Document:

By Hand Delivery

 

September 14, 2012

 

Lewis H. Bender

 

Re:Separation Agreement

 

Dear Lew:

 

The purpose of this
letter agreement (the “Agreement”) is to set forth the terms of your separation from Interleukin Genetics, Inc. (“Interleukin”
or the “Company”). Payment of the Separation Benefit described below is contingent on your agreement to and compliance
with the terms of this Agreement, as set forth below.

 

1.Separation of Employment;
Resignation from Board. Your employment with the Company ended on August 23, 2012 (the “Separation Date”).
Pursuant to this separation, you resigned your position as a member of Company’s Board of Directors, and any committee thereof,
as of the Separation Date, and you memorialized your separation from employment and your resignation as a member of the Board of
Directors by executing the letter of resignation attached as Exhibit A. You acknowledge that from and after the Separation
Date, you shall have no authority to, and shall not, represent yourself as a director, employee or agent of the Company.

 

2.Separation
Benefit. In exchange for the mutual promises set forth in this Agreement, and beginning as soon as practicable after the
eighth (8th) day following your execution of this Agreement (the “Effective Date”), provided that you do
not revoke the Agreement before the Effective Date, the Company agrees to provide you with the following payments and benefits
(together, the “Separation Benefit”):

 

(a)The Company
shall provide you with payment in lieu of notice under your February 14, 2011 Employment Agreement (the “Employment
Agreement”) in an amount equal to one month of your base salary, plus payment in an amount equal to your base salary for
a period of six months, on the following terms: (i) payment in lieu of the one month notice period and the first
two months of severance payments (i.e., an amount equal to three months of your base salary) shall be paid in one lump sum
within ten (10) days following the Effective Date; and (ii) the remaining amount (i.e., an amount equal to four months
of your base salary) shall be paid in equal installments over a four month period following the payment described in subsection
(i), in accordance with the Company’s normal payroll practices. All payments described herein shall be less all customary
and required taxes and employment-related deductions, in accordance with the Company’s normal payroll practices.

 

    	 

    	 	

    

 

(b)Upon
completion of appropriate COBRA1/
forms, and subject to the requirements of COBRA, the Company shall continue your participation in the Company’s medical,
dental and vision insurance plan at the Company’s cost through February 28, 2013, to the same extent that such insurance
is provided to persons currently employed by the Company. Your co-pay for such coverage shall be deducted from the
payments under subsection (a) above or, if no such payments remain to be paid, shall be paid by you directly to the Company within
seven (7) days of receipt of notice of such payment due. You and the Company understand and acknowledge that Public Health Service
Act section 2716 (imposing non-discrimination rules and requirements on fully-insured group health plans), once implemented, may
cause the Company to incur penalties. Should this occur, the parties agree to renegotiate the requirement to provide subsidized
COBRA coverage under the terms of this Section 2(b) so as to preserve the intent of the parties without running afoul of applicable
law.

 

You acknowledge and
agree that the Separation Benefit is not intended to and does not constitute a severance plan or confer a benefit on anyone other
than the parties. You further acknowledge that except for the Separation Benefit, along with: (i) your final wages, (ii)
any accrued but unused vacation, and (iii) any documented and appropriate business expenses incurred prior to the Separation
Date and properly submitted under Company policy (with such amounts described in (i)-(iii) to be paid to you in accordance with
the Company’s regular payroll practices and applicable law), you are not now and shall not in the future be entitled to any
other compensation from the Company including, without limitation, other wages, commissions, bonuses, vacation pay, holiday pay,
paid time off, stock, stock options, equity, or any other form of compensation or benefit.

 

3.Equity. To the
extent applicable, the terms and conditions of the Company’s 2004 Employee, Director and Consultant Stock Plan (the “Stock
Plan”) and any agreements executed by you pursuant thereto (together, the “Stock Agreements”) are expressly incorporated
by reference and shall survive the signing of this Agreement. You acknowledge and agree that,
as of the Separation Date, you are vested in options to purchase a total of 750,000 shares of Company common stock (the
“Vested Options”), and that following the Separation Date you shall not have any
right to vest in any additional stock or stock options under the Stock Plan, Stock Agreements or any other Company equity, stock
or stock option plan (of whatever name or kind) that you may have participated in or were eligible to participate in during your
employment. In exchange for the mutual promises set forth in this Agreement, the Company hereby agrees to extend the expiration
date of the Vested Options until September 14, 2013; the remaining terms of the Stock Plan and Stock Agreements shall remain in
full force and effect pursuant to their terms.

 

4.Unemployment Benefits.
 By virtue of your separation of employment, you shall be entitled to apply for unemployment benefits. The determination
of your eligibility for such benefits (and the amount of benefits to which you may be entitled) shall be made by the appropriate
state agency pursuant to applicable state law. The Company agrees that it shall not contest any claim for unemployment benefits
by you. The Company, of course, shall not be required to falsify any information.

 

 

________________________

1/
“COBRA” is the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended. Regardless of whether you sign
this Agreement, you shall have the right to elect to continue your healthcare benefits pursuant to the
terms and conditions of COBRA. Your eligibility for benefits under COBRA, the amount of such benefits, and the terms and conditions
of such benefits, shall be determined by COBRA statutory and regulatory guidelines.

 

    	 

    	 	

    
 

 

5.Confidentiality, Non-Disparagement,
and Related Obligations. You expressly acknowledge and agree to the following:

 

(a)That you shall adhere
to your February 14, 2011 Confidentiality and Intellectual Property Agreement (the “Confidentiality Agreement,” attached
hereto), as well as Sections 7 and 8 of your Employment Agreement, both of which are expressly incorporated by reference and shall
survive the signing of this Agreement.

 

(b)That you promptly shall
return to the Company all Company documents, files and property (and any copies thereof), and that you shall abide by any and all
common law and/or statutory obligations relating to protection of the Company’s trade secrets and confidential and proprietary
information.

 

(c)That all information
relating in any way to the negotiation of this Agreement, including the terms and amount of financial consideration provided for
in this Agreement, shall be held confidential by you and shall not be publicized or disclosed to: (i) any person (other
than an immediate family member, legal counsel or financial advisor, provided that any such individual agrees to be bound
by these confidentiality obligations); (ii) any business entity; or (iii) any government agency (except as mandated
by state or federal law), except that nothing in this section shall prohibit you from participating in an investigation with a
state or federal agency if requested by the agency to do so. The Company may disclose the terms of this Agreement as required by
law, including the rules and regulations of the Securities and Exchange Commission.

 

(d)That you shall not make
any statements that are professionally or personally disparaging about, or adverse to, the interests of the Company (including
its officers, directors, employees and consultants) including, but not limited to, any statements that disparage any person, product,
service, finances, financial condition, capability or any other aspect of the business of the Company, and that you shall not engage
in any conduct which could reasonably be expected to harm professionally or personally the reputation of the Company (including
its officers, directors, employees and consultants).

 

(e)That a breach of any
of the above sub-sections shall constitute a material breach of this Agreement and, in addition to any other legal or equitable
remedy available to the Company, shall entitle the Company to recover any Separation Benefit paid to you hereunder.

 

6.Your
Release of Claims.

 

(a)Release.
You hereby agree and acknowledge that by signing this Agreement and accepting the Separation Benefit, and for other good and valuable
consideration provided for in this Agreement, you are waiving and releasing your right to assert any form of legal claim against
the Company2/ whatsoever for
any alleged action, inaction or circumstance existing or arising from the beginning of time through the Separation Date. Your waiver
and release herein is intended to bar any form of legal claim, charge, complaint or any other form of action (jointly referred
to as “Claims”) against the Company seeking any form of relief including, without limitation, equitable relief (whether
declaratory, injunctive or otherwise), the recovery of any damages or any other form of monetary recovery whatsoever (including,
without limitation, back pay, front pay, compensatory damages, emotional distress damages, punitive damages, attorneys fees and
any other costs) against the Company, for any alleged action, inaction or circumstance existing or arising through the Separation
Date. Without limiting the generality of the foregoing, you specifically waive and release the Company
from any waivable claim arising from or related to your employment relationship with the Company through the Separation Date including,
without limitation: 

 

________________________  

2/
For purposes of this section, “the Company” means Interleukin Genetics, Inc. and its divisions, affiliates, parents,
subsidiaries and related entities, and its and their owners, shareholders, partners, directors, officers, employees, trustees,
agents, successors and assigns.

    	 

    	 	

    
 

 

(i)
Claims under any Massachusetts (or any other state) or federal discrimination, fair employment practices, or other employment
related statute, regulation or executive order (as amended through the Separation Date), including but not limited to the Age
Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Civil Rights Acts of 1866 and 1871, Title VII of
the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Equal Pay Act, the Americans With Disabilities Act, and any similar
Massachusetts or other state or federal statute.

 

(ii)
Claims under any other Massachusetts (or any other state) or federal employment related statute, regulation or executive order
(as amended through the Separation Date) relating to wages, hours or any other terms and conditions of employment, including
but not limited to the National Labor Relations Act, the Family and Medical Leave Act, the Employee Retirement Income Security
Act of 1974, COBRA, and any similar Massachusetts or other state or federal statute.

 

(iii)
Claims under any Massachusetts (or any other state) or federal common law theory, including, without limitation, wrongful
discharge, breach of express or implied contract, promissory estoppel, unjust enrichment, breach of a covenant of good faith and
fair dealing, violation of public policy, defamation, interference with contractual relations, intentional or negligent infliction
of emotional distress, invasion of privacy, misrepresentation, deceit, fraud or negligence or any claim to attorneys’ fees
under any applicable statute or common law theory of recovery. 

 

(iv)
Claims under any Massachusetts (or any other state) or federal statute, regulation or executive order (as amended through
the Separation Date) relating to whistleblower protections, violation of public policy, or any other form of retaliation or wrongful
termination, including but not limited to the Sarbanes-Oxley Act of 2002 and any similar Massachusetts or other state or federal
statute.

 

(v) Any
other Claim arising under other state or federal law.

 

(b)Release
Limitations; Participation in Agency Proceedings. Notwithstanding the foregoing, this section does not:

 

(i) Release
the Company from any obligation expressly set forth in this Agreement, nor from any rights you may have to defense and indemnity
as an officer or director of the Company.

 

(ii) Waive
or release any legal claims which you may not waive or release by law, including obligations under workers’ compensation
laws.

 

    	 

    	 	

    

 

(iii) Prohibit
you from challenging the validity of this release under federal law, from filing a charge or complaint of employment-related discrimination
with the Equal Employment Opportunity Commission (“EEOC”) or similar state agency, or from participating in any investigation
or proceeding conducted by the EEOC or similar state agency.

 

Your waiver and release,
however, are intended to be a complete bar to any recovery or personal benefit by or to you with respect to any claim (except those
which cannot be released under law), including those raised through a charge with the EEOC. Accordingly, nothing in this section
shall be deemed to limit the Company’s right to seek immediate dismissal of such charge or complaint on the basis that your
signing of this Agreement constitutes a full release of any individual rights under the federal discrimination laws, or to seek
restitution to the extent permitted by law of the economic benefits provided to you under this Agreement in the event you successfully
challenge the validity of this release and prevail in any claim under the federal discrimination laws.

 

(c)Acknowledgement.
You acknowledge and agree that, but for providing this waiver and release, you would not be receiving the Separation Benefit provided
to you under the terms of this Agreement.

 

7.ADEA/OWBPA Review and Revocation
Period. You and the Company acknowledge that you have specific rights under the Age Discrimination in Employment Act (“ADEA”)
and the Older Workers Benefit Protection Act (the “OWBPA”), which prohibit discrimination on the basis of age. It is
the Company’s desire and intent to make certain that you fully understand the provisions and effects of this Agreement, which
include a release of Claims under the ADEA and OWBPA. To that end, you have been encouraged and given the opportunity to consult
with legal counsel for the purpose of reviewing the terms of this Agreement. Consistent with the provisions of the ADEA and OWBPA,
the Company also is providing you with twenty one (21) days in which to consider and accept the terms of this Agreement
by signing below and returning it to James Weaver, Chairman of the Board of Directors, Interleukin Genetics, Inc., 135 Beaver Street,
Waltham, MA, 02452. You may rescind your assent to this Agreement if, within seven (7) days after you sign this Agreement,
you deliver by hand or send by mail (certified, return receipt and postmarked within such 7 day period) a notice of rescission
to Mr. Weaver at the above-referenced address.

 

8.Waiver of Employment.
You hereby waive and release forever any right or rights you may have to employment with the Company and any affiliate thereof
at any time in the future and agree not to seek or make application for employment with the Company or any affiliate thereof.

 

    	 

    	 	

    

 

9.Taxes. 

 

(a)If
the Separation Benefit (or any portion thereof) constitutes “non-qualified deferred compensation” subject to Section
409A of the Internal Revenue Code and the rules and regulations thereunder (“Section 409A”),
then the following conditions apply to the payment of the Separation Benefit: (i) Any termination of your employment
triggering payment of the Separation Benefit must constitute a “separation from service” under Section 409A(a)(2)(A)(i)
of the Code and Treas. Reg. §1.409A-1(h) before distribution of such benefits can commence. To the extent that the termination
of your employment does not constitute a separation of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h)
(as the result of further services that are reasonably anticipated to be provided by you to the Company at the time your employment
terminates), any portion of the Separation Benefit that constitutes non-qualified deferred compensation under Section 409A shall
be delayed until after the date of a subsequent event constituting a separation of service under Section 409A(a)(2)(A)(i) of the
Code and Treas. Reg. §1.409A-1(h). For purposes of clarification, this Section shall not cause any forfeiture of benefits
on your part, but shall only act as a delay until such time as a “separation from service” occurs; (ii) if you
are a “specified employee” (as that term is used in Section 409A and regulations and other guidance issued thereunder)
on the date your separation from service becomes effective, any Separation Benefit (or portion thereof) that constitutes non-qualified
deferred compensation subject to Section 409A shall be delayed until the earlier of (A) the business day following the six-month
anniversary of the date the separation from service becomes effective, and (B) the date of your death, but only to the extent necessary
to avoid the adverse tax consequences and penalties under Section 409A. On the earlier of (A) the business day following the six-month
anniversary of the date the separation from service becomes effective, and (B) your death, the Company shall pay you in a lump
sum the aggregate value of the non-qualified deferred compensation that the Company otherwise would have paid you prior to that
date as a Separation Benefit under this Agreement; (iii) it is intended that each installment of the Separation Benefit
provided under this Agreement shall be treated as a separate “payment” for purposes of Section 409A; and (iv)
neither the Company nor you shall have the right to accelerate or defer the delivery of any such payments or benefits except to
the extent specifically permitted or required by Section 409A. 

 

(b)The
parties intend this Agreement to be in compliance with Section 409A. Notwithstanding any other provision
of this Agreement, in the event of any ambiguity in the terms of this Agreement, such term(s) shall be interpreted and at all times
administered in a manner that avoids the inclusion of compensation in income under Section 409A, or the payment of increased taxes,
excise taxes or other penalties under Section 409A.

 

(c)You
acknowledge and agree that the Company does not guarantee the tax treatment or tax consequences associated with any payment or
benefit arising under this Agreement, including but not limited to consequences related to Section 409A. You
shall be solely liable and shall hold the Company harmless with respect to any such tax treatment or tax consequences.

 

10.Officers
and Directors Insurance. The Company agrees that for so long as an officers and directors
or employer practices liability insurance policy is in place covering the present or former officers and directors of the Company
(“D&O Policy”), including without limitation any “tail” or other extension of coverage, you will continue
to be an insured under the D&O Policy with respect to your acts and omissions as an officer and director of the Company to
the same extent as are the Company’s other officers and directors, pursuant to the terms and conditions of the D&O Policy.

 

    	 

    	 	

    

 

11.Entire Agreement; Modification;
Waiver; Choice of Law; Enforceability. You acknowledge and agree that, other than the agreements or specified agreement
sections expressly stated as surviving herein, this Agreement supersedes any and all prior or contemporaneous oral and/or written
agreements between you and the Company, and sets forth the entire agreement between you and the Company. No variations or modifications
hereof shall be deemed valid unless reduced to writing and signed by the parties hereto. The failure of the Company to seek enforcement
of any provision of this Agreement in any instance or for any period of time shall not be construed as a waiver of such provision
or of the Company’s right to seek enforcement of such provision in the future. This Agreement shall be deemed to have been
made in Massachusetts, shall take effect as an instrument under seal within Massachusetts, and shall be governed by and construed
in accordance with the laws of Massachusetts, without giving effect to conflict of law principles. You agree that any action, demand,
claim or counterclaim relating to the terms and provisions of this Agreement, or to its breach, shall be commenced in Massachusetts
in a court of competent jurisdiction, and you further acknowledge that venue for such actions shall lie exclusively in Massachusetts
and that material witnesses and documents would be located in Massachusetts. Both parties hereby waive and renounce in advance
any right to a trial by jury in connection with such legal action. The provisions of this Agreement are severable, and if for any
reason any part hereof shall be found to be unenforceable, the remaining provisions shall be enforced in full. 

 

By executing this Agreement,
you are acknowledging that you have been afforded sufficient time to understand the terms and effects of this Agreement, that your
agreements and obligations hereunder are made voluntarily, knowingly and without duress, and that neither the Company nor its agents
or representatives have made any representations inconsistent with the provisions of this Agreement. This Agreement may be signed
on one or more copies, each of which when signed shall be deemed to be an original, and all of which together shall constitute
one and the same Agreement.

 

[Signature Page to Follow]

 

    	 

    	 	

    

 

 

If the foregoing correctly
sets forth our understanding, please sign, date and return the enclosed copy of this Agreement to James Weaver within twenty
one (21) days.

 

 

 

	 	Sincerely,
	 	 
	 	INTERLEUKIN GENETICS, INC. 
	 	 
	 	By: 	/s/ James Weaver
	 	Date: 	September 14, 2012

 

Acknowledged and Agreed:

 

 

/s/ Lewis H. Bender                 

LEWIS H. BENDER

 

Date:Sept. 14, 2012EMPLOYMENT
AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”)
is made effective as of September 14, 2012 (the “Effective Date”), by and among Mandalay Digital Group, Inc.
(formerly NeuMedia, Inc.), a Delaware corporation (the “Employer”) and Dan L. Halvorson (the “Executive”).  In
consideration of the mutual covenants contained in this Agreement, the Employer and the Executive agree as follows:

 

1.           Employment.  The
Employer agrees to employ the Executive and the Executive agrees to be employed by the Employer on the terms and conditions set
forth in this Agreement.

 

2.           Capacity.  The
Executive shall serve the Employer as Executive Vice President and Chief Financial Officer of the Employer.  As Chief
Financial Officer, the Executive shall be responsible for the general supervision, management and control of the financial and
accounting operations of the Employer’s and its subsidiaries’ business and shall be its “principal accounting
and financial officer” for SEC purposes, subject to the direction of the Board of Directors of the Employer. The Executive
shall report directly to the Chief Executive Officer of the Employer. At the reasonable request of Board of Directors or the Chief
Executive Officer of the Employer, the Executive shall provide services to subsidiaries and affiliates of the Employer, without
additional compensation becoming payable.

 

3.           Term.  Subject
to the provisions of Section 6, the term of employment pursuant to this Agreement shall be three (3) years, i.e., thirty six (36)
calendar months, from the Effective Date (the “Initial Term”), and such Initial Term shall be automatically
extended for an additional three (3) year period unless either the Employer or Executive in their discretion provides the other
party hereto at least one hundred and eighty (180) days’ prior written notice before the last day of the Initial Term to
the effect that the term of this Agreement shall not be so extended (the Initial Term and any extension thereof pursuant to this
Section 3, the “Term”).

 

4.           Compensation
and Benefits.  The regular compensation and benefits payable to the Executive under this Agreement shall be as follows:

 

(a)           Salary.  For
all services rendered by the Executive under this Agreement, the Employer shall pay the Executive an annual salary (the “Salary”)
at the annual rate of Three Hundred Fifty Thousand Dollars ($350,000).  The Executive’s Salary shall be payable
in periodic installments in accordance with the Employer’s usual practice for its employees, but in no event less than monthly
over the year in which the Salary is earned.  

 

(b)           Bonuses.

  

(i)          Annual
Bonus. The Executive shall be entitled to be paid an annual incentive bonus in cash in an amount of up to 100% of the Executive’s
Salary based upon satisfaction of performance-related milestones, determined by the Board of Directors and the Executive, and subject
to the additional provisions of Exhibit A.

 

(iii)         Any
bonus payable under this subsection (b) shall vest and accrue upon the achievement of the specified performance criteria and shall
be paid on or within thirty (30) days of such vesting and accrual date.

 

(c)           Regular
Benefits.  The Executive shall also be entitled to participate in any qualified retirement plans, deferred compensation
plans, stock option and incentive plans, stock purchase plans, group and executive medical insurance plans (i.e., coverage for
the Executive and family), life insurance plans, disability income plans, retirement plans, vacation plans, expense reimbursement
plans and other benefit plans which the Employer may from time to time have in effect for any, all or most of its senior executives
(collectively “Employer Benefit Plans”).  Such participation shall be subject to the terms of applicable
plan documents, generally applicable policies of the Employer, applicable law and the discretion of the Board of Directors, the
Compensation Committee or any administrative or other committee provided for in or contemplated by any such plan.  Nothing
contained in this Agreement shall be construed to create any obligation on the part of the Employer to establish any such plans
or to maintain the effectiveness of any such plans which may be in effect from time to time.

 

    	1

    	 

    
 

 

(d)           Reimbursement
of Business Expenses.  The Employer shall reimburse the Executive for all reasonable expenses incurred by the Executive
in performing services during the Term, in accordance with the Employer’s policies and procedures for its senior executive
officers, as in effect from time to time, including but not limited to, business class air travel (or, if unavailable, first class),
meals and entertainment, fuel costs for transportation, wireless mobile communications, and personal computer equipment.

 

(e)           Stock
Option Grant.  On the Effective Date, the Employer shall grant the Executive “non-qualified” options
to purchase 2 million (2,000,000) shares of Employer’s common stock under Employer’s 2011 Equity Incentive Plan having
a ten year term and an exercise price per share equal to the closing price of the Employer’s common stock on the OTC Markets
as of the Effective Date (or if the Effective Date is not a trading day on such market, on the next trading day after the Effective
Date), subject to the terms and conditions specified in such plan and in a Stock Option Agreement having the material terms specified
in this subparagraph (e) and the other applicable portions of this Agreement and such additional terms, not inconsistent with such
terms, as the Employer deems appropriate for Stock Option Agreements with senior executives (the “Stock Option Agreement”),
which option shall vest on a monthly, pro-rata basis over thirty-six (36) months, as further specified in the Stock Option Agreement;
provided, however, that all unvested options to purchase common stock shall vest immediately upon the sale
of all or substantially all of the assets of the Employer, upon the merger or reorganization of the Employer following which the
equityholders of the Employer immediately prior to the consummation of such merger or reorganization collectively own less than
50% of the voting power of the resulting entity, or upon the sale of equity securities of the Employer representing 50% or more
of the voting power of the Employer or 50% or more of the economic interest in the Employer in a single transaction or in a series
of related transactions (i.e., a “Change of Control”).  

 

(f) Exclusivity of Salary and Benefits.  The
Executive shall not be entitled to any payments or benefits other than those provided under this Agreement.

 

5.           Extent
of Service.  During the Executive’s employment under this Agreement, the Executive shall, subject to the direction
and supervision of the Board of Directors, devote the Executive’s full business time, best efforts and business judgment,
skill and knowledge to the advancement of the Employer’s interests and to the discharge of the Executive’s duties and
responsibilities under this Agreement.  The Executive shall not engage in any other business activity, except as may
be approved by the Board of Directors; provided, that nothing in this Agreement shall be construed as preventing the Executive
from:

 

(a)           investing
the Executive’s personal assets in any non-competitive business enterprise, company or other entity in such form or manner
as shall not require any material personal time commitment on the Executive’s part in connection with the operations or affairs
of such other enterprise, company or other entity in which such investments are made; or

 

(b)           engaging
in religious, charitable or other community or non-profit activities that do not impair the Executive’s ability to fulfill
the Executive’s duties and responsibilities under this Agreement.

 

6.           Termination.  Notwithstanding
the provisions of Section 3, the Executive’s employment under this Agreement shall terminate under the following circumstances
set forth in this Section 6. For purposes of this Agreement, the date of the Executive’s termination (the “Termination
Date”) shall mean the date of the Executive’s “separation from service” as such term is defined under
Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”).

 

(a)           Termination
by the Employer for Cause.  The Executive’s employment under this Agreement may be terminated for Cause without
further liability on the part of the Employer effective immediately upon a vote of the Board of Directors and written notice to
the Executive.  Only the following shall constitute “Cause” for such termination:

 

(i)           any
act committed by the Executive against the Employer or any of its affiliates which involves fraud, willful misconduct, gross negligence
or insubordination; or

 

 

    	2

    	 

    

 

(ii)          the
commission by the Executive of, or indictment for (A) a felony or (B) any misdemeanor involving moral turpitude, deceit, dishonesty
or fraud.

 

(b)           Termination
by the Employer Without Cause.  Subject to the payment of Termination Benefits pursuant to Section 7(b), the Executive’s
employment under this Agreement may be terminated by the Employer without Cause upon not less than fifteen (15) days’ prior
written notice to the Executive.

 

(c)           Death.  The
Executive’s employment with the Employer shall terminate automatically upon his death.

 

(d)           Disability.  If
the Executive shall become Disabled so as to be unable to perform the essential functions of the Executive’s then existing
position or positions under this Agreement with or without reasonable accommodation, the Board of Directors may remove the Executive
from any responsibilities and/or reassign the Executive to another position with the Employer for the remainder of the Term or
during the period of such Disability.  Notwithstanding any such removal or reassignment, the Executive shall continue
to receive the Executive’s full Salary (less any disability pay or sick pay benefits to which the Executive may be entitled
under the Employer’s policies) and benefits under Section 4(c) of this Agreement (except to the extent that the Executive
may be ineligible for one or more such benefits under applicable plan terms) for a period of time equal to twelve (12) months payable
at the same time as such amounts would otherwise have been paid to the Executive had he continued in his current capacity.  If
the Executive is unable to perform substantial services of any kind for the Employer during this period, such period shall be considered
a paid leave of absence and the Executive shall have the contractual right to return to employment at any time during such period.  If
the Executive’s Disability continues beyond such twelve (12) month period, the Executive’s employment may be terminated
by the Employer by reason of Disability at any time thereafter.  For purposes hereof, the term “Disabled”
or “Disability” shall mean a written determination that the Executive, as certified by at least two (2) duly licensed
and qualified physicians, one (1) approved by the Board of Directors of the Employer and one (1) physician approved by the Executive
(the “Examining Physicians”), or, in the event of the Executive’s total physical or mental disability, the Executive’s
legal representative, that the Executive suffers from a physical or mental impairment that renders the Executive unable to perform
the Executive’s regular personal duties under this Agreement and that such impairment can reasonably be expected to continue
for a period of six (6) consecutive months or for shorter periods aggregating one hundred and eighty (180) days in any twelve (12)
month period; provided, that the Executive’s primary care physician may not serve as one of the Examining Physicians
without the consent of the Employer and the Executive (or the Executive’s legal representation).  The Executive
shall cooperate with any reasonable request of a physician to submit to a physical examination for purposes of such certification.  Nothing
in this Section 6(d) shall be construed to waive the Executive’s rights, if any, under existing law including, without limitation,
the Family and Medical Leave Act of 1993, 29 U.S.C. §2601 et seq. and the Americans with Disabilities Act, 42 U.S.C.
§12101 et seq.

 

7.           Compensation
Upon Termination.

 

(a)           Termination
Generally.  If the Executive’s employment with the Employer is terminated for any reason during or upon expiration
of the Term, the Employer shall pay or provide to the Executive (or to his authorized representative or estate) (i) any earned
but unpaid Salary payable on the Termination Date, (ii) any bonus that has been accrued under Section 4(b) through the Termination
Date but not yet paid, payable at the same time such amounts would otherwise have been paid to the Executive (for clarity, no amounts
related to future periods or future performance shall be payable under this clause; any such amounts shall be payable only pursuant
to Section 7(d)), (iii) any unpaid expense reimbursements, payable in accordance with the Employer’s reimbursement policies,
(iv) any accrued but unused vacation, payable on the Termination Date, and (v) any vested benefits the Executive may have under
any of the Employer Benefit Plans, payable as specified in the applicable plan documents (collectively, the “Accrued Compensation”).

 

(b)           Termination
by the Employer Without Cause.  In the event of termination of the Executive’s employment with the Employer
pursuant to Section 6(b) above prior to the expiration of the Term or (solely with respect to clauses (ii) and (iv) below, to the
extend provided for therein), Executive’s resignation for “Good Reason”, as defined below, and subject to the
Executive’s execution and delivery of a release of any and all legal claims in a form reasonably satisfactory to the Employer
within forty-five (45) days of the Termination Date (the “Release Period”), the Employer shall provide to the
Executive, in addition to the Accrued Compensation, the following termination benefits (“Termination Benefits”)
effective as of the final day of the Release Period:

 

    	3

    	 

    
 

 

(i)           subject
to clause (iv) below, continuation of the Executive’s Salary during the Termination Benefits Period (as defined below) at
the rate and in accordance with this Agreement and the Employer’s payroll practices then in effect pursuant to Section 4(a);

 

(ii)          continuation
of any executive health and group health plan benefits during the Termination Benefits Period plus, if clause (iv) applies, an
additional six (6) months beyond the end of the Termination Benefits Period, to the extent authorized by and consistent with 29
U.S.C. § 1161 et seq. (commonly known as “COBRA”), subject to payment of premiums by the Employer to the extent
that the Employer was covering such premiums as of the Termination Date (if permitted by law without violation of applicable discrimination
rules, or, if not, the equivalent after-tax value payable as additional severance at the same time such premiums are otherwise
payable);

 

(iii)continuation of vesting
of the stock option granted pursuant to the Stock Option Agreement during the Termination Benefits Period; and (if applicable);

 

(iv)if (but only if) such Section
6(b) termination of Executive’s employment occurs within twelve (12) months following the consummation of a Change of Control,
or a resignation by Executive for “Good Reason” where the events giving rise to Executive’s right to resign for
“Good Reason” occur within twelve (12) months following the consummation of a Change of Control, the Employer shall
pay the following amounts to Executive (for clarity, the amount under this Section 7(b)(iv) shall be in lieu of any amount that
would otherwise be due Executive under Section 7(b)(i) in connection with the termination):

 

(a)In the event the Employer’s
total enterprise value (computed by multiplying the number of outstanding shares of the Employer’s common stock on a fully
diluted (taking into account only those stock options or other convertible securities that are in-the-money on such date), as-converted
basis by the consideration paid per share of Common Stock in connection with such Change of Control) is at least $250 million but
less than $350 million, Employer shall pay Executive a lump sum cash amount equal to (i) 12 months of Salary, plus (ii) the greater
of (A) the maximum annual bonus for which Executive is then eligible under Section 4(b) above and (B) the maximum annual bonus
for which Executive was eligible during the last completed fiscal year immediately preceding the Change of Control under Section
4(b) above.

 

(b)In the event the Employer’s
total enterprise value (computed by multiplying the number of outstanding shares of the Employer’s common stock on a fully
diluted (taking into account only those stock options or other convertible securities that are in-the-money on such date), as-converted
basis by the consideration paid per share of Common Stock in connection with such Change of Control) is at least $350 million,
Employer shall pay Executive a lump sum cash amount equal to (i) 24 months of Salary, plus (ii) two times (2x) the greater of (A)
the maximum annual bonus for which Executive is then eligible under Section 4(b) above and (B) the maximum annual bonus for which
Executive was eligible during the last completed fiscal year immediately preceding the Change of Control under Section 4(b) above.

 

(c)For purposes of this sub-clause
(iv), “total enterprise value” shall be reasonably determined by the Employer after good faith consultation with the
Executive.

 

(d)For purposes of Section 7(b),
“Good Reason” shall be present where Executive resigns due to the occurrence of any of the following, without Executive’s
written consent: (i) a material reduction in Executive’s Salary; (ii) any material diminution, without Cause, in Executive’s
duties, authority or responsibility; (iii) relocation of the Employer’s principal executive offices to a location outside
of a 30 mile radius of its then-current principal executive offices where such relocation requires a material increase in Executive’s
one-way commuting distance; or (iv) any material breach by Employer of the terms of this Agreement, including but not limited to
a material failure to pay Executive any compensation due under this Agreement, or a breach of Section 11 hereof; provided, however
that in each case any termination by the Executive shall only be deemed for Good Reason pursuant to the foregoing definition if
(A) the Employer is given written notice from the Executive within sixty (60) days following the first occurrence of the condition
that he considers to constitute Good Reason describing the condition; (B) the Employer fails to satisfactorily remedy such condition
within thirty (30) days (provided such period shall be ten (10) days in the case of any failure to pay Executive compensation due
under this Agreement) following receipt of such written notice; and (C) the Executive terminates employment within ninety (90)
days following the end of the period within which the Employer was entitled to remedy the condition constituting Good Reason but
failed to do so.

 

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The “Termination Benefits Period” shall be the
lesser of (x) the remainder of the Term and (y) six (6) months; provided that in the event that the Executive commences
any employment during the Termination Benefits Period, the benefits provided under Section 7(b)(ii) shall cease effective as of
the date Executive qualifies for group health plan benefits in his new employment.  The Employer’s liability for
Salary continuation pursuant to Section 7(b)(i) shall not be reduced by the amount of any severance pay paid to the Executive pursuant
to any severance pay plan or stay bonus plan of the Employer. Notwithstanding the foregoing, nothing in this Section 7(b) shall
be construed to affect the Executive’s right to receive COBRA continuation entirely at the Executive’s own cost to
the extent that the Executive may continue to be entitled to COBRA continuation after Employer-paid premiums cease.  The
Executive shall be obligated to give prompt notice of the date of commencement of any employment during the Termination Benefits
Period and shall respond promptly to any reasonable inquiries concerning any employment in which the Executive engages during the
Termination Benefits Period.

  

Any Section 409A payments which are subject to execution of
a waiver and release which may be executed and/or revoked in a calendar year following the calendar year in which the payment event
(such as termination of employment) occurs shall commence payment only in the calendar year in which the release revocation period
ends as necessary to comply with Section 409A.

 

(c)           Termination
by Reason of Cause, Death, Disability, Voluntary Termination or Expiration of Term.  If the Executive’s employment
is terminated for any reason other than by the Employer without Cause under Section 6(b), including by reason of the Employer’s
election not to extend the Initial Term, the Employer shall have no further obligation to the Executive other than payment of his
Accrued Compensation and any payment required by Section 7(d) below.

 

(d)           Payments
For Compensation Earned After the Term. In the event that, following the termination of the Executive’s employment for
any reason other than for Cause,  the Executive becomes entitled to receive compensation due to the occurrence of an
event after such termination but during the applicable measurement period therefor, the Employer shall, pay to the Executive the
applicable amount and form of compensation, as set forth elsewhere in this Agreement, as follows: with respect to the annual incentive
bonus, an amount equal to a pro-rated portion of the annual incentive bonus Executive otherwise would have been paid for the fiscal
year (or portion thereof for the Stub Year (as defined in Exhibit A)) in which such termination of employment occurs, payable when
the annual incentive bonus would otherwise have been paid to Executive pursuant to Section 4(b), based upon (x) actual performance
for such fiscal year (or Stub Year), as determined at the end of such fiscal year (or Stub Year) and (y) the percentage of such
fiscal year (or Stub Year) that shall have elapsed through the date of Executive's termination of employment

 

8.           Confidential
Information, Nonsolicitation and Cooperation.

 

(a)           Confidential
Information.  As used in this Agreement, “Confidential Information” means proprietary information of
the Employer which is of value to the Employer in the course of conducting its business and the disclosure of which could result
in a competitive or other disadvantage to the Employer.  Confidential Information includes, without limitation, financial
information, reports, and forecasts; inventions, improvements and other intellectual property; trade secrets; know-how; designs,
processes or formulae; software; market or sales information or plans; customer lists; and business plans, prospects and opportunities
(such as possible acquisitions or dispositions of businesses or facilities) which have been discussed or considered by the management
of the Employer.  Confidential Information includes information developed by the Executive in the course of the Executive’s
employment by the Employer, as well as other information to which the Executive may have access in connection with the Executive’s
employment.  Confidential Information also includes the confidential information of others with which the Employer has
a business relationship.  Notwithstanding the foregoing, Confidential Information does not include (i) information
in the public domain, unless due to breach of the Executive’s duties under Section 8(b), or (ii) information obtained
in good faith by the Executive from a third party who was lawfully in possession of such information and not subject to an obligation
of confidentiality owed to the Employer.

 

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(b)           Duty
of Confidentiality.  The Executive understands and agrees that the Executive’s employment creates a relationship
of confidence and trust between the Executive and the Employer with respect to all Confidential Information.  At all
times, both during the Executive’s employment with the Employer and after termination, the Executive will keep in confidence
and trust all such Confidential Information, and will not use or disclose any such Confidential Information without the written
consent of the Employer, except (i) as may be necessary in the ordinary course of performing the Executive’s duties
to the Employer or (ii) as may be required in response to a valid order by a court or other governmental body or as otherwise
required by law (provided that if the Executive is so required to disclose the Confidential Information, the Executive shall (i) immediately
notify the Employer of such required disclosure sufficiently in advance of the intended disclosure to permit the Employer to seek
a protective order or take other appropriate action, (ii) cooperate in any effort by the Employer to obtain a protective order
or other reasonable assurance that confidential treatment will be afforded the Confidential Information).

 

(c)           Documents,
Records, etc.  All documents, records, data, apparatus, equipment and other physical property, whether or not pertaining
to Confidential Information, which are furnished to the Executive by the Employer or are produced by the Executive in connection
with the Executive’s employment will be and remain the sole property of the Employer.  The Executive will return
to the Employer all such materials and property as and when requested by the Employer.  In any event, the Executive will
return all such materials and property immediately upon termination of the Executive’s employment for any reason.  The
Executive will not retain with the Executive any such material or property or any copies thereof after such termination.

 

 

(d)           Nonsolicitation.  During
the Term and for six-months thereafter, the Executive (i) will refrain from directly or indirectly employing, attempting to employ,
recruiting or otherwise soliciting, inducing or influencing any person to leave employment with the Employer (other than subordinate
employees whose employment was terminated in the course of the Executive’s employment with the Employer); and (ii) will refrain
from soliciting or encouraging any customer or supplier to terminate or otherwise modify adversely its business relationship with
the Employer.  The Executive understands that the restrictions set forth in this Section 8(d) are intended to protect
the Employer’s interest in its Confidential Information and established employee, customer and supplier relationships and
goodwill, and agrees that such restrictions are reasonable and appropriate for this purpose.

 

(e)           Third-Party
Agreements and Rights.  The Executive hereby confirms that the Executive is not bound by the terms of any agreement
with any previous employer or other party which restricts in any way the Executive’s use or disclosure of information or
the Executive’s engagement in any business.  The Executive represents to the Employer that the Executive’s
execution of this Agreement, the Executive’s employment with the Employer and the performance of the Executive’s proposed
duties for the Employer will not violate any obligations the Executive may have to any such previous employer or other party.  In
the Executive’s work for the Employer, the Executive will not disclose or make use of any information in violation of any
agreements with or rights of any such previous employer or other party, and the Executive will not bring to the premises of the
Employer any copies or other tangible embodiments of non-public information belonging to or obtained from any such previous employment
or other party.

 

(f)       
    Litigation and Regulatory Cooperation.  During and after the Executive’s employment,
the Executive shall cooperate reasonably with requests from the Employer, or the Employer’s legal counsel, in the defense
or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Employer
which relate to events or occurrences that transpired while the Executive was employed by the Employer.  The Executive’s
cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel
to prepare for discovery or trial and to act as a witness on behalf of the Employer at mutually convenient times.  During
and after the Executive’s employment, the Executive also shall cooperate fully with the Employer in connection with any investigation
or review of any federal, state or local regulatory authority as any such investigation or review relates to events or occurrences
that transpired while the Executive was employed by the Employer.  The Employer shall reimburse the Executive for any
reasonable out-of-pocket expenses incurred in connection with the Executive’s performance of obligations pursuant to this
Section 8(f), and if the Executive spends more than ten (10) hours in any calendar month in performance of these obligations, the
Employer shall pay the Executive $500 per hour for each part of an hour over ten (10) hours in such calendar month.

 

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(g)           Injunction.  The
Executive agrees that it would be difficult to measure any damages caused to the Employer which might result from any breach by
the Executive of the promises set forth in this Section 8, and that in any event money damages may be an inadequate remedy for
any such breach.  Accordingly, subject to Section 9 of this Agreement, the Executive agrees that if the Executive breaches,
or proposes to breach, any portion of this Agreement, the Employer shall be entitled, in addition to all other remedies that it
may have, to an injunction or other appropriate equitable relief to restrain any such breach without showing or proving any actual
damage to the Employer and without the need to post a bond or other security.

 

9.           Arbitration
of Disputes.  In the event of any dispute or controversy arising out of, or relating to, this Agreement, the parties
hereto agree to submit such dispute or controversy to binding arbitration pursuant to either the JAMS Streamlined (for claims under
$250,000.00) or the JAMS Comprehensive (for claims over $250,000.00) Arbitration Rules and Procedures, except as modified herein,
including the Optional Appeal Procedure.  A sole neutral arbitrator shall be selected from the list (the “List”)
of arbitrators supplied by J.A.M.S. (“JAMS”) Los Angeles County, California office, or any successor entity,
or if it no longer exists, from a List supplied by the ADR Services, Inc., in Los Angeles, California (“ADR”) following
written request by any party hereto.  If the parties hereto after notification of the other party(-ies) to such dispute
cannot agree upon an arbitrator within thirty (30) days following receipt of the List by all parties to such arbitration, then
either party may request, in writing, that JAMS or ADR, as appropriate, appoint an arbitrator within ten (10) days following receipt
of such request (the “Arbitrator”).  The arbitration shall take place in Los Angeles County, California,
at a place and time mutually agreeable to the parties or if no such agreement is reached within ten (10) days following notice
from the Arbitrator, at a place and time determined by the Arbitrator.  Such arbitration shall be conducted in accordance
with the Streamlined Arbitration Rules and Procedures of JAMS then in effect, and Section 1280 et seq. of the California Code of
Civil Procedure, or if applicable, the Commercial Arbitration Rules of ADR then in effect.  The preceding choice of venue
is intended by the parties to be mandatory and not permissive in nature, thereby precluding the possibility of litigation between
the parties with respect to or arising out of this Agreement in any jurisdiction other than that specified in this Section.  Each
party hereby waives any right it may have to assert the doctrine of forum non conveniens or similar doctrine or to object to venue
with respect to any proceeding brought in accordance with this Section, and stipulates that the Arbitrator shall have in personam
jurisdiction and venue over each of them for the purpose of litigating any dispute, controversy, or proceeding arising out of or
related to this Agreement.  Each party hereby authorizes and accepts service of process sufficient for personal jurisdiction
in any action against it as contemplated by this Section by registered or certified mail, return receipt requested, postage prepaid,
to its address for the giving of notices as set forth in this Agreement.  The decision of the Arbitrator shall be final
and binding on all the parties to the arbitration, shall be non-appealable and may be enforced by a court of competent jurisdiction.  The
prevailing party shall be entitled to recover from the non-prevailing party reasonable attorney’s fees, as well as its costs
and expenses.  The Arbitrator may grant any remedy appropriate including, without limitation, injunctive relief or specific
performance.  Notwithstanding any of the foregoing, the Employer may seek a temporary restraining order or a preliminary
injunction as contemplated in Section 8(g) herein.

 

10.         Integration.  This
Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior
agreements between the parties with respect to any related subject matter.

 

11.         Assignment;
Successors and Assigns, etc.  Except as otherwise provided in this Section 11, neither the Employer nor the Executive
may make any assignment of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent
of the other party; provided, in connection with effecting any reorganization, consolidation, or merger with or into any other
corporation, partnership, organization or other entity, or any transfer of all or substantially all of the Employer’s properties
or assets to any other corporation, partnership, organization or other entity, the Employer may assign the Employer’s rights
under this Agreement to the acquiring or surviving entity and shall require the assumption of the Employer’s obligations
hereunder by the acquiring or surviving entity for the benefit of the Executive (it being understood that Employer need not require
such assumption where the assumption occurs by operation of law as a result of the transaction). Any failure by the Employer to
obtain such assumption of the Employer’s obligations by any surviving or acquiring entity shall constitute a material breach
of this Agreement.  This Agreement shall inure to the benefit of and be binding upon the Employer and the Executive,
their respective successors, executors, administrators, heirs and permitted assigns. It is anticipated that the Executive’s
employer of record and salary and bonus payor may be the Employer or another subsidiary, as determined by the Employer and communicated
to Executive from time to time, but the Employer and such other subsidiary will be jointly and severally liable for all amounts
payable to Executive hereunder.

 

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12.         Enforceability.
If any portion or provision of this Agreement (including, without limitation, any portion or provision of any section of this Agreement)
shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement,
or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable,
shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.

 

13.         Waiver.  No
waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party.  The failure
of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of
this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.

 

14.         Notices.  Any
notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by a nationally recognized overnight courier service or by registered or certified mail, postage prepaid, return
receipt requested, to the Executive at the Executive’s last residential address the Executive has filed in writing with the
Employer or, in the case of the Employer, at its main offices, attention of the Chairman of the Board, and shall be effective on
the date of delivery in person or by courier or three (3) days after the date mailed.

 

15.         Third
Party Beneficiary; Amendment.  The Executive and the Employer acknowledge and agree that no third party shall have
any rights or benefits under this Agreement.  This Agreement may be amended or modified only by a written instrument
signed by the Executive and the Employer.

 

16.         Governing
Law.  This contract has been entered into in the State of California and shall be construed under and be governed
in all respects by the laws of the State of California, without giving effect to the conflict of laws principles of such state;
provided that Section 19 shall be governed by the laws of the State of Delaware.

 

17.         Counterparts.  This
Agreement may be executed in any number of original, facsimile or other electronic counterparts, each of which when so executed
and delivered shall be taken to be an original; but such counterparts shall together constitute one and the same document.

 

18.         No
Prior Agreements.  The Executive hereby represents and warrants to the Employer and that the execution of this Agreement
by the Executive, the Executive’s employment by the Employer, and the performance of the Executive’s duties hereunder
will not violate or constitute a breach of any agreement, including any non-competition agreement, invention or confidentiality
agreement, with a former employer, client or any other person or entity.  Further, the Executive agrees to indemnify
the Employer for any loss, including, but not limited to, reasonable attorneys’ fees and expenses, that the Employer may
incur based upon or arising out of the Executive’s breach of this Section.

 

  19.         Indemnification.  The
Employer shall indemnify the Executive against and hold the Executive harmless from any costs, liabilities, losses and exposures
for the Executive’s services as an employee, officer and director of the Employer (or any successor in interest thereof),
whether before or after the Effective Date, to the maximum extent permitted under the Delaware General Corporate Law.  If
the Executive is made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by the Employer against the Executive), by reason of the fact that the Executive is or was
performing services to the Employer under this Agreement or while acting as an executive officer of the Employer, the Employer
shall indemnify the Executive against all expenses (including reasonable attorneys’ fees), judgments, fines and amounts paid
in settlement, and advance payment to Executive of any and all such amounts as actually and reasonably incurred by the Executive
in connection therewith, to the maximum extent permitted under the Delaware General Corporation Law.  If the Executive
is made a party to any third-party action, complaint, suit or proceeding, the Executive shall given prompt notice thereof to the
Employer, and the Employer shall have the right to assume and control the defense of such action, complaint, suit or proceeding;
provided that if legal counsel selected by the Employer shall have a conflict of interest that prevents such counsel from representing
the Executive, the Executive may engage separate counsel and the Employer shall reimburse all reasonable attorneys’ fees
and reasonable expenses of such separate counsel.  Notwithstanding the foregoing, the Employer shall not have, and the
Executive acknowledges and agrees that the Employer does not have, any obligation to indemnify the Executive under this Section
or under its certificate of incorporation or bylaws, with respect to (a) any breach of representation, warranty or covenant committed
by the Executive under this Agreement, or (b) any action or inaction by the Executive where the Executive failed to act in good
faith and in a manner the Executive reasonably believed to be in, or not opposed to, the best interests of the Employer, or with
respect to any criminal action or proceeding, where the Executive had reasonable cause to believe that his conduct was unlawful.

 

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20.         Directors’
and Officers’ Insurance. As soon as reasonably practicable following the Effective Date, the Employer shall use commercially
reasonable efforts to obtain directors’ and officers’ insurance from a reputable insurance company with such coverage
amounts and policy terms as is customary for public companies with market valuations similar to the Employer, as determined by
the Employer in its sole discretion.

 

21.         
Section 954 of the Dodd Frank Act. This Agreement and all other Compensation of Executive are intended to comply with the “clawback
obligations” of Section 954 of the Dodd Frank Act ((including the related regulations, “Section 954”).
If the Employer’s financial statements must be restated, to the extent and only to the extent required by Section 954 (if
applicable), the Employer shall be entitled to recover from Executive, and Executive agrees to promptly repay, any incentive-based
compensation which would not have been earned under the restated financial statements. 

 

22.         Section
409A Compliance.  Unless otherwise expressly provided, any payment of compensation by the Employer to the Executive,
whether pursuant to this Agreement or otherwise, shall be made no later than the fifteenth (15th) day of the third (3rd) month
(i.e., 21⁄2 months) after the later of the end of the calendar year or the Employer’s fiscal year in which the Executive’s
right to such payment vests (i.e., is not subject to a “substantial risk of forfeiture” for purposes of Section 409A).  Each
payment and each installment of any bonus or severance payments provided for under this Agreement shall be treated as a separate
payment for purposes of application of Section 409A. The severance benefits are intended to satisfy the exemptions from application
of Section 409A provided under Treasury Regulations Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9), and any ambiguities
herein shall be interpreted accordingly. However, to the extent such exemptions are not available and any amounts payable by the
Employer to the Executive constitute “nonqualified deferred compensation” (within the meaning of Section 409A) such
payments are intended to comply with the requirements of Section 409A, and shall be interpreted in accordance therewith. Neither
party individually or in combination may accelerate, offset or assign any such deferred payment, except in compliance with Section
409A. No amount shall be paid prior to the earliest date on which it is permitted to be paid under Section 409A and the Executive
shall have no discretion with respect to the timing of payments except as permitted under Section 409A. In the event that the Executive
is determined to be a “key employee” (as defined and determined under Section 409A) of the Employer at a time when
its stock is deemed to be publicly traded on an established securities market, payments determined to be “nonqualified deferred
compensation” payable upon separation from service shall be made no earlier than (a) the first (1st) day of the seventh (7th)
complete calendar month following such termination of employment, or (b) the Executive’s death, consistent with the provisions
of Section 409A.  Any payment delayed by reason of the prior sentence shall be paid out in a single lump sum at the end of
such required delay period in order to catch up to the original payment schedule.  All expense reimbursement or in-kind
benefits subject to Section 409A provided under this Agreement or, unless otherwise specified in writing, under any Employer program
or policy, shall be subject to the following rules: (i) the amount of expenses eligible for reimbursement or in-kind benefits provided
during one calendar year may not affect the benefits provided during any other year; (ii) reimbursements shall be paid no later
than the end of the calendar year following the year in which the Executive incurs such expenses, and the Executive shall take
all actions necessary to claim all such reimbursements on a timely basis to permit the Employer to make all such reimbursement
payments prior to the end of said period, and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation
or exchange for another benefit.  The Executive shall be responsible for the payment of all taxes applicable to payments
or benefits received from the Employer.  It is the intent of the Employer that the provisions of this Agreement and all
other plans and programs sponsored by the Employer be interpreted to comply in all respects with Section 409A; however, the Employer
shall have no liability to the Executive, or any successor or beneficiary thereof, in the event taxes, penalties or excise taxes
may ultimately be determined to be applicable to any payment or benefit received by the Executive or any successor or beneficiary
thereof, except to the extent resulting from the Employer’s negligence or bad faith.

 

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23.Set Off. The Employer's obligation
to pay Executive the amounts provided and to make the arrangements provided hereunder shall be subject to set-off, counterclaim
or recoupment of amounts owed by Executive to the Employer or its Subsidiaries to the extent permitted by applicable law.

 

24.Withholding Obligations. The
Employer, or any other entity making a payment, may withhold and make such deductions from any amounts payable under this Agreement
such federal, state and local taxes as may be required to be withheld or deducted from time to time pursuant to any applicable
law, governmental regulation and/or order.

 

25.Interpretation. Executive
understands that this Agreement is deemed to have been drafted jointly by the parties and that the parties had a reasonable opportunity
to retain legal counsel for such purpose. Any uncertainty or ambiguity shall not be construed for or against any party based on
attribution of drafting to any party.

 

26.Headings. Titles or captions
of Sections contained in this Agreement are inserted only as a matter of convenience and for reference, and in no way define, limit,
extend or describe the scope of this Agreement or the intent of any provisions hereof.

 

27.Survival of Provisions. All
other rights and obligations of the parties hereto, other than those applicable by their express terms only during the Term, shall
survive any termination or expiration of this Agreement or of Executive’s employment with the Employer, and shall be fully
enforceable thereafter.

 

28.Section 280G Payments.

 

(a)If any payment or benefit Executive
will or may receive from the Employer or otherwise (a “280G Payment”) would (i) constitute a “parachute payment”
within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) but for
this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then any such 280G
Payment pursuant to this Agreement (a “Payment”) shall be equal to the Reduced Amount. The “Reduced Amount”
shall be either (x) the largest portion of the Payment that would result in no portion of the Payment (after reduction) being subject
to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount (i.e., the amount
determined by clause (x) or by clause (y)), after taking into account all applicable federal, state and local employment taxes,
income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in Executive’s receipt,
on an after-tax basis, of the greater economic benefit notwithstanding that all or some portion of the Payment may be subject to
the Excise Tax. If a reduction in a Payment is required pursuant to the preceding sentence and the Reduced Amount is determined
pursuant to clause (x) of the preceding sentence, the reduction shall occur in the manner (the “Reduction Method”)
that results in the greatest economic benefit for Executive. If more than one method of reduction will result in the same economic
benefit, the items so reduced will be reduced pro rata (the “Pro Rata Reduction Method”).

 

(b)Notwithstanding any provision
of Section 28(a) to the contrary, if the Reduction Method or the Pro Rata Reduction Method would result in any portion of the Payment
being subject to taxes pursuant to Section 409A that would not otherwise be subject to taxes pursuant to Section 409A, then the
Reduction Method and/or the Pro Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes
pursuant to Section 409A as follows: (A) as a first priority, the modification shall preserve to the greatest extent possible,
the greatest economic benefit for Executive as determined on an after-tax basis; (B) as a second priority, Payments that are contingent
on future events (e.g., being terminated without Cause), shall be reduced (or eliminated) before Payments that are not contingent
on future events; and (C) as a third priority, Payments that are “deferred compensation” within the meaning of Section
409A shall be reduced (or eliminated) before Payments that are not deferred compensation within the meaning of Section 409A.

 

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(c)Unless Executive and the Employer
agree on an alternative accounting firm or law firm, the accounting firm engaged by the Employer for general tax compliance purposes
as of the day prior to the effective date of the Change of Control shall perform the foregoing calculations. If the accounting
firm so engaged by the Employer is serving as accountant or auditor for the individual, entity or group effecting the Change of
Control, the Employer shall appoint a nationally recognized accounting or law firm to make the determinations required hereunder.
The Employer shall bear all expenses with respect to the determinations by such accounting or law firm required to be made hereunder.
The Employer shall use commercially reasonable efforts to cause the accounting or law firm engaged to make the determinations hereunder
to provide its calculations, together with detailed supporting documentation, to Executive and the Employer within fifteen (15)
calendar days after the date on which Executive’s right to a 280G Payment becomes reasonably likely to occur (if requested
at that time by Executive or the Employer) or such other time as requested by Executive or the Employer.

 

(d)If Executive receives a Payment
for which the Reduced Amount was determined pursuant to clause (x) of Section 28(a) and the Internal Revenue Service determines
thereafter that some portion of the Payment is subject to the Excise Tax, Executive shall promptly return to the Employer a sufficient
amount of the Payment (after reduction pursuant to clause (x) of Section 28(a)) so that no portion of the remaining Payment is
subject to the Excise Tax. For the avoidance of doubt, if the Reduced Amount was determined pursuant to clause (y) of Section 28(a),
Executive shall have no obligation to return any portion of the Payment pursuant to the preceding sentence.

 

IN WITNESS WHEREOF, this Agreement has been
executed by the Employer and by the Executive as of the Effective Date.

 

 

	 	EMPLOYER
	 	 	 
	 	Mandalay Digital Group, Inc., a Delaware corp.
	 	 	 
	 	By: 	/s/ Peter Adderton
	 	 	Name: Peter Adderton
	 	 	Title: CEO
	 	 

 

	 	EXECUTIVE
	 	 	 
	 	Name: 	/s/ Dan L. Halvorson 
	 	 	Dan L. Halvorson

 

    	11

    	 

    

 

Exhibit A

 

Benchmarks for Annual Incentive Bonus for Stub Year 2012
and full year 2013.

 

The Board of Directors of Employer (or any compensation committee
thereof) shall establish benchmarks, targets and/or milestones, in each case its sole discretion after consultation with the Executive,
which shall serve as the basis for payment of Executive’s annual bonus pursuant to Section 4(b) of the Agreement to which
this Exhibit A is attached. Unless otherwise determined by the Board of Directors of Employer, the Board of Directors shall establish
a revenue and an EBITDA target for the Employer for the remainder of 2012 (the “Stub Year”) within thirty (30)
days of the Effective Date, and for fiscal year 2013 by March 31, 2013, in each case its sole discretion after consultation with
the Executive. Revenue and EBITDA shall be as defined by the Board of Directors (or any compensation committee thereof) in its
reasonable discretion. The Board of Directors (or any compensation committee thereof) shall communicate each applicable target
to the Executive in writing promptly after it is determined.

 

If the revenue target for the applicable period is achieved,
as reasonably determined by the Employer, within 90 days of the end of such period, then Executive shall receive a bonus payment
equal to 50% of his Salary due for that applicable period. For example, if the revenue target is met for the Stub Year, then Executive
shall receive a bonus payment equal to 50% of the Salary due to Executive with respect to the Stub Year. And if the revenue target
is met for fiscal 2013, then Executive shall receive a bonus payment equal to 50% of the Salary due to Executive with respect to
fiscal 2013.

 

If the EBITDA target for the applicable period is achieved,
as reasonably determined by the Employer, within 90 days of the end of such period, then Executive shall receive a bonus payment
equal to 50% of his Salary due for that applicable period. For example, if the EBITDA target is met for the Stub Year, then Executive
shall receive a bonus payment equal to 50% of the Salary due to Executive with respect to the Stub Year. And if the EBITDA target
is met for fiscal 2013, then Executive shall receive a bonus payment equal to 50% of the Salary due to Executive with respect to
fiscal 2013

 

The total annual incentive bonus for the Stub Year of the Term
shall not exceed 100% of the Salary due to Executive for the Stub Year, and the total annual incentive bonus for 2013 shall not
exceed 100% of the Salary due to Executive for 2013, unless otherwise provided by the Board of Directors (or any compensation committee
thereof).

 

For all periods after 2013 during the Term, the Board of Directors
(or any compensation committee thereof) and the Executive shall establish the applicable performance targets and measurement periods,
and the Board of Directors (or any compensation committee thereof) shall reasonably determine whether such targets have been achieved.

 

304595620.1

 

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