideration) payable to the Company upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities, or in the case of Options for Convertible Securities, the exercise
of such Options for Convertible Securities and the conversion or exchange of
such Convertible Securities, by:

(ii) the
maximum number of shares of Common Stock (as set forth in the instruments
relating thereto, without regard to any provision contained therein for a
subsequent adjustment of such number) issuable upon the exercise of such
Options or the conversion or exchange of such Convertible Securities, or in the
case of Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities.

-8- 

4.6.5    Multiple Closing Dates.  In the event the Company shall
issue on more than one date Additional Securities that are a part of one
transaction or a series of related transactions and that would result in an
adjustment to the Conversion Price pursuant to the terms of Subsections
4.6.2,, and such issuance dates occur within a period of no more than ninety (90)
days from the first such issuance to the final such issuance, then, upon the
final such issuance, the Conversion Price shall be readjusted to give effect to
all such issuances as if they occurred on the date of the first such issuance
(and without giving effect to any additional adjustments as a result of any
such subsequent issuances within such period).

4.6.6    Adjustment for
Stock Splits and Combinations.  If the Company shall
at any time or from time to time after the Note Issuance Date effect a
subdivision of the outstanding Common Stock, the Conversion Price in effect
immediately before that subdivision shall be proportionately decreased so that
the number of Conversion shares issuable on conversion of this Note shall be
increased in proportion to such increase in the aggregate number of shares of
Common Stock outstanding.  If the Company shall at any time or from time to
time after the date of this Note combine the outstanding shares of Common
Stock, the Conversion Price in effect immediately before the combination shall
be proportionately increased so that the number of Conversion shares issuable
on conversion of this Note shall be decreased in proportion to such decrease in
the aggregate number of shares of Common Stock outstanding.  Any adjustment
under this subsection shall become effective at the close of business on the
date the subdivision or combination becomes effective.

4.6.7    Adjustment
for Certain Dividends and Distributions on Common Stock.  In the event the Company
at any time or from time to time after the Note Issuance Date shall make or
issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable on the Common
Stock in additional shares of Common Stock, then and in each such event the
Conversion Price in effect immediately before such event shall be decreased as
of the time of such issuance or, in the event such a record date shall have
been fixed, as of the close of business on such record date, by multiplying the
Conversion Price then in effect by a fraction:

(a)        the
numerator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date, and

(b)        the
denominator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of Common Stock issuable
in payment of such dividend or distribution.

Notwithstanding
the foregoing, if such record date shall have been fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed
therefor, the Conversion Price shall be recomputed accordingly as of the close
of business on such record date and thereafter the Conversion Price shall be
adjusted pursuant to this subsection as of the time of actual payment of such
dividends or distributions.

-9- 

4.6.8    Adjustments
for Other Dividends and Distributions.  In the event the Company at any
time or from time to time after the Note Issuance Date shall make or issue, or
fix a record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in securities of the Company (other
than a distribution of shares of Common Stock in respect of outstanding shares
of Common Stock) or in other property and the provisions of Section 4.6.7 do
not apply to such dividend or distribution, then and in each such event the Holder,
upon conversion of the Conversion Amount into shares of Common Stock, pursuant
to this Note, shall receive, simultaneously with effectiveness of such
conversion, a dividend or other distribution of such securities or other
property in an amount equal to the amount of such securities or other property
as they would have received if the Conversion Amount of this Note had been
converted to Common Stock on the date of such event.

4.6.9    Certificate
as to Adjustments.  Upon the occurrence of each adjustment or readjustment
of the Conversion Price pursuant to this Section 4.6, the Company at its
expense shall, as promptly as reasonably practicable but in any event not later
than ten (10) days thereafter, compute such adjustment or readjustment in
accordance with the terms hereof and furnish to the Holder a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based.  The Company shall, as
promptly as reasonably practicable after the written request at any time of the
Holder (but in any event not later than ten (10) days thereafter), furnish or
cause to be furnished to the Holder a certificate setting forth the Conversion
Price then in effect, for the Common Stock.

4.6.10  Calculations. 
All calculations under this Section 4.6 shall be made to the nearest cent or
the nearest 1/100th of a share, as the case may be.  

4.6.11  Notice
to Allow Conversion by Holder.  If (a) the Company shall declare a dividend
(or any other distribution) 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 rights,
options, 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, of 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 mailed to the Holder
at her last address as it shall appear upon the stock books of the Company, at
least twenty (20) calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating (y) the date on which a record is
to be taken for the purpose of such dividend, distribution, redemption, rights,
options, 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, options, or warrants are to be determined or
(z) the date on which  

-10- 

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, however, that
the failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice.  The Holder is entitled to convert the Conversion Amount of this
Note pursuant to Section 4.1 herein during said twenty (20) day period
commencing the date of such notice to the effective date of the event
triggering such notice. 

5. Company
Sale.  In the event of a Company Sale prior to the Maturity Date and prior
to any conversion of the Conversion Amount hereunder, the Holder of this Note
shall be entitled to receive upon the closing of the Company Sale, as full
satisfaction of all amounts owing under this Note, payment in the amount of the
greater of (a) the outstanding principal amount of this Note plus all accrued
and unpaid interest hereunder, (b) an amount equal to one hundred and twenty-five
percent (125%) of the outstanding principal amount of this Note; and (c) the
amount which the Holder would have received if this Note were converted to shares 
immediately prior to the Closing of the Company Sale. 

6. Events of Default.

6.1 Event
of Default.  Wherever used herein, "Event of Default" means any one or
more of the following events (whatever the reason and whether it 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): 

(a) any
default in the payment of (i) the principal amount of the Note, or (ii) any
interest on the Note; or (iii) other fees owing on the Note, as and when the
same shall become due and payable (whether on the Maturity Date or by
acceleration or otherwise) which default, solely in the case of defaults under
clause (iii) above, is not cured, within twenty (20) days;

(b)the
Company shall fail to observe or perform any other covenant or agreement
contained in this Note which failure is not cured, if possible to cure, within
the earlier to occur of (i) thirty (30) days after notice of such default sent
by the Holder and (ii) forty-five (45) days after the Company shall become or
should have become aware of such failure;

 (c) (i)
the Company shall commence a case, as debtor, under any applicable bankruptcy
or insolvency laws as now or hereafter in effect or any successor thereto, or
the Company commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency, or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Company, or (ii) there is commenced a case against the
Company, under any applicable bankruptcy or insolvency laws, as now or
hereafter in effect or any successor thereto, which remains undismissed for a
period of ninety (90) days; or (iii) the Company is adjudicated by a court of
competent jurisdiction insolvent or bankrupt; or any order of relief or other
order approving any such case or proceeding is entered; or (iv) the Company
suffers any appointment of any custodian, receiver, trustee, or the like for it
or any substantial part of its  

-11- 

property which continues undischarged or
unstayed for a period of ninety (90) days; or (v) the Company makes a general
assignment for the benefit of creditors; or (vi) the Company shall fail to pay,
or shall state that it is unable to pay, or shall be unable to pay, its debts
generally as they become due; or (vii) any corporate or other action is taken
by the Company for the purpose of effecting any of the foregoing; 

(d) the
Company shall default (following the failure to cure as provided in any
applicable agreement described in this Section 6.1(d)) in an amount exceeding $100,000
in any of its payment obligations under any credit agreement or other facility,
indenture agreement, or other instrument under which 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 of the Company,
whether such indebtedness now exists or shall hereafter be created and such
default shall result in such indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise become due and payable,
with the exception of  mortgages collateralized by real estate and which such
outstanding loan is less than 50% of the value of the collateral ;

(e) The
issuance of any order or decree enjoining or prohibiting the Company from
performing under this Note or any of the Transaction Agreements, which order or
decree is not vacated within fifteen (15) days after the granting thereof;

(f) The occurrence of any event or condition, that with the
giving of notice or passage of time, or both, could result in a material
default by the Company under any other contract, loan, obligation or agreement
of any kind to which the Company is a party that results in a material adverse
effect against the Company; 

(g) The
occurrence of any event or condition that Holder, in reasonable judgment,
believes results in a material adverse effect against the Company.

                       
6.2  Remedies
Upon Event of Default.  If any Event of Default occurs, the full Principal Amount
of this Note, accrued interest, fees and expenses, together with other amounts
owing pursuant hereto, to the date of acceleration shall become, at the
Holder's election, immediately due and payable in cash.  Commencing twenty (20)
days after the occurrence of any Event of Default that results in the eventual
acceleration of this Note, the interest rate on this Note shall accrue daily at
the rate of twelve percent (6%) per annum, payable quarterly.  The Holder need
not provide, and the Company hereby waives, any presentment, demand, protest,
or other notice or demands 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 declaration may be rescinded and annulled by Holder at any time prior to
payment hereunder and the Holder shall have all rights as a Holder until such
time, if any, as the full payment under this Section shall have been received
by it.  No such rescission or annulment shall affect any subsequent Event of
Default or impair any right consequent thereon.

-12- 

           
7. Transfer
Restrictions.  The Holder shall not sell, transfer, convey, or assign the
Note until: (a) it has first given written notice to the Company, describing
briefly the manner of any such proposed transfer; and (b) (i) it has provided the
Company, at the Holder's sole expense, an opinion satisfactory to the Company
both in substance and as to the counsel providing such opinion, that such
transfer can be made without compliance with the registration requirements of
the Securities Act, and applicable state securities laws, or (ii) a
registration statement filed by the Company under the Securities Act and
applicable state securities laws registering the sale of the Notes by the
Holders is declared effective by the Securities and Exchange Commission and
state securities commissions having jurisdiction (except, in each case, (y) a
transfer of the Note directly to or in trust for the primary benefit of the
Holder, the spouse of the Holder, and/or the issue of the Holder and/or her
spouse, and (ii) in the event of the death of the Holder, a transfer of the
Note from the name of the deceased Holder to the name of either the personal
representative of the deceased Holder's estate or the nominee of such personal
representative and any subsequent transfer to the heirs or legatees of the
deceased Holder).  

8. Currency;
Payments. All references herein to "dollars" or "$" are to U.S. dollars,
and all payments of principal of, and interest on, this Note shall be made in
lawful money of the United States of America in immediately available funds.  If
the date on which any such payment is required to be made pursuant to the
provisions of this Note occurs on a Saturday or Sunday or legal holiday
observed in the State of Nevada, such payments shall be due and payable on the
immediately succeeding date which is not a Saturday or Sunday or legal holiday
so observed.

9. Right
of Prepayment.  The Company may prepay the Principal Amount of this Note,
in whole or in part, without penalty, and any partial prepayments shall be
applied to installments under this Note in the reverse order of their stated
maturities.  

10. Miscellaneous.

10.1 Time
of Essence.  Time is of the essence with respect to the Company's duties
and obligations under this Note.

10.2 Amendments
and Waivers.  No term of the Note may be amended or compliance therewith
waived (either generally or in a particular instance and either retroactively
or prospectively) without the written consent of the Company and the Holder.  

10.3 Severability.
 If one or more provisions of this Note are held to be unenforceable under
applicable law, such provision shall be excluded from this Note and the balance
of the Note shall be interpreted as though such provision were so excluded and
shall be enforceable in accordance with its terms.  The parties agree to
replace such illegal, void, invalid, or unenforceable provision of this Note
with a legal, valid, and enforceable provision that shall achieve, to the
extent possible, the economic, business, and other purposes of such illegal, void,
invalid or unenforceable provision.

10.4 Attorneys'
Fees and Costs.  Each party shall bear its own expenses in connection with
the issuance of this Note; provided, however, that if any action
at law or in equity is necessary to enforce or interpret the terms of this Note,
the prevailing party shall be entitled to its attorneys' fees, costs, and
disbursements in addition to any other relief to which such party may be
entitled.  As used in this Section, attorneys' fees shall be deemed to mean the
full and actual 

-13- 

costs of any legal services
actually performed in connection with the matters involved calculated on the
basis of the usual fee charged by the attorney performing such services and
shall not be limited to "reasonable attorneys' fees" as defined in any statute
or rule of court.

10.5 Entire
Agreement.  This Note, together with the Transaction Agreements delivered
in connection herewith, constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior and
contemporaneous negotiations, agreements, and understandings (including any "term
sheets" or similar documents). 

10.6 Notices.
Any notice or communication required or permitted by this Agreement shall be
given in writing and addressed as follows:

                        If to the
Company:

CrowdGather, Inc.

23945
Calabasas Rd

Suite
115

Calabasas,
CA 92302

Attn:
CEO

                        If to the
Holder:                        _______________

Notices shall be
served personally, by overnight express mail service by a nationally recognized
courier, or first-class, certified mail, return receipt requested, postage
pre-paid.  If sent personally, notice shall be deemed delivered upon receipt. 
If sent by overnight express mail service, notice shall be deemed delivered 24
hours after delivery into the possession and control of the courier.  If sent
by first-class, certified mail, return receipt requested, notice shall be
deemed delivered the earlier of seventy-two (72) hours after mailing or the
date on the return receipt, a refusal being deemed a delivery on the date of
refusal.  If the party to whom any such notice is sent has relocated without
leaving a forwarding address, then the notice shall be deemed delivered on the
date the notice-receipt is returned stating that the same was undeliverable at
such address.  Any party may give notification to the other party in any manner
described above for change of address for the sending of notices.

 

10.7 Successors
and Assigns.  This Note shall be binding upon and inure to the benefit of
the Company and the Holder and their respective successors and permitted
assigns.  The Company may not voluntarily or involuntarily transfer, convey, or
assign this Note, or any of its duties or obligations hereunder, without the
Holder's prior written consent, which may be withheld for any reason, or for no
reason at all. As used herein, the term "Holder" shall mean and include the
successors and permitted assigns of the Holder.

 

10.8 Absolute
Obligation.  Except as expressly provided herein, no provision of this Note
shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the Principal Amount and accrued interest of, and
liquidated damages (if any) on, this Note at the time, place, and rate, and in
the currency, herein prescribed.  This Note is a direct debt obligation of the
Company.  

 

-14- 

10.9 Lost
or Mutilated Note.  If this Note shall be mutilated, lost, stolen, or
destroyed, the Company shall execute and deliver, in exchange and substitution
for and upon cancellation of a mutilated Note, or in lieu of or in substitution
for a lost, stolen, or destroyed Note, a new Note for the Principal Amount of
this Note so mutilated, lost, stolen, or destroyed but only upon receipt of
evidence of such loss, theft, or destruction of such Note, and of the ownership
hereof, and indemnity, if requested, all reasonably satisfactory to the
Company.  

10.10 Usury. 
If it shall be found that any interest or other amount deemed interest due
hereunder violates applicable laws governing usury, the applicable rate of
interest due hereunder shall automatically be lowered to equal the maximum
permitted rate of interest.  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 Amount of or interest
on this Note as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of
this indenture, 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 shall not, by resort to any such law, hinder, delay, or impede the execution
of any power herein granted to the Holder, but shall suffer and permit the
execution of every such as though no such law has been enacted.  

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

10.12 Governing
Law; Venue.  This Note is to be governed by and interpreted in accordance
with the laws of the State of Nevada.  Any legal action or proceeding with
respect to this Note or any document related hereto shall be brought in the
Jefferson County, Nevada Circuit Court or any court of the United States of
America for the District of Nevada, and, by execution and delivery of this
Note, the Company hereby accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of such courts.

[The remainder
of this page left intentionally blank.  Signature page immediately follows.]

-15- 

The Company has caused this Note
to be signed in its name and executed as a sealed instrument as of the date
first written above.

CrowdGather,
Inc.

 

 

By:       _________________________________________

Name:
 Sanjay Sabani

Title: 
Chief Executive Officer

 

 

 

 

 

 

 

 

 

Signature page to
Convertible Promissory Note

-16- 

EXHIBIT A

NOTICE
OF CONVERSION

The undersigned
hereby elects to convert the Conversion Amount under the Secured Convertible Promissory
Note (the "Note") of CrowdGather, Inc., a Nevada corporation (the "Company")
into Shares of common stock, all as defined and pursuant to the terms and conditions
of the Convertible Promissory Note, as of the date written below.  

Furthermore,
with respect to the accrued and unpaid interest on the Note as of the
Conversion Date, the undersigned hereby elects (CHOOSE ONE):

 

____    To include such accrued and
unpaid interest in the Conversion Amount

 

OR

 

____    To
receive payment from the Company for such accrued and unpaid interest.

 

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

 

Date:                                        

 

Signature:                                                                                 

 

Name:                                                                                      

 

Address:

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