Document:

Exhibit
10.6.2

 

PAVmed
Inc.

One
Grand Central Place

Suite
4600

New
York, NY 10165

 

December
27, 2018

 

To
the parties listed in Paragraph 3

 

Re: Notice
of Prepayment

 

Dear
Sirs and Mesdames:

 

Reference
is made to the 15% Senior Secured Note due 2019, dated as of June 30, 2017 (the “Note”), by and among PAVmed
Inc. (the “Company”), the subsidiaries of the Company party thereto, and Scopia Holdings LLC (the “Noteholder”).
Capitalized terms used but not defined herein have the meaning ascribed thereto in the Note.

 

	 	1	This
    letter (the “Letter Agreement”) is to confirm that it is the intention of the Company to satisfy in full
    all of its Obligations owing to the Noteholder outstanding under the Note on December 27, 2018 (the “Payoff Date”).
    Such Obligations shall be satisfied by (a) the Borrower making a payment of $5,000,000 (the “Principal Payoff Amount”)
    to the Noteholder by wire transfer of immediately available funds, and (b) pursuant to the Noteholder’s instruction
    to the Borrower hereby made, the Borrower issuing 600,000 privately placed unregistered shares of its Common Stock (to be
    legended as set forth on Annex I hereto) to the Noteholder and to its syndicatees (as listed in paragraph 3 below, the “Syndicatees”)
    as consideration for all remaining accrued and unpaid interest outstanding under the Note as of the Payoff Date (the “Interest
    Payoff Amount” and, together with the Principal Payoff Amount, the “Final Payoff Amount”).
	 	 	 
	 	2	In
    connection with the repayment, the Noteholder hereby acknowledges and agrees that, effective upon its receipt of each of (a)
    an original or facsimile transmission of this Letter Agreement, duly countersigned by Company; (b) the Principal Payoff Amount
    in immediately available funds by 5:00 p.m. (New York time) on the Payoff Date; and (c) a copy of the irrevocable instructions
    to its transfer agent (the “Irrevocable Instructions”) to issue certificates for an aggregate 600,000 shares
    of Common Stock of the Company (the “Interest Payoff Amount Shares”) registered in the names of the Syndicatees
    (to be delivered to their addresses as set forth in the separate letter from the Noteholder and the Syndicatees previously
    delivered to the Company), in satisfaction of the Interest Payoff Amount, then, automatically upon such event:

 

	 	(i)	The
    Noteholder and each Syndicatee shall automatically be deemed to hereby have irrevocably waived any right to receive any further
    amounts with respect to any portion of the Obligations;
	 	 	 
	 	(ii)	All
    of the outstanding debts, liabilities, and obligations owing by the Company to the Noteholder or any Syndicatee under the
    Note, the Note and Securities Purchase Agreement, the Note and Guaranty Security Agreement, the Patent Security Agreement
    and the Guaranty (collectively, the “Note Agreements”), shall be satisfied in full and the Company and
    each Guarantor shall be released from all liability therefor; provided that if all or any portion of the Final Payoff Amount
    shall be recovered from, or repaid by, such Noteholder or Syndicatee, in whole or in part, in any bankruptcy, insolvency or
    similar proceeding instituted by or against the Company, then the liability of the Company shall be automatically reinstated
    to the extent of the amount so recovered from or repaid by such Noteholder or Syndicatee;
	 	 	 
	 	(iii)	The
    Note Agreements shall automatically terminate effective as of such date and all obligations of the Company, each Guarantor
    and any other obligor under the Note Agreements shall terminate (other than any such obligations under any provision in any
    Note Agreement which by its terms survives the termination of such Note Agreement);
	 	 	 
	 	(iv)	All
    liens, security interests, mortgages, and other encumbrances (collectively, the “Security Interests”) of
    any kind, nature, or description, whenever and however arising in favor of the Noteholder under the Note Agreements on any
    of the assets and property, real or personal, tangible or intangible, of the Company and the Guarantors (collectively, the
    “Security Interests”) shall thereupon be released and terminated; and
	 	 	 
	 	(v)	The
    Noteholder shall (A) promptly deliver to Company any Notes, marked “Paid in Full” or “Cancelled”,
    together with all certificated Collateral that the Company has delivered to the Noteholder and all other instruments and other
    property of Company that are in the Noteholder’s possession, and (B) execute and deliver to the Company such releases,
    reconveyances, and other appropriate documentation reasonably requested by the Company to effectuate the agreement in paragraph
    (iii) above with respect to the Security Interests. Noteholder hereby authorizes Company to prepare and file any UCC termination
    statements and to file any other documentation executed by Noteholder under the preceding clause (B), in each case as necessary
    to effectuate the termination of any Security Interests. Noteholder also hereby confirms that it has not taken any action
    to foreclose on or dispose of any of the Collateral, or to create any liens upon any of the Collateral that are not provided
    to be released by this Letter Agreement.

 

    	 

     

    

 

	 	3	By
    their execution at the end hereof, the Noteholder hereby makes to the Company, and the Syndicatees hereby make to the Noteholder
    and the Company, the representations and warranties that are set forth in Annex II hereto. The Noteholder hereby transfers
    and assigns its right to the Interest Payoff Amount Shares to its Syndicatees. The allocation of such assigned Interest Payoff
    Amount Shares is as set forth below:

 

	Name	 	Number
    of shares
	MATTHEW
    SIROVICH	 	 	272,400	 
	THE BOOMER FUND, L.P.	 	 	60,000	 
	JEREMY MINDICH	 	 	120,000	 
	DAVID BROSER	 	 	120,000	 
	RICHARD & CAROL
    HOCHMAN	 	 	9,000	 
	2003 HOCHMAN FAMILY
    LLC	 	 	6,000	 
	HOCHMAN FAMILY PARTNERSHIP	 	 	6,000	 
	CAROL HOCHMAN	 	 	3,000	 
	NATHANIEL HOCHMAN	 	 	1,800	 
	JASON
    HOCHMAN	 	 	1,800	 
	 	 	 	600,000	 

 

	 	4	The
    Syndicatees hereby acknowledge their shares will bear the legend as set forth on Annex I.
	 	 	 
	 	5	The
    Principal Payoff Amount shall be made by wire transfer in immediately available funds to the account of the Noteholder previously
    provided by it to the Company. Payments received after 5:00 p.m. (New York time) shall be deemed to be received on the following
    business day.
	 	 	 
	 	6	The
    Interest Payoff Amount shall be made by delivery to the Noteholder and each Syndicatee of a copy of the Irrevocable Instructions.
	 	 	 
	 	7	The
    parties acknowledge that, in connection herewith, the Company will issue and sell certain securities (the “Ayrton
    Securities”) to Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B, and in connection therewith,
    the Company is obligated to file with the SEC an initial registration statement (the “Registration Statement”)
    covering the resale of certain of the Ayrton Securities. The Company shall cause the Registration Statement to cover the resale
    of the Interest Payoff Amount Shares to the same extent the Ayrton Securities are so covered. After the effectiveness of the
    Registration Statement, the Company shall notify the Noteholder and Syndicatees if, and as to such periods, as the Registration
    Statement may not be used for resales.
	 	 	 
	 	8	Each
    party covenants and agrees to promptly execute and deliver any additional documents and instruments and perform any additional
    acts that any party determines may be reasonably necessary or desirable to effectuate the transactions contemplated hereby.
	 	 	 
	 	9	By
    executing this Letter Agreement, the Company hereby indicates its agreement to all of the foregoing. This letter agreement
    may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when
    so delivered shall be deemed an original, but all of which counterparts shall constitute but one and the same instrument.
    Delivery of an executed counterpart of a signature page to this letter agreement by facsimile transmission shall be effective
    as delivery of a manually executed counterpart thereof. This letter agreement shall be governed by and construed in accordance
    with the internal laws of the State of New York without application of principles of conflicts of law.

 

	 	Very
    truly yours,
	 	 
	 	PAVMED
    INC. 
	 	 	 
	 	By:	/s/
    Lishan Aklog
	 	Name:	Lishan
    Aklog, M.D.
	 	Title:	Chief
    Executive Officer

 

	Accepted
    and Agreed to:	 
	 	 
	SCOPIA
    HOLDINGS LLC	 
	 	 	 
	By:	/s/
    Aaron Morse	 
	Name:	Aaron
    Morse	 
	Title:	Authorized
    Signatory	 

 

    	2

     

    

 

	SYNDICATEES:	 
	 	 	 
	By:
    	/s/
    Matthew Sirovich	 
	Name: 	Matthew
    Sirovich	 
	 	 	 
	By:
    	/s/
    Jeremy Mindich	 
	Name:	Jeremy
    Mindich	 
	 	 	 
	By:
    	/s/
    David Broser	 
	Name:	David
    Broser	 
	 	 	 
	By:
    	/s/
    Richard Hochman	 
	 	Richard
    & Carol Hochman	 
	Name:	Richard
    Hochman	 
	 	 	 
	By:
    	/s/
    Carol Hochman	 
	 	Richard
    & Carol Hochman	 
	Name:	Carol
    Hochman	 
	 	 	 
	By:
    	/s/
    Carol Hochman	 
	Name:	Carol
    Hochman	 
	 	 	 
	By:
    	/s/
    Nathaniel Hochman	 
	Name:	Nathaniel
    Hochman	 
	 	 	 
	By:
    	/s/
    Jason Hochman	 
	Name:	Jason
    Hochman	 
	 	 	 
	THE
    BOOMER FUND, L.P.	 
	 	 	 
	By:
    	/s/
    Matthew Sirovich	 
	Name:	Matthew
    Sirovich	 
	Title:	General
    Partner	 
	 	 	 
	2003
    HOCHMAN FAMILY LLC	 
	 	 	 
	By:
    	/s/
    Richard H. Hochman	 
	Name:	Richard
    H. Hochman	 
	Title:	Member	 
	 	 	 
	HOCHMAN
    FAMILY PARTNERSHIP	 
	 	 	 
	By:
    	/s/
    Richard H. Hochman	 
	Name:	Richard
    H. Hochman	 
	Title:	G.P.	 

 

    	3

     

    

 

ANNEX
I

Legend

 

THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL
TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

 

    	 

     

    

 

ANNEX
II

 

Representations
and Warranties of the Noteholder and the Syndicatees

 

(a)
Organization; Authority. The Noteholder and each Syndicatee is either an individual or an entity duly incorporated or formed,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate,
partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated
by this Letter Agreement and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this
Letter Agreement and performance by the Noteholder and each Syndicatee of the transactions contemplated by this Letter Agreement
has been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable,
on the part of the Noteholder and each Syndicatee. This Letter Agreement has been duly executed by the Noteholder and each Syndicatee,
and when delivered by the Noteholder and each Syndicatee in accordance with the terms hereof, will constitute the valid and legally
binding obligation of the Noteholder and each Syndicatee, enforceable against it in accordance with its terms, except: (i) as
limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions
may be limited by applicable law.

 

(b)
Own Account. The Noteholder and each Syndicatee understands that the Interest Payoff Amount Shares are “restricted
securities” and have not been registered under the Securities Act of 1933 (the “Securities Act”) or any
applicable state securities law and is acquiring the Interest Payoff Amount Shares as principal for its own account and not with
a view to or for distributing or reselling such Interest Payoff Amount Shares or any part thereof in violation of the Securities
Act or any applicable state securities law, has no present intention of distributing any of such Interest Payoff Amount Shares
in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings
with any other persons to distribute or regarding the distribution of such Interest Payoff Amount Shares in violation of the Securities
Act or any applicable state securities law. The Noteholder and each Syndicatee is acquiring the Interest Payoff Amount Shares
hereunder in the ordinary course of its business.

 

(c)
Noteholder and Syndicatee Status. At the time the Noteholder was offered the Interest Payoff Amount Shares, it was, and
as of the date hereof it is, an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8)
under the Securities Act, and at the time the Syndicatee was offered the Interest Payoff Amount Shares by assignment from the
Noteholder, the Syndicatee was, and at the date hereof is, an “accredited investor” as defined in Rule 501(a) of the
Securities Act.

 

(d)
Experience of the Noteholder and each Syndicatee. The Noteholder and each Syndicatee, either alone or together with its
respective representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable
of evaluating the merits and risks of the prospective investment in the Interest Payoff Amount Shares, and has so evaluated the
merits and risks of such investment. The Noteholder and each Syndicatee is able to bear the economic risk of an investment in
the Interest Payoff Amount Shares and, at the present time, is able to afford a complete loss of such investment.

 

(e)
General Solicitation. The Noteholder and each Syndicatee is not, to the Noteholder and each Syndicatee’s knowledge,
acquiring the Interest Payoff Amount Shares as a result of any advertisement, article, notice or other communication regarding
the Interest Payoff Amount Shares published in any newspaper, magazine or similar media or broadcast over television or radio
or presented at any seminar or any other general solicitation or general advertisement. The Noteholder and each Syndicatee acknowledges
and agrees that it had a pre-existing relationship with the Company prior to the date hereof.

 

(f)
Access to Information. The Noteholder and each Syndicatee acknowledges that it has had the opportunity to review this Letter
Agreement (including all annexes thereto) and the SEC Reports (as defined in the Note Agreements) and has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning
the terms and conditions of the offering of the Interest Payoff Amount Shares and the merits and risks of investing in the Interest
Payoff Amount Shares; (ii) access to information about the Company and its financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make
an informed investment decision with respect to the investment.

 

(g)
Certain Transactions; Confidentiality. Other than to other parties to this Letter Agreement or to the Noteholder’s
and each Syndicatee’s representatives, including, without limitation, its officers, directors, partners, legal and other
advisors, employees, agents and affiliates, the Noteholder and each Syndicatee has maintained the confidentiality of all disclosures
made to it in connection with this transaction (including the existence and terms of this transaction). The Noteholder and each
Syndicatee acknowledges that, as a result of certain confidential information disclosed to it, the Noteholder and each Syndicatee
may be subject to restrictions on its ability to trade in the Company’s securities prior to public announcement of such
information.ex_139299.htm

Exhibit 10.12

 

EMPLOYMENT AGREEMENT

 

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into on December __, 2018 and effective as of October 5, 2018 (the “Effective Date”), by and between ALEA KLEINHAMMER (“Executive”), and ENTERPRISE DIVERSIFIED, INC. (the “Company”), a Nevada corporation having an address at 1518 Willow Lawn Drive, Richmond, Virginia 23230.

 

R E C I T A L S

 

WHEREAS, the parties desire to have Executive’s employment relationship with the Company be governed by the terms and conditions of this Agreement, which include material benefits favorable to Executive; and

 

WHEREAS, in return for such material benefits, Executive is agreeing to the terms and conditions contained in this Agreement, which include material obligations as to Executive;

 

NOW, THEREFORE, in consideration of the mutual covenants in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Executive and the Company hereby agree as follows:

 

1. Employment Term

 

Upon the execution and delivery of this Agreement by the Company and Executive, this Agreement shall become effective as from, and Executive’s employment hereunder shall have commenced as of, the Effective Date, and shall replace and supersede any and all other understandings and employment contracts and arrangements between the parties.

 

The term of this Agreement, and Executive’s employment hereunder, shall be from the Effective Date through the first to occur of (a) the date Executive’s employment terminates in accordance with Section 4.1 hereof, or (b) December 31, 2019; provided, that, on December 31, 2019 and each annual anniversary thereof thereafter (such date and each annual anniversary thereof, a “Renewal Date”), this Agreement, and Executive’s employment hereunder, unless earlier terminated pursuant to Section 4.1 hereof, shall be deemed to be automatically extended, upon the same terms and conditions, for successive periods of one year each, unless the Company provides Executive written notice of its intention not to extend the term of the Agreement at least thirty (30) days prior to the applicable Renewal Date. The period during which Executive is employed by the Company hereunder is hereinafter referred to as the “Employment Term.”

 

2. Position and Duties

 

During the Employment Term, Executive shall serve as the Chief Financial Officer of the Company, and Executive hereby accepts such employment and agrees to act in such capacity, all in accordance with the terms and conditions of this Agreement. Executive shall report directly to the Chief Executive Officer (“CEO”). Executive shall have such duties, authority and responsibility as shall be determined from time to time by the CEO, and which duties, authority and responsibility are consistent with Executive’s position.

 

Executive agrees that, during the Employment Term, Executive shall devote her reasonable best efforts and substantially all of her business time and attention to the business and affairs of the Company, and use her reasonable best efforts to advance the best interests and welfare of the Company. During the Employment Term, Executive shall not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere with the performance of Executive’s duties and responsibilities to the Company, either directly or indirectly, without the prior written consent of the CEO.

 

Executive shall at all times comply with and abide by all policies of the Company applicable to Executive.

 

3. Compensation and Benefits

 

3.1 Salary

 

Executive’s salary during the Employment Term shall be at a gross annual rate of $120,000. Such salary, less normal deductions, shall be paid to Executive in accordance with the Company’s customary payroll practices in effect from time to time.

 

3.2 Annual Incentive Bonus

 

(a) Executive shall be eligible to receive an annual incentive bonus (the “Incentive Bonus”) from the Company as described below. Notwithstanding the foregoing or anything herein to the contrary, the decision to pay any Incentive Bonus and the amount and terms of any Incentive Bonus shall be, at all times, in the sole and absolute discretion of the Board.

 

(i) Calendar Year 2019 Incentive Bonus. In respect of the calendar year ended December 31, 2019, Executive shall be eligible to receive an Incentive Bonus in an aggregate amount up to $30,000, as determined by the Board, comprised of three equal parts as follows: (1) the consistent demonstration by Executive of career development, particularly evolving as a proactive executive of the Company and implementing appropriate financial planning and analysis processes, tools and reports for use by the Board, CEO and management, (2) the successful mitigation of financial risk(s) concerning Mt Melrose, and (3) the Company achieving superior financial results as of December 31, 2019 that outperform the Company’s 2019 budget as finally approved and adopted by the Board, all as determined by the Board.

 

(b) Executive must be employed by the Company as of December 31 of a given calendar year in order to earn and be eligible to receive any Incentive Bonus in respect of such calendar year. Each Incentive Bonus, if any, will be paid as soon as reasonably practicable, based on the availability of reliable financial data required to make the determination as to whether performance criteria for the bonus have been met and to perform any bonus calculation, and in any event within two and a half (2 1/2) months after the end of the applicable calendar year; provided, however, in the event that Executive’s employment terminates at any time as a result of a Termination With Cause or a Termination Upon Resignation, Executive shall forfeit automatically all rights in and to any and all earned but yet unpaid Incentive Bonus amounts.

 

3.3 Benefit Plans and Programs; Vacation

 

During the Employment Term, Executive shall be entitled to participate in all health and welfare and other employee benefit plans and programs maintained by the Company, as any may be in effect from time to time, to the extent consistent with applicable law and the terms of the applicable employee benefit plans and programs.

 

During the Employment Term, Executive shall be entitled to such paid vacation and sick leave as is in accordance with the most favorable plans, policies, programs and practices of the Company and its affiliated companies as in effect from time to time, and as otherwise may be approved by the Board. Any vacation shall be taken at the reasonable and mutual convenience of the Company and Executive.

 

3.4 Business Expenses

 

The Company shall pay or reimburse Executive for reasonable travel, lodging, meals, entertainment and other reasonable business expenses actually and necessarily incurred by Executive in connection with the performance of Executive’s duties hereunder, upon presentation of receipts therefor submitted to the Company on a timely basis and in accordance with, and in all cases subject to, the Company’s policies and practices in effect from time to time.

 

3.5 Withholding; Set-Off

 

Notwithstanding anything to the contrary herein, all compensation under this Agreement shall be subject to applicable tax withholding requirements and other deductions required by law.  Executive agrees that the Company shall be entitled to deduct from and offset against any monies payable or reimbursable to Executive hereunder any and all sums that Executive may owe the Company at any time.

 

4. Termination of Employment

 

4.1 Termination

 

Executive’s employment, and any obligations of the Company under this Agreement, shall or may be terminated, in the circumstances set forth below.

 

(a) Death.  Executive’s employment shall terminate automatically in the event of Executive’s death.

 

(b) Disability.  The Company may terminate Executive’s employment in accordance with and subject to the provisions of applicable law, in the event the Company and Executive agree that Executive has been substantially unable to perform Executive’s duties hereunder due to partial or total disability or incapacity resulting from a mental or physical illness, injury or other health-related cause (“Disability”). Executive’s position with respect to the reason or reasons for any such inability to perform duties shall be based upon the opinion of qualified physicians and/or other appropriate medical professionals. Disability shall not be grounds for termination of Executive’s employment under this Agreement in violation of the Americans with Disabilities Act, the Family and Medical Leave Act or any other applicable state or federal law governing the obligations of employers to persons having disabilities, handicaps or serious health conditions.

 

(c) Termination With Cause by the Company or Termination Upon Resignation by Executive.

 

(i) The Company may terminate Executive’s employment hereunder at any time for Cause by providing to Executive written notice of termination stating the grounds for termination for Cause and such termination shall take effect immediately upon notice of termination (“Termination With Cause”). As used herein, “Cause” means (a) an act of fraud or dishonesty by Executive that results in material gain or personal enrichment of Executive at the Company’s expense, including, without limitation, embezzlement or other misappropriation of funds; (b) Executive’s conviction of a felony-class crime or a crime involving moral turpitude; (c) any material breach by Executive of any provision of this Agreement that, if curable, has not been cured by Executive within thirty (30) days of written notice of such breach from the Company; (d) Executive willfully engaging in gross misconduct materially injurious to the Company that, if curable, has not been cured by Executive within thirty (30) days of written notice from the Company specifying the alleged willful gross misconduct and material injury; or (e) any intentional act or gross negligence on the part of Executive that has a material, detrimental effect on the reputation or business of the Company, as determined by the Board.

 

(ii) Executive may resign and terminate Executive’s employment at any time for any reason (or for no reason) upon at least thirty (30) days’ prior written notice of resignation to the Company (“Termination Upon Resignation”).

 

(d) Termination Without Cause by the Company.  The Company may terminate Executive’s employment at any time for any reason (or for no reason) upon five (5) business days’ prior written notice to Executive (without stating any grounds for termination for Cause) (“Termination Without Cause”). For purposes of this Section 4, except as otherwise expressly provided herein, Termination Without Cause shall also include a termination of Executive’s employment by virtue of expiration of the Employment Term as of a Renewal Date on account of the Company’s election not to extend this Agreement in accordance with Section 1 hereof.

 

Upon termination of Executive’s employment hereunder for any reason, Executive shall be deemed to have resigned from all positions that Executive holds as an officer or member of the Board (and any committee thereof) of the Company or any of its affiliates unless otherwise agreed to and specified in writing by the Company.

 

4.2 Payments and Other Entitlements As a Result of Termination  

 

Executive’s sole entitlements as a result of a termination under Section 4.1 above shall be as set forth below in this Section 4.2; provided, that, in no event shall Executive be entitled to any payments in the nature of severance or termination payments except as specifically provided herein.

 

(a) Death or Disability.  Following termination due to death or Disability, Executive (or Executive’s estate, as applicable) shall be entitled only to payment of Executive’s then-current salary through the date of termination and for a period of three (3) months thereafter (payable in accordance with the Company’s regular payroll practices), any previously earned but yet unpaid Incentive Bonus amount pursuant to Section 3.2 in respect of the immediately preceding calendar year, any amounts accrued and payable under any benefit plans (payable at such times as provided therein), and any amounts payable for unreimbursed business expenses incurred prior to the date of termination.

 

(b) Termination With Cause by the Company or Termination Upon Resignation by Executive.  If Executive’s employment terminates as a result of a Termination With Cause or a Termination Upon Resignation, Executive shall be entitled only to payment of Executive’s then-current salary through the date of termination (payable in accordance with the Company’s regular payroll practices), and any amounts payable for unreimbursed business expenses incurred prior to the date of termination.

 

(c) Termination Without Cause by the Company.  If Executive’s employment is terminated as a result of a Termination Without Cause, Executive shall be entitled only to payment of Executive’s then-current salary through the date of termination and for a period of twelve (12) months thereafter (payable in accordance with the Company’s regular payroll practices), any previously earned but yet unpaid Incentive Bonus amount pursuant to Section 3.2 in respect of the immediately preceding calendar year, any amounts accrued and payable under any benefit plans (payable at such times as provided therein), and any amounts payable for unreimbursed business expenses incurred prior to the date of termination.

 

5. Confidential Information

 

During the Employment Term and thereafter, Executive shall keep secret and retain in strictest confidence, and shall not, without the prior written consent of the Company, furnish, make available or disclose to any person or use for the benefit of himself or any other person, any Confidential Information, except to the extent reasonably necessary to carry out Executive’s duties and responsibilities to the Company or to the extent required by law or to comply with a valid court order or the lawful subpoena of any administrative or governmental body, in which case Executive shall give prompt notice of such court order or subpoena to the Company. As used in this Section 5, “Confidential Information” shall mean any information relating to the business or affairs of the Company or its affiliates, including, but not limited to, information relating to financial statements, business plans, forecasts, purchasing plans, customer identities, potential customers, employees, current, past and future products or services, suppliers, equipment, marketing programs, strategies and information, analyses, profit margins or other proprietary information used by the Company in connection with the business of the Company; provided, however, Confidential Information shall not include any information which is in the public domain or becomes known in the industry through no wrongful act on the part of Executive. Executive acknowledges that all Confidential Information is vital, sensitive, confidential and proprietary to the Company. The provisions and obligations under this Section 5 shall survive the termination, for any reason, of this Agreement and Executive’s employment hereunder.

 

6. Indemnification

 

In the event that Executive is made a party or threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative, or investigative (a “Proceeding”), other than any Proceeding initiated by Executive or the Company related to any contest or dispute between Executive and the Company or any of its affiliates with respect to this Agreement or Executive’s employment hereunder, by reason of the fact that Executive is or was a director or officer of the Company, or any affiliate of the Company, or is or was serving at the request of the Company as a director, officer, member, employee, or agent of another corporation or a partnership, joint venture or other enterprise, Executive shall be indemnified and held harmless by the Company to the maximum extent permitted under applicable law and the Company’s bylaws from and against any liabilities, costs, claims and expenses, including all costs and expenses incurred in defense of any Proceeding (including attorneys’ fees). During the Employment Term and for a period of two (2) years thereafter, the Company or any successor to the Company shall purchase and maintain, at its own expense, directors’ and officers’ liability insurance providing coverage to Executive on terms that are no less favorable than the coverage provided to other directors and similarly situated executives of the Company.

 

7. Miscellaneous

 

7.1 Notices

 

All notices and other communication between the parties pursuant to this Agreement must be in writing and will be deemed given when delivered in person, one (1) business day after being dispatched by a nationally recognized overnight courier service, three (3) business days after being deposited in the U.S. Mail, registered or certified mail, return receipt requested, or when sent by facsimile (with receipt acknowledged and a copy sent for next day delivery by a nationally recognized overnight courier service), to the Company at the address of its principal office in Virginia (as shown on the records of the State Corporation Commission of the Commonwealth of Virginia), and to Executive (or her representatives) at her address as shown on the signature page hereto. The parties hereto (or their representatives) may change their addresses for notice purposes by delivering notice to the other party in accordance with this Section 7.1.

 

7.2 Governing Law

 

This Agreement shall be subject to and governed by the laws of the Commonwealth of Virginia, without regard to any principles of conflicts of laws. Any action or claim between the parties arising out of this Agreement shall be instituted and prosecuted only in a state or federal court situated in the Commonwealth of Virginia. The parties hereby irrevocably submit to the exclusive jurisdiction of such courts and waive the defense of inconvenient forum to the maintenance of any such action or proceeding in such venue.

 

7.3 Binding Effect

 

This Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, legal representatives, executors, administrators, successors and assigns, subject to the limitations on assignment herein.

 

7.4 Modification

 

No amendment, change or modification of this Agreement will be valid unless it is in writing and signed by both of the parties. No waiver of any provision of this Agreement will be valid unless in writing and signed by the person or party to be charged. No waiver by either of the parties of any breach by the other party hereto of any condition or provision of this Agreement to be performed by the other party hereto shall be deemed a waiver of any similar or dissimilar provision or condition at the same or any prior or subsequent time, nor shall the failure of or delay by either of the parties in exercising any right, power, or privilege hereunder operate as a waiver thereof to preclude any other or further exercise thereof or the exercise of any other such right, power, or privilege.

 

7.5 Entire Agreement

 

This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof.

 

7.6 Severability

 

If any provision of this Agreement is, for any reason, invalid or unenforceable, the remaining provisions of this Agreement will nevertheless be valid and enforceable and will remain in full force and effect. Any provision of this Agreement that is held invalid or unenforceable by a court of competent jurisdiction will be deemed modified to the extent necessary to make it valid and enforceable and as so modified will remain in full force and effect.

 

7.7 Headings

 

The headings in this Agreement are inserted for convenience only and are not to be considered in the interpretation of construction of the provisions of this Agreement.

 

 

 

 

 

7.8 Assignability

 

This Agreement may not be assigned by either party without the prior written consent of the other party, except that the Company may assign its rights to, and cause its obligations under this Agreement to be assumed by, any affiliate of the Company and any person or entity to whom or to which the Company simultaneously transfers by sale, merger or otherwise all or substantially all of its assets or equity. For purpose of clarity, if Enterprise Diversified, Inc. merges into, or transfers all or substantially all of its assets to, or as part of a reorganization, restructuring or other transaction becomes a subsidiary of, another entity, then such other entity shall be deemed to be the successor to Enterprise Diversified, Inc. hereunder, the term “Company” as used herein shall mean such other entity (together with its subsidiaries) as is appropriate, and this Agreement shall continue in full force and effect.

 

7.9 Costs and Fees

 

In the event of litigation relating to this Agreement, if a court of competent jurisdiction determines that (i) the Company has materially breached this Agreement, then the Company shall reimburse Executive for her reasonable costs and expenses (including, without limitation, reasonable legal fees and expenses) incurred in connection with all such litigation; or (ii) Executive has materially breached this Agreement, then Executive shall reimburse the Company for its reasonable costs and expenses (including, without limitation, reasonable legal fees and expenses) incurred in connection with all such litigation.

 

7.10 No Strict Construction

 

The language used in this Agreement will be deemed to be the language chosen by Executive and the Company to express their mutual intent, and no rule of strict construction will be applied against Executive or the Company.

 

7.11 Compliance with Section 409A

 

This Agreement shall be interpreted and administered in a manner so that any amount payable hereunder shall be paid or provided in a manner and at such time and in such form that is either exempt from or compliant with the applicable requirements of Section 409A of the Code. As used herein, the “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time, and the regulations and interpretive guidance promulgated thereunder. Notwithstanding anything in this Agreement to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code would otherwise be payable by reason of Executive’s termination of employment, such amount or benefit will not be payable to Executive by reason of such circumstance unless (i) the circumstances giving rise to such termination of employment meet any description or definition of “separation from service” in Section 409A of the Code (without giving effect to any elective provisions that may be available under such definition), or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A of the Code by reason of the short-term deferral exemption or otherwise. If any amount that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code would otherwise be payable or distributable under this Agreement by reason of Executive’s separation from service during a period in which she is a “specified employee” (as defined in Section 409A of the Code and applicable regulations), then payment of such non-exempt amounts shall be delayed until the earlier of (a) Executive’s death or (b) the first day of the seventh month following Executive’s separation from service. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A of the Code, and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Executive on account of non-compliance with Section 409A of the Code.

 

7.12 Acknowledgement of Full Understanding 

 

EXECUTIVE ACKNOWLEDGES AND AGREES THAT SHE HAS FULLY READ, UNDERSTANDS AND VOLUNTARILY ENTERS INTO THIS AGREEMENT. EXECUTIVE ACKNOWLEDGES AND AGREES THAT SHE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS AND CONSULT WITH AN ATTORNEY OF HER CHOICE BEFORE SIGNING THIS AGREEMENT.

 

7.13 Signatures 

 

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The facsimile signature of any party shall be deemed to be an original signature of such party and shall be given the same effect as an original signature of such party.

 

[SIGNATURE PAGE FOLLOWS]

 

 

 

 

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

 

 

 

	
			THE COMPANY:

				
			ENTERPRISE DIVERSIFIED, INC.

			
	 	 
	
			By:

				
			/s/ G. Michael Bridge

			
	
			Name:

				
			G. Michael Bridge

			
	
			Title:

				
			Chief Executive Officer

			
	 
	 
	 
	 
	
			EXECUTIVE:

				
			/s/ Alea Kleinhammer

			
	 	
			ALEA KLEINHAMMER

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