Document:

exv10w4

 

Exhibit 10.4

CHANGE IN CONTROL AGREEMENT

     THIS CHANGE IN CONTROL AGREEMENT (the “Agreement”) effective August 25, 2006, is between THE
CLOROX COMPANY, a Delaware corporation (the “Company”) and Donald Knauss (the “Executive”).

     The Board of Directors of the Company (the “Board”) believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal uncertainties and risks created
by a pending or threatened Change in Control and to encourage the Executive’s full attention and
dedication to the Company currently and in the event of any threatened or pending Change in
Control, and to provide the Executive with compensation and benefits arrangements upon a Change in
Control which ensure that the compensation and benefits expectations of the Executive will be
satisfied and which are competitive with those of other corporations. Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into this Agreement.

     NOW, THEREFORE, IT IS AGREED AS FOLLOWS:

     1. Certain Definitions.

          (a) The “Effective Date” shall mean the first date during the Change in Control Period (as
defined in Section 1(b)) on which a Change in Control (as defined in Section 2) occurs. Anything
in this Agreement to the contrary notwithstanding, if a Change in Control occurs and if the
Executive’s employment with the Company is terminated prior to the date on which the Change in
Control occurs, and if it is reasonably demonstrated by the Executive that such termination of
employment (i) was at the request of a third party who has taken steps reasonably calculated to
effect a Change in Control or (ii) otherwise arose in connection with or anticipation of a Change
in Control, then for all purposes of this Agreement the “Effective Date” shall mean the date
immediately prior to the date of such termination of employment.

          (b) The “Change in Control Period” shall mean the period commencing on the date on which the
Executive’s employment with the Company begins and ending on the third anniversary of the date
thereof; provided, however, that commencing on the last day before the third anniversary of the
date thereof, and on each annual anniversary of such date (such date and each annual anniversary
thereof shall be hereinafter referred to as the “Renewal Date”), unless previously terminated, the
Change in Control Period shall be automatically extended one additional year from such Renewal
Date, unless at least one hundred eighty (180) days prior to the Renewal Date the Company shall
give notice to the Executive that the Change in Control Period shall not be so extended; provided,
the Company shall not be permitted to give such notice unless it also has given the Executive a
non-renewal notice pursuant to Section 1(b) of the Current Agreement (defined below).

          (c) The “Separation Period” shall mean the period from the Date of Termination through the
third anniversary of the Date of Termination.

 

 

          (d) “Annual Bonus” shall mean the annual award the Executive receives in any year under the
Company’s Annual Incentive Plan (“AIP Plan”) and/or the Company’s Executive Incentive Compensation
Plan (“EIC Plan”) or any successors thereto.

          (e) The “Average Annual Bonus” shall mean the average Annual Bonus the Executive received for
the three (3) completed fiscal years immediately preceding the Date of Termination, or the average
Annual Bonus for the actual number of completed fiscal years immediately preceding the Date of
Termination if less than three (3), provided that the First Year Bonus Target shall be used in the
event that the Date of Termination occurs prior to the date that the Executive receives (or is
entitled to receive, together with other senior executives if earlier) his Annual Bonus, if any,
for the fiscal year ending June 30, 2007.

          (f) “Bonus Target” means the Annual Bonus that the Executive would have received in a fiscal
year under the AIP Plan and/or the EIC Plan, if the target goals had been achieved.

          (g) “First Year Bonus Target” means the Executive’s Bonus Target as of the Effective Date.

     2. Change in Control. For the purpose of this Agreement, a “Change in Control” shall
mean:

          (a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
30%, of either (i) the then outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (ii) the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors (the “Outstanding Company
Voting Securities”); provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, including any acquisition which by reducing the
number of shares outstanding, is the sole cause for increasing the percentage of shares
beneficially owned by any such Person to more than the applicable percentage set forth above, (iii)
any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or (iv) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this
Section 2; or

          (b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or nomination for
election by the Company’s stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or threatened election contest
with respect to the election or removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board; or

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          (c) Consummation by the Company of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company or the acquisition of assets
of another corporation (a “Business Combination”), in each case, unless, following such Business
Combination, (i) more than 50% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation resulting from such Business
Combination (including without limitation, a corporation which as a result of such transaction owns
the Company or all or substantially all of the Company’s assets either directly or through one or
more subsidiaries) is represented by Outstanding Company Common Stock and Outstanding Company
Voting Securities, respectively, that were outstanding immediately prior to such Business
Combination (or, if applicable, is represented by shares into which such Outstanding Company Common
Stock and Outstanding Company Voting Securities were converted pursuant to such Business
Combination) and such ownership of common stock and voting power among the holders thereof is in
substantially the same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be, (ii) no Person (excluding any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination) beneficially owns, directly
or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or

          (d) Approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company.

     3. Employment Period.

          (a) This Agreement shall become effective on the Effective Date. Before the Effective Date,
the terms and conditions of the Executive’s employment shall be as set forth in the Employment
Agreement between the Executive and the Company dated of even date herewith (the “Current
Agreement”) during the term thereof. From and after the Effective Date, this Agreement shall
supersede the Current Agreement and any other agreement between the parties with respect to the
subject matter hereof. Notwithstanding the foregoing, in the event that the Executive’s employment
with the Company does not begin on or before December 1, 2006, this Agreement shall be null and
void.

          (b) The Company agrees to continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Company subject to the terms and conditions of this
Agreement, for the period commencing on the Effective Date and ending on the earlier of the second
anniversary of such date or the first day of the month following the Executive’s 65th birthday (the
“Employment Period”).

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     4. Terms of Employment.

          (a) Position and Duties.

               (i) During the Employment Period, (A) the Executive’s position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held, exercised and
assigned to the Executive at any time during the 120-day period immediately preceding the Effective
Date and (B) the Executive’s services shall be performed at the location where the Executive was
employed immediately preceding the Effective Date or any office or location not more than 40 miles
from such location.

               (ii) During the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the Executive hereunder, to use the
Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities.
During the Employment Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, provided that with respect to any
corporate board, such service has been pre-approved by the Presiding Director of the Company, (B)
deliver lectures or fulfill speaking engagements (other than lectures and engagements pursuant to
the discharge of his duties hereunder) or teach at educational institutions on a part-time basis
not to exceed five hours per week in the aggregate and (C) manage personal investments, so long as
such activities do not significantly interfere with the performance of the Executive’s
responsibilities as an employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been conducted by the
Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive’s responsibilities to the
Company.

          (b) Compensation.

               (i) Base Salary. During the Employment Period, the Executive shall receive an annual
base salary (“Annual Base Salary”), which shall be paid at a monthly rate, at least equal to twelve
times the highest monthly base salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by the Company and its affiliated companies in respect of the
twelve-month period immediately preceding the month in which the Effective Date occurs. During the
Employment Period, the Annual Base Salary shall be reviewed no more than 12 months after the last
salary increase awarded to the Executive prior to the Effective Date and thereafter at least
annually. Any increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after
any such increase and the term Annual Base Salary as utilized in this Agreement shall refer to
Annual Base Salary as so increased. As used in this Agreement, the term “affiliated companies”
shall include any company controlled by, controlling or under common control with the Company.

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               (ii) Annual Bonus. In addition to Annual Base Salary, the Executive shall have the
opportunity to earn, for each fiscal year ending during the Employment Period, an Annual Bonus in
cash at least equal to the highest Annual Bonus the Executive had the opportunity to earn for any
of the last three full fiscal years prior to the Effective Date (annualized in the event that the
Executive was not employed by the Company for the whole of such fiscal year). Each such Annual
Bonus shall be paid no later than the end of the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.

               (iii) Incentive, Savings and Retirement Plans.

                    A. During the Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs applicable generally to
other peer executives of the Company and its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the Executive with incentive opportunities
(measured with respect to both regular and special incentive opportunities, to the extent, if any,
that such distinction is applicable), savings opportunities and retirement benefit opportunities,
in each case, less favorable, in the aggregate, than the most favorable of those provided by the
Company and its affiliated companies for the Executive under such plans, practices, policies and
programs as in effect at any time during the 120-day period immediately preceding the Effective
Date or if more favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated companies.

                    B. With respect to any unvested restricted stock units and stock options granted to the
Executive in Section 3(b) of the Current Agreement prior to the Effective Date, in the event the
continuing entity does not assume or replace such awards with equivalent value awards upon a Change
in Control, such awards shall immediately vest upon the Effective Date (provided that the Executive
shall participate in such Change in Control respecting such fully vested awards).

               (iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the
Executive’s family, as the case may be, shall be eligible for participation in and shall receive
all benefits under welfare benefit plans, practices, policies and programs provided by the Company
and its affiliated companies (including, without limitation, medical, prescription drugs, dental,
disability, salary continuance, severance pay, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Executive with benefits which are less favorable, in
the aggregate, than the most favorable of such plans, practices, policies and programs in effect
for the Executive at any time during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, those provided generally at any time after the Effective
Date to other peer executives of the Company and its affiliated companies.

               (v) Expenses. During the Employment Period, the Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by the Executive

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in accordance with the most favorable policies, practices and procedures of the Company and
its affiliated companies in effect for the Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the Company and its
affiliated companies.

               (vi) Fringe Benefits. During the Employment Period, the Executive shall be entitled
to fringe benefits, including, without limitation, tax and financial planning services, payment of
club dues, and, if applicable, use of an automobile and payment of related expenses, in accordance
with the most favorable plans, practices, programs and policies of the Company and its affiliated
companies in effect for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its affiliated companies.

               (vii) Office and Support Staff. During the Employment Period, the Executive shall be
entitled to an office or offices of a size and with furnishings and other appointments, and to
exclusive personal secretarial and other assistance, at least equal to the most favorable of the
foregoing provided to the Executive by the Company and its affiliated companies at any time during
the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive,
as provided generally at any time thereafter with respect to other peer executives of the Company
and its affiliated companies.

               (viii) Vacation. During the Employment Period, the Executive shall be entitled to
paid vacation in accordance with the most favorable plans, policies, programs and practices of the
Company and its affiliated companies as in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, to the extent of the more favorable, if either
is more favorable, to the Executive, (x) five (5) weeks per year or (y) as in effect generally at
any time thereafter with respect to other peer executives of the Company and its affiliated
companies.

               (ix) Supplemental Executive Retirement Plan. The Executive shall continue to be
eligible to receive supplemental executive retirement plan benefits equal to the greater of the
amount attributable to the Company SERP or the Replacement SERP, as described below: 

                    A. Company SERP. The Executive will be eligible to continue to participate in the
Company’s Supplemental Executive Retirement Plan (the “Company SERP”) in accordance with the terms
and conditions of the Company SERP as in effect 120 days preceding the Effective Date, unless
provision is made by the Board in connection with the Change in Control for the substitution of a
comparable supplemental retirement plan for the benefit of the Executive that is effective on the
Effective Date; provided, however, that, to the extent not vested, the Executive shall be fully
vested and eligible for an Early Retirement Benefit (at Separation of Employment) (each such term
as defined under the SERP) upon completion of seven (7) years of service with the Company, and
otherwise as provided in the Company SERP.

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                     B. Replacement SERP. The Company shall also continue the supplemental executive
retirement plan for the benefit of the Executive (and his surviving spouse in the event of the
Executive’s death) that duplicates the rights and benefits the Executive would have been entitled
to under The Coca-Cola Company Employee Retirement Plan and The Coca-Cola Company Supplemental
Benefit Plan — Pension, as in effect on the date hereof, had his employment with The Coca-Cola
Company continued until the Executive’s retirement or other termination of employment with the
Company (the “Replacement SERP”) and which shall be subject to the following terms for purposes of
attributing the amount attributable to the Replacement SERP:

     (1) final average compensation for purposes of the Replacement SERP shall include the
actual Annual Base Salary and bonuses paid by the Company to the Executive and, to the
extent needed to obtain five years of consecutive annual compensation, the Executive’s
actual annual base salary and bonuses paid by The Coca-Cola Company prior to the Executive’s
retirement;

     (2) the Executive shall be fully vested at all times in the Replacement SERP benefit;

     (3) in the event that the Executive’s employment with the Company terminates prior to
the third anniversary of the Effective Date, the Executive shall be credited with a minimum
of three (3) years of benefit accruals under the Replacement SERP; and

     (4) the Executive’s service with The Coca-Cola Company under such plans shall be
credited as service under the Replacement SERP and any benefits to which the Executive
becomes entitled under the Replacement SERP shall be offset by benefits received by the
Executive under The Coca-Cola Company Employee Retirement Plan and Supplemental Benefit Plan
 — Pension.

               (x) Relocation and Housing Expenses. The Executive shall be entitled to the full
benefit of the provisions of Section 3(g) of the Current Agreement, to the extent not paid or
provided prior to the Effective Date.

               (xi) Retiree Benefits. The Executive shall be entitled to the full benefit of the
provisions of Section 3(j) of the Current Agreement, in accordance with the terms of such plans
identified therein as in effect 120 days prior to the Effective Date.

     5. Termination of Employment.

          (a) Death or Disability. The Executive’s employment shall terminate automatically
upon the Executive’s death during the Employment Period. If the Company determines in good faith
that the Disability of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written notice in
accordance with Section 12(b) of this Agreement of its intention to terminate the Executive’s
employment. In such event, the Executive’s employment with the Company shall terminate effective
on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”),
provided that, within the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive’s duties. For

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purposes of this Agreement, “Disability” shall mean the absence of the Executive from the
Executive’s duties with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable to the Executive or
the Executive’s legal representative.

          (b) Cause. The Company may terminate the Executive’s employment during the Employment
Period for Cause. For purposes of this Agreement, “Cause” shall mean:

               (i) the willful and continued failure of the Executive to perform substantially the
Executive’s duties with the Company or one of its affiliates (other than any such failure resulting
from incapacity due to physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board which specifically identifies the manner in
which the Board believes that the Executive has not substantially performed the Executive’s duties,
or

               (ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company.

     For purposes of this provision, no act or failure to act, on the part of the Executive, shall
be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company. The cessation of employment of the Executive shall not be deemed to be
for Cause unless and until there shall have been delivered to the 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 at a meeting of the Board called and held for such purpose (after reasonable notice is
provided to the Executive and the Executive is given an opportunity, together with counsel, to be
heard before the Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.

          (c) Good Reason. The Executive’s employment may be terminated by the Executive for
Good Reason. For purposes of this Agreement, “Good Reason” shall mean:

               (i) the assignment to the Executive of any duties inconsistent in any respect with the
Executive’s position (including status, offices, titles and reporting requirements), authority,
duties or responsibilities as contemplated by Section 4(a) of this Agreement, or any other action
by the Company which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof
given by the Executive;

               (ii) any failure by the Company to comply with any of the provisions of Section 4(b) of this
Agreement, other than an isolated, insubstantial and inadvertent failure not

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occurring in bad faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;

               (iii) the Company’s requiring the Executive to be based at any office or location other than
as provided in Section 4(a)(i)(B) hereof or the Company’s requiring the Executive to travel on
Company business to a substantially greater extent than required immediately prior to the Effective
Date;

               (iv) any purported termination by the Company of the Executive’s employment otherwise than as
expressly permitted by this Agreement; or

               (v) any failure by the Company to comply with and satisfy Section 11(c) of this Agreement.

     Notwithstanding the above, a failure by the Company’s stockholders to elect the Executive to
the Board shall not constitute Good Reason, but a failure by the Board to nominate the Executive to
the Board at any time shall constitute Good Reason.

     For purposes of this Section 5(c), any good faith determination of “Good Reason” made by the
Executive shall be conclusive.

          (d) Notice of Termination. Any termination by the Company for Cause, or by the
Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto
given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a
“Notice of Termination” means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date (which date shall
be not more than thirty days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such
fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

          (e) Date of Termination. “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of
receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii)
if the Executive’s employment is terminated by the Company other than for Cause or Disability, the
date on which the Company notifies the Executive of such termination and (iii) if the Executive’s
employment is terminated by reason of death or Disability, the date of death of the Executive or
the Disability Effective Date, as the case may be.

     6. Obligations of the Company upon Termination.

          (a) By the Executive for Good Reason; or by the Company Other Than for Cause, Death or
Disability. If, during the Employment Period, the Company shall terminate the

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Executive’s employment other than for Cause or Disability or the Executive shall terminate
employment for Good Reason:

               (i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date
of Termination the aggregate of the following amounts:

                    A. the sum of (1) the Executive’s Annual Base Salary through the Date of Termination to the
extent not theretofore paid, (2) the product of (x) the Average Annual Bonus and (y) a fraction,
the numerator of which is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365 and (3) any compensation previously deferred by
the Executive (together with any accrued interest or earnings thereon) and any accrued vacation
pay, in each case to the extent not theretofore paid and in full satisfaction of the rights of the
Executive thereto (the sum of the amounts described in clauses (1), (2), and (3) shall be
hereinafter referred to as the “Accrued Obligations”); and

                    B. the amount equal to the product of (1) three (3) and (2) the sum of (x) the Executive’s
Annual Base Salary and (y) the Average Annual Bonus; and

                    C. an amount equal to the difference between (a) the actuarial equivalent of the aggregate
benefits under the Company’s qualified pension and profit-sharing plans (the “Retirement Plans”)
and any excess or supplemental pension and profit-sharing plans in which the Executive participates
(collectively, the “Nonqualified Plans”), specifically including the Company SERP and Replacement
SERP (whichever of the two plans applies in accordance with the provisions of Section 4(b)(ix)
hereof) which the Executive would have been entitled to receive if the Executive’s employment had
continued for the Separation Period, assuming (to the extent relevant) that the Executive’s
compensation during the Separation Period would have been equal to the Executive’s compensation as
in effect immediately before the termination or, if higher, on the Effective Date, and that
employer contributions to the Executive’s accounts in the Retirement Plans and the Nonqualified
Plans during the Separation Period would have been equal to the average of such contributions for
the three years immediately preceding the Date of Termination or, if higher, the three years
immediately preceding the Effective Date, and (b) the actuarial equivalent of the Executive’s
actual aggregate benefits (paid or payable), if any, under the Retirement Plans and the
Nonqualified Plans as of the Date of Termination (the actuarial assumptions used for purposes of
determining actuarial equivalence shall be no less favorable to the Executive than the most
favorable of those in effect under the Retirement Plan and the Nonqualified Plans on the Date of
Termination and the date of the Change in Control);

          (ii) for the Separation Period, the Company shall continue benefits to the Executive and/or
the Executive’s family at least equal to those which would have been provided to them in accordance
with the plans, programs, practices and policies described in Section 4(b)(iv) of this Agreement if
the Executive’s employment had not been terminated or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of the Company and
its affiliated companies and their families (in each case with such contributions by the Executive
as would have been required had the Executive’s employment not been terminated); provided, however,
that if the Executive becomes reemployed with another employer and is eligible to receive medical
or other welfare benefits under another

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employer-provided plan, the medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during such applicable period of eligibility, and
for purposes of determining eligibility (but not the time of commencement of benefits) of the
Executive for retiree benefits pursuant to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed during the Separation Period and to have
retired on the last day of such period. The Separation Period shall not be subtracted from the
period of months for which the Executive is eligible for benefits under the Consolidated Omnibus
Budget Reconciliation Act of 1985;

          (iii) if the Executive was entitled to receive financial planning and/or tax return
preparation benefits immediately before the Date of Termination, the Company shall continue to
provide the Executive with such financial planning and/or tax return preparation benefits with
respect to the calendar year in which the Date of Termination occurs (including without limitation
the preparation of income tax returns for that year), on the same terms and conditions as were in
effect immediately before the Date of Termination (disregarding for all purposes of this clause
(iii) any reduction or elimination of such benefits that was the basis of a termination of
employment by the Executive for Good Reason); and

          (iv) the Executive shall be entitled to purchase the Company-leased automobile, if any, being
used by the Executive prior to termination at the “buyout amount” specified by the vehicle’s
lessor.

          (v) to the extent not theretofore paid or provided, the Company shall timely pay or provide to
the Executive any other amounts or benefits required to be paid or provided or which the Executive
is eligible to receive under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and benefits shall be hereinafter referred
to as the “Other Benefits”).

          (vi) all awards granted to the Executive prior to the Change in Control under the Company’s
2005 Stock Incentive Plan or any successor plan thereto (including, without limitation, the awards
granted under Section 3(b)(iii) of the Current Agreement) will become immediately fully vested and
any such awards constituting stock options will be immediately fully exercisable (for the lesser of
three (3) years or the expiration of the option term in the case of the award granted under Section
3(b)(iii)(B) of the Current Agreement) in the event that the Executive’s termination (other than
for Cause or Disability (as defined under the Company’s Long-term Disability Plan or Policy, as in
effect on the Date of Termination of the Executive’s employment)) occurs within twenty-four (24)
months of the Change in Control. If such termination occurs after twenty-four (24) months of the
Change in Control, then the awards granted under Section 3(b)(iii) of the Current Agreement shall
be subject to the provisions of Section 6(a)(iv)(C) of the Current Agreement to the extent that
such provisions are more favorable to the Executive than may otherwise be provided hereunder or
under any other plan, program or agreement applicable to such awards after the date awarded.

     To the extent any benefits described in Section 6(a)(ii) and (iii) cannot be provided pursuant
to the appropriate plan or program maintained for employees, the Company shall provide such
benefits outside such plan or program at no additional cost (including without limitation tax cost)
to the Executive.

11

 

          (b) Death. If the Executive’s employment is terminated by reason of the Executive’s
death during the Employment Period, this Agreement shall terminate without further obligations to
the Executive’s legal representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits and, in addition, all restricted
stock units and stock options granted to the Executive pursuant to Section 3(b) of the Current
Agreement shall immediately vest upon the Executive’s date of death, and such stock options will
remain exercisable for one (1) year after the Executive’s date of death, subject to the earlier
expiration of the term of such stock options. Accrued Obligations shall be paid to the Executive’s
estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of
Termination.

          (c) Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits and, in addition, all restricted stock units and stock options
granted to the Executive pursuant to Section 3(b) of the Current Agreement shall immediately vest
upon the date the Executive’s employment is terminated by reason of Disability, and such stock
options will remain exercisable for one (1) year after the date of such termination of the
Executive’s employment, subject to the earlier expiration of the term of such stock options.
Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date
of Termination.

          (d) Cause; Other than for Good Reason. If the Executive’s employment shall be
terminated for Cause during the Employment Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to the Executive (x) the Annual Base
Salary through the Date of Termination, (y) the amount of any compensation previously deferred by
the Executive, and (z) Other Benefits, in each case to the extent theretofore unpaid. If the
Executive voluntarily terminates employment during the Employment Period, excluding a termination
for Good Reason, this Agreement shall terminate without further obligations to the Executive, other
than for Accrued Obligations and the timely payment or provision of Other Benefits and the
Executive’s vested and outstanding stock options granted pursuant to Section 3(b)(iii)(B) of the
Current Agreement shall remain exercisable for one (1) year after the Date of Termination, subject
to the earlier expiration of the term of such stock option. In such case, all Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination.

     7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the
Executive’s continuing or future participation in any plan, program, policy or practice provided by
the Company or any of its affiliated companies and for which the Executive may qualify, nor,
subject to Section 3(a), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or agreement except
as explicitly modified by this Agreement.

12

 

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

     9. Certain Additional Payments by the Company.

          (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required under this Section 9)
(a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the “Code”), or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled
to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments, provided, however, that
a Gross-Up Payment shall only be made in the event that application of the gross-up feature would
result in the Executive receiving total after-tax Payments of at least one hundred five percent
(105%) of the benefits the Executive would be entitled to receive without becoming subject to the
tax imposed by Section 4999 of the Code (“Maximum Amount”). In the event that a Gross-Up Payment
under this Agreement would result in total after-tax Payments of less than one hundred five percent
(105%) of the Maximum Amount, the Executive’s Payments shall be capped at the Maximum Amount. If
the Payments become subject to the cap described above, the amount due to the Executive under
Sections 6(a)(i)A, 6(a)(i)B or 6(a)(i)C (cash Payments) shall be reduced initially; thereafter, the
Management Development and Compensation Committee of the Company’s Board shall determine how the
Payments subject to the cap shall be paid.

          (b) Subject to the provisions of Section 9(c), all determinations required to be made under
this Section 9, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by Ernst & Young LLP or such other certified public accounting firm as may be designated by
the Executive (the “Accounting Firm”), which shall provide detailed supporting calculations both to
the Company and the Executive within fifteen (15) business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is requested by the Company. In
the event that the Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change in Control, the Executive shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting firm shall then be
referred to as the

13

 

Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 9, shall be
paid by the Company to the Executive within five (5) days of the receipt of the Accounting Firm’s
determination. Any determination by the Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 9(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that
has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit
of the Executive.

          (c) The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten (10) business days
after the Executive is informed in writing of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period following the date on which it
gives such notice to the Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies the Executive in writing prior
to the expiration of such period that it desires to contest such claim, the Executive shall:

               (i) give the Company any information reasonably requested by the Company relating to such
claim,

               (ii) take such action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the Company,

               (iii) cooperate with the Company in good faith in order effectively to contest such claim, and

               (iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such representation and payment
of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the
Company shall control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or

14

 

contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial jurisdiction and in one
or more appellate courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of the contest shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

          (d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to
Section 9(c), the Executive becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of Section 9(c)) promptly
pay to the Company the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 9(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.

     10. Post Termination Obligations.

          (a) Proprietary Information Defined. “Proprietary Information” is all information and
any idea in whatever form, tangible or intangible, pertaining in any manner to the business of the
Company or any of its affiliated companies, or to its clients, consultants, or business associates,
unless: (i) the information is or becomes publicly known through lawful means; (ii) the information
was rightfully in the Executive’s possession or part of his general knowledge prior to his
employment by the Company; or (iii) the information is disclosed to the Executive without
confidential or proprietary restriction by a third party who rightfully possesses the information
(without confidential or proprietary restriction) and did not learn of it, directly or indirectly,
from the Company.

          (b) General Restrictions on Use of Proprietary Information. The Executive agrees to
hold all Proprietary Information in strict confidence and trust for the sole benefit of the Company
and not to, directly or indirectly, disclose, use, copy, publish, summarize, or remove from
Company’s premises any Proprietary Information (or remove from the premises any other property of
the Company), except (i) during his employment to the extent necessary to carry out the Executive’s
responsibilities under this Agreement, and (ii) after termination of his employment as specifically
authorized in writing by the Board or pursuant to a subpoena.

15

 

          (c) Non-Solicitation and Non-Raiding. To forestall the disclosure or use of
Proprietary Information in breach of Section 10(b), and in consideration of this Agreement,
Executive agrees that for a period of two (2) years after termination of his employment, he shall
not, for himself or any third party, directly or indirectly (i) divert or attempt to divert from
the Company (or any of its affiliated companies) any business of any kind in which it is engaged,
including, without limitation, the solicitation of its customers as to products which are directly
competitive with products sold by the Company at the time of the Executive’s termination, or
interference with any of its suppliers or customers, or (ii) solicit for employment any person
employed by the Company, or by any of its affiliated companies, during the period of such person’s
employment and for a period of three months after the voluntary termination of such person’s
employment with the Company.

          (d) Contacts with the Press. Following termination, the Executive will continue to
abide by the Company’s policy that prohibits discussing any aspect of Company business with
representatives of the press without first obtaining the permission of the Company’s Public
Relations Department.

          (e) Remedies. Nothing in this Section 10 is intended to limit any remedy of the
Company under the California Uniform Trade Secrets Act (California Civil Code Section 3426), or
otherwise available under law.

          (f) In no event shall an asserted violation of the provisions of this Section 10 constitute a
basis for deferring or withholding any amounts otherwise payable to the Executive pursuant to this
Agreement.

     11. Successors.

          (a) This Agreement is personal to the Executive and without the prior written consent of the
Company shall not be assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s
legal representatives.

          (b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

          (c) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place. As
used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor
to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.

     12. Miscellaneous.

          (a) This Agreement shall be governed by and construed in accordance with the laws of the State
of California, without reference to principles of conflict of laws. The captions of this Agreement
are not part of the provisions hereof and shall have no force or effect.

16

 

This Agreement may not be amended or modified otherwise than by a written agreement executed
by the parties hereto or their respective successors and legal representatives.

          (b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:

If to the Executive:

To
the residence address for the Executive last shown on the Company’s payroll
records.

If to the Company:

The Clorox Company

1221 Broadway

Oakland, California 94612

Attention: General Counsel

or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.

          (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.

          (d) The Company may withhold from any amounts payable under this Agreement such Federal,
state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or
regulation.

          (e) This Agreement may not be modified, amended, or terminated except by an instrument in
writing, signed by the Executive and by a duly authorized representative of the Company other than
Executive. By an instrument in writing similarly executed, either party may waive compliance by
the other party with any provision of this Agreement that such other party was or is obligated to
comply with or perform, provided, however, that such waiver shall not operate as a waiver of, or
estoppel with respect to, any other or subsequent failure. No failure to exercise and no delay in
exercising any right, remedy, or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, or power hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, or power provided herein or by law or
in equity.

          (f) Together with the Current Agreement (and the restricted stock unit agreement contemplated
under Section 3(a)(ii)(A) and the stock option award agreement contemplated under Section
3(a)(ii)(B) thereunder), the terms of this Agreement are intended by the parties to be the final
expression of their agreement with respect to the employment of Executive by the Company and may
not be contradicted by evidence of any prior or contemporaneous agreement. The parties further
intend that this Agreement and the Current

17

 

Agreement (and such restricted stock unit and stock option award agreements thereunder) shall
constitute the complete and exclusive statement of their terms and that no extrinsic evidence
whatsoever may be introduced in any judicial, administrative, or other legal proceeding involving
either Agreement. The Current Agreement (and such restricted stock unit and stock option award
agreements thereunder) and this Agreement supersede any prior agreements, written or oral, between
the Company and the Executive concerning the terms of his employment.

          (g) In the event of any inconsistency between (a) this Agreement and (b) any other plan,
program, practice or agreement in which the Executive participates or is a party, this Agreement
shall control.

     13. Executive Acknowledgment. The Executive acknowledges (a) that he has consulted
with or has had the opportunity to consult with independent counsel of his own choice concerning
this Agreement and has been advised to do so by the Company, and (b) that he has read and
understands the Agreement, is fully aware of its legal effect, and has entered into it freely based
on his own judgment.

     14. Survival. The Executive’s rights under Sections 4(b)(ix), 4(b)(x), 4(b)(xi), 6,
9, 15, 17 and this Section 14 shall survive any termination of the Executive’s employment and the
term of this Agreement.

     15. Arbitration. Any controversy between the Executive or the Executive’s heirs or
estate and the Company or any employee of the Company, including but not limited to, those
involving the construction or application of any of the terms, provisions or conditions of this
Agreement or otherwise arising out of or related to this Agreement, shall be settled by arbitration
before a single arbitrator in accordance with the then current commercial arbitration rules of the
American Arbitration Association, and judgment on the award rendered by the arbitrator may be
entered by any court having jurisdiction thereof. The location of the arbitration shall be San
Francisco, California if the Executive’s current or most recent location of employment with the
Company is or was located in Alameda County, California. If it is or was elsewhere, the
arbitration shall be held at the city nearest to the Executive’s last location of employment with
the Company which has an office of the American Arbitration Association. The arbitrator shall
award attorney’s fees to the Executive to the extent that the Executive prevails in the arbitration
proceeding.

     16. Code Section 409A. To the extent applicable, it is intended that this Agreement
and any payment made hereunder shall comply with the requirements of Section 409A of the Code, and
any related regulations or other guidance promulgated with respect to such Section by the U.S.
Department of the Treasury or the Internal Revenue Service (“Code Section 409A”). Any provision
that would cause the Agreement or any payment hereof to fail to satisfy Code Section 409A shall
have no force or effect until amended to the minimum extent required to comply with Code Section
409A, which amendment may be retroactive to the extent permitted by Code Section 409A.

     17. Indemnification. The Company agrees to indemnify the Executive and hold him
harmless to the fullest extent permitted by the Company’s certificate of incorporation, bylaws

18

 

and applicable law against and in respect to any and all actions, suits, proceedings, claims,
demands, judgments, costs, expenses, losses, and damages resulting from the Executive’s good faith
performance of his duties and obligations with the Company. The Company shall insure the Executive
under any contract of directors and officers liability insurance, insuring members of the Board,
during his employment and tenure as a Board member and thereafter for so long as he may be subject
to liability for such acts or omissions in the performance of his duties and obligations to the
Company.

     18. Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will constitute one and the same
instruments. One or more counterparts of this Agreement may be delivered by facsimile, with the
intention that delivery by such means shall have the same effect as delivery of an original
counterpart thereof.

     The parties have duly executed this Agreement as of the effective date that appears at the
beginning of this Agreement.

	 	 	 	 	 
	THE CLOROX COMPANY	 	EXECUTIVE
	The Company	 	 
	 
	 	 	 	 
	By: 

Name: 

Title:

	 	/s/ Robert W. Matschullat
 

Robert W. Matschullat

Interim Chairman and Interim

Chief Executive Officer
	 	/s/ Donald R. Knauss

 

(Executive)
  

19exv10w1

 

Exhibit 10.1

MASTER SECURITY AGREEMENT

dated as of October 31, 2006 “Agreement”)

     THIS AGREEMENT is between General Electric Capital Corporation (together with its
successors and assigns, if any, “Secured Party”) and Genitope Corporation (“Debtor”). Secured
Party has an office at 83 Wooster Heights Road, Danbury, CT 06810. Debtor is a corporation
organized and existing under the laws of the state of DE (“the State”). Debtor’s mailing address
and chief place of business is 6900 Dumbarton Circle, Fremont, CA 94555.

1. CREATION OF SECURITY INTEREST.

     Debtor grants to Secured Party, its successors and assigns, a security interest in and
against all property listed on any collateral schedule now or in the future annexed to or made a
part of this Agreement (“Collateral Schedule”), and in and against all additions, attachments,
accessories and accessions to such property, all substitutions, replacements or exchanges therefor,
and all insurance and/or other proceeds thereof (all such property is individually and collectively
called the “Collateral”). This security interest is given to secure the payment and performance of
all debts, obligations and liabilities of any kind whatsoever of Debtor to Secured Party, now
existing or arising in the future, under this Agreement and those certain Promissory Notes from
time to time identified on any Collateral Schedule (collectively “Notes” and each a “Note”), and
any renewals, extensions and modifications of such debts, obligations and liabilities (such Notes,
debts, obligations and liabilities are called the “Indebtedness”).

2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.

     Debtor represents, warrants and covenants as of the date of this Agreement and as of the
date of each Collateral Schedule that:

     (a) Debtor’s exact legal name is as set forth in the preamble of this Agreement and Debtor
is, and will remain, duly organized, existing and in good standing under the laws of the State set
forth in the preamble of this Agreement, has its chief executive offices at the location specified
in the preamble, and is, and will remain, duly qualified and licensed in every jurisdiction
wherever necessary to carry on its business and operations except where the failure to so qualify
would not have a material adverse effect on the financial condition of Debtor or on its ability to
perform its obligations under this Agreement and any other Debt Document (as defined below);

     (b) Debtor has adequate power and capacity to enter into, and to perform its obligations
under this Agreement, each Note and any other documents evidencing, or given in connection with,
any of the Indebtedness (all of the foregoing are called the “Debt Documents”);

     (c) This Agreement and the other Debt Documents have been duly authorized, executed and
delivered by Debtor and constitute legal, valid and binding agreements enforceable in accordance
with their terms, except to the extent that the enforcement of remedies may be limited under
applicable bankruptcy and insolvency laws or similar laws affecting creditors’ rights generally and
by general principles of equity;

     (d) No approval, consent or withholding of objections is required from any governmental
authority or instrumentality with respect to the entry into, or performance by Debtor of any of the
Debt Documents, except any already obtained;

     (e) The entry into, and performance by, Debtor of the Debt Documents will not (i) violate
any of the organizational documents of Debtor or any judgment, order, law or regulation applicable
to Debtor, or (ii) result in any breach of or constitute a default under any contract to which
Debtor is a party, or result in the creation of any lien, claim or encumbrance on any of Debtor’s
property (except for liens in favor of Secured Party) pursuant to any indenture, mortgage, deed of
trust, bank loan, credit agreement, or other agreement or instrument to which Debtor is a party;

     (f) There are no suits or proceedings pending in court or before any commission, board or
other administrative agency against or affecting Debtor which could, in the aggregate, have a
material adverse effect on Debtor, its business or operations, or its ability to perform its
obligations under the Debt Documents, nor does Debtor have reason to believe that any such suits or
proceedings are threatened;

     (g) All financial statements delivered to Secured Party in connection with the
Indebtedness have been prepared in accordance with generally accepted accounting principles, and
since the date of the most recent financial statement, there has been no material adverse change in
Debtors financial condition;

     (h) The Collateral is not, and will not be, used by Debtor for personal, family or
household purposes;

     (i) The Collateral is, and will remain, in good condition and repair, normal wear and tear
excepted, and Debtor will not be negligent in its care and use;

 

 

     (j) Debtor is, and will remain, the sole and lawful owner, and in possession of, the
Collateral, and has the sole right and lawful authority to grant the security interest described in
this Agreement;

     (k) The Collateral is, and will remain, free and clear of all liens, claims and encumbrances
of any kind whatsoever, except for (i) liens in favor of Secured Party, (ii) liens for taxes not
yet due or for taxes being contested in good faith and which do not involve, in the judgment of
Secured Party, any risk of the sale, forfeiture or loss of any of the Collateral, and(iii) inchoate
materialmen’s, mechanic’s, repairmen’s and similar liens arising by operation of law in the normal
course of business for amounts which are not delinquent, (all of such liens are called “Permitted
Liens”);

     (l) Debtor is and will remain in full compliance with all laws and regulations applicable
to it including, without limitation, (i) ensuring that no person who owns a controlling interest in
or otherwise controls Debtor is or shall be (Y) listed on the Specially Designated Nationals and
Blocked Person List maintained by the Office of Foreign Assets Control (“OFAC”), Department of the
Treasury, and/or any other similar lists maintained by OFAC pursuant to any authorizing statute,
Executive Order or regulation or (Z) a person designated under Section 1(b), (c) or (d) of
Executive Order No. 13224 (September 23, 2001), any related enabling legislation or any other
similar Executive Orders, and (ii) compliance with all applicable Bank Secrecy Act (“BSA”) laws,
regulations and government guidance on BSA compliance and on the prevention and detection of money
laundering violations.

3. COLLATERAL.

     (a) Until the declaration of any default, Debtor shall remain in possession of the Collateral
(except to Secured Party or for maintenance and repair); except that Secured Party shall have the
right to possess (i) any chattel paper or instrument that constitutes a part of the Collateral,
and (ii) any other Collateral in which Secured Party’s security interest may be perfected only by
possession. At Secured Party’s expense not more frequently than once per calendar year (unless a
default has occurred and is continuing), Secured Party may inspect any of the Collateral during
normal business hours after giving Debtor reasonable prior notice. If Secured Party asks, Debtor
will promptly notify Secured Party in writing of the location of any Collateral.

     (b) Debtor shall (i) use the Collateral only in its trade or business, (ii) maintain all of
the Collateral in good operating order and repair, normal wear and tear excepted, (iii) use and
maintain the Collateral only in compliance with manufacturers recommendations and all applicable
laws, and (iv) keep all of the Collateral free and clear of all liens, claims and encumbrances
(except for Permitted Liens).

     (c) Secured Party does not authorize and Debtor agrees it shall not (i) part with possession
of any of the Collateral (except to Secured Party or for maintenance and repair), (ii) remove any
of the Collateral from the continental United States, or (iii) sell, rent, lease, mortgage,
license, grant a security interest in or otherwise transfer or encumber (except for Permitted
Liens) any of the Collateral.

     (d) Debtor shall pay promptly when due all taxes, license fees, assessments and public and
private charges levied or assessed on any of the Collateral, on its use, or on this Agreement or
any of the other Debt Documents except any taxes based upon, measured by or with respect to Secured
Party’s net income and except as contested in good faith and by appropriate proceedings and for
which adequate reserves have been established. At its option, if Debtor fails to do so after 10
days written notice from Secured Party, Secured Party may discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on the Collateral (subject to the
contest rights set forth in the preceding sentence) and may pay for the maintenance, insurance and
preservation of the Collateral and effect compliance with the terms of this Agreement or any of the
other Debt Documents. Debtor agrees to reimburse Secured Party, on demand, all reasonable costs
and expenses incurred by Secured Party in connection with such payment or performance and agrees
that such reimbursement obligation shall constitute Indebtedness.

     (e) Debtor shall, at all times, keep accurate and complete records of the Collateral, and at
Secured Party’s expense not more frequently than once per calendar year (unless a default has
occurred and is continuing) Secured Party shall have the right to inspect and make copies of all of
Debtor’s books and records relating to the Collateral during normal business hours, after giving
Debtor reasonable prior notice.

     (f) Debtor agrees and acknowledges that any third person who may at any time possess all or
any portion of the Collateral shall be deemed to hold, and shall hold, the Collateral as the agent
of, and as pledge holder for, Secured Party. Secured Party may at any time give notice to any third
person described in the preceding sentence that such third person is holding the Collateral as the
agent of, and as pledge holder for, the Secured Party.

4. INSURANCE.

     (a) Debtor shall at all times bear the entire risk of any loss, theft, damage to, or
destruction of, any of the Collateral from any cause whatsoever.

     (b) Debtor agrees to keep the Collateral insured against loss or damage by fire and extended
coverage perils, theft, burglary, and for any or all Collateral which are vehicles, for risk of
loss by collision, and if requested by Secured Party, against such other risks as Secured Party may
reasonably require. The insurance coverage shall be in an amount no less than the full replacement
value (“Fair Market Value”) of the Collateral, and deductible amounts, insurers and policies shall

 

 

be reasonably acceptable to Secured Party. Debtor shall deliver to Secured Party policies or
certificates of insurance evidencing such coverage. Each policy shall name Secured Party as a loss
payee, shall provide for coverage to Secured Party regardless of the breach by Debtor of any
warranty or representation made therein, shall not be subject to co-insurance, and shall provide
that coverage may not be canceled or materially altered by the insurer except upon thirty (30) days
prior written notice to Secured Party. Debtor appoints Secured Party as its attorney-in-fact to
make proof of loss, claim for insurance and adjustments with insurers, and to receive payment of
and execute or endorse all documents, checks or drafts in connection with insurance payments.
Secured Party shall not act as Debtor’s
attorney-in-fact unless Debtor is in default. Proceeds of insurance in excess of $100,000 shall be
applied, at the option of Secured Party, to repair or replace the Collateral or to reduce any of
the Indebtedness. Proceeds of insurance in the amount of $100,000 or less shall be applied, at the
option of Debtor, to repair or replace the Collateral or to reduce any of the Indebtedness.

5. REPORTS.

     (a) Debtor shall promptly notify Secured Party of (i) any change in the name of Debtor,
(ii) any change in the state of its incorporation, organization or registration, (iii) any
relocation of its chief executive offices, (iv) any relocation of any of the Collateral, (v) any
of the Collateral being lost, stolen, missing, destroyed, materially damaged or worn out, or (vi)
any lien, claim or encumbrance other than Permitted Liens attaching to or being made against any of
the Collateral.

     (b) Debtor will deliver to Secured Party financial statements as follows. If Debtor is a
privately held company, then Debtor agrees to provide monthly financial statements, certified by
Debtor’s president or chief financial officer including a balance sheet, statement of operations
and cash flow statement within 30 days of each month end and its complete audited annual financial
statements, certified by a recognized firm of certified public accountants, within 120 days of
fiscal year end or at such time as Debtor’s Board of Directors receives the audit. If Debtor is a
publicly held company, then Debtor agrees to provide quarterly unaudited statements and annual
audited statements, certified by a recognized firm of certified public accountants, within 10 days
after the statements are provided to the Securities and Exchange Commission (“SEC”). All such
statements are to be prepared using generally accepted accounting principles (“GAAP”) (except in
the case of unaudited financial statements, for the omission of footnotes and subject to year end
adjustments) and, if Debtor is a publicly held company, are to be in compliance with SEC
requirements.

6. FURTHER ASSURANCES.

     (a) Debtor shall, upon request of Secured Party, furnish to Secured Party such further
information, execute and deliver to Secured Party such documents and instruments (including,
without limitation, Uniform Commercial Code financing statements) and shall do such other acts and
things as Secured Party may at any time reasonably request relating to the perfection or protection
of the security interest created by this Agreement or for the purpose of carrying out the intent of
this Agreement. Without limiting the foregoing, Debtor shall cooperate and do all acts deemed
necessary or advisable by Secured Party to continue in Secured Party a perfected first security
interest in the Collateral, and shall obtain and furnish to Secured Party any subordinations,
releases, landlord waivers, lessor waivers, mortgagee waivers, or control agreements, and similar
documents as may be from time to time requested by, and in form and substance reasonably
satisfactory to, Secured Party.

     (b) Debtor authorizes Secured Party to file a financing statement and amendments thereto
describing the Collateral and containing any other information required by the applicable Uniform
Commercial Code. Debtor irrevocably grants to Secured Party the power to sign Debtor’s name and
generally to act on behalf of Debtor to execute and file applications for title, transfers of
title, financing statements, notices of lien and other documents pertaining to any or all of the
Collateral; this power is coupled with Secured Party’s interest in the Collateral. Debtor shall,
if any certificate of title be required or permitted by law for any of the Collateral, obtain and
promptly deliver to Secured Party such certificate showing the lien of this Agreement with respect
to the Collateral. Debtor ratifies its prior authorization for Secured Party to file financing
statements and amendments thereto describing the Collateral and containing any other information
required by the Uniform Commercial Code if filed prior to the date hereof.

     (c) Debtor shall indemnify and defend the Secured Party, its successors and assigns, and
their respective directors, officers and employees (“Indemnitees”), from and against all claims,
actions and suits (including, without limitation, related reasonable attorneys’ fees) of any kind
whatsoever arising, directly or indirectly, in connection with any of the Collateral except for
claims arising from Indemnities’ gross negligence or wilful misconduct.

7. DEFAULT AND REMEDIES.

     (a) Debtor shall be in default under this Agreement and each of the other Debt Documents
if:

          (i) Debtor breaches its obligation to pay when due any installment or other amount due or
coming due under any of the Debt Documents and fails to cure the breach within ten (10) days;

 

 

          (ii) Debtor, without the prior written consent of Secured Party, attempts to or does sell,
rent, lease, license, mortgage, grant a security interest in, or otherwise transfer or encumber
(except for Permitted Liens) any of the Collateral.

          (iii) Debtor breaches any of its insurance obligations under Section 4;

          (iv) Debtor breaches any of its other obligations under any of the Debt Documents and fails to
cure that breach within thirty (30) days after written notice from Secured Party;

          (v) Any warranty, representation or statement made by Debtor in any of the Debt Documents or
otherwise in connection with any of the Indebtedness shall be false or misleading in any material
respect when made;

          (vi) Any of the Collateral is subjected to attachment, execution, levy, seizure or
confiscation in any legal proceeding or otherwise and the same shall remain unsatisfied, unvacated
or unstayed pending appeal for a period of 10 days after the occurrence thereof, or if any legal or
administrative proceeding is commenced against Debtor or any of the Collateral, which in the good
faith judgment of Secured Party subjects any of the Collateral to a material risk of attachment,
execution, levy, seizure or confiscation and no bond is posted or protective order obtained to
negate such risk;

          (vii) Debtor breaches or is in default under any other agreement between Debtor and Secured
Party beyond the period of grace, if any, provided therein unless such default has been waived;

          (viii) Debtor or any guarantor or other obligor for any of the Indebtedness (collectively
“Guarantor”) dissolves, terminates its existence, becomes insolvent or ceases to do business as a
going concern;

          (ix) If Debtor or any Guarantor is a natural person, Debtor or any such Guarantor dies or
becomes incompetent;

          (x) A receiver is appointed for all or of any part of the property of Debtor or any Guarantor,
or Debtor or any Guarantor makes any assignment for the benefit of creditors;

          (xi) Debtor or any Guarantor files a petition under any bankruptcy, insolvency or similar law,
or any such petition is filed against Debtor or any Guarantor and is not dismissed within sixty
(60) days;

          (xii) Debtor’s improper filing of an amendment or termination statement relating to a filed
financing statement describing the Collateral;

          (xiii) There is a material adverse change in the Debtor’s financial condition such that the
Debtor’s ability to repay any indebtedness under the Agreement is materially impaired as reasonably
determined by Secured Party without limiting the scope of the foregoing, Debtor acknowledges and
agrees that if Debtor is party to transaction that results in (A) Debtor no longer being a publicly
traded company, and (B) controlling interest of Debtor being acquired by a person or entity not
reasonably acceptable to Secured Party based upon Secured Party’s customary credit underwriting
standards, the consummation of such transaction shall constitute a material adverse change within
the definition of this clause ;

          (xiv) Any Guarantor revokes or attempts to revoke its guaranty of any of the Indebtedness or
fails to observe or perform any covenant, condition or agreement to be performed under any guaranty
or other related document to which it is a party;

          (xv) Debtor defaults under any other material obligation with a third party for (A) borrowed
money, (B) the deferred purchase price of property or (C) payments due under any capital lease
agreement resulting in the acceleration by such third party of any indebtedness owed by Debtor to
such third party thereunder in an amount in excess of $ 100,000; and such default by Debtor was not
the result of a bona fide business dispute with such third party or

     (b) If Debtor is in default, the Secured Party, at its option, may declare any or all of the
Indebtedness to be immediately due and payable, without demand or notice to Debtor or any
Guarantor. The accelerated obligations and liabilities shall bear interest (both before and after
any judgment) until paid in full at the lower of eighteen percent (18%) per annum or the maximum
rate not prohibited by applicable law.

     (c) After default and during the continuance thereof, Secured Party shall have all of the
rights and remedies of a Secured Party under the Uniform Commercial Code, and under any other
applicable law. Without limiting the foregoing, Secured Party shall have the right to (i) notify
any account debtor of Debtor or any obligor on any instrument which constitutes part of the
Collateral to make payment to the Secured Party, (ii) with or without legal process, enter any
premises where the Collateral may be and take possession of and remove the Collateral from the
premises or store it on the premises, (iii) sell the Collateral at public or private sale, in
whole or in part, and have the right to bid and purchase at said sale, or (iv) lease or otherwise
dispose of all or part of the Collateral, applying proceeds from such disposition to the
obligations then in default. If requested by Secured Party, Debtor shall promptly assemble the
Collateral and make it available to Secured Party at a place to be designated by Secured Party,
which is reasonably convenient to both parties. Secured Party may also render any or all of the
Collateral unusable at the Debtor’s premises and may dispose of such Collateral on such premises
without liability for rent or costs. Any notice that Secured

 

 

Party is required to give to Debtor
under the Uniform Commercial Code of the time and place of any public sale or the time after which
any private sale or other intended disposition of the Collateral is to be made shall be deemed to
constitute reasonable notice if such notice is given to the last known address of Debtor at least
ten (10) days prior to such action.

     (d) Proceeds from any sale or lease or other disposition shall be applied: first, to all
costs of repossession, storage, and disposition including without limitation reasonable attorneys’,
appraisers’, and auctioneers’ fees; second, to discharge the obligations then in default; third, to
discharge any other Indebtedness of Debtor to Secured Party, whether as obligor, endorser,
guarantor, surety or indemnitor; fourth, to expenses incurred in paying or settling liens and
claims against the Collateral; and lastly, to Debtor, if there exists any surplus. Debtor shall
remain fully liable for any deficiency.

     (e) Debtor agrees to pay all reasonable attorneys’ fees and other costs incurred by
Secured Party in connection with the enforcement, assertion, defense or preservation of Secured
Party’s rights and remedies under this Agreement, or if prohibited by law, such lesser sum as may
be permitted. Debtor further agrees that such fees and costs shall constitute Indebtedness.

     (f) Secured Party’s rights and remedies under this Agreement or otherwise arising are
cumulative and may be exercised singularly or concurrently. Neither the failure nor any delay on
the part of the Secured Party to exercise any right, power or privilege under this Agreement shall
operate as a waiver, nor shall any single or partial exercise of any right, power or privilege
preclude any other or further exercise of that or any other right, power or privilege. SECURED
PARTY SHALL NOT BE DEEMED TO HAVE WAIVED ANY OF ITS RIGHTS UNDER THIS AGREEMENT OR UNDER ANY OTHER
AGREEMENT, INSTRUMENT OR PAPER SIGNED BY DEBTOR UNLESS SUCH WAIVER IS EXPRESSED IN WRITING AND
SIGNED BY SECURED PARTY. A waiver on any one occasion shall not be construed as a bar to or waiver
of any right or remedy on any future occasion.

     (g) DEBTOR AND SECURED PARTY UNCONDITIONALLY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER DEBT
DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED HEREBY, ANY DEALINGS BETWEEN DEBTOR AND SECURED PARTY
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE
RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN DEBTOR AND SECURED PARTY. THE SCOPE OF THIS WAIVER
IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT. THIS
WAIVER IS IRREVOCABLE. THIS WAIVER MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING. THE WAIVER
ALSO SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT, ANY OTHER DEBT DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
TRANSACTION OR ANY RELATED TRANSACTION. THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.

8. MISCELLANEOUS.

     (a) This Agreement, any Note and/or any of the other Debt Documents may be assigned, in
whole or in part, by Secured Party without notice to Debtor, and Debtor agrees not to assert
against any such assignee, or assignee’s assigns, any defense, set-off, recoupment claim or
counterclaim which Debtor has or may at any time have against Secured Party for any reason
whatsoever. Debtor agrees that if Debtor receives written notice of an assignment from Secured
Party, Debtor will pay all amounts payable under any assigned Debt Documents to such assignee or as
instructed by Secured Party. Debtor also agrees to confirm in writing receipt of the notice of
assignment as may be reasonably requested by Secured Party or assignee.

     (b) All notices to be given in connection with this Agreement shall be in writing, shall
be addressed to the parties at their respective addresses set forth in this Agreement (unless and
until a different address may be specified in a written notice to the other party), and shall be
deemed given (i) on the date of receipt if delivered in hand or by facsimile transmission, (ii)
on the next business day after being sent by express mail, and (iii) on the fourth business day
after being sent by regular, registered or certified mail. As used herein, the term “business day”
shall mean and include any day other than Saturdays, Sundays, or other days on which commercial
banks in New York, New York are required or authorized to be closed.

     (c) Secured Party may correct patent errors and fill in all blanks in this Agreement or in
any Collateral Schedule consistent with the agreement of the parties.

     (d) Time is of the essence of this Agreement. This Agreement shall be binding, jointly
and severally, upon all parties described as the “Debtor” and their respective heirs, executors,
representatives, successors and assigns, and shall inure to the benefit of Secured Party, its
successors and assigns.

     (e) This Agreement and its Collateral Schedules constitute the entire agreement between
the parties with respect to the subject matter of this Agreement and supersede all prior
understandings (whether written, verbal or implied) with respect to such subject matter. THIS
AGREEMENT AND ITS COLLATERAL SCHEDULES SHALL NOT BE CHANGED OR TERMINATED ORALLY OR BY COURSE OF
CONDUCT, BUT ONLY BY A WRITING SIGNED BY BOTH PARTIES. Section headings contained in this
Agreement have been included for convenience only, and shall not affect the construction or
interpretation of this Agreement.

 

 

     (f) This Agreement shall continue in full force and effect until all of the Indebtedness
has been indefeasibly paid in full to Secured Party or its assignee. Except as set forth below,
the surrender, upon payment or otherwise, of any Note or any of the other documents evidencing any
of the Indebtedness shall not affect the right of Secured Party to retain the Collateral for such
other Indebtedness as may then exist. Upon satisfaction of Debtor’s obligations hereunder and all
of the other Debt Documents, Secured Party will, at Debtor’s expense, execute and deliver to Debtor
such documents as Debtor shall reasonably request to evidence the termination of the security
interest hereunder and the release of the Collateral In addition, upon satisfaction of Debtor’s
obligations under any Note issued in connection with any Collateral Schedule, Secured Party will,
at Debtor’s expense, execute and deliver to Debtor such documents as Debtor shall reasonably
request to evidence the release of the Collateral described in such Collateral Schedule, This
Agreement shall automatically be reinstated if Secured Party is ever required to return or restore
the payment of all or any portion of the Indebtedness (all as though such payment had never been
made).

     (g) Debtor authorizes Secured Party to use its name, logo and/or trademark without notice to
or consent by Debtor, in connection with certain promotional materials that Secured Party may
disseminate to the public. The promotional materials may include, but are not limited to,
brochures, video tape, internet website, press releases, advertising in newspaper and/or other
periodicals, lucites, and any other materials relating the fact that Secured Party has a financing
relationship
with Debtor and such materials may be developed, disseminated and used without Debtor’s review.
Nothing herein obligates Secured Party to use Debtor’s name, logo and/or trademark, in any
promotional materials of Secured Party.

     (h) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL
RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CONNECTICUT (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE COLLATERAL.

     (i) In handling any confidential information of Debtor, Secured Party and all employees and
agents of Secured Party shall exercise the same degree of care that Secured Party exercises with
respect to its own proprietary information of the same types to maintain the confidentiality of any
non-public information thereby received or received pursuant to this Agreement except that
disclosure of such information may be made (i) to the subsidiaries or affiliates of Secured Party
in connection with their present or prospective business relations with Debtor, (ii) to prospective
transferees or purchasers of any interest in the Indebtedness, provided that they have entered into
a comparable confidentiality agreement in favor of Debtor and have delivered a copy to Debtor,
(iii) as required by law, regulations, rule or order, subpoena, judicial order or similar order,
(iv) as may be required in connection with the examination, audit or similar investigation of
Secured Party, and (v) as Secured Party may determine in connection with the enforcement of any
remedies hereunder. Confidential information hereunder shall not include information that either:
(a) is in the public domain or in the knowledge or possession of Secured Party when disclosed to
Secured Party, or becomes part of the public domain after disclosure to Secured Party through no
fault of Secured Party; or (b) is disclosed to Secured Party by a third party, provided Secured
Party does not have actual knowledge that such third party is prohibited from disclosing such
information.

IN WITNESS WHEREOF, Debtor and Secured Party, intending to be legally bound
hereby, have duly executed this Agreement in one or more counterparts, each of which shall
be deemed to be an original, as of the day and year first aforesaid.

	 	 	 	 	 	 	 	 	 
	SECURED PARTY:	 	DEBTOR:
	 
	General Electric Capital Corporation	 	Genitope Corporation
	By:

	 	/s/ Diane Earle 	 	 	 	By:
	 	/s/ Dan W. Denney, Jr.
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Name:

	 	Diane Earle 	 	 	 	Name:
	 	Dan W. Denney, Jr.
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Title:

	 	Duly Authorized Signatory 	 	 	 	Title:
	 	CEO

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