Document:

Exhibit

NORTHWEST NATURAL GAS COMPANY

DEFERRED COMPENSATION PLAN FOR DIRECTORS AND EXECUTIVES

EFFECTIVE JANUARY 1, 2005

RESTATED EFFECTIVE JULY 28, 2016

TABLE OF CONTENTS

Page

1.    Purpose; Effective Date                1

2.    Eligibility                        1

3.    Deferral Elections                    1

4.    Company Contributions for Executives         3

5.    FICA Withholding on Executives            4

6.    Accounts                        4

7.    Payment of Benefits                    6

8.    Supplemental Retirement Benefit            8

9.    Administration                    10

10.    Claims Procedure                    11

11.    Amendment and Termination of the Plan        11

12.    Miscellaneous                        12

NORTHWEST NATURAL GAS COMPANY

DEFERRED COMPENSATION PLAN FOR DIRECTORS AND EXECUTIVES

1.Purpose; Effective Date; Restatement.  The Board of Directors (the “Board”) of Northwest Natural Gas Company (the “Company”) adopts this Deferred Compensation Plan for Directors and Executives (the “Plan”) for the purpose of providing an unfunded nonqualified deferred compensation plan for directors and a select group of top management personnel.  The Plan was effective as of January 1, 2005, although initial deferral elections under the Plan could have been submitted at any time after November 30, 2004.  The Plan was previously restated effective January 1, 2007, December 20, 2007, January 1, 2010,  December 15, 2011 and September 24, 2015, and was restated effective as of February 28, 2008, except that the changes to Section 6(b) made by that restatement do not apply to deferral allocations made in Participation Agreements that were irrevocable on or prior to December 31, 2006.  The Plan is further amended by this restatement on and effective as of July 28, 2016.

2.Eligibility.  Persons eligible to defer compensation under the Plan shall consist of (a) all directors of the Company (“Directors”), and (b) a select group of management or highly compensated employees of the Company, which shall consist of all executive officers of the Company and such other employees of the Company as may be designated in writing by the Chief Executive Officer of the Company as eligible to defer compensation and receive Company contributions under the Plan for the applicable calendar year (“Executives”).  Any person who is both a Director and an Executive at any time shall be considered an Executive, and not a Director, at such time.  For all purposes of this Plan, a person who is an employee of a subsidiary of the Company shall be considered an employee of the Company.

3.Deferral Elections.  A Director or Executive may elect to defer compensation under the Plan by submitting a “Participation Agreement” to the Company on a form specified by the Company no later than the applicable deferral deadline.  The minimum annual aggregate deferral for all forms of compensation specified in a Participation Agreement shall be $2,000.  Any Director or Executive who has submitted a Participation Agreement is hereafter referred to as a “Participant.”  A Participation Agreement submitted by a Participant shall automatically continue from year to year and shall be irrevocable with respect to compensation once the deferral deadline for that compensation has passed, but the Participant may modify or terminate a Participation Agreement for compensation payable in any year by submitting a revised Participation Agreement or otherwise giving written notice to the Company at any time on or prior to the deferral deadline for that compensation.

(a)Elections by Directors.

(i)Cash Fees.  A Director may elect to defer receipt of all or any whole percentage of the annual retainer, meeting fees and any other cash fees payable for service as a director (“Fees”).  The deferral deadline for an election to defer Fees for services performed in any calendar year shall be the last day of the prior calendar year.

(ii)NEDSCP Shares.  Prior to the termination of the Company’s Non-Employee Directors Stock Compensation Plan (“NEDSCP”) in 2005 and the subsequent vesting of all remaining awards under the NEDSCP, Directors were permitted to elect to defer receipt of unvested shares (“NEDSCP Shares”) of common stock of the Company (“Common Stock”) awarded to the Directors under the NEDSCP.
(iii)RSU Awards.  A Director may elect to defer receipt of all or any whole percentage of compensation payable to the Director pursuant to a restricted stock unit award under the Company’s Long Term Incentive Plan (“Director RSU”).  The deferral deadline for an election to defer 

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compensation under a Director RSU shall be the last day of the calendar year prior to the grant date of the award.
(b)Elections by Executives.

(i)Salary.  An Executive may elect to defer receipt of any whole percentage (up to a maximum of 50 percent) of the Executive’s base annual salary, specifically excluding other forms of compensation referred to below as well as commissions and any non-cash compensation (“Salary”).  The deferral deadline for an election to defer Salary for services performed in any calendar year shall be the last day of the prior calendar year.

(ii)Bonus.  An Executive may elect to defer receipt of all or any whole percentage of the Executive’s annual bonus payable under the Company’s Executive Annual Incentive Plan or other similar annual incentive plan (“Bonus”).  Payments under the Key Goals program shall not be considered Bonus and shall not be eligible for deferral under the Plan.  The deferral deadline for an election to defer Bonus earned with respect to the Executive’s or the Company’s performance in any calendar year shall be the last day of the prior calendar year.

(iii)LTIP Compensation.  An Executive may elect to defer receipt of all or any whole percentage of compensation payable to the Executive pursuant to an award under the Company’s Long Term Incentive Plan (“LTIP Compensation”); provided, however, that (1) a stock option shall not be considered LTIP Compensation eligible for deferral under the Plan, and (2) no election shall be permitted after December 31, 2008 to defer receipt of an award that consists of shares of Common Stock issued subject to forfeiture if vesting conditions are not satisfied (“Unvested LTIP Shares”).  The deferral deadline for an election to defer LTIP Compensation shall be (x) the last day of the calendar year prior to the commencement of the performance period if a performance period is specified in the award, or (y) the last day of the calendar year prior to the grant date of the award if no performance period is specified; provided, however, that for any award of LTIP Compensation for which the performance period ends on or before December 31, 2008, the deferral deadline shall be the last day of the calendar year prior to the last year of the performance period, and for any award of LTIP Compensation for which the performance period ends on December 31, 2009 or December 31, 2010, the deferral deadline shall be December 31, 2008.  If an Executive elects to defer less than 100 percent of an award of LTIP Compensation that becomes payable in increments over time, the deferral percentage elected by the Executive shall be applied uniformly to each increment.

(iv)2012 RSU Grants.  An Executive may elect to defer receipt of all or any whole percentage of LTIP Compensation payable to the Executive pursuant to a restricted stock unit award granted in February 2012 (a “2012 RSU”); provided, however, that:

(1)the portion of the Executive’s 2012 RSU that is scheduled to vest before March 31, 2013 (the “First Installment”) shall not be eligible for deferral;

(2)as a precondition to any deferral election under this subparagraph (b)(iv), the Executive must agree to a modification of the terms of the Executive’s 2012 RSU under which all of the 2012 RSU other than the First Installment shall be forfeited if the Executive’s employment terminates before the first anniversary of the grant date of the 2012 RSU other than (x) as a result of death or disability (as defined in Treasury Regulations §1.409A-3(i)(4)) or (y) in circumstances that result in accelerated vesting of the 2012 RSU due to the occurrence of a change in control event (as defined in Treasury Regulations §1.409A-3(i)(5)); and
(3)a deferral election under this subparagraph (b)(iv) shall be void and have no effect if the Executive’s employment terminates before the first anniversary of the grant date of the 

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2012 RSU either (x) as a result of death or disability (as defined in Treasury Regulations §1.409A-3(i)(4)) or (y) in circumstances that result in accelerated vesting of the 2012 RSU due to the occurrence of a change in control event (as defined in Treasury Regulations §1.409A-3(i)(5)).

The deferral deadline for an election to defer LTIP Compensation payable under a 2012 RSU shall be 30 days after the grant date of the 2012 RSU.  If an Executive elects to defer less than 100 percent of the Executive’s 2012 RSU, the deferral percentage elected by the Executive shall be applied uniformly to each installment of the 2012 RSU that vests over time, excluding the First Installment.  LTIP Compensation payable pursuant to restricted stock unit awards granted after 2012 shall be eligible for deferral under subparagraph (b)(iii).
(c)New Directors and Executives.  A person who first becomes a Director or Executive during a calendar year may elect to defer any of the types of compensation referred to in paragraphs (a) and (b) above that is payable solely for services performed after submission of the Participation Agreement, subject to all of the provisions of paragraphs (a) and (b), except that the deferral deadline for any such election shall be 30 days after the date the person becomes eligible under the Plan.

4.Company Contributions for Executives.

(a)Matching Contributions.  The Company shall credit a “Matching Contribution” to each Executive’s Cash Account (as defined below) each year based on the Executive’s total Salary and Bonus and the amount of Salary and Bonus deferred under the Plan and the Company’s Retirement K Savings Plan by the Executive during that year; provided, however, that no Matching Contribution shall be made with respect to any Salary or Bonus deferred under the Plan at a time when the Executive is not a participant in the Retirement K Savings Plan.  The amount of the Matching Contribution shall be equal to the excess of (i) the Match Percentage multiplied by the lesser of (1) the total amount of Executive’s Salary and Bonus deferred under the Plan and the Retirement K Savings Plan during the calendar year, or (2) the Maximum Match Percentage multiplied by the Executive’s total Salary and Bonus during such calendar year, over (ii) the amount the Company would have contributed for such calendar year as a matching contribution for the Executive under the Retirement K Savings Plan if the Executive had deferred into the Retirement K Savings Plan the maximum amount of compensation permitted under that plan and applicable tax law for the year.  The “Match Percentage” shall mean the first percentage set forth in Article IV, Section D.1 of the Retirement K Savings Plan, which as of the effective date of this restatement is sixty percent (60%), as such percentage may be modified from time to time.  The “Maximum Match Percentage” shall mean the second percentage set forth in Article IV, Section D.1 of the Retirement K Savings Plan, which as of the effective date of this restatement is six percent (6%), as such percentage may be modified from time to time.  An Executive is not required to elect to defer Salary or Bonus under the Plan to be eligible to receive a Matching Contribution credit.  Matching Contributions shall be credited to the Executive’s Account no later than January 31 of the year immediately following the calendar year in which the Matching Contribution was earned, and shall be fully vested at all times.

(b)Supplemental Contributions.  For any Executive who is hired after December 31, 2006 and is therefore eligible to receive enhanced employer contributions under Article IV, Section E of the Retirement K Savings Plan, the Company shall credit a “Supplemental Contribution” to the Executive’s Cash Account each year in an amount equal to the Enhanced Contribution Percentage multiplied by the greater of (i) the Executive’s Salary and Bonus deferred under the Plan during the calendar year, or (ii) the excess, if any, of the Executive’s total Salary and Bonus during such calendar year over the limit provided by Section 401(a)(17) of the Internal Revenue Code on compensation counted under the Retirement K Savings Plan for 

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that year.  The “Enhanced Contribution Percentage” shall mean the percentage set forth in Article IV, Section E.1 of the Retirement K Savings Plan, which as of the effective date of this restatement is five percent (5%), as such percentage may be modified from time to time.  A Supplemental Contribution shall be credited for an Executive whose total Salary and Bonus exceeds the Section 401(a)(17) limit whether or not the Executive defers compensation under the Plan.  Supplemental Contributions shall be credited to the Executive’s Account no later than January 31 of the year immediately following the calendar year in which the Supplemental Contribution was earned.  Supplemental Contributions for an Executive shall be vested if enhanced employer contributions for the Executive made for the same year would be vested under the terms of the Retirement K Savings Plan.  Upon termination of an Executive’s employment, any unvested Supplemental Contributions, as well as any dividends or interest credited thereon, shall be forfeited and deducted from the Executive’s Accounts.

5.FICA Withholding on Executives.  Under current law, all compensation, Matching Contributions and vested Supplemental Contributions credited to an Executive’s Accounts will be treated as wages subject to FICA tax, and the Company will be required to withhold FICA tax from the Executive.  The amount required to be withheld for FICA tax with respect to any amount of deferred compensation or related Matching Contribution or Supplemental Contribution shall be withheld from the non-deferred portion, if any, of the same compensation; provided, however, that if the non-deferred portion of the compensation is insufficient to cover the full required withholding, the Company shall withhold the remaining amount from other non-deferred compensation payable to the Executive unless the Executive otherwise pays such remaining amount to the Company.

6.Accounts.

(a)Accounts.  The Company shall establish on its books one or two separate accounts (individually, an “Account” and collectively, the “Accounts”) for each Participant:  a Company Stock Account, which shall be denominated in shares of Common Stock, including fractional shares, and a Cash Account, which shall be denominated in U.S. dollars.

(b)Allocation of Deferrals Among Accounts.  All NEDSCP Shares deferred by a Director were credited to the Company Stock Account.  All compensation pursuant to a Director RSU payable in shares of Common Stock that is deferred by a Director shall be credited to the Company Stock Account.  All LTIP Compensation payable in shares of Common Stock that is deferred by an Executive shall be credited to the Company Stock Account.  All other compensation deferred by a Participant shall be credited to the Cash Account.

(c)Crediting of Deferrals.  The credits for deferred Salary, Bonus, Fees and compensation pursuant to Director RSUs shall be entered on the Company’s books of account at the time that such compensation would otherwise be paid.  The credit for any LTIP Compensation deferred by an Executive consisting of Unvested LTIP Shares shall be entered on the Company’s books of account as soon as practicable after such deferral is irrevocable.  The credit for any other deferred LTIP Compensation shall be entered on the Company’s books of account at the time that such compensation would otherwise be paid.

(d)Transfers Among Accounts.  Participants may elect in writing to transfer amounts previously credited to the Cash Account to the Company Stock Account, but shall be limited to four such transfers per calendar year.  No transfers may be made out of a Company Stock Account unless otherwise permitted under Section 6(i)(iv).  The Committee may require that designated fees be deducted from amounts transferred to or from Company Stock Accounts.

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(e)Valuation of Stock; Dividend Credits.  Any dollar amount transferred or credited to a Company Stock Account shall be deemed to increase the number of shares of Common Stock recorded as the balance of that Account based on the closing market price of the Common Stock reported for the day of the transfer or credit or, if such day is not a trading day, the next trading day.  As of each date for payment of dividends on the Common Stock, each Company Stock Account shall be credited with the amount of dividends that would be paid on the number of shares recorded as the balance of that Account as of the record date for such dividend.

(f)Cash Account Interest.  Interest shall be credited to the Cash Account of each Participant as of the last day of each calendar quarter.  The rate of interest to be applied at the end of each calendar quarter shall be the quarterly equivalent of an annual yield that is equal to the annual yield on Moody’s Average Corporate Bond Yield for the preceding quarter, as published by the Moody’s Investors Service, Inc. (or any successor thereto), or if such index is no longer published, a substantially similar index selected by the Board.  Interest shall be calculated for each calendar quarter based upon the average daily balance of the Participant’s Cash Account during the quarter.

(g)Forfeitures.  If any Unvested LTIP Shares deferred by an Executive under this Plan are forfeited under the terms of the Executive’s applicable award agreement, the Executive’s Company Stock Account shall be reduced by the number of shares so forfeited.

(h)Statement of Account.  At the end of each calendar quarter, a report shall be issued by the Company to each Participant setting forth the balances of the Participant’s Accounts under the Plan.

(i)Effect of Corporate Transaction on Company Stock Accounts.  At the time of consummation of a Corporate Transaction (as defined below), if any, the amount credited to a Participant’s Company Stock Account shall be converted into a credit for cash or common stock of the acquiring company (“Acquiror Stock”) based on the consideration received by shareholders of the Company in the Corporate Transaction, as follows:

(i)Stock Transaction.  If holders of Common Stock receive Acquiror Stock in the Corporate Transaction, then (1) the amount credited to each Participant’s Company Stock Account shall be converted into a credit for the number of shares of Acquiror Stock that the Participant would have received as a result of the Corporate Transaction if the Participant had actually held the Common Stock credited to his or her Company Stock Account immediately prior to the consummation of the Corporate Transaction, and (2) Company Stock Accounts will thereafter be denominated in shares of Acquiror Stock and ongoing deferrals into Company Stock Accounts, if any, shall continue to be made in accordance with outstanding deferral elections into the Company Stock Accounts as so denominated.

(ii)Cash or Other Property Transaction.  If holders of Common Stock receive cash or other property in the Corporate Transaction, then the amount credited to a Participant’s Company Stock Account shall be transferred to the Participant’s Cash Account and converted into a cash credit for the amount of cash or the value of the property that the Participant would have received as a result of the Corporate Transaction if the Participant had actually held the Common Stock credited to his or her Company Stock Account immediately prior to the consummation of the Corporate Transaction.

(iii)Combination Transaction.  If holders of Common Stock receive Acquiror Stock and cash or other property in the Corporate Transaction, then (1) the amount credited to each Participant’s Company Stock Account shall be converted in part into a credit for Acquiror Stock under Section 6(i)(i) and in part into a credit for cash under Section 6(i)(ii) in the same proportion as such consideration is received 

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by shareholders, and (2) ongoing deferrals into Company Stock Accounts, if any, shall continue to be made in accordance with outstanding deferral elections into Company Stock Accounts in accordance with Section 6(i)(i).

(iv)Election Following Stock Transaction.  For a period of 12 months following the consummation of any Corporate Transaction which results in Participants having Company Stock Accounts denominated in Acquiror Stock, each Participant shall have a one-time right to elect to transfer the entire amount in the Participant’s Company Stock Account into the Participant’s Cash Account; provided, however, that this election shall not be available if the Corporate Transaction results in holders of Common Stock becoming holders of all of the outstanding common stock of a parent corporation of the Company.  Such election shall be made by written notice to the Company and shall be effective on the date received by the Company.  If such an election is made, the amount of cash to be credited to the Participant’s Cash Account shall be determined by multiplying the number of shares of Acquiror Stock in the Participant’s Company Stock Account by the closing market price of the Acquiror Stock reported for the effective date of the election or, if such day is not a trading day, the next trading day.

(v)For purposes of this Plan, a “Corporate Transaction” shall mean any of the following:
(1)    any consolidation, merger or plan of share exchange involving the Company (a “Merger”) pursuant to which shares of Common Stock would be converted into cash, securities or other property;
(2)    any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, the assets of the Company; or
(3)    the adoption of any plan or proposal for the liquidation or dissolution of the Company.
7.Payment of Benefits.

(a)Plan Benefits.  The Company shall pay Plan benefits to each Participant equal to the Participant’s Accounts.  Each Participation Agreement shall include an election by the Participant as to the term of benefit payments with respect to amounts deferred under the Participation Agreement, and Participation Agreements from Executives shall also include an election as to the commencement of benefit payments.  The payment elections in a Participation Agreement shall also apply to Matching Contributions and Supplemental Contributions credited as a result of Salary or Bonus during the deferral period covered by the Participation Agreement, and shall also apply to any dividends or interest credited with respect to amounts deferred under the Participation Agreement and such Matching Contributions and Supplemental Contributions.  If a Supplemental Contribution is credited to an Executive’s Account for a year that is not covered by a Participation Agreement, the Executive shall be deemed to have elected a single lump sum payment following Separation from Service as permitted by Sections 7(b) and 7(c) below with respect to benefits resulting from such Supplemental Contribution.  Except as otherwise provided in this Section 7, payment elections shall be irrevocable with respect to compensation once the deferral deadline for that compensation has passed.  Participants may make different payment elections with respect to subsequent deferrals of compensation, but no Participant may at any time have compensation deferred under the Plan payable under more than three different payment elections.

(b)Commencement of Payments.  Payment of benefits to Directors shall commence in January of the year following the Director’s Separation from Service (as defined below) with the Company.  

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Payment of benefits to Executives shall commence in the later of (i) January of the year following the Executive’s Separation from Service with the Company, or (ii) the seventh month following the month of the Executive’s Separation from Service with the Company; provided, however, that Executives may elect in their Participation Agreements to have benefits from their Accounts commence in January of a year specified by the Executive if such year is earlier than the year following the Executive’s Separation from Service with the Company.  When used in this Plan, the term “Separation from Service” shall have the meaning ascribed to such term in Treasury Regulations §1.409A-1(h).

(c)Term of Payments.  Participants may elect in their Participation Agreements to have benefits from their Accounts paid in (i) annual installments over 5, 10 or 15 years, (ii) a single lump sum payment, or (iii) a combination of a partial lump sum payment (expressed as a percentage) and the remainder in installments over 5, 10 or 15 years.

(d)Form of Payments.  Benefits payable to a Participant from a Company Stock Account shall be paid as a distribution of Common Stock plus cash for fractional shares.  Benefits payable to a Participant from a Cash Account shall be paid in cash.

(e)Payment Timing and Valuation.  All lump sum payments or installment payments due under the Plan in any year shall be paid on a date in January determined by the Company, except that if Section 7(b) requires benefits to commence in a month other than January, the initial payment shall be paid on a date in that month determined by the Company.  All payments shall be based on Account balances as of the close of business on the last trading day of the immediately preceding month.  Each partial lump sum payment and installment payment to a Participant shall be paid in the same proportion from each of the Accounts of the Participant subject to the applicable payment election.  The amount of each installment payment from each Account shall be determined by dividing the Account balance by the number of remaining installments, including the current installment to be paid.

(f)Modification of Payment Elections.
(i)An Executive who has elected to have any benefit commence in a specified year prior to termination of employment as permitted in Section 7(b) may elect (after such election has otherwise become irrevocable) to specify a later year for commencement of such benefit, provided that for any such election submitted after December 31, 2008, (1) such election is made in writing delivered to the Company no later than, and becoming irrevocable on, the last day of the second year preceding the previously specified year, and (2) the later year so specified is at least 5 years later than the previously specified year.

(ii)After a Participant’s election under Section 7(c) regarding the term of any benefit payments has otherwise become irrevocable, the Participant may elect to change such term of payments, provided (1) the choice of annual installments over 15 years shall not be available for a change election under this subsection, (2) the term of any particular payments may be changed only once under this subsection, (3) such election must be made in writing delivered to the Company no later than, and becoming irrevocable on, the last day of the second year preceding the year in which the payments otherwise would have commenced (and shall not be effective if a Separation from Service occurs on or before the date the election becomes irrevocable), and (4) the commencement of the affected payments shall be delayed for 5 years after the date the payments would have commenced under the terms of the previous payment election.  Accordingly, for a Director who elects to change the term of any benefit payments, the commencement of those payments will be delayed until January of the year following the fifth anniversary of the Director’s Separation from Service.  Notwithstanding the foregoing, a Participant may elect on or prior to December 31, 2008 to change the term of any benefit payments that have not commenced as of that date without application of any of the limitations or restrictions set forth in this Section 7(f)(ii).

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(g)Unforeseeable Emergency.  Notwithstanding the foregoing provisions of this Section 7, an accelerated payment from a Participant’s Accounts may be made to the Participant in the sole discretion of the Committee based upon a finding that the Participant has suffered an Unforeseeable Emergency.  For this purpose, “Unforeseeable Emergency” means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse or a dependent of the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.  Unforeseeable Emergency shall be determined by the Committee on the basis of information supplied by the Participant in accordance with uniform guidelines promulgated from time to time by the Committee.  The amount of any accelerated payment under this Section 7(g) shall be limited to the amount reasonably necessary to meet the Participant’s needs resulting from the Unforeseeable Emergency, after taking into account insurance and other potential sources of funds to meet such needs, plus the amount reasonably necessary to cover income and withholding taxes on the accelerated payment.  Any such accelerated payment shall be paid as promptly as practicable following approval by the Committee and shall be paid pro-rata from the Participant’s Accounts based on the account balances as of the close of business on the day prior to the payment date.

(h)Designation of Beneficiaries; Death.
(i)Each Participant shall have the right, at any time, to designate any person or persons as the Participant’s beneficiary or beneficiaries (both primary as well as secondary) to whom benefits under this Plan shall be paid in the event of the Participant’s death prior to complete distribution of the benefits due under the Plan.  If greater than fifty percent (50%) of the benefit is designated to a beneficiary other than the Participant’s spouse, such beneficiary designation shall be consented to by the Participant’s spouse.  Each beneficiary designation shall be in written form prescribed by the Company and will be effective only if filed with the Company during the Participant’s lifetime.  Such designation may be changed by the Participant at any time without the consent of a beneficiary, subject to the spousal consent requirement above.  If no designated beneficiary survives the Participant, the balance of the Participant’s benefits shall be paid to the Participant’s surviving spouse or, if no spouse survives, to the Participant’s estate.

(ii)Upon the death of a Participant, notwithstanding any contrary provisions of Section 7(b) or 7(f), benefit payments to the Participant’s beneficiary shall commence no later than January of the year following the Participant’s death.  Any benefits payable after the death of a Participant shall otherwise be paid in accordance with the payment elections for such benefits that would have applied if the Participant had not died.

(i)Payment to Guardian.  If a benefit under the Plan is payable to a minor or a person declared incompetent or to a person incapable of handling the disposition of his property, the Committee may direct payment of such Plan benefit to the guardian, legal representative or person responsible for the care and custody of such minor, incompetent or person.  The Committee may require proof of incompetence, minority, incapacity or guardianship as it may deem appropriate prior to distribution of the Plan benefit.  Such distribution shall completely discharge the Committee and the Company from all liability with respect to such benefit.
(j)Withholding; Payroll Taxes.  The Company shall withhold from payments made hereunder any taxes required to be withheld from such payments under federal, state or local law, with such tax withholding generally being required only for deferred compensation for services as an employee.

8.Supplemental Retirement Benefit.  Any Executive who elects to defer compensation under this Plan and who also satisfies the eligibility requirements for payment of any benefit under the Company’s Retirement Plan for Non-Bargaining Unit Employees (the “Retirement Plan”) shall qualify for further 

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payment by the Company of supplemental retirement benefits payable as a monthly annuity under this Plan, as provided below:

(a)    Commencement.
(i)    If the Executive is eligible to receive normal retirement benefits under the Retirement Plan based on having reached age 62 at the time of Separation from Service, the annuity shall commence with the first month following the Executive’s Separation from Service.
(ii)    If the Executive is eligible to receive early retirement benefits under the Retirement Plan based on having satisfied the Rule of 70 at the time of Separation from Service, the annuity shall commence with the first month following the later of the Executive’s 55th birthday or the Executive’s Separation from Service.
(iii)    If the Executive is not eligible to receive normal retirement benefits or early retirement benefits as referred to in Section 8(a)(i) or (ii), but is eligible to receive vested benefits under the Retirement Plan, the annuity shall commence with the first month following the Executive’s 62nd birthday.
(iv)    If the Executive’s surviving spouse is eligible to receive death benefits under the Retirement Plan as a result of the Executive’s death before commencement of benefits under this Section 8, the annuity shall commence in the month that benefits would have commenced as provided in this Section 8(a) if the Executive had a Separation from Service on the date of death (or on the Executive’s actual Separation from Service, if earlier) and then survived until benefits had commenced.
(b)    Form of Benefit.
(i)    Annuity Form.  If the Executive elects a form of annuity benefit under the Retirement Plan at least 30 days prior to the first day of the month in which the benefit under this Section 8 is required to commence, the benefit under this Section 8 shall be paid in the same annuity form as selected under the Retirement Plan.  If the Executive’s benefit under this Section 8 commences earlier than the Executive’s benefit under the Retirement Plan, the Executive may, at least 30 days prior to the first day of the month in which the benefit under this Section 8 is required to commence and otherwise in accordance with the rules of the Retirement Plan, elect any of the standard or optional annuity forms of benefit described in 6.01 and 6.02 of the Retirement Plan, other than a joint and survivor annuity upon marriage or remarriage after the annuity starting date.  If the Executive does not make a timely election under this Section 8(b), the benefit under this Section 8 shall be paid in the default annuity form applicable to the Executive under the Retirement Plan.
(ii)    Small Benefit Cash Out.  If the actuarial equivalent lump sum present value of the Executive’s benefit under this Section 8, based on the actuarial assumptions used for determining equivalent benefits under the Retirement Plan at the time of the Executive’s commencement of benefits, is no more than the applicable dollar amount under Internal Revenue Code section 402(g)(1)(B) (which is $16,500 in 2011), the benefit shall be paid as a lump sum in such amount at the time annuity payments would have otherwise commenced under Section 8(a).
(c)    Amount.  The amount payable by the Company each month to the Executive or Executive’s beneficiaries under the Retirement Plan shall be:
(i)    The amount that would be payable at such time under the Retirement Plan assuming that (1) benefits had commenced on the date specified in Section 8(a), (2) benefits were payable 

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in the annuity benefit form determined under Section 8(b), (3) all accrued benefits under the Retirement Plan were payable only in the annuity form as provided in Section 8(d), and (4) all Salary and Bonus deferred by the Executive under this Plan and under the Company’s former Executive Deferred Compensation Plan (the “Prior Plan”) had been “paid” to or “received” by Executive in the year when the deferral was made, provided that all such deferred amounts shall be subject to the other applicable definitions and rules of the Retirement Plan relating to benefit determination; plus
(ii)    The reduction, if any, in the amount of the monthly Social Security benefit payable to the Executive, provided that such reduction results from the fact that compensation deferred under this Plan causes the primary Social Security Benefit payable to the Executive to be reduced, with the amount under this Section 8(c)(ii) calculated assuming commencement of Social Security benefits at the earliest possible time, no earnings after Separation from Service and no projected increases in the national average wage index or cost of living between Separation from Service and commencement of benefits; minus
(iii)    The amount that would actually be payable at such time under the Retirement Plan assuming that (1) benefits had commenced on the date specified in Section 8(a), (2) benefits were payable in the annuity benefit form determined under Section 8(b), and (3) all accrued benefits under the Retirement Plan were payable only in the annuity form as provided in Section 8(d).
(d)    Retirement Plan Lump Sum Election Ignored.  Notwithstanding any election by an Executive to receive a portion of Executive’s Retirement Plan benefit as a lump sum, the amount of the supplemental retirement benefit as determined under Section 8(c) shall be calculated and determined as if Executive were to receive Executive’s entire Retirement Plan accrued benefit in the annuity form determined under Section 8(b).
(e)    Six-Month Minimum Delay.  Notwithstanding the foregoing, no supplemental retirement benefit payments under this Section 8 shall be paid to any Executive until the seventh month following the month of the Executive’s Separation from Service with the Company.  Any payments that would have been paid if not for this Section 8(e) shall be accumulated and paid in full in the seventh month following the month of the Executive’s Separation from Service with the Company together with interest from the date each payment otherwise would have been payable until the date actually paid.  Interest for any period will be paid at the same rate applicable for that period under Section 6(f).
(f)    Waiver of Comparable Benefits Under Prior Plan.  Because amounts deferred under the Prior Plan are taken into account in calculating the benefits payable under this Section 8, acceptance of the benefits under this Section 8 shall be deemed to be a waiver of the comparable benefits set forth in Section 5.7 of the Prior Plan.
9.Administration.
(a)Committee Duties.  This Plan shall be administered by the Organization and Executive Compensation Committee of the Board (the “Committee”).  The Committee shall have responsibility for the general administration of the Plan and for carrying out its intent and provisions.  The Committee shall interpret the Plan and have such powers and duties as may be necessary to discharge its responsibilities.  The Committee may, from time to time, employ other agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with counsel who may be counsel to the Company.

(b)Tax Law Compliance.  The Committee shall have the authority to cancel any Participation Agreement in whole or in part, and immediately distribute any compensation deferred under such Participation Agreement, but only to the extent the Committee determines that deferral of compensation in accordance with such Participation Agreement has or will violate Section 409A of the Internal Revenue 

10

Code and therefore has or will require immediate inclusion of such compensation in the income of the Participant.

(c)Binding Effect of Decisions.  The decision or action of the Committee in respect of any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.

10.Claims Procedure.
(a)Claim.  Any person claiming a benefit, requesting an interpretation or ruling under the Plan, or requesting information under the Plan shall present the request in writing to the Committee, which shall respond in writing as soon as practicable.

(b)Denial of Claim.  If the claim or request is denied, the written notice of denial shall state:
(i)The reasons for denial, with specific reference to the Plan provisions on which the denial is based;
(ii)A description of any additional material or information required and an explanation of why it is necessary; and
(iii)An explanation of the Plan’s claim review procedure.

(c)Review of Claim.  Any person whose claim or request is denied or who has not received a response within thirty (30) days may request review by notice given in writing to the Committee.  The claim or request shall be reviewed by the Committee who may, but shall not be required to, grant the claimant a hearing.  On review, the claimant may have representation, examine pertinent documents, and submit issues and comments in writing.

(d)Final Decision.  The decision on review shall normally be made within sixty (60) days.  If an extension of time is required for a hearing or other special circumstances, the claimant shall be notified and the time limit shall be one hundred twenty (120) days.  The decision shall be in writing and shall state the reasons and the relevant Plan provisions.  All decisions on review shall be final and bind all parties concerned.

11.Amendment and Termination of the Plan.
(a)Amendment.  The Board may at any time amend the Plan in whole or in part; provided, however, that no amendment shall without the consent of each affected Participant (i) decrease or restrict the amount credited to any Account maintained under the Plan as of the date of amendment, or (ii) accelerate or decelerate the payment of benefits with respect to amounts credited to any Account as of the date of the amendment.

(b)Termination.  The Board may at any time partially or completely terminate the Plan if, in its judgment, the tax, accounting, or other effects of the continuance of the Plan, or potential payments thereunder, would not be in the best interests of the Company.

(i)Partial Termination.  The Board may partially terminate the Plan by instructing the Committee not to accept any additional Participation Agreements and terminating deferrals under all existing Participation Agreements.  In the event of such a partial termination, the Plan shall continue to operate and be effective with regard to all compensation deferred prior to the effective date of such partial termination.

11

(ii)Complete Termination.  The Board may completely terminate the Plan, provided such termination is covered by an exception (set forth in regulations or other guidance of the Internal Revenue Service) to the prohibition on acceleration of deferred compensation.  In that event, on the effective date of the complete termination, the Plan shall cease to operate and the Company shall determine the balance of each Participant’s Accounts as of the close of business on such effective date.  The Company shall pay out such Account balances to the Participants in a single lump sum payment as soon as practicable after such effective date.

12.Miscellaneous.
(a)Unsecured General Creditor.  The Accounts shall be established solely for the purpose of measuring the amounts owed to Participants or beneficiaries under the Plan.  Participants and their beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interest or claims in any property or assets of the Company, nor shall they be beneficiaries of, or have any rights, claims or interests in any mutual funds, other investment products or the proceeds therefrom owned or which may be acquired by the Company.  Except as may be provided in Section 12(b), such mutual funds, other investment products or other assets of the Company shall not be held under any trust for the benefit of the Participants, their beneficiaries, heirs, successors or assigns, or held in any way as collateral security for the fulfilling of the obligations of the Company under this Plan.  Any and all of the Company’s assets shall be, and remain, the general, unpledged, unrestricted assets of the Company.  The Company’s obligation under the Plan shall be that of an unfunded and unsecured promise to pay money in the future, and the rights of Participants and beneficiaries shall be no greater than those of unsecured general creditors of the Company.

(b)Trust Fund.  The Company shall be responsible for the payment of all benefits provided under the Plan.  The Company shall establish one or more trusts, with such trustees as the Board may approve, for the purpose of providing for the payment of such benefits, but the Company shall have no obligation to contribute to such trusts except as specifically provided in the applicable trust documents.  Such trust or trusts shall be irrevocable, but the assets thereof shall be subject to the claims of the Company’s creditors.  To the extent any benefits provided under the Plan are actually paid from any such trust, the Company shall have no further obligation with respect thereto, but to the extent not so paid, such benefits shall remain the obligation of, and shall be paid by, the Company.

(c)Non-assignability.  Neither a Participant nor any other person shall have the right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be non-assignable and nontransferable.  No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.

(d)Not a Contract of Employment.  The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between the Company and any Participant, and the Participants (and their beneficiaries) shall have no rights against the Company except as may otherwise be specifically provided herein.  Moreover, nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of the Company or to interfere with the right of the Company to discipline or discharge the Participant at any time.

(e)Governing Law.  The provisions of this Plan shall be construed and interpreted according to the laws of the State of Oregon, except as preempted by federal law.

12

(f)Validity.  In case any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal and invalid provisions had never been inserted herein.

(g)Notice.  Any notice or filing required or permitted to be given to the Company or the Committee under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to the Secretary of the Company.  Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

(h)Successors.  The provisions of this Plan shall bind and inure to the benefit of the Company and its successors and assigns.  The term successors as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise acquire all or substantially all of the business and assets of the Company, and successors of any such corporation or other business entity.

The foregoing restatement of the Plan was approved by the Board of Directors of Northwest Natural Gas Company on and effective as of July 28, 2016.

NORTHWEST NATURAL GAS COMPANY

By:      

Attest:                  

13Exhibit 10.1

 

 

 

EMPLOYMENT AGREEMENT

 

AGREEMENT made as of
the 1st day of July, 2016, by and between APPLIED DNA SCIENCES, INC., a Delaware corporation (the “Company”),
and JAMES A. HAYWARD (“Executive”).

 

1.                  Employment.
Executive shall continue to be employed as the Chief Executive Officer of the Company, which employment will be subject to and
governed by this Agreement.

 

1.1           Duties
and Responsibilities. Executive will have the authority, duties and responsibilities customarily associated with the position
of Chief Executive Officer, consistent with the Company’s by-laws and applicable law. Executive will have such additional
duties and responsibilities commensurate with his position as the Company’s Board of Directors (the “Board”)
may assign to him from time to time. Executive will report directly to and be subject to the control and direction of the Board.
The Company will use its reasonable efforts to ensure that Executive will continue to be a member of the Board during the period
of his employment under this Agreement. At the request of the Board, Executive shall serve as an officer and director of the Company’s
subsidiaries and other affiliates without additional compensation. Executive will observe and adhere to all applicable written
Company policies and procedures in effect from time to time, including, and without limitation, policies on business ethics and
conduct, and policies on the use of inside information and insider trading.

 

1.2           Term.
Unless sooner terminated pursuant to Section 3, the term of this Agreement (the “Term”) will begin July 1, 2016 and
end June 30, 2017. Thereafter, the Term will automatically be renewed for successive one-year periods unless either party provides
written notice of non-renewal to the other at least 90 days before the end of the then-current Term.

 

1.3           Full
Time. Executive shall devote all of his business time and attention to the performance of his duties and responsibilities under
this Agreement. Executive will not render services to others for compensation or, without the written consent of the Board (which
should not be unreasonably withheld), serve on the board of directors or other governing body of another for profit entity, provided, however,
that the Company hereby consents to Executive’s continuing to engage in the other business activities listed on Exhibit A
hereto, so long as such activities do not conflict or interfere with Executive’s obligations and covenants under this Agreement
or Executive’s ability to fully and properly perform the duties and responsibilities of his employment under this Agreement.
Executive may engage in personal, charitable and passive investment activities, so long as such activities do not conflict or interfere
with his ability to perform the duties and responsibilities of his employment under this Agreement.

 

    	 	Page 1 of 19	 

     

    

 

 

 

1.4           Location
of Employment. Executive’s principal place of employment will be at the Company’s principal offices, currently
located in Stony Brook, New York. The Company will not relocate the Executive’s office beyond a 75 mile radius of the then
current location without Executive’s consent. Notwithstanding the foregoing, Executive acknowledges that he will have to
engage in business travel in connection with the performance of his duties and in accordance with the needs of the Company.

  

2.                  Compensation.

 

2.1           Base
Salary. The Company will pay base salary (“Base Salary”) to Executive, in accordance with its regular payroll practices,
at an initial annual rate, as earned, of $400,000. The Board and/or the Compensation Committee of the Board (the “Compensation
Committee”) will review Executive’s Base Salary annually. The Board or the Compensation Committee, acting in its discretion,
may increase (but may not decrease unless elected by Executive) the annual rate of Executive’s Base Salary.

 

2.2           Annual
Bonus Opportunity. The Board or Compensation Committee may award an annual bonus to the Executive in such amount and upon such
terms and conditions as the Board or the Compensation Committee, acting in its discretion, determines (provided that the Executive
will not be treated less favorably with respect to annual bonuses than other executives of the Company). The bonus for any fiscal
year will be recognized by the Company when achieved and/or granted and will be payable to Executive as a lump sum, or installments,
as practicable and feasible (with consideration for cash flow and cash collections from bonus eligible revenues).

 

2.3           Cash
Incentive Award. The Company will pay a cash bonus to Executive of up to $800,000, to be earned as follows: $300,000 for the
first fiscal year-ending after the date hereof in which the Company’s revenue equals at least $8 million, plus $100,000 for
each $2 million of revenue in excess of $8 million. For example, if the Company’s has $10 million of revenue in the first
fiscal year in which its revenues equal or exceed $8 million, the Executive will be entitled to $400,000 ($300,000 + $100,000);
and if the Company has revenue of $12 million in the next succeeding fiscal year, then Executive will earn an additional $200,000;
and, if the Company has $14 million of revenue in the third succeeding fiscal year, the Executive will earn an additional $200,000
at of the end of that year, at which point, Executive will have earned the $800,000 aggregate maximum incentive amount under this
subsection 2.3.

 

2.4           Annual
Equity Awards. Executive will be eligible for annual equity awards under the Company’s equity incentive plan on a basis
that is not less favorable than the annual equity awards being made generally to other senior executives of the Company.

 

2.5           Employee
Benefits. Executive will be eligible to participate in such retirement, welfare and other employee benefit and fringe benefit
plans, arrangements, programs and perquisites as are provided by the Company from time to time to or for the benefit of the Company’s
other executives, on comparable terms and conditions. Executive shall be entitled to five weeks of vacation time during each calendar
year of his employment, subject to the Company’s current personal time off (PTO) policies and procedures.

 

    	 	Page 2 of 19	 

     

    

 

 

 

2.6           Reimbursement
of Business Expenses. Executive is authorized to incur reasonable expenses in carrying out his duties and responsibilities
of his employment under this Agreement, and the Company will promptly reimburse him for all expenses that are so incurred upon
presentation of appropriate vouchers or receipts, subject to the Company’s expense reimbursement policies applicable to senior
executives generally as in effect from time to time. Executive will be entitled to first class travel on flights that are scheduled
to exceed three hours. The Company will pay or reimburse Executive for the cost of computer, phone and other equipment and services
reasonably required in order to enable Executive to conduct business from his home outside of regular business hours.

 

2.7           Other
Items. The Company will pay or reimburse Executive for the payment of up to $1,500 per month for the costs associated with
an automobile used by Executive and, in addition, will provide Executive with a gas credit card (the charges on which will not
be taken into account in applying the $1,500 monthly automobile allowance). The Company will pay or reimburse Executive for the
payment of an annual or monthly gym membership and for at least one airline club membership. The Company will also pay for the
use of an outside driver for Executive for up to 20 hours per week.

 

3.                  Termination
of Employment Before End of Term.

 

3.1           Termination
by Company for Cause. The Company may terminate Executive’s employment before the end of the Term for Cause if Executive:
(a) is convicted of or pleads nolo contendre to a felony, (b) commits fraud or a material act or omission involving dishonesty
affecting the assets, business or reputation of the Company or any of its subsidiaries or affiliates, (c) willfully fails or refuses
to carry out the material responsibilities of his employment, as reasonably determined by the Board, (d) engages in gross negligence,
willful misconduct or a pattern of behavior that has had or is reasonably likely to have a significant adverse effect on the Company
or the ability of Executive to perform the duties and responsibilities of his employment, or (e) willfully engages in any act or
omission that is in material violation of Company policy, including, without limitation, Company policy on business ethics and
conduct, and Company policy on the use of inside information and insider trading; provided, however, that, if the conduct giving
rise to termination for Cause is curable without material harm to the business or assets of the Company, the Executive will be
afforded an opportunity to effect such a cure within 30 days after notice of termination and thereby avoid a termination for Cause
based upon such conduct.

 

3.2           Resignation
by Executive. Executive may terminate his employment before the end of the Term, subject to at least 60 days’ prior written
notice to the Company. Upon receipt of such notice, the Company may relieve Executive of some or all of his duties and/or set an
earlier termination date.

 

    	 	Page 3 of 19	 

     

    

 

 

 

3.3           Termination
by Company without Cause. Company may terminate Executive’s employment without Cause before the end of the Term, subject
to 60 days prior written notice to Executive. Following such notice, the Company may relieve Executive of some or all of his duties,
provided that Company continues to pay Executive through the end of the notice period. For the purposes hereof, the termination
of this Agreement at the expiration of the initial Term or the expiration of either of the first two renewal Terms (if any) due
to non-renewal by Company pursuant to Section 1.2 will be deemed to be a termination of Executive’s employment by Company
without Cause.

 

3.4           Termination
Due to Disability or Death. Company may terminate Executive’s employment before the end of the Term due to “Disability”
if Executive is unable to substantially perform the customary duties and responsibilities of his employment for at least 120 consecutive
calendar days or 150 or more calendar days during any 365 calendar day period by reason of physical or mental illness,  injury,
impairment or incapacity. No minimum notice is required for a termination due to Executive’s Disability. If Executive dies
before the end of the Term, his employment will terminate on the date of his death.

 

3.5           Termination
by Executive for Good Reason. Executive may terminate his employment for Good Reason at any time, subject to applicable notice
and cure conditions described below. For this purpose, the term “Good Reason” means any of the following: (a) a material
adverse change by Company of Executive’s status or position as the Chief Executive Officer, including, without limitation,
a material diminution of his position, duties, responsibilities or authority or the assignment to him of duties or responsibilities
that are materially inconsistent with his status or position; (b) a non-voluntary reduction by the Company of Executive’s
annual Base Salary or failure to pay same ; (c) a breach by the Company of any of its material obligations under this Agreement;
(d) relocation of Executive without Executive’s consent beyond a 75 mile radius of Executive’s then principal place
of employment in violation of this Agreement; or (e) in connection with a Change in Control, the failure or refusal by the successor
or acquiring company to expressly assume the obligations of Company under this Agreement. As a condition to terminating his employment
for Good Reason, Executive must, within 60 days after the occurrence of the event or condition giving rise to such termination,
provide written notice to the Company (or the successor or acquiring company) of his desire to terminate for Good Reason, specifying
the nature of the act or omission that Executive deems to constitute Good Reason. The Company shall have 30 days after receipt
of such notice to review and, if required, correct the situation (and thus prevent Executive’s termination for Good Reason).

 

3.6           Definition
of Change in Control.  For the purposes hereof, a “Change in Control” will be deemed to have occurred
if and when, after the date of this Agreement,

 

    	 	Page 4 of 19	 

     

    

 

 

 

(a)           any
person, as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”),
other than (1) the Company, (2) any trustee or other fiduciary holding securities under an employee benefit plan of the Company,
(3) the Executive, or (4) any entity owned, directly or indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company, is or becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such
person any securities acquired directly from the Company or its affiliates) representing 30 percent or more of the combined voting
power of the Company’s then outstanding voting securities;

 

(b)          during
any period of two consecutive years, individuals who at the beginning of such period constitute the Board and any new director
(other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described
in clause (a), (c) or (d) of this subsection) whose election by the Board or nomination for election by the company’s stockholders
was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority
thereof;

 

(c)           there
is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other entity,
other than (1) a merger or consolidation which results in the directors of the Company immediately prior to such merger or consolidation
continuing to constitute at least a majority of the board of directors of the Company, the surviving entity or any parent thereof
or (2) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person
(other than persons described in any of parts (1) – (4) of subsection (a) above) is or becomes the beneficial owner, directly
or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired
directly from the Company or its affiliates) representing 30% or more of the combined voting power of the Company’s then
outstanding securities; or

 

(d)           the
complete liquidation or dissolution of the Company or the sale or other disposition by the Company of all or substantially all
of the Company’s assets, other than a sale or disposition by the Company of all or a majority of the Company’s assets,
income or revenue to an entity, at least 70% of the combined voting power of the voting securities of which are owned by shareholders
of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.

 

4.                  Payments
and Benefits Upon Termination of Employment.

 

4.1           Termination
of Employment by Company without Cause or by Executive for Good Reason. Except as provided in Section 4.4 (relating to the
effect of a Change in Control), if Executive’s employment is terminated by Company without Cause pursuant to Section 3.3
or by Executive for Good Reason pursuant to Section 3.5, then, subject to Section 5, Executive shall receive the following payments
and benefits:

 

    	 	Page 5 of 19	 

     

    

 

 

 

(a)           a
single cash payment equal to the sum of (1) the unpaid amount, if any, of Base Salary previously earned by Executive through the
date of his termination, and (2) the unpaid amount, if any, of the annual bonus earned by Executive for the preceding year;

 

(b)           payment
of any business and other expenses described in Sections 2.7 and 2.8 that were previously incurred but not reimbursed and are otherwise
eligible for reimbursement;

 

(c)           any
payments or benefits payable to Executive or his covered spouse, or a dependent or beneficiary of Executive, under and in accordance
with the provisions of any employee benefit plan of the Company;

 

(d)           a
cash payment equal to the product of (1) the greater of (A) the annual bonus award (if any) that would have been earned by Executive
for the fiscal year in which his employment terminates if his employment had continued through the end of such year, and (B) the
annual bonus earned by Executive for the preceding year, multiplied by (2) a fraction, the numerator of which is the number of
days elapsed from the beginning of that fiscal year until the date his employment terminates, and the denominator of which is 365
(“Pro Rata Bonus”), which payment will be made when the bonus for such year would otherwise have been paid;

  

(e)           an
amount of severance equal to the greater of (1) 2.99- times Executive’s annual rate of Base Salary in effect at the time
his employment terminates, or (2) 2-times the sum of (A) such annual rate of Base Salary, plus (B) the annual bonus, if any, earned
by Executive for the year preceding the year of termination, or, if greater, the target bonus, if any, for the year of termination,
which amount (the greater of (1) and (2)) shall be payable ratably for a period of 24 months following such termination of employment
as if it were salary payable in accordance with the Company’s normal payroll practices,  provided, however,
that the initial installment will begin on the 60th day following the date on which Executive’s employment terminates
and will include the payments that would otherwise have been made during such 60-day period;

 

(f)            any
vested stock options and stock appreciation rights held by Executive at the time of his termination of employment will remain exercisable
by the Executive or his beneficiary, as the case may be, for a period of at least three years following the termination of his
employment (but in no event later than the stated expiration date of such option or stock appreciation right;

 

(g)           if
the Executive and/or his covered spouse or dependents elect COBRA continuation coverage as a result of the termination of Executive’s
employment, then the Company will pay the full amount of the COBRA premium for such coverage for a period of up to 18 months following
the termination of Executive’s employment, it being understood that Executive may be taxable on the value of such coverage
in order to enable the Company to avoid any penalty or additional tax that may otherwise be incurred by reason of the provision
of such subsidized COBRA coverage; and

    	 	Page 6 of 19	 

     

    

 

 

 

(h)           if
the Executive is covered by Company-provided life insurance, continuing life insurance benefits for 24 months following the termination
of his employment as if Executive’s employment had continued.

 

4.2           Termination
Due to Disability or Death. If Executive’s employment is terminated pursuant to Section 3.4 by reason of his death or
Disability, then, subject to Section 5, Executive (or, as applicable, his spouse, covered dependents and/or beneficiaries) shall
receive the payments and benefits described in Sections 4.1(a) – (d) and 4.1(g), and any vested stock options held by Executive
at the time of his termination of employment will remain exercisable by the Executive or his beneficiary, as the case may be, for
a period of at least three  years following the termination of his employment (but in no event later than the stated
expiration date of the option, as such date may be extended without causing the option to become subject to Section 409A of the
Code).

 

4.3           Termination
by Company for Cause or Resignation by Executive. If Company terminates Executive’s employment for Cause pursuant to
Section 3.1 or if Executive resigns his employment pursuant to Section 3.2 (other than a resignation for Good Reason pursuant to
Section 3.5), Executive shall not be entitled to any payments or benefits except for those described in section 4.1 (a)-(c).

 

4.4           Effect
of Change in Control.

 

(a)           Vesting
of Certain Equity Awards. If a Change in Control occurs, then immediately prior to such Change in Control, Executive will become
fully vested in any then outstanding unvested stock options, restricted stock or other equity incentive awards for shares of Company
stock, unless and except to the extent that they are assumed by or otherwise converted into economically equivalent stock options,
restricted stock or other equity incentive awards with respect to shares of stock of the acquiring company, the surviving company
or any of its or their affiliates.

  

(b)           Termination
of Employment in Connection with Change in Control. If Executive’s employment is terminated by Company without Cause
or by Executive for Good Reason within two years after a Change in Control or within 6 months prior to a Change in Control, then
(1) the amount of severance payable to Executive pursuant to Section 4.1(e) (or, as the case may be, the amount remaining to be
paid to Executive at the time of a Change in Control occurring within 6 months after the termination of Executive’s employment)
will be payable to Executive in a single sum cash payment on the 60th day following his termination of employment (or, if
Executive’s employment terminated before the Change in Control, on the later of the date of the Change in Control or the
date which is 60 days after the date Executive’s employment terminated); and (2) any stock options and stock appreciation
rights that are outstanding at the time of such termination of employment will remain exercisable for at least three years following
the date on which the Change in Control occurs or, if later, the date Executive’s employment terminates (but in no event
later than the stated expiration date of such option or stock appreciation right).

    	 	Page 7 of 19	 

     

    

 

 

 

5.                  Release
of Claims; Restoration of Payments; Section 280G.

 

5.1           Release.  Notwithstanding
anything to the contrary contained herein, as conditions to the Company’s being obligated to make the separation payments
and provide the benefits described in Sections 4.1(d) – 4.1(h) (and, by extension, Section 4.2)), (a) within 60 days after
the date of Executive’s termination, the Company must have received from Executive an executed valid general release of claims
substantially in the form attached hereto as Exhibit A, that is no longer subject to revocation, and (b) on or before
Executive’s termination date, the Executive shall have (1) turned over all Company property in his possession or control
to the Company, and (2) resigned from the Board of the Company and the board of directors or comparable body of every subsidiary
or other Affiliate of the Company, and every committee thereof. Executive shall not be entitled to receive such severance payment
and benefits if the conditions described in the preceding sentence are not timely satisfied.

 

5.2           Restoration
of Payments. Executive’s right to receive any separation payments and benefits pursuant to this Agreement shall be subject
to his compliance with the restrictive covenants referenced or set forth in Section 6 and repayment pursuant to this Section. If
Executive violates or is in breach of any said restrictive covenants, then (a) Executive shall not be entitled to any further separation
payments and benefits under this Agreement, (b) Executive shall be obligated to immediately return to the Company any separation
payments and the value of any separation benefits previously received hereunder, and (c) Executive shall have no further rights
or entitlements under this Agreement. This Section shall not in any manner supersede or limit any other right the Company may have
to enforce or seek legal or equitable relief with respect to a violation or breach by Executive of any of said restrictive covenants.

  

5.3           Section
280G.

 

(a)           General.
If any payment or benefit received or to be received by Executive in connection with or contingent on a change in ownership or
control of the Company, within the meaning of Section 280G of the Code, whether or not in connection with Executive’s termination
of employment, and whether or not pursuant to this Agreement (such payments or benefits being referred to as the “Total Payments”)
will be subject to an excise tax as provided for in Section 4999 of the Code (the “Excise Tax”), then Executive will
be entitled to receive either (a) the full amount of the Total Payments, or (b) a portion of the Total Payments having a value
equal to 2.99-times Executive’s “base amount” (as such term is defined in Section 280G(b)(3)(A) of the Code),
whichever of clauses (a) and (b), after taking into account applicable federal, state, and local income taxes and the Excise Tax,
results in the receipt by Executive on an after-tax basis, of the greatest portion of the Total Payments. For purposes of determining
the after-tax amounts in (a) and (b) above, Executive will be deemed to pay federal, state and local income tax at the highest
marginal rates, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local
taxes. If there is a reduction of the Total Payments pursuant to the foregoing, then, unless the parties agree otherwise, such
reduction will occur in the following order: (A) any cash severance payable under this Agreement; (B) any other cash amount payable
to Executive; (C) any benefit valued as a “parachute payment;” and (D) acceleration of vesting of any equity awards.

 

    	 	Page 8 of 19	 

     

    

 

 

 

(b)           Determinations.
All determinations under this subsection must be made by a nationally recognized accounting firm, which must not be the auditor
of the acquirer in the transaction constituting a change in ownership or control of the Company, selected by the Company (the “Auditor”),
and the Company will pay all costs and expenses of the Auditor. The Company will cooperate in good faith in making such determinations
and in providing the necessary information for this purpose.

 

6.                  Restrictive
Covenants.

 

6.1           Nondisclosure
of Confidential Information; Inventions.

 

(a)                The
Company possesses valuable business and technical information, know-how and trade secrets (whether written or oral) related to
its and its subsidiaries’ current, future and proposed products, including, but not limited to, research, developments, improvements,
methods, procedures, discoveries, patents, patent applications, inventions, processes, formulas, technology, designs, models, drawings,
product plans, products, services, customers, customer lists, strategies, studies, business plans, forecasts, markets, techniques,
engineering, testing systems, hardware configuration information, computer software and programs (including source code and related
documentation), test and/or experimental data and results, laboratory notebooks, marketing, finances or other business information
(herein collectively referred to as “Confidential Information”).  Confidential Information shall include
any and all information relating to the Company, and its subsidiaries, affiliates, clients, customers, investors, and joint venture
and strategic partners.

 

(b)                The
Executive is an employee of the Company and as such the Company has and will disclose Confidential Information to the Executive.  The
Executive shall not communicate the Company’s Confidential Information to any third party without the prior written consent
of the Company, and the Executive shall use his best efforts to prevent inadvertent disclosure of the Company’s Confidential
Information to any third party.  The Executive hereby acknowledges that he is aware that United States securities laws
prohibits any person who has received from an issuer material, non-public information from purchasing or selling securities of
such issuer or from communicating such information to any other person under circumstances in which it is reasonably foreseeable
that such person is likely to purchase or sell such securities. The obligation of this Section 6.1(b) shall terminate with respect
to any particular portion of the Company’s Confidential Information when the Executive can document that the information
is part of the public domain other than as a result of the Executive’s or another person’s breach of duty to maintain
confidentiality.

 

    	 	Page 9 of 19	 

     

    

 

 

 

(c)                In
the event that the Executive is requested or required (by oral question or request for information or documents and legal proceedings,
interrogatories, subpoena, civil investigative demand or similar process) to disclose Confidential Information of the Company,
or if the Executive is advised by his legal counsel that it is legally required to disclose the Confidential Information, it is
agreed that the Executive (i) will provide the Company prompt notice of any request or requirement, (ii) will provide the Company
full and complete cooperation to seek an appropriate order or remedy, (iii) will cooperate with the Company in obtaining reliable
assurances that confidential treatment will be accorded to the disclosure of Confidential Information, and (iv) will, if disclosure
of said Confidential Information is required, disclose only that portion of the Confidential Information which is legally required
to be disclosed.

 

(d)               The
Executive will make full and prompt disclosure to the Company of all inventions, creations, improvements, discoveries, trade secrets,
secret processes, technology, know-how, methods, developments, software, and works of authorship or other creative works, whether
patentable or not, which are created, made, conceived or reduced to practice by him or under his direction or jointly with others
during his employment by the Company, whether or not during normal working hours or on the premises of the Company (herein collectively
referred to as “Developments”).

 

(e)               The
Executive agrees to assign and does hereby assign to the Company (or any person or entity designated by the Company) all his right,
title and interest in and to all Developments and all related patents, patent applications, copyrights and copyright applications.  However,
this Section 6.1(f) shall not apply to Developments that do not relate to the present or planned business or research and development
of the Company and which are made and conceived by the Executive not during normal working hours, not on the Company premises and
not using the Company’s tools, devices, equipment or Confidential Information.

 

(f)               The
Executive agrees to cooperate fully with the Company and to take such further actions as may be necessary or desirable, both during
and after his employment with the Company, with respect to the procurement, maintenance and enforcement of copyrights, patents
and other intellectual property rights (both in the United States and foreign countries) relating to Developments.  The
Executive shall sign all papers, including, without limitation, copyright applications, patent applications, declarations, oaths,
formal assignments, assignments of priority rights, and powers of attorney, which the Company may deem necessary or desirable in
order to protect its rights and interests in any Development.  The Executive further agrees that if the Company is unable,
after reasonable effort, to secure the signature of the Executive on any such papers, any executive officer of the Company shall
be entitled to execute any such papers as the agent and the attorney-in-fact of the Executive, and the Executive hereby irrevocably
designates and appoints each executive officer of the Company as his/her agent and attorney-in-fact to execute any such papers
on his/her behalf, and to take any and all actions as the Company may deem necessary or desirable in order to protect its rights
and interests in any Development, under the conditions described in this sentence.

 

    	 	Page 10 of 19	 

     

    

 

 

 

(g)               Nothing
herein shall be construed as giving the Executive any right in or to the Confidential Information or Developments or granting the
Executive any license under any intellectual property rights.

 

6.2           Duty
to Return Company Documents and Property.  Upon the termination of Executive’s employment with the Company
for any reason, Executive shall immediately return and deliver to the Company any and all papers, books, records, documents, memoranda
and manuals, e-mail, electronic or magnetic recordings or data, including all copies thereof, belonging to the Company or any of
its subsidiaries or relating to the business of the Company or any of its subsidiaries, in Executive’s possession, whether
prepared by Executive or others. If at any time after the termination of employment, Executive determines that he has any trade
secrets or other confidential information belonging to the Company or any of its subsidiaries in his possession or control, Executive
shall immediately return to the Company all such trade secrets and other confidential information, including all copies and portions
thereof.

 

6.3           Non-Solicitation.
During the period of Executive’s employment or other service with the Company and for 24 months thereafter,
Executive shall not, without the prior written consent of the Company, directly or indirectly: (a) solicit, request, advise, entice,
persuade, induce, offer to employ, or hire any employee, consultant, or independent contractor employed by or working on behalf
of the Company or any of its subsidiaries at any time during the one-year period prior to the Executive’s termination of
employment with the Company to leave the Company or any of its subsidiaries or to engage in any activity which, were it done by
the Executive, would violate the terms of this Agreement; (b) or solicit, request, advise, entice, persuade or induce any individual
or entity, including but not limited to any customer, supplier, vendor, investor, equity or financing source, or other contracting
party of the Company or any of its subsidiaries, to terminate, reduce or refrain from continuing or renewing their present or prospective
contractual or business relationship with the Company or any of its subsidiaries. Upon request, Executive will execute a standard
form of Company non-solicitation agreement, as in effect from time to time for executives generally, which shall apply in addition
to and not in lieu of the covenants contained in this Agreement (it being understood that, in the event of any inconsistency, the
provisions of this Agreement shall govern).

 

    	 	Page 11 of 19	 

     

    

 

 

 

6.4           Non-Competition
Restrictions. During the period of Executive’s employment or other service with the Company and for 24 months
thereafter, Executive shall not, directly or indirectly, without the prior written consent of the Company, engage in, become financially
interested in, be employed by, render any consultation or business advice with respect to, or have any connection with, any business
engaged in the research, development, testing, design, manufacture, sale, lease, marketing, utilization or exploitation of any
products or services which are designed for the same purpose as, are similar to, or are otherwise competitive with, products or
services of the Company or any of its subsidiaries, in any geographic area where, during the period of his employment with the
Company or any subsidiary or at the time of the termination of his employment or other service with the Company and its subsidiaries,
as the case may be, the business of the Company or any of its subsidiaries was being conducted or was proposed to be conducted
in any manner whatsoever; provided, however, that Executive’s mere purchase or holding, for investment purposes, of securities
representing less than 5% of the outstanding value or voting interest of a publicly traded company shall not be deemed
to be a violation of the provisions of this paragraph.

 

6.5           Reformation.
Executive acknowledges that the Company and its subsidiaries conduct their business on a world-wide basis, that their sales and
marketing prospects are for continued expansion into world markets and that; therefore, the territorial and time limitations set
forth in Section 6.4 are reasonable and properly required for the adequate protection of the business of the Company and its subsidiaries.
If a court concludes that any time period and/or the geographic area specified in Section 6.4 is unenforceable, then the time period
will be reduced by the number of months, or the geographic area will be reduced by the elimination of the overbroad portion, or
both, as the case may be, so that the restrictions may be enforced in the geographic area and for the time to the fullest extent
permitted by law.

 

6.6           Remedies.
It is intended that, in view of the nature of the Company’s business, the restrictions contained in Sections 6.1 through
6.4 (including, without limitation, the restrictions that are specifically incorporated herein by reference), are considered reasonable
and necessary to protect the Company’s legitimate business interests and that any violation of these restrictions would result
in irreparable injury to the Company.  In the event of a breach or a threatened breach by Executive of any restrictive
covenant contained herein, the Company shall be entitled to a temporary restraining order and injunctive relief restraining Executive
from the commission of any breach, and to recover the Company’s attorneys’ fees, costs and expenses related to the
breach or threatened breach. Nothing contained herein shall be construed as prohibiting the Company from pursuing any other remedies
available to it for any breach or threatened breach, including, without limitation, the restoration and other remedies specified
in this Agreement and/or the recovery of money damages, attorneys’ fees, and costs.  These covenants and restrictions
shall each be construed as independent of any other provisions in the Agreement, and the existence of any claim or cause of action
by Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement
by the Company of such covenants and restrictions.

 

6.7           Severability.  Should
a court determine that any paragraph or sentence, or any portion of a paragraph or sentence of this Section 6 is invalid, unenforceable,
or void, this determination shall not have the effect of invalidating or validating the remainder of the paragraph, sentence or
any other provision of this Section 6.  Further, it is intended that the court should construe this Section 6 by limiting
and reducing it only to the extent necessary to be enforceable under then applicable law.

 

    	 	Page 12 of 19	 

     

    

 

 

 

7.                  Recoupment
Upon Certain Restatement of Financial Statements. If the Company is required to restate all or a portion of its financial statement(s)
for any period following the date of this agreement, and if the Board or the Compensation Committee determines that such restatement
is attributable in whole or in significant part to fraud, negligence, or intentional misconduct on the part of Executive or known
to Executive, then, subject to applicable law, the Board or the Compensation Committee, acting in its discretion, may require Executive
to reimburse the Company for the amount of any incentive compensation paid to him, cause the cancellation of outstanding equity
compensation awards, and seek reimbursement of any gains otherwise realized by him in respect of the exercise or settlement of
any such awards if and to the extent that (a) the amount of such incentive compensation was or will be based upon the achievement
of certain financial results that were subsequently reduced due to such restatement, and (b) the amount of the incentive compensation
that was, would have been or would be paid or provided to Executive if the financial results had been properly reported would have
been lower than the amount actually paid or provided.

 

8.                  Assignment.
The services and duties to be performed by Executive hereunder are personal and may not be assigned.  This Agreement
shall be binding upon and inure to the benefit of the Company, its successors and assigns and Executive and his heirs and representatives.
Company may assign this Agreement to a successor in interest, provided that any such assignee affirmatively adopts and agrees to
fulfill all obligations to Executive hereunder.

 

9.                  Legal
Fees to Enforce Rights after a Change in Control.  If, following a Change in Control, the Company fails to comply
with any of its obligations under this Agreement or the Company takes any action to declare this Agreement void or unenforceable
or institutes any litigation or other legal action designed to deny, diminish or to recover from Executive (or Executive’s
beneficiary) the payments and benefits intended to be provided, then Executive (or Executive’s beneficiary, as the case may
be) shall be entitled to select and retain counsel at the expense of the Company to represent Executive (or Executive’s beneficiary)
in connection with the good faith initiation or defense of any litigation or other legal action, whether by or against the Company
or any director, officer, stockholder or other person affiliated with the Company or any successor thereto in any jurisdiction.

 

10.                No
Impediment to Agreement.  Executive covenants that, except as otherwise specifically disclosed herein, he is not,
as of the date hereof, aware of any circumstance or condition (legal, health or otherwise), which, in any such case, would constitute
an impediment to, or restriction upon, his ability to enter into this Agreement and to perform the duties and responsibilities
of his employment hereunder.

 

    	 	Page 13 of 19	 

     

    

 

 

 

11.                Arbitration.
Except as otherwise specifically provided herein (relating to the Company’s right to obtain injunctive or other equitable
relief from a court) or enforcement rights by Executive after a Change of Control, any claim or controversy arising out of or relating
to this Agreement or the breach hereof shall be resolved exclusively by arbitration. Any such arbitration will be administered
in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association (“AAA”), in the
metropolitan area of New York before an experienced employment law arbitrator licensed to practice law in that jurisdiction who
has been selected in accordance with such Rules. Each party may be represented by counsel of its or his own choosing and at its
or his own expense; provided, however, that attorneys’ fees and costs may be awarded to a prevailing party in the discretion
of the arbitrator. The arbitrator’s award will be enforceable, and a judgment may be entered thereon, in a federal or state
court of competent jurisdiction in the state where the arbitration was held.  The decision of the arbitrator will be
final and binding.

 

12.                Governing
Law. This Agreement shall be governed by the laws of the State of New York, excluding its conflict of law rules.

 

13.                Indemnification;
D&O Insurance. To the extent permitted by its Certificate of Incorporation and By-laws and subject to applicable law, the
Company will indemnify, defend and hold Executive harmless from and against any claim, liability or expense (including reasonable
attorneys’ fees) made against or incurred by him as a result of his employment with the Company or any subsidiary or other
affiliate of the Company, including service as an officer or director of the Company or any subsidiary or other affiliate of the
Company. The Company shall cover Executive under directors and officers liability insurance both during and, while potential liability
exists, after the Term, in the same amount and to the same extent as the Company covers its other officers and directors.

 

14.                Withholding.
All payments made by Company to or for the benefit of Executive in connection with his employment shall be subject to applicable
tax withholding.

 

15.                Severability.
In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason,
in whole or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and
effect to the fullest extent permitted by law.

 

16.                Section
409A.

 

16.1         Parties’
Intent. The intent of the parties is that payments and benefits under this Agreement comply with Internal Revenue Code Section
409A and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly,
to the maximum extent permitted, this Agreement will be interpreted to be in compliance therewith. To the extent any of the payments
or benefits required under this Agreement are, or in the opinion of counsel to the Company or Executive, could be interpreted in
the future to create, a nonqualified deferred compensation plan that does not meet the requirements of Code Section 409A(a)(2),
(3) and (4), the Company and Executive hereby agree to execute any and all amendments to this Agreement or otherwise reform this
Agreement as deemed necessary by either of such counsel and reasonably acceptable to the other, and prepared by counsel to the
Company, to either cause such payments or benefits not to be a nonqualified deferred compensation plan or to meet the requirement
of Code Section 409A. In amending or reforming this Agreement for Code Section 409A purposes, the parties maintain, to the maximum
extent practicable, the original intent and economic benefit of this Agreement without subjecting Executive to additional tax or
interest; provided further, however, the Company will not be obligated to pay any additional material amount to Executive as a
result of such amendment.

 

    	 	Page 14 of 19	 

     

    

 

 

 

16.2         Delayed
Distribution to Key Employees. If the Company determines in accordance with Code Sections 409A and 416(i), that Executive is
a “Specified Employee” (within the meaning of Code Section 409A) of the Company on the date his employment with the
Company terminates and, the parties agree that a delay in severance pay and benefits provided under this Agreement is necessary
for compliance with Code Section 409A(a)(2)(B)(i), then any severance payments and any continuation of benefits or reimbursement
of benefit costs provided under this Agreement, and not otherwise exempt from Code Section 409A (for example, pursuant to the “short-term
deferral” or “separation pay” exemptions”), will be delayed until the earlier of (i) the first day of the
seventh (7th) calendar month commencing after Executive’s termination of employment, or (ii) Executive’s death, consistent
with and to the extent necessary to meet the requirements of Code Section 409A (the “409A Delay Period”). In
such event, any such severance payments and the cost of any such continuation of benefits provided under this Agreement that would
otherwise be due and payable to Executive during the 409A Delay Period will be paid to Executive in a lump sum cash amount at the
end of the 409A Delay Period.

 

16.3         Separation
from Service. A termination of employment will not be deemed to have occurred for purposes of any provision of this Agreement
providing for the payment of any amounts or benefits following or upon a termination of employment (to the extent such payments
or benefits are subject to Code Section 409A) unless such termination also constitutes a “Separation from Service”
within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,”
“termination of employment,” “separation from service” or like terms mean Separation from Service.

 

16.4         Separate
Payments. Each payment required under this Agreement will be considered a separate payment for purposes of determining the
applicability of or exemption from Section 409A. Whenever a payment under this Agreement specifies a payment period with reference
to a number of days, the actual date of payment within the specified period will be within the sole discretion of the Company.

  

16.5         Reimbursements.
To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation”
for purposes of Code Section 409A, (i) all expenses or other reimbursements hereunder will be made no later than the time frame
set forth in this Agreement, but in any event, on or prior to the last day of the taxable year following the taxable year in which
such expenses were incurred by Executive, (ii) any right to reimbursement or in-kind benefits will not be subject to liquidation
or exchange for another benefit, and (iii) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided
in any taxable year will in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any
other taxable year.

 

    	 	Page 15 of 19	 

     

    

 

 

 

17.                Counterparts.  This
Agreement may be executed in separate counterparts, each of which will be an original and all of which taken together shall constitute
one and the same agreement, and any party hereto may execute this Agreement by signing any such counterpart.

 

18.                Amendment
or Waiver.  No provision of this Agreement may be modified, amended, waived or terminated except by an instrument
in writing signed by the parties to this Agreement.  No course of dealing between the parties will modify, amend, waive
or terminate any provision of this Agreement or any rights or obligations of any party under or by reason of this Agreement.  No
delay on the part of the Company in exercising any right hereunder shall operate as a waiver of such right.  No waiver,
express or implied, by a party of any right or any breach by the other party shall constitute a waiver of any other right of such
party or breach by such other party.

 

19.                Notices.  Any
notice given to a party shall be in writing and shall be deemed to have been given when delivered personally or sent by certified
or registered mail, postage prepaid, return receipt requested, or express mail to the recipient at his or its last known address.

 

20.                Entire
Agreement.  This Agreement contains the entire understanding between the parties hereto with respect to the subject
matter hereof and supersedes any prior and/or contemporaneous understandings, agreements or representations, written or oral, relating
to the subject matter hereof and Executive’s compensation for employment with the Company.

 

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

 

	 	APPLIED DNA SCIENCES, INC.
	 	 	 
	 	By:	/s/ Beth Jantzen, CFO 

7/28/16

 

	 	/s/ James A. Hayward, CEO
	 	 
	 	James A. Hayward 7/28/16

 

    	 	Page 16 of 19	 

     

    

 

 

 

EXHIBIT A

SECTION 1.3

PERMITTED ACTIVITIES

 

This Exhibit A is attached to the Employment
Agreement (the “Agreement”) made as of July 01, 2016, by and between Applied DNA Sciences, Inc. (“Company”)
and James A. Hayward (“Executive”). Subject to Section 1.3 of the Agreement, Executive is permitted to continue to
engage in any one or more of the outside business activities listed below.

 

Boards:

 

Not for profit

 

1) Stony
Brook Foundation

 

2) Regents Council

 

3) Ward
Melville Heritage Organization

 

Corporate

 

1) Softheon, Inc.

  

2) NeoMatrix Formulations Inc.

 

    	 	Page 17 of 19	 

     

    

 

 

 

EXHIBIT B

FORM OF RELEASE

 

In consideration of
the premises and the payments and benefits to be made or provided by Applied DNA Sciences, Inc. (the Company”) to James A.
Hayward (the “Executive”) under this Release and the provisions of Section 4 of the Employment Agreement between the
parties to which this Exhibit is attached (the “Employment Agreement”) relating to the termination of Executive’s
employment with the Company, the Executive, for the Executive and for the executors and administrators of the Executive’s
estate, and the Executive’s heirs, successors and assigns, hereby releases and forever discharges the Company and its officers,
directors, employees, agents and stockholders from any and all claims, actions, causes of action, suits, sums of money, debts,
dues, accounts, reckonings, bonds, bills, covenants, contracts, controversies, agreements, promises, demands or damages of any
nature whatsoever or by reason of any matter, cause or thing regardless of whether known or unknown at present, which against the
Company or any of its officers, directors, employees, agents or stockholders Executive ever had, now has or may have arising out
of or relating to any transaction, dealing, relationship, conduct, act or omission, or any other matters or things occurring or
existing at any time prior to and including the date of this Release (collectively defined herein as “Claims”). This
Release includes, but is not limited to, all Claims the Executive might have under Title VII of the Civil Rights Act of 1964, as
amended, 42 U.S.C. §§2000e, et. seq.; 42 U.S.C. §§1981, et. seq.; the Americans with
Disabilities Act, 29 U.S.C. §§2000e, et. seq.; the Age Discrimination in Employment Act; the Older Workers
Benefits Protection Act; the federal Family and Medical Leave Act; Section 451 et. seq.; similar Connecticut laws,
the New York State Executive Law, and any and all statutory and common law causes of action for defamation; slander; slander per
se; defamation per se; false light; tortious interference with prospective business relationships; assault; sexual
assault; battery; sexual harassment; sexual discrimination; hostile work environment; discrimination; retaliation; workers’
compensation retaliation; wrongful termination; intentional infliction of emotional distress; breach of a duty or obligation of
any kind or description, including any implied covenant of good faith and fair dealing; and for breach of contract or any tort
whatsoever, as well as any expenses or attorney’s fees associated with such Claims. The parties acknowledge that this Release
does not either affect the rights and responsibilities of the Equal Employment Opportunity Commission to enforce the Age Discrimination
in Employment Act, or justify interfering with the protected right of an employee to file a charge or participate in an investigation
or proceeding conducted by the Equal Employment Opportunity Commission under the Age Discrimination in Employment Act. In the event
the Equal Employment Opportunity Commission commences a proceeding against the Company in which Executive is a named party, the
Executive agrees to waive and forego any monetary claims which may be alleged by the Equal Employment Opportunity Commission to
be owed to Executive. Notwithstanding the foregoing, nothing in the provisions of this Release shall act as a release by the Executive
of any Claims against the Company with respect to (i) any amounts or benefits to which the Executive may become entitled to receive
under the Employment Agreement after the date hereof, including the right to indemnity referenced therein, (ii) the Executive’s
rights under and in accordance with the terms of any employee benefit plan in which Executive participates, and (iii) any Claims
arising with respect to acts, events or occurrences taking place after the date of this Release.

 

    	 	Page 18 of 19	 

     

    

 

 

 

The Company has advised
the Executive in writing to consult with an attorney prior to executing this Release. By executing this Release, the Executive
acknowledges that (a) the Executive has been provided an opportunity to consult with an attorney or other advisor of the Executive’s
choice regarding the terms of this Release, (b) Executive has been given twenty-one (21) days (or, if required by applicable law,
45 days) in which to consider whether the Executive wishes to enter into this Release, (c) Executive has elected to enter into
this Agreement knowingly and voluntarily, (d) Executive’s waiver of rights or claims is in exchange for the good and valuable
consideration herein; and (e) if Executive does so within fewer than twenty-one (21) days (or, if required by applicable law, 45
days) from receipt of this Release, Executive has knowingly and voluntarily waived the remaining time. This Release will become
effective, enforceable and irrevocable on the eighth day after the date on which it is executed by the Executive (the “Effective
Date”). During the seven-day period prior to the Effective Date, the Executive may revoke this Release by delivering a written
notice of revocation to the Company.

 

    	 	Page 19 of 19

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