Document:

Exhibit 10.19

Exhibit 10.19

SECOND AMENDMENT TO AMENDED AND RESTATED PROMISSORY NOTE

THIS SECOND AMENDMENT TO AMENDED AND RESTATED PROMISSORY NOTE (this “Amendment") is entered
into as of March 24, 2011 by and among BAY CITY CAPITAL FUND IV, L.P. (“Investor”) and VIA
PHARMACEUTICALS, INC., a Delaware corporation (the “Company"). Investor and the Company are
sometimes referred to in this Amendment, individually, as a “Party” and, collectively, as the
“Parties.”

	1.	 	Amendment of Note. The Parties hereby agree to amend that certain Promissory Note,
dated March 26, 2010, made and issued by the Company to Investor under that certain Note and
Warrant Purchase Agreement dated as of March 26, 2010, which Promissory Notes were amended and
restated on November 15, 2010 and amended on January 14, 2011 (as amended, restated,
supplemented or otherwise modified from time to time, the “Note”), as follows: the phrase
“June 30, 2011” in subclause (i) of Section 4 of the Note is hereby deleted in its entirety
and replaced with “September 30, 2011.”
	 
	2.	 	Survival. Except as expressly modified hereby, all of the provisions of the Note
remain in full force and effect and shall be unaffected by this Amendment.
	 
	3.	 	Execution in Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but all of which together will
constitute one and the same instrument. This Amendment or any counterpart may be executed and
delivered by facsimile or email with scan attachment copies or pdf, each of which shall be
deemed an original.

[Signature Page Follows]

 

1

 

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

	 	 	 
	 

	 	COMPANY:
	 
	 	 
	 

	 	VIA PHARMACEUTICALS, INC.
	 
	 	 
	 
	 	 
	 

	 	By: /s/ Karen S. Wright
	 
	 	 
	 

	 	Name: Karen S. Wright
	 
	 	 
	 

	 	Title: VP Finance, Controller
	 
	 	 
	 
	 	 
	 

	 	Address:
	 
	 	 
	 

	 	VIA Pharmaceuticals, Inc.
	 

	 	750 Battery Street, Suite 330
	 

	 	San Francisco, California 94111
	 

	 	Attention: Vice President, Controller
	 

	 	Facsimile: (415) 283-2214
	 

	 	Electronic mail:
	 

	 	Karen.Wright@viapharmaceuticals.com

[Signature page to Note Amendment]

 

 

 

	 	 	 
	 

	 	INVESTOR:
	 
	 	 
	 

	 	BAY CITY CAPITAL FUND IV, L.P.
	 
	 	 
	 

	 	By: Bay City Capital Management IV LLC, its
	 

	 	general partner
	 
	 	 
	 

	 	By: Bay City Capital LLC, its manager
	 
	 	 
	 

	 	By: /s/ Fred Craves
	 
	 	 
	 

	 	Name: Fred Craves
	 
	 	 
	 

	 	Title: Managing Director
	 
	 	 
	 

	 	Address:
	 

	 	Bay City Capital Fund IV, L.P.
	 

	 	750 Battery Street, Suite 400
	 

	 	San Francisco, California 94111
	 

	 	Attention: Managing Director
	 

	 	Facsimile:
	 

	 	Electronic mail:

[Signature page to Note Amendment]Exhibit 10.20

Exhibit 10.20

SECOND AMENDMENT TO AMENDED AND RESTATED PROMISSORY NOTE

THIS SECOND AMENDMENT TO AMENDED AND RESTATED PROMISSORY NOTE (this “Amendment") is entered
into as of March 24, 2011 by and among BAY CITY CAPITAL FUND IV CO-INVESTMENT FUND, L.P.
(“Investor”) and VIA PHARMACEUTICALS, INC., a Delaware corporation (the “Company"). Investor and
the Company are sometimes referred to in this Amendment, individually, as a “Party” and,
collectively, as the “Parties.”

	1.	 	Amendment of Note. The Parties hereby agree to amend that certain Promissory Note,
dated March 26, 2010, made and issued by the Company to Investor under that certain Note and
Warrant Purchase Agreement dated as of March 26, 2010, which Promissory Notes were amended and
restated on November 15, 2010 and amended on January 14, 2011 (as amended, restated,
supplemented or otherwise modified from time to time, the “Note”), as follows: the phrase
“June 30, 2011” in subclause (i) of Section 4 of the Note is hereby deleted in its entirety
and replaced with “September 30, 2011.”

	2.	 	Survival. Except as expressly modified hereby, all of the provisions of the Note
remain in full force and effect and shall be unaffected by this Amendment.

	3.	 	Execution in Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but all of which together will
constitute one and the same instrument. This Amendment or any counterpart may be executed and
delivered by facsimile or email with scan attachment copies or pdf, each of which shall be
deemed an original.

[Signature Page Follows]

 

1

 

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

	 	 	 
	 

	 	COMPANY:
	 
	 	 
	 

	 	VIA PHARMACEUTICALS, INC.
	 
	 	 
	 
	 	 
	 

	 	By: /s/ Karen S. Wright
	 
	 	 
	 

	 	Name: Karen S. Wright
	 
	 	 
	 

	 	Title: VP Finance, Controller
	 
	 	 
	 
	 	 
	 

	 	Address:
	 
	 	 
	 

	 	VIA Pharmaceuticals, Inc.
	 

	 	750 Battery Street, Suite 330
	 

	 	San Francisco, California 94111
	 

	 	Attention: Vice President, Controller
	 

	 	Facsimile: (415) 283-2214
	 

	 	Electronic mail:
	 

	 	Karen.Wright@viapharmaceuticals.com

[Signature page to Note Amendment]

 

 

 

	 	 	 
	 

	 	INVESTOR:
	 
	 	 
	 

	 	BAY CITY CAPITAL FUND IV CO-INVESTMENT FUND, L.P.,
	 
	 	 
	 

	 	By: Bay City Capital Management IV LLC, its
	 

	 	general partner
	 
	 	 
	 

	 	By: Bay City Capital LLC, its manager
	 
	 	 
	 

	 	By: /s/ Fred Craves
	 
	 	 
	 

	 	Name: Fred Craves
	 
	 	 
	 

	 	Title: Managing Director
	 
	 	 
	 

	 	Address:
	 

	 	Bay City Capital Fund IV, L.P.
	 

	 	750 Battery Street, Suite 400
	 

	 	San Francisco, California 94111
	 

	 	Attention: Managing Director
	 

	 	Facsimile:
	 

	 	Electronic mail:

[Signature page to Note Amendment]exv10w1

Exhibit 10.1

Fiscal 2012 Reporting Officer Performance Pay Plan

Philosophy

We support a pay-for-performance approach to variable compensation that rewards individual and
Company performance towards the achievement of our Company goals. This Plan is designed to provide
upside reward for outstanding Company and individual performance, motivate reporting officers to
focus on and work together toward achieving Company goals; and be competitive within our industry.

Eligibility

Company reporting officers are eligible to participate in the plan. As of April 1, 2011, the
following officers are eligible to participate in the Plan:

	 	•	 	Chief Executive Officer and President and Chairman of the Board of Directors

	 	•	 	Senior Vice President, Chief Financial Officer and Treasurer

	 	•	 	Senior Vice President, Corporate Development

	 	•	 	Senior Vice President, Government Relations and Public Policy, General Counsel,
Secretary and Chief Compliance Officer

	 	•	 	Senior Vice President, Research and Development and Chief Medical Officer

	 	•	 	Senior Vice President, Chief Operating Officer and Chief Risk Officer

The performance period under the Plan consists of the twelve month period from April 1, 2011 to
March 31, 2012. To be eligible to participate in this Plan, the executive officer must be actively
employed by the Company at the time awards are paid by the Company. Performance pay awards will be
paid prior to two and one half months after the end of the performance period.

Individual Performance Pay Targets

An individual performance pay range and target as a percentage of base salary will be established
by the Compensation Committee of the Board of Directors of the Company for each of the reporting
officers and shall be based generally on comparable market data. Performance pay awards are to be
pro-rated based on the number of days employed in the performance period.

Company Objectives -

The Company objectives for fiscal 2012 are:

i) Manage relationships with key business partners,

ii) Successfully launch VIVITROL® into the opioid indication,

iii) Execute on the expanded development of our late stage product portfolio,

iv) Rapidly advance our emerging proprietary pipeline,

v) Efficiently supply clinical and commercial products,

vi) Achieve financial performance against guidance and

vii) Respond to changing business conditions

Individual Performance

Each individual’s performance pay award under the Plan will be determined by the Compensation
Committee. Individual performance against the Company objectives affects the determination of each
individual’s performance pay award relative to that individual’s target performance pay amount. The
CEO of the Company shall provide the Compensation Committee with recommendations regarding the
performance pay for the Senior Vice Presidents. The percentage of base salary represented by each
performance pay award granted under the Plan shall fall within the target performance pay range.

The Compensation Committee reserves the right to modify the Plan, Company objectives or overall
payouts under the Plan at any time during the course of the fiscal year, including in response to
changing business goals, needs and operations.Exhibit 10.1

Exhibit 10.1

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

FOR

RODERICK H. DILLON, JR.

This Amended and Restated Employment Agreement (the “Agreement”) is entered into this
22nd day of March, 2011, by and between Diamond Hill Investment Group, Inc.
(hereinafter referred to as the “Employer”) and Roderick H. Dillon, Jr. (hereinafter referred to
as the “Executive”).

WHEREAS, the Executive is currently employed as the President and Chief Executive Officer
(“CEO”) of the Employer pursuant to the terms of that certain Employment Agreement, dated February
28, 2008 and amended on December 2, 2008 (the “Prior Agreement”); and

WHEREAS, the Executive desires to continue his employment with the Employer in such capacity
under the terms of this Agreement which shall, except as otherwise provided herein, supersede the
terms of the Prior Agreement; and

WHEREAS, upon the expiration of the term of this Agreement, the Executive and the Employer
anticipate that the Executive will continue his employment with the Employer as a portfolio manager
(“PM”) for an indefinite term.

NOW, THEREFORE, and in consideration of the mutual covenants herein contained and other
valuable consideration, the receipt and adequacy of which is agreed to by the parties, the Employer
and the Executive hereby mutually agree as follows:

1. Employment and Duties. The Employer hereby employs the Executive, and the Executive hereby
accepts continued employment with the Employer upon the terms and conditions hereinafter set forth.
The Executive will continue to serve the Employer as its President and CEO. In such capacity, the
Executive will report directly to the Board of Directors of the Employer (the “Board”) and have all
powers, duties, and obligations as are normally associated with such positions. Subject to the
provisions of Paragraph 5 [“Termination of Employment"], the Executive will further perform such
other duties and hold such other positions related to the business of the Employer and its
Affiliates as may from time to time be reasonably requested of him by the Board. For purposes of
this Agreement, an “Affiliate” shall mean any corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture, trust, association or
organization which is, directly or indirectly, controlled by, or under common control with, the
Employer. Except as otherwise set forth in this Agreement, the Executive will devote all of his
skills and substantially all of his time and attention to said positions and in furtherance of the
business and interests of the Employer and its Affiliates and will not directly or indirectly
render any services of a business, commercial or professional nature to any person or organization
without the prior written consent of the Board (which consent will not be unreasonably withheld or
delayed); provided, however, that the Executive will not be precluded from participation in
community, civic, charitable or similar activities which do not unreasonably interfere with his
responsibilities hereunder.

 

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2. Term of Employment. This Agreement will be effective upon execution by both parties. The
term of employment will begin, or be deemed to have begun, on January 1, 2011 (the “Effective
Date”), and to the extent the Executive’s Compensation (as defined in Section 3, below) is
increased, retroactive payments will be made back to the Effective Date within 30 days of the
execution of this Agreement. The Agreement will continue through the five-year period ending on
the day of the fifth anniversary date of the Effective Date, subject, however, to prior
termination, as herein provided. Notwithstanding any provision contained herein, in the event that
a Change in Control (as defined in Paragraph 6) occurs during the term of this Agreement, following
such Change in Control, the term of this Agreement will be the longer of (i) the remaining term
under the preceding provisions of this Paragraph 2; and (ii) twenty-four (24) months.

3. Compensation.

a. Salary. The Executive will receive an initial annual base salary of a minimum of
$360,000, which may be increased on an annual basis, but not decreased without the Executive’s
written consent, at the Board’s discretion during the term of this Agreement. In the event that
the Board increases the Executive’s initial base salary, the amount of the initial base salary,
together with any increase(s) will be his base salary (hereinafter referred to as the “Base
Salary”). The Base Salary will be payable in accordance with the Employer’s regular payroll
payment practices.

b. Annual Cash Bonus. Each calendar year during the term of this Agreement, the
Executive will be paid a cash bonus of at least 5% of the company’s annual operating income,
generally with a maximum of$640,000 and a minimum of $0. All bonus payments to be made pursuant
to this Paragraph 3(b) will be paid to the Executive in cash in the calendar year following the
calendar year for which such bonus is payable and no later than March 15th thereof, and
such payment shall not include a deferral feature.

c. Restricted Stock Award. The Executive shall receive an award of up to 100,000
restricted common shares of the Company (the “Shares”) pursuant to the terms and conditions of the
Diamond Hill Investment Group, Inc. 2011 Equity and Cash Incentive Plan (the “Equity Plan”),
subject to: (i) approval of the Equity Plan by the Company’s shareholders and the (ii) the
effectiveness of the Form S-8 registering the common shares available for the issuance thereunder.
The award of the Shares will be evidenced by an award agreement (the “Award Agreement”) between the
Executive and the Employer and shall be subject to the applicable provisions of the Equity Plan.
Subject to the specific terms and conditions of the Award Agreement, (i) the vesting restrictions
on the Shares shall lapse on January 1, 2016 (the “Vesting Date”), to the extent of the
satisfaction of performance criteria established by the Compensation Committee included in the
Award Agreement by no later than March 31, 2011; and (ii) the transfer restrictions on the Shares
shall lapse with respect to 20% of the vested Shares on each of the first, second, third, fourth
and fifth anniversaries of the Vesting Date.

 

Page 2 of 13

 

4. Fringe Benefits and Expenses.

a. Fringe Benefits. The Employer will provide the Executive with all health and life
insurance coverages, disability programs, tax-qualified retirement plans, equity
compensation programs, paid holidays, paid vacation, perquisites, and such other fringe
benefits of employment as the Employer may provide from time to time to actively employed senior
executives of the Employer; and consistent with the foregoing the Executive shall be entitled to a
minimum of the following benefits during the term of this Agreement:

	 	(i)	 	standard health insurance of such coverage and term as provided
by the Employer to actively employed senior executives of the Employer;
	 
	 	(ii)	 	a minimum of six (6) weeks paid vacation each year, based on
current year Base Salary;
	 
	 	(iii)	 	continued participation in the Employer’s 401(k) retirement
savings plan;
	 
	 	(iv)	 	participation in such other health, disability, insurance,
pension, profit sharing or other employee benefit plans that the Employer may
establish from time to time in which the Executive is otherwise eligible to
participate.

Notwithstanding any provision contained in this Agreement, the Employer may discontinue or
terminate at any time any employee benefit plan, policy or program, now existing or hereafter
adopted, to the extent permitted by the terms of such plan, policy or program and will not be
required to compensate the Executive for such discontinuance or termination.

b. Expenses. The Employer shall reimburse the Executive for all reasonable travel,
industry, entertainment, and out-of-pocket and miscellaneous expenses incurred by the Executive in
connection with the performance of his business activities under this Agreement in accordance with
the existing policies and procedures of the Employer pertaining to reimbursement of such expenses
to senior executives. In addition, the Employer agrees to reimburse the Executive for reasonable
legal expenses in connection with the review and analysis of this Agreement by an attorney selected
by the Executive, in an amount not to exceed $10,000.

5. Termination of Employment. Wherever used in this Paragraph 5, the word “terminate” or
“termination” shall mean a “separation from service” of the Executive from the Employer within the
meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and Treasury
Regulation § 1.409A-1(h), except in the event of the Executive’s death.

a. Death of Executive. The Executive’s employment hereunder will terminate upon his
death and the Executive’s beneficiary (as designated by the Executive in writing with the Employer
prior to his death) will be entitled to the following payments and benefits:

i. any Base Salary that is accrued but unpaid, the value of any vacation that is accrued but
unused (determined by dividing Base Salary by 365 and multiplying such amount by the number of
unused vacation days), and any business expenses that are unreimbursed—all, as of the date of
termination of employment; and

 

Page 3 of 13

 

ii. any rights and benefits (if any) provided under plans and programs of the Employer,
determined in accordance with the applicable terms and provisions of such plans and programs,
including but not limited to (A) any portion of the Shares, as determined pursuant to the terms of
the Award Agreement; and (B) a pro rata portion of the bonus payment specified in Paragraph 3(b),
above, and such payment shall be made no later than March 15th of the calendar year following the
calendar year for which such bonus is payable.

In the absence of a beneficiary designation by the Executive, or, if the Executive’s designated
beneficiary does not survive him, payments and benefits described in this subparagraph will be paid
to the Executive’s estate.

b. Disability. The Executive’s employment hereunder may be terminated by the Employer
upon 45 days written notice from the Employer following the determination, as set forth immediately
below, that the Executive suffers from a Permanent Disability. For purposes of this Agreement,
“Permanent Disability” means a disability that, in the opinion of the Employer, renders, or will
render, the Executive unable to perform his duties under this Agreement by reason of any medically
determinable impairment, which can be expected to result in death, or which has lasted or can be
expected to last, for a continuous period of at least twelve months. If the Executive disagrees
with the Employer’s decision that the Executive’s disability renders or will render him unable to
perform his duties under this Agreement, such dispute shall be resolved by a panel of three
physicians: one physician to be chosen by the Employer, one physician to be chosen by the
Executive, and a third physician to be chosen by the first two physicians. Each physician shall
have the opportunity to examine the Executive and the decision of a majority of the physicians on
the panel shall be binding on the Employer and the Executive, and shall be rendered within 45 days
after the third physician is appointed to the panel. The cost of the physicians shall be paid by
the Employer. During any period that the Executive fails to perform his duties hereunder as a
result of a Permanent Disability (“Disability Period”), the Executive will continue to receive his
Base Salary at the rate then in effect for such period until his employment is terminated pursuant
to this subparagraph; provided, however, that payments of Base Salary so made to the Executive will
be reduced by the sum of the amounts, if any, that were payable to the Executive at or before the
time of any such salary payment under any disability benefit plan or plans of the Employer and that
were not previously applied to reduce any payment of Base Salary. In the event that the Employer
elects to terminate the Executive’s employment pursuant to this subparagraph, the Executive will be
entitled to the following payments and benefits:

i. any Base Salary and Annual Cash Bonus that is accrued but unpaid, the value of any
vacation that is accrued but unused (determined by dividing Base Salary by 365 and multiplying such
amount by the number of unused vacation days), and any business expenses that are
unreimbursed—all, as of the date of termination of employment; and

ii. any rights and benefits (if any) provided under plans and programs of the Employer,
determined in accordance with the applicable terms and provisions of such plans and programs,
including but not limited to (A) any portion of the Shares, as determined pursuant to the terms of
the Award Agreement and (B) a pro rata portion of the bonus payment specified in Paragraph 3(b),
above, and such payment shall be made no later than March 15th of the calendar year following the
calendar year for which such bonus is payable.

 

Page 4 of 13

 

c. Termination of Employment for Cause. The Employer may terminate the Executive’s
employment upon written notice at any time for “Cause” if such Cause is reasonably determined by
the Board (provided the Executive does not fully cure the effect of the event giving rise to
“Cause” to the Employer’s reasonable satisfaction within thirty (30) days following his receipt of
notice of termination from the Employer). For purposes of this Agreement, the term “Cause” means
that the Executive has:

i. caused the Employer or any of its Affiliates, other than pursuant to the advice of the
Employer’s legal counsel, to violate a law which, in the opinion of the Employer’s legal counsel,
is reasonable grounds for civil penalties in excess of $250,000 or criminal penalties against the
Employer, an Affiliate or the Board;

ii. engaged in conduct which constitutes a material violation of the established written
policies or procedures of the Employer regarding the conduct of its employees, including policies
regarding sexual harassment of employees and use of illegal drugs or substances in the course of
his employment with the Employer;

iii. committed fraud, or acted with willful misconduct or gross negligence, in carrying out
his duties under this Agreement;

iv. been convicted of any crime involving moral turpitude or a violation of federal or state
securities or investment adviser laws; or

vi. committed a breach of any material covenant, provision, term, condition, understanding or
undertaking set forth in this Agreement.

In the event that the Employer terminates the Executive’s employment for Cause, the Executive
will be entitled to the following payments and benefits:

A. any Base Salary that is accrued but unpaid, the value of any vacation that is accrued but
unused (determined by dividing Base Salary by 365 and multiplying such amount by the number of
unused vacation days), and any business expenses that are unreimbursed—all, as of the date of
termination of employment; and

B. any rights and benefits (if any) provided under plans and programs of the Employer,
determined in accordance with the applicable terms and provisions of such plans and programs,
including but not limited to any portion of the Shares, as determined pursuant to the terms of the
Award Agreement.

d. Termination Without Cause. The Employer may terminate the Executive’s employment
for any reason upon ninety (90) days prior written notice to the Executive. If the Executive’s
employment is terminated by the Employer for any reason other than the reasons set forth in
subparagraphs (a), (b) or (c) of this Paragraph 5, subject to the applicable provisions of Section
409A of the Code, the Executive will be entitled to the following payments and benefits:

i. any Base Salary and Annual Cash Bonus that is accrued but unpaid, the value of any
vacation that is accrued but unused (determined by dividing Base Salary by 365 and
multiplying such amount by the number of unused vacation days), and any business expenses that
are unreimbursed—all, as of the date of termination of employment;

 

Page 5 of 13

 

ii. any rights and benefits (if any) provided under plans and programs of the Employer,
determined in accordance with the applicable terms and provisions of such plans and programs,
including but not limited to (A) any portion of the Shares, as determined pursuant to the terms of
the Award Agreement; and (B) a pro rata portion of the bonus payment specified in Paragraph 3(b),
above, and such payment shall be made in the calendar year following the calendar year for which
such bonus is payable and no later than March 15th thereof;

iii. a single lump sum payment, payable within 15 days following the date of termination of
employment, equal to six (6) months of the Base Salary applicable to the Executive on the date of
termination of employment;

iv. beginning on the first day of the seventh month following the date of termination of
employment, continuation of the Executive’s Base Salary in effect on the date of his termination of
employment for a period of six (6) months; provided, that these payments will be made in separate,
equal payments no less frequently than monthly over such six-month period; and

v. a single lump sum payment, payable within fifteen (15) days following the date of
termination of employment, equal to the bonus under Paragraph 3(b) paid or payable to the Executive
with respect to the most recently completed fiscal year of the Employer.

Each payment, and each installment thereof, described in subparagraph (i) through (v) above shall
be treated as a right to a separate payment under Section 409A of the Code.

e. Voluntary Termination by Executive. The Executive may resign and terminate his
employment with the Employer for any reason whatsoever upon not less than ninety (90) days prior
written notice to the Employer. In the event that the Executive terminates his employment
voluntarily pursuant to this Paragraph 5(e), the Executive will be entitled to the following
payments and benefits:

i. any Base Salary that is accrued but unpaid, the value of any vacation that is accrued but
unused (determined by dividing Base Salary by 365 and multiplying such amount by the number of
unused vacation days), and any business expenses that are unreimbursed—all, as of the date of
termination of employment; and

ii. any rights and benefits (if any) provided under plans and programs of the Employer,
determined in accordance with the applicable terms and provisions of such plans and programs,
including but not limited to any portion of the Shares, as determined pursuant to the terms of the
Award Agreement.

f. Good Reason Termination. The Executive may resign and terminate his employment
with the Employer for “Good Reason” upon not less than thirty (30) days prior written notice to the
Employer, given no later than ninety (90) days following the occurrence of one of the events
described below in subparagraph (i) through (iv). For purposes of this Agreement, the Executive
will have “Good Reason” to terminate his employment with the
Employer if any of the following events occur (provided the Employer does not fully cure the
effect of such event to the Executive’s reasonable satisfaction within thirty (30) days following
its receipt of notice of termination of employment from the Executive):

 

Page 6 of 13

 

i. the Executive’s Base Salary or Annual Cash Bonus is reduced for any reason other than in
connection with the termination of his employment;

ii. without his consent, the Employer permanently and/or consistently assigns the Executive
to duties that are materially inconsistent in any respect with his position (including, without
limitation, his status, office and title), authority, duties or responsibilities as set forth in
Paragraph 1 (but excluding any other duties related to the business of the Employer or its
Affiliates reasonably requested of him by the Board), or takes any other action that results in a
permanent and/or consistent material diminution in such position, authority, duties, or
responsibilities; provided, that, to the extent that during the term of this Agreement the Employer
hires an individual for purposes of his or her succession as President and CEO of the Employer,
such hiring and the assignment of duties and responsibilities to such individual shall not
constitute Good Reason pursuant to this subparagraph (f)(ii);

iii. without his consent, the Employer changes the Executive’s reporting structure within the
organization so that the Executive no longer reports directly to the Board; or

iv. the Employer breaches any material covenant, provision, term, condition, understanding or
undertaking set forth in this Agreement.

In the event that the Executive terminates his employment for Good Reason pursuant to this
Paragraph 5(f), subject to the applicable provisions of Section 409A of the Code, the Executive
will be entitled to the following payments and benefits:

A. any Base Salary that is accrued but unpaid, the value of any vacation that is accrued but
unused (determined by dividing Base Salary by 365 and multiplying such amount by the number of
unused vacation days), and any business expenses that are unreimbursed—all, as of the date of
termination of employment;

B. any rights and benefits (if any) provided under plans and programs of the Employer,
determined in accordance with the applicable terms and provisions of such plans and programs,
including but not limited to (I) any portion of the Shares, as determined pursuant to the terms of
the Award Agreement; and (II) a pro rata portion of the bonus payment specified in Paragraph 3(b),
above, and such payment shall be made no later than March 15th of the calendar year following the
calendar year for which such bonus is payable;

C. a single lump sum payment, payable within 15 days following the date of termination of
employment, equal to six (6) months’ of the Base Salary applicable to the Executive on the date of
termination of employment;

D. beginning on the first day of the seventh month following the date of termination of
employment, continuation of the Executive’s Base Salary in effect on the date of his termination of
employment for a period of six (6) months; provided, that these payments
will be made in separate, equal payments no less frequently than monthly over such six-month
period; and

 

Page 7 of 13

 

E. a single lump sum payment, payable within fifteen (15) days following the date of
termination of employment, equal to the bonus under Paragraph 3(b) paid or payable to the Executive
with respect to the most recently completed fiscal year of the Employer.

Each payment, and each installment thereof, to which the Executive is entitled under this Paragraph
5(f) shall be treated as a right to a separate payment under Code Section 409A.

g. End of Term of Agreement. In the event that the Executive remains employed by the
Employer at the end of the term of this Agreement, he will cease to be the President and CEO of the
Employer and, with the exception of Paragraphs 9, 10 and 11, the terms of this Agreement shall
terminate. The Executive will continue as an “at will” employee of the Employer and will continue
to perform the duties of a PM of the Employer.

6. Change In Control. Wherever used in this Paragraph 6, the word “terminate” or
“termination” shall mean a “separation from service” of the Executive from the Employer within the
meaning of Section 409A of the Code and Treasury Regulation § 1.409A-1(h).

a. Occurrence of Change in Control. In the event that during the term of this
Agreement, a Change in Control [as defined under Section 409A of the Code and the regulations
thereunder] occurs and, within twenty-four (24) months following such Change in Control, the
Executive’s employment is terminated by the Employer or its successor for any reason other than the
reasons set forth in subparagraphs (a), (b) or (c) of Paragraph 5 or is terminated by the Executive
under subparagraph (f) of Paragraph 5, then in addition to any other provision of Paragraph 5 of
this Agreement and subject to the applicable provisions of Section 409A of the Code, the Employer
or its successor will pay to the Executive the following payments and benefits:

i. a single lump sum payment, payable within 30 days following the date of termination of
employment, equal to the total annual Base Salary and Bonus paid or payable to the Executive with
respect to the most recently completed fiscal year of the Employer; and

ii. a single lump sum payment, payable within 60 days following the date of termination of
employment, equal to twelve (12) months of the premium applicable to the Executive on the date of
termination of employment for the Executive and his family (provided the Executive had family
coverage on such date) under the Employer’s group health plan.

Each payment, and each installment thereof, to which the Executive is entitled under this Paragraph
6(a) shall be treated as a right to a separate payment under Code Section 409A.

 

Page 8 of 13

 

b. Treatment of Taxes. If and to the extent the payments provided under this
Agreement to the Executive, together with all other payments to which the Executive is entitled in
connection with a Change of Control (but not including any payments and benefits which may be
excluded from such calculation under Code Section 280G(b)(6)) (collectively, the “Payments”), under
circumstances in which the Executive is a “disqualified individual” within
the meaning of Code Section 280G, would cause any portion of the Payments to be nondeductible
by the Employer under Code Section 280G and subject to the excise tax imposed upon the Executive
under Code Section 4999 (the “Excise Tax”), then the Employer shall pay to the Executive (or to the
applicable taxing authority on the Executive’s behalf) an additional cash payment (the “Gross-Up
Payment”) equal to an amount such that after payment by the Executive of all taxes, interest,
penalties, additions to tax and costs imposed or incurred with respect to the Gross-Up Payment
(including, without limitation, any income and excise taxes imposed upon the Gross-Up Payment), the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon such
Payment or Payments. The Gross-Up Payment, if triggered pursuant to this Paragraph 6(b), is
intended to put the Executive in the same position as the Executive would have been had no Excise
Tax been imposed upon or incurred as a result of any Payment. Any such Gross-Up Payment shall be
paid as soon as practicable and in all events no later than the end of the calendar year following
the year in which the Executive remits the related taxes.

7. Special Timing Rules for Certain Payments. Anything in this Agreement notwithstanding, any
payment to which the Executive is entitled under this Agreement that is not otherwise exempt under
Code Section 409A and that is payable in connection with the Executive’s separation from service
(within the meaning of Section 409A of the Code) shall be paid no earlier than the 181st
day following his separation from service and any payment that would have been made during the six
months following the Executive’s separation from service but for this Paragraph 7 shall be paid on
the first business day following the 181st day after the Executive’s separation from
service.

8. Nonexclusivity of Rights. Nothing in this Agreement will prevent or limit the Executive’s
continuing or future participation in any incentive, fringe benefit, deferred compensation, or
other plan or program provided by the Employer and for which the Executive may qualify, nor will
anything herein limit or otherwise affect such rights as the Executive may have under any other
agreements with the Employer. Amounts that are vested benefits or that the Executive is otherwise
entitled to receive under any plan or program of the Employer at or after the date of termination
of employment, will be payable in accordance with such plan or program.

9. Noncompetition Covenant. The Executive agrees that, during his employment with the
Employer or any of its Affiliates and for a period of one (1) year thereafter following his
termination of employment, he shall not:

a. call upon or solicit, either for the Executive or for any other person or firm that
engages in competition with any business operation actively conducted by the Employer or any
Affiliate during the Executive’s employment, any customer with whom the Employer or any Affiliate
directly conducts business (including, solely by way of example, intermediaries and corporations
that purchase directly from the Employer or an Affiliate); or interfere with any relationship,
contractual or otherwise, between the Employer or any Affiliate and any customer with whom the
Employer or any Affiliate directly conducts business; or

b. induce any person who is an employee, officer or agent of the Employer or any Affiliate to
terminate said relationship.

 

Page 9 of 13

 

Nothing in this Paragraph 9 or this Agreement shall be interpreted to (i) limit or reduce the
Executive’s ownership rights in the Dillon Value Model (the “DVM”); (ii) prevent the Executive from
devoting his time and attention to the revision of the DVM; or (iii) limit or preclude the
Executive from licensing the use of the DVM to any individual or entity following his termination
of employment with the Employer.

In the event of a breach by the Executive of any covenant set forth in this Paragraph 9, the
term of such covenant will be extended by the period of the duration of such breach.

The restrictions on competition provided herein shall supersede any restrictions on
competition contained in any other agreement between the Employer and the Executive and may be
enforced by the Employer and/or any successor thereto, by an action to recover payments made under
this Agreement, an action for injunction, and/or an action for damages. The provisions of this
Paragraph 9 constitute an essential element of this Agreement, without which the Employer would not
have entered into this Agreement. Notwithstanding any other remedy available to the Employer at
law or at equity, the parties hereto agree that the Employer or any successor thereto, will have
the right, at any and all times, to seek injunctive relief in order to enforce the terms and
conditions of this Paragraph 9.

If the scope of any restriction contained in this Paragraph 9 is too broad to permit
enforcement of such restriction to its fullest extent, then such restriction will be enforced to
the maximum extent permitted by law, and the Executive hereby consents and agrees that such scope
may be judicially modified accordingly in any proceeding brought to enforce such restriction.

10. Confidential Information. The Executive will hold in a fiduciary capacity, for the
benefit of the Employer, all secret or confidential information, knowledge, and data relating to
the Employer and its Affiliates, that shall have been obtained by the Executive during his
employment with the Employer or any of its Affiliates and that is not public knowledge (other than
by acts by the Executive or his representatives in violation of this Agreement). During and after
termination of the Executive’s employment with the Employer and its Affiliates, the Executive will
not, without the prior written consent of the Board, communicate or divulge any such information,
knowledge, or data to anyone other than the Employer or those designated by it, unless the
communication of such information, knowledge or data is required pursuant to a compulsory
proceeding in which the Executive’s failure to provide such information, knowledge, or data would
subject the Executive to criminal or civil sanctions and then only with prior notice to the
Employer.

The restrictions imposed on the release of information described in this Paragraph 10 may be
enforced by the Employer and/or any successor thereto, by an action to recover payments made under
this Agreement, an action for injunction, and/or an action for damages. The provisions of this
Paragraph 10 constitute an essential element of this Agreement, without which the Employer would
not have entered into this Agreement. Notwithstanding any other remedy available to the Employer
at law or at equity, the parties hereto agree that the Employer or any successor thereto, will have
the right, at any and all times, to seek injunctive relief in order to enforce the terms and
conditions of this Paragraph 10.

 

Page 10 of 13

 

If the scope of any restriction contained in this Paragraph 10 is too broad to permit
enforcement of such restriction to its fullest extent, then such restriction will be enforced to
the maximum extent permitted by law, and the Executive hereby consents and agrees that such scope
may be judicially modified accordingly in any proceeding brought to enforce such restriction.

11. Intellectual Property. The Executive agrees to communicate to the Employer, promptly and
fully, and to assign to the Employer all intellectual property developed or conceived solely by the
Executive, or jointly with others, during the term of his employment, which are within the scope of
either the Employer ‘s business or an Affiliate’s business, or which utilized Employer materials or
information. For purposes of this Agreement, “intellectual property” means inventions,
discoveries, business or technical innovations, creative or professional work product, or works of
authorship. The Executive further agrees to execute all necessary papers and otherwise to assist
the Employer, at the Employer ‘s sole expense, to obtain patents, copyrights or other legal
protection as the Employer deems fit. Any such intellectual property is to be the property of the
Employer whether or not patented, copyrighted or published. Notwithstanding any provision
contained herein or anywhere else in the Agreement, the provisions of this Paragraph 11 shall not
apply to the DVM.

12. Assignment and Survivorship of Benefits. The rights and obligations of the Employer under
this Agreement will inure to the benefit of, and will be binding upon, the successors and assigns
of the Employer, if the Employer shall at any time be merged or consolidated into, or with, any
other company, or if substantially all of the assets of the Employer are transferred to another
company, then the provisions of this Agreement will be binding upon and inure to the benefit of the
company resulting from such merger or consolidation or to which such assets have been transferred,
and this provision will apply in the event of any subsequent merger, consolidation, or transfer.

13. Notices. Any notice given to either party to this Agreement will be in writing, and will
be deemed to have been given when delivered personally or sent by certified mail, postage prepaid,
return receipt requested, duly addressed to the party concerned, at the address indicated below or
to such changed address as such party may subsequently give notice of:

	 	 	 
	If to Diamond Hill:

	 	Diamond Hill Investment Group, Inc.
	 

	 	325 John H. McConnell Blvd.
	 

	 	Suite 200
	 

	 	Columbus, Ohio 43215
	 

	 	Attn.: Chairman, Compensation Committee
	 
	 	 
	If to the

	 	Roderick H. Dillon, Jr.
	Executive:

	 	At the last address on file
	 

	 	with the Employer

14. Indemnification. The Executive shall be indemnified by the Employer to the extent
provided in the case of officers under the Employer’s Articles of Incorporation or Regulations, to
the maximum extent permitted under applicable law. The Employer shall use commercially reasonable
efforts to continue its Director and Officer Liability Insurance (“DOL
Insurance”) under substantially similar terms and in substantially similar amounts as in
existence prior to the termination of employment. The DOL Insurance shall be maintained for at
least seven (7) years from termination of employment and without limiting the foregoing, the
Executive shall not be excluded from coverage under such DOL Insurance during such period.

 

Page 11 of 13

 

15. Taxes. Anything in this Agreement to the contrary notwithstanding, all payments required
to be made hereunder by the Employer to the Executive will be subject to withholding of such
amounts relating to taxes as the Employer may reasonably determine that it should withhold pursuant
to any applicable law or regulations. In lieu of withholding such amounts, in whole or in part,
however, the Employer may, in its sole discretion, accept other provision for payment of taxes,
provided that it is satisfied that all requirements of the law affecting its responsibilities to
withhold such taxes have been satisfied.

16. Arbitration; Enforcement of Rights. Any controversy or claim arising out of, or relating
to this Agreement, or the breach thereof, except with respect to Paragraphs 9, 10 and 11, will be
settled by arbitration in the city of Columbus, Ohio, in accordance with the Rules of the American
Arbitration Association, and judgment upon the award rendered by the arbitrator or arbitrators may
be entered in any court having jurisdiction thereof.

All legal and other fees and expenses, including, without limitation, any arbitration
expenses, incurred by the Executive in connection with seeking in good faith to obtain or enforce
any right or benefit provided for in this Agreement, or in otherwise pursuing any right or claim,
will be paid by the Employer, to the extent permitted by law, provided that the Executive is
successful in whole or in part as to such claims as the result of litigation, arbitration, or
settlement.

In the event that the Employer refuses or otherwise fails to make a payment when due and is
ultimately decided that the Executive is entitled to such payment, such payment will be increased
to reflect an interest equivalent for the period of delay, compounded annually, equal to the prime
or base lending rate used by Bank of America, and in effect as of the date the payment was first
due.

17. Governing Law/Captions/Severance. This Agreement will be construed in accordance with,
and pursuant to, the laws of the State of Ohio. The captions of this Agreement will not be part of
the provisions hereof, and will have no force or effect. The invalidity or unenforceability of any
provision of this Agreement will not affect the validity or enforceability of any other provision
of this Agreement. Except as otherwise specifically provided in this paragraph, the failure of
either party to insist in any instance on the strict performance of any provision of this Agreement
or to exercise any right hereunder will not constitute a waiver of such provision or right in any
other instance.

18. Entire Agreement/Amendment. This instrument contains the entire agreement of the parties
relating to the subject matter hereof, and the parties have made no agreement, representations, or
warranties relating to the subject matter of this Agreement that are not set forth herein. This
Agreement may be amended only by mutual written agreement of the parties. However, by signing this
Agreement, the Executive agrees without any further consideration, to consent to any amendment
necessary to avoid penalties under Code Section 409A. Anything in
this Agreement notwithstanding, in the event that the Shareholders of the Employer do not
approve the Equity Plan thereby rendering the award of Shares under Paragraph 3(c) null and void,
this Agreement shall become null and void and of no legal effect. In such event, the terms of the
Prior Agreement, except for the provisions of Paragraph 2(b) thereof, shall again become effective
and the Executive’s employment with the Employer shall be governed by the terms and conditions of
such Prior Agreement.

 

Page 12 of 13

 

19. Section 409A of the Code. This Agreement is intended to comply with, or be exempt from,
the requirements of Section 409A of the Code, as applicable, and, to the maximum extent permitted
by law, shall be operated, administered and construed consistent with this intent. Nothing herein
shall be construed as the guarantee of any particular tax treatment to the Executive.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written.

	 	 	 	 	 
	 	DIAMOND HILL INVESTMENT GROUP, INC.

 	 
	 	By:  	/s/ Donald B. Shackelford
 	 
	 	 	Donald B. Shackelford, Director 	 
	 	 	Chairman of the Compensation Committee 	 
	 
	 	 	 
	 	                                              /s/ Roderick H. Dillon, Jr.
 	 
	 	Roderick H. Dillon, Jr. 	 
	 	 	 
	 

 

Page 13 of 13

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