Document:

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                                                                   Exhibit 10.15

                        COMMUTATION AND RELEASE AGREEMENT

As of the Effective Date, this Commutation and Release Agreement (this
"Commutation Agreement") is made and entered into by and between AMERISAFE,
Inc., (also known as Amerisafe Insurance Group of DeRidder, Louisiana) on behalf
of itself and all of its Affiliated (as defined herein) and/or subsidiary
companies, including, but not limited to, American Interstate Insurance Company
and Silver Oak Casualty, Inc., and Converium Reinsurance (North America) Inc.
(formerly known as Zurich Reinsurance (North America), Inc.) of Stamford,
Connecticut.

WHEREAS, Company (as defined herein) and Reinsurer (as defined herein) have
entered into the Reinsurance Agreements (as defined herein) pursuant to which
Company ceded to Reinsurer, and Reinsurer assumed from Company, certain
liabilities arising out of policies of insurance written by Company; and

WHEREAS, Company and Reinsurer wish to terminate and extinguish the Reinsurance
Agreements and to fully and finally settle, resolve and commute, by means of the
payment described herein, all their rights, privileges, duties, liabilities and
obligations under the Reinsurance Agreements; and

WHEREAS, Company and Reinsurer understand and acknowledge that Reinsurer's
liabilities and obligations to Company under the Reinsurance Agreements include
paid and outstanding losses and loss adjustment expenses, as well as losses
incurred but not reported, and therefore can be estimated but cannot presently
be determined in an amount certain; and

WHEREAS, Company and Reinsurer intend by this Commutation Agreement to fully and
forever release and discharge each other from their respective existing and
future liabilities and obligations, including contingent and uncertain
liabilities, under the Reinsurance Agreements; and

WHEREAS, Company and Reinsurer agree that it is in each of their best interests
to freely and voluntarily enter into this Commutation Agreement and to
compromise, resolve and settle all amounts due, or which may become due, between
each other.

NOW, THEREFORE, and in consideration of the premises and mutual covenants and
conditions set forth herein and the payment to be made hereunder, and intending
to be legally bound, Company and Reinsurer agree as follows:

                             ARTICLE I - DEFINITIONS

A.    "Affiliate" or "Affiliated" means that the person in question is an
      "affiliate" of, or a person "affiliated" with a specified person, if the
      person in question is a person that directly, or indirectly, through one
      or more intermediaries, controls, or is controlled by, or is under common
      control with, such specified person.

B.    "Company" means AMERISAFE, Inc., (also known as Amerisafe Insurance Group
      of DeRidder, Louisiana) and its predecessors, successors and assigns, and

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       all Affiliated and/or subsidiary insurers that are presently, or were at
       one time, parties to any Reinsurance Agreement, including, but not
       limited to, the following persons: American Interstate Insurance Company
       and Silver Oak Casualty, Inc.

C.    "Closing Date" is July 27, 2005

D.    "Effective Date" is June 30, 2005.

E.    "Reinsurer" is Converium Reinsurance (North America) Inc. (formerly known
      as Zurich Reinsurance (North America), Inc.) and its predecessors,
      successors and assigns.

F.    "Reinsurance Agreements" are: (i) the specific treaty reinsurance
      agreements, including all amendments, endorsements and addenda thereto,
      entered into by and between Company and Reinsurer as follows: (CRNA ref.
      no. WC3080A) First Casualty Excess of Loss Reinsurance Agreement -
      A20500-221 99-0101 A4, (CRNA ref. no. WC3080B) Second Casualty Excess of
      Loss Reinsurance Agreement- A20500-222 99-0101 A4, (CRNA ref. no. WC3080C)
      Third Casualty Excess of Loss Reinsurance Agreement - A20500-223 99-01-01
      A4; and (ii) also any and all other insurance or reinsurance agreements
      that are not identified specifically in this paragraph (F) and that are
      agreements pursuant to which Reinsurer assumes or has assumed from Company
      liabilities or obligations arising out of insurance written and/or
      reinsurance assumed by Company with the exception of the following
      treaties that are excluded from the scope of this Commutation Agreement
      and shall remain in full force and effect: (CRNA ref. no. WC3080D) Fourth
      Casualty Excess of Loss Reinsurance Agreement - A20500-224 99-01-01 A4,
      (CRNA ref. no. WC3080E) Fifth Casualty Excess of Loss Reinsurance
      Agreement - A20500-225 99-01-01 A4.

                              ARTICLE II - PAYMENT

A.    Reinsurer shall pay to Company the sum of USD $61,296,796.68 (the
      "Commutation Amount").

B.    Reinsurer shall remit payment of 81% of the Commutation Amount via direct
      wire transfer, in immediately available funds, to the account designated
      by Company in Exhibit A (that is attached hereto and incorporated herein
      by reference) within two (2) business days of the Closing Date. Reinsurer
      shall remit payment of the remaining 19% of the Commutation Amount via
      direct wire transfer, in immediately available funds, to the account
      designated by Company in Exhibit A within eight (8) business days of the
      Closing Date.

                              ARTICLE III - RELEASE

As of the Effective Date, the Reinsurance Agreements shall be terminated and
commuted in full and the parties agree as follows:

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A.    In consideration for Reinsurer's payment of the Commutation Amount,
      Company, on behalf of itself, its Affiliates, and its successors and
      assigns, hereby fully and unconditionally releases and forever discharges
      Reinsurer and its Affiliates, its successors and assigns, and their
      officers, directors, shareholders, employees, representatives and
      attorneys and their heirs, executors and assigns from any and all
      liabilities and obligations arising out of, in respect of, or relating to
      the Reinsurance Agreements, including, but not limited to, any and all
      premiums, losses, claims, liabilities, damages, judgments, debts, duties,
      sums of money, covenants, errors, omissions, counter-claims, suits,
      accounts, contributions, indemnifications, promises, interest credit,
      ultimate net loss amounts, return premium amounts, funds withheld account
      balance amounts (whether such balance amounts are positive or negative as
      of the Effective Date), experience refund amounts, dividends, expenses,
      costs, offsets, attorney's fees, and all other causes of action and
      demands whatsoever, whether in law, in equity, or otherwise, whether known
      or unknown, vested or contingent, liquidated or unliquidated, matured or
      unmatured, reported or unreported, disputed or undisputed, quantified or
      not quantified and whether currently existing or arising in the future.
      Company acknowledges that its receipt of the Commutation Amount effects a
      complete discharge, release, accord, satisfaction, settlement and
      commutation of all of the past, present and future liabilities and
      obligations of Reinsurer arising out of, in respect of, or relating to the
      Reinsurance Agreements.

B.    Effective simultaneously with Company's release of Reinsurer as provided
      in Paragraph A herein, Reinsurer on behalf of itself, its Affiliates, and
      its successors and assigns, hereby fully and unconditionally releases and
      forever discharges Company and its Affiliates, its successors and assigns,
      and their officers, directors, shareholders, employees, representatives
      and attorneys and their heirs, executors and assigns from any and all
      liabilities and obligations arising out of, in respect of, or relating to
      the Reinsurance Agreements, including, but not limited to, any and all
      premiums, losses, claims, liabilities, damages, judgments, debts, duties,
      sums of money, covenants, errors, omissions, counter-claims, suits,
      accounts, contributions, indemnifications, promises, interest credit,
      ultimate net loss amounts, return premium amounts, funds withheld account
      balance amounts (whether such balance amounts are positive or negative as
      of the Effective Date), experience refund amounts, dividends, expenses,
      costs, offsets, attorney's fees, and all other causes of action and
      demands whatsoever, whether in law, in equity, or otherwise, whether known
      or unknown, vested or contingent, liquidated or unliquidated, matured or
      unmatured, reported or unreported, disputed or undisputed, quantified or
      not quantified and whether currently existing or arising in the future, it
      being the intention of the parties that this Commutation Agreement
      operates as a full and final settlement of any and all of the parties'
      respective obligations and liabilities related to the Reinsurance
      Agreements.

C.    Nothing in this Commutation Agreement shall be construed as releasing any
      claims that Company or Reinsurer may have against any person that is not a
      person (or category or subset of persons) that is included within the
      scope of the general release language set forth in Paragraph A and
      Paragraph B herein,

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      including but not limited to, any claims or potential claims that
      Reinsurer may have against its retrocessionaires that arise out of or are
      related to one or more of the Reinsurance Agreements. This Commutation
      Agreement shall not confer any rights or benefits upon any third party,
      except as may be expressly provided herein.

D.    Company and Reinsurer expressly assume the risk that acts, omissions,
      matters, causes or things may have occurred which are not known or are not
      expected to exist by either of them. To the fullest extent permitted by
      law, Company and Reinsurer hereby waive, and shall not seek the protection
      of the terms and provisions of any statute, rule or doctrine of common law
      which:

            (i)   narrowly construes releases that purport by their terms to
                  release claims based upon, relating to or arising out of such
                  acts, omissions, matters, causes or things referred to above
                  in this Paragraph D, or

            (ii)  restricts or prohibits the release of such claims.

                            ARTICLE IV - NON-RELIANCE

A.    This Commutation Agreement fully and finally resolves the rights, duties
      and obligations of Company and Reinsurer under the Reinsurance Agreements,
      and neither party shall:

            (i)   have any remedy in respect of any representation, warranty or
                  undertaking of the other that is not specifically set forth in
                  this Commutation Agreement, whether or not relied upon by the
                  other party, or

            (ii)  seek to reopen or set aside this Commutation Agreement or any
                  of the Reinsurance Agreements on any basis whatsoever,
                  including, without limitation, that this Commutation Agreement
                  or any of the Reinsurance Agreements is void or voidable due
                  to a mistake or change in law or mistake of fact in any way
                  related to this Commutation Agreement or any of the
                  Reinsurance Agreements.

B.    Each of Company and Reinsurer has entered voluntarily into this
      Commutation Agreement based upon its own independent assessment of the
      relevant facts and its rights and obligations under the Reinsurance
      Agreements and not based upon any representations that were made or
      disclosures that were not made by the other party, its Affiliates,
      officers, directors, shareholders, employees, representatives, agents,
      attorneys or their respective heirs, administrators, predecessors,
      successors and assigns. Company and Reinsurer acknowledge that each has
      had a full and fair opportunity to consult with, and seek the advice and
      recommendations of, its counsel prior to its execution of this Commutation
      Agreement.

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                                ARTICLE V - OTHER

A.    Each of Company and Reinsurer represents and warrants to the other that:

            (i)   it is authorized to enter into this Commutation Agreement;

            (ii)  the persons executing this Commutation Agreement on behalf of
                  the party have the necessary and appropriate authority to do
                  so and that this Commutation Agreement has been duly and
                  validly executed by such party;

            (iii) this Commutation Agreement constitutes the valid and binding
                  obligation of such party and is enforceable according to its
                  terms;

            (iv)  there are no pending or existing agreements, transactions, or
                  negotiations to which either party is a party that would
                  render this Commutation Agreement, or any part thereof, void,
                  voidable or unenforceable;

            (v)   it has obtained all authorizations, consents or approvals of
                  any governmental or regulatory entity required to make this
                  Commutation Agreement valid and binding; and

            (vi)  no claim or loss being released by this Commutation Agreement
                  has been assigned, transferred or sold to any other person or
                  entity.

B.    Company represents and warrants to Reinsurer the following: (i) all
      Affiliated insurers that are presently, or were at one time, parties to
      any Reinsurance Agreement are listed specifically in the definition of
      "Company" in this Commutation Agreement; and (ii) there are no insurers
      that were formerly Affiliated with Company and that are presently, or were
      at one time, parties to any Reinsurance Agreement that are now controlled
      by a person that is not Affiliated with Company.

C.    This Commutation Agreement may not be modified except by written amendment
      executed by both Company and Reinsurer.

D.    This Commutation Agreement, and the rights, duties and obligations set
      forth herein, shall inure to the benefit of, and be binding upon,
      Company's and Reinsurer's officers, directors, employees, affiliates,
      stockholders, predecessors, successors, assigns and, to the extent
      permitted by law, liquidators, rehabilitators, receivers and other
      statutory successors.

E.    Company and Reinsurer each intend and agree that the existence of this
      Commutation Agreement, and the terms hereof, shall remain strictly
      confidential. Neither Company nor Reinsurer (including their respective
      attorneys, agents, representatives and/or Affiliates) shall disclose or
      disseminate in any way the facts or terms related to this Commutation
      Agreement, except as may be

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      necessary or appropriate to parent companies and/or Affiliates,
      retrocessionaires, auditors, reinsurance intermediaries, rating agencies,
      governmental or regulatory authorities, in filings with the Securities and
      Exchange Commission, or as may be required by legal or regulatory process
      or for any purpose relating to or arising from such filings.

F.    This Commutation Agreement may be executed and delivered in multiple
      counterparts, each of which, when so executed and delivered, shall
      constitute an original, and all of which taken together shall constitute
      one instrument. This Commutation Agreement may be executed and transmitted
      by facsimile provided that an original executed copy shall be exchanged
      promptly and be substituted for copies executed and transmitted by
      facsimile.

G.    This Commutation Agreement shall be construed and governed by the laws of
      the State of Louisiana, without regard for the State of Louisiana's
      conflicts of law provision, and any action brought to enforce the terms of
      this Commutation Agreement shall be brought solely in the State or Federal
      Courts for the State of Louisiana. In any such action, the Parties consent
      to the jurisdiction of the State or Federal Courts for the State of
      Louisiana and waive any right to argue that the State or Federal Courts
      for the State of Louisiana are an inappropriate or inconvenient forum.

H.    The parties, as between and among themselves, understand that they may
      have sustained damages or incurred obligations that may not yet be
      manifest and that are presently unknown, but nevertheless, the parties
      deliberately intend and do hereby fully release one another as provided in
      this Commutation Agreement. Furthermore, the parties expressly accept and
      assume the risk that the factual or legal assumptions made by either party
      in connection with this Commutation Agreement may be found hereafter to be
      different from the true facts or law, and the parties agree that this
      Commutation Agreement (including the release of claims contemplated
      thereby) shall be and remain in full force and effect notwithstanding such
      differences in facts or law.

I.    The parties specifically agree and acknowledge that Reinsurer's payment of
      the value of the Commutation Amount is being paid in good faith and
      constitutes fair consideration for the discharge of amounts allegedly
      owing now or potentially owing in the future by either party in respect of
      the Reinsurance Agreements.

J.    Each party has had the opportunity to negotiate the terms and modify the
      draftsmanship of this Commutation Agreement. Therefore, the terms of this
      Commutation Agreement shall be considered and interpreted without any
      presumption, inference or rule requiring construction or interpretation of
      any provision of this Commutation Agreement against the interest of the
      drafter of the Commutation Agreement.

K.    The failure of the parties to enforce any provision of this Commutation
      Agreement shall not be construed as a waiver of such provision or any
      other provision of this Commutation Agreement. No waiver of any provision
      of this

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      Commutation Agreement shall be deemed a waiver of any of its other terms,
      nor shall such waiver constitute a continuing waiver.

L.    The Parties agree that in the event payment of the Commutation Amount by
      Reinsurer, as described in Article II herein, is not received by Company,
      then this Commutation Agreement shall be considered null and void ab
      initio. Moreover, if any court of competent jurisdiction issues an order,
      decision or ruling in accordance with applicable law declaring this
      Commutation Agreement, any of the provisions contained in Article III(A)
      or Article III(B) herein, or the payment of the Commutation Amount made
      under Article II herein to be null, void, illegal, avoided or otherwise
      unenforceable or rescinded ab initio and such order, decision or ruling
      becomes final and unappealable with no appeal or stay pending (the "Final
      Order"), then this Commutation Agreement shall be rescinded immediately
      and be declared null and void ab initio, each of Reinsurer and Company
      shall be restored to the position they were in just prior to the execution
      of this Commutation Agreement and the Reinsurance Agreements shall be in
      full force and effect as if this Commutation Agreement had never existed.
      Company shall return the Commutation Amount plus an Investment Credit
      Amount (as defined herein) within ten (10) business days of the date of
      such Final Order, subject to deduction and/or offset by Company for
      amounts that would have become due and owing under the Reinsurance
      Agreements during the period commencing with the Effective Date and ending
      with the date of the Final Order. In the event that Company wrongfully
      fails to return the Commutation Amount plus the Investment Credit Amount
      within ten (10) business days of such Final Order (subject to deduction
      and/or offset by Company for amounts that Reinsurer would have paid to
      Company under the Reinsurance Agreements had this Commutation Agreement
      not been in effect) and Reinsurer institutes legal proceedings against
      Company to enforce its rights under this Commutation Agreement, Company
      shall pay all of Reinsurer's reasonable and necessary expenses and costs,
      including, but not limited to, Reinsurer's reasonable attorneys' fees,
      associated with such legal proceedings. The "Investment Credit Amount"
      shall be defined as the sum of all Quarterly Investment Credits (as
      defined herein) for each calendar quarter from the date that the
      Commutation Amount was paid by Reinsurer to the date that Reinsurer
      receives payment in full pursuant to this paragraph L. The "Quarterly
      Investment Credit" shall be calculated quarterly, commencing with the
      calendar quarter following the date that the Commutation Amount was paid
      by Reinsurer, by applying the coupon rate on a 10-Year U.S. Treasury Bond
      as of the last business day of each calendar quarter, divided by 4, to the
      Remaining Balance (as defined herein) as of the end of each calendar
      quarter. If Reinsurer is repaid at other than quarter-end, the final
      Quarterly Investment Credit will be pro-rated accordingly. The "Remaining
      Balance" shall be defined as the Commutation Amount less all amounts that
      would have been paid to Company under the Reinsurance Agreements if this
      Commutation Agreement had never existed. In the event of a Final Order,
      Reinsurer expressly reserves all rights it has to challenge any claims
      billed to it by Company under the Reinsurance Agreements and the parties
      each reserve all rights to setoff, recoupment, counterclaim and defenses
      that it may have. Company agrees that neither the foregoing provision nor
      any other provision in this paragraph is intended to be and shall not be

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      deemed or argued to constitute a waiver by Reinsurer of any and all rights
      that it may have to audit, question, challenge, or dispute any claims
      deducted or offset from the Commutation Amount by Company under this
      paragraph, and Reinsurer expressly reserves all such rights. In the event
      that any part of this Commutation Agreement (except for any of the
      provisions contained in Article III(A) or Article III(B) herein or the
      payment of the Commutation Amount made under Article II) should for any
      reason become or be found to be null, void, illegal or otherwise
      unenforceable, it shall be struck out to the extent that it is so null,
      void, illegal or unenforceable, and the remaining provisions of this
      Commutation Agreement shall remain in full force and effect.

M.    This Commutation Agreement constitutes the entire agreement between
      Company and Reinsurer and supersedes all prior and contemporaneous oral
      and/or written agreements and understandings between the parties relating
      to the Reinsurance Agreements.

N.    Company and Reinsurer absolutely and unconditionally covenant and agree
      with each other, and their respective successors and assigns, that
      subsequent to the Closing Date of this Commutation Agreement, neither
      party will hereafter for any reason whatsoever, demand, claim, file suit
      or initiate arbitration, mediation, litigation or other legal proceedings
      against the other in respect of any matters relating to the Reinsurance
      Agreements, except for a legal proceeding to enforce rights and/or
      remedies that are provided for expressly pursuant to this Commutation
      Agreement.

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IN WITNESS WHEREOF, the parties have executed this Commutation Agreement by
their respective duly authorized officers.

AMERISAFE, INC. (ALSO KNOWN AS AMERISAFE INSURANCE GROUP) ON BEHALF OF ITSELF
AND ALL OF ITS AFFILIATED AND/OR SUBSIDIARY COMPANIES, INCLUDING, BUT NOT
LIMITED TO, AMERICAN INTERSTATE INSURANCE COMPANY AND SILVER OAK CASUALTY, INC.

By: /s/  C Allen Bradley, Jr.
    ----------------------------------------------------
Title:  President and Chief Executive Officer

CONVERIUM REINSURANCE (NORTH AMERICA) INC.
(FORMERLY KNOWN AS ZURICH REINSURANCE (NORTH AMERICA), INC.)

By: /s/  Raymond Dowling
    --------------------------------------------------
         Raymond Dowling
       _______________________________________________
Title: Senior Vice President and Chief Reinsurance
       Officer

                                       9exv10w61

 

Exhibit 10.61

TRANSITION AGREEMENT AND RELEASE

RECITALS

     This Transition Agreement and Release (“Agreement”) is made by and between Thomas E. Worthy
(“Executive”) and Cholestech Corporation, its predecessors, successors and assigns (“Company”)
(collectively referred to as the “Parties”):

     WHEREAS, Executive is employed by the Company as its Vice President of Development;

     WHEREAS, the Company wishes to begin a search process to find a suitable replacement
candidate;

     WHEREAS, the Executive and Company have agreed that in order to effectuate a smooth
transition, Executive will resign from his position as Vice President of Development effective the
naming of a new Vice President of Development.

     WHEREAS, the Executive’s Change of Control document executed October 10, 2003 will remain in
effect until he resigns.

     WHEREAS, the Company and Executive entered into an At-Will Employment, Confidential
Information, Invention Assignment, and Arbitration Agreement (the “Confidentiality Agreement”)
signed on August 9, 1999;

     WHEREAS, the Company and Executive have entered into Stock Option Agreements dated August 17,
2000; June 14, 2001; March 27, 2002; March 27, 2003; March 25, 2004; and March 23, 2005 granting
Executive the option to purchase shares of the Company’s common stock subject to the terms and
conditions of the Company’s 1997 and the Company’s 2000 Stock Option Plan and the Stock Option
Agreement (the “Stock Agreements”);

     WHEREAS, the Parties, and each of them, wish to resolve any and all disputes, claims,
complaints, grievances, charges, actions, petitions and demands that the Executive may have against
the Company as defined herein, including, but not limited to, any and all claims arising or in any
way related to Executive’s employment with, or separation from, the Company;

     WHEREAS, the Parties wish to set forth the terms of the orderly transition of Executive’s
employment duties;

 

 

     NOW THEREFORE, in consideration of the promises made herein, the Parties hereby agree as
follows:

COVENANTS

     1. Transition Period. This Agreement shall become effective on the dates it is signed
by both parties (the “Effective Date”).

     2. Position and Duties. Upon the Effective Date, Employee shall continue to serve as
Vice President of Development but agrees to voluntarily resign from this position upon the naming
of a suitable replacement to the position of Vice President of Development. However, the parties
agree that the Executive’s employment with the Company shall be “at-will” employment and may be
terminated at any time, for any reason, with or without Cause (as defined herein) or notice. No
provision of this Agreement shall be construed as conferring upon the Executive a right to continue
as an employee of the Company.

          (a) Post-Resignation Position. Upon resignation of his position as Vice President of
Development, Executive shall continue to be employed by the Company, reporting to the Company’s
Chief Executive Officer (“CEO”), and shall assume and discharge such responsibilities as may be
requested and deemed necessary and appropriate by the CEO. Executive’s employment shall be deemed
“at-will” employment and may be terminated at any time, for any reason, with or without cause or
notice. Executive shall continue in this new capacity as an employee reporting to the CEO until he
resigns, he is terminated or March 31, 2006, which ever date comes earliest (the “Termination
Date”). The Executive shall perform his duties faithfully and to the best of his ability. The
Executive may serve on the boards of directors of other entities and engage in other business
activities outside of his employment with the Company, so long as such activities do not materially
interfere with his duties to the Company. Upon employment of a New Vice President of Development,
it is expected that the Executive will make himself available to work hours as required by the CEO.
Below is a guideline to what is anticipated for the majority of the time period :

	 	•	 	32 hours/per week for the months of November and December 2005
	 
	 	•	 	24 hours/per week for the months of January and February 2006
	 
	 	•	 	16 hours/per week for the months of March 2006

          (b) Salary. The Company will continue to pay Executive as compensation his base
salary at an annualized rate of $198,300 in accordance with the Company’s normal payroll practices
and continuing until the Termination Date. Cholestech expects the hours worked to remain at 40
hours until a replacement V.P. of Development is hired. Hours worked after the hire of a new Vice
President will be based on the hours listed in Paragraph 2(a) of this Agreement.  

 

 

          (c) Benefits. During the Payment Period, the Executive shall be entitled to
participate in the employee benefit plans and programs of the Company, if any, to the extent that
his position, salary, age, health and other qualifications make him eligible to participate in such
plans or programs, subject to the rules and regulations applicable thereto. The Company reserves
the right to cancel or change the benefit plans and programs it offers to its employees at any
time.

          (d) Paid Time Off. (“PTO”) During the Payment Period, the Executive shall be entitled
to accrue pro-rated PTO in accordance with the Company’s current policy for an employee of the
Executive’s position and salary. Any accrued and unused PTO will be paid upon the Termination
Date.

          (e) Expenses. The Company shall reimburse the Executive for reasonable travel,
entertainment or other expenses incurred by the Executive in the furtherance of or in connection
with the performance of the Executive’s duties hereunder during the Payment Period, in accordance
with the Company’s expense reimbursement policy as in effect from time to time.

          (f) Bonus: The Executive will be eligible for the Management Incentive Bonus Plan
(“MIBP”) in FY06. Terms of any payout amounts will be subject to the terms and conditions of the
Cholestech policy.

     3. Severance Agreement. If: (1) the Company terminates Executive’s employment,
provided such termination is not “for Cause” as defined below, or Executive tenders his
resignation, provided such resignation does not follow acts by the Executive that the Company
determines in its sole discretion warrant the termination of Executive for Cause; and (2) in
consideration for the execution by Executive of a general release on the Termination Date, the form
of which is attached hereto as Exhibit A (the “Supplemental Agreement”), provided Executive
does not revoke the Supplemental Agreement, the Company agrees to pay Executive severance as
follows:

          (a) Severance Payment. The Executive shall be entitled to receive a lump sum payment
of One Hundred Ninety Eight Thousand Three Hundred ($198,300) (the “Severance Payment”), less all
applicable withholding taxes and in accordance with Company’s standard payroll practices. The
Severance Payment, if applicable, will be paid no later than fifteen (15) days after the Effective
Date of the Supplemental Agreement.

          (b) COBRA. The Company shall reimburse Executive for the payments he makes for COBRA
coverage for a period of 12 months beginning on the Termination Date, or until Executive has
secured other employment, whichever occurs first. COBRA reimbursements shall be made by the Company
to Executive within thirty (30) days of Executive’s provision to the Company of his payments for
COBRA coverage, provided, however, that (i) the Executive constitutes a qualified beneficiary, as
defined in Section 4980B(g)(1) of the Internal Revenue Code of 1986, as amended, and (ii) Executive
timely elects and pays for COBRA coverage.

          (c) Stock Treatment. If the Company or the Executive terminates the Executive’s
employment, for any or no reason, the Executive agrees and acknowledges that the remaining

 

 

unvested shares of the Company subject to his stock options shall terminate immediately as of
the date of such termination. The Parties agree that for purposes of determining the number of
shares of the Company’s common stock which Executive is entitled to purchase from the Company,
pursuant to the exercise of outstanding options, the Executive will have continued vesting through
the March 31, 2006. The exercise of any stock options shall continue to be subject to the terms
and conditions of the Stock Agreements

          (d) Cause. For the purposes of this Agreement, the term “Cause” shall mean the
occurrence of any one or more of the following: (i) any act of personal dishonesty taken by the
Executive in connection with his responsibilities as an employee which is intended to result in
substantial personal enrichment of the Executive, (ii) the Executive’s conviction of a felony which
the Board of Directors reasonably believes has had or will have a material detrimental effect on
the Company’s reputation or business, (iii) a willful act by the Executive which constitutes
misconduct and is injurious to the Company, or (iv) continued willful violations by the Executive
of the Executive’s obligations to the Company after there has been delivered to the Executive a
written demand for performance from the Company which describes the basis for the Company’s belief
that the Executive has not substantially performed his duties.

          (e) Mitigation. The Executive shall not be required to mitigate the amount of any
payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that
the Executive may receive from any other source. However, the Executive shall not be entitled to
receive the health coverage and benefits contemplated by this Agreement in the event that the
Executive receives similar health coverage and benefits as a result of new employment during the 18
month period commencing on the date of the Executive’s termination.

     4. Confidential Information. Executive shall continue to maintain the confidentiality
of all confidential and proprietary information of the Company and shall continue to comply with
the terms and conditions of the Confidentiality Agreement between Executive and the Company.
Executive shall return all of the Company’s property and confidential and proprietary information
in his possession to the Company on the Termination Date.

     5. Confidentiality. The Parties acknowledge that Executive’s agreement to keep the
terms and conditions of this Agreement and the Supplemental Agreement confidential was a material
factor on which all parties relied in entering into this Agreement. Executive hereto agrees to use
his best efforts to maintain in confidence: (i) the existence of this Agreement and the
Supplemental agreement, (ii) the contents and terms of this Agreement and the Supplemental
Agreement, (iii) the consideration for this Agreement and the Supplemental Agreement, and (iv) any
allegations relating to the Company or its officers or employees with respect to Executive’s
employment with the Company, except as otherwise provided for in this Agreement (hereinafter
collectively referred to as “Settlement Information”). Executive agrees to take every reasonable
precaution to prevent disclosure of any Settlement Information to third parties, and agrees that
there will be no publicity, directly or indirectly, concerning any Settlement Information.
Executive agrees to take every precaution to disclose Settlement Information only to those
attorneys, accountants, governmental entities, and family members who have a reasonable need to
know of such Settlement Information. The Parties agree that if Company proves that Executive
breached this Confidentiality provision, it shall be entitled to an award of its costs spent
enforcing this provision, including all reasonable

 

 

attorneys’ fees associated with the enforcement action, without regard to whether the Company
can establish actual damages from the breach by Executive.

     6. Arbitration. The Parties agree that any and all disputes arising out of the terms
of this Agreement, their interpretation, and any of the matters herein released, shall be subject
to binding arbitration in Alameda County before the American Arbitration Association under its
National Rules for the Resolution of Employment Disputes or the California Code of Civil Procedure.
The Parties agree that the prevailing party in any arbitration shall be entitled to injunctive
relief in any court of competent jurisdiction to enforce the arbitration award. The Parties hereby
agree to waive their right to have any dispute between them resolved in a court of law by a judge
or jury. This section will not prevent either party from seeking injunctive relief (or any other
provisional remedy) from any court having jurisdiction over the Parties and the subject matter of
their dispute relating to Executive’s obligations under this Agreement and the agreements
incorporated herein by reference.

     7. Authority. The Company represents and warrants that the undersigned has the
authority to act on behalf of the Company and to bind the Company and all who may claim through it
to the terms and conditions of this Agreement. Executive represents and warrants that he has the
capacity to act on his own behalf and on behalf of all who might claim through him to bind them to
the terms and conditions of this Agreement. Each party warrants and represents that there are no
liens or claims of lien or assignments in law or equity or otherwise of or against any of the
claims or causes of action released herein.

     8. No Representations. Each party represents that it has had the opportunity to
consult with an attorney, and has carefully read and understands the scope and effect of the
provisions of this Agreement. Neither party has relied upon any representations or statements made
by the other party hereto which are not specifically set forth in this Agreement.

     9. Severability. In the event that any provision hereof becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue
in full force and effect without said provision so long as the remaining provisions remain
intelligible and continue to reflect the original intent of the Parties.

     10. Entire Agreement. This Agreement and the Supplemental Agreement represents the
entire agreement and understanding between the Company and Executive concerning the subject matter
of this Agreement and Executive’s relationship with the Company, and supersedes and replaces any
and all prior agreements and understandings between the Parties concerning the subject matter of
this Agreement and Executive’s relationship with the Company, with the exception of the
Confidentiality Agreement and the Stock Agreements.

     11. No Waiver. The failure of any party to insist upon the performance of any of the
terms and conditions in this Agreement, or the failure to prosecute any breach of any of the terms
and conditions of this Agreement, shall not be construed thereafter as a waiver of any such terms
or conditions. This entire Agreement shall remain in full force and effect as if no such
forbearance or failure of performance had occurred.

 

 

     12. No Oral Modification. Any modification or amendment of this Agreement, or
additional obligation assumed by either party in connection with this Agreement, shall be effective
only if placed in writing and signed by both Parties or by authorized representatives of each
party.

     13. Governing Law. This Agreement shall be deemed to have been executed and delivered
within the State of California, and it shall be construed, interpreted, governed, and enforced in
accordance with the laws of the State of California, without regard to choice of law principles.

     14. Attorneys’ Fees. In the event that either Party brings an action to enforce or
effect its rights under this Agreement, the prevailing party shall be entitled to recover its costs
and expenses, including the costs of mediation, arbitration, litigation, court fees, plus
reasonable attorneys’ fees, incurred in connection with such an action.

     15. Counterparts. This Agreement may be executed in counterparts, and each
counterpart shall have the same force and effect as an original and shall constitute an effective,
binding agreement on the part of each of the undersigned.

     16. Voluntary Execution of Agreement. This Agreement is executed voluntarily and
without any duress or undue influence on the part or behalf of the Parties hereto, with the full
intent of releasing all claims. The Parties acknowledge that:

          (a) They have read this Agreement;

          (b) They have been represented in the preparation, negotiation, and execution of this
Agreement by legal counsel of their own choice or that they have voluntarily declined to seek such
counsel;

          (c) They understand the terms and consequences of this Agreement and of the releases it
contains; and

          (d) They are fully aware of the legal and binding effect of this Agreement.

 

 

     IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth
below.

	 	 	 	 	 	 	 
	 	 	CHOLESTECH CORPORATION	 	 
	 
	 	 	 	 	 	 
	Dated: July 25, 2005

	 	By
	 	/s/ Warren E. Pinckert II	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Warren E. Pinckert	 	 
	 

	 	 	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Thomas E. Worthy, an individual	 	 
	 
	 	 	 	 	 	 
	Dated: July 25, 2005

	 	By
	 	/s/ Thomas E. Worthy	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Thomas E. Worthy	 	 

 

 

EXHIBIT A

SUPPLEMENTAL SEVERANCE AGREEMENT AND RELEASE

     This Supplemental Severance Agreement and Release (“Supplemental Agreement”) is made by and
between Thomas E. Worthy (“Executive”) and Cholestech Corporation (“Company”) (collectively
referred to as the “Parties”):

WHEREAS, Executive’s employment was terminated on ___(the “Termination Date”);

WHEREAS, the Company and Executive have entered into a Transition Employment Agreement effect as of
the date it is signed by both parties (the “Transition Agreement”);

NOW THEREFORE, in consideration of the mutual promises made herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and
Executive (collectively referred to as the “Parties”) desiring to be legally bound do hereby agree
as follows:

     1. Transition Agreement. Company and Executive agree that the terms of the Transition
and Release Agreement dated ___, 2005 (the “Transition Agreement”) shall remain in full force
and effect and are fully incorporated herein except to the extent it is inconsistent with this
Supplemental Agreement.

     2. Payment of Salary. Executive acknowledges and represents that the Company has paid
all salary, wages, bonuses, accrued vacation, commissions and any and all other benefits due to
Executive as of the Effective Date of this Supplemental Agreement.

     3. Consideration. In exchange for Executive’s execution, and non-revocation of this
Supplemental Agreement, the Company agrees to pay Executive severance as follows:

          (a) Severance Payment: Executive shall be entitled to receive a lump sum payment of
One Hundred Ninety Eight Thousand Three Hundred Dollars ($198,300) (the “Severance Payment”), less
all applicable withholding taxes and in accordance with Company’s standard payroll practices. The
Severance Payment, if applicable, will be paid no later than fifteen (15) days after the Effective
Date of the Supplemental Agreement

          (b) COBRA. The Company shall reimburse Executive for the payments he makes for COBRA
coverage for a period of 12 months beginning on the Termination Date, or until Executive has
secured other employment, whichever occurs first. COBRA reimbursements shall be made by the Company
to Executive within thirty (30) days of Executive’s provision to the Company of documentation
substantiating his payments for COBRA coverage, provided, however, that (i) the
Executive constitutes a qualified beneficiary, as defined in Section 4980B(g)(1) of the Internal
Revenue Code of 1986, as amended, and (ii) Executive timely elects and pays for COBRA coverage.

 

 

          (c) Stock Treatment. The Parties agree that for purposes of determining the number of
shares of the Company’s common stock which Executive is entitled to purchase from the Company,
pursuant to the exercise of outstanding options, the Executive will be considered to have vested
only up to the Termination Date. Executive acknowledges that as of the Termination Date, he will
have vested in 104,273 options and no more. Executive shall not be entitled to continue vesting
after the Termination Date. The exercise of any stock options shall continue to be subject to the
terms and conditions of the Stock Agreements.

     4. Release of Claims. Executive agrees that the foregoing consideration represents
settlement in full of all outstanding obligations owed to Executive by the Company and its
officers, managers, supervisors, agents and employees. Executive, on his own behalf, and on behalf
of his respective heirs, family members, executors, agents, and assigns, hereby fully and forever
releases the Company and its officers, directors, employees, agents, investors, shareholders,
administrators, affiliates, divisions, subsidiaries, predecessor and successor corporations, and
assigns, from, and agree not to sue concerning, any claim, duty, obligation or cause of action
relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected,
that Executive may possess arising from any omissions, acts or facts that have occurred up until
and including the Effective Date of this Supplemental Agreement including, without limitation:

          (a) any and all claims relating to or arising from Executive’s employment relationship with
the Company and the termination of that relationship;

          (b) any and all claims relating to, or arising from, Executive’s right to purchase, or actual
purchase of shares of stock of the Company, including, without limitation, any claims for fraud,
misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law,
and securities fraud under any state or federal law;

          (c) any and all claims under the law of any jurisdiction including, but not limited to,
wrongful discharge of employment; constructive discharge from employment; termination in violation
of public policy; discrimination; breach of contract, both express and implied; breach of a
covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent
or intentional infliction of emotional distress; negligent or intentional misrepresentation;
negligent or intentional interference with contract or prospective economic advantage; unfair
business practices; defamation; libel; slander; negligence; personal injury; assault; battery;
invasion of privacy; false imprisonment; and conversion;

          (d) any and all claims for violation of any federal, state or municipal statute, including,
but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the
Americans with Disabilities Act of 1990; the Fair Labor Standards Act; the Fair Credit Reporting
Act; the Age Discrimination in Employment Act of 1967; the Employee Retirement Income Security Act
of 1974; the Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act;
the California Family Rights Act; the California Fair Employment and Housing Act, and the
California Labor Code;

          (e) any and all claims for violation of the federal, or any state, constitution;

-2-

 

          (f) any and all claims arising out of any other laws and regulations relating to employment or
employment discrimination;

          (g) any claim for any loss, cost, damage, or expense arising out of any dispute over the
non-withholding or other tax treatment of any of the proceeds received by Executive as a result of
this Supplemental Agreement; and

          (h) any and all claims for attorneys’ fees and costs.

     The Company and Executive agree that the release set forth in this section shall be and remain
in effect in all respects as a complete general release as to the matters released. This release
does not extend to any obligations incurred under this Supplemental Agreement.

     Executive acknowledges and agrees that any breach of any provision of this Supplemental
Agreement shall constitute a material breach of this Supplemental Agreement and shall entitle the
Company immediately to recover and cease the severance benefits provided to Executive under this
Supplemental Agreement.

     5. Acknowledgement of Waiver of Claims Under ADEA. Executive acknowledges that he is
waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967
(“ADEA”) and that this waiver and release is knowing and voluntary. Executive and the Company
agree that this waiver and release does not apply to any rights or claims that may arise under ADEA
after the Effective Date of this Supplemental Agreement. Executive acknowledges that the
consideration given for this waiver and release Supplemental Agreement is in addition to anything
of value to which Executive was already entitled. Executive further acknowledges that he has been
advised by this writing that

          (a) he should consult with an attorney prior to executing this Supplemental Agreement;

          (b) he has up to twenty-one (21) days within which to consider this Supplemental Agreement;

          (c) he has seven (7) days following his execution of this Supplemental Agreement to revoke
this Supplemental Agreement;

          (d) this Supplemental Agreement shall not be effective until the revocation period has
expired; and,

          (e) nothing in this Supplemental Agreement prevents or precludes Executive from challenging or
seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it
impose any condition precedent, penalties or costs for doing so, unless specifically authorized by
federal law.

-3-

 

     6. Civil Code Section 1542. The Parties represent that they are not aware of any
claim by either of them other than the claims that are released by this Supplemental Agreement.
Executive acknowledges that he has been advised by legal counsel and is familiar with the
provisions of California Civil Code Section 1542, which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

     Executive, being aware of said code section, agrees to expressly waive any rights he may have
thereunder, as well as under any other statute or common law principles of similar effect.

     7. ARBITRATION. THE PARTIES AGREE THAT ANY AND ALL DISPUTES ARISING OUT OF THE TERMS
OF THIS AGREEMENT, THEIR INTERPRETATION, AND ANY OF THE MATTERS HEREIN RELEASED, SHALL BE SUBJECT
TO ARBITRATION IN ALAMEDA COUNTY, BEFORE THE AMERICAN ARBITRATION ASSOCIATION UNDER ITS NATIONAL
RULES FOR THE RESOLUTION OF EMPLOYMENT DISPUTES AND CALIFORNIA LAW. THE ARBITRATOR MAY GRANT
INJUNCTIONS AND OTHER RELIEF IN SUCH DISPUTES. THE DECISION OF THE ARBITRATOR SHALL BE FINAL,
CONCLUSIVE AND BINDING ON THE PARTIES TO THE ARBITRATION. THE PARTIES AGREE THAT THE PREVAILING
PARTY IN ANY ARBITRATION SHALL BE ENTITLED TO INJUNCTIVE RELIEF IN ANY COURT OF COMPETENT
JURISDICTION TO ENFORCE THE ARBITRATION AWARD. THE PARTIES HEREBY AGREE TO WAIVE THEIR RIGHT TO
HAVE ANY DISPUTE BETWEEN THEM RESOLVED IN A COURT OF LAW BY A JUDGE OR JURY.

     8. Entire Agreement. The Supplemental Agreement and the Transition Agreement represent
the entire agreement and understanding between the Company and Executive concerning the subject
matter of this Supplemental Agreement and Executive’s relationship with the Company, and supersedes
and replaces any and all prior agreements and understandings between the Parties concerning the
subject matter of this Supplemental Agreement and Executive’s relationship with the Company, with
the exception of the Transition Agreement, the Confidentiality Agreement and the Stock Agreements.

     9. Governing Law. This Supplemental Agreement shall be deemed to have been executed
and delivered within the State of California, and it shall be construed, interpreted, governed, and
enforced in accordance with the laws of the State of California, without regard to choice of law
principles.

     10. Effective Date. This Supplemental Agreement is effective after it has been signed
by both parties and after seven (7) days have passed since Executive has signed the Supplemental
Agreement (the “Effective Date”), unless revoked by Executive within seven (7) days after the date
the Supplemental Agreement was signed by Executive.

-4-

 

     11. Voluntary Execution of Agreement. This Supplemental Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of the Parties hereto,
with the full intent of releasing all claims. The Parties acknowledge that:

          (a) They have read this Supplemental Agreement;

          (b) They have been represented in the preparation, negotiation, and execution of this
Supplemental Agreement by legal counsel of their own choice or that they have voluntarily declined
to seek such counsel;

          (c) They understand the terms and consequences of this Supplemental Agreement and of the
releases it contains; and

          (d) They are fully aware of the legal and binding effect of this Supplemental Agreement.

     IN WITNESS WHEREOF, the Parties have executed this Supplemental Agreement on the respective
dates set forth below.

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	CHOLESTECH CORPORATION

	 
	Dated:

	 	 
	 	 	 	By
	 	 
	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Warren E. Pinckert	 	 
	 

	 	 	 	 	 	 	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Thomas E. Worthy, an individual	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Thomas E. Worthy	 	 

-5-

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