Document:

Exhibit 10.4

 

security
agreement

 

This
Security Agreement dated as of August 15, 2022 (“Security Agreement”),
is made by and among Accelerate Diagnostics, Inc., a Delaware corporation (“Grantor”),
and the secured party listed on the signature page hereto (the “Secured Party”).

 

Recitals

 

A.       The
Secured Party has made and has agreed to make certain advances of money and to extend certain financial accommodations to Grantor as
evidenced by that certain Secured Promissory Note, dated as of August 15, 2022, executed by Grantor in favor of the Secured Party (the
 “Note”), such advances, future advances, and financial accommodations being referred to herein as the “Loans”.

 

B.       The
Secured Party is willing to make the Loans to Grantor, but only upon the condition, among others, that Grantor shall have executed and
delivered to the Secured Party this Security Agreement.

 

Agreement

 

Now,
Therefore, in order to induce the Secured Party to make the Loans and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, Grantor hereby represents,
warrants, covenants and agrees as follows:

 

1.              
Defined Terms.
When used in this Security Agreement the following terms shall have the meanings set forth below (such meanings being equally applicable
to both the singular and plural forms of the terms defined). Any term used in the UCC and not defined herein shall have the meaning given
to such term in the UCC.

 

“Collateral”
shall have the meaning assigned to such term in Section 2 of this Security Agreement.

 

“Contracts”
means all contracts (including any customer, vendor, supplier, service or maintenance contract), personal property leases, licenses,
undertakings, purchase orders, permits, franchise agreements or other agreements (other than any right evidenced by Chattel Paper, Documents
or Instruments), whether in written or electronic form, in or under which Grantor now holds or hereafter acquires any right, title or
interest, including, without limitation, with respect to an Account, any agreement relating to the terms of payment or the terms of performance
thereof.

 

“Copyright
License” means any agreement, whether in written or electronic form, in which Grantor now holds or hereafter acquires any
interest, granting any right in or to any Copyright or Copyright registration (whether Grantor is the licensee or the licensor thereunder)
including, without limitation, licenses pursuant to which Grantor has obtained the exclusive right to use a copyright owned by a third
party.

 

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“Copyrights”
means all of the following now owned or hereafter acquired or created (as a work for hire for the benefit of Grantor) by Grantor or in
which Grantor now holds or hereafter acquires or receives any right or interest, in whole or in part: (a) all copyrights, whether registered
or unregistered, held pursuant to the laws of the United States, any State thereof or any other country; (b) registrations, applications,
recordings and proceedings in the United States Copyright Office or in any similar office or agency of the United States, any State thereof
or any other country; (c) any continuations, renewals or extensions thereof; (d) any registrations to be issued in any pending applications,
and shall include any right or interest in and to work protectable by any of the foregoing which are presently or in the future owned,
created or authorized (as a work for hire for the benefit of Grantor) or acquired by Grantor, in whole or in part; (e) prior versions
of works covered by copyright and all works based upon, derived from or incorporating such works; (f) income, royalties, damages, claims
and payments now and hereafter due and/or payable with respect to copyrights, including, without limitation, damages, claims and recoveries
for past, present or future infringement; (g) rights to sue for past, present and future infringements of any copyright; and (h) any
other rights corresponding to any of the foregoing rights throughout the world.

 

“Event
of Default” means (i) any failure by Grantor forthwith to pay or perform any of the Secured Obligations, (ii) any breach
by Grantor of any warranty, representation, or covenant set forth herein, and (iii) any “Event of Default” as defined in
the Note.

 

“Excluded
Account” means any Account (including, for the avoidance of doubt, any cash, cash equivalents or other property contained
therein) to the extent, and for so long as, such Account (A) is pledged to secure (i) performance of tenders, bids, leases, statutory
or regulatory obligations, surety and appeal bonds, government contracts, performance and return-of-money bonds, and other obligations
of like nature, in each case, in the ordinary course of business or (ii) liability for reimbursement or indemnification obligations in
respect of letters of credit or bank guarantees for the benefit of landlords, in each case whether such pledge is by escrow or otherwise
or (B) is used specifically and exclusively for payroll, payroll taxes, workers’ compensation or unemployment compensation premiums
or benefits, pension benefits, and other employee wage and benefit payments to or for the benefit of any of Grantor’s or any of
its Subsidiary’s employees.

 

“Excluded
Property” means (i) Excluded Accounts (and any assets contained therein), (ii) more than
65% of the presently existing and hereafter arising issued and outstanding shares of capital stock owned by Grantor of any Foreign
Subsidiary which shares entitle the holder thereof to vote for directors or any other matter, (iii) “intent-to-use”
trademarks at all times prior to the first use thereof, whether by the actual use thereof in commerce, the recording of a statement
of use with the United States Patent and Trademark Office or otherwise and (iv) any property, right or asset held by Grantor or any
Subsidiary to the extent that a grant of a security interest therein is prohibited by any Requirement of Law of a Governmental
Authority or constitutes a breach or default under or results in the termination of or requires any consent not obtained under, any
contract, license, agreement, instrument or other document evidencing or giving rise to such property, except (A) to the extent that
the terms in such contract, license, instrument or other document providing for such prohibition, breach, default or termination, or
requiring such consent are not permitted under this Security Agreement or (B) to the extent that such Requirement of Law or the term
in such contract, license, agreement, instrument or other document providing for such prohibition, breach, default or termination or
requiring such consent is ineffective under Section 9406, 9407, 9408 or 9409 of the UCC (or any successor provision or provisions)
of any relevant jurisdiction or any other applicable law (including the Bankruptcy Code of the United States) or principles of
equity; provided, however, that such security interest shall attach immediately at such time as such Requirement of Law is not
effective or applicable, or such prohibition, breach, default or termination is no longer applicable or is waived, and to the extent
severable, shall attach immediately to any portion of the Collateral that does not result in such consequences.

 

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“Foreign
Subsidiary” means (i) any Subsidiary other than a Subsidiary organized under the laws of any state within the United States
and (ii) any Subsidiary if it has no material assets other than the Equity Interests of one or more Subsidiaries described in clause
(i) of this definition.

 

“Governmental
Authority” means the government of any nation or any political subdivision thereof, whether state, local, territory, province
or otherwise, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supranational
bodies such as the European Union or the European Central Bank).

 

“Intellectual
Property” means any intellectual property, in any medium, of any kind or nature whatsoever, now or hereafter owned or acquired
or received by Grantor or in which Grantor now holds or hereafter acquires or receives any right or interest, and shall include, in any
event, any copyright, trademark, patent, license, trade secret, customer list, marketing plan, internet domain name (including any right
related to the registration thereof), proprietary or confidential information, mask work, source, object or other programming code, invention
(whether or not patented or patentable), technical information, procedure, design, knowledge, know-how, software, data base, data,
skill, expertise, recipe, experience, process, model, drawing, material or record.

 

“License”
means any Copyright License, Patent License, Trademark License or other license of rights or interests, whether in-bound or out-bound,
whether in written or electronic form, now or hereafter owned or acquired or received by Grantor or in which Grantor now holds or hereafter
acquires or receives any right or interest, and shall include any renewals or extensions of any of the foregoing thereof.

 

“Patent
License” means any agreement, whether in written or electronic form, in which Grantor now holds or hereafter acquires any
interest, granting any right with respect to any invention on which a Patent is in existence (whether Grantor is the licensee or the
licensor thereunder).

 

“Patents”
means all of the following in which Grantor now holds or hereafter acquires any interest: (a) all letters patent of the United
States or any other country, all registrations and recordings thereof and all applications for letters patent of the United States
or any other country, including, without limitation, registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any State thereof or any other country; (b) all reissues,
divisions, continuations, renewals, continuations-in-part or extensions thereof; (c) all petty patents, divisionals and patents of
addition; (d) all patents to issue in any such applications; (e) income, royalties, damages, claims and payments now and hereafter
due and/or payable with respect to patents, including, without limitation, damages, claims and recoveries for past, present or
future infringement; and (f) rights to sue for past, present and future infringements of any patent.

 

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“Person”
means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, other entity or government.

 

“Pro
Rata” means, as to any Secured Party at any time, the percentage equivalent at such time of such Secured Party’s
aggregate unpaid principal amount of Loans, divided by the combined aggregate unpaid principal amount of all Loans of all Secured Parties.

 

“Requirement
of Law” means, as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority,
in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

“Secured
Obligations” means (a) the obligation of Grantor to repay the Secured Party all of the unpaid principal amount of, accrued
interest on (including any interest that accrues after the commencement of bankruptcy) and fees arising under, the Loans and (b) the
obligation of Grantor to pay any fees, costs or expenses of the Secured Party under the Note or this Security Agreement.

 

“Security
Agreement” means this Security Agreement, as the same may from time to time be amended, modified, supplemented or restated.

 

“Subsidiary”
means an entity, whether corporate, partnership, limited liability company, joint venture or otherwise, in which Grantor owns or controls
fifty percent (50%) or more of the outstanding voting securities.

 

“Trademark
License” means any agreement, whether in written or electronic form, in which Grantor now holds or hereafter acquires any
interest, granting any right in and to any Trademark or Trademark registration (whether Grantor is the licensee or the licensor thereunder).

 

“Trademarks”
means any of the following in which Grantor now holds or hereafter acquires any interest: (a) any trademarks, tradenames, corporate names,
company names, business names, trade styles, service marks, logos, other source or business identifiers, prints and labels on which any
of the foregoing have appeared or appear, designs and general intangibles of like nature, now existing or hereafter adopted or acquired,
all registrations and recordings thereof and any applications in connection therewith, including, without limitation, registrations,
recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States,
any State thereof or any other country (collectively, the “Marks”); (b) any reissues, extensions or renewals thereof; (c)
the goodwill of the business symbolized by or associated with the Marks; (d) income, royalties, damages, claims and payments now and
hereafter due and/or payable with respect to the Marks, including, without limitation, damages, claims and recoveries for past, present
or future infringement; and (e) rights to sue for past, present and future infringements of the Marks.

 

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“UCC”
means the Uniform Commercial Code as the same may from time to time be in effect in the State of Delaware (and each reference in this
Security Agreement to an Article thereof (denoted as a Division of the UCC as adopted and in effect in the State of Delaware) shall
refer to that Article (or Division, as applicable) as from time to time in effect); provided, however, in the event that,
by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of the Secured Party’s security
interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of Delaware,
the term “UCC” shall mean the Uniform Commercial Code (including the Articles thereof) as in effect at such time in
such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.

 

2.              
Grant of Security Interest.
As collateral security for the full, prompt, complete and final payment and performance when due (whether at stated maturity, by acceleration
or otherwise) of all the Secured Obligations and in order to induce the Secured Party to cause the Loans to be made, Grantor hereby pledges
to the Secured Party, and hereby grants to the Secured Party a security interest in, all of Grantor’s right, title and interest
in, to and under the following, whether now owned or hereafter acquired (all of which being collectively referred to herein as the “Collateral”):

 

(a)            
All Accounts of Grantor;

 

(b)           
All Chattel Paper of Grantor;

 

(c)            
The Commercial Tort Claims of Grantor;

 

(d)           
All Commodity Accounts of Grantor;

 

(e)            
All Contracts of Grantor;

 

(f)             
All Deposit Accounts of Grantor;

 

(g)            
All Documents of Grantor;

 

(h)           
All General Intangibles of Grantor, including, without limitation, Intellectual Property;

 

(i)             
All Goods of Grantor, including, without limitation, Equipment, Inventory and Fixtures;

 

(j)             
All Instruments of Grantor, including, without limitation, Promissory Notes;

 

(k)           
All Investment Property of Grantor;

 

(l)             
All Letter-of-Credit Rights and Letters of Credit of Grantor;

 

(m)         
All Money of Grantor;

 

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(n)           
 All Securities Accounts of Grantor;

 

(o)            
All Supporting Obligations of Grantor;

 

(p)           
All property of Grantor held by any Secured Party, or any other party for whom any Secured Party is acting as agent, including,
without limitation, all property of every description now or hereafter in the possession or custody of or in transit to any Secured Party
or such other party for any purpose, including, without limitation, safekeeping, collection or pledge, for the account of Grantor, or
as to which Grantor may have any right or power;

 

(q)           
All other goods and personal property of Grantor, wherever located, whether tangible or intangible, and whether now owned
or hereafter acquired, existing, leased or consigned by or to Grantor; and

 

(r)            
To the extent not otherwise included, all Proceeds of each of the foregoing and all accessions to, substitutions and replacements
for and rents, profits and products of each of the foregoing.

 

Notwithstanding
the foregoing provisions of this Section 2,
the grant, assignment and transfer of a security interest as provided herein shall not extend to, and the term “Collateral”
shall not include any Excluded Property. 

 

If
this Security Agreement is terminated in accordance with its terms, the lien granted to the Secured Party hereunder shall continue until
the Secured Obligations (other than inchoate indemnity obligations) are satisfied in full. At such time, the Collateral shall be released
from the liens created hereby, this Security Agreement and all obligations (other than those expressly stated to survive such termination)
of the Secured Party and Grantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party,
and all rights to the Collateral shall automatically revert to Grantor. Secured Party shall execute such documents, return any Collateral
held by the Secured Party hereunder and take such other steps as are reasonably necessary to accomplish the foregoing, all at Grantor’s
sole cost and expense.

 

Upon
any sale, lease, transfer or other disposition of any item of Collateral not prohibited by the terms of this Security Agreement or the
Note, the Secured Party will, at Grantor’s sole cost and expense, execute and deliver to Grantor such documents as Grantor shall
reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted hereby; provided,
however, that (i) at the time of such request and such release no Event of Default shall have occurred and be continuing and (ii) Grantor
shall have delivered to the Secured Party prior to the date of the proposed release a written request for release describing the item
of Collateral, together with a form of release for execution by the Secured Party, and such other information as the Secured Party may
reasonably request.

 

3.              
Rights of the Secured Party; Collection of Accounts.

 

(a)             Notwithstanding
anything contained in this Security Agreement to the contrary, Grantor expressly agrees that it shall remain liable under each of
its Contracts, Chattel Paper, Documents, Instruments and Licenses to observe and perform all the conditions and obligations to be
observed and performed by it thereunder and that it shall perform all of its duties and obligations thereunder, all in accordance
with and pursuant to the terms and provisions of each such Contract, Chattel Paper, Document, Instrument, and License. The Secured
Party shall not have any obligation or liability under any such Contract, Chattel Paper, Document, Instrument, or License by reason
of or arising out of this Security Agreement or the granting to the Secured Party of a lien therein or the receipt by any Secured
Party of any payment relating to any such Contract, Chattel Paper, Document, Instrument, or License pursuant hereto, nor shall any
Secured Party be required or obligated in any manner to perform or fulfill any of the obligations of Grantor under or pursuant to
any such Contract, Chattel Paper, Document, Instrument, or License, or to make any payment, or to make any inquiry as to the nature
or the sufficiency of any payment received by it or the sufficiency of any performance by any party under any such Contract, Chattel
Paper, Document, Instrument, or License, or to present or file any claim, or to take any action to collect or enforce any
performance or the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or
times.

 

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(b)           
Upon the occurrence and during the continuance of any Event of Default, the Secured Party authorizes Grantor to collect its
Accounts and, at the request of the Secured Party, Grantor shall deliver all original and other documents evidencing and relating to
the performance of labor or service which created such Accounts, including, without limitation, all original orders, invoices and shipping
receipts.

 

(c)            
The Secured Party may at any time, upon the occurrence and during the continuance of any Event of Default, notify Account
Debtors of Grantor, parties to the Contracts of Grantor constituting Collateral, obligors in respect of Instruments of Grantor, and obligors
in respect of Chattel Paper of Grantor that the Accounts and the right, title and interest of Grantor in and under such Contracts, Instruments
and Chattel Paper have been assigned to the Secured Party and that payments shall be made directly to the Secured Party. Upon the occurrence
and during the continuance of any Event of Default, upon the request of the Secured Party, Grantor shall so notify such Account Debtors,
parties to such Contracts, obligors in respect of such Instruments and obligors in respect of such Chattel Paper. The Secured Party may,
in its name or in the name of others, communicate with such Account Debtors, parties to such Contracts, obligors in respect of such Instruments
and obligors in respect of such Chattel Paper to verify with such parties, to the Secured Party’s satisfaction, the existence,
amount and terms of any such Accounts, Contracts, Instruments or Chattel Paper.

 

4.              
Representations And Warranties.
Grantor hereby represents and warrants to the Secured Party that:

 

(a)            
This Security Agreement creates a legal and valid security interest on and in all of the Collateral in which Grantor now has
rights.

 

(b)           
Grantor’s correct legal name and taxpayer identification number are set forth on the signature page hereof. The jurisdiction
under whose law Grantor was organized is set forth on the signature page hereof. Grantor’s chief executive office, principal place
of business, and the place where Grantor maintains its records concerning the Collateral are presently located at the address set forth
on the signature page hereof.

 

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5.              
 Covenants. Unless
the Secured Party otherwise consents (which consent shall not be unreasonably withheld), Grantor covenants and agrees with the Secured
Party and the Secured Party that from and after the date of this Security Agreement and until the Secured Obligations have been performed
and paid in full and any commitment of the Secured Party to make Loans to Grantor has expired or terminated:

 

5.1           
Change of Name, Jurisdiction of Organization, Relocation of Business. Grantor shall not change its name or jurisdiction of
organization or relocate its chief executive office, principal place of business or its records from such address(es) provided to the
Secured Party pursuant to Section 4(b) above without at least seven (7) days prior notice to the Secured Party.

 

5.2           
Further Assurances. At any time and from time to time, upon the written request of the Secured Party, and at the sole expense
of Grantor, Grantor shall promptly and duly execute and deliver any and all such further instruments and documents and take such further
action as the Secured Party may reasonably deem necessary or desirable to obtain the full benefits of this Security Agreement, including,
without limitation, executing, delivering and causing to be filed any financing or continuation statements under the UCC with respect
to the security interests granted hereby. Grantor also hereby authorizes the Secured Party to file any such financing or continuation
statement without the signature of Grantor.

 

5.3           
Insurance. Grantor shall maintain insurance policies insuring the Collateral against loss or damage from such risks and in
such amounts and forms and with such companies as are customarily maintained by businesses similar to Grantor.

 

5.4           
Taxes, Assessments, Etc. Grantor shall pay promptly when due all property and other taxes, assessments and government charges
or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the Collateral, except to the extent
the validity or amount thereof is being contested in good faith and adequate reserves are being maintained in connection therewith.

 

5.5           
Defense of Intellectual Property. Grantor shall use commercially reasonable efforts to (i) protect, defend and maintain the
validity and enforceability of all Copyrights, Patents and Trademarks material to Grantor’s business and (ii) detect infringements
of all Copyrights, Patents and Trademarks material to Grantor’s business.

 

6.              
Secured Party’s Appointment as Attorney-in-Fact; Performance
by Secured Party.

 

(a)             Subject
to Section 6(b) below, Grantor hereby irrevocably constitutes and appoints the Secured Party, and any officer or agent of the
Secured Party, with full power of substitution, as its true and lawful attorney-in-fact with full, irrevocable power and authority
in the place and stead of Grantor and in the name of Grantor or in its own name, from time to time at the Secured Party’s
discretion, for the purpose of carrying out the terms of this Security Agreement, to take any and all appropriate action and to
execute and deliver any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this
Security Agreement and, without limiting the generality of the foregoing, hereby gives the Secured Party the power and right, on
behalf of Grantor, without notice to or assent by Grantor to do the following:

 

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(i)             
to ask, demand, collect, receive and give acquittances and receipts for any and all monies due or to become due under any
Collateral and, in the name of Grantor, in its own name or otherwise to take possession of, endorse and collect any checks, drafts, notes,
acceptances or other Instruments for the payment of monies due under any Collateral and to file any claim or take or commence any other
action or proceeding in any court of law or equity or otherwise deemed appropriate by the Secured Party for the purpose of collecting
any and all such monies due under any Collateral whenever payable;

 

(ii)           
to pay or discharge any liens, including, without limitation, any tax lien, levied or placed on or threatened against the
Collateral, to effect any repairs or any insurance called for by the terms of this Security Agreement and to pay all or any part of the
premiums therefor and the costs thereof, which actions shall be for the benefit of the Secured Party and not Grantor;

 

(iii)         
to (1) direct any person liable for any payment under or in respect of any of the Collateral to make payment of any and
all monies due or to become due thereunder directly to the Secured Party or as the Secured Party shall direct, (2) receive payment
of any and all monies, claims and other amounts due or to become due at any time arising out of or in respect of any Collateral, (3) sign
and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other Instruments and Documents constituting or relating to the Collateral,
(4) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect
the Collateral or any part thereof and to enforce any other right in respect of any Collateral, (5) defend any suit, action or proceeding
brought against Grantor with respect to any Collateral, (6) settle, compromise or adjust any suit, action or proceeding described
above, and in connection therewith, give such discharges or releases as the Secured Party may deem appropriate, (7) license, or,
to the extent permitted by an applicable License, sublicense, whether general, special or otherwise, and whether on an exclusive or non-exclusive
basis, any Copyright, Patent or Trademark throughout the world for such term or terms, on such conditions and in such manner as the Secured
Party shall in its discretion determine and (8) sell, transfer, pledge, make any agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as though the Secured Party were the absolute owner thereof for all purposes; and

 

(iv)          
to do, at the Secured Party’s option and Grantor’s expense, at any time, or from time to time, all acts and things
which the Secured Party may reasonably deem necessary to protect, preserve or realize upon the Collateral and the Secured Party’s
security interest therein in order to effect the intent of this Security Agreement, all as fully and effectively as Grantor might do.

 

(b)            The
Secured Party agrees that, except upon the occurrence and during the continuation of an Event of Default, it shall not exercise the
power of attorney or any rights granted to the Secured Party pursuant to this Section 6. Grantor hereby ratifies, to the
extent permitted by law, all that said attorney shall lawfully do or cause to be done by virtue hereof. The power of attorney
granted pursuant to this Section 6 is a power coupled with an interest and shall be irrevocable until the Secured
Obligations are completely and indefeasibly paid and performed in full and the Secured Party no longer have any commitment to make
any Loans to Grantor.

 

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(c)            
If Grantor fails to perform or comply with any of its agreements contained herein and the Secured Party, as provided for by
the terms of this Security Agreement, shall perform or comply, or otherwise cause performance or compliance, with such agreement, the
reasonable expenses, including reasonable attorneys’ fees and costs, of the Secured Party incurred in connection with such performance
or compliance, together with interest thereon at a rate of interest equal to the highest per annum rate of interest charged on the Loans,
shall be payable by Grantor to the Secured Party within five (5) business days of demand and shall constitute Secured Obligations
secured hereby.

 

7.              
Rights And Remedies Upon Default. Beginning
on the date which is ten (10) business days after any Event of Default shall have occurred and while such Event of Default is continuing:

 

(a)            
The Secured Party, may exercise in addition to all other rights and remedies granted to it under this Security Agreement or
the Note, all rights and remedies of a secured party under the UCC. Without limiting the generality of the foregoing, Grantor expressly
agrees that in any such event the Secured Party, without demand of performance or other demand, advertisement or notice of any kind (except
the notice specified below of time and place of public or private sale) to or upon Grantor or any other person, may (i) reclaim, take
possession, recover, store, maintain, finish, repair, prepare for sale or lease, shop, advertise for sale or lease and sell or lease
(in the manner provided herein) the Collateral, and in connection with the liquidation of the Collateral and collection of the accounts
receivable pledged as Collateral, use any Trademark, Copyright, or process used or owned by Grantor and (ii) forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and may forthwith sell, lease, assign, give an option or options to
purchase or sell or otherwise dispose of and deliver said Collateral (or contract to do so), or any part thereof, in one or more parcels
at public or private sale or sales, at any exchange or broker’s board or at the Secured Party’s offices or elsewhere at such
prices as it may deem commercially reasonable, for cash or on credit or for future delivery without assumption of any credit risk. Grantor
further agrees, at the Secured Party’s request, to assemble the Collateral and make it available to the Secured Party at places
which the Secured Party shall reasonably select, whether at Grantor’s premises or elsewhere. The Secured Party shall apply the
net proceeds of any such collection, recovery, receipt, appropriation, realization or sale as provided in Section 7(d), below,
with Grantor remaining liable for any deficiency remaining unpaid after such application. Grantor agrees that the Secured Party need
not give more than twenty (20) days’ notice of the time and place of any public sale or of the time after which a private sale
may take place and that such notice is reasonable notification of such matters.

 

(b)           
Grantor also agrees to pay all fees, costs and expenses of the Secured Party, including, without limitation, reasonable attorneys’
fees, incurred in connection with the enforcement of any of its rights and remedies hereunder.

 

(c)            
Grantor hereby waives presentment, demand, protest or any notice (to the maximum extent permitted by applicable law) of any
kind in connection with this Security Agreement or any Collateral.

 

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(d)           
 The Proceeds of any sale, disposition or other realization upon all or any part of the Collateral shall be distributed by
the Secured Party in the following order of priorities:

 

First,
to the Secured Party in an amount sufficient to pay in full the costs of the Secured Party in connection with such sale, disposition
or other realization, including all fees, costs, expenses, liabilities and advances incurred or made by the Secured Party in connection
therewith, including, without limitation, reasonable attorneys’ fees;

 

Second,
to the Secured Party in amounts proportional to the Pro Rata share of the then unpaid Secured Obligations of each Secured Party; and

 

Finally,
upon payment in full of the Secured Obligations, to Grantor or its representatives, in accordance with the UCC or as a court of competent
jurisdiction may direct.

 

Notwithstanding
the foregoing, the terms of this Security Agreement, and the rights and remedies (including the exercise thereof) of the Secured Party
set forth herein, are subject to the terms of the Intercreditor Agreements (as defined in the Note).

 

8.              
[Reserved].

 

9.              
Indemnity. Grantor
agrees to defend, indemnify and hold harmless the the Secured Party and its officers, employees, and agents against (a) all obligations,
demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this Security
Agreement and (b) all losses or expenses in any way suffered, incurred, or paid by the Secured Party as a result of or in any way arising
out of, following or consequential to the transactions contemplated by this Security Agreement (including without limitation, reasonable
attorneys fees and expenses), except for losses arising from or out of the gross negligence or willful misconduct of the Secured Party.

 

10.           
Reinstatement.
This Security Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against
Grantor for liquidation or reorganization, should Grantor become insolvent or make an assignment for the benefit of creditors or should
a receiver or trustee be appointed for all or any significant part of Grantor’s property and assets, and shall continue to be effective
or be reinstated, as the case may be, if at any time payment and performance of the Secured Obligations, or any part thereof, is, pursuant
to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Secured Obligations,
whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Secured Obligations
shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

 

11.           
Miscellaneous.

 

11.1         Waivers;
Amendments. Any amendment of the Note or this Security Agreement shall require the written consent of Grantor and the Secured
Party. Notwithstanding any provision in this Section 11.1 to the contrary, no amendment, modification, termination or waiver
affecting or modifying the rights or obligations of the Secured Party hereunder shall be effective unless signed by Grantor and the
Secured Party.

 

    11

     

    

 

11.2        
Termination of this Security Agreement. Subject to Section 10 hereof, this Security Agreement shall terminate
upon the payment and performance in full of the Secured Obligations and the expiration or termination of any commitment of the Secured
Party to make any Loans to Grantor.

 

11.3        
Successor and Assigns. This Security Agreement and all obligations of Grantor hereunder shall be binding upon the successors
and assigns of Grantor, and shall, together with the rights and remedies of the Secured Party hereunder, inure to the benefit of the
Secured Party, any future holder of any of the Secured Obligations, and their respective successors and assigns. No sales of participations
in the Secured Obligations or any portion thereof or interest therein, and no sales, assignments, transfers or other dispositions of
any agreement governing or instrument evidencing the Secured Obligations or any portion thereof or interest therein, shall in any manner
affect the lien granted to the Secured Party hereunder.

 

11.4        
Governing Law. In all respects, including all matters of construction, validity and performance, this Security Agreement shall
be governed by, and construed and enforced in accordance with, the laws of the State of Delaware applicable to contracts made and performed
in such state, without regard to the principles thereof regarding conflict of laws, except to the extent that the UCC provides for the
application of the law of a different jurisdiction.

 

11.5        
Counterparts; Facsimile or PDF Copies. This Security Agreement may be executed in any number of counterparts and by different
parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when
taken together, shall constitute but one and the same agreement.  Executed copies of the signature pages of this Security Agreement
sent by facsimile or transmitted electronically in Portable Document Format (“PDF”), or any similar format, shall be treated
as originals, fully binding and with full legal force and effect, and the parties waive any rights they may have to object to such treatment.

 

[Signature pages
follow.]

 

    12

     

    

 

In
Witness Whereof, each of the parties hereto has caused this Security Agreement to be executed
and delivered by its duly authorized officer on the date first set forth above.

 

	Address
    Of Grantor	Accelerate
    Diagnostics, Inc.
	 	 
	3950 South Country
    Club Road, Suite 470	By: 	/s/ Jack Phillips
	Tucson, AZ 85714	Printed Name:
    Jack Phillips
	 	Title: President
    and Chief Executive Officer
	 	 
	 	Jurisdiction
    of Organization of Grantor
	 	Delaware

 	jack
w. schuler living trust, as Secured Party	 
	 	 
	/s/ Jack W. Schuler	 
	Jack W. Schuler, Trustee
of the JACK W. SCHULER LIVING TRUSTex_411356.htm

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT (this “Agreement”) dated as of January 1 2022 between ARJAN HAVERHALS (the “Executive”) and MILESTONE SCIENTIFIC INC. (the “Company”).

 

WHEREAS, the Executive is currently the President and Chief Executive Officer of the Company; and

 

WHEREAS, the parties desire, by this Agreement, to set forth the terms and conditions of the employment relationship between the Company and the Executive.

 

NOW, THEREFORE, in consideration of the premises and covenants herein contained, the parties hereto agree as follows:

 

1.    Employment Term. Subject to the terms and conditions hereof, the Company hereby employs the Executive and the Executive hereby accepts such employment for the three-year period (the “Employment Term”) commencing January 1, 2022 (the “Effective Date”) and ending December 31 2024, unless the Employment Term is extended by mutual written agreement of the parties or terminated pursuant to Section 6 hereof.

 

2.    Duties and Responsibilities; Board Observer.

 

(a)   Duties and Responsibilities. During the Employment Term, the Executive shall serve as the President and Chief Executive Officer of the Company and such other senior executive positions consistent therewith as the Company’s Board of Directors (the “Board”) may determine. The Executive shall perform from time to time such services as are customary for a president and chief executive officer of a company such as the Company and other duties and services as the Board of Directors may reasonably request. Subject to the foregoing, the Executive shall report to, and be subject to, the direction of the Board. The Executive agrees to devote his entire business time and attention the business and affairs of the Company and to use his reasonable best efforts to perform faithfully and efficiently the duties and responsibilities of his positions and to accomplish the goals and objectives of the Company as may be established by the Board. Notwithstanding the foregoing, the Executive may engage in the following activities (and shall be entitled to retain all economic benefits thereof including fees paid in connection therewith) as long as they do not interfere in any respect with the performance of the Executive’s duties and responsibilities hereunder and, with respect to item (i) below, that such activity is pre-approved by the Board: (i) serve on corporate, civic, religious, educational and/or charitable boards or committees, provided that the Executive shall not serve on any board or committee of any corporation or other business which competes with the Company’s business; and (ii) make investments in businesses or enterprises and manage his personal investments; provided that with respect to such activities the Executive shall comply with any business conduct and ethics policy, including, but not limited to, the Company’s Insider Trading Policy, applicable to employees of the Company.

 

(b)   Board Observer. During the Employment Term, the Executive shall be invited to attend all meetings of the Board of Directors as a non-voting observer; provided, however, in the sole discretion of the Chairman of the Board, the Executive shall be excused from portions of meeting and, further provided, that the Executive shall not be entitled to attend executive sessions of the Board among the independent members of the Board. 

 

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3.     Compensation.

 

(a)    Base Compensation. In payment for services to be rendered by the Executive hereunder, the Executive shall be entitled to base compensation, payable in cash, less any withholding required by law, at the rate of $350,000 per annum, payable in accordance with the Company’s normal payroll policy as in effect from time to time during the Employment Term (“Base Compensation”).

 

(b)    Bonus. For each calendar year during the Employment Term, the Executive shall be entitled to receive an annual aggregate incentive bonus of up to $400,000 per year, comprised of (i) three (3) separate performance-based bonuses, each up to $100,000 per year, based upon the Company’s achievement of three (3) performance or financial goals, as established by the Compensation Committee in its reasonable discretion; and (ii) a discretionary bonus up to $100,000, as determined by the Compensation Committee, in its sole discretion (the “Bonus Compensation”). Amounts and goals or targets for partial calendar years will be pro rated. Satisfaction of bonus goals will be determined by the Compensation Committee from time to time in its reasonable discretion. In the event that (A) the Company does not achieve one or more of the specific bonus goals established by the Compensation Committee in full, the Committee will give consideration to a pro rata or lesser bonus amount, and (B) in the event that the Company exceeds one or more of the specific bonus goals established by the Compensation Committee, the Committee will give consideration to a discretionary bonus amount, in each case based on the value to the Company of the actions taken by or the milestones not achieved and the milestones exceeded by the Executive, as applicable; however, it being understood that any such pro rata/lesser bonus or discretionary bonus for exceeding any specific bonus goal shall be in the Compensation Committee’s sole discretion and the Compensation Committee shall be under no obligation to approve any such bonus to the Executive.

 

EXECUTIVE UNDERSTANDS THAT EXECUTIVE MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF HIS RECEIPT OR DISPOSITION OF THE SHARES. EXECUTIVE REPRESENTS (a) THAT EXECUTIVE HAS CONSULTED WITH ANY TAX ADVISER THAT EXECUTIVE DEEMS ADVISABLE IN CONNECTION WITH THE RECEIPT OR DISPOSITION OF THE SHARES AND (b) THAT EXECUTIVE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.

 

Bonus compensation, if any, shall be payable annually in arrears thirty-three percent (33%) in cash and sixty-seven percent (67%) in shares of the Company’s common stock (“Common Stock”) valued at the average closing price of the Common Stock on the NYSE American stock exchange, or such other market or exchange on which such shares are then traded, during the period of each calendar year during the Employment Term in accordance with the then practice of the Company for valuing bonus compensation for senior executives, or if the Company has no such practice, then during the first fifteen (15) trading days of December of each calendar year during the Employment Term. With respect to any Bonus Compensation earned hereunder that is payable in cash, such cash amount shall be determined and paid on or before March 31 of the following year. With respect to any Bonus Compensation earned hereunder that is payable in shares of Common Stock (“Bonus Shares”), in addition to such Bonus Shares, the Executive shall be entitled to receive stock options to acquire twice the number of Bonus Shares earned pursuant to a non-qualified stock option grant agreement under the Company’s Amended and Restated 2020 Equity Compensation Plan, or such successor plan in effect at such time (the “Plan”) in the Company’s standard form, which shall provide for a five-year term and shall vest in three equal annual installments on each of the first, second and third anniversary of the grant date, subject to continued employment on such vesting date (“Bonus Options”). The exercise price of the Bonus Options shall be the fair market value of a share of Common Stock on the date of grant (or 110% of such value if at the time of grant the Executive beneficially own ten (10%) or more of the Common Stock), subject to adjustment as provided for in the Plan. Any Bonus Shares earned by Executive hereunder in any calendar year during the Employment Term shall be issued to the Executive, or his estate, if applicable, within the number of days after cessation of employment of Executive for any reason in accordance with the then practice of the Company for issuing bonus shares to senior executive upon cessation of their employment, or if the Company has no such practice, then within ninety (90) days after the cessation of employment of Executive for any reason.

 

2

 

 

(c)    Restricted Securities. The Executive acknowledges that all shares of Common Stock issuable to him hereunder shall be acquired for investment purposes and not for distribution thereof and will not be sold or otherwise disposed of in violation of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

(d)    Section 409A of the Code. Notwithstanding anything herein to the contrary, if any payment of money or other benefits due to the Executive hereunder could cause the application of an accelerated or additional tax or penalty under Section 409A of the Internal Revenue Code (the “Code”), such payment or other benefits will be deferred if deferral will make such payment or other benefits compliant under Section 409A of the Code (for instance, if the Executive is a “specified employee” within the meaning of Section 409A of the Code and the Executive receives a payment or benefit constituting deferred compensation hereunder at or a specified time following a separation from service, such payment or benefit shall not be delivered to the Executive until the earlier of the Executive’s death or six months and one day following the Executive’s separation from service), or otherwise any such payment or other benefits that would not be in compliance with Section 409A of the Code so as to avoid accelerated or additional taxation or penalties thereunder will be restructured but not reduced, to the extent possible, in a manner, reasonably determined by the Company, that does not cause such an accelerated or additional tax or penalty. This Agreement is intended to comply with Section 409A of the Code and will be interpreted accordingly and will be automatically modified to the extent necessary to so comply. With regard to any payment or benefit that constitutes a deferral of compensation subject to Section 409A of the Code, references under this Agreement to the Executive’s termination of employment shall be deemed to refer to the date upon which the Executive has experienced a “separation from service” within the meaning of Section 409A of the Code. Each payment made under this Agreement constitutes a “separate payment” for purposes of Section 409A of the Code. It is intended that each such separate payment under Paragraph 3(b), to the maximum extent possible, be deemed to constitute a short-term deferral under Treasury Regulation §1.409A-1(b)(4) and, to the extent not excluded as a short-term deferral, to the maximum extent possible and applying this rule to the earliest in time of such payments, be deemed to constitute amounts payable under the “two-years/two-times” exclusion from being a deferral of compensation under Treasury Regulation § 1.409A-1(b)(9)(iii). To the extent any reimbursements or in-kind benefits due to the Executive under this Agreement constitute “deferred compensation” under Section 409A of the Code, any such reimbursement or in-kind benefits shall be paid to the Executive in a manner consistent with Treasury Regulation § 1.409A-3(i)(1)(iv). The foregoing and other provisions of this Agreement notwithstanding, the Executive will be responsible for all taxes (including excise taxes and tax penalties) owed by the Executive relating to the Executive’s compensation hereunder or otherwise paid by the Company or any of its affiliates, and the Company and its affiliates shall not and does not indemnify the Executive for any such taxes owed by him.

 

3

 

 

4.     Expenses; Relocation.

 

(a)    Business Expenses. During the Employment Term, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by him in performing services hereunder, provided that such expenses are incurred and accounted for in accordance with the policies and procedures established by the Company. Air travel for executives and employees is generally in economy class, though from time to time based on circumstances exceptions may be made to business class. All business travel, including hotel arrangements, must be made through the Company. Every effort will be made by the Company to accommodate the Executive’s requested airlines, date, time of travel and hotel selection.

 

(b)    Relocation Expenses. The Company will reimburse the Executive for his moving expenses to relocate to New Jersey, based on at least two (2) competitive estimates from reputable moving companies, including two (2) round trip airline tickets (based on the lowest cost available, other than basic economy) for the Executive and his wife for house hunting purposes.

 

5.     Other Benefits. The Executive shall be entitled to the following additional benefits:

 

(a)    four weeks of paid vacation during each year of the Employment Term, which vacation time will accrue during the term of the Executive’s employment in accordance with the Company’s PTO policy, as set forth in the Employee Handbook, from time to time, but subject to the satisfaction of the needs and requirements of the Company, without roll-over;

 

(b)    paid holidays and personal days in accordance with the Company’s standard policies applicable to its full time employees;

 

(c)    the Executive and his eligible dependents shall have the right to participate in any retirement plans (qualified and non-qualified), pension, insurance, health, disability or other benefit plan or program that has been or is hereafter adopted by the Company (or in which the Company participates), according to the terms of such plan or program, on terms no less favorable than the most favorable terms granted to senior executives of the Company; provided, that the health insurance contribution of the Company shall be up to $2,500 per month and the cost of such coverage in excess of such amount shall be available at the Executive’s expense. The Company reserves the right to change, terminate and rescind any of its benefit plans and programs, alter employee contribution levels or replace any of such plans or programs at its discretion; and

 

(d)    a car allowance in the amount of $1,200 per month (the “Car Payments”).

 

4

 

 

6.     Termination.

 

(a)    Disability. The Company shall have the right to terminate the employment of the Executive under this Agreement for disability in the event the Executive suffers an injury, or physical or mental illness or incapacity of such character as to substantially disable him from performing his duties hereunder for a period of more than ninety (90) consecutive days upon the Company giving at least thirty (30) days written notice of termination; provided, however, that (i) through the effective date of such termination, the Executive shall be entitled to receipt of his compensation as provided for in the Agreement, and (ii) if the Executive is eligible to receive disability payments pursuant to a disability insurance policy paid for by the Company, the Executive shall assign such benefits to the Company for all periods as to which he is receiving payment under this Agreement.

 

(b)    Death. This Agreement shall terminate upon the death of the Executive.

 

(c)    Termination by the Company.

 

 (i)    Termination For Cause. The Company may terminate the Term and the employment of Executive hereunder at any time for Cause (as hereinafter defined) (such termination being referred to herein as a “Termination for Cause”) by giving Executive written notice of such termination, effective immediately upon the giving of such notice to Executive, subject to any required cure periods. As used in this Agreement, unless otherwise mutually agreed by Executive and the Company in writing referencing this Agreement, “Cause” shall mean any of the following: (A) the indictment of or plea of guilty or no contest by the Executive to (I) a felony (other than driving related offenses which do not impair the Executive’s ability to perform his duties hereunder) or other serious crime involving dishonesty, fraud, moral turpitude or unethical business conduct, or a violation of such rules and regulations of the Securities and Exchange Commission as may result in criminal action or material fines against the Company; (ii) materially breaches any term of this Agreement or (II) theft, embezzlement, obtaining funds or property under false pretenses; (B) any material and intentional violation or breach of this Agreement or any written and lawful required (but excluding aspirational or expectational) Company policy furnished or otherwise made available to the Executive; provided, that if any matter dealt with in such policies is in conflict with the provisions of this Agreement, the provisions in this Agreement shall control; or (C) intentional or repeated disregard by Executive of a lawful directive given to Executive by the Board or the willful and persistent failure or refusal by Executive to perform Executive’s material duties to the Company or its subsidiaries under this Agreement, in each case other than by reason of Executive’s physical or mental illness or impairment or any such disregard, failure or refusal after a notice of termination for Good Reason by Executive or notice of termination without Cause by the Board. No Cause shall exist unless the Board has, within ninety (90) days of becoming aware of such alleged conduct, event or circumstance, provided Executive with written notice describing the particular circumstances giving rise to Cause, and has provided Executive the opportunity to cure, to the extent reasonably susceptible to cure, such circumstances within thirty (30) days after receiving such notice. If Executive so effects a cure to the satisfaction of the Board, the notice of Cause shall be deemed rescinded and of no force or effect. If, following Executive’s termination of employment hereunder for other than Cause, it is determined in good faith by the Board that Executive’s employment could have been terminated for Cause for the reasons set forth in clause (A)(I) of this Section 6(c)(i) or clause (A)(II) of this Section 6(c)(i), in each case to the extent that such conduct involves or relates to the Company and occurs prior to such termination, Executive’s employment shall be deemed to have been terminated for Cause retroactively to the date of termination.

 

5

 

 

 (ii)   Termination Other Than for Cause. The Company may terminate the Term and the employment of the Executive hereunder at any time other than for Cause or Disability (such termination shall be defined as a “Termination Other Than for Cause”) by giving the Executive written notice of such termination, which notice shall be effective thirty (30) days after the giving of such notice or such later date set forth therein; provided, that the Company’s obligations to Executive under this Agreement shall be as set forth in Section 7(c) hereof.

 

(d)    Termination by Executive. If at any time during the Term, the Executive elects to terminate the Term and his employment with the Company other than for “Good Reason” (as defined below), then the Company’s obligations to the Executive under this Agreement shall be as set forth in Section 7(d) hereof. If the Executive elects to terminate the Term and his employment with the Company for Good Reason, then the Company shall pay the Executive the amounts set forth in Section 7(c) hereof. As used herein, unless otherwise mutually agreed by the Executive and the Company in writing referencing this Agreement, “Good Reason” shall mean (i) a material diminution in duties or responsibilities or material change in his reporting obligations or titles as provided of in this Agreement, other than a change in the Executive’s duties or responsibilities in accordance with Section 2(a) or that results from becoming part of a larger organization following a Change in Control; (ii) a material reduction in the amount of the Executive’s Base Compensation, other than in connection with an “across-the-board” reduction for all senior executives; (iii) the failure to pay when due Base Salary or incentive compensation; (iv) a violation or breach by the Company of any of its other material obligations contained in this Agreement; provided, that Good Reason shall not occur unless the Executive shall have (A) given a detailed written notice to the Company of any fact or circumstance believed by the Executive to constitute Good Reason within ninety (90) days of the occurrence of such fact or circumstance, (B) given the Company thirty (30) days therefrom to cure, to the extent reasonably susceptible to cure, such fact or circumstance and the Company shall have failed to so cure (it being understood that if the Company cures the fact or circumstance giving rise to Good Reason, the notice of Good Reason shall be deemed rescinded and of no force or effect), and (C) the Executive in fact resigns his employment within ninety (90) days from the date that such circumstance first occurs. For purposes of this Agreement, “Good Reason” shall be interpreted in a manner, and limited to the extent necessary, so that it shall not cause, to the extent possible, adverse tax consequences for either party with respect to Section 409A of the Code and any successor statute, regulation and guidance thereto.

 

7.     Effect of Termination.

 

(a)    Upon the termination of the Term and Executive’s employment hereunder due to a Termination for Cause (as defined in Section 6(a) above), neither the Executive nor his beneficiary or estate shall have any further rights or claims against the Company, except the right to receive (i) the Executive’s earned but unpaid Base Compensation and accrued but unused and outstanding vacation, as provided in Section 3, through the termination date, (ii) reimbursement for any reimbursable expenses for which the Executive shall not have been reimbursed as provided in Section 4(a) and which were incurred prior to the termination date and (iii) all vested benefits under employee benefit programs of the Company to which it or the Executive contributes or participates (the amounts described in clauses (i) through (iii) hereof being referred to as the “Accrued Benefits”).

 

6

 

 

(b)    Upon the termination of the Term and the Executive’s employment hereunder due to death or Disability, neither the Executive nor his beneficiary or estate shall have any further rights or claims against the Company except the right to receive (i) the Accrued Benefits, (ii) any earned but unpaid Bonus Compensation from the prior fiscal year, payable in accordance with the Company’s standard payroll practices and on the date that such bonus would otherwise be payable hereunder, and (iii) payment of any Bonus Compensation with respect to the then-current fiscal year based on actual performance and pro-rated based on the number of completed months the Executive was employed with the Company in such fiscal year through the date of termination, payable in accordance with the Company’s standard payroll practices and on the date that such bonus would otherwise be payable hereunder.

 

(c)    Upon the termination of the Term and the Executive’s employment due to a Termination Other Than for Cause or a termination of the Executive’s employment by Executive for Good Reason, neither the Executive nor his beneficiary nor his estate shall have any rights or claims against the Company except the right to receive (i) the Accrued Benefits, (ii) any earned but unpaid Bonus Compensation from the prior fiscal year, payable in accordance with the Company’s standard payroll practices and on the date that such bonus would otherwise be payable hereunder, (iii) payment of any Bonus Compensation with respect to the then-current fiscal year based on actual performance and pro-rated based on the number of completed months the Executive was employed with the Company in such fiscal year through the date of termination or resignation, as applicable, payable in accordance with the Company’s standard payroll practices and on the date that such bonus would otherwise be payable hereunder, (iv) accelerated vesting in full of all unvested Bonus Options held by the Executive as of the date of termination and the unvested portion of any Bonus Compensation deferred pursuant to the terms hereof or the applicable plan and the Executive’s elections thereunder, if any, and (v) continued payment, for six (6) months (the “Severance Period”), of (A) Executive’s Base Compensation, in accordance with the Company’s standard payroll practices and subject to applicable withholding taxes, plus (B) the Car Payments, and (C) continued provision of the benefits with respect to health, vision and dental pursuant to and to the extent required by Section 5(c) herein ((iv) and (v), collectively, “Severance”).

 

(d)    Upon the termination of the Term and the Executive’s employment by the Executive (other than for Good Reason or death or Disability), neither the Executive nor his beneficiary or estate shall have any further rights or claims against the Company, except the right to receive the Accrued Benefits.

 

7

 

 

(e)    Notwithstanding anything to the contrary in this Agreement, payment of Severance shall be subject to and conditioned on (i) the Executive’s resignation from any positions the Executive may hold by virtue of his employment with the Company, (ii) the Executive delivering to the Company an executed copy of a release in form and substance satisfactory to the Company (the “Release”), within thirty-five (35) days following the Executive’s termination of employment (the “Release Period”) and such release becoming effective, enforceable and irrevocable in accordance with its terms, (iii) the Executive’s continued compliance with the Company’s Employee Proprietary Information, Invention and Non-Solicitation Agreement, provided, that in the event of a claimed breach under this clause (iii), the Company shall provide the Executive with notice and five (5) days to cure such breach, to the extent reasonably susceptible to cure, and (iv) Executive’s continued compliance with Covenant Agreement, subject to any right to notice and cure as provided in the Covenant Agreement. It is understood and agreed that the Executive’s right to payment called for by Section 6(c) shall be unaffected by any other compensation he might receive from outside sources during the period of the payments called for by such Section. If the Release Period spans two (2) calendar years (that is, includes December 31 of one year and the next day (January 1) of the first day of next year), then payments that would otherwise have been made prior to the end of the Release Period will be made, after the release becomes irrevocable, in lump sum on the first payroll date that occurs in the next calendar year.

 

(f)    Upon the expiration of this Agreement, neither the Executive nor his beneficiary or estate shall have any further rights or claims against the Company, except the right to receive (i) the Accrued Benefits, and (ii) any earned but unpaid Bonus Compensation from such fiscal year, payable in accordance with the Company’s standard payroll practices and on the date that such bonus would otherwise be payable hereunder.

 

(g)    The Executive shall not be required to seek other employment or otherwise to mitigate the Executive’s damages on or after the Executive’s date of termination, and the amount of any payment or benefit provided for in this Agreement shall not be reduced by any compensation or benefits received by Executive from outside sources.

 

(h)    Notwithstanding anything to the contrary in the foregoing, the Executive shall continue to have any rights (i) in the nature of indemnification which the Executive may have with respect to claims against the Executive relating to or arising out of his employment with the Company, any benefit to which the Executive is entitled under any tax qualified pension plan of the Company, COBRA continuation coverage benefits or any other similar benefits required to be provided by statute, (ii) in respect of the shares or other securities or options to purchase shares or other securities of the Company owned or held by the Executive as of the date of termination, in all cases in accordance with the terms of the plan, agreement or arrangement governing such rights, it being the intention and agreement of the Company that whether Executive shall be deprived or be entitled to retain by reason of any termination of employment any payments, options or benefits which have been vested or have been earned or to which Executive is entitled as of the effective date of such termination shall be governed by the terms of payment, grant or benefits or written agreement between the Company and Executive, and (iii) any rights to COBRA or any other statutorily required rights. For the avoidance of doubt, for purposes of determining the amount of any Base Compensation, Bonus Compensation or other payments, the vesting of any grant or benefit, or the calculation of any other amount under this Agreement or otherwise, the Severance Period shall not be included.

 

8.     Representations and Covenants of the Executive.

 

(a)    The Executive represents and warrants that he has the full right and authority to enter into this Agreement and fully perform his obligations hereunder, that he is not subject to any non-competition agreement that limits or restricts his ability to perform the services provided for in this Agreement, and that his past, present and anticipated future activities have not and will not infringe on the proprietary rights of others. The Executive further represents and warrants that he is not obligated under any contract (including, but not limited to, licenses, covenants or commitments of any nature) or other agreement or subject to any judgment, decree or order of any court or administrative agency which would conflict with his obligation to use his best efforts to perform his duties hereunder or which would conflict with the Company’s business and operations as presently conducted or proposed to be conducted. Neither the execution nor delivery of this Agreement, nor the carrying on of the Company’s business as officer and employee by the Executive will conflict with or result in a breach of the terms, conditions or provisions of or constitute a default under any contract, covenant or instrument to which the Executive is currently a party.

 

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(b)    Simultaneous with the execution of this Agreement, the Executive and the Company shall enter into the Covenant Agreement in the form of Exhibit A to this Agreement. The Executive agrees and acknowledges that the execution and delivery of the Covenant Agreement is a material inducement to the Company to enter into this Agreement.

 

9.     Miscellaneous.

 

(a)    (a) Integration; Amendment. This Agreement constitutes the entire agreement between the parties hereto with respect to the matters set forth herein and supersedes and renders of no force and effect all prior understandings and agreements between the parties with respect to the matters set forth herein. No amendments or additions to this Agreement shall be binding unless in writing and signed by both parties.

 

(b)    Severability. If any part of this Agreement is contrary to, prohibited by, or deemed invalid under applicable law or regulations, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited, or invalid, but the remainder of this Agreement shall not be invalid and shall be given full force and effect so far as possible.

 

(c)    Waivers. The failure or delay of any party at any time to require performance by the other party of any provision of this Agreement, even if known, shall not affect the right of such party to require performance of that provision or to exercise any right, power, or remedy hereunder, and any waiver by any party of any breach of any provision of this Agreement shall not be construed as a waiver of any continuing or succeeding breach of such provision, a waiver of the provision itself, or a waiver of any right, power, or remedy under this Agreement. No notice to or demand on any party in any case shall, of itself, entitle such party to other or further notice or demand in similar or other circumstances.

 

(d)    Power and Authority. The Company represents and warrants to the Executive that it has the requisite corporate power to enter into this Agreement and perform the terms hereof; that the execution, delivery and performance of this Agreement by it has been duly authorized by all appropriate corporate action; and that this Agreement represents the valid and legally binding obligation of the Company and is enforceable against it in accordance with its terms.

 

(e)    Burden and Benefit. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, personal and legal representatives, successors and assigns.

 

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(f)    Governing Law; Headings. This Agreement and its construction, performance, and enforceability shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to its conflict of laws principles. Headings and titles herein are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement.

 

(g)    Arbitration; Remedies. Any dispute or controversy arising under this Agreement or as a result of or in connection with Executive’s employment (other than disputes arising under the Covenant Agreement) shall be arbitrated and settled pursuant to the National Rules for the Resolution of Employment Disputes of the American Arbitration Association which are then in effect in a proceeding held in New York, New York. This provision shall also apply to any and all claims that may be brought under any federal or state anti-discrimination or employment statute, rule or regulation, including, but not limited to, claims under: the National Labor Relations Act; Title VII of the Civil Rights Act; Sections 1981 through 1988 of Title 42 of the United States Code; the Employee Retirement Income Security Act; the Immigration Reform and Control Act; the Americans With Disabilities Act; the Age Discrimination in Employment Act; the Fair Labor Standards Act; the Occupational Safety and Health Act; the Family and Medical Leave Act; and the Equal Pay Act. The decision of the arbitrator and award, if any, is final and binding on the parties and the judgment may be entered in any court having jurisdiction thereof. The parties will agree upon an arbitrator from the list of labor arbitrators supplied by the American Arbitration Association. The parties understand and agree, however, that disputes arising under the Covenant his Agreement may be brought in a court of law or equity without submission to arbitration.

 

(h)    Jurisdiction. Except as otherwise provided for herein, each of the parties (a) submits to the exclusive jurisdiction of any state court sitting in New York, New York or federal court sitting in New York County in any action or proceeding arising out of or relating to this Agreement, (b) agrees that all claims in respect of the action or proceeding may be heard and determined in any such court, (c) agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court and (d) waives any right such party may have to a trial by jury with respect to any action or proceeding arising out of or relating to this Agreement. Each of the parties waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto. Any party may make service on another party by sending or delivering a copy of the process to the party to be served at the address and in the manner provided for giving of notices in Section 9(i). Nothing in this Section, however, shall affect the right of any party to serve legal process in any other manner permitted by law.

 

(i)    Notices. All notices called for under this Agreement shall be in writing and shall be deemed given upon receipt if delivered personally or by confirmed facsimile transmission and followed promptly by mail, or mailed by registered or certified mail (return receipt requested), postage prepaid, to the parties at their respective addresses (or at such other address for a party as shall be specified by like notice; provided, that notices of a change of address shall be effective only upon receipt thereof) set forth below, or to any other address or addressee as any party entitled to receive notice under this Agreement shall designate, from time to time, to others in the manner provided in this subsection 9(i) for the service of notices.

 

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			If to the Company:

			 

				 
	
			addressed to:    

				
			Milestone Scientific Inc.

			425 Eagle Rock Avenue

			Suite 403

			Roseland, New Jersey 07068

			Attn.: Chairman of the Board

			Email: LBernhard@milestonescientific.com

			
	 	 
	
			with a copy to:    

				
			Golenbock Eiseman Assor Bell & Peskoe LLP

			711 Third Avenue

			New York, New York 10017

			Attn.: Lawrence M Bell, Esq.

			Email: LBell@golenbock.com

			
	 	 
	
			If to the Executive:    

				
			Mr. Arjan Haverhals

			41 Hidden Court

			North Andover, Massachusetts 01845

			Email: arjan.haverhals@gmail.com

			
	 	 
	
			with a copy to:    

				
			Elizabeth Haverhals

			Email: elizabethjan.1975@gmail.com

			

 

(j)    Number of Days. In computing the number of days for purposes of this Agreement, all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or holiday on which federal banks are or may elect to be closed, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or such holiday.

 

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

 

 

	
			 

				
			The Company:

			 

			MILESTONE SCIENTIFIC INC.

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			 

				
			 

			
	
			 

				
			 

				
			Name:

			Title:

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	 	 	 	 
	 	 	The Executive:	 
	 	 	 	 
	 	 	 	 
	 	 	Arjan Haverhals	 

 

[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]

 

 

 

 

Exhibit A

 

AGREEMENT

 

This COVENANT AGREEMENT (the “Agreement”), dated and effective as of January 1, 2022, is made by and between MILESTONE SCIENTIFIC INC., a Delaware corporation (together with its successors and affiliates, the “Company”) and ARJAN HAVERHALS (the “Executive”). This Agreement is entered into pursuant to the Employment Agreement, dated January 1, 2022, between the Company and Executive regarding Executive’s employment with the Company (as amended from time to time, the “Employment Agreement”). As used herein, the term “Company” shall include the Company and its direct and indirect subsidiaries. Other capitalized terms used but not defined in this Agreement have the meanings ascribed to them on Annex 1 attached hereto.

 

1.     Nondisclosure of Proprietary Information.

 

(a)    Except in connection with the faithful performance of the Executive’s duties under the Employment Agreement and as provided herein, the Executive shall, in perpetuity, maintain in confidence and shall not directly, indirectly or otherwise, use, disseminate, disclose or publish, or use for the Executive’s benefit or the benefit of any person, firm, corporation or other entity any Proprietary Information or deliver to any person, firm, corporation or other entity any document, record, notebook, computer program or similar repository of or containing any such Proprietary Information. The parties hereby stipulate and agree that as between them the Proprietary Information is important, material and affects the successful conduct of the businesses of the Company (and of any successor or assignee of the Company). The Executive acknowledges and agrees that these steps to maintain the confidentiality of its Proprietary Information are reasonable and that it is reasonable and necessary for the Company to take such steps.

 

(b)    Upon termination of the Executive’s employment with the Company for any reason, the Executive will promptly deliver to the Company all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, computer disk drives, flash drives, disks, or any other materials consisting of, including or relating to Proprietary Information in his possession.

 

(c)    Notwithstanding the foregoing, the Executive may respond to a lawful and valid subpoena or other legal or administrative process but: (i) shall give the Company the earliest practicable notice thereof, (ii) shall, as much in advance of the return date as practicable, make available to the Company and its counsel the documents and other information sought and (iii) shall assist such counsel at the Company’s expense in resisting or otherwise responding to such process.

 

(d)    Nothing in this Agreement shall prohibit the Executive from (i) disclosing information and documents when required by law, subpoena, court or administrative order (subject to the requirements of Section 1(c) above), (ii) disclosing information and documents related to his own personal benefits, entitlements and obligations in confidence to his attorney or tax or financial adviser for the purpose of securing legal or tax advice, (iii) disclosing the post-employment restrictions in this Agreement in confidence to any potential new employer, (iv) reporting possible violations of federal law or regulations to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission or making other disclosures that are protected under the whistleblower provisions of federal or state law or regulations, or (v) retaining, at any time, his personal correspondence, his personal rolodex and documents related to his own personal benefits, entitlements and obligations.

 

 

1 NTD: Has Arjan already signed an Employee Proprietary Information, Inventions and Non-Solicitation Agreement? See Sec. 6 of his Letter Agreement.

 

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2.     Non-Solicitation; Non-Compete; Non-Disparagement.

 

(a)    At any time during the term of his employment with the Company (the “Employment Period”) and for a period of thirty-six (36) months immediately following the end of the Employment Period, the Executive shall not, directly or indirectly, either for himself or on behalf of any other person, firm, corporation or other entity, (i) recruit or otherwise solicit, encourage or induce any employee, client, customer or investor of any Company Party to terminate such person or entity’s employment or other arrangement with a Company Party, or otherwise to change such person or entity’s relationship with a Company Party, (ii) hire or offer to employ or retain or offer to retain as a consultant or advisor or in any other capacity (or cause or influence any other person or entity to hire or offer to employ or retain or offer to retain as a consultant or advisor or in any other capacity) any person who was employed by the Company in a similar capacity as such person is employed by the Company in a manner which would deprive the Company of the services of such person or (iii) cause or seek to cause any client or customer of, or investor in, any Company Party to become a client or customer of, or investor in, any business or activity that competes with the Business and in which the Executive becomes engaged (directly or indirectly) or otherwise has a financial interest.

 

(b)    At any time during the Employment Period and for a period of twelve (12) months immediately following the end of the Employment Period, the Executive shall not, directly or indirectly, either for himself or on behalf of any other person, firm, corporation or other entity, shall not, directly or indirectly; (i) in any manner, engage in any business which competes with any business conducted by the Company (including any subsidiary) and will not directly or indirectly own, manage, operate, join, control or participate in the ownership, management, operation or control of, or be employed by or connected in any manner with any corporation, firm or business that is so engaged (provided, however, that nothing herein shall prohibit the Executive from owning not more than three percent (3%) of the outstanding stock of any publicly held corporation).

 

(c)    The Executive agrees not to make any disparaging remarks about any Company Party, or any of their practices, or any Company Party’s directors, managers, officers, equity holders or trustees either orally or in writing, at any time.

 

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3.    Inventions and Other Works. During the Employment Period, the Executive may either alone or with others, author, create, conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, or assist in the authoring, creation, conception, development or reduction to practice of documents, materials, designs, drawings, processes, Proprietary Information and other works which relate to the Business or are otherwise capable of being used by the Company (“Works”). The Executive agrees that any and all Works and the related intellectual property and other rights in those Works including, without limitation, inventions, patents, copyrights, mask works, design rights, database rights, trademarks, service marks, internet rights/domain names, trade secrets and know-how (whether registered or unregistered and including any applications or rights to apply) subsisting anywhere in the world in any and all media now existing or hereafter created (collectively, “Works IP Rights”) will belong solely to and be the absolute property of the Company. The Executive agrees that all original works of authorship which are made by the Executive (solely or jointly with others) within the scope of and during the period of his employment with the Company and which are protectable by copyright are “works made for hire,” as that term is defined in the United States Copyright Act. The Executive hereby assigns with full title guarantee to the Company by way of present assignment of all Works IP Rights, all intellectual property rights in the Works. The Executive hereby irrevocably and unconditionally waives any moral rights which he may have in any Works. The Executive shall immediately disclose to the Company all Works and all Works IP Rights, and shall immediately on request by the Company (whether during or after the termination of his Employment Period) and at the expense of the Company execute all instruments and do all things necessary for vesting in the Company (or such other person as the Company may designate) all right, title and interest to and in the Works and Works IP Rights and as otherwise necessary for giving to the Company the full benefit of this clause. Notwithstanding the foregoing, Works and Works IP Rights does not apply to any invention for which no equipment, supplies, facility, or trade secret information of the Company was used and which was developed entirely on the Executive’s own time, unless (a) the invention relates (i) to the Business, or (ii) to the Company’s actual or demonstrably anticipated research or development, or (b) the invention results from any work performed by the Executive for the Company.

 

4.    Patent and Copyright Registrations. The Executive agrees to assist the Company, or its designee, at the Company’s expense, in every proper way to secure the Company’s rights in the inventions and any copyrights, patents, mask work rights or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments which the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, mask work rights or other intellectual property rights relating thereto. The Executive further agrees that his obligation to execute or cause to be executed, when it is in his power to do so, any such instrument or papers shall continue after the termination of this Agreement.

 

5.    Injunctive Relief. It is recognized and acknowledged by the Executive that a breach of one or more of the covenants contained in Sections 1 and 2 may cause irreparable damage to the Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach may be inadequate. Accordingly, the Executive agrees that in the event of a breach or threatened breach of any of the covenants contained in Sections 1 or 2, in addition to any other remedy which may be available at law or in equity, the Company shall be entitled to seek injunctive relief and special performance to prevent or prohibit such breach. The Executive agrees to waive any requirements for the securing or posting of any bond in connection with such remedy.

 

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6.    Tolling. In the event of the breach by the Executive of any covenants contained in Sections 1 or 2 the running of the applicable period of restriction shall be automatically tolled and suspended for the amount of time that the breach continues, and shall automatically recommence when the breach is remedied so that the Company shall receive the benefit of the Executive’s compliance with such covenants.

 

7.    Assignment and Successors. The Company may assign its rights and obligations under this Agreement to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise), and may assign or encumber this Agreement and its rights hereunder as security for indebtedness of the Company and its affiliates. This Agreement shall be binding upon and inure to the benefit of parties to this Agreement and their respective heirs, executors, administrators, personal and legal representatives, successors and assigns. None of the Executive’s rights or obligations may be assigned or transferred by the Executive, other than the Executive’s rights to payments hereunder, which may be transferred only by will or operation of law.

 

8.    Governing Law. This Agreement shall be governed, construed, interpreted and enforced in accordance with its express terms, and otherwise in accordance with the substantive laws of the State of New York, without reference to the principles of conflicts of law or choice of law of the State of New York or of any other jurisdiction, and where applicable, the laws of the United States.

 

9.    Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement. Signatures delivered by facsimile shall be deemed effective for all purposes.

 

10.   Entire Agreement. The terms of this Agreement and the Employment Agreement are intended by the parties to be the final expression of their agreement with respect to the subject matter hereof and to supersede all prior understandings and agreements, whether written or oral. The parties further intend that this Agreement shall constitute the complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.

 

11.   Amendments; Waivers. This Agreement may not be modified or amended except by an instrument in writing, signed by the Executive and the Chairman of the Board of the Company. By an instrument in writing similarly executed, the Executive or the Company may waive compliance by the other party with any specifically identified provision of this Agreement that such other party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent breach or failure to comply or perform. No failure to exercise and no delay in exercising any right, remedy, or power hereunder shall preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity. Except as otherwise set forth in this Agreement, the respective rights and obligations of the parties under this Agreement shall survive any termination of the Executive’s employment by the Company.

 

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12.   Dispute Resolution. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively in accordance with the provisions of Section 5 of this Agreement and Section 9 of the Employment Agreement.

 

13.  Enforcement. If any term, provision, covenant or condition of this Agreement is held by a court of competent jurisdiction to exceed the limitations permitted by applicable law, as determined by such court in such action, then the provisions will be deemed reformed to the maximum limitations permitted by applicable law and the parties hereby expressly acknowledge their desire that in such event such action be taken. If any provision of this Agreement is held to be illegal, invalid or unenforceable during the term of this Agreement after application of the first sentence of this Section 13, then such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

 

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5

 

 

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

 

	
			 

				
			The Company:

			 

			MILESTONE SCIENTIFIC INC.

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			/s/ Leonard Osser

				
			 

			
	
			 

				
			 

				
			Title: Vice-Chairman of Board Directors

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	 	By:	/s/ Leslie Bernhard	 
	 	 	Title: Chairman of Board of Directors	 
	 	 	 	 
	 	The Executive:	 
	 	 	/s/ Arjan Haverhals	 

 

[SIGNATURE PAGE TO COVENANT AGREEMENT]

 

 

 

 

ANNEX 1 

 

Defined Terms 

 

“Business” means all commercial activities of the Company.

 

“Company Party” means the Company and the Company’s customers, distributors, vendors, suppliers and consultants.

 

“Proprietary Information” means and includes any confidential or proprietary information, trade secrets or intellectual property of or relating to any Company Party; provided, however, that Proprietary Information does not include information which (i) becomes publicly available, other than by disclosure by the Executive in violation of this Agreement, (ii) is contained in a publicly available document or (iii) was known to the Executive before the Executive commenced discussion with the Company regarding the prospect of employment by the Company.

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