Document:

ex10_18.htm

EXHIBIT 10.18

Wells Fargo Bank, National Association

119 West 40th Street

New York, New York 10018

March 4, 2010

Goodman Company, L.P.

Goodman Manufacturing Company, L.P.

Goodman Sales Company

5151 San Felipe, Suite 500

Houston, Texas  77056

	
  

	
Re:

	
Amended and Restated Subordination Agreement

Ladies and Gentlemen:

This letter agreement (this “Agreement”) amends and restates in its entirety that certain letter agreement dated August 9, 2005 among Goodman Company, L.P., Goodman Manufacturing Company, L.P. and Goodman Sales Company (collectively referred to herein as “Consignor”), Universal Supply Group, Inc. (“Company”) and Wells Fargo Bank, National Association (“Wells Fargo”).

 

We understand that Consignor has entered into arrangements with Company pursuant to which Consignor has agreed, under certain conditions, to (a) deliver certain goods to Company, from time to time, on a consignment basis, for sale by Company in the ordinary course of its business and (b) sell certain other goods to Company, from time to time (all goods purchased by Company from Consignor, whether purchased directly without having ever been on consignment, or whether first delivered to Company on a consignment basis and then purchased by Company from Consignor pursuant to and in accordance with the agreements between Company and Consignor, are collectively referred to herein as the “Purchased Inventory”).  All goods delivered to Company on a consignment basis that have not been purchased by Company from Consignor pursuant to and in accordance with the agreements between Company and Consignor are herein referred to as the “Consignment Inventory”.  The obligation of Company to pay Consignor for the Purchased Inventory is secured by a security interest in favor of Consignor in the Purchased Inventory and all accounts receivable of Company and other proceeds arising from the sale by Company of such Purchased Inventory (collectively, the “Collateral”).

 

Wells Fargo has entered into a financing arrangement with Company (the “Wells Fargo Facility”).  In connection therewith, all obligations, liabilities and indebtedness of Company from time to time owing to Wells Fargo are secured by a security interest in favor of Wells Fargo in all of the personal property and assets of Company, including, without limitation, all of the Collateral.  For the sake of clarity, Wells Fargo and Consignor hereby agree that (i) Wells Fargo does not and shall not have a security interest or any other lien, encumbrance or interest on or in any of the Consignment Inventory or the proceeds of any Consignment Inventory and (ii) for purposes of this Agreement, proceeds of Consignment Inventory shall not include any proceeds arising from the sale of Purchased Inventory.  Further, notwithstanding anything to the contrary herein, Consignor shall have a first priority security interest in Company’s rights to any price protection payments, rebates, discounts, credits, factory holdbacks, incentive payments, co-operative advertising credits and other amounts which at any time are due Company with respect to, or in connection with, the Consignment Inventory or the Purchased Inventory.  As a condition to its agreeing to continue to make loans to Company based upon the value of the inventory purchased by Company from Consignor and the accounts receivable of Company arising from the sale thereof, Wells Fargo has required that Consignor enter into this Agreement to set forth the relative interests of the parties with respect to the Collateral.

  

  

  

Goodman Company, L.P.

Goodman Manufacturing Company, L.P.

Goodman Sales Company

March 4, 2010

Page 2

 

Wells Fargo and Consignor each hereby acknowledge and agree as follows:

 

1.           The Consignment Inventory is and shall remain the property of Consignor until such time as such Consignment Inventory is purchased by Company from Consignor pursuant to and in accordance with Company’s agreements with Consignor as in effect from time to time, at which time title to the purchased items of Consignment Inventory shall be transferred to Company. Wells Fargo shall not have or assert any interest in any Consignment Inventory that has not been purchased by Company from Consignor pursuant to and in accordance with the aforementioned agreements between Company and Consignor or in any proceeds of such Consignment Inventory.  For purposes of clarity, any and all goods for which title has not passed to Company pursuant to and in accordance with Company’s agreements with Consignor shall be considered Consignment Inventory for purposes of this Agreement.

 

2.           Any sales of Purchased Inventory by Company shall be for Company’s account, and any accounts receivable and other proceeds created from the sale thereof shall also be the property of Company.

 

3.           Regardless of any priority otherwise available to Consignor or Wells Fargo by law or by agreement:

 

 (a)          (i) On the earlier to occur of March 31, 2010 and the date on which the aggregate unpaid balance of accounts receivable owing to Consignor that have arisen from the sale of Purchased Inventory by Consignor to Company (the “Company Payables”) shall first equal or exceed $2,000,000 (such earlier date, the “Conversion Date”), Consignor shall convert the aggregate unpaid balance of Company Payables (not to exceed $2,000,000) to a term note (the “Term Note”), in substantially the form attached hereto as Exhibit A, with the date of the Term Note to be the Conversion Date and the original principal amount of the Term Note to be equal to the lesser of (x) $2,000,000 or (y) the aggregate unpaid balance of Company Payables on the Conversion Date.  Company shall sign the Term Note and provide it to Consignor.  Company shall not be permitted to prepay the Term Note or amend or modify any provisions of the Term Note without the prior written consent of Wells Fargo, such consent not to be unreasonably withheld.  Any lien or security interest that Consignor may now hold or at any time hereafter acquire in any or all of the Collateral prior to the Conversion Date and, after the Conversion Date, securing Company’s obligations to Consignor under the Term Note shall be subordinate to the security interest of Wells Fargo therein.  Subject to Section 3(a)(ii) below, Company shall make and Consignor may accept all regularly scheduled payments of principal and interest in respect of the Term Note (but no accelerated payments or prepayments of principal), on and subject to the terms and conditions set forth therein.

  

  

  

Goodman Company, L.P.

Goodman Manufacturing Company, L.P.

Goodman Sales Company

March 4, 2010

Page 3

 

(ii) If at any time and from time to time Wells Fargo or Company obtains actual knowledge in the ordinary course of its business that an Event of Default (as defined in the Credit Agreement) has occurred and is continuing, then Wells Fargo or Company (as the case may be) shall thereafter send written notice of such fact (a “Credit Agreement Default Notice”) to Consignor to the address for Consignor identified in Section 8 below.  Consignor may accept and retain all regularly scheduled payments of principal and interest in respect of the Term Note that are received by Consignor prior to Consignor’s receipt of a Credit Agreement Default Notice from Wells Fargo or Company.  If Consignor receives any payment in respect of the Term Note from Company after Consignor’s receipt of a Credit Agreement Default Notice from Wells Fargo or Company, Consignor will hold the amount so received in trust for Wells Fargo and will forthwith turn over such payment to Wells Fargo in the form received (except for the endorsement thereof where necessary) for application in such manner of application as Wells Fargo may deem appropriate.  For purposes hereof, “Credit Agreement” shall mean that certain Credit and Security Agreement, dated as of July 28, 2004, as amended to the date hereof and as further amended, supplemented, amended and restated or otherwise modified from time to time, by and among Company, The RAL Supply Group, Inc., S&A Supply, Inc. and Wells Fargo.

 

  (b)        From and after the Conversion Date, so long as the aggregate unpaid Company Payables not evidenced by the Term Note shall be less than or equal to $1,500,000, any lien or security interest that Consignor may now hold or at any time hereafter acquire in any or all of the Collateral shall be subordinate to the security interest of Wells Fargo therein.

 

  (c)         Subject to clause (d) below, if, at any time from and after the Conversion Date, the aggregate unpaid balance of Company Payables not evidenced by the Term Note shall exceed $1,500,000, any lien or security interest that Wells Fargo may now hold or at any time hereafter acquire in any or all of the Collateral, shall be subordinate to the security interest of Consignor therein, but only to the extent of such excess and only so long as such excess exists.

 

  (d)        If at any time and from time to time after the Conversion Date Consignor obtains actual knowledge in the ordinary course of its business, based upon Consignor’s internal books and records and sales and inventory information reported to Consignor by Company, that the aggregate unpaid balance of Company Payables not evidenced by the Term Note equals or exceeds $1,250,000, then Consignor shall promptly thereafter (and in no event later than the business day after the day on which Consignor obtains actual knowledge of such excess) send written notice of such fact to Wells Fargo, to the following address: Wells Fargo Business Credit, 119 West 40th Street, 16th Floor, New York, New York 10018, Attn:  Joseph Mullen.  If Consignor fails to send said written notice to Wells Fargo promptly (and in no event later than the business day after the day on which Consignor obtains actual knowledge of such excess), then notwithstanding Section 3(c) above, Consignor’s security interest in the Collateral shall be subordinate to the security interest of Wells Fargo therein without any limitation as to amount until the date that the aggregate unpaid balance of Company Payables not evidenced by the Term Note falls below $1,500,000.  Upon the date that the aggregate unpaid balance of Company Payables not evidenced by the Term Note falls below $1,500,000, the subordinations and priorities of Consignor and Wells Fargo set forth in Sections 3(b) and 3(c) above shall once again apply.

  

  

  

Goodman Company, L.P.

Goodman Manufacturing Company, L.P.

Goodman Sales Company

March 4, 2010

Page 4

 

4.           If at any time and from time to time Consignor obtains actual knowledge, based upon Consignor’s internal books and records and sales and inventory information reported to Consignor by Company or any third-party bonding agent, that a “forced release,” as defined in that certain Distributor Sales Agreement between Goodman Sales Company and Company, effective as of January 1, 2009 (as amended, supplemented, amended and restated or otherwise modified from time to time, the “Distributor Sales Agreement”), or a requested release from the Bonded Program (as defined in the Distributor Sales Agreement) that is not in the ordinary course of business (e.g., in the event that Company elects to make a bulk purchase of products from Consignor pursuant to a pre-buy program or in an amount in excess of the amount required to cover bona fide sales of products by Company to third parties) has occurred, then Consignor shall promptly thereafter (and in no event later than the business day after the day on which Consignor obtains actual knowledge of any such release) send written notice of such fact to Wells Fargo via reputable overnight courier service at the address set forth in paragraph 3(d) above.  If Consignor fails to send said written notice to Wells Fargo promptly (and in no event later than the business day after the day on which Consignor obtains actual knowledge of any such release), then for purposes of this Agreement only title to the product that was so released shall be deemed to have passed to Company, notwithstanding any contrary provision in the Distributor Sales Agreement, herein or in any other document, and such product shall be deemed Purchased Inventory for all purposes hereunder.

 

5.           Subject to the express provisions of this Agreement, Wells Fargo shall have no obligation to Consignor with respect to any Collateral.  Subject to the express provisions of this Agreement, Wells Fargo may, upon furnishing at least one business day’s prior written notice identifying the action to be taken to Consignor at the address for Consignor identified in Section 8 below, (a) exercise collection rights, (b) take possession of, sell or dispose of, and otherwise deal with, the Collateral, (c) demand, sue for, collect or receive any money or property at any time payable or receivable on account of or securing, any right to payment, or grant any extension to, make any compromise or settlement with or otherwise agree to waive, modify, amend or change the obligations (including collateral obligations) of any account debtor or other obligor of Company, (d) prosecute, settle and receive proceeds on any insurance claims relating to the Collateral, and (e) exercise and enforce any right or remedy available to Wells Fargo with respect to the Collateral, whether available before or after the occurrence of any default, all without consent by Consignor except as specifically required by law.  Subject to the express provisions of this Agreement, Wells Fargo may, upon furnishing at least one business day’s prior written notice identifying the action to be taken to Consignor at the address for Consignor identified in Section 8 below, apply the proceeds of any Collateral in any order of application, and may remit or release such proceeds or any other sums or amounts to Company without being obligated to assure that any such proceeds or sums are applied to the satisfaction of Consignor’s lien in any such Collateral, except as required by law.  Consignor hereby waives any and all right to require the marshalling of assets in connection with the exercise of any of the remedies permitted by applicable law or agreement.

  

  

  

Goodman Company, L.P.

Goodman Manufacturing Company, L.P.

Goodman Sales Company

March 4, 2010

Page 5

 

6.           Consignor will not commence any action or proceeding with respect to any Collateral, will not take possession of, sell or dispose of, or otherwise deal with, any Collateral, and will not exercise or enforce any other right or remedy which may be available to Consignor with respect to any Collateral upon default, without Wells Fargo’s prior written consent; provided, however, that nothing in this Agreement or otherwise shall restrict or limit Consignor’s right, without Wells Fargo’s consent, to collect in the ordinary course of business Company Payables, regularly scheduled payments of principal and interest in respect of the Term Note, and any other amounts owed to it from time to time by Company, including but not limited to sending collection correspondence and engaging in other collection efforts in the ordinary course, short of repossession or commencing any action or proceeding against Company.  In addition, and without limiting the generality of the foregoing but subject to the express provisions of this Agreement, if Company is in default under any agreement with Wells Fargo and Wells Fargo or Company intends to sell any of the Collateral to an unrelated third party outside the ordinary course of business, and if Wells Fargo has furnished at least one business day’s prior written notice identifying the action to be taken to Consignor at the address for Consignor identified in Section 8 below, then Consignor shall be deemed to have consented to such sale and to have released any security interest it may have in such Collateral and to have authorized Wells Fargo or its agents to file partial releases (and any related financing statements) with respect to such Collateral.

 

7.           1)          Subject to the express provisions of this Agreement, but otherwise notwithstanding any lien or security interest now held or hereafter acquired by Consignor, Wells Fargo may, upon furnishing at least one business day’s prior written notice identifying the action to be taken to Consignor at the address for Consignor identified in Section 8 below, take possession of, sell, dispose of, and otherwise deal with all or any part of the Collateral, and may enforce any right or remedy available to it with respect to Company or the Collateral, all without consent of Consignor except as specifically required by applicable law.

 

  (b)        Subject to the express provisions of this Agreement, all proceeds received by Wells Fargo with respect to any Collateral shall be applied, first, to pay or reimburse Wells Fargo for all costs and expenses (including reasonable attorneys’ fees) incurred by Wells Fargo in connection with the collection of such proceeds.

  

  

  

Goodman Company, L.P.

Goodman Manufacturing Company, L.P.

Goodman Sales Company

March 4, 2010

Page 6

 

8.           If Consignor sends Company a notice of default due to a material default under the terms of the Distributor Sales Agreement or the Consignment and Security Agreement, dated as of May 13, 2005 (as amended, supplemented, amended and restated or otherwise modified from time to time, the “Consignment and Security Agreement”), among Company and Consignor, Consignor shall contemporaneously provide a copy of said notice of default to Wells Fargo to the address for Wells Fargo set forth above.  If Wells Fargo sends Company a notice of default due to a material default under the Wells Fargo Facility, the Credit Agreement or the documentation evidencing or associated with the Wells Fargo Facility or the Credit Agreement, Wells Fargo shall contemporaneously provide a copy of said notice of default to Consignor via reputable overnight courier service, to the following address:  5151 San Felipe, Suite 500, Houston, TX 77056, Attn:  Associate General Counsel.

 

9.           If, following a material default by Company under its agreement(s) with Consignor or Wells Fargo, notice of which default has been provided by Consignor or Wells Fargo, as the case may be, to the other party hereto pursuant to Section 8 above, Consignor or Wells Fargo receives any payment on the Collateral as to which such party’s lien has been subordinated to the other party under the provisions of Section 3 above, Consignor or Wells Fargo, as the case may be, will hold the amount so received in trust for the other party and will forthwith turn over such payment to the other party in the form received (except for the endorsement thereof where necessary) for application in such manner of application as such other party may deem appropriate.  In the event of any conflict between this Section 9 and the provisions of Section 3(a)(i) or (ii) above, Section 3(a)(i) or (ii) above, as the case may be, shall control.

 

10.         This Agreement shall constitute a continuing agreement of subordination, and Wells Fargo may, without the consent of Consignor, but upon furnishing at least one business day’s prior written notice identifying the action to be taken to Consignor at the address for Consignor identified in Section 8 above, modify any term of the Wells Fargo Facility in reliance upon this Agreement.  Without limiting the generality of the foregoing, Wells Fargo may, subject to the express provisions of this Agreement, at any time and from time to time, without the consent of Consignor but upon furnishing at least one business day’s prior written notice identifying the action to be taken to Consignor at the address for Consignor identified in Section 8 above, and without otherwise incurring responsibility to Consignor or impairing or releasing any of either party’s rights or obligations hereunder:

 

 (a)          change the interest rate or change the amount of payment or extend the time for payment or renew or otherwise alter the terms of any obligation, liability or indebtedness owing by Company to Wells Fargo or any instrument evidencing the same in any manner;

  

  

  

Goodman Company, L.P.

Goodman Manufacturing Company, L.P.

Goodman Sales Company

March 4, 2010

Page 7

 

 (b)         sell, exchange, release or otherwise deal with any property at any time securing payment of any obligation, liability or indebtedness owing by Company to Wells Fargo or any part thereof;

 

 (c)         release anyone liable in any manner for the payment or collection of any obligation, liability or indebtedness owing by Company to Wells Fargo or any part thereof;

 

 (d)         exercise or refrain from exercising any right against Company or any other person; and

 

 (e)          apply any sums received by Wells Fargo, by whomsoever paid and however realized (other than any sums that (i) Wells Fargo is holding in trust for Consignor pursuant to Section 9 above or (ii) are proceeds of Consignment Inventory), to the obligations, liabilities and indebtedness owing by Company to Wells Fargo in such manner as Wells Fargo shall deem appropriate.

 

11.         Consignor shall give Wells Fargo written notice of each amendment, modification, supplement or restatement to or of any of the Distributor Sales Agreement, the Consignment and Security Agreement or any other agreement between Company and a Consignor, at least 30 days prior to the effectiveness of each such amendment, modification, supplement or restatement.

 

12.         None of the provisions of this Agreement shall be deemed or construed to constitute or imply any commitment or obligation on the part of Wells Fargo or Consignor to make any future loans or other extensions of credit or financial accommodations to Company.

 

13.         This Agreement shall be binding upon Wells Fargo, Consignor and their respective successors and assigns. Notice of acceptance by Wells Fargo of this Agreement or of reliance by Wells Fargo upon this Agreement is hereby waived by Consignor.

 

14.         Wells Fargo, its successors and assigns will not require individual UCC filings for each delivery of Consignment Inventory by Consignor to Company and we agree that a one-time omnibus UCC filing referring to all after-acquired Consignment Inventory will suffice as proper notice under this provision for our purposes.

 

15.         This Agreement may be executed in multiple counterparts and multiple originals, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

  

  

  

 

	  	
Very truly yours,

	  	  	  	  
	  	
WELLS FARGO BANK, NATIONAL ASSOCIATION

	  	  	  	  
	  	  	  	  
	  	
By:

	
/s/ Joseph Mullen

	  
	  	  	
Name: Joseph Mullen

	  
	  	  	
Title: Vice President

	  

	
Acknowledged and agreed to this 4th day of March, 2010:

	  
	
GOODMAN COMPANY, L.P.

	
By:

	
Goodman Holding Company, its General Partner

	  	  
	  	  
	
By:

	
/s/ Mark M. Dolan

	  
	  	
Name: Mark M. Dolan

	  	
Title: V.P. Corporate Controller and Treasurer

	  	  
	
GOODMAN MANUFACTURING COMPANY, L.P.

	
By:

	
Goodman Holding Company, its General Partner

	  	  
	  	  
	
By:

	
/s/ Mark M. Dolan

	  
	  	
Name: Mark M. Dolan

	  	
Title: V.P. Corporate Controller and Treasurer

	  	  
	
GOODMAN SALES COMPANY

	  	  
	  	  
	
By:

	
/s/ Mark M. Dolan

	  
	  	
Name: Mark M. Dolan

	  	
Title: V.P. Corporate Controller and Treasurer

	  	  
	
UNIVERSAL SUPPLY GROUP, INC.

	  	  
	  	  
	
By:

	
/s/ William Pagano

	  
	  	
Name: William Pagano

	  	
Title: President

  

  

  

EXHIBIT A

Form of Term Note

 

  

  

  

  

PROMISSORY NOTE

	
$***

	  	
***

FOR VALUE RECEIVED, Universal Supply Group, Inc., a New York corporation (“Maker”), promises to pay to the order of Goodman Company, L.P., Goodman Manufacturing Company, L.P., and Goodman Sales Company (collectively, “Payee”), at 5151 San Felipe, Suite 500, Houston, Texas, 77056, the principal sum of *** U.S. Dollars ($***), in accordance with Schedule 1, which is attached hereto and incorporated by reference herein for all purposes.  All amounts payable hereunder shall be paid in lawful money of the United States of America which at the time of payment is legal tender for the payment of public and private debts.

Maker further promises to pay interest from the date hereof until maturity, on the aggregate unpaid principal amount hereof, in accordance with Schedule 1, at the lesser of the highest lawful rate allowed to be charged at that time under applicable law or eight percent (8%) per annum; and after maturity (whether by acceleration or otherwise) until paid, at a rate per annum equal to the lesser of the highest lawful rate allowed to be charged at that time under applicable law or eighteen percent (18%).  Interest accruing after maturity shall be payable on demand.  Maker shall pay default interest on each past due installment of principal and/or interest at a rate per annum equal to the lesser of the highest lawful rate allowed to be charged at that time under applicable law or eighteen percent (18%), from the due date until paid.

Maker understands that Payee may transfer this Promissory Note.  Payee or anyone who takes this Promissory Note by transfer and who is entitled to receive payments under this Promissory Note will be called the “Holder”.  This Promissory Note shall be governed by the Laws of the State of Texas.

This Promissory Note is subject to the terms and conditions of an Amended and Restated Subordination Agreement dated as of March 4, 2010, by and among Maker, Payee and Wells Fargo Bank, National Association (as it may be amended, the “Subordination Agreement”).

This Promissory Note is secured by a Consignment and Security Agreement between Maker and Payee dated as of May 13, 2005 (as it may be amended, the “Consignment and Security Agreement”), and covering and constituting a first lien on certain Collateral (as defined therein).

Notwithstanding any provisions in this Promissory Note or in any other instrument now or hereafter securing this Promissory Note or the indebtedness evidenced hereby to the contrary, in no event shall the amount of interest paid or agreed to be paid to Holder exceed an amount computed at the highest rate of interest permissible under applicable law.  If, from any circumstances whatsoever, fulfillment of any provision of this Promissory Note or any other instrument securing this Promissory Note or all or any part of the indebtedness evidenced hereby, at the time performance of such provision shall be due, shall involve exceeding the interest limitation validly prescribed by law which a court of competent jurisdiction may deem applicable hereto, then, ipso facto, the obligation to be fulfilled shall be reduced to an amount computed at the highest rate of interest permissible under such applicable law; and if for any reason whatsoever Holder shall ever receive as interest an amount which would be deemed unlawful under such applicable law, such interest shall be automatically applied to the payment of the principal of this Promissory Note (whether or not then due and payable), and not to the payment of interest, or shall be refunded to Maker if such principal has been paid in full.

  

1

  

It is understood and agreed that time is of the essence under this Promissory Note and that on default in the payment of any installment of principal or interest, or any part thereof, when due the Holder hereof, on or after five (5) business days after written notice thereof to Maker, Holder, at its election, may accelerate the unpaid balance of the principal and all accrued interest due and declare the same due and payable immediately, without presentment or demand for payment of any past-due installment of principal or interest, or of any remaining unpaid balance of principal or interest and without notice of intent to accelerate the payment of the unpaid balance of the principal or all accrued interest due to any parties to this instrument.  If any Maker, endorser, or guarantor or other surety hereof shall become insolvent, commit an act of bankruptcy or become the subject of an order for relief (as that term is used in the U.S. Bankruptcy Code), or if an “event of default” occurs under the Consignment and Security Agreement, or if a “Credit Agreement Default Notice” (as defined in the Subordination Agreement) has been received by the Holder, or if for any other cause the protection of the Holder, in the sole discretion of the Holder, so requires, all liabilities of the undersigned Maker to the Holder, including without limitation this Promissory Note, shall, at the option of the Holder, mature and become due and payable without demand, grace, notice, presentment for payment, and protest, all of which are hereby waived by any and all parties to this instrument.  The failure of the Holder to exercise its option to accelerate the maturity of this Promissory Note shall not constitute a waiver of its right to exercise the same at any other time.

Each Maker, endorser, and guarantor or other surety of this Promissory Note does hereby waive demand, grace, notice, presentment for payment, and protest.  Maker hereby waives any defense, right of set-off or other claim, which Maker may now or hereafter have against Holder.

This Promissory Note shall not be amended, modified or any obligation hereunder waived or discharged except in accordance with the terms hereof or as expressly consented to by Holder in writing.  This Promissory Note may not be amended or modified except as permitted under the Subordination Agreement.

Payments under this Promissory Note may not be pre-paid, unless prepayment has been authorized pursuant to the Subordination Agreement.  Holder will use authorized prepayments, if any, to reduce the amount of principal owed by Maker under this Promissory Note.  If an authorized partial prepayment is made, there shall be no delays in the due dates or changes in the amounts of monthly payments unless the Holder agrees in writing to those delays or changes.  Holder may require any authorized prepayment to be made on the same day that a monthly payment is due, and may also require that the amount of any authorized partial prepayment be equal to the amount of principal that would have been part of the next one or more monthly payments.

Any notice required or permitted to be given to Maker or any endorser, guarantor or other surety under this Promissory Note shall be in writing and shall be given by hand-delivering it, sending it by reputable overnight courier, or mailing it by certified mail, return receipt requested and postage prepaid, addressed to the Maker at Maker’s address set forth below.  Any notice required or permitted to be given to the Holder under this Promissory Note shall be in writing and shall be given by hand-delivering it, sending it by reputable overnight courier, or mailing it by certified mail, return receipt requested and postage prepaid, addressed to Holder at the address of Payee referenced above.  Addresses for notice to a party may be changed by written notice to the other party as provided herein.

  

2

  

The Maker will pay on demand all costs and expenses of collection and enforcement of this Promissory Note to the extent not prohibited by law, including without limitation all legal expenses and attorneys’ fees incurred or paid by the Holder in collecting or enforcing this Promissory Note on default.

No delay or omission on the part of the Holder in exercising any right or remedy hereunder shall operate as a waiver of such right or remedy or of any other right or remedy under this Promissory Note.  A waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future occasion.

	  	
Maker:

	
UNIVERSAL SUPPLY GROUP, INC.

	  	  	  
	  	
By:

	  
	  	  	  
	  	
Title:

	
President

	  	  	  
	  	
Name:

	
William Pagano

	
Maker’s Address:

	
275 Wagaraw Road

	  	
Hawthorne, NJ  07506

  

3

  

SCHEDULE 1

[NOTE:  this draft schedule assumes that the Conversion Date occurs on March 15, and that the amount of Company Payables on that Date is $2,000,000.  The actual schedule will be adjusted to reflect the actual Conversion Date and the amount of Company Payables on that date.]

	
Pymt seq. #

	 	
Due Date

	 	
Payment

	 	 	
Interest

	 	 	
Principal

	 	 	
Balance

	 
	
 

	 	
03/15/10

	 	
 

	 	 	
 

	 	 	
 

	 	 	$	2,000,000.00	 
	1	 	
04/15/10

	 	$	13,333.33	 	 	$	13,333.33	 	 	$	0.00	 	 	$	2,000,000.00	 
	2	 	
05/15/10

	 	$	13,333.33	 	 	$	13,333.33	 	 	$	0.00	 	 	$	2,000,000.00	 
	3	 	
06/15/10

	 	$	13,333.33	 	 	$	13,333.33	 	 	$	0.00	 	 	$	2,000,000.00	 
	4	 	
07/15/10

	 	$	13,333.33	 	 	$	13,333.33	 	 	$	0.00	 	 	$	2,000,000.00	 
	5	 	
08/15/10

	 	$	13,333.33	 	 	$	13,333.33	 	 	$	0.00	 	 	$	2,000,000.00	 
	6	 	
09/15/10

	 	$	90,454.58	 	 	$	13,333.33	 	 	$	77,121.25	 	 	$	1,922,878.75	 
	7	 	
10/15/10

	 	$	90,454.58	 	 	$	12,819.19	 	 	$	77,635.39	 	 	$	1,845,243.36	 
	8	 	
11/15/10

	 	$	90,454.58	 	 	$	12,301.62	 	 	$	78,152.96	 	 	$	1,767,090.40	 
	9	 	
12/15/10

	 	$	90,454.58	 	 	$	11,780.60	 	 	$	78,673.98	 	 	$	1,688,416.42	 
	10	 	
01/15/11

	 	$	90,454.58	 	 	$	11,256.11	 	 	$	79,198.47	 	 	$	1,609,217.95	 
	11	 	
02/15/11

	 	$	90,454.58	 	 	$	10,728.12	 	 	$	79,726.46	 	 	$	1,529,491.49	 
	12	 	
03/15/11

	 	$	90,454.58	 	 	$	10,196.61	 	 	$	80,257.97	 	 	$	1,449,233.52	 
	13	 	
04/15/11

	 	$	90,454.58	 	 	$	9,661.56	 	 	$	80,793.02	 	 	$	1,368,440.50	 
	14	 	
05/15/11

	 	$	90,454.58	 	 	$	9,122.94	 	 	$	81,331.64	 	 	$	1,287,108.86	 
	15	 	
06/15/11

	 	$	90,454.58	 	 	$	8,580.73	 	 	$	81,873.85	 	 	$	1,205,235.01	 
	16	 	
07/15/11

	 	$	90,454.58	 	 	$	8,034.90	 	 	$	82,419.68	 	 	$	1,122,815.33	 
	17	 	
08/15/11

	 	$	90,454.58	 	 	$	7,485.44	 	 	$	82,969.14	 	 	$	1,039,846.19	 
	18	 	
09/15/11

	 	$	90,454.58	 	 	$	6,932.31	 	 	$	83,522.27	 	 	$	956,323.92	 
	19	 	
10/15/11

	 	$	90,454.58	 	 	$	6,375.49	 	 	$	84,079.09	 	 	$	872,244.83	 
	20	 	
11/15/11

	 	$	90,454.58	 	 	$	5,814.97	 	 	$	84,639.61	 	 	$	787,605.22	 
	21	 	
12/15/11

	 	$	90,454.58	 	 	$	5,250.70	 	 	$	85,203.88	 	 	$	702,401.34	 
	22	 	
01/15/12

	 	$	90,454.58	 	 	$	4,682.68	 	 	$	85,771.90	 	 	$	616,629.44	 
	23	 	
02/15/12

	 	$	90,454.58	 	 	$	4,110.86	 	 	$	86,343.72	 	 	$	530,285.72	 
	24	 	
03/15/12

	 	$	90,454.58	 	 	$	3,535.24	 	 	$	86,919.34	 	 	$	443,366.38	 
	25	 	
04/15/12

	 	$	90,454.58	 	 	$	2,955.78	 	 	$	87,498.80	 	 	$	355,867.58	 
	26	 	
05/15/12

	 	$	90,454.58	 	 	$	2,372.45	 	 	$	88,082.13	 	 	$	267,785.45	 
	27	 	
06/15/12

	 	$	90,454.58	 	 	$	1,785.24	 	 	$	88,669.34	 	 	$	179,116.11	 
	28	 	
07/15/12

	 	$	90,454.58	 	 	$	1,194.11	 	 	$	89,260.47	 	 	$	89,855.64	 
	29	 	
08/15/12

	 	$	90,454.58	 	 	$	598.94	 	 	$	89,855.64	 	 	$	0.00	 
	
Grand Totals

	 	
 

	 	$	2,237,576.57	 	 	$	237,576.57	 	 	$	2,000,000.00	 	 	 	 	 

 

Schedule 1ex10_1.htm

Exhibit 10.1

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT ("Agreement") dated as of March 1, 2010, between EUGENE SEYMOUR, c/o Nanoviricides, Inc., 135 Wood St., Suite 205, West Haven, CT ("Employee"), and NanoViricides, Inc., a corporation with offices at 135 Wood St., Suite 205, West Haven, CT ("the Company").

WHEREAS, the parties hereto desire to enter into this Agreement in order to set forth the terms pursuant to which the Company will employ the Employee and the Employee will serve as an employee of the Company.

NOW THEREFORE, in consideration of the foregoing and the mutual agreements set forth herein, the parties hereto, intending to be legally bound, agree as follows:

	
1.

	
Employment

The Company agrees to employ the Employee, and the Employee hereby agrees to such employment, subject to the terms and conditions set forth in this Agreement.

	
2.

	
Term

The employment of Employee shall be for a period of four (4) years commencing on the date of this Agreement, but subject to the unanimous approval of the Board of Directors, renewable annually thereafter upon unanimous approval of the Board of Directors, provided that either party can terminate the employment at any time, for any reason, upon 90 days’ notice (the “Employment Period”).

	
3.

	
Position and Duties

The Employee shall serve as Chief Executive Officer and Chief Financial Officer, to perform the usual duties of said offices, and shall have responsibility, subject to direction of the Board of Directors, for participating in the management and direction of the Company's business and operations, and shall perform such specific other tasks consistent with such position as may from time to time be assigned to him by the Board of Directors.  The Employee shall devote his business time to the performance of his duties hereunder, and shall devote his labor, skill, attention, and best ability in a manner that will faithfully and diligently further the business and interests of the Company.  Upon the commencement of the Employment Period, the Employee shall fulfill such general management duties and responsibilities as are consistent with the position of Chief Executive Officer, and the direction of the Board of Directors. In his capacity as Chief Executive Officer, the Employee shall endeavor to, and shall be given all necessary support (including financial and administrative support) by the Company to (i) identify markets for the Company's products and services; (ii) maintain, expand, and improve the Company's profile in the financial markets; (iii) develop strategies and operational plans for bringing the Company products to market; (iv) identify potential business partners for strategic or marketing alliances; (v) identify potential senior executives; (vi) establish budgets and control costs with regard to the foregoing; and (vii) implement the Company's business strategies.

Employee shall primarily work out of a location of his selection. The Employee agrees that he will travel to whatever extent it is reasonably necessary in the conduct of the Company's business; provided, however, that the Employee shall not be required directly or indirectly to relocate without his consent.

  

  

  

 

	
4.

	
Indemnification

A.            Subject to the provisions of the Company's Certificate of Incorporation, as amended from time to time, the Company shall indemnify the Employee to the fullest extent permitted by the General Corporation Law of the State of Nevada, as amended from time to time, for all amounts (including, without limitation, judgments, fines, settlement payments, expenses, and attorney's fees) actually and necessarily incurred or paid by the Employee in connection with any action, suit, investigation, or proceeding arising out of or relating to the performance by the Employee of services for, or the acting by Employee as an officer or employee of, the Company, or any other person or enterprise at the Company's request provided that he acted in good faith, for a purpose which he reasonably believed to be in the best interests of the Company and, in criminal actions or proceedings, in addition, had no reasonable cause to believe that his conduct was unlawful.  The Employee’s expenses incurred in any such action, suit, investigation or proceeding shall be advanced as incurred upon an undertaking by the Employee to repay such expenses if they are subsequently finally adjudicated and not indemnifiable.

B.             No indemnification may be made to or on behalf of the Employee if a judgment or final adjudication adverse to the Employee establishes that his acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled.

C.            The Company shall use its best efforts to obtain appropriate levels of D&O insurance as soon as possible as well as other insurance for general business and product liability insurances.

	
5.

	
Compensation and Benefits

	
A.

	
Base Salary

As compensation for the Employee's services hereunder during the Employment Period, the Company shall pay the Employee a base salary of two hundred fifty Thousand and 00/100 Dollars ($250,000.00).  Upon the closing of a financing for the Company with gross proceeds of at least five million dollars ($5,000,000) such base salary shall increase to $275,000.  In the event that the Company applies for and is listed on a national stock exchange, the employees base salary shall increase to three hundred thousand ($300,000) dollars due to the additional requirements associated with such listing.  Any base salary payable hereunder shall be paid in regular intervals in accordance with the Company's payroll practices, but no less frequently than once each month.  The Board of Directors may determine, from time to time, in its sole discretion, to pay the Employee bonuses or additional compensation.  The Employee shall be entitled to participate in all fringe benefits the Company provides for its employees generally, and such other benefits as the Company provides generally for its senior executives.

  

  

  

 

	
B.

	
Preferred Stock

The Company shall grant 1,000,000 shares of the Company’s Series A Convertible Preferred Shares to Employee (the “Preferred Stock”) upon execution of this Agreement, as follows:

i)  The Employee shall receive 250,000 shares of Preferred Stock upon execution of this Agreement and an additional 250,000 shares of Preferred Stock on each anniversary of this Agreement (the “Vesting Date”) until and including March 1, 2013, or until this Agreement is earlier terminated by Employee or Employer.

ii)  In the event that the Employee’s employment is terminated without cause, the Employee shall be entitled to the  shares of  Preferred Stock which would have been vested on the next Vesting date multiplied by a fraction wherein the numerator is the number of days from the previous Vesting Date to the date of termination and the denominator is 365, said shares of Preferred Stock to vest as of the date of termination.

	
C.

	
Bonus

The Employee's performance shall be reviewed by the Board no less frequently than annually and the Board shall have, at its discretion, the right to grant additional stock options, increase base salary, or provide a cash bonus.  The Employee shall not vote on matters specifically and solely related to his compensation.  The Board is expected to provided performance guidelines and strategic goals consistent with the Company's mission, objectives, and resources.  A Compensation Committee of the Board will compare the overall Executive Compensation Program of the Company versus its competition and similar businesses.

	
D.

	
Expense Reimbursement

The Company shall promptly pay the reasonable expenses incurred by the Employee in the performance of his duties hereunder, including, without limitation, those incurred in connection with business-related travel, telecommunications, and entertainment, or, if such expenses are paid directly by the Employee, shall promptly reimburse the Employee for such payment, provided that Employee has properly accounted therefore in accordance with the Company's written policy of which the Employee has had reasonable prior notice.

	
E.

	
Portable or Cellular Telephone

The Company shall reimburse the Employee for business-related expenses incurred in the use of a portable or cellular telephone.

  

  

  

 

	
6.

	
Termination

Notwithstanding any other provisions of this Agreement, the Employee's employment may be terminated:

A.            For Cause.  By the Company for Cause upon notice to the Employee. "Cause" shall mean the Employee’s having engaged in fraud, embezzlement, theft, commission of a felony or, except as may be required by law or upon advice of counsel, his having been proven to have made an intentional unauthorized disclosure with the knowledge that such disclosure would materially harm the Company of trade secrets or other proprietary information of the Company or a subsidiary in violation of written policies regarding disclosure of trade secrets and such information, and in each case such disclosure shall have damaged the Company or s subsidiary in a material manner.

B.             Death.  In the event of Employee's death during the term of his employment, the Company's obligation to pay further compensation hereunder shall cease forthwith, except that Employee's legal representative shall be entitled to (a) receive his monthly compensation for the period up to the last day of the month in which such death shall have occurred and (b) receive on behalf of the Employee's estate such benefits as to which the Employee may be entitled under then existing; benefit policies and programs.

C.             Not for Cause/Severance.  By the Company other than for Cause in which event the Company shall pay to the Employee an amount equal to six (6) months salary as severance compensation (without regard to compensation or benefits the Employee receives from any other source).  The Employee shall be eligible for all benefits during this 6 month period including bonuses, vesting of stock options, health care insurance and other fringe benefits that have been ongoing prior to the written notice(without regard to compensation or benefits the Employee receives from any other source).  The Company may elect to pay such severance compensation in a lump sum or in equal payments over a period of not more than six (6) months.  If the Employee leaves the employ of the Company voluntarily as a result of a breach of this Agreement by the Company, there having been as of the date of the Company's breach no breach of this Agreement by the Employee which has not been cured or waived, then the Employee's termination of employment shall be deemed to have been a termination by the Company other than for Cause.  The Employee may treat reduction in rank or responsibilities as termination of him without cause.

Notwithstanding any of the foregoing provisions of this Section 6, if the Employee is indebted to the Company, the severance pay or other compensation obligations of the Company shall be applied first to such indebtedness, but only in the amount and to the extent that the Employee does not dispute, the excess, if any, will be paid to said Employee and, in any event, the Employee shall remain liable for any excess of his indebtedness to the Company over any amounts owed by the Company.  In addition, upon termination of the Employee's employment (other than a voluntary termination by the Employee) all loans, expense reimbursements and other amounts owed by the Company to the Employee (other than severance compensation) shall become immediately due and payable.

  

  

  

 

	
7.

	
Compensation Upon Termination

Upon termination of this Agreement for any reason, the Company shall promptly compensate the Employee (or, in the event of the Employee's death, his surviving spouse, if any, or his estate) for all unreimbursed business expenses in accordance with the Company's expense reimbursement policy in effect at the time the expenses were incurred.

	
8.

	
Nondisclosure of Proprietary/Confidential Information

The Employee acknowledges that he will have access to information about the Company and his employment with the Company shall, throughout the Employment Period, bring him into close contact with many confidential affairs of the Company, its subsidiaries and affiliates, and their respective customers, including, without limitation, information proprietary to the Company, trade secrets, and other confidential material, which information is not readily available to the public and all of which is highly confidential and proprietary and was developed at great effort and expense (such material, "Confidential Information"). In recognition of the foregoing, during the Employment Period and for a period of two (2) year thereafter, regardless of the reason for any termination of employment (whether voluntary or involuntary and whether for Cause or otherwise), the Employee shall not, without the written consent of the Board of Directors of the Company , disclose, or use or make available for anyone to use (except in the course of his employment hereunder and in furtherance of the business of the Company, its subsidiaries, or its affiliates) any Confidential Information and the Employee shall during the continuance of his employment by the Company use his best efforts to prevent the unauthorized publication or misuse of any Confidential Information; provided, however, that Confidential Information shall not include any information (i) known generally to the public (other than as a result of unauthorized disclosure by the Employee) or (ii) developed by the Employee without violating any of the provisions of this Agreement.

The Employee agrees that upon termination of his employment with the Company for any reason, voluntary or involuntary, with or without Cause, he will immediately return to the Company all Confidential Information within his possession (or under his control), and shall not at any time thereafter copy or reproduce the same.

	
9.

	
Restrictive Covenant

A.            Employee recognizes and acknowledges that during employment the Employee will have access to, learn, be provided with, and, in some cases, will prepare and create certain confidential proprietary business information, including, but not limited to, client and customer information and customer lists, all of which are of substantial value to the Company's business. The Employee agrees that in addition to any other limitation, for a period of twenty four (24) months after the termination of employment hereunder by him or for any reason by the employer, the Employee will not, on his behalf or on behalf of any other person, firm, or corporation, call on any of the Employer's, or that of any of its affiliates or subsidiaries, customers, Investors, analysts, Investment bankers, or other persons or businesses with which the employer and/ or Its subsidiaries or affiliates had communicated, solicited Investment, or solicited for any business purposes,   for the purpose of soliciting and/or providing to any of these customers any non-public customer information relating to the Company's services, nor will the Employee in any way, directly or indirectly, for himself, or on behalf of any other person, firm, or corporation competing with the Company, solicit, divert, or take away any customers of the Employer, its affiliates, or its subsidiaries. In the event of an actual or threatened breach by the Employee of the provisions of this paragraph, the Company shall be entitled to injunctive relief restraining the Employee from the breach or threatened breach. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to the Company for such breach or threatened breach, including the recovery of damages from the Employee.

  

  

  

B.             During the course of employment and for a period of six (6) months from the date of termination of this Agreement by him or for Cause, Employee shall not, directly or indirectly, individually or on behalf of persons not now parties to this agreement, or as a partner, stockholder, director, officer, principal, agent, employee, or in any other capacity or relationship, engage in any business or employment, or aid or endeavor to assist any business or legal entity to engage in a business utilizing technology or other products or  businesses that directly compete with the Company's then current customer sales and / or products In development (as of termination) within the United States. Employee acknowledges the reasonableness of this restrictive covenant and the reasonableness of the geographic area and duration which are a part of this covenant.

C.             The Company recognizes that the Employee has had  years of experience in the diagnostic and health care industry, and that concomitant with such experience is a network of personal and business relationships already established prior to employment with the Company, and nothing in this Section 9 will limit the business or activities of Employee except for the restriction on information and customers set forth above. but limited to the extent that such Information, customers, and other contacts were not established prior to the employee's employment with the company.

10.            Independence and Severability

Each of the rights enumerated in Sections 8 and 9 (the Restrictive Covenant, Nondisclosure, and No-Solicitation clauses) shall be independent of the others and shall be in addition to and not in lieu of any other rights and remedies available to the Company at law or in equity. If any of the covenants contained in Sections 8 or 9, or any part of any of them is hereafter construed or adjudicated to be invalid or unenforceable, the same shall not affect the remainder of the covenant or covenants or rights or remedies which shall be given full effect without regard to the invalid portions. If any of the covenants contained in Sections 8 and 9, is held to be invalid or unenforceable because of the duration of such provision or the area covered thereby, the parties agree that the court making such determination shall have the power to reduce the duration and/or area of such provision and in its reduced form said provision shall then be enforceable.

  

  

  

 

	
11.

	
Solicitation of Former Employees

Employee agrees that during his employment with Employer and for twelve (12) months, after termination of employment by him or for cause, the Employee will not, on behalf of himself or on behalf of any, other person, firm, or corporation, solicit for hire, nor for six months after such termination, hire any of the professional or scientific employees of the Company employed as of such termination.

	
12.

	
Specific Remedies

A.           The Employee acknowledges that the Company shall suffer irreparable injury if he breaches his obligations under Sections 8, 9 and 11. Accordingly, in the event of such breach, the Employee acknowledges that the Company will be entitled to injunctive relief in any state or federal court of competent jurisdiction within Connecticut. The Employee further submits to the personal jurisdiction of such courts for the purposes of any such action.

B.            Employee hereby acknowledges that his services are unique and extraordinary, and are not readily replaceable, and hereby expressly agrees that the Company, in enforcing the covenants contained herein, in addition to any other remedies provided for herein or otherwise available at law, shall be entitled in any court of equity having jurisdiction to an injunction restraining him in the event of a breach, actual or threatened, of the agreements and covenants contained in these paragraphs.

	
13.

	
Employee's Duty to Mitigate

In the event Employee's employment is actually or constructively terminated by the Company prior to the end of the Employment Period, whether or not such termination is for Cause, Employee agrees to exert reasonable efforts to seek alternative employment in the same or substantially similar position as that held with the Company and at the same or substantially similar remuneration.

	
14.

	
Cooperation Following Termination

Provided that he is fairly compensated for his time and reimbursed for his out-of-pocket expenses, the Employee agrees that, following notice of termination of his employment, (i) he will cooperate fully with the Company in all matters relating to the completion of his pending work on behalf of the Company and the orderly transition of such work to such other employees as the Company may designate; and (ii) he will cooperate with the Company as to any and all claims, controversies, disputes, or complaints over which he has any knowledge or that may relate to him or his employment relationship with the Company. Such cooperation includes, but is not limited to, providing the Company with all information known to him related to such claims, controversies, disputes, or complaints and appearing and giving testimony in any forum.

  

  

  

 

	
15.

	
Arbitration

To ensure rapid and economical resolution of any and all disputes directly or indirectly arising out of, or in any way connected or related to the Executive's employment with the Company or the termination of that employment, the Company and the Executive each agree that any and all such dispute, whether of law or fact of any nature whatsoever, shall, if dispute cannot be resolved within thirty days despite good faith negotiation, be resolved by final and binding arbitration by The American Arbitration Association - Commercial Division ("AAA") in New Haven, Ct.. The Employee agrees to submit to binding arbitration for the resolution of any employment related controversy, dispute or claim ("Employment Related Claim"). The term "Employment Related Claim" means any dispute, claim, or controversy against the Company, including claims related to salary, bonuses, stock, options, vacation pay, fringe benefits, expense reimbursement, severance benefits, wrongful discharge, defamation, fraud, and breach of good faith and fair dealing, whether arising out of Employee's employment, the cessation of Employee's employment or any terms or conditions of Employee's employment, or arising out of this Agreement (including the restrictive covenant hereunder), which could have been brought before an appropriate government administrative agency or in an appropriate court. Arbitration pursuant to this Agreement shall be the exclusive means for resolution of such claims and the Company and the Employee understand that by signing this Agreement, they are waiving his right to obtain any legal or equitable relief from any government agency or court, or to commence any court action or to have a jury trial.  Notwithstanding the foregoing, Employee does not waive his right to file a complaint with the Equal Employment Opportunity Commission pursuant to Title VII, the ADEA, and/or the OWBPA.

The arbitrator's decision shall be final and binding. The arbitrator shall have the power to award all legal or equitable relief that would have been available in a court of law, including the costs of arbitration, to the extent such damages are allowed under law.

Employee further acknowledges that he has been advised of his right to consult legal counsel with regard to this Agreement.

The arbitration shall be governed by the laws of the State of Connecticut.

	
16.

	
Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut (without giving effect to conflicts of law).  Only the state and federal courts of Connecticut shall have jurisdiction over any controversies regarding this Agreement; any action may be brought only in those courts in Connecticut and the United States District Court for the District of Connecticut having jurisdiction of the subject matter.  Any process in any such action may be served upon either party by delivering it or mailing it, certified mail, directed to the addresses listed in Section 20.

  

  

  

 

	
17.

	
Integration

This Agreement constitutes the entire understanding between the parties hereto relating to the subject matter hereof, superseding all negotiations, prior discussions, preliminary agreements, and agreements related to the subject matter hereof made prior to the date hereof.

	
18.

	
Modifications and Amendments

This Agreement may be modified or amended only by an instrument in writing executed by the parties hereto and approved in writing by a majority of the Board of Directors.  Such modification or amendment will not become effective until such approval has been given.

	
19.

	
Severability

If any of the terms or conditions of this Agreement shall be declared void or unenforceable by any court or administrative body of competent jurisdiction, such term or condition shall be deemed severable from the remainder of this Agreement, and the other terms and conditions of this Agreement shall continue to be valid and enforceable.

	
20.

	
Notice

For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given as of the date delivered if delivered in person or by telecopy or if mailed, by express courier, postage prepaid, addressed as follows:

	
If to Employee:

	
c/o NanoViricides, Inc.

	  	
135 Wood Street

	  	
West Haven, CT

	 	 

	
If to the Company:

	
NanoViricides, Inc.

	  	
135 Wood Street

	  	
West Haven, CT

or to such other address as any party may have furnished to the other in writing in accordance herewith, except that notices of changes of address shall be effective upon receipt.

	
21.

	
Waiver

The observation or performance of any condition or obligation imposed upon the Employee hereunder may be waived only upon the written consent of the Shareholders of the Company. Such waiver shall be limited to the terms thereof and shall not constitute a waiver of any other condition or obligation of the Employee under this Agreement.

  

  

  

 

	
22.

	
Assignment

Neither party shall have the right to assign any rights or obligations under this Agreement without the prior written approval of the other party.

	
23.

	
Headings

The headings have been inserted for convenience only and are not to be considered when construing the provisions of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first written upon.

	  	
Nanoviricides, Inc.

	  
	  	  	  
	  	  	  
	  	
/s/

	  	  
	  	
By Anil R. Diwan, President

	  
	  	
Duly authorized

	  
	  	  	  
	  	  	  
	  	
/s/

	  	  
	  	
Eugene Seymour

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