Document:

Exhibit 4.4

FORM OF WARRANT

THIS WARRANT AND ANY COMMON STOCK ISSUED UPON THE EXERCISE OF THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM, AS EVlDENCED BY A LEGAL OPINlON OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO SUCH EFFECT. NOTWITHSTANDING THE FOREGOING, THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

Z TRIM HOLDINGS, INC.

	
Warrant Shares: 400.000

	
Initial Exercise Date: March 2. 2016:

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Jonathan Kahn or his assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any lime on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the five (5) year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Z Trim Holdings, Inc., an Illinois corporation (the “Company”), up to 400,000 shares (as subject to adjustment hereunder, the “Warrant Shares”) of common stock, par value $0.0005 per share, of the Company (the “Common Stock”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 1 (b).

	 	
Section 1.

	
Exercise.

a)                 Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise form annexed hereto (a “Notice of Exercise”). Within three (3) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section I (c) below is available and specified in the applicable Notice of Exercise. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full , in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased . The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases; provided that the records of the Company, absent manifest error, will be conclusive with respect to the number of Warrant Shares purchasable from time to time hereunder. The Company shall deliver any objection to any Notice of Exercise form within three (3) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that , by reason of the provisions of this paragraph , following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

b)                        Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $0.64, subject to adjustment hereunder (the “Exercise Price”). Except as where otherwise permitted in accordance with Section 1(c), this Warrant may only be exercised by means of payment by wire transfer or cashier’s check drawn on a United States bank. 

c)                         Cashless Exercise. If at the time of exercise hereof there is not in effect a registration statement covering the resale of the Warrant Shares, then the Holder may elect to exercise this Warrant in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A) , where:

	 	
(A) = 

	
the VW AP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;

	 	
(B) = 

	
the Exercise Price of this Warrant, in effect at the time of exercise; and

	 	
(X) = 

	
the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the principal Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (“Bloomberg”) (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)) , (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by the OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Board of Directors of the Company and reasonably acceptable to the Holders of a simple majority of the Securities (on an as-converted basis), the fees and expenses of which shall be paid by the Company.

 

d)                         Mechanics of Exercise. 

i.              Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement registering the resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise (or if either of the conditions set forth in Section 2(d)(i)(A) or (B) are not met, then by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the latest of (I) the delivery to the Company of the Notice of Exercise, (II) surrender of this Warrant (if required by the Company’s Transfer Agent) and (Ill) payment of the aggregate Exercise Price as set forth above (except if exercised by cashless exercise pursuant hereto) (such date, the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant Share Delivery Date.

ii.        Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iii.           Rescission Rights. If the Company fails to cause its Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise. 

iv.           Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails for any reason to deliver to the Holder any Warrant Shares pursuant Section 1(d)(i) on or before the Warrant Share Delivery Date, and if after such date at any time the Warrant Shares are eligible for quotation or are listed for trading on the Trading Market, and if after such Warrant Share Delivery Date and continued failure to deliver the Warrant Shares (without restrictive legend if an Unrestricted Condition is met), the Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm purchases, shares of Common Stock to deliver in satisfaction of a sale by such Holder of the Warrant Shares which the Holder was entitled to receive upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder (in addition to any remedies available to or elected by the Holder) the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the product of (I) the aggregate number of Warrant Shares that such Holder was entitled to receive from the exercise at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including brokerage commissions, if any) giving rise to such purchase obligation and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case the exercise will be deemed rescinded) or deliver to the Holder the number of Warrant Shares that would have been issued had the Company timely complied with its delivery requirements under Section 2(d)(i). For example, if the Holder (or his brokerage firm) purchases Common Stock in the open market having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of this Warrant with respect to which the actual aggregate sale price (including any brokerage commissions) giving rise to such purchase obligation was $10,000, under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1 ,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Such funds shall be provided to the Holder by the Company within five (5) Trading Days from receipt by the Company of proof by the Holder of funds owned to the Holder resulting from a Buy-ln. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing the Warrant Shares (without restrictive legend if an Unrestricted Condition is met).

 

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

vi.       Charges. Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that, in the event Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.

vii .     Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

viii .    Partial Liquidated Damages. The Company understands and agrees that a delay in the delivery of Warrant Shares beyond the Warrant Share Delivery Date (free from any restrictive legend if an Unrestricted Condition is met), could result in economic loss to the Holder. If in the case of an exercise of this Warrant, such DWAC transfer or certificate(s) are not delivered to or as directed by the then Holder (without restrictive legend if an Unrestricted Condition is met), by the Warrant Share Delivery Date for the number of Warrant Shares such Holder is entitled to receive pursuant to a Notice of Exercise, the Company shall pay to such Holder, in cash, an amount per Trading Day for each Trading Day during a Failure to Deliver Warrant Shares Period (as defined below), equal to the greater of (I) (A) I % of the VW AP for the Warrant Shares sought to by the Holder hereof to be purchased by exercise of this Warrant pursuant to the Notice of Exercise for each of the first five (5) Trading Days after the Warrant Share Delivery Date, and (B) 2% of such amount for each Trading Day thereafter, and (II) $1 ,500 per Trading Day (which amount shall constitute as partial liquidated damages and not a penalty) (“Partial Liquidated Damages”). Notwithstanding anything to the contrary contained herein or elsewhere, the Holder shall be entitled to withdraw a Notice of Exercise, and upon such withdrawal , the Company shall only be obligated to pay the Partial Liquidated Damages through and including the date the Notice of Exercise is withdrawn . “A Failure to Deliver Warrant Shares Period” shall mean each and every Trading Day commencing on the first (1st) Trading Day after the Warrant Share Delivery Date that any Warrant Shares required to be delivered to the Holder pursuant to a Notice of Exercise are either not received by such Holder and/or are received but have a restrictive legend on any certificate representing the Warrant Shares if an Unrestricted Condition is met, through and including the Trading Day on which such Holder receives the all (i) Warrant Shares such Holder is entitled to receive based upon its Notice of Exercise without any restrictive (provided an Unrestricted Condition is met). Partial Liquidated Damages shall be paid to the Holder no later than the fifth (5th) calendar day of the month following the month in which they accrue.

 

		
Section 2.

	
Intentionally Omitted

		
Section 3.

	
Certain Adjustments.

a)                 Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-c1assification.

 

b)                 Anti-Dilution. If, at any time while this Warrant is outstanding, the Company sells or grants any option to purchase, or sells or grants any right to reprice or otherwise dispose of or issue (or announces any offer, sale, grant or any option to purchase or dispose of) any Common Stock or Common Stock Equivalents, (i) at an effective price per share less than the current market price in effect immediately prior to such issuance (such lower price, the “Base Share Price,” and each such issuance during the Adjustment Period collectively, a “Dilutive Issuance”) (it being understood and agreed that if the holder of the Common Stock or Common Stock Equivalents so issued during the Adjustment Period shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is less than the current market price in effect immediately prior to such issuance, such issuance shall be deemed to have occurred for less than the current market price in effect immediately prior to such issuance on such date of the Dilutive Issuance at such effective price) then simultaneously with the consummation of each Dilutive Issuance the Exercise Price shall be reduced to equal the Base Share Price and the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the current market price in effect immediately prior to such issuance prior to such adjustment. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued during the Adjustment Period. Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 3(b) in respect of an Exempt Issuance (defined below). The Company shall notify the Holder, in writing, no later than the Trading Day following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to exercise the Warrant at the reduced Exercise Price and to receive a number of Warrant Shares based upon the reduced Exercise Price regardless of whether the Holder accurately refers to the adjusted Exercise Price in the Notice of Exercise. “Exempt Issuance” means the issuance of: (i) shares of Common Stock or options to employees, officers, directors, consultants or advisors of the Company pursuant to any stock or option plan duly adopted for such purpose by a majority of the non- employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose; (ii) shares of Preferred Stock and Warrants in connection with the Offering (as defined in the Company’s Information Statement on Form 14C filed with the SEC on November 30, 2015), including upon conversion of any existing notes and securities upon the exercise, exchange, conversion or adjustment of such Preferred Stock and Warrants pursuant to the terms thereof; (iii) shares of Common Stock issued and outstanding on the Initial Exercise Date or issuable upon conversion of convertible securities outstanding on the Initial Exercise Date or securities issuable pursuant to agreements to which the Company is a party as of the Initial Exercise Date (and including any issuances of securities pursuant to antidilution provisions of any such securities), provided that such securities and such agreements to issue securities have not been amended since the Initial Exercise Date to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities; (iv) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities; (v) restricted securities for fair market value, from time to time, for the payment of services or to vendors who are not Affiliates of the Company: and (vi) shares of Common Stock issued in connection with a one-time warrant exchange at par value to be offered to all existing warrant holders with warrants outstanding prior to the Offering (the “Warrant Exchange”).

 

c)                 Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time during which this Warrant is outstanding the Company grants, issues or sells any Common Stock Equivalents or other rights to purchase Stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, any limitation in Section 2(e) immediately before the dale on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the any limitation in Section 2(e), then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding any limitation in Section 2(e). The provisions of this Section 3(c) will not apply to any grant, issuance or sale of Common Stock Equivalents or other rights 10 purchase stock, warrants, securities or other property of the Company which is not made pro rata to the record holders of any class of shares of Common Stock.

d)                         Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution. 

 

e)                         Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person , (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment. transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization. recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction that is (I) an all cash transaction, (2) a “Rule l3e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a Fundamental Transaction involving a person or entity not traded on a national securities exchange, including, but not limited to, the NYSE MKT, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, the Company or any Successor Entity (as defined below) shall, at the option of the Holder or the Company or any Successor Entity, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction. “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(e), and to deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction) . Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

f)                 Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

g)                         Notice to Holder.

i.              Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment. The Company shall , upon the written request at any time of any Holder of a Warrant, furnish or cause to be furnished to such Holder a certificate setting forth (i) such adjustments and readjustments, (ii) the Exercise Price at the time in effect, and (iii) the number of  shares of Common Stock and the amount, if any. of other property which at the time would be received upon the exercise of the Warrant.

ii.        Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (8) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then. in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 10 Business Days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Co=on Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation , merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

		
Section 4.

	
Compliance with Securities Laws.

The Holder of this Warrant acknowledges that this Warrant is being acquired solely for the Holder’s own account and not as a nominee for any other party, and for investment and not with a view to the distribution hereof. This Warrant and any Warrant issued in substitution or replacement therefor shall be stamped or imprinted with a legend in substantially the following form:

“THlS WARRANT AND ANY COMMON SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLlCABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTI-IECATED IN THE ABSENCE OF SUCH REGISTRATTON OR AN APPLICABLE EXEMPTION THEREFROM, AS EVIDENCED BY A LEGAL OPlNION OF COUNSEL REASONABLY SA TIS FACTOR Y TO TH.E COMPANY TO SUCH EFFECT. NOTWITHSTANDING THE FOREGOING, TH IS WARRANT AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS WARRANT MAYBE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.”

 

		
Section 5.

	
Transfer of Warrant.

a)                 Transferability. Subject to compliance with applicable securities laws and the conditions set forth in Section 5(d), this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be canceled. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued. Any such transfer/assign requested by a Holder of this Warrant shall be made by the Company to the transferee/assignee within five (5) Trading Days from the date the Company is deemed to have received the required and completed transfer form annexed to this Warrant.

b)                New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney . Subject to compliance with Section 5(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto .

c)                         Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary. 

d)                        Transfer Restrictions. If, at the time of surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, the transferee to agree in writing to be bound by the terms of the warrant.

e)                Representation by the Holder. The Holder by acceptance hereof, represents and warrants that is acquiring the Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrants Shares or any part thereof in violation of the Securities Act or any applicable state securities law.

 

		
Section 6.

	
Miscellaneous.

a)                         No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividend rights or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d), except as expressly set forth in Section 3. 

b)                        Loss, Theft. Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant , shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

c)                         Saturdays. Sundays. Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day. 

d)                        Authorized Shares. 

The Company shall at all times during the period this Warrant is outstanding, reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of issuing Warrant Shares, free from preemptive rights or any other contingent purchase rights of persons other than the Holders, not less than the product of (i) 2.5, multiplied by (ii) the aggregate number of Warrant Shares issuable upon exercise of this Warrant, taking into account the adjustments provided for under Section 3 hereof and excluding the restrictions on exercise pursuant to Section 2(e) hereof. The Company further covenants that its issuance of this Warrant shall constitute the grant of full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates representing Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company shall , from time to time in accordance with Illinois law and the federal securities laws, increase its authorized shares of Common Stock if at any time the unissued number of authorized shares of Common Stock shall not be sufficient to satisfy the Company’s obligations under this Section 6(d). The Company will take all action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed at the time of exercise. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue and restrictions imposed by applicable securities laws).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action , avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof

e)                 Jurisdiction. This Warrant shall be governed by and construed solely and exclusively in accordance with the internal laws of the State of New York without regard to the conflicts of laws principles thereof. The parties hereto hereby expressly and irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Warrant shall be brought solely in a federal or state court located in the City, County and State of New York. By its execution hereof, the parties hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the City, County and State of New York and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in New York City. The parties hereto expressly and irrevocably waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other party hereto of all of its reasonable counsel fees and disbursements.

 

f)                  Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

g)                 Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Purchaser Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

h)                         Notices.

(i)            Any notice, demand, request, waiver or other communication required or permitted to be given hereunder, including, without limitation, any Notice of Exercise, shall be in writing and shall be delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company at its principle business address, facsimile number (847) 549-6028, Attn: Edward B. Smith, or such other address or facsimile number as the Company may specify for such purposes by written notice to the Holders delivered in accordance with this Section. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of such Holder appearing on the books and records of the Company, or if no such facsimile number or address appears, at the principal place of business of the Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section prior to 5:30 p.m. (eastern standard time) , (ii) the date after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section later than 5:30 p.m. (eastern standard time) on any date and earlier than II :59 p.m.  (eastern standard time) on such date (iii) the second Trading Day following the date of mailing, if sent by nationally recognized overnight courier services, or (iv) upon actual receipt by the party to whom such notice is required to be given. The Company shall give the Holder notice in the same manner and same procedures set forth herein to the address, facsimile, number and/or email address set forth in the Company‘s files, any of which may be amended by the Holder by delivery of written notice to the Company as provided above,

(ii)           The Company will give written notice to the Holder at least ten (10) days prior to the date on which the Company takes a record (a) with respect to any dividend or distribution upon the Common Shares, (b) with respect to any pro rata subscription offer to holders of shares of Common Stock or (c) for determining rights to vote with respect to any Organic Change, dissolution, liquidation or winding-up, but in no event shall such notice be provided to the Holder prior to such information being made known to the public. The Company also will give written notice to the Holder at least twenty (20) days prior to the date on which any dissolution, liquidation or winding-up will take place, but in no event shall such notice be provided to the Holder prior to such information being made known to the public. Notwithstanding anything herein to the contrary, neither the failure to deliver such notice nor any defect therein or in the delivery thereof shall affect the validity of the corporate action required to be specified in such notice.

i)                  Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

j)                 Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k)                Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

I)                 Amendment. This Warrant may be modified or amended or the provisions hereof waived with the express written consent of the Company and the Holder.

m)                       Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant. 

n)                         Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant. 

 

IN WlTNESS WHEREOF, the party below has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

	 	
Z TRIM HOLDINGS, INC.

	 	 	 
	 	
By:

	
/s/ Edward B. Smith

	 	 	
Name: Edward B. Smith

	 	 	 
	 	 	
Title: CEOExhibit 10.1

 

EXECUTION COPY

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) between Agritech Worldwide, Inc., a Nevada corporation (the “Company”), and Jonathan Kahn (the “Executive”) is entered into as of May 17, 2016 (the “Effective Date”).  In consideration of the covenants contained herein, the parties agree as follows:

1.         Employment.  The term of Executive’s employment by the Company under this Agreement will begin on the Effective Date, and will continue, subject to earlier termination as provided in Section 4 hereof, until June 30, 2019, unless earlier terminated pursuant to Section 4 hereof; provided, however, that such term shall automatically be extended as of each July 1st commencing July 1, 2019, for one additional year unless either the Company or  Executive shall have terminated this automatic extension provision by written notice to the other party at least 90 days prior to the automatic extension date.  The term of employment in effect from time to time hereunder is hereinafter called the “Employment Period.”

2.         Position and Duties.  During the Employment Period, Executive shall serve as the Chief Executive Officer of the Company and shall have the normal duties, responsibilities and authority of an executive serving in such positions, subject to the direction of the Board of Directors of the Company (the “Board”).  Executive shall have the titles of Chief Executive Officer and shall report to the Board.  Executive shall be appointed to serve as a member of the Board promptly following the Effective Date. At each annual meeting of the Company’s stockholders during the Employment Period, the Company shall nominate Executive to serve as a member of the Board, with such Board service subject to any required stockholder approval. During the Employment Period, Executive shall devote his full business time and efforts to the business and affairs of the Company and its subsidiaries.  Notwithstanding the foregoing, during his employment, Executive may devote reasonable time to the supervision of his personal and family investments and activities involving professional, charitable, community, educational, religious and similar types of organizations, speaking engagements, membership on the boards of directors of other organizations, and similar types of activities, to the extent that such other activities are not competitive with the Company, do not violate the provisions of Section 6 below or otherwise conflict in any material way with the business of the Company.

3.         Compensation and Benefits.  (a)  Base Salary.  As compensation for Executive’s performance of Executive’s duties hereunder, Company shall pay to Executive an initial Base Salary of $200,000 per year beginning May 1, 2016 through December 31, 2016 and $225,000 beginning January 1, 2017, payable in accordance with the normal payroll practices of the Company, less required deductions for state and federal withholding tax, social security and all other employment taxes and payroll deductions. The Base Salary shall be reviewed for increases by the Board in good faith, based upon Executive’s and Company’s performance, not less often than annually.  The term “Base Salary” shall refer to the Base Salary as so increased by the Board.

 

(b)       Annual Incentive Compensation.  Commencing in calendar year 2016, Executive shall be eligible to participate in Company’s annual incentive compensation program (the “Annual Incentive Program”), with a target annual bonus for each year in which Executive participates in the Annual Incentive Program equal to 100% of Executive’s Base Salary (“Target Bonus”) and a maximum annual bonus for each year in which Executive participates in the Annual Incentive Program equal to 200% of Executive’s Base Salary (“Maximum Bonus”).  Executive’s annual bonus for the 2016 calendar year shall be prorated based on the number of days served during 2016. The actual amount of the annual bonus earned by and payable to Executive in any year shall be determined upon the satisfaction of goals and objectives established by the Compensation Committee of the Board and communicated to Executive and shall be subject to such other terms and conditions of the Company’s Annual Incentive Program as in effect from time to time.  Each bonus paid under the Annual Incentive Program shall be paid to Executive no later than March 15th of the calendar year following the calendar year in which the bonus is earned.

(c)        Equity Compensation.

 

(i)        (A) Promptly following the Effective Date, Executive shall be granted 6,067,931 shares of fully-vested Company Common Stock, par value $0.00005 per share (the “Common Stock”), such amount representing 3.5% of the Company’s shares of Common Stock on a fully diluted basis as of the Effective Date, and (B) on each of May 1, 2017 and May 1, 2018, respectively, Executive shall receive an additional grant of fully-vested Company Common Stock, such additional grants each representing 0.75% of the Company’s shares of Common Stock on a fully diluted basis as of May 1, 2017 and May 1, 2018, respectively (together with the shares granted on the Effective Date pursuant to Section 3(c)(i)(A), the “Equity Award”).

(ii)       All shares of Common Stock that comprise the Equity Award and any additional grants of Company equity made pursuant to this Section 3(c) or otherwise shall be registered on a Form S-8 that is filed and effective prior to such grant(s).  In addition, promptly following the Effective Date, the Company will promptly file and use best efforts to have promptly declared effective a registration statement with the Securities and Exchange Commission registering the resale by the Executive of the shares comprising the Equity Award and any additional grants made pursuant to this Section 3(c) or otherwise (the “Resale Registration Statement”).  The Company shall keep such Resale Registration Statement effective for so long as Executive shall hold such shares including, for the avoidance of doubt, any period following the Employment Period when the Executive continues to hold the shares. In addition, the Company shall take all steps to facilitate the sale of the Executive’s equity as may be reasonably requested by Executive.

(iii)      Commencing in calendar year 2017, each year, Executive shall be eligible to participate in the Company’s annual equity incentive compensation program, with an annual target equity grant for each year in which Executive participates in the equity incentive compensation program having a grant date fair value determined in accordance with FASB Topic 718 equal to 100% of Executive’s Base Salary (the “Target Annual Equity Award”) and a maximum Annual Equity Award for each year in which Executive participates in the equity incentive compensation program equal to 250% of Executive’s Base Salary (the “Maximum Annual Equity Award”). In determining the amount of Executive’s equity grant for any year, the Compensation Committee shall consider the Company’s performance over the immediately preceding fiscal year.

 

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(iv)      On each anniversary of the Effective Date and each Equity Issuance Date, until such time as Executive terminates employment with the Company, Executive shall receive an additional grant of unrestricted Common Stock (which grant shall be deemed for purposes of this section to be part of the Equity Award), if necessary, so that on each such anniversary and each such Equity Issuance Date, the total number of shares received by Executive pursuant to the Equity Award shall equal at least 3.5% of the Company’s shares of Common Stock on a fully diluted basis until April 30, 2016, 4.25% until April 30, 2018, and 5% thereafter. An “Equity Issuance Date” is any date on which the Company consummates the sale of or issuance of (x) more than 1% of the Company’s shares of Common Stock on a fully diluted basis or (y) any instrument that is convertible into more than 1% of the Company’s shares of Common Stock on a fully diluted basis. For the sake of clarity, in calculating the total number of shares held by Executive pursuant to the Equity Award for purposes of this Section 3(c)(iv), only shares granted pursuant to Section 3(c)(i) and this Section 3(c)(iv) shall be considered and any shares (A) held by the Executive on or prior to the Effective Date or (B) granted to or acquired by Executive in any other manner following the grant to Executive of the Equity Award (including pursuant to Sections 3(c)(iii) hereof or otherwise) shall be disregarded.

(d)       Other Benefits.

 

(i)          Savings and Retirement Plans.  Executive shall be entitled to participate in all qualified and non-qualified savings and retirement plans applicable generally to other senior executives of Company, in accordance with the terms of the plans, as may be amended from time to time.

(ii)          Welfare Benefit Plans.  Executive and/or his eligible dependents shall be eligible to participate in and shall receive all benefits under the Company’s welfare benefit plans and programs applicable generally to other senior executives of Company, in accordance with the terms of the plans, as may be amended from time to time.

(iii)          Vacation.  Executive shall be entitled to paid vacation time consistent with the applicable policies of Company as in effect from time to time, but in any event no less than four weeks of such vacation per year.

(iv)          Fringe Benefits.  Executive shall be entitled to such fringe benefits as may be available generally to other senior executives of Company.

(v)          Legal Fees.  No later than 30 days following the Effective Date, the Company shall reimburse Executive for any reasonable legal fees and expenses incurred by Executive in connection with the review of this Agreement and any documents ancillary thereto up to a maximum amount equal to $10,000.

 

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(vi)          Business Expenses.  Executive is authorized to incur reasonable expenses in carrying out his duties and responsibilities under this Agreement, and the Company shall promptly reimburse him for all such business expenses incurred in connection therewith, subject to Section 16 of this Agreement.

4.         Termination of Employment.  (a)  The Employment Period shall end upon the first to occur of: (i) the expiration of the term of this Agreement pursuant to Section 1 hereof; (ii) termination of Executive’s employment by the Company on account of Executive’s Disability (as defined in Exhibit A attached hereto) (“Termination for Disability”); (iii) termination of Executive’s employment by the Company for Cause (as defined in Exhibit A attached hereto) (“Termination for Cause”); (iv) termination of  Executive’s employment by the Company other than a Termination for Disability or a Termination for Cause (“Termination Without Cause”); (v) Executive’s death; (vi) termination of Executive’s employment by Executive for Good Reason (as defined in Exhibit A attached hereto) (“Termination for Good Reason”); or (vii) termination of Executive’s employment by Executive for any reason other than Good Reason (“Termination by Executive without Good Reason”).

(b)       If the Employment Period ends for any reason set forth in Section 4(a), except as otherwise provided in this Section 4, Executive shall cease to have any rights to salary, bonus (if any) or benefits hereunder, other than (i) payment of unpaid Base Salary through and including the date of termination or resignation (which shall be paid on the next regularly scheduled payroll date), (ii) Executive’s business expenses that are reimbursable pursuant to Section 3(d) but have not been reimbursed by the Company as of the date of termination, (iii) Executive’s annual bonus for the fiscal year immediately preceding the fiscal year in which the date of termination occurs, if such bonus has not been paid as of the date of termination, (iv) any accrued vacation pay to the extent not theretofore paid, and (v) any other amounts or benefits required to be paid or provided by law or under any plan, program, policy or practice of the Company (“Accrued Compensation and Benefits”).

(c)       If the Employment Period ends on account of Termination without Cause or Termination for Good Reason, Executive shall receive two times the sum of (A) Executive’s Base Salary at the time of termination (or, in the event of a Termination for Good Reason, the Base Salary prior to the event constituting Good Reason if such Base Salary is higher than the Base Salary at the time of termination) plus (B) Target Bonus at the time of termination (the “Severance Payment”).  In addition, Executive shall receive (i) an annual bonus for the year in which the terminations occurs, determined based on actual performance during such year and prorated for the period during the year in which Executive was employed by the Company, payable at the same time annual bonuses are paid to other senior executives of the Company  (but no later than March 15th following the year in which Executive’s termination of employment occurs), (ii) accelerated vesting of all outstanding Company equity awards, and, in the case of stock options, if any, such options shall remain exercisable until the expiration date of such option, and (iii) if the Executive timely and properly elects health continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall reimburse the Executive for the monthly COBRA premium paid by the Executive for himself and his dependents. Such COBRA premium reimbursement shall be paid to the Executive no later than the 15th day of the month immediately following the month in which the Executive timely remits the premium payment. The Executive shall be eligible to receive such COBRA premium reimbursement until the earlier of:  (i) the 18-month anniversary of the Termination Date; and (ii) the date the Executive is no longer eligible to receive COBRA continuation coverage.   Subject to Section 16, the Separation Payment shall be paid in a lump sum payment on the sixtieth day following the termination date.   As a condition to Executive’s receipt of the post-employment payments and benefits set forth in this Section 4(c), Executive must execute, return, not rescind and comply with a commercially reasonable, customary release of claims in a form reasonably acceptable to the Executive.

 

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(d)       If, (i) during the two year period following a Change of Control, Executive’s employment is terminated due to a Termination Without Cause or a Termination for Good Reason or (ii) during the 90-day period preceding a Change of Control, the Executive’s employment is terminated due to a Termination Without Cause in anticipation of a Change of Control transaction that the Board is actively considering and that is ultimately consummated, Executive shall receive the benefits set forth in Section 4(c), except that (1) in lieu of the Severance Payment described in Section 4(c), Executive shall receive two times the sum of (A) Executive’s Base Salary at the time of such termination or Change of Control, whichever Base Salary level is greater, plus (B) the Maximum Bonus at the time of such termination or Change of Control, whichever Maximum Bonus level is greater (the “CIC Severance Payment”) and (2) the Executive shall be eligible to receive such COBRA premium reimbursement until the earlier of:  (x) the 24-month anniversary of the Termination Date; and (y) the date the Executive is no longer eligible to receive COBRA continuation coverage.  Subject to Section 16, any enhanced severance payment pursuant to this Section 4(d) shall be paid in a lump sum payment on the sixtieth day following the termination date or, in the case of a termination of employment prior to a Change of Control, the sixtieth day following the date of the consummation of the Change of Control.

(e)       If the Employment Period ends on account of Termination due to Disability, Executive shall receive an annual bonus for the year in which the terminations occurs, determined based on actual performance during such year and prorated for the period during the year in which Executive was employed by the Company, payable at the same time annual bonuses are paid to other senior executives of the Company  (but no later than March 15th following the year in which Executive’s termination of employment occurs).

(f)        Section 280G.

	 	
(i)

	
Notwithstanding any other provision of this Agreement or any other plan, arrangement or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Company or its affiliates to the Executive or for the Executive’s benefit pursuant to the terms of this Agreement or otherwise (“Covered Payments”) constitute parachute payments (“Parachute Payments”) within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and will be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any interest or penalties with respect to such excise tax (collectively, the “Excise Tax”), then the Company shall pay to the Executive, no later than the time the Excise Tax is required to be paid by the Executive or withheld by the Company, an additional amount (the “Gross-up Payment”) equal to the sum of the Excise Tax payable by the Executive, plus the amount necessary to put the Executive in the same after-tax position (taking into account any and all applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax and any income and employment taxes imposed on the Gross-up Payment)) that he would have been in if the Executive had not incurred any tax liability under Section 4999 of the Code.

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(ii)

	
Any determination required under this Section 4(f) shall be made in writing in good faith by an independent accounting firm selected by the Company which is reasonably acceptable to the Executive (the “Accountants”), which shall provide detailed supporting calculations to the Company and the Executive as requested by the Company or the Executive. The Company and the Executive shall provide the Accountants with such information and documents as the Accountants may reasonably request in order to make a determination under this Section 4(f). For purposes of making the calculations and determinations required by this Section 4(f), the Accountants may rely on reasonable, good faith assumptions and approximations concerning the application of Section 280G and Section 4999 of the Code. The Accountants’ determinations shall be final and binding on the Company and the Executive. The Company shall be responsible for all fees and expenses incurred by the Accountants in connection with the calculations required by this Section 4(f).

	 	
(iii)

	
In light of the uncertainty in applying Section 4999 of the Code, if it is subsequently determined that the Gross-up Payment is not sufficient to put the Executive in the same after-tax position (taking into account any and all applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax and such taxes imposed on the Gross-up Payment)) that he would have been in if the Executive had not incurred the Excise Tax, then the Company shall promptly pay to or for the benefit of the Executive such additional amounts necessary to put the Executive in the same after-tax position that he would have been in if the Excise Tax had not been imposed. In the event that a written ruling of the Internal Revenue Service (IRS) is obtained by or on behalf of the Company or the Executive, which provides that the Executive is not required to pay, or is entitled to a refund with respect to, all or a portion of the Excise Tax, then the Executive shall reimburse the Company in an amount equal to the Gross-up Payment, less any amounts which remain payable by or are not refunded to the Executive, within 14 days of the date of the IRS determination or the date the Executive receives the refund, as applicable. The Executive and the Company shall reasonably cooperate with each other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for the Excise Tax.

 

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5.         Confidential Information.  Executive acknowledges that the information, observations and data obtained by him while employed by the Company pursuant to this Agreement, as well as those obtained by him while employed by the Company or any of its subsidiaries prior to the date of this Agreement, concerning the business or affairs of the Company or any of its subsidiaries (“Confidential Information”) are the property of the Company or such subsidiary. Therefore, Executive agrees that he shall not disclose to any unauthorized person or use for his own account any Confidential Information without the prior written consent of the Board unless and except to the extent that such Confidential Information becomes generally known to and available for use by the public other than as a result of Executive’s acts or omissions to act. Executive shall deliver to the Company at the termination of the Employment Period, or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data (and copies thereof) relating to the Confidential Information or the business of the Company or any of its subsidiaries or affiliates which he may then possess or have under his control. Notwithstanding anything herein to the contrary, nothing in this Agreement shall be construed to limit the Executive’s ability to provide information to any governmental agency, including but not limited to the U.S. Securities and Exchange Commission.

 

6.         Noncompetition; Nonsolicitation.  (a)  Executive acknowledges that in the course of his employment with the Company pursuant to this Agreement he will become familiar, and during the course of his employment by the Company or any of its subsidiaries prior to the date of this Agreement he has become familiar, with trade secrets and customer lists of and other confidential information concerning the Company and its subsidiaries and that his services have been and will be of special, unique and extraordinary value to the Company.

(b)       Executive agrees that during the Employment Period and for one year thereafter in the case of Termination for Good Reason, Termination without Cause, Company Non-Renewal or Termination for Disability, or for two years thereafter in the case of termination of employment for any other reason, the (“Noncompetition Period”) he shall not in any manner, directly or indirectly, through any person, firm or corporation, alone or as a member of a partnership or as an officer, executive, manager, director, stockholder, investor or employee of or in any other corporation or enterprise or otherwise, engage or be engaged, or assist any other person, firm corporation or enterprise in engaging or being engaged, in any business then actively being conducted by the Company in any geographic area in which the Company is conducting such business (whether through manufacturing or production, calling on customers or prospective customers, or otherwise). Notwithstanding the foregoing, subsequent to the Employment Period Executive may engage or be engaged, or assist any other person, firm, corporation or enterprise in engaging or being engaged, in any business activity which is not competitive with a business activity being conducted by the Company at the time subsequent to the Employment Period that Executive first engages or assists in such business activity.

(c)       Executive further agrees that during the Noncompetition Period he shall not in any manner, directly or indirectly (i) induce or attempt to induce any employee of the Company or of any of its subsidiaries to terminate or abandon his employment, or any customer of the Company or any of its subsidiaries or affiliates to terminate or abandon its relationship, for any purpose whatsoever, or (ii) in connection with any business to which Section 6(b) applies, call on, service, solicit or otherwise do business with any then current or prospective customer of the Company or of any of its subsidiaries or affiliates.

 

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(d)       Nothing in this Section 6 shall prohibit Executive from being (i) a stockholder of a mutual fund or a diversified investment company or (ii) a passive owner of not more than 5% of the outstanding stock of any class of a corporation or other entity, so long as Executive has no active participation in the business of such publicly-traded corporation.

(e)       If, at the time of enforcement of this Section 6, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law.

7.          Insurance and Indemnification.

(a)       To the fullest extent permitted by the indemnification provisions of the laws of the state or jurisdiction of the Company’s incorporation in effect from time to time, and subject to the conditions thereof, the Company shall (i) indemnify the Executive, as a director and officer of the Company or a trustee or fiduciary of an employee benefit plan of the Company against all liabilities and reasonable expenses that the Executive may incur in any threatened, pending, or completed action, suit or proceeding, whether civil, criminal or administrative, or investigative and whether formal or informal, because the Executive is or was a director or officer of the Company or a trustee or fiduciary of such employee benefit plan, and (ii) pay for or reimburse the reasonable expenses upon submission of appropriate documentation incurred by the Executive in the defense of any proceeding to which the Executive is a party because the Executive is or was a director or officer of the Company or a trustee or fiduciary of such employee benefit plan, including an advancement of such expenses to the extent permitted by applicable law, subject to the Executive’s execution of any legally required repayment undertaking.  The preceding indemnification right shall be in addition to, and not in lieu of, any rights to indemnification to which the Executive may be entitled under the articles of incorporation and bylaws of the Company in effect from time to time.  The indemnification rights of the Executive in this Section 7 are referred to below as the “Indemnification Provisions.”  The rights of the Executive under the Indemnification Provisions shall survive the cessation of the Executive’s employment with the Company.

(b)       The Company shall maintain a directors' and officers' liability insurance policy, or an equivalent errors and omissions liability insurance policy, covering the Executive with scope, exclusions, amounts and deductibles that are customary for a public company comparable to the Company and no less favorable to the insured than those applicable to the Company’s senior officers and directors on the Execution Date, or any more favorable as may be available to any other director or senior executive of the Company, while the Executive is employed with the Company and thereafter until the sixth anniversary of the Executive's termination date.

8.         Survival.  Sections 5, 6, 7 and 16 hereof shall survive and continue in full force and effect in accordance with their respective terms, notwithstanding any termination of the Employment Period.

9.         Notices.  Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, or sent by certified mail, return receipt requested, postage prepaid, addressed (a) if to Executive, to his last known address shown on the payroll records of the Company, and if to the Company, to Agritech Worldwide, Inc., 1011 Campus Drive, Mundelein, IL 60060, attention:  Board of Directors or (b) to such other address as either party shall have furnished to the other in accordance with this Section 9.

 

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10.       Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

11.       Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or between the parties, written or oral, which may have related in any manner to the subject matter hereof.

 

12.       Successors and Assigns. This Agreement shall inure to the benefit of and be enforceable by Executive and his heirs, executors and personal representatives, and the Company and its successors and assigns. Any successor or assignee of the Company shall assume the liabilities of the Company hereunder.

 

13.       Governing Law.  This Agreement shall be governed by the internal laws (as opposed to the conflicts of law provisions) of the State of Illinois.

 

14.       Amendment and Waiver.  The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Executive, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.

 

15.       Withholding.  All payments and benefits under this Agreement are subject to withholding of all applicable taxes.

 

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16.       Code Section 409A.  This Agreement is intended to comply with the requirements of Section 409A of the Code, and shall be interpreted and construed consistently with such intent.  The payments to Executive pursuant to this Agreement are also intended to be exempt from Section 409A of the Code to the maximum extent possible, under either the separation pay exemption pursuant to Treasury regulation §1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury regulation §1.409A-1(b)(4), and for such purposes, each payment to Executive under this Agreement shall be considered a separate payment.    In the event the terms of this Agreement would subject Executive to taxes or penalties under Section 409A of the Code (“409A Penalties”), the Company and Executive shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the extent possible.  To the extent any amounts under this Agreement are payable by reference to Executive’s “termination of employment” such term and similar terms shall be deemed to refer to Executive’s “separation from service,” within the meaning of Section 409A of the Code.  Notwithstanding any other provision in this Agreement, to the extent any  payments hereunder constitutes nonqualified deferred compensation, within the meaning of Section 409A, and Executive is a specified employee (within the meaning of Section 409A of the Code) as of the date of Executive’s separation from service, each such payment that is payable upon Executive’s separation from service and would have been paid prior to the six-month anniversary of  Executive’s separation from service, shall be delayed until the earlier to occur of (i) the first day of the seventh month following Executive’s separation from service or (ii) the date of Executive’s death.  Any reimbursement payable to Executive pursuant to this Agreement shall be conditioned on the submission by Executive of all expense reports reasonably required by Employer under any applicable expense reimbursement policy, and shall be paid to Executive within 30 days following receipt of such expense reports, but in no event later than the last day of the calendar year following the calendar year in which Executive incurred the reimbursable expense.  Any amount of expenses eligible for reimbursement, or in-kind benefit provided, during a calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefit to be provided, during any other calendar year.  The right to any reimbursement or in-kind benefit pursuant to this Agreement shall not be subject to liquidation or exchange for any other benefit.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

	 	
AGRITECH WORLDWIDE, INC.

	 
	 	 	 
	 	 	
By:

	 	
/s/ Morris Garfinkle

	 
	 	 	
Name:

	 	
Morris Garfinkle

	 
	 	 	
Title:

	 	
Chairman of the Board of Directors

	 

	 	
EXECUTIVE:

	 
	 	 	 
	 	
/s/ Jonathan Kahn

	 
	 	
Jonathan Kahn

	 

 

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EXHIBIT A

 

DEFINITIONS

“Cause” shall mean:

(i)        any act or omission that constitutes a material breach by Executive of any of his material obligations under this Agreement, after a written demand for substantial performance is delivered to Executive by the Board that specifically identifies the manner in which the Board believes that Executive has materially breached such obligations and Executive’s failure to cure such alleged breach not later than 30 days following his receipt of such notice;

(ii)       Executive's conviction of, or plea of nolo contendere to, any felony pertaining to the Company; or

(iii)      Executive's ongoing willful refusal to follow the proper and lawful directions of the Board after a written demand for substantial performance is delivered to Executive by the Board that specifically identifies the manner in which the Board believes that Executive has refused to follow its proper and lawful instructions and Executive’s failure to cure such refusal not later than 30 days following his receipt of such notice.

 

For purposes of this definition, no act, or failure to act, on the part of Executive shall be considered “willful” unless it is done, or omitted to be done, by Executive in bad faith or without reasonable belief that Executive’s action or omission was in the best interests of the Company.  Any act, or failure to act, based upon (A) authority given pursuant to a resolution duly adopted by the Board or (B) the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of the Company.  The cessation of employment of Executive shall not be deemed to be for Cause unless and until there shall have been delivered to Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board (excluding Executive, if Executive is a member of the Board) at a meeting of the Board called and held for such purpose (after reasonable notice is provided to Executive and Executive is given an opportunity, together with counsel for Executive, to be heard before the Board), finding that, in the good faith opinion of the Board, the conditions set forth in clauses (i), (ii) or (iii) above have been satisfied, and specifying the particulars thereof in detail.

“Change of Control” shall mean the occurrence of any of the following events:  (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) (other than, Edward B. Smith, any trust, partnership or other entity which Edward B. Smith controls or of which he is the managing member or partner, any trust, partnership, or other entity for the benefit of Edward B. Smith, the estate of Edward B. Smith, any charitable organization established by Edward B. Smith, the Company or a Company benefit plan) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under such Act), directly or indirectly during a 12-month period, of securities of the Company representing more than 30% of the total voting power represented by the Company’s then outstanding voting securities other than in a transaction the primary purpose of which is to raise equity capital, (ii) a merger or consolidation of the Company with another corporation or entity, or (iii) the sale or disposition by the Company of all or substantially all the Company’s assets (other than in the usual and regular course of business); provided, however, that no change of control shall be deemed to occur as a result of such an acquisition by any other corporation or entity of voting securities or assets of the Company or such a merger or consolidation where immediately following such acquisition more than 50% of the total voting power represented by the then outstanding voting securities of such other corporation or entity or the survivor of such merger or consolidation is owned by the individuals and entities owning the Company’s outstanding voting securities, in substantially the same proportions, immediately prior to such acquisition.

 

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“Disability” shall mean the Executive's inability, due to physical or mental incapacity (that can be expected to last for a continuous period of not less than 12 months), to substantially perform his duties and responsibilities under this Agreement for a period of more than six consecutive months. Prior to any termination for Disability, the Employer shall provide such reasonable accommodation to Executive as and to the extent may be required by law. Any question as to the existence of the Executive's Disability as to which the Executive and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Executive and the Company. If the Executive and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and the Executive shall be final and conclusive for all purposes of this Agreement.

“Good Reason” shall mean any of the following actions, if taken without the express written consent of Executive:   (i) a material diminution in Executive’s Base Salary or Target Bonus; (ii) a material diminution in Executive’s authority, duties or responsibilities; (iii) requiring Executive to move his place of employment more than 50 miles from his place of employment prior to such move; or (iv) a material breach by the Company of this Agreement.  Executive’s employment with the Company may be terminated for Good Reason if (i) Executive provides written notice to Company of the occurrence of the Good Reason event (as described above) within 90 days after Executive has knowledge of the circumstances constituting Good Reason, which notice shall specifically identify the circumstances which Executive believes constitute Good Reason, (ii)  Company fails to correct the circumstances constituting “Good Reason” within 30 days after such notice; and (iii) Executive resigns within six (6) months after the initial existence of such circumstances.

 

 

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