Document:

Exhibit

EXHIBIT 10.2

    
SECOND AMENDMENT TO SEVERANCE AGREEMENT
 
 
This Amendment (the “Amendment”) is made as of the 31st day of May, 2016, between St. Jude Medical, Inc., a Minnesota corporation, with its principal offices at One St. Jude Medical Drive, St. Paul, Minnesota 55117 (the “Company”) and _____________ (“Executive”), and amends that certain Severance Agreement, dated_____________, between Executive and the Company, as amended by the First Amendment to Severance Agreement, dated_____________, (the “First Amendment” and collectively, the “Change in Control Severance Agreement”).
 
WITNESSETH THAT:
 
WHEREAS, the Change in Control Severance Agreement provides severance protection to Executive under certain circumstances solely in connection with a change in control;
 
WHEREAS, The First Amendment eliminated Executive’s right to parachute tax gross-up payments; 
 
WHEREAS, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Abbott Laboratories (“Parent”), Vault Merger Sub, Inc., a wholly owned subsidiary of Parent (“Merger Sub 1”) and Vault Merger Sub, LLC, a wholly owned subsidiary of Parent (“Merger Sub 2” and, together with Merger Sub 1, the “Merger Subs”) that provides for, among other things, the merger of Merger Sub 1 with and into the Company (the “First Merger”), with the Company surviving the First Merger and, promptly following the First Merger, the merger of the Company with and into Merger Sub 2 (the “Second Merger” and, together with the First Merger, the “Mergers”), with Merger Sub 2 surviving such Second Merger; and

WHEREAS, in consideration for (i) the retention of Executive during the period through at least the closing of the First Merger and (ii) Executive’s obligations to the Company pursuant to any agreement to refrain from performing services pursuant to an agreement containing a covenant not to compete or similar covenant, including the Noncompetition Agreement between the Company and Executive dated as of _____________ (the “Noncompetition Agreement”), the Company deems it advisable and in the best interests of the Company and its shareholders to provide additional protection and indemnification to Executive against potential excise taxes under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) in the event the First Merger is consummated.
 
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and Executive agree as follows:
 
1.     The words “Anything to the contrary notwithstanding” in the first sentence of Section 4(ii) are hereby deleted and replaced with the following:

(ii)    “Except as provided in Section 4(iii),” 

2.    A new Section 4(iii) to the Change in Control Severance Agreement is hereby added to read in full as follows:
 
(iii)                              
(a)    In the event that any payment or benefit received or to be received by Executive either in connection with (x) the First Merger or (y) the termination of Executive’s employment during the term of Executive’s Change in Control Severance Agreement following the consummation of the First Merger (whether payable pursuant to the terms of the Change in Control Severance Agreement or any other plan, contract, agreement, program or arrangement with the Company, Parent or with any person constituting a member of an “affiliated group” as defined in Section 280G(d)(5) of the Code with the Company or Parent (collectively, the “Total Payments”)) would be subject to the excise tax imposed by Section 4999 of the Code, or any successor provision thereto, or any interest, penalties or additions to tax with respect to such excise tax (such excise tax, together with any such interest, penalties or additions to tax, are collectively referred to as the “Excise Tax”), then Executive shall be entitled to receive from the Company (or any 

successor) an additional cash payment (a “Gross-Up Payment”) which, subject to Section 14 of the Change in Control Severance Agreement, shall be paid within thirty (30) business days of such determination in an amount such that after payment by Executive of all taxes (including any interest, penalties or additions to tax imposed with respect to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments. All determinations required to be made in connection with the foregoing, including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by the independent accounting firm retained by the Company immediately prior to the time that the proposed transaction with Parent is consummated (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and Executive within fifteen (15) business days of Executive’s termination of employment, or such earlier time as is requested by the Company; 

(b)    if the Accounting Firm determines that no Excise Tax is payable by Executive, it shall furnish the Company with an opinion that the Company has substantial authority not to report any Excise Tax on Executive’s Form W-2 or other applicable tax reporting form and shall furnish Executive with an opinion that Executive has substantial authority not to report any Excise Tax on Executive’s federal income tax return;

(c)    any uncertainty in the application of Section 4999 of the Code, or any successor provision thereto, at the time of the initial determination by the Accounting Firm hereunder shall be resolved in favor of Executive;

(d)    if, notwithstanding the initial determination of the Accounting Firm, Executive is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the underpayment of any Gross-Up Payment that has occurred, and any such underpayment shall be promptly paid by the Company to or for the benefit of Executive; 

(e)    if, notwithstanding the initial determination of the Accounting Firm, it is discovered that an overpayment of any Gross-Up Payment has been made to Executive, (x) the Company shall deliver to Executive a written request for repayment (accompanied by updated detailed supporting calculations prepared by the Accounting Firm), (y) Executive shall refund the Company the amount of any overpayment, and (z) if Executive has not repaid such overpayment to the Company within a reasonable period of time following the receipt by Executive of the Company’s written request, the Company will take commercially reasonable steps to recover from Executive the amount of any overpayment that the Accounting Firm determines has occurred in connection with the foregoing;     
(f)    Executive shall cooperate with the Company in good faith in valuing, and the Accounting Firm shall take into account the value of, services provided or to be provided by Executive, including without limitation, Executive’s agreeing to refrain from performing services pursuant to a covenant not to compete or similar covenant before, on or after the date of a change in ownership or control of the Company (within the meaning of Q&A-2(b) of the final regulations under Section 280G of the Code), including pursuant to the Noncompete Agreement, such that payments in respect of such services may be considered reasonable compensation within the meaning of Q&A-9 and Q&A-40 to Q&A-44 of the final regulations under Section 280G of the Code and/or exempt from the definition of the term “parachute payment” within the meaning of Q&A-2(a) of the final regulations under Section 280G of the Code in accordance with Q&A-5(a) of the final regulations under Section 280G of the Code; and
(g)    any good faith determination by the Accounting Firm as to the amount of any Gross-Up Payment, including the amount of any Underpayment or Overpayment, shall be binding upon the Company and Executive.
(h)    The payments or benefits provided pursuant to this Amendment are governed by and subject to all of the terms and conditions of the remaining provisions of the Change in Control Severance Agreement to the extent not in direct conflict with this Amendment, including, without limitation, those listed below.  For avoidance of doubt, nothing in this Amendment shall limit, abridge, amend, modify or otherwise affect Executive’s Change in Control Severance Agreement in a manner that is adverse to Executive.

(A)    Any payment not made to Executive when due hereunder shall thereafter, until paid in full, bear interest at the rate of interest equal to the reference rate announced from time to 

time by Wells Fargo Bank Minnesota, National Association, plus two percent, with such interest to be paid to Executive upon demand or monthly in the absence of a demand;

(B)    Executive shall not be required to mitigate the amount of any payment provided for in this Amendment by seeking other employment or otherwise. The amount of any payment or benefit provided in this Amendment shall not be reduced by any other payment received by Executive from any source; and

(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), by agreement in form and substance satisfactory to Executive, to expressly assume and agree to perform under this Amendment 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.

(i)    Executive shall not be eligible for the foregoing benefits if Executive has voluntarily resigned or been terminated for “cause” prior to the closing of the First Merger.

3.    The existing Sections 4(iii) and 4(iv) are renumbered to 4(iv) and 4(v), respectively.

4.          Except as expressly provided herein, all other terms of the Change in Control Severance Agreement are unchanged by this Amendment and remain in full force and effect.
 
IN WITNESS WHEREOF, the Company has caused this Amendment to be executed in its name by a duly authorized officer, and Executive has hereunto set his or her hand, all as of the date first written above.
 
 
	
				
	 
	ST. JUDE MEDICAL, INC.

	 
	 

	 
	 

	 
	By
	 

	 
	Its
	 

	 
	 

	 
	 

	 
	EXECUTIVE

_____________________________________EXHIBIT 10.1

 

 

 

EXCHANGE AGREEMENT

THIS EXCHANGE AGREEMENT (the "Agreement"), dated this 28th day of July 2016, is by and between HealthWarehouse.com, Inc. (the "Company") and Dellave Holdings LLC ("Dellave").  The Company and Dellave are collectively referred to herein as the "Parties."

RECITALS

WHEREAS, Dellave holds accounts payable that are liabilities of the Company;

WHEREAS, the Company's total current liabilities exceed the Company's total assets, and at June 30, 2016 the Company had a working capital deficiency of $4,260,215 and a total accumulated deficit of $31,498,616;

WHEREAS, the Company's independent auditors indicated in their most recent audit opinion dated March 25, 2016 that there is substantial doubt about the Company's ability to continue as a going concern in light of the Company's significant losses in 2015 and 2014 and the Company's need to raise additional funds to meet its obligations and sustain its operations;

WHEREAS, the Company desires to have the accounts payable held by Dellave extinguished in exchange for the issuance of shares of common stock of the Company, par value $.001 per share ("Company Common Stock"), which will result in a significant improvement in the Company's balance sheet and financial health by reducing the Company's current liabilities and increasing the Company's stockholders' equity;

WHEREAS, the managing member of Dellave is Timothy E. Reilly, and a separate company of Mr. Reilly is the senior lender to the Company;

WHEREAS, Dellave and Mr. Reilly are willing to exchange the accounts payable held by Dellave for shares of Company Common Stock in order to improve the Company's ability to continue as a going concern and to have upside potential with respect to the Company's Common Stock as the Company's financial results and prospects improve;

WHEREAS, the Company believes that it is the best interests of all of its stockholders to reduce its current liabilities in order to ensure the continued viability of the Company; and

WHEREAS, the Parties have agreed that it is in their mutual interests to enter into this Agreement.

NOW THEREFORE, in consideration of the Recitals and the representations, warranties, covenants and agreements contained herein and other good and valuable consideration, and intending to be legally bound hereby, the Parties hereto agree as follows:

1.          Representations and Warranties of Dellave.  Dellave represents and warrants to the Company as follows:

(a)        Dellave holds as of the date of this Agreement all rights and interest in and to each of the various accounts payable set forth in confidential Exhibit 1 hereto, which accounts payable aggregate $698,593.61 as of the date hereof (the "Accounts Payable");

 

 

 

 

 

Page 1 of 4

 

 

 

 

(b)        Dellave has full power and authority to enter into and perform its obligations under this Agreement, the execution and delivery of this Agreement by Dellave has been duly authorized, and the performance of the terms of this Agreement will not constitute a violation of any limited partnership agreement, articles of incorporation, bylaws, operating agreement or any agreement or instrument to which Dellave is a party;

(c)        This Agreement is a valid and binding obligation of Dellave enforceable against Dellave in accordance with its terms, subject to bankruptcy, insolvency and other laws affecting creditors' rights and general equitable principles; and

(d)        There are no arrangements, agreements or understandings concerning the subject matter of this Agreement between Dellave and Mr. Reilly on the one hand and the Company on the other hand, other than as set forth in this Agreement.

2.          Representations and Warranties of the Company.

(a)        The Company hereby represents and warrants to Dellave that the Company has full power and authority to enter into and perform its obligations under this Agreement and that the execution and delivery of this Agreement by the Company has been duly authorized by the Board of Directors of the Company.  This Agreement constitutes a valid and binding obligation of the Company and the performance of its terms will not constitute a violation of its certificate of incorporation or bylaws or any agreement or instrument to which the Company is a party; and

(b)        The Company hereby represents and warrants to Dellave that there are no arrangements, agreements or understandings concerning the subject matter of this Agreement between the Company on the one hand and Dellave and Mr. Reilly on the other hand, other than as set forth in this Agreement.

3.          Exchange of Accounts Payable for Company Common Stock.

(a)        Effective as of the date of this Agreement, Dellave agrees that all of the Accounts Payable shall be extinguished in exchange for the Company's issuance to Dellave of 2,523,528 shares of Company Common Stock, which shares were valued at $0.31 per share.  Dellave agrees that it shall have no further rights or interests in or to any of the Accounts Payable, and that all rights to collect payments from the Company with respect to each of the Accounts Payable is hereby extinguished.

(b)        The Company agrees to provide timely instructions to its transfer agent to cause 2,523,528 shares of Company Common Stock to be issued to Dellave as of the date of this Agreement.  Dellave acknowledges and agrees that the stock certificate for such shares of Company Common Stock shall bear a restrictive legend which will read as follows:

 NEITHER THE ISSUANCE NOR SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS 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, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

 

 

 

Page 2 of 4

  

 

4.          Covenants.

(a)        Dellave shall timey file a Schedule 13D with the Securities and Exchange Commission (the "SEC") to report its acquisition and beneficial ownership of the 2,523,528 shares of Company Common Stock being issued pursuant to this Agreement.

(b)        The Company shall timely file a Current Report on Form 8-K with the SEC to report its entry into this Agreement.

5.          Governing Law and Choice of Forum.  Unless applicable Delaware law or regulation is deemed controlling, Kentucky law shall govern the construction and enforceability of this Agreement.  Any and all actions concerning any dispute arising hereunder shall be filed and maintained in the United States District Court for the Eastern District of Kentucky or, if there is no basis for federal jurisdiction, in the applicable state court of Kentucky.  Each Party agrees that the United States District Court for the Eastern District of Kentucky may exercise personal jurisdiction over them in any such actions.

6.          Severability.  If any term or provision of this Agreement is held by any governmental authority or a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms and provisions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

7.          Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the successors and assigns, and transferees by operation of law, of the Parties.  Except as otherwise expressly provided, this Agreement shall not inure to the benefit of, be enforceable by or create any right or cause of action in any person, including any stockholder of the Company, other than the Parties to the Agreement.

8.          Survival of Representations, Warranties and Covenants. All representations, warranties and covenants shall survive the execution and delivery of this Agreement unless otherwise provided.

9.          Amendments.  This Agreement may not be modified, amended, altered or supplemented except by a written agreement executed by all of the Parties.

10.        Counterparts; Facsimile.  This Agreement may be executed in any number of counterparts and by the Parties in separate counterparts, and signature pages may be delivered by facsimile or electronic delivery, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

 

 

 

[Remainder of this page intentionally left blank.]

 

 

 

 

Page 3 of 4

 

 

 

 

 

IN WITNESS WHEREOF, this Agreement has been duly executed by the undersigned and is effective as of the day and year first written above.

	
HEALTHWAREHOUSE.COM, INC.

 

 

 

 

By:  /s/ Lalit Dhadhale                                                                

              Lalit Dhadphale

              Chairman, President and 

              Chief Executive Officer

 

	 
	
DELLAVE HOLDINGS, LLC

 

 

 

 

By:  /s/ Timothy E. Reilly                                                              

              Timothy E. Reilly

              Managing Partner

	 

 

 

  

Page 4 of 4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00260-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00260-of-00352.parquet"}]]