Document:

Exhibit 10.16

Explanatory Note – Notes were issued in the amounts listed below to the parties indicated below on separate agreements identical in form and substance, mutatis mutandis, to this Exhibit 10.16.

	
Holder

	 	
Original Balance

	 
	
MICHAEL FABY

	 	
$

	
50,000

	 
	
FRANCISCO TRUST

	 	 	
500,000

	 
	
UNIVEST MANAGEMENT

	 	 	
50,000

	 
	
PINNACLE FAMILY TRUST*

	 	 	
2,000,000

	 
	
SANDOR CAPITAL MASTER FUND

	 	 	
400,000

	 
	
Total 2011 Convertible Note

	 	
$

	
3,000,000

	 

 LOAN AGREEMENT

THIS LOAN AGREEMENT (“Agreement”) made this 30th day of September, 2011 by and among ______________________________________, (the “Lender”), and DYADIC INTERNATIONAL, INC., a Delaware corporation, and its wholly-owned subsidiary DYADIC INTERNATIONAL (USA), INC., a Florida corporation (together, the “Borrower”).

Recitals:

	A.	The Borrower seeks to borrow up to three million dollars ($3,000,000) in the aggregate on or before October 31, 2011 from private lenders (the "Offering").

	B.	The Lender has agreed to participate in the Offering.

	C.	The loans comprising the Offering shall be subordinated, secured and convertible into restricted shares of the Borrower's common stock, all on the terms set forth herein below.

NOW THEREFORE, based on the foregoing and for valuable consideration, the parties hereto hereby agree as follows:

	1.	Lending Commitment.  The Lender hereby commits to lend _________________ dollars ($_________) to the Borrower (the “Commitment”).  The Lender shall disburse funds under the Commitment upon receipt of a fully executed Convertible Subordinated Secured Promissory Note in the form attached hereto as Exhibit “A” (the “Note”) and a fully executed Security Agreement in the form attached hereto as Exhibit "B" (the "Security Agreement"), each of which forms a part hereof, provided such receipt occurs on or before September 30, 2011.

	2.	Representations and Warranties.  The Borrower hereby represents and warrants that:

	 	
(a)

	
The Borrower is duly organized, validly existing and in good standing under the laws of Delaware in the case of Dyadic International, Inc. and the laws of Florida in the case of Dyadic International (USA), Inc.; has the corporate power to carry out the business in which it is engaged; and the execution and delivery of this Agreement and any related documents (including but not limited to the Note and the Security Agreement) have been duly authorized by all necessary action of the directors of the Borrower and are not and will not be in contravention of any provision of law nor in contravention of any organizational documents of the Borrower, nor result in the breach of any agreement, indenture, or undertaking to which it is a party or by which it is bound.

	 	
(b)

	
There is no action, suit, proceeding or investigation at law in equity or before any court, public board or body pending, or to the Borrower’s knowledge, threatened against or affecting it, that could or might adversely affect the validity or enforceability of this Agreement, or the Borrower’s ability to discharge its obligations under this Agreement., or would, if there were an unfavorable decision, individually or in the aggregate, have or reasonably be expected to result in a material and adverse effect on the results of operations, assets, prospects, business or condition (financial or otherwise) of the Lender and its subsidiaries (a “Material Adverse Effect”).

	 	
(c)

	
No consent or approval is necessary from any governmental authority as a condition to the execution and delivery of this Agreement by the Borrower or the performance of any of its obligations hereunder.

	 	
(d)

	
The execution, delivery and performance of this Agreement, the Note and the Security Agreement (the “Transaction Documents”) by the Borrower and the consummation by the Borrower of the transactions contemplated thereby do not and will not (i) conflict with or violate any provision of the Borrower's or any of the Borrower’s subsidiaries’ certificate or articles of incorporation (as applicable), bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Borrower or subsidiary debt or otherwise) or other understanding to which the Borrower or any subsidiary is a party or by which any property or asset of the Borrower or any subsidiary is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Borrower or any subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Borrower or any subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

	 	
(e)

	
The common stock of Dyadic International, Inc. issuable upon conversion of the Note (the “Common Stock,” and together with the Note, the “Securities”) have been duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all liens.  The Borrower has reserved from its duly authorized capital stock a number of shares of Common Stock issuable upon conversion of the Note.  All securities previously issued by the Borrower were duly and validly issued, fully paid and nonassessable when issued.

	 	
(f)

	
The number of shares and type of all authorized, issued and outstanding capital stock of the Borrower, and all shares of Common Stock reserved for issuance under the Borrower’s various option and incentive plans, are specified in Schedule 2(f).  Except as specified in Schedule 2(f), no securities of the Borrower are entitled to preemptive or similar rights, and no person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents.  Except as specified in Schedule 2(f), there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Borrower or any subsidiary is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock.  The issue and sale of the Securities will not, immediately or with the passage of time, obligate the Borrower to issue shares of Common Stock or other securities to any person and will not result in a right of any holder of the Borrower securities to adjust the exercise, conversion, exchange or reset price under such securities.

2

	 	
(g)

	
Since the date of the latest audited financial statements, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Borrower has not incurred any liabilities (contingent or otherwise) other than (A) trade payables, accrued expenses and other liabilities incurred in the ordinary course of business consistent with past practice and (B) liabilities (not to exceed fifty thousand dollars ($50,000)) not required to be reflected in the Borrower's financial statements pursuant to United States Generally Accepted Accounting Principles, (iii) the Borrower has not altered its method of accounting or the identity of its auditors, (iv) the Borrower has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (v) the Borrower has not issued any equity securities to any officer, director or affiliate, except pursuant to existing the Borrower stock option plans and consistent with past practice.

	 	
(h)

	
No material labor dispute exists or, to the knowledge of the Borrower, is imminent with respect to any of the employees of the Borrower.

	 	
(i)

	
Neither the Borrower nor any subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Borrower or any subsidiary under), nor has the Borrower or any subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including, without limitation, all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

3

	 	
(j)

	
The Borrower and its subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such permits could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, and neither the Borrower nor any subsidiary has received any notice of proceedings relating to the revocation or modification of any such permits.

	 	
(k)

	
The Borrower and the subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or material for use in connection with their respective businesses and which the failure to so have could, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect (collectively, the “Intellectual Property Rights”).  Neither the Borrower nor any subsidiary has received a written notice that the Intellectual Property Rights used by the Borrower or any subsidiary violates or infringes upon the rights of any person.  To the knowledge of the Borrower, all such Intellectual Property Rights are enforceable and there is no existing infringement by another person of any of the Intellectual Property Rights.

	 	
(l)

	
The Borrower and the subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with United States Generally Accepted Accounting Principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

	 	
(m)

	
The Borrower’s assets constitute sufficient capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Borrower, and projected capital requirements and capital availability thereof.

	 	
(n)

	
The Borrower is not, and is not an affiliate of, and immediately following the date hereof will not have become, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

	 	
(o)

	
As of the date of this Agreement, other than as set forth in Schedule 2(o), the Borrower has no debt that is secured by any lien.

	 	
(p)

	
As of the date of this Agreement, except as set forth on Schedule 2(p), no indebtedness of the Borrower is senior to the Note in right of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise.

4

	 	
(q)

	
The Borrower confirms that neither it nor any person acting on its behalf has provided the Lender or its respective agents or counsel with any information that the Borrower believes constitutes material, non-public information except insofar as the existence and terms of the proposed transactions hereunder may constitute such information.  The Borrower understands and confirms that the Lender will rely on the foregoing representations and covenants in effecting transactions in securities of the Borrower.  All disclosure provided to the Lender regarding the Borrower, its business and the transactions contemplated hereby, furnished by or on behalf of the Borrower (including the Borrower’s representations and warranties set forth in this Agreement) are true and correct in all material respects and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

	3.	Covenants.  The Borrower shall at all times preserve its legal existence.  In the event the Borrower wishes to: sell, lease, or otherwise dispose of all or substantially all of its assets; make a public offering of its capital stock; or take any action which would result in a change in the control of, or in fifty percent (50%) or more of, the equity ownership (including, without limitation, a merger, reorganization or consolidation) of the Borrower from the form of ownership or control (as the case may be) which exists as of the date of this Agreement, the Borrower shall provide the Lender thirty (30) days written notice prior to the effective date of such event and, upon the date of closing of such event, the outstanding principal and any accrued interest under the Note shall be immediately due and payable to the Lender and this Agreement may be terminated by the Lender.

	4.	Independent Status.  Neither this Agreement nor any provisions hereof shall be deemed to create a partnership or joint venture between the Lender and the Borrower. The relationship of the parties is strictly that of a borrower and lender.  The Borrower specifically agrees that it shall not represent itself as an agent or employee of the Lender, nor is this Agreement intended to be construed so as to make the Borrower an agent or employee of the Lender.

	5.	Disclosure of Information.

	 	
(a)

	
Although the Borrower is under no obligation to provide trade secrets or confidential proprietary information to the Lender, in the event that the Borrower provides any such information to the Lender, the Lender shall exert its best efforts to protect the confidentiality of technical, scientific or financial information considered proprietary by the Borrower until such time as such information becomes publicly available through no fault of the Lender and in accordance with the terms of any confidentiality agreement between the Borrower and the Lender.  The Borrower acknowledges and agrees that as of the date hereof no trade secrets, confidential proprietary information, or non-public information with respect to the Borrower or its subsidiaries has been provided to the Lender.

5

	 	
(b)

	
The Borrower periodically discloses material financial and other information to the public through its financial statements. The Lender hereby acknowledges having had the opportunity to review such financial statements before entering into this Agreement including, but not limited to, the Borrower’s financial statements for the year ended December 31, 2010 and the quarterly periods ended March 31, and June 30, 2011.

	6.	Events of Default and Remedies.

	 	
(a)

	
Each of the following shall constitute an “Event of Default” by the Borrower under this Agreement, whatever the reason for such Event of Default and whether it shall be voluntary or involuntary, or be affected by operation of law or otherwise:

	 	
i.

	
Any payment of principal or interest on the Note, or any other amount due hereunder, is not made when due;

	 	
ii.

	
Any provision, covenant or agreement of the Borrower in this Agreement (including the Note and the Security Agreement), is breached or proves to be untrue or misleading in any material respect;

	 	
iii.

	
Any warranty, representation or statement made or furnished to the Lender by the Borrower in this Agreement (including the Note and the Security Agreement), is untrue or misleading in any material respect;

	 	
iv.

	
Any voluntary or involuntary bankruptcy, reorganization, insolvency, arrangement, receivership, or similar proceeding is commenced by or against the Borrower under any federal or state law, or the Borrower makes an assignment for the benefit of creditors; or

	 	
v.

	
Any substantial part of the inventory, equipment or other property of the Borrower, real or personal, tangible or intangible, is damaged or destroyed and the damage or destruction is not covered by collectible insurance.

	 	
(b)

	
Subject to Section 7.3(a) of the Security Agreement, upon the occurrence of any Event of Default, and in every such event, the Lender, upon notice to the Borrower, may declare the principal of and interest on the Note and other amounts payable under this Agreement to be, and the Note and all such other amounts shall thereupon become, due and payable to the Lender, without presentment, demand, protest or other notice of any kind, all of which are expressly waived, anything in this Agreement or the Note to the contrary notwithstanding.  In addition to the foregoing, the Lender shall have all the rights and remedies of a secured party under Florida law.  No remedy herein conferred upon or reserved to the Lender is intended to be exclusive of any other remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now hereafter existing in law or equity.  No failure or delay by the Lender in exercising any right shall operate as a waiver of it, nor shall any single or partial exercise of any power or right preclude its other or further exercise of any power or right.  The Lender may, by written notice to the Borrower, at any time and from time to time, waive any Event of Default or "Unmatured Event of Default" (as defined below), which shall be for such period and subject to such conditions as shall be specified in any such notice. In the case of any such waiver, the Lender and the Borrower shall be restored to their former position and rights hereunder, and any Event of Default or Unmatured Event of Default so waived shall be deemed to be cured and not continuing; but no such waiver shall extend to or impair any subsequent or other Event of Default or Unmatured Event of Default. No failure to exercise, and no delay in exercising, on the part of the Lender of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies of the Lender herein provided are cumulative and not exclusive of any rights or remedies provided by law. "Unmatured Event of Default" means any event or condition which might become an Event of Default if continuing after notice or the passage of time or both.

6

	7.	Notices.  All notices required or permitted to be delivered hereunder and all communications in respect hereof shall be in writing and shall be deemed given on the date it is personally delivered or on the date it is deposited in the United States mail, certified, return receipt requested, first class postage prepaid and addressed as follows:

If to the Lender, to:

	If to the Borrower, to:	Dyadic International, Inc.

Dyadic International (USA), Inc.

140 Intracoastal Pointe Dr., Suite 404

Jupiter, FL 33477

Attn: General Counsel

or addressed to such other address or to the attention of such other individual as the Lender or the Borrower shall have specified in a notice delivered pursuant to this section.

	8.	Construction.  This Agreement shall be construed and governed by the laws of the State of Florida, excepting only its conflict of law principles.

	9.	Benefit and Assignment.  The rights, duties and obligations of the parties under this Agreement shall inure to the benefit of the parties and shall be binding upon their successors and permitted assigns.  Neither this Agreement nor the respective rights, duties, obligations, and responsibilities of the Borrower may by transferred or assigned, in whole or in part, by the Borrower to any other person, firm or organization (including sub-agents) without the prior written consent of the Lender.  The Lender may freely assign or transfer its rights, duties, obligations and responsibilities, in whole or in part, to any other party, other than a competitor of the Borrower, without the prior consent of the Borrower.

7

	10.	Survival.  All representations and warranties made by the Borrower herein shall survive delivery of the Note hereunder.

	11.	Severability of Provisions.  Any provision of this Agreement which is prohibited or unenforceable in any manner, in any jurisdiction, shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

	12.	Furnishing of Information.  If the Borrower is not required to file reports pursuant to the Securities Exchange Act of 1934, as amended, it will prepare and furnish to the Lender and make publicly available in accordance with Rule 144(c) such information as is required for the Lender to sell the Common Stock under Rule 144.  The Borrower further covenants that it will take such further action as the Lender may reasonably request, all to the extent required from time to time to enable the Lender to sell the Common Stock without registration under the Securities Act of 1933, as amended, within the limitation of the exemptions provided by Rule 144.

	13.	Reservation of Shares.  The Borrower shall maintain a reserve from its duly authorized shares of Common Stock equal to the shares of Common Stock required to comply with its conversion obligations under the Note.  If on any date the Borrower would be, if notice of conversion were to be delivered on such date, precluded from issuing the number of shares of Common Stock issuable upon conversion in full of the Note due to the unavailability of a sufficient number of authorized but unissued or reserved shares of Common Stock, then the Board of Directors of the Borrower shall promptly prepare and mail to the stockholders of the Borrower proxy materials or other applicable materials requesting authorization to amend the Borrower’s certificate of incorporation or other organizational document to increase the number of shares of Common Stock which the Borrower is authorized to issue so as to provide enough shares for issuance of the Common Stock.  In connection therewith, the Board of Directors shall (a) adopt proper resolutions authorizing such increase, (b) recommend to and otherwise use its best efforts to promptly and duly obtain stockholder approval to carry out such resolutions (and hold a special meeting of the stockholders as soon as practicable, but in any event not later than the 60th day after delivery of the proxy or other applicable materials relating to such meeting) and (c) within five (5) business days of obtaining such stockholder authorization, file an appropriate amendment to the Borrower’s certificate of incorporation or other organizational document to evidence such increase.

	14.	Remedies.  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Lender and the Borrower will be entitled to specific performance under the Transaction Documents.  The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

8

	15.	Indemnification of Lender.  The Borrower will indemnify and hold the Lender and its members, partners, employees and agents (each, a “Lender Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys' fees and costs of investigation (collectively, “Losses”) that any such Lender Party may suffer or incur as a result of or relating to any misrepresentation, breach or inaccuracy of any representation, warranty, covenant or agreement made by the Borrower in the Transaction Documents.  In addition to the indemnity contained herein, the Borrower will reimburse each Lender Party for its reasonable legal and other expenses (including the cost of any investigation, preparation and travel in connection therewith) incurred in connection therewith, as such expenses are incurred.

	16.	Payment Set Aside.  To the extent the Borrower makes a payment or payments to the Lender pursuant to any Transaction Document or the Lender enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Borrower, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

	17.	Entire Agreement.  This Agreement (including the Note and the Security Agreement) and any related documents (including financing statements as applicable) supersede all prior discussions and/or agreements between the Lender and the Borrower, and express the entire understanding with respect to the subject matter hereof, and shall not be amended, modified, or altered, nor any of their provisions waived, without the prior written consent of both the Borrower and the Lender.

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

	
 

	
LENDER:

	
 

	
 

	
 

	
 

	
 

	
 

	
[Name of Entity]

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
   

	
 

	
 

	
 

	
Name:

	
 

	
 

	
 

	
Title:

	
 

9

	
 

	
 

	
BORROWER:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
DYADIC INTERNATIONAL, INC.

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
     

	
 

	
 

	
 

	
Name:

	
Adam J Morgan

	
 

	
 

	
Title:

	
Vice President General Counsel & Business Development

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
DYADIC INTERNATIONAL (USA), INC.

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
      

	
 

	
 

	
 

	
Name:

	
Adam J. Morgan

	
 

	
 

	
Title:

	
Vice President General Counsel & Business Development

10

Exhibit A

NEITHER THIS CONVERTIBLE SUBORDINATED SECURED PROMISSORY NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).  NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN APPLICABLE EXEMPTION THEREFROM.

 

CONVERTIBLE SUBORDINATED SECURED PROMISSORY NOTE

Jupiter, Florida

	
$_____________

	
September 30, 2011

 

For value received, Dyadic International, Inc., a Delaware corporation, and Dyadic International (USA), Inc., a Florida corporation (together, “Payor”), hereby promises to pay to the order of ____________________ (“Holder”), the principal sum of ____________________ dollars ($___________) with interest on the outstanding principal amount at the rate of eight percent (8%) per annum, compounded annually based on a 365-day year.  Interest shall commence upon the date hereof and shall continue on the outstanding principal until paid in full or converted pursuant to Section 2 below.

1.            Payment; Maturity.  At any time upon or after the earlier of (i) January 1, 2013, (ii) an Event of Default, or (iii) a Change of Control (the “Maturity Date”), if this Note has not been converted in accordance with the terms of Section 2 below, Holder may demand payment of the entire outstanding principal balance of this Note and all unpaid accrued interest thereon.  Interest shall be paid on the last day of each calendar quarter beginning on December 31, 2011.  All payments of interest and principal shall be in lawful money of the United States of America.  All payments shall be applied first to accrued interest, and thereafter to principal.  If any payments on this Note become due on a Saturday, Sunday or a public holiday under the laws of the State of Florida, such payment shall be made on the next succeeding business day and such extension of time shall be included in computing interest in connection with such payment.  An “Event of Default” shall have the meaning set forth in that certain Loan Agreement dated of even date herewith between Payor and Holder (the “Loan Agreement”) to which this Note is an exhibit.  A “Change of Control” means (a) the consummation of a sale, transfer or lease of all or substantially all of Payor's assets, or (b) the consummation of an acquisition of Payor by another entity in which Payor's stockholders immediately prior to the transaction do not control a majority of the voting securities of the surviving entity.

2.            ELECTIVE CONVERSION.

(a)          The outstanding principal balance and the interest thereon of this Note may be converted, in whole or in part, by Holder, as follows.  To effectuate Holder’s election to convert this Note pursuant to this Section 2(a), Holder shall deliver to Payor a notice setting forth its desire to convert and Holder shall surrender this Note, duly endorsed, to Payor or its transfer agent.  Payor shall not be obligated to issue certificates evidencing the common stock of Dyadic International, Inc. (the “Common Stock”) issuable upon such conversion unless this Note is either delivered to Payor or its transfer agent, or Holder notifies Payor or its transfer agent that this Note has been lost, stolen or destroyed and executes an agreement satisfactory to Payor to indemnify Payor from any loss incurred by it in connection with this Note.  Payor shall, within five (5) business days after such delivery, or such agreement and indemnification, issue and deliver at such office to Holder a certificate or certificates for the Common Stock to which Holder shall be entitled.  Such conversion shall be deemed to have been made immediately prior to the close of business on the date of the closing of receipt of Holder's notice of election.  The person or persons entitled to receive Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Common Stock on such date.

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(b)           If by the fifth trading day after the date the Note is delivered for conversion Payor fails to deliver to Holder such shares issuable upon conversion of this Note in such amounts and in the manner requested, then Holder will have the right to rescind its conversion request pertaining thereto by giving written notice to Payor prior to Holder’s receipt of such shares.

(c)           If by the fifth trading day after the date the Note is delivered for conversion Payor fails to deliver to Holder the required number of shares in the manner requested, and if after such fifth trading day and prior to the receipt of such shares, the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by Holder of the shares which Holder anticipated receiving upon such conversion (a “Buy‐In”), then Payor shall: (1) pay in cash to Holder (in addition to any other remedies available to or elected by Holder) the amount by which (x) Holder's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of shares that Payor was required to deliver to Holder in connection with the exercise at issue by (B) the closing price at the time of the obligation giving rise to such purchase obligation and (2) at the option of Holder, either void the conversion at issue and reinstate the principal amount of the Note (plus accrued interest therein) for which such conversion was not timely honored or deliver to Holder the number of shares of Common Stock that would have been issued had Payor timely complied with its exercise and delivery obligations hereunder.  Holder shall provide Payor reasonably detailed evidence or written notice indicating the amounts payable to Holder in respect of the Buy‐In.

(d)          Notwithstanding anything to the contrary contained herein, the number of shares of Common Stock that may be acquired by Holder upon conversion of the Note (or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such conversion (or other issuance), the total number of shares of Common Stock then beneficially owned by Holder and its affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with Holder’s for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), does not exceed 4.9% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such conversion) of Payor.  For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  By written notice to Payor, Holder may waive the provisions of this Section 2(d) as to itself but any such waiver will not be effective until the 61st day after delivery thereof.

(e)          The conversion price in the event of such an elective conversion shall be equal to the lesser of (i) $1.82 and (ii) one hundred twenty percent (120%) of the 30-day average closing price of Payor’s Common Stock for the 30 trading days immediately following the date on which Payor publicly discloses the final determination of its binding arbitration proceedings against Ernst & Young LLP and Ernst & Young-Hong Kong, L.P., subject to equitable adjustment for any stock dividends, splits, combination, distribution, or other transaction having similar effect.

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3.           Subordinate Debt.  The indebtedness represented by this Note is subordinate in right of payment to all current secured indebtedness of Payor as set forth in the condensed consolidated financial statements, including the notes thereto, of Payor for the quarter ended June 30, 2011.

4.            Security.  Payment of this Note is secured and otherwise entitled to the benefits of that certain Security Agreement of even date herewith (the “Security Agreement”) made by Payor in favor of Holder.

5.            Waiver; Payment of Fees and Expenses.

(a)           Payor expressly and irrevocably waives presentment, protest and demand for payment.  The right to plead any and all statutes of limitations as a defense to any demands hereunder is hereby waived to the full extent permitted by law.  No delay by Holder shall constitute a waiver, election or acquiescence by it.

(b)           Payor agrees to pay upon demand all expenses (including, without limitation, attorneys' fees, legal costs and expenses, whether in or out of court, in original or appellate proceedings or in bankruptcy) incurred or paid by Holder or any holder hereof in connection with the enforcement or preservation of its rights hereunder or under any document or instrument executed in connection herewith.

6.            REPRESENTATIONS AND WARRANTIES OF HOLDER.  Holder hereby represents and warrants to Payor as follows:

(a)          Purchase Entirely for Own Account.  This Note is issued to Holder in reliance upon the Holder’s representation to Payor, which by Holder’s execution of this Note Holder hereby con-firms, that this Note and the Common Stock issuable upon the conversion hereof (together, the “Securities”) will be acquired for investment for Holder’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that Holder has no present intention of selling, granting any participation in, or otherwise distributing the same.  By executing this Note, Holder further represents that Holder does not presently have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Securities.  Holder has not been formed for the specific purpose of acquiring the Securities.

(b)           Restricted Securities.  Holder understands that no public market now exists for any of the Securities to be issued by Payor in the event of conversion of the Note and that Payor has made no assurances that a public market will ever exist for the Securities.  Holder understands that the Securities have not been and may never be registered under the Act, and without such registration, may only be sold through a specific exemption from the registration provisions of the Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of Holder’s representations as expressed herein.  Holder understands that the Securities are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, Holder must hold the Securities indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available.

(c)           Accredited Investor.  Holder is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Act.

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7.            Miscellaneous

(a)           Public Disclosure of Arbitration.  Payor covenants to publicly disclose the final determination of its binding arbitration proceedings against Ernst & Young LLP and Ernst & Young-Hong Kong, L.P. as promptly as possible following its being notified of the final determination of such proceeding.

(b)           Governing Law.  This Note and any document or instrument executed in connection herewith shall be governed by and construed in accordance with the internal laws of the State of Florida.

(c)           Successors and Assigns; Assignment.  The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties.  Payor may not assign this Note or delegate any of its obligations hereunder without the written consent of Holder.  Holder may freely assign or transfer its rights, duties, obligations and responsibilities, in whole or in part, to any other party, other than a competitor of Payor, without the prior consent of Payor.

 

(d)           Titles and Subtitles.  The titles and subtitles used in this Note are used for convenience only and are not to be considered in construing or interpreting the Note.

(e)           Notices.  All notices required or permitted under this Note shall be given in writing and shall be deemed effectively given:  (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (iii) five (5) days after deposit in the United States mail, by registered or certified mail, postage prepaid and properly addressed to the party to be notified, or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.

(f)            Default Rate of Interest.  Upon the occurrence of an Event of Default, interest shall accrue on the outstanding principal of this Note so long as such default continues at the rate of four-teen percent (14%) per annum.  Payor does not intend or expect to pay, nor does Holder intend or expect to charge, accept or collect any interest which, when added to any fee or other charge upon the principal which may legally be treated as interest, is in excess of the highest lawful rate. If acceleration, prepayment or any other charges upon the principal or any portion thereof, or any other circumstance, result in the computation or earning of interest in excess of the highest lawful rate, then any and all such excess is hereby waived and shall be applied against the remaining principal balance. Without limiting the generality of the foregoing, and notwithstanding anything to the contrary contained herein or otherwise, no deposit of funds shall be required in connection herewith which will, when deducted from the principal amount outstanding hereunder, cause the rate of interest hereunder to exceed the highest lawful rate.

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(g)          Miscellaneous.  Unless the context requires otherwise, wherever used herein the singular shall include the plural and vice versa, and the use of one gender shall also denote the other.  Captions herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof; references herein to Sections or provisions without reference to the document in which they are contained are references to this Note.

In Witness Whereof, the parties have executed this Convertible Subordinated secured Promissory Note as of the date first written above.

 

	
 

	
 

	
DYADIC INTERNATIONAL, INC.

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
    

	
 

	
 

	
 

	
Name:

	
Adam J. Morgan

	
 

	
 

	
 

	
Title:

	
Vice President General Counsel & Business Development

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
DYADIC INTERNATIONAL (USA), INC.

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
    

	
 

	
 

	
 

	
Name:

	
Adam J. Morgan

	
 

	
 

	
 

	
Title:

	
Vice President General Counsel & Business Development

	
 

AGREED TO AND ACCEPTED

this 30th day of September, 2011:

[Name of Lender]

 

Name: 

Title: 

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Exhibit B

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (“Agreement”) made this 30th day of September, 2011 by and among DYADIC INTERNATIONAL, INC., a Delaware corporation, and DYADIC INTERNATIONAL (USA), INC., a Florida corporation (together, the “Obligor”), and ____________________________________ (the “Secured Party”).

 

Recitals:

 

A.            The Secured Party is simultaneously herewith providing the Obligor with a loan pursuant to the terms of a Loan Agreement of even date herewith (the “Loan Agreement”).

B.            The Obligor is evidencing its repayment obligation for such loan by executing and delivering to the Secured Party a Convertible Subordinated Secured Promissory Note of even date herewith (the “Note”).  Payment of the Note is secured by the security interest granted herein below.

 

NOW THEREFORE, based on the foregoing, for value received, the parties hereto agree as follows:

 

Section 1  Grant of Security Interest.

 

1.1           Grant of Security.  To secure the Obligor’s obligation to pay the principal amount represented by the Note and any accrued and unpaid interest, the Obligor hereby grants to the Secured Party a continuing subordinated security interest in and to all of the Obligor’s right, title and interest in, to and under:

(a)           all of the assets of the Obligor and its subsidiaries, wherever located, of every kind and description, tangible or intangible, including, but not limited to, all biological materials, strains and molecular tools of any kind, all laboratory and other equipment, including, without limitation, the following property of the Obligor, whether now or hereafter owned (in whole or in part), existing, acquired or arising and wherever now or hereafter located:  (a) all Accounts and all Goods the sale, lease or other disposition of which by the Obligor has given rise to Accounts and has been returned to, or repossessed or stopped in transit by, the Obligor; (b) all Chattel Paper, Instruments, Documents and General Intangibles (including, without limitation, all patents, patent applications, trademarks, trademark applications, tradenames, trade secrets, goodwill, copyrights, copyright applications, registrations, licenses, software, franchises, customer lists, tax refund claims, claims against carriers and shippers, guarantee claims, contract rights including, without limitation, leases and grants, payment intangibles, security interests, security deposits, rights to indemnification, strains and microorganisms and related mutants and derivatives thereof now existing or hereafter produced, fermentation processes and protocols, proprietary and confidential information and materials, sequenced genome, annotated genome, genes, genetic material, research and development projects, research tools and materials, research equipment and supplies and know-how); (c) all Inventory including, without limitation, raw materials; (d) all Goods (other than Inventory) including, without limitation, Equipment, vehicles and Fixtures; (e) all Investment Property; (f) all Deposit Accounts, bank accounts, prepaid expenses and all deposits and cash; (g) all Letter of Credit Rights; (h) all Commercial Tort Claims, and all other claims and causes of action, whether in contract, tort or otherwise, including but not limited to the proceeds of any recovery in the Obligor’s professional negligence/malpractice lawsuit against its former auditors and legal counsel; (i) any property of the Obligor now or hereafter in the possession, custody or control of the Secured Party or any agent or any parent, affiliate or subsidiary of the Secured Party for any purpose (whether for safekeeping, deposit, collection, custody, pledge, transmission or otherwise); (j) all additions and accessions to, substitutions for, and replacements, products and Proceeds of the foregoing property, including, without limitation, proceeds of all insurance policies insuring the foregoing property including, but not limited to, the proceeds of all insurance policies owned or for the benefit of the Obligor including, but not limited to, life insurance policies on its officers, directors and/or employees, all of the Obligor’s books and records relating to any of the foregoing and to the Obligor’s business; and (k) all access fees, milestone payments, facility fees, royalties, research and commercial payments and any other payments made in the past, present or future by any of the Obligor’s licensees, collaborators or strategic partners.  “Account”, “Account Obligor” “Chattel Paper”, “Commercial Tort Claims”, Deposit Accounts”, “Documents”, “Equipment”, “Fixtures”, “General Intangibles”, “Goods”, “Instruments”, “Inventory”, “Investment Property”, “Letter of Credit Rights”, “Proceeds” and “Tangible Chattel Paper” shall have the meanings assigned to such terms, as of the date of this Agreement in the Uniform Commercial Code (“UCC”);

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(b)           all proceeds of any and all of the foregoing (including, without limitation, any property or cash) and, to the extent not otherwise included, all payments under insurance (whether or not the Secured Party is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing; and

(c)           any other property or right constituting any part of the foregoing.

The items covered in subsections (a) - (c) shall be collectively referred to as the "Collateral".

 

1.2           Financing Statements.  The Secured Party is hereby authorized by the Obligor to file any documents, including, without limitation, UCC Financing Statements, to perfect and/or record the security interest in the Collateral granted herein and to file amendments, releases and termination statements relating to any UCC Financing Statements.

1.3           Assignment.  The rights under this Agreement and the security interest granted hereby only may be assigned or transferred by the Secured Party together with the Note in circumstances where the transfer of the Note is allowed under the terms of the Note.

Section 2  Security for Obligations.  This Agreement secures the payment of all obligations of the Obligor now or hereafter existing under the Note (all such obligations of the Obligor being the "Obligations").

 

Section 3  Obligor Remains Liable.  Anything herein to the contrary notwithstanding, should any agreements or contracts of the Obligor to the Secured Party be deemed part of the Obligor’s assets and, accordingly, a part of the Collateral, (a) the Obligor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Secured Party of any of the rights hereunder shall not release the Obligor from any of its duties or obligations under the contracts and agreements included in the Collateral, and (c) the Secured Party shall have no obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement, nor shall the Secured Party be obligated to perform any of the obligations or duties of the Obligor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

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Section 4  Representations and Warranties.  The Obligor represents and warrants as follows:

 

(a)           The Obligor is the legal and beneficial owner of the Collateral subject to those liens, security interests, and other encumbrances reflected in the public records and/or on the Obligor's financial statements.

(b)           This Agreement has been duly executed and delivered by the Obligor and is a valid and binding obligation of the Obligor, enforceable against the Obligor in accordance with its terms.

(c)           The execution and delivery by the Obligor of this Agreement and the performance of its obligations hereunder are within the Obligor’s authority and capacity and, to its knowledge, do not contravene any law, regulation, order or contractual restriction binding on or affecting the Obligor.

(d)           The grant of the security interest in the Collateral pursuant to this Agreement creates a valid subordinated security interest in the Collateral in favor of the Secured Party securing the payment of all of the Obligations.

Section 5  The Obligor’s Covenants.

 

5.1          Affirmative Covenants.  The Obligor hereby covenants that so long as this Agreement remains in effect or any amount due hereunder or under the Note remains outstanding and unpaid, it will, unless otherwise consented to in writing by the Secured Party:

(a)           do all things necessary to preserve and keep in full force and effect its corporate existence, including, without limitation, all licenses or similar qualifications required by it to engage in business as presently conducted; and continue to (i) engage in business as presently conducted, and (ii) conduct business substantially as presently conducted or as otherwise permitted hereunder;

(b)           pay and discharge when due all taxes, assessments and governmental charges or levies imposed upon it or upon its income and profits, or in respect of its assets or upon any properties belonging to it, before the same shall become delinquent or in default which, if unpaid, would reasonably be expected to give rise to liens or charges upon such assets or any part thereof; provided, however, that the Obligor shall not be required to pay any such tax, assessment, charge or levy which is being contested in good faith by proper proceedings and adequate reserves for the accrual of same are maintained if required by GAAP;

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(c)           comply in all material respects with all federal, state and local laws and regulations, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations and requirements applicable to the operation of its business (collectively, "Requirements") of all governmental bodies, departments, commissions, boards, companies or associations insuring the Obligor or any of its assets, except where the failure so to comply would not have a material adverse effect ("Material Adverse Effect") on the Obligor or the assets; provided, however, that nothing provided herein shall prevent the Obligor from contesting the validity or the application of any Requirements;

(d)           keep proper records and books of account with respect to its business activities, in which proper entries reflecting all financial transactions are made.  Such books and records shall be open at reasonable times and upon reasonable notice to inspection by the Secured Party;

(e)           notify the Secured Party in writing, promptly upon learning thereof, of any litigation or administrative proceeding commenced or threatened against the Obligor which involves a claim in excess of one hundred thousand dollars ($100,000);

(f)            maintain at all times, preserve, protect and keep its assets used or useful in the conduct of its business in good repair, working order and condition, and make all needed and proper repairs, renewals, replacements and improvements thereof as shall be reasonably required in the conduct of its business;

(g)           to the extent necessary for the operation of its business, keep adequately insured by financially sound reputable insurers, all property of a character usually insured by similar entities and carry such other insurance as is usually carried by similar entities;

(h)           defend the title to the Collateral against all persons and against all claims and demands whatsoever, other than secured parties with priority lien positions;

(i)            keep the Collateral free and clear of all further liens, security interests, options or other charges or encumbrances, except as authorized herein and in the ordinary course of the Obligor’s business;

(j)            in addition to the requirements set forth in Section 1.2 herein, on at least twenty (20) days notice in writing by the Secured Party, furnish further assurance of title, execute any written agreement or do any other acts necessary to effectuate the purposes and provisions of this Agreement, execute any instrument or statement required by law or otherwise in order to perfect, continue or terminate the security interest of the Secured Party in the Collateral including, but not limited to, filing the proper UCC financing statements and entering into account control agreements with the Obligor’s banking institutions, and pay all costs in connection therewith;

(k)           retain possession of the Collateral and not remove, sell, exchange, assign, loan, deliver, lease, license, mortgage or otherwise dispose of same outside of the normal course of business without the prior written consent of the Secured Party; and

(l)            promptly give notice in writing to the Secured Party of the occurrence of any default or Event of Default under this Agreement or of any default under any other material instrument or agreement to which any of them is a party.

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5.2          Negative Covenants.  The Obligor hereby covenants that so long as this Agreement remains in effect or any amount due hereunder or under the Note remains outstanding and unpaid, it will not, unless otherwise consented to in writing by the Secured Party:

(a)          take any action or fail to take any action that would cause any lien, security interest, option or other charge or encumbrance (except for the security interests contemplated in this Agreement), whether by contract or operation of law, to be placed on any of the Collateral or otherwise to sell or transfer any such Collateral, except in the ordinary course of business;

(b)          amend its Certificate of Incorporation in the case of Dyadic International, Inc., or Articles of Incorporation, in the case of Dyadic International (USA), Inc. or its respective Bylaws;

(c)            incur any subsequent indebtedness senior to the Note; other than in cases of trade payables incurred in the ordinary course of business;

(d)           create, incur, assume or suffer to exist any lien, security interest, option or other charge or encumbrance (except for the security interests contemplated in this Agreement) upon the Collateral (tangible or intangible) or assets, income or profits secured hereunder, whether now owned or hereafter acquired, except for (i) liens contemplated by this Agreement; (ii) statutory liens; (iii) purchase money liens and other liens granted in the ordinary course of business on equipment, fixtures and similar property; and (iv) liens which, in the aggregate, would not exceed one hundred thousand dollars ($100,000);

(e)           guarantee, assume or otherwise become responsible for (directly or indirectly) the indebtedness for borrowed funds or performance obligations of any person;

(f)            consummate any merger, combination or consolidation involving the Obligor (whether in a single transaction or a related series of transactions) or sell, lease, transfer or assign to any persons or otherwise dispose of (whether in a single transaction or a related series of transactions) all or substantially all of the assets (whether now owned or hereafter acquired);

(g)           negatively alter the compensation or employment status of Mark A. Emalfarb, or remove him as Chairman of the Board of Directors or Director or President or Chief Executive Officer of the companies defined as the Obligor or its subsidiaries without his written consent; or

(h)           Purchase or acquire any stock, obligations, assets or securities of, or any interest in, or make any capital contribution or loan or advance of money, credit or property to, any other person, or make any other investments.

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Section 6  Further Assurances.

(a)           The Obligor agrees that from time to time it will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Secured Party may reasonably request, in order to perfect and protect the security interest granted or purported to be granted hereby or to enable the Secured Party to exercise and enforce its rights and remedies hereunder with respect to any Collateral including, but not limited to, account control agreements with the Obligor’s banking institutions.  Without limiting the generality of the foregoing, the Obligor will: (i) deliver and pledge to the Secured Party promptly upon receipt thereof all instruments or certificates representing or evidencing any of the Collateral duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Secured Party; and (ii) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Secured Party may request, in order to perfect and preserve the security interest granted or purported to be granted hereby.

(b)           The Obligor hereby authorizes the Secured Party to file financing or continuation statements, and amendments thereto, relating to all or any part of the Collateral without the signature of the Obligor where permitted by law.  A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law.

(c)           The Obligor will furnish to the Secured Party from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Secured Party may reasonably request, all in reasonable detail.

Section 7  Default; Acceleration.

 

7.1           Events of Default.  An Event of Default shall have been deemed to have occurred hereunder immediately at such time as any Event of Default under the Loan Agreement or the Note shall have occurred and any period for remedying such default prescribed in the Loan Agreement, the Note or this Agreement shall have expired.

7.2           Acceleration.  In addition to any other remedies provided by the Loan Agreement or the Note, upon the occurrence of an Event of Default, the Secured Party may, by written notice to the Obligor, take any or all of the following actions to enforce the Secured Party’s claims against the Obligor: (a) declare the principal of and any accrued interest and all other amounts payable under the Note to be due and payable, whereupon the same shall become forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Obligor, or (b) exercise any other remedies available at law or in equity, including specific performance of any covenant or other agreement contained in this Agreement.  In addition to any other remedies provided by the Note, upon the occurrence of an Event of Default, then without prejudice to the rights and remedies specified in clause (b) above, the Note and other obligations of the Obligor pursuant to this Agreement shall automatically be immediately due and payable with interest and other fees, if any, thereon without notice, demand or any other act by the Secured Party.

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7.3           Remedies.

(a)           On the occurrence of an Event of Default, the Secured Party shall have the following rights and remedies, which are cumulative in nature and are in addition to the rights set forth in the Loan Agreement and the Note and shall be available to the Secured Party after the Secured Party provides the Obligor written notice of the Event of Default and ten (10) days from the date of receipt of the notice to cure the default.  However, if the nature of the Event of Default is such that it cannot be cured within such ten (10) day period, the Obligor shall not be deemed to be in default if the Obligor within that period commences to cure the Event of Default and thereafter diligently pursues the cure to completion within a thirty (30) day period:

(i)           All rights and remedies provided by law, including but not limited to those provided by the UCC, and equitable remedies for specific performance and injunctive relief; and

(ii)           All rights and remedies provided in the Loan Agreement including the Note and this Agreement.

(b)           Upon any default by the Obligor hereunder, the Secured Party shall have all the rights, remedies and privileges with respect to repossession, retention and sale of any or all of the Collateral of the Obligor and disposition of the proceeds as are accorded by the applicable sections of the UCC and the Obligor shall fully cooperate with the Secured Party in exercising such rights, remedies and privileges.

(c)           Upon any default by the Obligor hereunder and upon demand of the Secured Party, the Obligor shall, at its sole expense, assemble the Collateral and make it available to the Secured Party at the place and at the time designated in the demand.

Section 8  Secured Party May Perform.  If the Obligor fails to perform any agreement contained herein, after notice of such failure and a reasonable cure period, the Secured Party may itself perform, or cause performance of, such agreement including, but not limited to, taking any other action which the Secured Party deems necessary or desirable for the preservation of the Collateral or the Secured Party's interest therein and the carrying out of this Agreement or the Loan Agreement or the Note, including without limiting the generality of the foregoing: (i) any action to collect or realize upon the Collateral; (ii) the discharge of taxes, liens, security interests or other encumbrances at any time levied or placed on the Collateral; (iii) the discharge or keeping current of any obligation of the Obligor having an effect on the Collateral; or (iv) receiving, endorsing and collecting all checks and other orders for the payment of money made payable to the Obligor representing any dividend, interest payment or other distribution payable or distributable in respect of the Collateral or any part thereof, and to give full discharge for the same, and the expenses of the Secured Party incurred in connection therewith shall be payable by the Obligor.

 

Section 9  Secured Party’s Duties.  The powers conferred on the Secured Party hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers.  Except for accounting for moneys actually received by the Obligor hereunder, the Secured Party shall have no duty as to any Collateral, or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.

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Section 10  Remedies.  If any Event of Default shall have occurred and be continuing:

 

(a)           the Secured Party may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party in the event of default under the UCC in effect in the State of Florida at that time  (whether or not the UCC applies to the affected Collateral), and also may (i) require the Obligor to, and the Obligor hereby agrees that it will at its expense and upon request of the Secured Party forthwith, assemble all or part of the Collateral as directed by the Secured Party and make it available to the Secured Party at a place to be designated by the Secured Party which is reasonably convenient to both parties, and (ii) without notice except as specified below, sell or, to the extent permitted by applicable law, purchase the Collateral or any part thereof at public or private sale, for cash, on credit or for future delivery, and upon such other terms as the Secured Party may deem commercially reasonable.  The Obligor agrees that, to the extent notice of sale shall be required by law, at least twenty (20) days' notice to the Obligor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification.  The Secured Party shall not be obligated to make any sale of Collateral regardless of notice of sale having been given.  The Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.  The Obligor hereby waives any claim against the Secured Party arising by reason of the fact that the price at which any Collateral may have been sold at a private sale was less than the price that might have been obtained at a public sale, even if the Secured Party accepts the first offer received and does not offer such Collateral to more than one offeree; and

(b)           any cash held by the Secured Party as Collateral and all cash proceeds received by the Secured Party in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Secured Party, be held by the Secured Party as collateral for, and then or at any time thereafter be applied (after payment of any amounts payable to the Secured Party under Section 14 of this Agreement) in whole or in part by the Secured Party against all or any part of the Obligations in such order as the Secured Party shall elect.  Any surplus of such cash or cash proceeds held by the Secured Party and remaining after payment in full of all the Obligations shall be paid over to the Obligor or to whomsoever may be lawfully entitled to receive such surplus.

Section 11  Obligations Unconditional; Waiver of Defenses.  The Obligor irrevocably agrees that no fact or circumstance whatsoever which might at law or in equity constitute a discharge or release of, or defense to the obligations of, a guarantor or surety shall limit or affect any obligations of the Obligor under this Agreement or any document or instrument executed in connection herewith.  Without limiting the generality of the foregoing:

(a)           The Secured Party may at any time and from time to time, without notice to the Obligor, take any or all of the following actions without affecting or impairing the liability of the Obligor on this Agreement:

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(i)            renew or extend time of payment of the Obligations;

(ii)           accept, substitute, release or surrender any security for the Obligations; and

(iii)          release any person primarily or secondarily liable on the Obligations (including without limitation any endorser, and any guarantor)

(b)           No delay in enforcing payment of the Obligations, nor any amendment, waiver, change, or modification of any terms of any document or instrument which evidences or is given in connection with the Secured Obligations, shall release the Obligor from any obligation hereunder.  The obligations of the Obligor under this Agreement are and shall be primary, continuing, unconditional and absolute (notwithstanding that at any time or from time to time all of the Obligations may have been paid in full), irrespective of the value, genuineness, regularity, validity or enforceability of any documents or instruments respecting or evidencing the Obligations.  In order to hold the Obligor liable or exercise rights or remedies hereunder, there shall be no obligation on the part of the Secured Party, at any time, to resort for payment to any guarantor or to any other security for the Secured Obligations.  The Secured Party shall have the right to enforce this Agreement as against any one or all of the Obligor and irrespective of whether or not other proceedings or steps are being taken against any other property securing the Obligations or any other party primarily or secondarily liable on any of the Obligations.

(c)           Expect as otherwise provided in any note, agreement, instrument or document evidencing the Obligations, the Obligor irrevocably waives presentment, protest, demand, notice of dishonor or default, notice of acceptance of this Agreement, notice of any loans made, extensions granted or other action taken in reliance hereon, and all demands and notices of any kind in connection with this Agreement or the Obligations.

(d)          While this Agreement remains in full force and effect, the Obligor waives any claim or other right which the Obligor might now have or hereafter acquire against any other person primarily or contingently liable on the Obligations (including without limitation any maker, endorser or guarantor) or that arises from the existence or performance of the Obligor’s obligations under this Agreement, including without limitation any right of subrogation, reimbursement, exoneration, contribution, indemnification, or participation in any claim or remedy of the Secured Party against the Obligor or any other person primarily or contingently liable on the Obligations (including without limitation any maker, endorser or guarantor) or any other collateral security for the Obligations, which the Secured Party now has or hereafter acquires, however arising.

Section 12  Amendments.  No amendment or waiver of any provision of this Agreement, and no consent to any departure by the Obligor herefrom, shall in any event be effective unless the same shall be in writing and signed by the Secured Party.

 

Section 13  Continuing Security Interest.  This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the payment in full of the Obligations and all other amounts payable under the Note; (b) be binding upon the Obligor, its successors and assigns; and (c) inure to the benefit of, and be enforceable by, the Secured Party and its successors, transferees and assigns.

24

Section 14  Payment of Fees.  The Obligor agrees to pay all costs and expenses of the Secured Party in enforcing or preserving any of the rights and remedies available to the Secured Party under this Agreement, the Note, the Loan Agreement or under any other documents, instruments or writings executed and delivered to the Secured Party in connection herewith including, without limitation, legal fees, costs and disbursements of the Secured Party’s attorneys in the enforcement thereof.

 

Section 15  Liability for Deficiency.  The Obligor shall remain liable for any deficiency relating to the obligations underlying the Note resulting from a sale of the Collateral and shall pay any such deficiency forthwith on demand.

 

Section 16  Survival of Agreements.  All agreements, representations and warranties made herein and in any certificates delivered pursuant hereto shall survive the execution and delivery of this Agreement and the Note, and shall continue in full force and effect until the indebtedness of the Obligor under the Note and all other Obligations hereunder and thereunder have been paid in full.

 

Section 17  Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the Obligor and its successors and assigns, except that the Obligor may not transfer or assign any of its rights or interests hereunder without the prior written consent of the Secured Party, which consent may be given or withheld in the Secured Party’s absolute discretion.  The Secured Party may only assign this Agreement and its rights or interests hereunder together with an assignment of the Loan Agreement and the Note that is allowable under the terms of the Loan Agreement and the Note.

 

Section 18  Construction of Agreement; Jurisdiction and Venue.  This Agreement and the Note and the rights and obligations of the parties hereunder and thereunder shall be governed by, and construed and interpreted in accordance with, the law of the State of Florida, without regard to principles of conflicts of law.  THE OBLIGOR AND THE SECURED PARTY, IN ANY LITIGATION IN WHICH THE SECURED PARTY OR THE OBLIGOR SHALL BE AN ADVERSE PARTY, WAIVE TRIAL BY JURY, WAIVE THE RIGHT TO CLAIM THAT A FORUM OR VENUE SPECIFIED HEREIN IS AN INCONVENIENT FORUM OR VENUE AND WAIVE THE RIGHT TO INTERPOSE ANY SETOFF, DEDUCTION OR COUNTERCLAIM OF ANY NATURE OR DESCRIPTION, AND IRREVOCABLY CONSENT TO THE JURISDICTION OF THE FLORIDA STATE COURT IN PALM BEACH COUNTY IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND THE OBLIGOR AND THE SECURED PARTY FURTHER AGREE TO ACCEPT AND ACKNOWLEDGE SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED UPON THEM IN ANY SUCH SUIT, ACTION OR PROCEEDING VIA CERTIFIED MAIL TO THE ADDRESS AS SET FORTH IN THE ASSET PURCHASE AGREEMENT WITH RESPECT TO THE OBLIGOR AND THE SECURED PARTY.  If any of the provisions of this Agreement shall be or become illegal or unenforceable under any law, the other provisions shall remain in full force and effect.

25

Section 19  Counterparts.  This Agreement may be signed in counterparts with the same effect as if the signatures to each counterpart were upon a single instrument, and both such counterparts together shall be deemed an original of this Agreement.

 

IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the date first written above.

	
 

	
 

	
[Name of Lender]

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
   

	
 

	
 

	
 

	
Name:

	
 

	
 

	
 

	
 

	
Title:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
DYADIC INTERNATIONAL, INC.

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
   

	
 

	
 

	
 

	
Name:

	
Adam J. Morgan

	
 

	
 

	
 

	
Title:

	
Vice President General Counsel & Business Development

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
DYADIC INTERNATIONAL (USA), INC.

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	

	
 

	
 

	
 

	
Name:

	
Adam J. Morgan

	
 

	
 

	
 

	
Title:

	
Vice President General Counsel & Business Development

26

Schedule 2(f)

Capital Stock

Common Stock, $.001 par value

Authorized Shares:  100,000,000 (as of June 30, 2011)

Issued and Outstanding:  31,409,620 (as of June 30, 2011)

Preferred Stock, $.0001 par value

Authorized Shares:  5,000,000 (as of June 30, 2011)

Issued and Outstanding:  None (as of June 30, 2011)

Description of Equity Plans

The Borrower maintains the Dyadic International, Inc. 2006 Stock Option Plan, as amended (the “2006 Option Plan”) and the Dyadic International, Inc. 2011 Equity Incentive Award Plan (the “2011 Plan”)(the 2006 Option Plan and the 2011 Plan are hereinafter collectively referred to as the “Equity Compensation Plans”).  All options granted under the Equity Compensation Plans are service-based and typically vest over a four year period.

2006 Stock Option Plan

Under the 2006 Option Plan, 4,700,000 shares of common stock have been reserved for issuance.  As of the date hereof, there were 4,050,375 stock options outstanding and 304,750 stock options available for grant under the 2006 Option Plan.  The term of the stock options outstanding under the 2006 Option Plan is ten years.

2011 Plan

Under the 2011 Plan, 3,000,000 shares of our common stock will be initially reserved for issuance pursuant to a variety of stock-based compensation awards, including stock options, stock appreciation rights (“SARs”), restricted stock awards, restricted stock unit awards, deferred stock awards, dividend equivalent awards, stock payment awards and performance awards and other stock-based awards, plus the number of shares remaining available for future awards under our 2006 Option Plan. The number of shares initially reserved for issuance or transfer pursuant to awards under the 2011 Plan will be increased by (i) the number of shares represented by awards outstanding under our 2006 Stock Option Plan that are forfeited or lapse unexercised and which following the effective date are not issued under the 2006 Stock Option Plan and (ii) an annual increase on the first day of each fiscal year beginning in 2012 and ending in 2021, equal to either 1,500,000 shares or such smaller number of shares of stock as determined by our Board.  As of the date hereof, there were no stock options outstanding under the 2011 Option Plan.  The term of the stock options under the 2011 Option Plan will be ten years.

27

Schedule 2(o)

Secured Indebtedness

 

	
1.

	
Security Agreement dated May 7, 2000, as amended, by and between Dyadic International, Inc., a Florida corporation (now known as Dyadic International (USA), Inc.), and the Mark A. Emalfarb Trust under agreement dated October 1, 1987, as amended.

	
2.

	
Security Agreement dated May 29, 2003, as amended, by Dyadic International, Inc., a Florida corporation (now known as Dyadic International (USA), Inc.) in favor of the Mark A. Emalfarb Trust, under agreement dated October 1, 1987, as amended.

	
3.

	
Loan and Security Agreement dated as of November 14, 2008 by Dyadic International (USA), Inc. and Dyadic International, Inc. in favor of the Mark A. Emalfarb Trust under agreement dated as of October 1, 1987, as amended.

	
4.

	
Collateral Assignment of Inventions and Patents and Patent Application dated as of November 14, 2008 by Dyadic International (USA), Inc. and Dyadic International, Inc. in favor of the Mark A. Emalfarb Trust under agreement dated as of October 1, 1987, as amended.

	
5.

	
Collateral Assignment of Trademarks dated as of November 14, 2008 by Dyadic International (USA), Inc. and Dyadic International, Inc. in favor of the Mark A. Emalfarb Trust under agreement dated as of October 1, 1987, as amended.

	
6.

	
Security Agreement dated as of August 23, 2010 by and among Dyadic International, Inc., Dyadic International (USA), Inc. and John S. Lemak IRA Rollover Morgan Keegan &Co. Inc. Custodian.

	
7.

	
Security Agreement dated as of August 23, 2010 by and among Dyadic International, Inc., Dyadic International (USA), Inc. and JSL Kids Partners.

	
8.

	
Security Agreement dated as of August 23, 2010 by and among Dyadic International, Inc., Dyadic International (USA), Inc. and Lisa Joy Emalfarb.

	
9.

	
Security Agreement dated as of August 23, 2010 by and among Dyadic International, Inc., Dyadic International (USA), Inc. and Mario F. Maffei.

	
10.

	
Security Agreement dated as of August 23, 2010 by and among Dyadic International, Inc., Dyadic International (USA), Inc. and Mark A. Emalfarb Trust.

	
11.

	
Security Agreement dated as of August 23, 2010 by and among Dyadic International, Inc., Dyadic International (USA), Inc. and Michael J. Faby.

	
12.

	
Security Agreement dated as of August 23, 2010 by and among Dyadic International, Inc., Dyadic International (USA), Inc. and Michael Weiss.

	
13.

	
Security Agreement dated as of August 23, 2010 by and among Dyadic International, Inc., Dyadic International (USA), Inc. and Pinnacle Family Investments.

	
14.

	
Security Agreement dated as of August 23, 2010 by and among Dyadic International, Inc., Dyadic International (USA), Inc. and Samuel Fromkin.

	
15.

	
Security Agreement dated as of August 23, 2010 by and among Dyadic International, Inc., Dyadic International (USA), Inc. and Univest Management Inc. EPSP.

 

 

28ex10_1.htm

EXHIBIT 10.1

 

EMPLOYMENT AGREEMENT

 

P R E A M B L E

 

This Employment Agreement defines the essential terms and conditions of our employment relationship with you.  The subjects covered in the Agreement are vitally important to you and to the Company.  Thus, you should read the document carefully and ask any questions before signing the Agreement.

 

This EMPLOYMENT AGREEMENT between Carlyn Solomon (“Executive”) and Hill-Rom Holdings, Inc. (“Company”) is dated this 3rd day of October, 2014.

 

W I T N E S S E T H:

 

WHEREAS, the Company and its affiliated entities are engaged in the healthcare industry throughout the United States and abroad including, but not limited to, the design, manufacture, sale, service and rental of hospital beds and stretchers, hospital furniture, medical-related architectural products, specialty sleep surfaces (including therapeutic surfaces), air clearing devices, biomedical and asset management services, as well as other medical-related accessories, devices, products and services;

 

WHEREAS, the Company is willing to employ Executive in an executive or managerial position and Executive desires to be employed by the Company in such capacity based upon the terms and conditions set forth in this Agreement;

 

WHEREAS, in the course of the employment contemplated under this Agreement, it will be necessary for Executive to acquire and maintain knowledge of certain trade secrets and other confidential and proprietary information regarding the Company as well as any of its parent, subsidiary and/or affiliated entities (hereinafter jointly referred to as the “Companies”); and

 

  

  

  

 

WHEREAS, the Company and Executive (collectively referred to as the “Parties”) acknowledge and agree that the execution of this Agreement is necessary to memorialize the terms and conditions of their employment relationship as well as safeguard against the unauthorized disclosure or use of the Company’s confidential information and to otherwise preserve the goodwill and ongoing business value of the Company;

 

NOW THEREFORE, in consideration of Executive’s employment, the Company’s willingness to disclose certain confidential and proprietary information to Executive and the mutual covenants contained herein as well as other good and valuable consideration, the receipt of which is hereby acknowledged, the Parties agree as follows:

 

	
1.

	
Employment.  As of Executive’s first date of employment with the Company (“Start Date”), as mutually agreed upon by the Company and Executive, but no later than November 30, 2014, the Executive agrees to serve as Chief Operating Officer of the Company, reporting to the Chief Executive Officer of the Company.  Executive agrees to perform all duties and responsibilities traditionally assigned to, or falling within the normal responsibilities of, an individual employed as Chief Operating Officer of the Company.  Executive also agrees to perform any and all additional duties or responsibilities consistent with such position as may be assigned by the Board of Directors or the Chief Executive Officer of the Company in its or his sole discretion.

 

  

2

  

 

	
2.

	
Efforts and Duty of Loyalty.  During the term of employment with the Company, Executive covenants and agrees to exercise reasonable efforts to perform all assigned duties in a diligent and professional manner and in the best interest of the Company.  Executive agrees to devote his full working time, attention, talents, skills and efforts to further the Company’s business interests.  Executive agrees not to engage in any outside business activity, whether or not pursued for gain, profit or other pecuniary advantage, without the express written consent of the Company.  Executive shall act at all times in accordance with the Company’s Code of Ethical Business Conduct, and all other applicable policies which may exist or be adopted by the Company from time to time.  The Executive may serve on other boards of directors as shall not interfere with the proper performance of his duties and obligations hereunder consistent with the Company’s Corporate Governance Standards for Board of Directors and applicable laws, with the prior consent of the Company.

 

	
3.

	
At-Will Employment.  Subject to the terms and conditions set forth below, Executive specifically acknowledges and accepts such employment on an “at-will” basis and agrees that both Executive and the Company retain the right to terminate this relationship at any time, with or without cause, for any reason not prohibited by applicable law upon notice as required by this Agreement.  Executive acknowledges that nothing in this Agreement is intended to create, nor should be interpreted to create, an employment contract for any specified length of time between the Company and Executive.

 

	
4.

	
Compensation.  For all services rendered by Executive on behalf of, or at the request of, the Company, in his capacity as Chief Operating Officer of the Company, Executive shall be compensated as follows from and after the Start Date, subject to withholding for payment of any and all applicable federal, state and local payroll and withholding taxes.

 

	
  

	
(a)

	
Base Salary.  For the services performed by him under this Agreement, the Company shall pay Executive a base salary of Six Hundred Thousand Dollars ($600,000) per year, pro-rated for the period which Executive serves (“Base Salary”).  The Base Salary shall be paid in the same increments as the Company’s normal payroll, but no less frequently than monthly and prorated for any period less than a full month.  Executive’s Base Salary shall be reviewed at least annually, with the initial review taking place during the fourth quarter of 2015.

 

  

3

  

 

	
  

	
(b)

	
STIC Bonus.  Incentive compensation, payable solely at the discretion of the Board of Directors of the Company, pursuant to the Company’s existing Incentive Compensation Program or any other program as the Company may establish from time to time in its sole discretion.  For each fiscal year, the annual performance bonus target will be not less than 80% of base salary earned during such fiscal year.  Bonus will be based upon the performance measure and objectives established by the Board from time to time, but ultimately subject to the Compensation and Management Development Committee’s (“CMDC”) discretion.  Minimum bonus will be 0% of target and maximum bonus will be 200% of target.

 

	
  

	
(c)

	
Sign-On Restricted Stock Units.  On the Start Date, Executive will receive an award with a value on the date of grant of $2,500,000 of restricted stock units (otherwise known as deferred stock awards) (“RSUs”) under the terms and conditions of a Stock Award Agreement and the related Company Stock Incentive Plan.  Such RSUs shall vest in equal increments on each of the first, second and third year anniversaries of the Start Date, respectively.

 

	 	
(d)

	
Cash Sign-On.  Executive will receive a cash sign-on payment of $500,000 prior to March 15, 2015.  Executive shall reimburse the $500,000 sign-on bonus to the Company, should Executive voluntarily resign his employment with the Company within twelve months of Executive's Start Date.

 

  

4

  

 

	
  

	
(e)

	
Long-Term Incentive Plan.  The Executive will be eligible to participate in the long-term incentive plan in place at the time and as authorized by the CMDC, at the time of the normal equity grant, with the first year’s value of 300% of base salary.  The Award is expected to be comprised of stock options and performance shares, in combination or exclusively, realizing the proportional mix may change over time in consultation with the Executive and the Board.

 

	
  

	
(f)

	
Retirement Plans.  Commencing on the Start Date, Executive will be entitled to participate in Company retirement plans (e.g., 401(k) Savings Plan and Supplemental Executive Retirement Plan) consistent with plans, programs or policies available to other senior executive officers of the Company and subject to satisfaction of any applicable eligibility requirements.

 

	
  

	
(g)

	
Other Benefits.  Commencing on the Start Date, Executive will be entitled to participate in and receive such additional benefits and perquisites, including health and welfare benefits (such as a Company-paid Executive physical examination) as are available to other senior executives of the Company and as the Board of Directors of Company may deem appropriate and as pre-approved by the Compensation and Management Development Committee of the Board.  From the Start Date through December 31, 2015, Executive will be entitled to 31 days of paid time off.  After 2015, Executive will be entitled to 26 days of paid time off.

 

	
  

	
(h)

	
Relocation.  Company shall reimburse Executive for relocation costs in accordance with the Company's relocation policy.

 

  

5

  

 

	
5.

	
Changes to Compensation.  Notwithstanding anything contained herein to the contrary, Executive acknowledges that the Company specifically reserves the right to make changes to Executive’s compensation in its sole discretion including, but not limited to, modifying or eliminating a compensation component.  The Parties agree that such changes shall be deemed effective immediately and a modification of this Agreement unless, within thirty (30) days after receiving notice of such change, Executive exercises his right to terminate this Agreement without cause or for “Good Reason,” in the event Executive is not treated in a manner that is commensurate with the treatment of other senior executives of the Company, if applicable, as provided below in Paragraphs Nos. 9 and 11.

 

	
6.

	
Direct Deposit.  As a condition of employment, and within thirty (30) days of the Start Date of this Agreement, Executive agrees to make all necessary arrangements to have all sums paid pursuant to this Agreement direct deposited into one or more bank accounts as designated by Executive.

 

	
7.

	
Predecessor Employers.  Except as otherwise disclosed in writing to the Compensation Committee of the Board prior to the date hereof Executive warrants that he is not a party to any contract, restrictive covenant, or other agreement purporting to limit or otherwise adversely affecting his ability to secure employment with any third party.  Alternatively, should any such agreement exist, Executive warrants that the contemplated services to be performed hereunder will not violate the terms and conditions of any such agreement.

 

  

6

  

 

	
8.

	
Restricted Duties.  Executive agrees not to disclose, or use for the benefit of the Company, any confidential or proprietary information belonging to any predecessor employer(s) that otherwise has not been made public and further acknowledges that the Company has specifically instructed him not to disclose or use such confidential or proprietary information.  Based on his understanding of the anticipated duties and responsibilities hereunder, Executive acknowledges that such duties and responsibilities will not compel the disclosure or use of any such confidential and proprietary information.

 

	
9.

	
Termination Without Cause.  The Parties agree that either party may terminate this employment relationship at any time, without cause, upon sixty (60) days’ advance written notice or, if terminated by the Company, pay in lieu of notice (hereinafter referred to as “notice pay”).  In such event, Executive shall only be entitled to such compensation, benefits and perquisites that have been paid or fully accrued as of the effective date of his separation and as otherwise explicitly set forth in this Agreement.  However, in no event shall Executive be entitled to notice pay if Executive is eligible for and accepts severance payments pursuant to the provisions of Paragraphs 16 and 17, below.  Notice pay shall be paid as if the Executive remained on payroll, subject to Paragraph 14 hereof.

 

	
10.

	
Termination With Cause.  Executive’s employment may be terminated by the Company at any time “for cause” without notice or prior warning.  For purposes of this Agreement, “cause” shall mean the Company’s good faith determination that Executive has:

 

	
  

	
(a)

	
Acted with gross neglect or willful misconduct in the discharge of his duties and responsibilities, or refused to follow or comply with the lawful direction of the Board of Directors of the Company, the Chief Executive Officer or the terms and conditions of this Agreement providing such refusal is not based primarily on Executive’s good faith compliance with applicable legal or ethical standards.

 

  

7

  

 

	
  

	
(b)

	
Acquiesced or participated in any conduct that is dishonest, fraudulent, illegal, unethical, involves moral turpitude or is otherwise illegal and involves conduct that has the potential, in the Board of Directors’ reasonable opinion, to cause the Company, its officers or its directors significant embarrassment or ridicule;

 

	
  

	
(c)

	
Violated a material requirement of any Company policy or procedure, specifically including a violation of the Company’s Code of Ethics or Associate Policy Manual;

 

	
  

	
(d)

	
Disclosed without proper authorization any trade secrets or other Confidential Information (as defined herein);

 

	
  

	
(e)

	
Engaged in any act that, in the reasonable opinion of the Board of Directors of the Company would hold the Company, its officers or directors up to probable civil or criminal liability, provided that, if Executive acts in good faith for compliance with applicable legal or ethical standards, such actions shall not be grounds for termination for cause;

 

	
  

	
(f)

	
Breached the warranties of Executive set forth in Paragraph 7 herein; or

 

	
  

	
(g)

	
Engaged in such other conduct recognized at law as constituting cause.

 

  

8

  

 

Upon the occurrence or discovery of any event specified above, the Company shall have the right to terminate Executive’s employment, effective immediately, by providing notice thereof to Executive without further obligation to him other than accrued wages or other accrued wages, deferred compensation or other accrued benefits of employment (collectively referred to herein as “Accrued Obligations”), which shall be paid in accordance with the Company’s past practice and applicable law.  To the extent any violation of this Paragraph is capable of being promptly cured by Executive (or cured within a reasonable period to the Company’s satisfaction), the Company agrees to provide Executive with a reasonable opportunity to so cure such defect.  Absent written mutual agreement otherwise, the Parties agree in advance that it is not possible for Executive to cure any violations of sub-paragraphs (b), (d) or (f) and, therefore, no opportunity for cure need be provided in those circumstances.  Notwithstanding the foregoing, the Company may not terminate the Executive’s employment for cause unless (A) a determination that cause exists is made and approved by a majority of the Company’s Board, (B) if the circumstance giving rise to the issue are capable of being cured the Executive is given at least ten (10) days’ written notice of the Board meeting called to make such determination, and (C) the Executive is given the opportunity to address such meeting.

 

	
11.

	
Termination by Executive for Good Reason.  Executive may terminate his employment and declare this Agreement to have been terminated “without cause” by the Company (and, therefore, for “Good Reason”) upon the occurrence, without Executive’s consent, of any of the following circumstances:

 

	
  

	
(a)

	
The assignment to Executives of duties that are materially inconsistent with Executive’s position as Chief Operating Officer;

 

	
  

	
(b)

	
The failure to elect or reelect Executive as Chief Operating Officer of the Company (unless such failure is related in any way to the Company’s decision to terminate Executive for cause);

 

  

9

  

 

	
  

	
(c)

	
A reduction by the Company in the amount of Executive’s base salary or the discontinuation or reduction by the Company of Executive’s participation at previously existing levels of eligibility in any incentive compensation, additional compensation or equity programs, benefits, policies or perquisites; provided, however, that the Company may make such changes and/or reductions without implicating the provisions of this subsection (c) so long as Executive is treated in a manner that is commensurate with the treatment of other senior executives of the Company;

 

	
  

	
(d)

	
A failure by the Company to perform its obligations under this Employment Agreement,

 

which, in each of subsections (a) through (d) above, is not remedied by the Company within thirty (30) days of receipt of written notice of such event or breach delivered by Executive to the Company within ninety (90) days of the occurrence of the event.  Any termination of employment by the Executive shall be within sixty (60) days of the end of the cure period.

 

	
12.

	
Termination Due to Death or Disability.  In the event Executive dies or suffers a disability (as defined herein) during the term of employment, this Agreement shall automatically be terminated on the date of such death or disability without further obligation on the part of the Company other than the Accrued Obligations (as defined in Section 10) except that Executive will be immediately vested in the Supplemental Executive Retirement Plan, which shall be paid in accordance with the award agreements, benefits plans, past practice and applicable law.  For purposes of this Agreement, Executive shall be considered to have suffered a “disability”:  (i) upon a good faith determination by Company that, as a result of any mental or physical impairment, Executive is and will likely remain unable to perform the essential functions of his duties or responsibilities hereunder on a full-time basis for one hundred eighty (180) days, with or without reasonable accommodation, or (ii) Executive becomes eligible for or receives any benefits pursuant to the Company’s long-term disability policy.  Notwithstanding anything expressed or implied above to the contrary, the Company agrees to fully comply with its obligations under the Family and Medical Leave Act of 1993 and the Americans with Disabilities Act as well as any other applicable federal, state, or local law, regulation, or ordinance governing the provision of leave to individuals with serious health conditions or the protection of individuals with disabilities as well as the Company’s obligation to provide reasonable accommodation thereunder.

 

  

10

  

 

	
13.

	
Reaffirmation.  Upon termination of Executive’s employment for any reason, Executive agrees, if requested to reaffirm in writing his post-employment obligation as set forth in this Agreement.

 

	
14.

	
Code Section 409A Notification.  Executive acknowledges that he has been advised of the American Jobs Creation Act of 2004, which includes Internal Revenue Code Section 409A, and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”), and which also significantly changed the taxation of nonqualified deferred compensation plans and arrangements.

 

	
  

	
(a)

	
The intent of the parties is that payments and benefits under this Agreement comply with, or be exempt from, Code Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in accordance therewith.  If any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause the Executive to incur any additional tax or interest under Code Section 409A, the Company shall, after consulting with the Executive, reform such provision to try to comply with Code Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Code Section 409A.  To the extent that any provision hereof is modified in order to comply with Code Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to the Executive and the Company of the applicable provision without violating the provisions of Code Section 409A.

 

  

11

  

 

	
  

	
(b)

	
A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment that are considered “nonqualified deferred compensation” under Code Section 409A unless such termination is also 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” or like terms shall mean “separation from service.”  If the Executive is deemed on the date of termination to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment that is considered non-qualified deferred compensation under Code Section 409A payable on account of a “separation from service,” and with regard to which an exemption from such section does not apply, such payment or benefit shall be made or provided at the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such “separation from service” of the Executive, and (B) the date of the Executive’s death (the “Delay Period”).  Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 14 (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

 

  

12

  

 

	
  

	
(c)

	
With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Code Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that the foregoing clause (ii) shall not be violated without regard to expenses reimbursed under any arrangement covered by Internal Revenue Code Section 105(b) solely because such expenses are subject to a limit related to the period the arrangement is in effect and (iii) such payments shall be made on or before the last day of Executive’s taxable year following the taxable year in which the expense occurred.

 

	
  

	
(d)

	
For purposes of Code Section 409A, the Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.  In no event may the Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement that is considered nonqualified deferred compensation.  In no event shall the timing of Executive’s execution of the Separation and Release Agreement, directly or indirectly, result in the Executive designating the calendar year of payment, and if a payment that is subject to execution of the Separation and Release Agreement could be made in more than one taxable year, payment shall be made in the later taxable year.

 

  

13

  

 

	
15.

	
Code Section 409A Acknowledgement.  Executive acknowledges that, notwithstanding anything contained herein to the contrary, both Parties shall be independently responsible for assessing their own risks and liabilities under Code Section 409A that may be associated with any payment made under the terms of this Agreement or any other arrangement which may be deemed to trigger Code Section 409A.  Further, the Parties agree that each shall independently bear responsibility for any and all taxes, penalties or other tax obligations as may be imposed upon them in their individual capacity as a matter or law.

 

  

14

  

 

	
16.

	
Severance Payments.  In the event Executive’s employment is terminated by the Company without cause (including by Executive for Good Reason), and subject to the normal terms and conditions imposed by the Company as set forth herein and in the attached Separation and Release Agreement (Exhibit A), Executive shall be eligible to receive severance pay based upon his base salary at the time of termination for a period of twelve (12) months and the Sign-On RSUs set forth in paragraph 4(c) herein, to the extent not previously vested, will be deemed to have been one-third vested in the event Executive’s employment is terminated before the first anniversary of his Start Date, two-thirds vested if the Executive is terminated after the first anniversary of his Start Date but before the second anniversary of his Start Date and fully vested if the Executive is terminated after the second anniversary of his Start Date, and such shares shall be delivered to Executive promptly thereafter, but in any event, by March 15 of the calendar year following such termination.  Executive will be immediately vested in the Supplemental Executive Retirement Plan.  Additionally, the Company shall arrange for the Executive to continue to participate (through COBRA or otherwise), on substantially the same terms and conditions as in effect for the Executive (including any required active employee contribution) immediately prior to such termination, in the health and similar welfare benefits provided to the Executive until the earlier of (i) the end of the 12 month period beginning on the effective date of the termination of Executive’s employment hereunder, or (ii) such time as the Executive is eligible to be covered by comparable benefits of a subsequent employer.  The Executive agrees to notify the Company promptly if and when he begins employment with another employer and if and when he becomes eligible to participate in any health or welfare plans of another employer.  The foregoing severance rights and obligations shall not exist if Executive voluntarily leaves the Company’s employ without “Good Reason” (as defined above) or is terminated for “cause” (as defined above).

 

  

15

  

 

	
17.

	
Severance Payment Terms and Conditions.  No severance pay shall be paid if Executive voluntarily leaves the Company’s employ without Good Reason, as defined above, or is terminated for cause.  Any severance pay made payable under this Agreement shall be paid in lieu of, and not in addition to, any other contractual, notice or statutory pay or other accrued compensation obligation (excluding accrued wages and deferred compensation).  Additionally, such severance pay is contingent upon Executive materially complying with the restrictive covenants contained herein and executing a Separation and Release Agreement in a form not substantially different from that attached as Exhibit A. Further, the Company’s obligation to provide severance hereunder shall be deemed null and void should Executive fail or refuse to execute and deliver to the Company the Company’s then-standard Separation and Release Agreement (without modification, and which shall not include any restrictive covenants not contained herein and shall not change the Company’s indemnification/liability insurance obligations set forth herein or elsewhere) within any time period as may be prescribed by law or, in absence thereof, twenty-one (21) days after the Executive’s Effective Termination Date.  Except as required by Code Section 409A, the above severance pay shall be paid in accordance with the Company’s standard payroll practices (e.g. bi-weekly), except no payment shall be made until after the Separation and Release Agreement becomes effective and the first payment thereafter shall include any missed payment.  Notwithstanding the foregoing, if any execution and revocation period overlap two calendar years, payments will be paid in the second (2nd) calendar year.  Amounts that are nonqualified deferred compensation under Code Section 409A that would otherwise be payable during the six (6) month period immediately following termination shall be paid, with interest, settled, made, or provided, on the expiration of the Delay Period.  Notwithstanding, the foregoing Section is subject to the provisions of Code Section 409A.

 

  

16

  

 

	
18.

	
Assignment of Rights.

 

	
  

	
(a)

	
Copyrights.  Executive agrees that all works of authorship fixed in any tangible medium of expression by him during the term of this Agreement relating to the Company’s business (“Works”), either solely or jointly with others, shall be and remain exclusively the property of the Company.  Each such Work created by Executive is a “work made for hire” under the copyright law and the Company may file applications to register copyright in such Works as author and copyright owner thereof.  If, for any reason, a Work created by Executive is excluded from the definition of a “work made for hire” under the copyright law, then Executive does hereby assign, sell, and convey to the Company the entire rights, title, and interests in and to such Work, including the copyright therein, to the Company.  Executive will execute any documents that the Company deems necessary in connection with the assignment of such Work and copyright therein.  Executive will take whatever steps and do whatever acts the Company requests, including, but not limited to, placement of the Company’s proper copyright notice on Works created by Executive to secure or aid in securing copyright protection in such Works and will assist the Company or its nominees in filing applications to register claims of copyright in such Works.  The Company shall have free and unlimited access at all times to all Works and all copies thereof and shall have the right to claim and take possession on demand of such Works and copies.

 

	
  

	
(b)

	
Inventions.  Executive agrees that all discoveries, concepts, and ideas, whether patentable or not, including, but not limited to, apparatus, processes, methods, compositions of matter, techniques, and formulae, as well as improvements thereof or know-how related thereto, relating to any present or prospective product, process, or service of the Company (“Inventions”) that Executive conceives or makes during the term of this Agreement relating to the Company’s business, shall become and remain the exclusive property of the Company, whether patentable or not, and Executive will, without royalty or any other consideration:

 

  

17

  

 

	
  

	
(i)

	
Inform the Company promptly and fully of such Inventions by written reports, setting forth in detail the procedures employed and the results achieved;

 

	
  

	
(ii)

	
Assign to the Company all of his rights, title, and interests in and to such Inventions, any applications for United States and foreign Letters Patent, any United States and foreign Letters Patent, and any renewals thereof granted upon such Inventions;

 

	
  

	
(iii)

	
Assist the Company or its nominees, at the expense of the Company, to obtain such United States and foreign Letters Patent for such Inventions as the Company may elect; and

 

	
  

	
(iv)

	
Execute, acknowledge, and deliver to the Company at the Company’s expense such written documents and instruments, and do such other acts, such as giving testimony in support of his inventorship, as may be necessary in the opinion of the Company, to obtain and maintain United States and foreign Letters Patent upon such Inventions and to vest the entire rights and title thereto in the Company and to confirm the complete ownership by the Company of such Inventions, patent applications, and patents.

 

  

18

  

 

	
19.

	
Company Property.  All records, files, drawings, documents, data in whatever form, business equipment (including computers, PDAs, cell phones, etc.), and the like relating to, or provided by, the Company shall be and remain the sole property of the Company.  Upon termination of employment, Executive shall immediately return to the Company all such items without retention of any copies and without additional request by the Company.  De minimis items such as pay stubs, 401(k) plan summaries, employee bulletins, and the like are excluded from this requirement.  Executive may retain his address books to the extent they only contain contact information.

 

	
20.

	
Confidential Information.  Executive acknowledges that the Company and its affiliated entities (herein collectively referred to as “Companies”) possess certain trade secrets as well as other confidential and proprietary information which they have acquired or will acquire at great effort and expense.  Such information may include, without limitation, confidential information, whether in tangible or intangible form, regarding the Companies’ products and services, marketing strategies, business plans, operations, costs, current or prospective customer information (including customer identities, contacts, requirements, creditworthiness, preferences, and like matters), product concepts, designs, prototypes or specifications, research and development efforts, technical data and know-how, sales information, including pricing and other terms and conditions of sale, financial information, internal procedures, techniques, forecasts, methods, trade information, trade secrets, software programs, project requirements, inventions, trademarks, trade names, and similar information regarding the Companies’ business(es) (collectively referred to herein as “Confidential Information”).  Executive further acknowledges that, as a result of his employment with the Company, Executive will have access to, will become acquainted with, and/or may help develop, such Confidential Information.  Confidential Information shall not include information readily available in the public so long as such information was not made available through fault of Executive or wrong doing by any other individual.

 

  

19

  

 

	
21.

	
Restricted Use of Confidential Information.  Executive agrees that all Confidential Information is and shall remain the sole and exclusive property of the Company and/or its affiliated entities.  Except as may be expressly authorized by the Company in writing, or other than in the course of the Executive’s employment and for the benefit of the Company, Executive agrees not to disclose, or cause any other person or entity to disclose, any Confidential Information to any third party while employed by the Company and for as long thereafter as such information remains confidential (or as limited by applicable law).  Further, Executive agrees to use such Confidential Information only in the course of Executive’s duties in furtherance of the Company’s business and agrees not to make use of any such Confidential Information for Executive’s own purposes or for the benefit of any other entity or person.  The foregoing shall not apply to information that (a) was known to the public prior to its disclosure to the Executive; (b) becomes generally known to the public subsequent  to disclosure to the Executive through no wrongful act of the Executive or any representative of the Executive; or (c) the Executive is required to disclose by applicable law, regulation or legal process (provided that the Executive provides the Company with prior notice of the contemplated disclosure and cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information).

 

  

20

  

 

	
22.

	
Acknowledged Need for Limited Restrictive Covenants.  Executive acknowledges that the Companies have spent and will continue to expend substantial amounts of time, money and effort to develop their business strategies, Confidential Information, customer identities and relationships, goodwill and Executive relationships, and that Executive will benefit from these efforts.  Further, Executive acknowledges the inevitable use of, or near-certain influence by his knowledge of, the Confidential Information disclosed to Executive during the course of employment if allowed to compete against the Company in an unrestricted manner and that such use would be unfair and extremely detrimental to the Company.  Accordingly, based on these legitimate business reasons, Executive acknowledges each of the Companies’ need to protect their legitimate business interests by reasonably restricting Executive’s ability to compete with the Company on a limited basis.

 

	
23.

	
Non-Solicitation.  During Executive’s employment and for a period of twenty-four (24) months thereafter, Executive agrees not to directly or indirectly engage in the following prohibited conduct:

 

	
  

	
(a)

	
Solicit, offer products or services to, or accept orders for, any Competitive Products or otherwise transact any competitive business on behalf of any Competitor;

 

	
  

	
(b)

	
Attempt on behalf of any Competitor to entice or otherwise cause any third party to withdraw, curtail or cease doing business with the Company (or any Affiliate thereof), specifically including customers, vendors, independent contractors and other third party entities;

 

	
  

	
(c)

	
Except in the course of the Executive’s employment and for the benefit of the Company, disclose to any person or entity the identities, contacts or preferences of any customers of the Company (or any Affiliate thereof), or the identity of any other persons or entities having business dealings with the Company (or any Affiliate thereof);

 

  

21

  

 

	
  

	
(d)

	
Induce any individual who has been employed by or had provided services to the Company (or any Affiliate thereof) within the six (6) month period immediately preceding the effective date of Executive’s separation to terminate such relationship with the Company (or any Affiliate thereof);

 

	
  

	
(e)

	
Assist, coordinate or otherwise offer employment to, accept employment inquiries from, or employ any individual who is or had been employed by the Company (or any Affiliate thereof) at any time within the six (6) month period immediately preceding such offer, or inquiry;

 

	
  

	
(f)

	
Communicate or indicate in any way to any customer of the Company (or any Affiliate thereof), prior to formal separation from the Company, any interest, desire, plan, or decision to separate from the Company; other than by way of long term retirement plans; or

 

	
  

	
(g)

	
Otherwise attempt on behalf of any Competitor to directly or indirectly interfere with the Company’s business, the business of any of the Companies or their relationship with their employees, consultants, independent contractors or customers.

 

	
24.

	
Limited Non-Compete.  For the above-stated reasons, and as a condition of employment to the fullest extent permitted by law, Executive agrees during the Relevant Non-Compete Period not to directly or indirectly engage in the following competitive activities:

 

  

22

  

 

	
  

	
(a)

	
Executive shall not have any ownership interest in, work for, advise, consult, or have any business connection or business or employment relationship in any competitive capacity with any Competitor unless Executive provides written notice to the Company of such relationship prior to entering into such relationship and, further, provides sufficient written assurances to the Company’s satisfaction that such relationship will not, jeopardize the Company’s legitimate interests or otherwise violate the terms of this Agreement;

 

	
  

	
(b)

	
Executive shall not engage in any research, development, production, sale or distribution of any Competitive Products on behalf of a Competitor;

 

	
  

	
(c)

	
Executive shall not market, sell, or otherwise offer or provide any Competitive Products within any Geographic Territory on behalf of a Competitor;

 

	
  

	
(d)

	
Executive shall not distribute, market, sell or otherwise offer or provide any Competitive Products to any customer of the Company on behalf of a Competitor.

 

	
25.

	
Non-Compete Definitions.  For purposes of this Agreement, the Parties agree that the following terms shall apply:

 

	
  

	
(a)

	
“Affiliate” includes any parent, subsidiary, joint venture, sister company, or other entity controlled, owned, managed or otherwise associated with the Company;

 

	
  

	
(b)

	
“Assigned Customer Base” shall include all accounts or customers formally assigned to Executive within a given territory or geographical area or contacted by him at any time during the eighteen (18) month period preceding Executive’s date of separation;

 

	
  

	
(c)

	
“Competitive Products” shall include any product or service that directly or indirectly competes with, is substantially similar to, or serves as a reasonable substitute for, any product or service in research, development or design, or manufactured, produced, sold or distributed by the Company;

 

  

23

  

 

	
  

	
(d)

	
“Competitor” shall mean the list of seven (7) companies on Exhibit B, which can be changed at any time prior to 90 days before termination of employment by or of Executive by written notice to Executive, so long as the list does not exceed fifteen (15) companies and each of which is a material competitor of the Company.

 

	
  

	
(e)

	
“Geographic Territory” shall include any territory in which the Company has provided any services or sold any products at any time during the twenty-four (24) month period preceding Executive’s date of separation;

 

	
  

	
(f)

	
“Relevant Non-Compete Period” shall include the period of Executive’s employment with the Company as well as a period of twenty-four (24) months after such employment is terminated, regardless of the reason for such termination provided, however, that this period shall be reduced to the greater of (i) twelve (12) months or (ii) the total length of Executive’s employment with the Company, including employment with any parent, subsidiary or affiliated entity, if such employment is less than twenty-four (24) months;

 

	
  

	
(g)

	
“Directly or indirectly” shall be construed such that the foregoing restrictions shall apply equally to Executive whether performed individually or as a partner, shareholder, officer, director, manager, Executive, salesperson, independent contractor, broker, agent, or consultant for any other individual, partnership, firm, corporation, company, or other entity engaged in such conduct.

 

  

24

  

 

	
26.

	
Consent to Reasonableness.  In light of the above-referenced concerns, including Executive’s knowledge of and access to the Companies’ Confidential Information, Executive acknowledges that the terms of the foregoing restrictive covenants are reasonable and necessary to protect the Company’s legitimate business interests and will not unreasonably interfere with Executive’s ability to obtain alternate employment.  As such, Executive hereby agrees that such restrictions are valid and enforceable, and affirmatively waives any argument or defense to the contrary.  Executive acknowledges that this limited noncompetition provision is not an attempt to prevent Executive from obtaining other employment in violation of IC § 22-5-3-1 or any other similar statute.  Executive further acknowledges that the Company may need to take action, including litigation, to enforce this limited non-competition provision, which efforts the Parties stipulate shall not be deemed an attempt to prevent Executive from obtaining other employment.

 

	
27.

	
Survival of Restrictive Covenants.  Executive acknowledges that the above restrictive covenants shall survive the termination of this Agreement and the termination of Executive’s employment for any reason.  Executive further acknowledges that any alleged breach by the Company of any contractual, statutory or other obligation shall not excuse or terminate the obligations hereunder or otherwise preclude the Company from seeking injunctive or other relief.  Rather, Executive acknowledges that such obligations are independent and separate covenants undertaken by Executive for the benefit of the Company.

 

	
28.

	
[Intentionally Omitted]

 

  

25

  

 

	
29.

	
Post-Termination Notification.  For the duration of his Relevant Non-compete Period or other restrictive covenant period, which ever is longer, Executive agrees to promptly notify the Company no later than five (5) business days of his acceptance of any employment or consulting engagement.  Such notice shall include sufficient information to ensure Executive compliance with his non-compete obligations and must include at a minimum the following information:  (i) the name of the employer or entity for which he is providing any consulting services; (ii) a description of his intended duties as well as (iii) the anticipated start date.  Such information is required to ensure Executive’s compliance with his non-compete obligations as well as all other applicable restrictive covenants.  Such notice shall be provided in writing to the Office of Vice President and General Counsel of the Company at 1069 State Road 46 E, Batesville, Indiana 47006.  Failure to timely provide such notice shall be deemed a material breach of this Agreement and entitle the Company to return of any severance paid to Executive plus attorneys’ fees.  Executive further consents to the Company’s notification to any new employer of Executive’s rights and obligations under this Agreement.

 

	
30.

	
Scope of Restrictions.  If the scope of any restriction contained in any preceding paragraphs of this Agreement is deemed too broad to permit enforcement of such restriction to its fullest extent, then such restriction shall be enforced to the maximum extent permitted by law, and Executive hereby consents and agrees that such scope may be judicially modified accordingly in any proceeding brought to enforce such restriction.

 

  

26

  

 

	
31.

	
Specific Enforcement/Injunctive Relief.  Executive agrees that it would be difficult to measure any damages to the Company from a breach of the above-referenced restrictive covenants, but acknowledges that the potential for such damages would be great, incalculable and irremediable, and that monetary damages alone would be an inadequate remedy.  Accordingly, Executive agrees that the Company shall be entitled to immediate injunctive relief against such breach, or threatened breach, in any court having jurisdiction.  In addition, if Executive violates any such restrictive covenant, Executive agrees that the period of such violation shall be added to the term of the restriction.  In determining the period of any violation, the Parties stipulate that in any calendar month in which Executive engages in any activity in violation of such provisions, Executive shall be deemed to have violated such provision for the entire month, and that month shall be added to the duration of the non-competition provision.  Executive acknowledges that the remedies described above shall not be the exclusive remedies, and the Company may seek any other remedy available to it either in law or in equity, including, by way of example only, statutory remedies for misappropriation of trade secrets, and including the recovery of compensatory or punitive damages.  Executive further agrees that the Company shall be entitled to an award of all costs and attorneys’ fees incurred by it in any attempt to enforce the terms of this Agreement if the Company prevails.

 

	
32.

	
Publicly Traded Stock.  The Parties agree that nothing contained in this Agreement shall be construed to prohibit Executive from investing his personal assets in any stock or corporate security traded or quoted on a national securities exchange or national market system provided, however, such investments do not require any services on the part of Executive in the operation or the affairs of the business or otherwise violate the Company’s Code of Ethics.

 

  

27

  

 

	
33.

	
Notice of Claim and Contractual Limitations Period.  Executive acknowledges the Company’s need for prompt notice, investigation, and resolution of any claims that may be filed against it due to the number of relationships it has with employees and others (and due to the turnover among such individuals with knowledge relevant to any underlying claim).  Accordingly, Executive agrees prior to initiating any litigation of any type (including, but not limited to, employment discrimination litigation, wage litigation, defamation, or any other claim) to notify the Company, within One Hundred and Eighty (180) days after the claim accrued, by sending a certified letter addressed to the Company’s General Counsel setting forth:  (i) claimant’s name, address, and phone; (ii) the name of any attorney representing Executive; (iii) the nature of the claim; (iv) the date the claim arose; and (v) the relief requested.  This provision is in addition to any other notice and exhaustion requirements that might apply.  For any dispute or claim of any type against the Company (including but not limited to employment discrimination litigation, wage litigation, defamation, or any other claim), Executive must commence legal action within the shorter of one (1) year of accrual of the cause of action or such shorter period that may be specified by law.

 

	
34.

	
Non-Jury Trials.  Notwithstanding any right to a jury trial for any claims, Executive waives any such right to a jury trial, and agrees that any claim of any type (including but not limited to employment discrimination litigation, wage litigation, defamation, or any other claim) lodged in any court will be tried, if at all, without a jury.

 

  

28

  

 

	
35.

	
Choice of Forum.  Executive acknowledges that the Company is primarily based in Indiana, and Executive understands and acknowledges the Company’s desire and need to defend any litigation against it in Indiana.  Accordingly, the Parties agree that any claim of any type brought by Executive against the Company or any of its employees or agents must be maintained only in a court sitting in Marion County, Indiana, or Ripley County, Indiana, or, if a federal court, the Southern District of Indiana, Indianapolis Division.  Executive further understands and acknowledges that in the event the Company initiates litigation against Executive, the Company may need to prosecute such litigation in such state where the Executive is subject to personal jurisdiction.  Accordingly, for purposes of enforcement of this Agreement, Executive specifically consents to personal jurisdiction in the State of Indiana.

 

	
36.

	
Choice of Law.  This Agreement shall be deemed to have been made within the County of Ripley, State of Indiana and shall be interpreted and construed in accordance with the laws of the State of Indiana.  Any and all matters of dispute of any nature whatsoever arising out of, or in any way connected with the interpretation of this Agreement, any disputes arising out of the Agreement or the employment relationship between the Parties hereto, shall be governed by, construed by and enforced in accordance with the laws of the State of Indiana without regard to any applicable state’s choice of law provisions.

 

	
37.

	
Titles.  Titles are used for the purpose of convenience in this Agreement and shall be ignored in any construction of it.

 

	
38.

	
Severability.  The Parties agree that each and every paragraph, sentence, clause, term and provision of this Agreement is severable and that, in the event any portion of this Agreement is adjudged to be invalid or unenforceable, the remaining portions thereof shall remain in effect and be enforced to the fullest extent permitted by law.  Further, should any particular clause, covenant, or provision of this Agreement be held unreasonable or contrary to public policy for any reason, the Parties acknowledge and agree that such covenant, provision or clause shall automatically be deemed modified such that the contested covenant, provision or clause will have the closest effect permitted by applicable law to the original form and shall be given effect and enforced as so modified to whatever extent would be reasonable and enforceable under applicable law.

 

  

29

  

 

	
39.

	
Assignment-Notices.  The rights and obligations of the Company under this Agreement shall inure to its benefit, as well as the benefit of its parent, subsidiary, successor and affiliated entities, and shall be binding upon the successors and assigns of the Company.  This Agreement, being personal to Executive, cannot be assigned by Executive, but his personal representative shall be bound by all its terms and conditions.  Any notice required hereunder shall be sufficient if in writing and mailed to the last known residence of Executive or to the Company at its principal office with a copy mailed to the Office of the General Counsel.

 

	
40.

	
Amendments and Modifications.  Except as specifically provided herein, no modification, amendment, extension or waiver of this Agreement or any provision hereof shall be binding upon the Company or Executive unless in writing and signed by both Parties.  The waiver by the Company or Executive of a breach of any provision of this Agreement shall not be construed as a waiver of any subsequent breach.  Nothing in this Agreement shall be construed as a limitation upon the Company’s right to modify or amend any of its manuals or policies in its sole discretion and any such modification or amendment which pertains to matters addressed herein shall be deemed to be incorporated herein and made a part of this Agreement.

 

	
41.

	
Outside Representations.  Executive represents and acknowledges that in signing this Agreement he does not rely, and has not relied, upon any representation or statement made by the Company or by any of the Company’s employees, officers, agents, stockholders, directors or attorneys with regard to the subject matter, basis or effect of this Agreement other than those specifically contained herein.

 

  

30

  

 

	
42.

	
Other Remedies.  The Executive agrees to execute and be bound by the terms and conditions of the Company’s Limited Recapture Agreement, and any applicable laws, rules and regulations.

 

	
43.

	
Voluntary and Knowing Execution.  Executive acknowledges that he has been offered a reasonable amount of time within which to consider and review this Agreement; that he has carefully read and fully understands all of the provisions of this Agreement; and that he has entered into this Agreement knowingly and voluntarily, with the assistance of counsel.

 

	
44.

	
Liability Insurance.  The Company shall cover the Executive under directors and officers liability insurance both during and, while potential liability exists, after the term of this Agreement in the same amount and to the same extent as the Company covers its other officers and non independent director.

 

	
45.

	
Attorney’s Fees.  The Company shall promptly pay the Executive’s reasonable costs of entering into this Agreement, including the reasonable fees and expenses of the Executive’s counsel and other professionals, up to a maximum of $10,000.

 

	
46.

	
Entire Agreement.  This Agreement constitutes the entire employment agreement between the Parties hereto concerning the subject matter hereof and shall supersede all prior and contemporaneous agreements between the Parties in connection with the subject matter of this Agreement.  Any pre-existing Employment Agreements shall be deemed null and void.  Nothing in this Agreement, however, shall affect any separately-executed written agreement addressing any other issues.

 

  

31

  

 

IN WITNESS WHEREOF, the Parties have signed this Agreement effective as of the day and year first above written.

 

	
EXECUTIVE

	 	
HILL-ROM HOLDINGS, INC.

	 	 	 	 	 
	 	 	 	 	 
	Signed: 	/s/ Carlyn Solomon	 	By:	/s/ John Greisch
	 	 	 	 	 
	
Printed:

	Carlyn Solomon	 	Title:	President & CEO
	 	 	 	 	 
	Dated:	
October 3, 2014

	 	Dated:	
October 3, 2014

 

CAUTION:  READ BEFORE SIGNING

 

  

32

  

 

Exhibit A

 

SAMPLE SEPARATION AND RELEASE AGREEMENT

 

THIS SEPARATION and RELEASE AGREEMENT (“Agreement”) is entered into by and between EMPLOYEE’S FULL NAME(“Executive”) and Hill-Rom Holdings, Inc. (together with its subsidiaries and affiliates, the “Company”).  To wit, the Parties agree as follows:

 

	
1.

	
Executive’s active employment by the Company shall terminate effective [date of termination](Executive’s “Effective Termination Date”).  Except as specifically provided by this Agreement, or in any other non-employment agreement that may exist between the Company and Executive, Executive agrees that the Company shall have no other obligations or liabilities to him/her following his/her Effective Termination Date and that his/her receipt of the Severance Benefits provided herein shall constitute a complete settlement, satisfaction and waiver of any and all claims he/she may have against the Company.

 

	
2.

	
Executive further submits, and the Company hereby accepts, his resignation as an Executive, officer and director, as of his Effective Termination Date for any position he may hold.  The Parties agree that this resignation shall apply to all such positions Executive may hold with the Company or any parent, subsidiary or affiliated entity thereof.  Executive agrees to execute any documents needed to effectuate such resignation.  Executive further agrees to take whatever steps are necessary to facilitate and ensure the smooth transition of his duties and responsibilities to others.

 

	
3.

	
The Company agrees to provide Executive severance pay on the termination of his employment, as provided for in his Employment Agreement.

 

  

  

  

 

	
4.

	
The Company further agrees to provide Executive with limited out-placement counseling with a company of its choice provided that Executive participates in such counseling immediately following termination of employment.  Notwithstanding anything in this Section 4 to the contrary, the out-placement counseling shall not be provided after the last day of the second calendar year following the calendar year in which termination of employment occurs.

 

	
5.

	
As of his/her Effective Termination Date, Executive will become ineligible to participate in the Company’s health insurance program and continuation of coverage requirements under COBRA (if any) will be triggered at that time.  The medical insurance provided herein does not include any disability coverage.

 

	
6.

	
Intentionally omitted

 

	
7.

	
In exchange for the foregoing Severance Benefits, EMPLOYEE FULL NAME on behalf of himself/herself, his/her heirs, representatives, agents and assigns hereby RELEASES, INDEMNIFIES, HOLDS HARMLESS, and FOREVER DISCHARGES (i) Company Name.  (ii) its parent, subsidiary or affiliated entities, (iii) in such capacity, all of their present or former directors, officers, Executives, shareholders, and agents, as well as, (iv) all predecessors, successors and assigns thereof from any and all actions, charges, claims, demands, damages or liabilities of any kind or character whatsoever, known or unknown, which Executive now has or may have had through the effective date of this Agreement.

 

  

2

  

 

	
8.

	
Without limiting the generality of the foregoing release, it shall include:  (i) all claims or potential claims arising under any federal, state or local laws relating to the Parties’ employment relationship, including any claims Executive may have under the Civil Rights Acts of 1866 and 1964, as amended, 42 U.S.C. §§ 1981 and 2000(e) et seq.; the Civil Rights Act of 1991; the Age Discrimination in Employment Act, as amended, 29 U.S.C. §§ 621 et seq.; the Americans with Disabilities Act of 1990, as amended, 42 U.S.C §§ 12,101 et seq.; the Fair Labor Standards Act 29 U.S.C. §§ 201 et seq.; the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §§ 2101, et seq.; the Sarbanes-Oxley Act of 2002, specifically including the Corporate and Criminal Fraud Accountability Act, 18 U.S.C. §1514,A et seq.; and any other federal, state or local law governing the Parties’ employment relationship; (ii) any claims on account of, arising out of or in any way connected with Executive’s employment with the Company or leaving of that employment; (iii) any claims alleged or which could have been alleged in any charge or complaint against the Company; (iv) any claims relating to the conduct of any Executive, officer, director, agent or other representative of the Company; (v) any claims of discrimination, harassment or retaliation on any basis; (vi) any claims arising from any legal restrictions on an employer’s right to separate its Executives; (vii) any claims for personal injury, compensatory or punitive damages or other forms of relief; and (viii) all other causes of action sounding in contract, tort or other common law basis, including (a) the breach of any alleged oral or written contract, (b) negligent or intentional misrepresentations, (c) wrongful discharge, (d) just cause dismissal, (e) defamation, (f) interference with contract or business relationship or (g) negligent or intentional infliction of emotional distress.

 

	
9.

	
Executive further agrees and covenants not to sue the Company or any entity or individual subject to the foregoing General Release with respect to any claims, demands, liabilities or obligations release by this Agreement provided, however, that nothing contained in this Agreement shall:

 

  

3

  

 

	
  

	
(a)

	
prevent Executive from filing an administrative charge with the Equal Employment Opportunity Commission or any other federal state or local agency; or

 

	
  

	
(b)

	
prevent employee from challenging, under the Older Worker’s Benefit Protection Act (29 U.S.C. § 626), the knowing and voluntary nature of his/her release of any age claims in this Agreement in court or before the Equal Employment Opportunity Commission.

 

	
10.

	
Notwithstanding his/her right to file an administrative charge with the EEOC or any other federal, state, or local agency, Executive agrees that with his/her release of claims in this Agreement, he/she has waived any right he/she may have to recover monetary or other personal relief in any proceeding based in whole or in part on claims released by him/her in this Agreement.  For example, Executive waives any right to monetary damages or reinstatement if an administrative charge is brought against the Company whether by Executive, the EEOC, or any other person or entity, including but not limited to any federal, state, or local agency.  Further, with his/her release of claims in this Agreement, Executive specifically assigns to the Company his/her right to any recovery arising from any such proceeding.

 

	
11.

	
The Parties acknowledge that it is their mutual and specific intent that the above waiver fully complies with the requirements of the Older Workers Benefit Protection Act (29 U.S.C. § 626) and any similar law governing release of claims.  Accordingly, Executive hereby acknowledges that:

 

  

4

  

 

	
  

	
(a)

	
He/she has carefully read and fully understands all of the provisions of this Agreement and that He/she has entered into this Agreement knowingly and voluntarily;

 

	
  

	
(b)

	
The Severance Benefits offered in exchange for Executive’s release of claims exceed in kind and scope that to which he/she would have otherwise been legally entitled absent the execution of this Agreement;

 

	
  

	
(c)

	
Prior to signing this Agreement, Executive had been advised, and is being advised by this Agreement, to consult with an attorney of his/her choice concerning its terms and conditions; and

 

	
  

	
(d)

	
He/she has been offered at least [twenty-one (21)/forty-five (45)] days within which to review and consider this Agreement.

 

	
12.

	
The Parties agree that this Agreement shall not become effective and enforceable until the date this Agreement is signed by both Parties or seven (7) calendar days after its execution by Executive, whichever is later.  Executive may revoke this Agreement for any reason by providing written notice of such intent to the Company within seven (7) days after he/she has signed this Agreement, thereby forfeiting Executive’s right to receive any Severance Benefits provided hereunder and rendering this Agreement null and void in its entirety.

 

	
13.

	
The Parties agree that nothing contained herein shall purport to waive or otherwise affect any of Executive’s rights or claims that may arise after he/she signs this Agreement.  It is further understood by the Parties that nothing in this Agreement shall affect any rights Executive may have under any Company sponsored Deferred Compensation Program, Executive Life Insurance Bonus Plan, Stock Grant Award, Stock Option Grant, Restricted Stock Unit Award, Pension Plan and/or Savings Plan (i.e., 401(k) plan) provided by the Company as of the date of his/her termination, such items to be governed exclusively by the terms of the applicable agreements or plan documents.

 

  

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14.

	
Similarly, notwithstanding any provision contained herein to the contrary, this Agreement shall not constitute a waiver or release or otherwise affect Executive’s rights with respect to any vested benefits, any rights he/she has to benefits which can not be waived by law, any coverage provided under any Directors and Officers (“D&O”) policy, any rights Executive may have under any indemnification agreement he/she has with the Company prior to the date hereof, any rights he/she has as a shareholder, or any claim for breach of this Agreement, including, but not limited to the benefits promised by the terms of this Agreement.

 

	
15.

	
[Option A] Executive acknowledges that his/her termination and the Severance Benefits offered hereunder were based on an individual determination and were not offered in conjunction with any group termination or group severance program and waives any claim to the contrary.

 

[Option B] Executive represents and agrees that he/she has been provided relevant cohort information based on the information available to the Company as of the date this Agreement was tendered to Executive.  This information is attached hereto as Exhibit A.  The Parties acknowledge that simply providing such information does not mean and should not be interpreted to mean that the Company was obligated to comply with 29 C.F.R. § 1625.22(f).

 

  

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16.

	
Executive hereby affirms and acknowledges his/her continued obligations to comply with the post-termination covenants contained in his/her Employment Agreement, including but not limited to, the non-compete, trade secret and confidentiality provisions.  Executive acknowledges that a copy of the Employment Agreement has been attached to this Agreement as Exhibit A [B] or has otherwise been provided to him/her and, to the extent not inconsistent with the terms of this Agreement or applicable law, the terms thereof shall be incorporated herein by reference.  Executive acknowledges that the restrictions contained therein are valid and reasonable in every respect and are necessary to protect the Company’s legitimate business interests.  Executive hereby affirmatively waives any claim or defense to the contrary.

 

	
17.

	
Executive acknowledges that the Company as well as its parent, subsidiary and affiliated companies (“Companies” herein) possess, and he/she has been granted access to, certain trade secrets as well as other confidential and proprietary information that they have acquired at great effort and expense.  Such information includes, without limitation, confidential information regarding products and services, marketing strategies, business plans, operations, costs, current or, prospective customer information (including customer contacts, requirements, creditworthiness and like matters), product concepts, designs, prototypes or specifications, regulatory compliance issues, research and development efforts, technical data and know-how, sales information, including pricing and other terms and conditions of sale, financial information, internal procedures, techniques, forecasts, methods, trade information, trade secrets, software programs, project requirements, inventions, trademarks, trade names, and similar information regarding the Companies’ business (collectively referred to herein as “Confidential Information”).

 

  

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18.

	
Executive agrees that all such Confidential Information is and shall remain the sole and exclusive property of the Company.  Except as may be expressly authorized by the Company in writing, or as may be required by law after providing due notice thereof to the Company, Executive agrees not to disclose, or cause any other person or entity to disclose, any Confidential Information to any third party for as long thereafter as such information remains confidential (or as limited by applicable law) and agrees not to make use of any such Confidential Information for Executive’s own purposes or for the benefit of any other entity or person.  The Parties acknowledge that Confidential Information shall not include any information that is otherwise made public through no fault of Executive or other wrong doing.  The foregoing shall not apply to information that the Executive is required to disclose by applicable law, regulation or legal process (provided that the Executive provides the Company with prior notice of the contemplated disclosure and cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information).

 

	
19.

	
On or before Executive’s Effective Termination Date or per the Company’s request, Executive agrees to return the original and all copies of all things in his/her possession or control relating to the Company or its business, including but not limited to any and all contracts, reports, memoranda, correspondence, manuals, forms, records, designs, budgets, contact information or lists (including customer, vendor or supplier lists), ledger sheets or other financial information, drawings, plans (including, but not limited to, business, marketing and strategic plans), personnel or other business files, computer hardware, software, or access codes, door and file keys, identification, credit cards, pager, phone, and any and all other physical, intellectual, or personal property of any nature that he/she received, prepared, helped prepare, or directed preparation of in connection with his/her employment with the Company.  Nothing contained herein shall be construed to require the return of any non-confidential and de minimis items regarding Executive’s pay, benefits or other rights of employment such as pay stubs, W-2 forms, 401(k) plan summaries, benefit statements, etc.  Additionally, Executive may retain his address books to the extent they only contain contact information.

 

  

8

  

 

	
20.

	
Executive hereby consents and authorizes the Company to deduct as an offset from the above-referenced severance payments, so long as the deduction is not taken from nonqualified deferred compensation under the definition of Code Section 409A, the value of any Company property not returned or returned in a damaged condition as well as any monies paid by the Company on Executive’s behalf (e.g., payment of any outstanding American Express bill).

 

	
21.

	
Executive agrees to cooperate with the Company in connection with any pending or future litigation, proceeding or other matter which has been or may be brought against or by the Company before any agency, court, or other tribunal and concerning or relating in any way to any matter falling within Executive’s knowledge or former area of responsibility.  Executive agrees to immediately notify the Company, through the Office of the General Counsel, in the event he/she is contacted by any outside attorney (including paralegals or other affiliated parties) with regard to matters related to his employment with the Company unless (i) the Company is represented by the attorney, (ii) Executive is represented by the attorney for the purpose of protecting his/her personal interests or (iii) the Company has been advised of and has approved such contact.  Executive agrees to provide reasonable assistance and completely truthful testimony in such matters including, without limitation, facilitating and assisting in the preparation of any underlying defense, responding to discovery requests, preparing for and attending deposition(s) as well as appearing in court to provide truthful testimony.  The Company agrees to reimburse Executive for all reasonable out of pocket expenses incurred at the request of the Company associated with such assistance and testimony.

 

  

9

  

 

	
22.

	
Executive agrees not to make any written or oral statement that may defame, disparage or cast in a negative light so as to do harm to the personal or professional reputation of (a) the Company, (b) its Executives, officers, directors or trustees or (c) the services and/or products provided by the Company and its subsidiaries or affiliate entities.  Similarly, in response to any written inquiry from any prospective employer or in connection with a written inquiry in connection with any future business relationship involving Executive, the Company agrees not to provide any information, and the senior officers shall not make any written or oral statement, that may defame, disparage or cast in a negative light so as to do harm to the personal or professional reputation of Executive.  The Parties acknowledge, however, that nothing contained herein shall be construed to prevent or prohibit the Company or the Executive from providing truthful information in response to any court order, discovery request, subpoena or other lawful request, rebutting statements by others or making normal competitive-type statements.

 

  

10

  

 

	
23.

	
EXECUTIVE SPECIFICALLY AGREES AND UNDERSTANDS THAT THE EXISTENCE AND TERMS OF THIS AGREEMENT ARE STRICTLY CONFIDENTIAL AND THAT SUCH CONFIDENTIALITY IS A MATERIAL TERM OF THIS AGREEMENT.  Accordingly, except as required by law or unless authorized to do so by the Company in writing, Executive agrees that he/she shall not communicate, display or otherwise reveal any of the contents of this Agreement to anyone other than his/her spouse, legal counsel or financial advisor provided, however, that they are first advised of the confidential nature of this Agreement and Executive obtains their agreement to be bound by the same.  The Company agrees that Executive may respond to legitimate inquiries regarding the termination of his/her employment by stating that the Parties have terminated their relationship on an amicable basis and that the Parties have entered into a Confidential Separation and Release Agreement that prohibits him/her from further discussing the specifics of his/her separation.  Nothing contained herein shall be construed to prevent Executive from discussing or otherwise advising subsequent employers of the existence of any obligations as set forth in his/her Employment Agreement.  Further, nothing contained herein shall be construed to limit or otherwise restrict the Company’s ability to disclose the terms and conditions of this Agreement as may be required by business necessity.

 

	
24.

	
In the event that Executive breaches or threatens to breach any provision of this Agreement, he/she agrees that the Company shall be entitled to seek any and all equitable and legal relief provided by law, specifically including immediate and permanent injunctive relief.  Executive hereby waives any claim that the Company has an adequate remedy at law.  In addition, and to the extent not prohibited by law, Executive agrees that the Company shall be entitled to discontinue providing any additional Severance Benefits upon such breach. Executive agrees that the foregoing relief shall not be construed to limit or otherwise restrict the Company’s ability to pursue any other remedy provided by law, including the recovery of any actual, compensatory or punitive damages.  Moreover, if Executive pursues any claims against the Company subject to the foregoing General Release, Executive agrees to immediately reimburse the Company for the value of all benefits received under this Agreement to the fullest extent permitted by law.

 

  

11

  

 

	
25.

	
Similarly, in the event that the Company breaches or threatens to breach any provision of this Agreement, Executive shall be entitled to seek any and all equitable or other available relief provided by law, specifically including immediate and permanent injunctive relief.  In the event Executive is wholly unsuccessful, the Company shall be entitled to an award of its costs and attorneys’ fees.

 

	
26.

	
Both Parties acknowledge that this Agreement is entered into solely for the purpose of terminating Executive’s employment relationship with the Company on an amicable basis and shall not be construed as an admission of liability or wrongdoing by the Company or Executive, both Parties having expressly denied any such liability or wrongdoing.

 

	
27.

	
Each of the promises and obligations shall be binding upon and shall inure to the benefit of the heirs, executors, administrators, assigns and successors in interest of each of the Parties.

 

	
28.

	
The Parties agree that each and every paragraph, sentence, clause, term and provision of this Agreement is severable and that, if any portion of this Agreement should be deemed not enforceable for any reason, such portion shall be stricken and the remaining portion or portions thereof should continue to be enforced to the fullest extent permitted by applicable law.

 

	
29.

	
This Agreement shall be governed by and interpreted in accordance with the laws of the State of Indiana without regard to any applicable state’s choice of law provisions.

 

	
30.

	
Executive represents and acknowledges that in signing this Agreement he/she does not rely, and has not relied, upon any representation or statement made by the Company or by any of the Company’s Executives, officers, agents, stockholders, directors or attorneys with regard to the subject matter, basis or effect of this Agreement other than those specifically contained herein.

 

  

12

  

 

	
31.

	
This Agreement represents the entire agreement between the Parties concerning the subject matter hereof, shall supersede any and all prior agreements which may otherwise exist between them concerning the subject matter hereof (specifically excluding, however, the post-termination obligations contained in an Executive’s Employment Agreement, any obligations contained in an existing and valid Indemnity Agreement of Change in Control or any obligation contained in any other legally-binding document), and shall not be altered, amended, modified or otherwise changed except by a writing executed by both Parties.

 

PLEASE READ CAREFULLY.  THIS SEPARATION AND RELEASE

AGREEMENT INCLUDES A COMPLETE RELEASE OF ALL

KNOWN AND UNKNOWN CLAIMS.

 

  

13

  

 

IN WITNESS WHEREOF, the Parties have themselves signed, or caused a duly authorized agent thereof to sign, this Agreement on their behalf and thereby acknowledge their intent to be bound by its terms and conditions.

 

	
[EXECUTIVE]

	 	

COMPANY NAME

	 	 	 	 	 
	 	 	 	 	 
	Signed: 	 	 	By:	 
	 	 	 	 	 
	
Printed:

	 	 	Title:	 
	 	 	 	 	 
	Dated:	 	 	Dated:	 

 

  

14

  

 

Exhibit B

List of Competitors

 

Stryker Corporation, Integra LifeSciences, Steris Corporation, CONMED Corporation, Gettinge AB, CareFusion Corp., Hospira, Inc., ResMed, Phillips Healthcare, Smith & Nephew plc, Arthrex Inc., including, for the avoidance of doubt and in each case, parents, subsidiaries and affiliates

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