Document:

ex_106974.htm

SECURITY AGREEMENT

 

This Security Agreement, dated as of March 1, 2018 (as amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof, this “Agreement”), made by and among Windtree Therapeutics, Inc., a Delaware corporation with its principal offices at 2600 Kelly Rd., Suite 100, Warrington, PA 18976 (the “Grantor”), in favor of LPH Investments Ltd., a Cayman Islands company organized and existing under the laws of Cayman Islands with its principal offices at Unit 110-111, Bio-Informatics Centre, No. 2 Science Park West Avenue, Hong Kong Science Park, Shatin, Hong Kong (the “Secured Party”).

 

WHEREAS, the Grantor and the Secured Party have entered into (i) a loan agreement (the “First Loan Agreement”) dated January 10, 2018, pursuant to which the Secured Party, as lender, subject to the terms and conditions contained therein, has agreed to make a loan to the Grantor, as borrower, in an aggregate principal amount of One Million and Five Hundred Thousand Dollars ($1,500,000) (the “First Loan”), and (ii) a second loan agreement (the “Second Loan Agreement”, and together with the First Loan Agreement, as the same may be amended from time to time, collectively, the “Loan Agreements”) dated the date hereof, pursuant to which the Secured Party, as lender, subject to the terms and conditions contained therein, has agreed to make a loan to the Grantor, as borrower, in an aggregate principal amount of One Million Dollars ($1,000,000) (the “Second Loan”, and together with the First Loan, collectively, the “Loans”). Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the applicable Loan Agreements;

 

WHEREAS, this Agreement is given by the Grantor in favor of the Secured Party to secure the payment and performance of all of the Secured Obligations; and

 

WHEREAS, in order to fully secure the Grantor’s obligations under the Loan Agreements, the Secured Party has requested the Grantor to execute this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.  Definitions.

 

    (a)  Unless otherwise specified herein, all references to Sections and Schedules herein are to Sections and Schedules of this Agreement.

 

    (b)  Unless otherwise defined herein, terms used herein that are defined in the UCC shall have the meanings assigned to them in the UCC. However, if a term is defined in Article 9 of the UCC differently than in another Article of the UCC, the term has the meaning specified in Article 9.

 

    (c)  For purposes of this Agreement, the following terms shall have the following meanings:

 

 

    “Collateral” has the meaning set forth in Section 2.

 

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    “Copyrights” means, collectively, with respect to the Grantor, all copyrights (whether statutory or common law, whether established or registered in the United States or any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished), all tangible embodiments of the foregoing and all copyright registrations and applications made by the Grantor, in each case, whether now owned or hereafter created or acquired by or assigned to the Grantor, together with any and all (i) rights and privileges arising under applicable law and international treaties and conventions with respect to the Grantor’s use of such copyrights, (ii) reissues, renewals, continuations and extensions thereof and amendments thereto, (iii) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable with respect thereto, including damages and payments for past, present or future infringements thereof, (iv) rights corresponding thereto throughout the world and (v) rights to sue for past, present or future infringements thereof.

 

    “Event of Default” has the meaning set forth in the Loan Agreements.

 

“First Priority” means, with respect to any lien and security interest purported to be created in any Collateral pursuant to this Agreement, such lien and security interest is the most senior lien to which such Collateral is subject (subject only to liens permitted under the Loan Agreements).

 

“Intellectual Property Collateral” means, collectively, the Patents, Trademarks (excluding only United States intent-to-use Trademark applications to the extent that and solely during the period in which the grant of a security interest therein would impair, under applicable federal law, the registrability of such applications or the validity or enforceability of registrations issuing from such applications), Copyrights, Trade Secrets, Intellectual Property Licenses and all other industrial, intangible and intellectual property of any type, including mask works and industrial designs.

 

“Intellectual Property Licenses” means, collectively, with respect to the Grantor, all license and distribution agreements with, and covenants not to sue, any other party with respect to any Patent, Trademark, Copyright or Trade Secret or any other patent, trademark, copyright or trade secret, whether the Grantor is a licensor or licensee, distributor or distributee under any such license or distribution agreement, together with any and all (i) renewals, extensions, supplements and continuations thereof, (ii) income, fees, royalties, damages, claims and payments now and hereafter due and/or payable thereunder and with respect thereto including damages and payments for past, present or future infringements or violations thereof, (iii) rights to sue for past, present and future infringements or violations thereof and (iv) other rights to use, exploit or practice any or all of the Patents, Trademarks, Copyrights or Trade Secrets or any other patent, trademark, copyright or trade secret.

 

“Patents” means, collectively, all patents issued or assigned to, and all patent applications and registrations made by (whether issued, established or registered or recorded in the United States or any other country or any political subdivision thereof), the Grantor including all tangible embodiments of the foregoing, together with any and all (i) rights and privileges arising under applicable law and international treaties and conventions with respect to the Grantor’s use of any patents, (ii) inventions and improvements described and claimed therein, (iii) reissues, divisions, continuations, renewals, extensions and continuations-in-part thereof and amendments thereto, (iv) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable thereunder and with respect thereto including damages and payments for past, present or future infringements thereof, (v) rights corresponding thereto throughout the world and (vi) rights to sue for past, present or future infringements thereof.

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    “Proceeds” means “proceeds” as such term is defined in section 9-102 of the UCC and, in any event, shall include, without limitation, all dividends or other income from the Collateral, collections thereon or distributions with respect thereto.

 

“Secured Obligations” has the meaning set forth in Section 3.

 

“Trade Secrets” means, collectively, with respect to the Grantor, all know-how, trade secrets, manufacturing and production processes and techniques, inventions, research and development information, technical, marketing, financial and business data and databases, pricing and cost information, business and marketing plans, customer and supplier lists and information, all other confidential and proprietary information and all tangible embodiments of the foregoing, together with any and all (i) rights and privileges arising under applicable law and international treaties and conventions with respect to such trade secrets, (ii) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable with respect thereto including damages and payments for past, present or future misappropriations thereof, (iii) rights corresponding thereto throughout the world and (iv) rights to sue for past, present or future misappropriations thereof.

 

“Trademarks” means, collectively, with respect to the Grantor, all trademarks (including service marks), slogans, logos, symbols, certification marks, collective marks, trade dress, uniform resource locators (URL’s), domain names, corporate names and trade names, whether statutory or common law, whether registered or unregistered and whether established or registered in the United States or any other country or any political subdivision thereof, that are owned by or assigned to the Grantor, all registrations and applications for the foregoing and all tangible embodiments of the foregoing, together with, in each case, the goodwill symbolized thereby and any and all (i) rights and privileges arising under applicable law and international treaties and conventions with respect to the Grantor’s use of any trademarks, (ii) reissues, continuations, extensions and renewals thereof and amendments thereto, (iii) income, fees, royalties, damages and payments now and hereafter due and/or payable thereunder and with respect thereto, including damages, claims and payments for past, present or future infringements thereof, (iv) rights corresponding thereto throughout the world and (v) rights to sue for past, present and future infringements thereof.

 

    “UCC” means the Uniform Commercial Code as in effect from time to time in the State of Delaware or, when the laws of any other state govern the method or manner of the perfection or enforcement of any security interest in any of the Collateral, the Uniform Commercial Code as in effect from time to time in such state.

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2.  Grant of Security Interest. The Grantor hereby pledges and grants to the Secured Party, and hereby creates a continuing First Priority lien on and security interest in and to, all of the right, title and interest of the Grantor in, to and under the following property, wherever located, and whether now existing or hereafter arising or acquired from time to time (collectively, the “Collateral”):

 

    (a)  all personal property of every kind and nature including all accounts (including health-care-insurance receivables), goods (including inventory and equipment), documents (including, if applicable, electronic documents), instruments, promissory notes, chattel paper (whether tangible or electronic), letters of credit, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), securities and all other investment property, general intangibles (including all payment intangibles), money, deposit accounts, and any other contract rights or rights to the payment of money; 

 

      (b) all Intellectual Property Collateral; and

 

    (c)  all Proceeds and products of each of the foregoing, all books and records relating to the foregoing, all supporting obligations related thereto, and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to the Grantor from time to time with respect to any of the foregoing. 

 

3.  Secured Obligations. The Collateral secures the due and prompt payment and performance of:

 

    (a)  the obligations of the Grantor from time to time arising under the Loan Agreements, this Agreement or otherwise with respect to the due and prompt payment of (i) the principal of and premium, if any, and interest on the Loans (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all other monetary obligations, including fees, costs, attorneys’ fees and disbursements, reimbursement obligations, contract causes of action, expenses and indemnities, whether primary, secondary, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Grantor under or in respect of the Loan Agreements and this Agreement; and

 

    (b)  all other covenants, duties, debts, obligations and liabilities of any kind of the Grantor under or in respect of the Loan Agreements, this Agreement or any other document made, delivered or given in connection with any of the foregoing, in each case whether evidenced by a note or other writing, whether allowed in any bankruptcy, insolvency, receivership or other similar proceeding, whether arising from an extension of credit, issuance of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, and whether primary, secondary, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, fixed or otherwise (all such obligations, covenants, duties, debts, liabilities, sums and expenses set forth in Section 3 being herein collectively called the “Secured Obligations”).

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4.  Perfection of Security Interest and Further Assurances.

 

    (a)  The Grantor shall, from time to time, as may be required by the Secured Party with respect to all Collateral, immediately take all actions as may be requested by the Secured Party to perfect the security interest of the Secured Party in the Collateral, including, without limitation, with respect to all Collateral over which control may be obtained within the meaning of sections 8-106, 9-104, 9-105, 9-106 and 9-107 of the UCC, section 201 of the federal Electronic Signatures in Global and National Commerce Act and, as the case may be, section 16 of the Uniform Electronic Transactions Act, as applicable, the Grantor shall immediately take all actions as may reasonably be requested from time to time by the Secured Party so that control of such Collateral is obtained and at all times held by the Secured Party. All of the foregoing shall be at the sole cost and expense of the Grantor.

 

    (b)  The Grantor hereby irrevocably authorizes the Secured Party at any time and from time to time to file in any relevant jurisdiction any financing statements and amendments thereto that contain the information required by Article 9 of the UCC of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including any financing or continuation statements or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted by the Grantor hereunder, without the signature of the Grantor where permitted by law, including the filing of a financing statement describing the Collateral as all assets now owned or hereafter acquired by the Grantor, or words of similar effect. The Grantor agrees to provide all information required by the Secured Party pursuant to this Section promptly to the Secured Party upon request.

 

    (c)  If the Grantor shall at any time hold or acquire any certificated securities, promissory notes, tangible chattel paper, negotiable documents or warehouse receipts relating to the Collateral, the Grantor shall immediately endorse, assign and deliver the same to the Secured Party, accompanied by such instruments of transfer or assignment duly executed in blank as the Secured Party may from time to time specify.

 

    (d)  If the Grantor shall at any time hold or acquire a commercial tort claim, the Grantor shall immediately notify the Secured Party in a writing signed by the Grantor of the particulars thereof and grant to the Secured Party in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Secured Party.

 

(e)  If any Collateral is at any time in the possession of a bailee, the Grantor shall promptly notify the Secured Party thereof and, at the Secured Party’s request and option, shall promptly obtain an acknowledgment from the bailee, in form and substance satisfactory to the Secured Party, that the bailee holds such Collateral for the benefit of the Secured Party and the bailee agrees to comply, without further consent of the Grantor, at any time with instructions of the Secured Party as to such Collateral.

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    (f)  The Grantor agrees that at any time and from time to time, at the expense of the Grantor, the Grantor will promptly execute and deliver all further instruments and documents, obtain such agreements from third parties, and take all further action, that may be necessary or desirable, or that the Secured Party may request, in order to create and/or maintain the validity, perfection or priority of and protect any security interest granted or purported to be granted hereby or to enable the Secured Party to exercise and enforce its rights and remedies hereunder or under any other agreement with respect to any Collateral.

 

5.  Representations and Warranties. The Grantor represents and warrants as follows:

 

    (a)  It has previously provided to the Secured Party information relating to the Grantor’s (i) exact legal name, (ii) type of organization and jurisdiction, and (iii) place of business (or, if more than one, its chief executive office), and its mailing address, and all such information relating to the Grantor is accurate and complete.

 

    (b)  All information provided by the Grantor to the Secured Party relating to the Collateral is accurate and complete.

 

    (c)  The Collateral consisting of securities have been duly authorized and validly issued, and are fully paid and non-assessable and subject to no options to purchase or similar rights. The Grantor has at all times operated its business in substantial compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances.

 

    (d)  At the time the Collateral becomes subject to the lien and security interest created by this Agreement, with the exception of Permitted Encumbrances set forth in the Loan Agreement, the Grantor will be the sole, direct, legal and beneficial owner thereof, free and clear of any lien, security interest, encumbrance, claim, option or right of others except for the security interest created by this Agreement and other liens permitted by the Loan Agreements.

 

    (e)  The pledge of the Collateral pursuant to this Agreement creates a valid and perfected First Priority security interest in the Collateral, with the exception of Permitted Encumbrances set forth in the Loan Agreement, securing the payment and performance when due of the Secured Obligations.

 

    (f)  It has full power, authority and legal right to borrow the Loans and pledge the Collateral pursuant to this Agreement.

 

    (g)  Each of this Agreement and the Loan Agreements has been duly authorized, executed and delivered by the Grantor and constitutes a legal, valid and binding obligation of the Grantor enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and subject to equitable principles (regardless of whether enforcement is sought in equity or at law).

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    (h)  No authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the borrowing of the Loans and the pledge by the Grantor of the Collateral pursuant to this Agreement or for the execution and delivery of the Loan Agreements and this Agreement by the Grantor or the performance by the Grantor of its obligations thereunder.

 

    (i)  The execution and delivery of the Loan Agreements and this Agreement by the Grantor and the performance by the Grantor of its obligations thereunder, will not violate any provision of any applicable law or regulation or any order, judgment, writ, award or decree of any court, arbitrator or governmental authority, domestic or foreign, applicable to the Grantor or any of its property, or the organizational or governing documents of the Grantor or any agreement or instrument to which the Grantor is party or by which it or its property is bound, except for such violations that individually or in the aggregate would not have a material adverse effect.

 

    (j)  The Grantor has taken all action required on its part for control (as defined in sections 8-106, 9-104, 9-105, 9-106 and 9-107 of the UCC, section 201 of the federal Electronic Signatures in Global and National Commerce Act and, as the case may be, section 16 of the Uniform Electronic Transactions Act, as applicable) to have been obtained by the Secured Party over all Collateral with respect to which such control may be obtained pursuant to the UCC. No person other than the Secured Party has control or possession of all or any part of the Collateral.

 

6.  Voting, Distributions and Receivables.

 

    (a)  The Secured Party agrees that unless an Event of Default shall have occurred and be continuing, the Grantor may, to the extent the Grantor has such right as a holder of the Collateral consisting of securities, other equity interests or indebtedness owed by any obligor, vote and give consents, ratifications and waivers with respect thereto, except to the extent that, in the Secured Party’s reasonable judgment, any such vote, consent, ratification or waiver would detract from the value thereof as Collateral or which would be inconsistent with or result in any violation of any provision of the Loan Agreements or this Agreement, and from time to time, upon request from the Grantor, the Secured Party shall deliver to the Grantor suitable proxies so that the Grantor may cast such votes, consents, ratifications and waivers.

 

    (b)  The Secured Party agrees that the Grantor may, unless an Event of Default shall have occurred and be continuing, receive and retain all dividends and other distributions with respect to the Collateral consisting of securities, other equity interests or indebtedness owed by any obligor.

 

    (c)  If any Event of Default shall have occurred and be continuing, the Secured Party may, or at the request and option of the Secured Party the Grantor shall, notify account debtors and other persons obligated on any of the Collateral of the security interest of the Secured Party in any account, chattel paper, general intangible, instrument or other Collateral and that payment thereof is to be made directly to the Secured Party.

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7.  Covenants. The Grantor covenants as follows:

 

    (a)  The Grantor will not, without providing at least 30 days’ prior written notice to the Secured Party, change its legal name, identity, type of organization, jurisdiction of organization, corporate structure, location of its chief executive office or its principal place of business or its organizational identification number. The Grantor will, prior to any change described in the preceding sentence, take all actions reasonably requested by the Secured Party to maintain the perfection and priority of the Secured Party’s security interest in the Collateral.

 

    (b)  The Collateral will be kept at those locations as is required in the Grantor’s ordinary course of business and the Grantor will not remove the Collateral from such locations without providing at least 30 days’ prior written notice to the Secured Party. The Grantor will, prior to any change described in the preceding sentence, take all actions reasonably required by the Secured Party to maintain the perfection and priority of the Secured Party’s security interest in the Collateral.

 

    (c)  The Grantor shall, at its own cost and expense, defend title to the Collateral and the First Priority lien and security interest of the Secured Party therein against the claim of any person claiming against or through the Grantor, except such claims arising in connection with Permitted Encumbrances set forth in the Loan Agreements, and shall maintain and preserve such perfected First Priority security interest for so long as this Agreement shall remain in effect.

 

    (d)  The Grantor will not sell, offer to sell, dispose of, convey, assign or otherwise transfer, grant any option with respect to, restrict, or grant, create, permit or suffer to exist any mortgage, pledge, lien, security interest, option, right of first offer, encumbrance or other restriction or limitation of any nature whatsoever on, any of the Collateral or any interest therein except as expressly provided for in the Loan Agreements herein or with the prior written consent of the Secured Party.

 

    (e)  The Grantor will keep the Collateral in good order and repair and will not use the same in violation of law or any policy of insurance thereon. The Grantor will permit the Secured Party, or its designee, to inspect the Collateral at any reasonable time, wherever located.

 

    (f)  The Grantor will pay promptly when due all taxes, assessments, governmental charges, and levies upon the Collateral or incurred in connection with the use or operation of the Collateral or incurred in connection with this Agreement.

 

    (g)  The Grantor will continue to operate its business in compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances.

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8.  Secured Party Appointed Attorney-in-Fact. The Grantor hereby appoints the Secured Party the Grantor’s attorney-in-fact, with full authority in the place and stead of the Grantor and in the name of the Grantor or otherwise, from time to time during the continuance of an Event of Default in the Secured Party’s discretion to take any action and to execute any instrument which the Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement (but the Secured Party shall not be obligated to and shall have no liability to the Grantor or any third party for failure to do so or take action). This appointment, being coupled with an interest, shall be irrevocable. The Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof.

 

9.  Secured Party May Perform. If the Grantor fails to perform any obligation contained in this Agreement, the Secured Party may itself perform, or cause performance of, such obligation, and the expenses of the Secured Party incurred in connection therewith shall be payable by the Grantor; provided that the Secured Party shall not be required to perform or discharge any obligation of the Grantor.

 

10.  Reasonable Care. The Secured Party shall have no duty with respect to the care and preservation of the Collateral beyond the exercise of reasonable care. The Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Secured Party accords its own property, it being understood that the Secured Party shall not have any responsibility for (a) ascertaining or taking action with respect to any claims, the nature or sufficiency of any payment or performance by any party under or pursuant to any agreement relating to the Collateral or other matters relative to any Collateral, whether or not the Secured Party has or is deemed to have knowledge of such matters, or (b) taking any necessary steps to preserve rights against any parties with respect to any Collateral. Nothing set forth in this Agreement, nor the exercise by the Secured Party of any of the rights and remedies hereunder, shall relieve the Grantor from the performance of any obligation on the Grantor’s part to be performed or observed in respect of any of the Collateral.

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11.  Remedies Upon Default.

 

    (a)  If any Event of Default shall have occurred and be continuing, the Secured Party, without any other notice to or demand upon the Grantor, may assert all rights and remedies of a secured party under the UCC or other applicable law, including, without limitation, the right to take possession of, hold, collect, sell, lease, deliver, grant options to purchase or otherwise retain, liquidate or dispose of all or any portion of the Collateral. If notice prior to disposition of the Collateral or any portion thereof is necessary under applicable law, written notice mailed to the Grantor at its notice address as provided in Section 15 hereof ten days prior to the date of such disposition shall constitute reasonable notice, but notice given in any other reasonable manner shall be sufficient. So long as the sale of the Collateral is made in a commercially reasonable manner, the Secured Party may sell such Collateral on such terms and to such purchaser(s) as the Secured Party in its absolute discretion may choose, without assuming any credit risk and without any obligation to advertise or give notice of any kind other than that necessary under applicable law. Without precluding any other methods of sale, the sale of the Collateral or any portion thereof shall have been made in a commercially reasonable manner if conducted in conformity with reasonable commercial practices of creditors disposing of similar property. At any sale of the Collateral, if permitted by applicable law, the Secured Party may be the purchaser, licensee, assignee or recipient of the Collateral or any part thereof and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold, assigned or licensed at such sale, to use and apply any of the Secured Obligations as a credit on account of the purchase price of the Collateral or any part thereof payable at such sale. To the extent permitted by applicable law, the Grantor waives all claims, damages and demands it may acquire against the Secured Party arising out of the exercise by it of any rights hereunder. The Grantor hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Collateral, whether before or after sale hereunder, and all rights, if any, of marshalling the Collateral and any other security for the Secured Obligations or otherwise. At any such sale, unless prohibited by applicable law, the Secured Party or any custodian may bid for and purchase all or any part of the Collateral so sold free from any such right or equity of redemption. Neither the Secured Party nor any custodian shall be liable for failure to collect or realize upon any or all of the Collateral or for any delay in so doing, nor shall it be under any obligation to take any action whatsoever with regard thereto. The Grantor agrees that it would not be commercially unreasonable for the Secured Party to dispose of the Collateral or any portion thereof by utilizing internet sites that provide for the auction of assets of the type included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets. The Secured Party shall not be obligated to clean up or otherwise prepare the Collateral for sale.

 

    (b)  If any Event of Default shall have occurred and be continuing, all rights of the Grantor to (i) exercise the voting and other consensual rights it would otherwise be entitled to exercise pursuant to Section 6(a) and (ii) receive the dividends and other distributions which it would otherwise be entitled to receive and retain pursuant to Section 6(b), shall immediately cease, and all such rights shall thereupon become vested in the Secured Party, which shall have the sole right to exercise such voting and other consensual rights and receive and hold such dividends and other distributions as Collateral.

 

    (c)  If any Event of Default shall have occurred and be continuing, 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 shall be applied in whole or in part by the Secured Party to the payment of expenses incurred by the Secured Party in connection with the foregoing or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Secured Party hereunder, including reasonable attorneys’ fees, and the balance of such proceeds shall be applied or set off against all or any part of the Secured 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 Secured Obligations shall be paid over to the Grantor or to whomsoever may be lawfully entitled to receive such surplus. The Grantor shall remain liable for any deficiency if such cash and the cash Proceeds of any sale or other realization of the Collateral are insufficient to pay the Secured Obligations and the fees and other charges of any attorneys employed by the Secured Party to collect such deficiency.

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    (d)  If the Secured Party shall determine to exercise its rights to sell all or any of the Collateral pursuant to this Section, the Grantor agrees that, upon request of the Secured Party, the Grantor will, at its own expense, do or cause to be done all such acts and things as may be necessary to make such sale of the Collateral or any part thereof valid and binding and in compliance with applicable law.

 

12.  No Waiver and Cumulative Remedies. The Secured Party shall not by any act (except by a written instrument pursuant to Section 14), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. All rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies provided by law.

 

13.  Security Interest Absolute. The Grantor hereby waives demand, notice, protest, notice of acceptance of this Agreement, notice of loans made, credit extended, Collateral received or delivered or other action taken in reliance hereon and all other demands and notices of any description. All rights of the Secured Party and liens and security interests hereunder, and all Secured Obligations of the Grantor hereunder, shall be absolute and unconditional irrespective of:

 

    (a)  any illegality or lack of validity or enforceability of any Secured Obligation or any related agreement or instrument;

 

    (b)  any change in the time, place or manner of payment of, or in any other term of, the Secured Obligations, or any rescission, waiver, amendment or other modification of the Loan Agreements, this Agreement or any other agreement, including any increase in the Secured Obligations resulting from any extension of additional credit or otherwise;

 

    (c)  any taking, exchange, substitution, release, impairment or non-perfection of any Collateral or any other collateral, or any taking, release, impairment, amendment, waiver or other modification of any guaranty, for all or any of the Secured Obligations;

 

    (d)  any manner of sale, disposition or application of proceeds of any Collateral or any other collateral or other assets to all or part of the Secured Obligations;

 

    (e)  any default, failure or delay, willful or otherwise, in the performance of the Secured Obligations;

 

    (f)  any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to, or be asserted by, the Grantor against the Secured Party; or

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    (g)  any other circumstance (including, without limitation, any statute of limitations) or manner of administering the Loans or any existence of or reliance on any representation by the Secured Party that might vary the risk of the Grantor or otherwise operate as a defense available to, or a legal or equitable discharge of, the Grantor or any other grantor, guarantor or surety.

 

14.  Amendments. None of the terms or provisions of this Agreement may be amended, modified, supplemented, terminated or waived, and no consent to any departure by the Grantor therefrom shall be effective unless the same shall be in writing and signed by the Secured Party and the Grantor, and then such amendment, modification, supplement, waiver or consent shall be effective only in the specific instance and for the specific purpose for which made or given.

 

15.  Addresses for Notices. All notices and other communications provided for in this Agreement shall be in writing and shall be given in the manner and become effective as set forth in the Loan Agreements, and addressed to the respective parties at their addresses as specified on the signature pages hereof or as to either party at such other address as shall be designated by such party in a written notice to each other party.

 

16.  Continuing Security Interest; Further Actions. This Agreement shall create a continuing First Priority lien and security interest in the Collateral and shall (a) subject to Section 17, remain in full force and effect until payment and performance in full of the Secured Obligations, (b) be binding upon the Grantor, its successors and assigns, and (c) inure to the benefit of the Secured Party and its successors, transferees and assigns; provided that the Grantor may not assign or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the Secured Party. Without limiting the generality of the foregoing clause (c), any assignee of the Secured Party’s interest in any agreement or document which includes all or any of the Secured Obligations shall, upon assignment, become vested with all the benefits granted to the Secured Party herein with respect to such Secured Obligations.

 

17.  Termination; Release. On the date on which all Secured Obligations have been paid and performed in full, the Secured Party will, at the request and sole expense of the Grantor, (a) duly assign, transfer and deliver to or at the direction of the Grantor (without recourse and without any representation or warranty) such of the Collateral as may then remain in the possession of the Secured Party, together with any monies at the time held by the Secured Party hereunder, and (b) execute and deliver to the Grantor a proper instrument or instruments acknowledging the satisfaction and termination of this Agreement.

 

18.  Governing Law. This Agreement and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement and the transactions contemplated hereby shall be governed by, and construed in accordance with, the laws of the State of New York.

 

19.  Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement. This Agreement and the Loan Agreements constitute the entire contract among the parties with respect to the subject matter hereof and supersede all previous agreements and understandings, oral or written, with respect thereto.

12

 

 

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

 

	
			 

				
			 

			Windtree Therapeutics, Inc., as Grantor

			
	
			 

				
			By:      /s/ Craig Fraser 

			Name: Craig Fraser

			Title:   President and Chief Executive Officer

			

 

	
			 

				
			LPH Investments Ltd., as Secured Party

			
	
			 

				
			By:     /s/ Benjamin Li, Ph.D. 

			Name: Benjamin Li, Ph.D.

			Title:   Chief Executive OfficerExhibit 10.1

 

EXECUTIVE EMPLOYMENT
AGREEMENT

 

This EXECUTIVE EMPLOYMENT
AGREEMENT (“Agreement”) is made and entered into as of February 27, 2018 (the “Effective Date”),
by and between SOLITRON DEVICES, INC., a Delaware corporation (the “Company”), and MARK MATSON (the “Executive”).
Company and Executive are sometimes individually referred to herein as a “Party” and collectively as the “Parties.”

WHEREAS, the Parties previously
entered into a certain Consulting Agreement effective as of May 11, 2016 (the “Consulting Agreement”), which
expired by its terms on May 1, 2017;

 

WHEREAS, the Company
desires to employ the Executive, and the Executive desires to be employed by the Company, subject to the terms and conditions set
forth in this Agreement;

NOW, THEREFORE,
in consideration of Executive’s employment with Company, the mutual agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1.                    
Recitals. The Parties agree that the foregoing Recitals to this Agreement are true and correct and are incorporated
by reference in this Agreement, as if fully set forth below.

2.                      Employment
Term. Unless terminated earlier in accordance with Section 7 hereof, Executive’s employment with Company pursuant to
this Agreement shall have an initial term of three (3) years commencing on the Effective Date (the “Initial Term”),
which shall be extended automatically without any action by either Party for successive terms of one (1) year commencing on the
applicable anniversary of the Effective Date (each such successive year being a “Renewal Term,” such Renewal
Terms and the Initial Term are hereinafter collectively referred to as the “Employment Term”), unless either
Party gives written notice to the other Party not less than one hundred twenty (120) days prior to the end of the Initial Term
or a Renewal Term, as the case may be (the “Notice Period”), of such Party’s election not to renew this
Agreement (“Notice of Non-Renewal”).

3.                 
    Position; Duties; Exclusive Employment.

(a)              
Position and Duties. Executive shall serve as President and Chief Operating Officer of Company, reporting directly
to the Board of Directors of Company (the “Board”) or the designee of the Board, and shall have such duties,
authority, and responsibility as shall be assigned and determined from time to time by the Board. While serving as President and
Chief Operating Officer, Executive agrees to utilize Executive’s best efforts to diligently, honestly, and faithfully perform
the duties that may be assigned to Executive from time to time by the Board, and to follow the reasonable and lawful instructions
of the Board. Executive agrees to comply with all policies, procedures, and practices established by Company from time to time,
and to perform Executive’s duties hereunder in accordance with all applicable laws and Company’s by-laws.

    	 		 

     

    

(b)              
Exclusive Employment. Executive agrees to devote Executive’s full business time and attention exclusively to
the performance of Executive’s duties hereunder and in furtherance of the business of Company; provided, however, that during
the Employment Term the Executive shall be allowed to devote a reasonable amount of Employee’s business time and attention
each workweek to Executive’s business interests pertaining to real estate and business investments in American Recreational
Communities LLC and Warden Lake Cottages Incorporated and other creative interests, and such activity shall be outside of the scope
of Employee’s employment with the Employer (the “Outside Activity”). Other than the Outside Activity,
Executive agrees that Executive will not engage in any other business, profession, or occupation for compensation or otherwise
that would conflict or interfere with the performance of Executive’s duties hereunder, without the prior written consent
of the Board. Executive shall not, during the Employment Term, be involved directly or indirectly, in any manner, as a partner,
officer, director, stockholder, consultant, advisor, investor, creditor or employee for any company engaged in a substantially
similar business to Company; however, Executive may use Executive’s personal funds to invest in a publicly traded company,
but shall not own more than two (2%) percent of the stock thereof. Notwithstanding the foregoing, Executive may engage in religious,
charitable or other community activities as long as such services and activities do not interfere with Executive’s performance
of Executive’s duties to Company.

4.                    
Compensation.

(a)              
Annual Base Salary. During the Employment Term, Company shall pay to Executive an annual base salary of One Hundred
Sixty Thousand and No/100 Dollars ($160,000.00) (the “Base Salary”). The Company may increase the Base Salary
paid to the Executive in an amount to be determined by the Compensation Committee or Board. The Base Salary shall be payable in
accordance with Company’s normal payroll practices, but in no event less frequently than monthly and prorated for any partial
month worked.

(b)              
Option Grant. The Compensation Committee of the Board (the “Committee”) appointed to administer
the Company’s 2017 Stock Incentive Plan dated [●] and as may be amended from time to time (the “Incentive
Plan”) awarded the Executive an option under the Incentive Plan and Award Agreement (as such term is defined in the
Incentive Plan) to purchase two hundred twenty thousand (220,000) shares of Company’s common stock (the “Sign-On
Option”), subject to stockholder approval of the Incentive Plan.  Subject to accelerated vesting as set forth in
Section 9 and provided that the Executive is employed on each vesting date, one-half (1/2) of the Sign-On Option shall vest and
become exercisable on the first anniversary of the Effective Date with an exercise price per share equal to the greater of $4.25
or the fair market value of the stock on the date of the grant of the Sign-On Option, and one-quarter (1/4) of the Sign-On Option
shall vest and become exercisable on the second anniversary of the Effective Date with an exercise price per share equal to the
greater of $5.00 or the fair market value of the stock on the date of the grant of the Sign-On Option, and the remaining one-quarter
(1/4) of the Sign-On Option shall vest and become exercisable on the third anniversary of the Effective Date with an exercise
price per share equal to the greater of $5.00 or the fair market value of the stock on the date of the grant of the Sign-On Option.
 The Sign-On Option shall be for a term of ten (10) years, subject to earlier termination as provided in the Incentive Plan
and herein.  The Sign-On Option is intended to be an “incentive stock option” as defined in Section 422(b) of
the Internal Revenue Code of 1986. However, to the extent the Sign-On Option fails to continue to meet the requirements of Code
Section 422 it shall automatically be re-designated as a Non-Qualified Stock Option (as such term is defined in the Incentive
Plan) on the date of such failure to continue to meet such requirements.

    	 	2	 

     

    

(c)              
Withholding Taxes. All forms of compensation paid or payable to Executive, whether set forth in this Agreement or
otherwise, are subject to reduction to reflect applicable withholding and payroll taxes.

5.                    
Reimbursement of Business Expenses. Company will reimburse Executive for reasonable and fully documented out-of-pocket
business expenses, in accordance with Company’s policies, which may be subject to reasonable modification with sixty (60)
days’ advance notice, and provided that Executive furnishes Company with such evidence relating to such expenses as Company
may reasonably require to substantiate such expenses for tax purposes.

6.                    
Benefits. Company will provide Executive with the following benefits during the Employment Term:

(a)              
Health Insurance. Company will provide health insurance coverage for Executive and Executive’s qualified dependents
under health insurance plans that are offered to employees by Company, to the same extent as the coverage offered to other similarly
situated employees of Company, subject to all eligibility requirements and rules applicable to such health insurance plans, and
further subject to Company’s right to amend, alter, terminate or eliminate any such plans from time to time in Company’s
sole discretion, subject to the terms of such plans and applicable law.

(b)              
Disability Insurance. Company will provide disability insurance coverage for Executive under a disability insurance
plan underwritten by a nationally-recognized insurance company, providing for a maximum monthly benefit of eighty percent (80%)
of $13,333.33 (equal to 1/12th of the Base Salary) for thirty-six (36) months, and subject to all eligibility requirements
and rules applicable to such disability insurance plan, subject to applicable law.

(c)              
Term Life Insurance. The Company shall pay directly to the insurance carrier the cost of premiums due on a term
life insurance in the amount of One Million and No/100 Dollars ($1,000,000), with such beneficiary or beneficiaries thereunder
as may be designated from time to time by Executive. The policy shall remain in effect for the duration of Executive’s employment
with the Company under the Agreement. The obligation of the Company to purchase such policy shall be conditioned on Executive’s
successful completion of any required medical examination(s) such that the policy can be bought at standard rates. The Company
shall reimburse Executive all amounts to maintain such policy in full force and effect during the Term of this Agreement.

    	 	3	 

     

    

(d)              
Vehicle Allowance. Company will purchase or lease a vehicle for Executive’s business and personal use and pay
the cost of insurance coverage for the vehicle, provided that the total cost to Company for the financing cost or lease of the
vehicle does not exceed One Thousand Two Hundred Fifty and No/100 Dollars ($1,250.00) per month. In the event of termination of
this Agreement for any reason, Company shall pay the residual and any other charges on the purchase or lease of the vehicle to
acquire title of ownership in the vehicle, and execute all necessary documents and pay the applicable fees and costs to convey
to Executive the title of ownership in the vehicle, in consideration for payment by Executive to Company of One Dollar ($1.00).
The cost of the vehicle will be based on a purchase price of $70,000 financed over a 72-month time period. The Company shall provide
insurance for said purchased or leased vehicle and Executive's personal car that shall be made available for short term use by
employees, contractors, consultants and traveling members of the Board. The Company shall also pay the maintenance costs on the
purchased or leased vehicle.

(e)              
Housing. Company will grant Executive use of one bedroom and use of the common areas in a company leased three or
four bedroom furnished apartment or house located in Palm Beach County, Florida for use by Executive and other Company employees,
contractors and consultants, provided that value for the use of one bedroom and the common areas of the apartment or house is approximately
Seven Hundred and No/100 Dollars ($700) per month (the “Housing”). In the event of termination of this Agreement
for any reason, Executive shall be required to vacate the Housing within eight (8) weeks of the termination date.

(f)               
Cellular Telephone. Company will reimburse the Executive for the cost of Executive's monthly cellular telephone services,
subject to the submission of corroborating documentation by Executive to Company substantiating the expenses incurred by the Executive.
In the event of termination of this Agreement for any reason, Company shall pay to Executive all applicable fees and costs incurred
by Executive to cancel the cellular telephone contract associated with the cellular telephone being used by Executive as of the
date of termination of this Agreement, within thirty (30) days of the submission of corroborating documentation by Executive to
Company substantiating the fees and costs incurred by Executive.

(g)              
Paid Vacation. Executive will be eligible for three (3) weeks of paid vacation each calendar year during the Employment
Term, which shall be prorated for any partial calendar year of employment. Executive will be entitled to carry over accrued but
unused vacation time, up to a maximum of one and one-half times Executive’s yearly allocation of vacation time, into a subsequent
calendar year, in accordance with the Company’s policy and practice. Executive must obtain advance approval from the CEO
prior to taking vacation, and such vacation shall not, in the reasonable judgment of the CEO, materially interfere with Executive’s
fulfillment of Executive’s duties hereunder.

(h)              
Additional Benefit Programs. Executive shall be entitled to additional fringe benefits and perquisites consistent
with the practices of Company, and to the extent Company provides similar benefits or perquisites (or both) to similarly situated
employees of Company, including participation in Company’s 401(k) plan, subject to all eligibility requirements and rules
applicable to such benefit and perquisite programs, and further subject to Company’s right to amend, alter, terminate or
eliminate any such benefit and perquisite programs from time to time in accordance with applicable law.

    	 	4	 

     

    

7.                    
Termination.

(a)              
Notice of Non-Renewal. Any Notice of Non-Renewal given by the Company to the Executive shall constitute a termination
of this Agreement by the Company without Cause. Any Notice of Non-Renewal given by the Executive to the Company shall constitute
a resignation by the Executive.

(b)              
Termination By Company With or Without Cause. Company may terminate this Agreement at any time, with or without Cause,
which shall be effective upon delivery by Company of written notice to Executive of such termination. For purposes of this Agreement,
“Cause” shall mean the occurrence of any of the following events:

(i)                
Material breach by Executive of any term or condition of this Agreement, including, without limitation, Executive’s
failure or refusal to perform, neglect of, or inability to perform (except where due to a Disability), to the satisfaction of the
Board, Executive’s duties and responsibilities, as set forth herein or otherwise delegated to Executive pursuant to this
Agreement, which such breach by Executive has not been cured (if curable) within fifteen (15) business days after receipt by Executive
of written notice from the Board specifically identifying the breach and the required action to cure (if curable) the breach; provided,
however, Company shall not be required to offer Executive an opportunity to cure any such breach on more than two (2) occasions
during the Employment Term;

(ii)             
Executive’s violation, as determined in the reasonable judgment of the Board, of the Company’s policies regarding
discrimination, harassment, retaliation, conflicts of interest, and insider trading, after prior notice of such policies has been
provided to Executive;

(iii)           
Executive commits any breach of fiduciary duty, act of gross negligence or willful misconduct in the performance of Executive’s
duties and responsibilities for Company;

(iv)            
Executive commits any act of dishonesty or disloyalty affecting Company, or any act constituting fraud, theft, embezzlement,
misappropriation, or other unlawful activity;

(v)              
Executive has been convicted of, or has plead guilty or nolo contendere to, a felony or a crime involving dishonesty or
moral turpitude; or

(vi)            
Executive’s use of illegal drugs, or repeated drunkenness by the Executive on Company property or while performing
duties for the Company off Company property.

(c)              
Termination Due to Death or Disability of Executive. This Agreement shall terminate automatically upon the Executive’s
death. This Agreement shall be terminated upon thirty (30) days’ written notice by Company to Executive that Company has
made a good faith determination that Executive has a Disability. For purposes of this Agreement, “Disability”
means the incapacity or inability of Executive, whether due to accident, sickness or otherwise, as confirmed in writing by a medical
doctor acceptable to Company, to perform the essential functions of Executive’s position under this Agreement, with or without
reasonable accommodation, for an aggregate of ninety (90) days during any twelve (12) month period of the Employment Term or an
aggregate of six (6) months at any time during the Employment Term. Upon written request by Company, Executive shall, as soon as
practicable, provide Company with medical documentation and other information sufficient to enable Company to determine whether
Executive has a Disability.

    	 	5	 

     

    

8.                    
Payments Upon Termination.

(a)              
Payment of Accrued Obligations. In the event that the Executive’s employment with the Company terminates for
any reason, including upon expiration of the Employment Term, the Company’s obligation to compensate the Executive shall
in all respects cease as of the date of termination, except that the Company shall pay to the Executive through the date of termination
(i) any accrued but unpaid Base Salary, (ii) any accrued but unused vacation time, and (iii) any rights or payments that are vested
benefits or that the Executive is otherwise entitled to receive at or subsequent to the date of termination of employment under
any benefit plan or any other contract or agreement with the Company, which shall be payable in accordance with the terms of such
benefit plan, contract or agreement, except as explicitly modified by this Agreement, including, without limitation, any of the
Executive’s business expenses that are reimbursable, but have not been reimbursed as of the date of termination of employment
(the “Accrued Obligations”). The Company shall pay to the Executive (or to the Executive’s estate in the
event of Executive’s death), the Accrued Obligations within thirty (30) days after the date of termination of the Executive's
employment with the Company.

(b)              
Severance Upon Termination By Company Without Cause. In the event this Agreement is terminated by the Company without
Cause (other than on account of the Executive’s death or Disability), Executive shall receive, subject to the Executive's
execution and non-revocation of a general release of claims in favor of the Company and its affiliates, successors, assigns, officers,
directors, employees, agents, and shareholders which shall have become irrevocable within sixty (60) days following the termination
of such employment, in a form provided by the Company, which form shall include, among customary terms and conditions, the survival
of Executive’s obligations in Sections 10, 11, 12 and 13 of this Agreement following termination of Executive’s employment
with Company (the “Release Agreement”): (i) a lump sum payment equal to three (3) times the Base Salary in
effect as of the date of termination of this Agreement (the “Severance Payment”); and (ii) to the extent the
Executive timely and properly elects health continuation coverage for Executive under the Consolidated Omnibus Budget Reconciliation
Act of 1985 (“COBRA”), the Company shall reimburse the Executive for the monthly COBRA premium paid by the
Executive for continuing health insurance coverage for the Executive, subject to the eligibility requirements set forth in this
Section 8(b). Such reimbursement shall be paid to the Executive on the fifteenth (15th) day of the month immediately following
the month in which the Executive submits documentation to the Company substantiating Executive's timely payment of the monthly
COBRA premium (the “COBRA Reimbursement”). The Executive shall be eligible to receive the COBRA Reimbursement
until the earliest of: (A) thirty-six (36) months following the month in which Executive’s employment with the Company is
terminated; (B) the date the Executive is no longer eligible to receive COBRA continuation coverage; and (C) the date on which
the Executive becomes eligible to receive substantially similar coverage at substantially similar or lesser cost from another
employer or other source. Notwithstanding the foregoing, if the Company's making the COBRA Reimbursement under Section 8(b)(ii)
would violate the nondiscrimination rules applicable to non-grandfathered plans under the Affordable Care Act (the “ACA”),
or result in the imposition of penalties under the ACA and the related regulations and guidance promulgated thereunder), the Parties
agree to reform Section 8(b)(ii) in a manner as is necessary to comply with the ACA. In the event that Executive executes (and
does not timely revoke) the Release Agreement, the Severance Payment will be paid to Executive within sixty (60) days of Executive’s
termination date. Notwithstanding the foregoing, if the above-referenced sixty (60) day period begins in one taxable year of the
Executive and ends in a second taxable year of the Executive, the lump sum payment shall be made in the second taxable year (and
within such sixty (60) day period). The Severance Payment and COBRA Reimbursement shall terminate immediately if Executive violates
the post-termination restrictive covenants in Sections 10, 11, 12, or 13 of this Agreement.

    	 	6	 

     

    

9.                   Accelerated Vesting of Stock Options Upon Termination by Company Without Cause. In the event this Agreement is terminated
by the Company without Cause, all options granted to Executive shall immediately vest subject to their respective terms.

10.                
Non-Disclosure of Confidential Information.

(a)              
Confidential Information. Executive acknowledges that in the course of Executive’s employment with Company,
Executive will use, have access to, and develop, Confidential Information of Company. For purposes of this Agreement, “Confidential
Information” shall mean and include all information, whether written or oral, tangible or intangible (in any form or
format), of a private, secret, proprietary or confidential nature, of or concerning Company or its business or operations, including
without limitation: any trade secrets or other confidential or proprietary information which is not publicly known or generally
known in the industry; the identity, background, and preferences of any current, former, or prospective customers, affiliates,
distributors, suppliers, vendors, or referral sources; pricing and financial information; current and prospective customer, distributor,
supplier, or vendor lists and leads; proposals with prospective customers, affiliates, suppliers, or vendors; contracts with customers,
distributors, affiliates, suppliers, or vendors; marketing plans; brand standards guidelines; proprietary computer software and
systems; marketing materials and information; information regarding corporate opportunities; operating and business plans and strategies;
research and development; policies and manuals; personnel information of employees that is private and confidential; any information
related to the compensation of employees, consultants, agents or representatives of Company; sales and financial reports and forecasts;
any information concerning any product, technology or procedure employed by Company but not generally known to its customers, prospective
customers, distributors, vendors or competitors, or under development by or being tested by Company; any inventions, innovations
or improvements covered by Section 13; and information concerning planned or pending acquisitions or divestitures. Notwithstanding
the foregoing, the term Confidential Information shall not include information which (A) becomes available to Executive from a
source other than Company or from third parties with whom Company is not bound by a duty of confidentiality, or (B) becomes generally
available or known in the industry other than as a result of its disclosure by Executive.

(i)                
Executive acknowledges and agrees that the Confidential Information is treated by Company as confidential and derives independent
value from not being generally known to and not readily ascertainable by proper means by other persons who can obtain economic
value from its disclosure or use. Executive further acknowledges and agrees that such Confidential Information has been the subject
of efforts by Company which are reasonable under the circumstances to maintain its confidentiality.

(ii)             
Executive acknowledges that Company has extended extensive time, effort, and money to develop the Confidential Information
and that the Confidential Information could be acquired and duplicated by others only with great difficulty and expense. Executive
further acknowledges that the Confidential Information is of a confidential and proprietary nature, and is a valuable, special,
and unique property and asset of Company.

(iii)           
Executive further understands that the purpose of this non-disclosure provision is to protect Company and is limited so
as to apply only to the extent necessary to protect the interests of Company. Executive further acknowledges and understands that
Company would not be willing to provide access to the Confidential Information to Executive without the assurance of reasonable
protection against Executive’s use of this information in a manner inconsistent with Company’s best interest.

(iv)            
During the course of Executive’s employment with Company, Executive agrees to use Executive’s best efforts to
maintain the confidentiality of the Confidential Information, including adopting and implementing all reasonable procedures prescribed
by Company to prevent unauthorized use of Confidential Information or disclosure of Confidential Information to any unauthorized
person.

(v)              
Executive agrees that all Confidential Information shall be Company’s sole property during and after Executive’s
employment with Company. Executive agrees that Executive will not remove any hard copies of Confidential Information from Company’s
premises, will not download, upload, or otherwise transfer copies of Confidential Information to any external storage media or
cloud storage (except as necessary in the performance of Executive’s duties for Company and for Company’s sole benefit),
and will not print hard copies of any Confidential Information that Executive accesses electronically from a remote location (except
as necessary in the performance of Executive’s duties for Company and for Company’s sole benefit).

    	 	7	 

     

    

(vi)            
Other than as contemplated in Section 10(a)(vii) below, in the event that Executive becomes legally obligated to disclose
any Confidential Information to anyone other than to Company, Executive will provide Company with prompt written notice thereof
so that Company may seek a protective order or other appropriate remedy and Executive will cooperate with and assist Company in
securing such protective order or other remedy. In the event that such protective order is not obtained, or that Company waives
compliance with the provisions of this Section 10(a)(vi) to permit a particular disclosure, Executive will furnish only that portion
of the Confidential Information which Executive is legally required to disclose.

(vii)         
Nothing in this Agreement shall be construed to prohibit Executive from: filing a charge or participating in any investigation
or proceeding conducted by any federal, state or local government agency charged with enforcement of any law; reporting possible
violations of any law, rule or regulation to any governmental agency or entity charged with enforcement of any law, rule or regulation;
or making other disclosures that are protected under whistleblower provisions of any law, rule or regulation. Executive acknowledges
that an individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure
of a trade secret that: (A) is made in confidence to a Federal, State, or local government official, either directly or indirectly,
or to an attorney, and made solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in
a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Executive further acknowledges
that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the
trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual:
(1) files any document containing the trade secret under seal; and (2) does not disclose the trade secret, except pursuant to court
order.

(b)              
Restrictions on Use And Disclosure Of Confidential Information. During the Employment Term and thereafter, Executive
agrees: (i) not to use, permit use of, discuss, disclose, transfer, or disseminate in any manner any Confidential Information,
except as necessary in the performance of Executive’s duties for Company and for Company’s sole benefit; (ii) not to
make, or cause to be made, copies (in any form or format) of the Confidential Information, except as necessary in the performance
of Executive’s duties for Company and for Company’s sole benefit; and (iii) to promptly and fully advise Company of
all facts known to Executive concerning any actual or threatened unauthorized use of the Confidential Information or disclosure
of the Confidential Information to any unauthorized person about which Executive becomes aware. The restrictions contained in this
Section 10(b) also apply to Confidential Information developed by Executive during Executive’s employment with Company, which
are related to Company or to Company’s subsidiaries, affiliates, successors, or assigns, as such information is developed
for the benefit of and ownership of Company and all rights and privileges to such information or derivative works, including but
not limited to trademarks, patents and copyrights, remain with Company.

(c)              
Third Party Information. Executive acknowledges that during the Employment Term, Executive may receive or have access
to confidential or proprietary information belonging to third parties (“Third Party Information”). During the
Employment Term and thereafter, Executive agrees: (i) to hold the Third Party Information in the strictest confidence, take all
reasonable precautions to prevent the inadvertent disclosure of the Third Party Information to any unauthorized person, and follow
all of Company’s policies regarding protecting the Third Party Information; (ii) not to use, permit use of, discuss, disclose,
transfer, or disseminate in any manner any Third Party Information, except as necessary in the performance of Executive’s
duties for Company; (iii) not to make, or cause to be made, copies (in any form or format) of the Third Party Information, except
as necessary in the performance of Executive’s duties for Company; and (iv) to promptly and fully advise Company of all facts
known to Executive concerning any actual or threatened unauthorized use of the Third Party Information or disclosure of the Third
Party Information to any unauthorized person about which Executive becomes aware.

(d)              
Prior Employer’s Confidential Information. During the course of Executive’s employment with Company,
Executive shall not use or disclose any confidential information or trade secrets belonging to any prior employer or other third
party which Executive may have learned through prior employment. If at any time during the employment with Company, Executive believes
Executive is being asked to engage in work that shall, or shall be likely to, jeopardize any confidentiality or other obligations
Executive may have to former employers or other third parties, Executive shall immediately advise the CEO so that Executive’s
duties can be modified appropriately. Executive represents and warrants to Company that Executive took nothing confidential with
Executive that belonged to any former employer when Executive left Executive’s prior position of employment, and that Executive
does not have possession of any documents in any form or format that contains any confidential information that belongs to any
former employer or any other third party. If at any time Executive discovers this is incorrect, Executive shall promptly return
any such materials to Executive’s former employer or other third party. Company does not want any such materials, and Executive
shall not be permitted to use or refer to any such materials in the performance of Executive’s duties hereunder.

(e)              
Return of Confidential Information and Property. Upon termination of Executive’s employment with Company,
notwithstanding the reason or cause of termination, and at any other time upon written request by Company, Executive immediately
shall return to Company all originals, copies, or duplicates, in any form or format (whether paper, electronic or other storage
media), of the Confidential Information and the Third Party Information, as well as any and all other documents, computer discs,
computer data, equipment, and property of Company (including laptop computers if one has been provided to Executive), relating
in any way to Company’s business or in any way obtained by Executive during the course of Executive’s employment with
Company. Executive further agrees that after termination of Executive’s employment with Company, Executive shall not retain
any copies, notes, or abstracts in any form or format (whether paper, electronic or other storage media) of the Confidential Information,
the Third Party Information, or other documents or property belonging to Company.

    	 	8	 

     

    

11.                
   Non-Competition and Non-Solicitation.

(a)              
Non-Competition. Executive acknowledges the highly competitive nature of Company’s business and, in consideration
of the payment of the Base Salary and certain benefits by Company to Executive of amounts that may hereafter be paid to Executive
pursuant to the terms hereof (which Executive acknowledges is sufficient to justify the restrictions contained below), Executive
agrees that during the Employment Term and for one (1) year from the date of termination of Executive’s employment with Company
for any reason (the “Restricted Period”), Executive will not compete with the business of Company, which means
that Executive will not engage, directly or indirectly, as a principal, officer, agent, employee, director, member, partner, stockholder
(other than as the passive holder of less than 2% of the outstanding stock of a publicly-traded corporation), independent contractor,
or through the investment of capital, lending of money or property, rendering of consulting services or advice, or in any other
capacity, in the Covered Business (as hereinafter defined) in any jurisdiction in which Company does business at or prior to the
date of termination of Executive’s employment with Company for any reason (the “Covered Area”). For purposes
of this Agreement, “Covered Business” shall mean the business conducted, services offered and/or products sold
by Company at or prior to the date of termination of Executive’s employment with Company and any lines of business described
in Company's business plans that have been presented to the Board during the Employment Term.

(b)              
Non-Solicitation. Executive agrees that during the Restricted Period, Executive shall not (i) directly or indirectly,
solicit or attempt to solicit any of the employees, independent contractors, agents, or representatives of Company, or any person
who was an employee, independent contractor, agent, or representative of Company in the preceding one (1) year period, to leave
Company, sever or reduce business relations with the Company or to cease to be engaged by Company, (ii) directly or indirectly,
hire or employ or attempt to hire or employ any of the employees, independent contractors, agents or representatives of Company,
or (iii) directly or indirectly, solicit or attempt to solicit any customer, vendor, or distributor of Company to sever or reduce
business relations with the Company.

(c)              
Scope of Restrictive Covenants. Company and Executive recognize and agree that Company conducts business operations
and generates revenues from customers located throughout the Covered Area. Executive acknowledges that Company would be greatly
damaged if Executive took action that would violate the restrictive covenants of this Section 11 anywhere in the Covered Area.
Accordingly, Company and Executive agree that the restrictive covenant provisions contained in this Section 11 are applicable to
the Covered Area, and Executive shall be prohibited from violating the terms of this Section 11 from any location anywhere in the
Covered Area.

(d)              
Reasonableness of Restrictive Covenants. Executive agrees that the promises made in this Section 11 are reasonable
and necessary for protection of Company’s legitimate business interests including, but not limited to: the Confidential
Information; customer good will associated with the specific marketing and trade area in which Company conducts its business;
Company’s substantial relationships with prospective and existing customers, distributors, referral sources, suppliers,
and vendors; and a productive and competent and undisrupted workforce. Executive agrees that the restrictive covenants in this
Agreement will not prevent Executive from earning a livelihood in Executive’s chosen business, they do not impose an undue
hardship on Executive, and that they will not injure the public.

    	 	9	 

     

    

(e)              
Tolling of Restrictive Period. The time period during which Executive is to refrain from the activities described
in Section 11 of this Agreement will be extended by any length of time during which Executive is in breach of any provision of
this Agreement. Executive acknowledges that the purposes and intended effects of the restrictive covenants would be frustrated
by measuring the period of the restriction from the date of termination of Executive’s employment where Executive failed
to honor the restrictive covenant until required to do so by court order.

12.                
  Non-Disparagement. Executive agrees that at all times during and after the Employment Term, Executive
will not engage in any conduct that is injurious to the reputation or interests of Company, including, but not limited to, making
disparaging comments (or inducing or encouraging others to make disparaging comments) about Company, any of Company’s members,
directors, officers, employees or agents, or Company’s operations, financial condition, prospects, products or services.
However, nothing in this Agreement shall prohibit Executive from: exercising protected rights under Section 7 of the National
Labor Relations Act; filing a charge with or participating in any investigation or proceeding conducted by the Equal Employment
Opportunity Commission or any other local, state, or federal administrative body or government agency that is authorized to enforce
or administer any law, rule, or regulation; testifying truthfully in any forum or before any government agency responsible for
enforcing any law, rule, or regulation; reporting possible violations of any law, rule or regulation to any governmental agency
or entity charged with enforcement of any law, rule or regulation; or making other disclosures that are protected under whistleblower
provisions of any law, rule or regulation.

13.                
   Intellectual Property.

                (a)              
Executive’s ACT System. The Executive represents and warrants ownership and inventorship of the Accountable,
Collaborative and Transparent system (referred to as the “ACT System”), which is a universal and systematic approach
to corporate values that can be disseminated rapidly. In the ACT System, individual behavior is accountable, group behavior is
collaborative, and corporate behavior synthesizes both of those with appropriate transparency. In Executive’s ACT System,
accountability can be established by tools or methods, such as a RACI matrix, and collaboration tools, such as IT networks and
email systems, can be used to enable collaboration while integrating accountability. Also in Executive’s ACT System, transparency
dictates how such tools are used and the expectations of individuals and groups to alert others to accountability and collaboration
issues. Executive provides the ability to identify and resolve deficiencies by implementing changes pursuant to Executive’s
ACT System. Executive agrees to license the ACT System, as set forth herein, and the Company agrees to take commercially reasonable
measures to obtain one or more appropriate Intellectual Property (as defined below) registrations for the ACT System, for joint
and severable benefits by the Executive and Company, except where certain rights are relinquished to the Executive to license to
third parties, and enforce such licenses, as set forth herein.

(b)              
Work Products. Except for the ACT System, , Executive agrees that the Company is and will be the sole and exclusive
owner of all ideas, inventions, discoveries, improvements, designs, plans, methods, works of authorship, deliverables, writings,
brochures, manuals, know-how, method of conducting its business, policies, procedures, products, processes, software, or any enhancements,
or documentation of or to the same and any other work product in any form or media that Executive makes, works on, conceives,
or reduces to practice, individually or jointly with others, in the course of Executive’s employment for the Company or
with the use of the Company’s time, materials or facilities, and is in any way related or pertaining to or connected with
the present or anticipated business, products or services of the Company whether produced during normal business hours or on personal
time (collectively, “Work Products”); provided, however, the Executive agrees that during the Employment
Term Executive shall not use, and shall not license others to use, the ACT System in the Covered Business.

    	 	10	 

     

    

(c)              
Inventions, Patents and Other Intellectual Property. “Intellectual Property” means any and all
(a) copyrights and other rights associated with works of authorship throughout the world, including neighboring rights, moral rights,
and mask works, (b) trade secrets and other confidential information, (c) patents, patent disclosures and all rights in inventions
(whether patentable or not), (d) trademarks, trade names, Internet domain names, and registrations and applications for the registration
thereof together with all of the goodwill associated therewith, (e) all other intellectual and industrial property rights of every
kind and nature throughout the world and however designated, whether arising by operation of law, contract, license, or otherwise,
and (f) all registrations, applications, renewals, extensions, continuations, divisions, or reissues thereof now or hereafter in
effect.

(d)              
Assignment and Work-For-Hire. Except for any Prior Inventions as set forth in Section 13(g) below and except for
any ACT System, Executive agrees to assign and transfer and hereby does assign and transfer to the Company, to the fullest extent
permitted by applicable law, all right, title, and interest in and to the Work Products, including but not limited to any and all
Intellectual Property pertaining thereto, and in and to all works based upon, derived from, or incorporating such Work Products,
and in and to all income, royalties, damages, claims and payments now or hereafter due or payable with respect thereto, and in
and to all causes of action, either in law or in equity for past, present, or future infringement. Executive hereby acknowledges
that Executive’s work and services provided for the Company and all results and proceeds thereof, including, without limitation,
the Work Products, are works done under the Company’s direction and control and have been specially ordered or commissioned
by the Company. To the extent the Work Products are copyrightable subject matter, they shall constitute “works made for hire”
for the Company within the meaning of the Copyright Act of 1976, as amended, and shall be the exclusive property of the Company,
and should any Work Product be held by a court of competent jurisdiction to not be a “work made for hire,” Executive
shall and does hereby assign the copyright therein to the Company. Any patent application filed by Executive within one (1) year
after termination of Executive's employment with the Company shall be presumed to relate to an invention which was made during
the Employment Term unless Executive can provide evidence to the contrary. Executive hereby waives and further agrees not to assert
his rights known in various jurisdictions as moral rights and grants the Company the right to make changes, as the Company deems
necessary, in the Work Products.

(e)              
License to Company. In the event that, notwithstanding the assignment of all Work Products and Intellectual Property
as set forth in Section 13(c) above, Executive is deemed to own or have any Intellectual Property that are used, embodied, or reflected
in the Work Products, Executive hereby grants to the Company, its successors and assigns, the non-exclusive, irrevocable, perpetual,
worldwide, fully paid and royalty-free license, with rights to sublicense through multiple levels of sublicenses, to use, reproduce,
publish, create derivative works of, market, advertise, distribute, sell, publicly perform and publicly display and otherwise exploit
by all means now known or later developed the Work Products and Intellectual Property.

(f)               
Disclosure to Company; Power of Attorney. Executive shall promptly disclose to the Company each Work Product and
shall communicate, without cost or delay, and without publishing the same, all available information relating thereto to the Company.
Following the disclosure of each Work Product to the Company, Executive will, at the request and cost of the Company, sign, execute,
make and do all such deeds, documents, acts and things as the Company and its duly authorized agents may reasonably require to
apply for, obtain and vest in the name of the Company alone (unless the Company otherwise directs) letters patent, copyrights
or other analogous protection in any country throughout the world and when so obtained or vested to renew and restore the same;
and to defend any opposition proceedings in respect of such applications and any opposition proceedings or petitions or applications
for revocation of such letters patent, copyright or other analogous protection. In the event the Company is unable, after reasonable
effort, to secure Executive’s signature on any letters patent, copyright or other analogous protection relating to a Work
Product, whether because of Executive’s physical or mental incapacity or for any other reason whatsoever, Executive hereby
irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive’s agent and attorney-in-fact
(which designation and appointment shall be (a) deemed coupled with an interest and (b) irrevocable, and shall survive Executive’s
death or incapacity), to act for and in Executive’s behalf and stead to execute and file any such application or applications
and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent, copyright or other analogous
protection thereon with the same legal force and effect as if executed by Executive.

    	 	11	 

     

    

(g)              
Prior Inventions and ACT System; License Thereof to Company. Executive claims right, title and interest in and to
certain inventions, innovations, policies, procedures, products, improvements, software, ideas, discoveries, works of authorship,
and other intellectual property, whether patentable or copyrightable or not, created prior to the earlier of Executive’s
receipt of any Confidential Information, the effective date of the Consulting Agreement, or the Effective Date of this Agreement
(collectively, “Prior Inventions”), which will be or may be used for or provided to the Company in the course
of performing the duties and services hereunder, or incorporated into any Work Products. The Company agrees that such Prior Inventions
and the ACT System are not assigned to the Company, provided, however, Executive unconditionally grants to the Company during
the term of such rights, a non-exclusive, irrevocable, perpetual, worldwide, fully paid and royalty-free license, with rights to
sublicense through multiple levels of sublicenses, to use, reproduce, publish, create derivative works of, market, advertise, distribute,
sell, publicly perform and publicly display and otherwise exploit by all means now known or later developed, such Prior Inventions
and ACT System. Executive represents and warrants that use of such Prior Inventions and ACT System by the Company does not and
will not violate any third parties’ rights.

14.                
Severability; Independent Covenants. If any term or provision of this Agreement shall be determined by a court of
competent jurisdiction to be illegal, invalid or unenforceable for any reason, the remaining provisions of this Agreement shall
remain enforceable and the invalid, illegal, or unenforceable provisions shall be modified so as to be valid and enforceable and
shall be enforced as modified. If, moreover, any part of this Agreement is for any reason held too excessively broad as to time,
duration, geographic scope, activity, or subject, it is the intent of the Parties that this Agreement shall be judicially modified
by limiting or reducing it so as to be enforceable to the extent compatible with the applicable law. The existence of any claim
or cause of action of Executive against Company (or against any member, director, officer or employee thereof), whether arising
out of the Agreement or otherwise, shall not constitute a defense to: (i) the enforcement by Company of any of the restrictive
covenants set forth in this Agreement; or (ii) Company’s entitlement to any remedies hereunder. Executive’s obligations
under this Agreement are independent of any of Company’s obligations to Executive.

15.                
Remedies for Breach of this Agreement. Executive acknowledges and agrees that it would be difficult to measure the
damages to Company from any breach or threatened breach by Executive of this Agreement; that injury to Company from any such breach
would be irreparable; and that money damages would therefore be an inadequate remedy for any such breach. Accordingly, Executive
agrees that if Executive breaches or threatens to breach any of the promises contained in this Agreement, Company shall, in addition
to all other remedies it may have (including monetary remedies), be entitled to seek injunction and/or equitable relief, on a temporary
or permanent basis, to restrain any such breach or threatened breach without showing or proving any actual damage to Company. In
addition, if Executive breaches the post-termination restrictive covenants in Sections 10, 11, 12 or 13 of this Agreement, Company's
obligations to pay the Severance Payment and COBRA Reimbursement referred to in Section 8(b) shall immediately cease, and Company
shall be entitled to all other remedies allowed in law or equity, including, but not limited to, the return of any Severance Payment
made to Executive under this Agreement. Nothing herein shall be construed as a waiver of any right Company may have or hereafter
acquire to pursue any other remedies available to it for such breach or threatened breach, including recovery of damages from Executive.
In addition to any other rights or remedies Company may have hereunder, Company shall have the right and remedy to require Executive
to account for and pay over to Company all compensation, profits, monies, accruals or other benefits derived or received by Executive
due to a breach of Sections 10, 11, 12 or 13 of this Agreement.

16.                  
Attorneys’ Fees and Costs. In any action brought to enforce or otherwise interpret any provision of this Agreement,
the prevailing party shall be entitled to recover reasonable attorneys’ fees and costs from the non-prevailing party to the
action or proceeding, including through settlement, judgment and/or appeal.

    	 	12	 

     

    

17.                
  Assignment. The rights of Company under this Agreement may, without the consent of Executive, be assigned by Company
to (i) any person, firm, corporation, or other business entity which at any time, whether by purchase, merger, or otherwise, directly
or indirectly, acquires all or substantially all of Company's stock or assets, or (ii) any affiliate or future affiliate of Company,
and such assignment by Company pursuant to this Section 17 shall automatically, and without any further action required by the
parties, relieve the assignor Company (and discharge and release the assignor Company) from all obligations and liabilities under
or related to this Agreement (all such obligations and/or automatically liabilities assumed by the assignee Company). This Agreement
shall be binding upon and inure to the benefit of any successor or assigns of Company. Executive may not assign this Agreement
without the written consent of Company. Executive expressly agrees and consents to the enforcement of this Agreement, including
but not limited to the restrictive covenants and other obligations in Sections 10, 11, 12 and 13 above, by Company as well as by
Company’s successors and/or assigns.

18.                  
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida,
without giving effect to any choice of law or conflict of law provision or rule that would cause the application of the laws of
any jurisdiction other than the State of Florida.

19.                
 Jurisdiction; Venue. The Parties hereto irrevocably and unconditionally submit to the exclusive jurisdiction
of any state or federal court sitting in Palm Beach County, Florida over any suit, action or proceeding arising out of or relating
to this Agreement. Service of any process, summons, notice or document by U.S. registered mail sent to the address of any Party
for receipt of notices hereunder as provided in Section 27 hereof shall be effective service of process for any action, suit or
proceeding brought against such Party in any such court. The Parties hereto irrevocably and unconditionally waive any objection
to the laying of venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient forum. A final judgment in any suit, action or proceeding
brought in any such court shall be conclusive and binding upon the Parties and may be enforced in any other courts to whose jurisdiction
a Party is or may be subject, by suit upon such judgment.

20.                
  Waiver. No waiver of any breach or other rights under this Agreement shall be deemed a waiver unless
the acknowledgment of the waiver is in writing executed by the Party committing the waiver. No waiver shall be deemed to be a
waiver of any subsequent breach or rights. All rights are cumulative under this Agreement. The failure or delay of Company at
any time or times to require performance of, or to exercise any of its powers, rights or remedies with respect to any term or
provision of this Agreement or any other aspect of Employee’s conduct or employment in no manner (except as otherwise expressly
provided herein) shall affect the Company’s right at a later time to enforce any such term or provision.

21.                
 Survival. Executive’s post-termination obligations and Company’s post-termination rights under Sections
10 through 21 of this Agreement shall survive the termination of this Agreement and the termination of Executive’s employment
with Company regardless of the reason for termination; shall continue in full force and effect in accordance with their terms;
and shall continue to be binding on the Parties.

22.                
  Construction; Independent Representation. The Parties agree that this Agreement is the product of negotiation between
sophisticated parties and individuals, all of whom were represented by counsel, and each of whom had an opportunity to participate
in and did participate in, the drafting of each provision hereof. Accordingly, ambiguities in this Agreement, if any, shall not
be construed strictly or in favor of or against any Party hereto but rather shall be given a fair and reasonable construction without
regard to the rule of contra proferentum. Executive acknowledges that Company has provided Executive with a reasonable opportunity
to obtain independent legal advice with respect to this Agreement, and that Executive has obtained such independent legal advice
prior to executing this Agreement.

23.                   
Legal Fees for Negotiation of Agreement. Company shall pay the reasonable and properly documented legal fees incurred
by Executive prior to the Effective Date related to the negotiation and execution of this Agreement, such amount not to exceed
the sum of Five Thousand and No/100 Dollars ($5,000.00), and to be supported by an invoice or bill as such is otherwise normally
issued by Executive’s attorney. Any costs and expenses paid or reimbursed hereunder shall be paid within forty-five (45)
days after receipt of written request by Executive for payment or reimbursement; provided that in no event shall any such amount
be paid later than the end of the calendar year next following the calendar year in which the legal fee and related expenses were
incurred.

24.                  
Entire Agreement. This Agreement constitutes the entire understanding of the Parties relating to the subject matter
hereof and supersedes all prior agreements, understandings, arrangements, promises and commitments, whether written or oral, express
or implied, relating to the subject matter hereof, and all such prior agreements, understandings, arrangements, promises and commitments,
including but not limited to the Consulting Agreement, are hereby canceled and terminated.

    	 	13	 

     

    

 

25.                  
Amendment. This Agreement may not be amended, supplemented or modified in whole or in part except by an instrument
in writing signed by the Party or Parties against whom enforcement of such amendment, supplement, or modification is sought.

26.                  
Notices. Any notice, request or other document required or permitted to be given under this Agreement shall be in
writing and shall be deemed given: (a) upon delivery, if delivered by hand; (b) three (3) days after the date of deposit in the
mail, postage prepaid, if mailed by certified U.S. mail; or (c) on the next business day, if sent by prepaid overnight courier
service. If not personally delivered by hand, notice shall be sent using the addresses set forth opposite each Party’s signature
to this Agreement or to such other address as either Party may designate by written notice to the other.

27.                  
Code Section 280G. Notwithstanding anything in this Agreement to the contrary, in the event that any payment or benefit
received or to be received by Executive (including any payment or benefit received in connection with a Change in Control or the
termination of Executive’s employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or
agreement) (all such payments and benefits being hereinafter referred to as the “Total Payments”) would not
be deductible (in whole or part) by Company as a result of section 280G of the Internal Revenue Code of 1986 (the “Code”),
then, to the extent necessary to make the maximum amount of the Total Payments deductible, the portion of the Total Payments that
do not constitute deferred compensation within the meaning of Code Section 409A (as defined below) shall first be reduced (if necessary,
to zero), and all other Total Payments shall thereafter be reduced (if necessary, to zero), with cash payments being reduced before
non-cash payments, and payments to be paid last being reduced first; provided, however, that such reduction shall only be made
if (i) the amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income
taxes on such reduced Total Payments) is greater than or equal to (ii) the amount of such Total Payments without such reduction
(but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of the excise
tax imposed under Section 4999 of the Code on such unreduced Total Payments).

28.                  
Code Section 409A Compliance. It is intended that the provisions of this Agreement are either exempt from or comply
with the terms and conditions of Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively,
“Code Section 409A”), and to the extent that the requirements of Code Section 409A are applicable thereto, all
provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under
Code Section 409A. Notwithstanding the foregoing, Company shall have no liability with regard to any failure to comply with Code
Section 409A. If under this Agreement, an amount is to be paid in two or more installments, for purposes of Code Section 409A,
each installment shall be treated as a separate payment. Notwithstanding anything herein to the contrary or otherwise, except to
the extent any expense, reimbursement or in-kind benefit provided pursuant to this Section does not constitute a “deferral
of compensation” within the meaning of Code Section 409A and the regulations and other guidance thereunder: (i) the amount
of expenses eligible for reimbursement or in-kind benefits provided to Executive during any calendar year will not affect the amount
of expenses eligible for reimbursement or in-kind benefits provided to Executive in any other calendar year; (ii) the reimbursements
for expenses for which Executive is entitled to be reimbursed shall be made on or before the last day of the calendar year following
the calendar year in which the applicable expense is incurred; and (iii) the right to payment or reimbursement or in-kind benefits
hereunder may not be liquidated or exchanged for any other benefit. A termination of employment shall not be deemed to have occurred
for purposes of any provision of this Agreement providing for the payment of amounts or benefits upon or following a termination
of employment 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. Notwithstanding anything to the contrary in this Agreement, if the Company determines
(i) that on the date the Executive’s employment with the Company terminates or at such other time that the Company determines
to be relevant, the Executive is a “specified Executive” (as such term is defined under Treasury Regulation 1.409A-1(i)(1))
of the Company and (ii) that any payments to be provided to the Executive pursuant to this Agreement are or may become subject
to the additional tax Code Section 409A or any other taxes or penalties imposed under Code Section 409A if provided at the time
otherwise required under this Agreement, then such payments shall be delayed until the date that is six (6) months after the date
of the Executive’s Separation from Service, or, if earlier, the date of the Executive’s death. Any payments delayed
pursuant to this Section shall be made in a lump sum on the first day of the seventh (7th) month following the Executive’s
Separation from Service, or, if earlier, the date of the Executive’s death.

29.                
Counterparts; Electronic Transmission; Headings. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, including an electronic copy or facsimile, but all of which taken together shall constitute
one and the same instrument. The headings used herein are for ease of reference only and shall not define or limit the provisions
hereof.

[Signatures on Following
Page]

 

    	 	14	 

     

    

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

	SOLITRON DEVICES, INC.	 	Address
for notices:
	 	 	 
	By: /s/ Tim Eriksen	 	3301 Electronics
Way
	Title: CEO	 	West Palm Beach, FL 33407
	 	 	 
	 	 	With a copy to:
	 	 	 
	 	 	Akerman LLP
	 	 	Three Brickell City Centre
	 	 	98 Southeast
Seventh Street
	 	 	Miami, FL 
33131
	 	 	Attn: Teddy D. Klinghoffer,
Esq.
	 	 	 
	 	 	 
	/s/ Mark Matson	 	 
	MARK MATSON	 	 
	 	 	 
	 	 	With a copy to:
	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

 

    	 	15

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