Document:

exv10w39

Exhibit 10.39

TERMINATION AND SURRENDER AGREEMENT

     This Agreement (“Agreement”)is made as of this 15th day of October, 2010 (the
“Effective Date”), by and between Converted Organics Inc. (“COIN”), a Delaware corporation having
offices at 7A Commercial Warf West, Boston, MA 02110, Converted Organics of Woodbridge, LLC, a New
Jersey limited liability company (“Woodbridge”) having offices at 7A Commercial Warf West, Boston,
MA 02110 (COIN and Woodbridge being sometimes herein collectively referred to as the “COIN
Parties”), and Recycling Technology Development, LLC (“Lessor”), a New Jersey limited liability
company having offices at 75 Crows Mills Road, Keasbey, New Jersey 08832.

RECITALS

     A. Lessor and COIN entered into an Agreement of Lease dated as of June 2, 2006 (as amended
from time to time (the “Lease”). On or about February 1, 2007, COIN entered into an Assignment and
Assumption Agreement pursuant to which COIN assigned all of its rights, title and interest, duties,
obligations, responsibilities and liabilities to and under the Lease to Woodbridge (the “Assignment
and Assumption Agreement”). Simultaneous with such assignment, COIN guaranteed the obligations of
Woodbridge under the Lease (the “Guaranty”).

     B. Woodbridge has defaulted in the payment of the rent due under the Lease. The rent that
would have been paid by Woodbridge for the unexpired term of the Lease absent its termination as
provided herein would be approximately Nine Million One Hundred Six Thousand Five Hundred Eight and
90/100 ($9,106,508.90) Dollars (the “Future Rent”). Neither Woodbridge nor COIN has the financial
ability at this time to pay any material part of the amount due and owing to the Lessor.

     C. Subject to the terms and conditions of this agreement and the occurrence of the Settlement
Date (defined below), the Lessor and Woodbridge have agreed to terminate the Lease, and Woodbridge
has agreed to surrender possession of the Leased Premises. Further, the parties have agreed that
Woodbridge shall transfer certain personal property located at the Leased Premises and COIN shall
issue certain shares of stock in satisfaction of certain claims of the Lessor under the Lease
arising from (i) damages to a tipping floor, to the extent not actually reimbursed by insurance
carried by Woodbridge, (ii) unpaid sewer and trash removal charges through August 3, 2010, (iii)
unpaid rent due Lessor for periods prior to termination of the Lease; (iv) certain costs and
expenses incurred by Lessor in connection with existing litigation entitled Lefcourt Associates et
al. v. Converted Organics of Woodbridge (the “Lefcourt Litigation”) alleging damage from odors
emanating from the Leased Premises (“Litigation Expenses”), (v) damages that may result from the
condition of the premises at the time of surrender, and (vi) the required removal and disposal of
abandoned inventory and materials (collectively the “Immediate Damages”). It is agreed that the
Immediate Damages do not include Lessor’s claims under any insurance policy assigned to Lessor by
Woodbridge and any claims under any insurance agreement where Lessor is named as an additional
insured or loss payee. Lessor has agreed to enter into a certain Claims Purchase Agreement (the
“CPA”) with American Capital Management, LLC (“American Capital”) whereby Lessor will sell and
assign its rights to the Future Rent and all other remaining claims other than the Immediate
Damages, those claims under any insurance policy assigned to Lessor by Woodbridge and any claims
under any insurance agreement where Lessor is named as an additional insured or loss payee
(collectively the “Claims”) it may have against the COIN Parties in connection with the Lease, and
against any officers, directors, employees, contractors and affiliates or representatives of either
of the COIN Parties, to American Capital.

     D. As used herein, the “Settlement Date” shall mean the first business day following
satisfaction of all of the following conditions: (i) payment of the Purchase Price (as defined in
the CPA) by American Capital to Lessor, (ii) satisfaction of all of the terms and conditions of
this Agreement, and

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(iii) execution and delivery by American Capital of a general release in favor of the COIN
Parties releasing the assigned Claims.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing and the covenants contained herein and for
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereby agree as follows:

	 	1.	 	Termination and Surrender. On the Settlement Date, the Lease shall be
deemed terminated and Woodbridge shall be deemed to have surrendered possession of the
Leased Premises to the Lessor. At any time following the Settlement Date, immediately
upon the request of Lessor, Woodbridge shall assign and transfer to Lessor or its
designee, to the extent assignable, the Class C recycling permit and any other permit
held by Woodbridge.
	 
	 	2.	 	Issuance of Shares. On the Settlement Date, COIN shall issue a number
of COIN common shares to Lessor or its designee to be determined by dividing Five
Hundred Thousand Dollars ($500,000.00) by the Closing Stock Price (as defined below).
As used herein, “Closing Stock Price” means the consolidated closing bid price of the
COIN common stock on the day prior to the Settlement Date. Notwithstanding any other
provision hereof, no fractional shares of COIN common stock, and no certificates or
scrip for a fractional share, or other evidence of ownership thereof, will be issued to
the Lessor or any designee. COIN shall cause the transfer agent to confirm the number
of shares issued to Lessor in writing or by electronic mail immediately following such
transfer.
	 
	 	3.	 	Sale of Personal Property. On the Settlement Date, Woodbridge shall
execute and deliver a bill of sale in the form attached hereto as Exhibit A
selling, transferring and conveying all equipment, tools and fixtures owned by
Woodbridge and presently located at the Leased Premises (“Personal Property”), free and
clear of all liens, claims and other encumbrances, but otherwise on an “as is, where
is” basis with no representations or warranties of any kind expressed or implied. On
the Settlement Date, Woodbridge shall have obtained and filed or shall deliver to
Lessor UCC-3 forms executed by The Bank of New York, as Trustee, on behalf of itself
and the New Jersey Economic Development Authority releasing each of those creditor’s
liens covering the Personal Property. Woodbridge shall provide executed lien releases
and discharges from (i) SNC-Lavalin Project Services, Inc, (ii) Airside, Inc., (iii)
Hatzel & Buehler, Inc., (iv) Brennan Industrial Contractors, Inc, (v) Armistead
Mechanical, Inc., and (vi) The Construction Partnership, Inc., and their respective
successors and assigns, releasing and discharging any and all liens and claims against
the Personal Property and the Leased Premises. In addition, Woodbridge shall provide
an executed release of the lis pendens executed by Armistead Mechanical, Inc. on March
12, 2010 and recorded on March 16, 2010 in book 2100, page 663.
	 
	 	4.	 	Assignment of Rights Under Insurance Policies. To the extent that
Woodbridge is covered under any insurance policy for (i) damage to the tipping floor at
the Leased Premises, (ii) the Litigation Expenses, (iii) any other claim, cost or
expense in connection with the Lefcourt Litigation, and/or (iv) any other claim, cost
or expense in connection with the Lease or the Leased Premises, and to the extent
assignable under applicable law, Woodbridge assigns to Lessor any claim under such
policy or policies for payment on account of such damages and expenses effective as of
and conditioned upon the Settlement Date. Nothing herein is intended to in anyway
compromise, convey or affect any claim that Lessor may have for

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	 	 	 	defense or indemnification under any insurance agreement where Lessor is named as an
additional insured or loss payee.
	 
	 	5.	 	Mutual Releases. On the Settlement Date, Lessor and the COIN Parties
shall execute and deliver a mutual release in the form attached hereto as Exhibit
B.
	 
	 	6.	 	Representations, Warranties and Covenants of Lessor. The Lessor hereby
represents, warrants and covenants to the COIN Parties as follows:

	 	a.	 	Lessor is the lessor under the Lease and sole owner of the
Claims, free and clear of all liens, claims, charges and encumbrances and other
restrictions of any nature. Other than as contemplated by this Agreement,
Lessor has not sold, transferred, assigned, encumbered or released its interest
in the Lease or any part of the Claims.
	 
	 	b.	 	Lessor has all necessary power and authority to execute,
deliver and perform all of its obligations under this Agreement. Lessor has
such knowledge and experience in business and financial matters that it is able
to protect its own interests and evaluate the risks and benefits of entering
into this Agreement. Lessor acknowledges and agrees that it has had an
opportunity to conduct its own due diligence and consult with its own legal
counsel, and tax, financial and other advisors, and that Lessor is not relying
on any advice or representations from the COIN Parties other than those
contained herein. Lessor acknowledges that neither Purchase nor any of its
affiliates, employees or agent of the COIN Parties is acting as a fiduciary or
in another similar capacity for, or an advisor to, Lessor in respect of this
Agreement or otherwise.
	 
	 	c.	 	The execution, delivery and performance of this Agreement by
Lessor has been duly authorized by all requisite action on the part of Lessor.
This Agreement has been duly executed and delivered by Lessor and constitutes
the legal, valid and binding obligation of Lessor, enforceable against Lessor
in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting Lessors’ rights generally or
the availability of equitable remedies.
	 
	 	d.	 	The execution and delivery of this Agreement by Lessor, and the
performance of all of its obligations hereunder (i) are not in violation or
breach of, and will not conflict with or constitute a default under, any note,
debt instrument, security agreement, security interest, lease, lien, deed of
trust, mortgage, indebtedness, indenture, guarantee, instrument or any other
material contract, license, obligation, purchase order, customer order,
agreement or commitment binding upon Lessor, and (ii) will not conflict with or
violate any applicable law, rule, regulation, judgment, order or decree of any
government, governmental instrumentality or court having jurisdiction over
Lessor.
	 
	 	e.	 	There is no action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the knowledge of Lessor, threatened,
against or affecting Lessor or any of its assets before or by any court,
arbitrator, governmental or administrative agency, or regulatory authority
(federal, state, county, local or foreign) that adversely affects or challenges
the legality, validity or enforceability of, or that could have or reasonably
be expected to result in a material adverse effect on this Agreement, the
Lease, or the Claim.

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	 	f.	 	Neither Lessor nor any of its affiliates is, or has been in the
past ninety (90) days, an “affiliate” (as defined in Rule 144 promulgated under
the Securities Act of 1933, as amended) of COIN. Lessor understands that the
COIN common shares are “restricted securities” and have not been registered
under the Securities Act of 1933, as amended (“Act”) or any applicable state
securities law and is acquiring the COIN common shares as principal for its own
account and not with a view to or for distributing or reselling such securities
or any part thereof in violation of the Act or any applicable state securities
law, has no present intention of distributing any of such COIN common shares in
violation of the Act or any applicable state securities law and has no direct
or indirect arrangement or understandings with any other persons to distribute
or regarding the distribution of such COIN common shares in violation of the
Act or any applicable state securities law. The Lessor is an “accredited
investor” as defined in Rule 501(a) under the Act. Lessor has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in the
COIN common shares, and has so evaluated the merits and risks of such
investment.

	 	7.	 	Representations and Warranties of The COIN Parties. The COIN Parties
hereby each represent and warrants to Lessor as follows:

	 	a.	 	The COIN Parties have all necessary power and authority to
execute, deliver and perform all of their respective obligations under this
Agreement.
	 
	 	b.	 	The execution, delivery and performance of this Agreement by
the COIN Parties has been duly authorized by all requisite action on the part
of the COIN Parties. This Agreement has been duly executed and delivered by
the COIN Parties and constitutes the legal, valid and binding obligation of the
COIN Parties, enforceable against the COIN Parties in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency or similar
laws affecting the COIN Parties generally or the availability of equitable
remedies.
	 
	 	c.	 	The execution and delivery of this Agreement by the COIN
Parties, and the performance of all of its obligations hereunder (i) are not in
violation or breach of, and will not conflict with or constitute a default
under, any note, debt instrument, security agreement, security interest, lease,
lien, deed of trust, mortgage, indebtedness, indenture, guarantee, instrument
or any other material contract, license, obligation, purchase order, customer
order, agreement or commitment binding upon COIN, and (ii) will not conflict
with or violate any applicable law, rule, regulation, judgment, order or decree
of any government, governmental instrumentality or court having jurisdiction
over the COIN Parties.
	 
	 	d.	 	The Personal Property shall be conveyed free and clear of all
liens, claims and other encumbrances.
	 
	 	e.	 	Oppenheimer Rochester National Municipals and Oppenheimer New
Jersey Municipal Fund, each a series of Oppenheimer Multi-State Municipal
Trust, a Massachusetts business trust (together the “Holder”) is the holder of
$17,500,000 aggregate principal amount of Solid Waste Facilities Revenue Bonds
Series A (the “Bonds”), has agreed to direct the Bank of New York, as trustee
and assignee of the New Jersey Economic Development Authority to (i) waive its
right to cure or remedy any default or breach of covenant by Woodbridge under
the Lease, (ii) consent to the

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	 	 	 	termination of the Lease by Lessor and Woodbridge and the surrender of
possession of the leased premises by Woodbridge, (iii) release and discharge the
mortgage on the leasehold estate of Woodbridge, and (iv) release all liens on
the Personal Property of Woodbridge located in the leased premises.

	 	8.	 	Fees and Expenses. Each party shall pay its own fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by it in connection with this Agreement. Lessor understands that the COIN
Parties shall not be liable for any commissions, selling expenses, orders, purchases,
contracts, taxes, withholding, or obligations of any kind resulting from any of
Lessor’s transactions.
	 
	 	9.	 	Choice of Law. This Agreement shall be governed by and construed
according to the laws of the State of New Jersey, without giving effect to its choice
of law principles. The parties agree that all actions and proceedings arising out of
or relating directly or indirectly to this Agreement or any ancillary agreement or any
other related obligations shall be litigated solely and exclusively in the state courts
in Middlesex County, New Jersey or the federal courts located in Newark, New Jersey,
and that such courts are convenient forums. Each party hereby submits to the personal
jurisdiction of such courts for purposes of any such actions or proceedings.
	 
	 	10.	 	Notices. All notices and other communications shall be in writing and
shall be provided to the recipient party to the addresses set forth on the first page
of this Agreement. All notices and communications shall be deemed made and effective
as follows: (i) if transmitted for overnight delivery via a nationally recognized
delivery service, the first business day after being delivered by the transmitting
party to such overnight delivery service, or (ii) if mailed via certified U.S. mail,
upon delivery. Any party may designate a superseding notice contact name and/or
address by providing the other parties with written notice pursuant to the provisions
of this section.
	 
	 	11.	 	General. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect any of
the provisions hereof. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party. This Agreement is intended for the
benefit of Lessor and the COIN Parties and its affiliates and their respective
successors and permitted assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other person. The representations, warranties and covenants
contained herein shall survive the execution and delivery of this Agreement and the
closing of the transactions contemplated herein for a period of one (1) year and shall
be true in all material respects as if made again on the Settlement Date. On or before
the Settlement Date, upon request of another party, each party shall certify that the
representations made herein are true and complete in all material respects as of the
Settlement Date. This Agreement may be executed in two or more counterparts, by
facsimile or electronic transmission, all of which when taken together shall be
considered one original. No party may assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of the other parties and any
such attempted assignment shall be null and void. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, and their respective representatives,
successors and permitted assigns.
	 
	 	12.	 	Amendments and Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment, by the
parties, or, in the case of a waiver, by the party against whom enforcement of such
waiver is sought. No

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	 	 	 	waiver of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of any
subsequent default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right.
	 
	 	13.	 	Further Assurances. Each party hereto shall do and perform, or cause
to be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents (including,
without limitation, stock powers) as any other party may reasonable request in order to
carry out the intent and accomplish the purpose of this Agreement and the consummation
of the transaction contemplated hereby. Woodbridge shall also provide reasonable
cooperation (at no material expense to itself) to Lessor in connection with efforts by
Lessor (i) to seek to reduce sewer charges incurred with respect to the Leased
Premises, (ii) in connection with the prosecution of any insurance claims that may be
assigned under this agreement, or (iii) in connection with seeking reimbursement for
the Litigation Expenses. Within five (5) business days of the Effective Date
Woodbridge shall provide to Lessor copies of all sampling results, correspondence
and/or other information in its possession that will support the reduction in the sewer
charges.
	 
	 	14.	 	ISRA Compliance. Woodbridge will complete the General Information
Notice and a Remediation in Progress Waiver form and Lessor shall submit same to the
New Jersey Department of Environmental Protection and pay any applicable fees, for the
purpose of complying with the requirements of the New Jersey Industrial Site Recovery
Act (“ISRA”), in connection with the cessation of Woodbridge’s operations. Lessor will
cooperate with Woodbridge in connection with the completion of the ISRA documentation.
	 
	 	15.	 	Termination. If the Settlement Date does not occur on or before the
date that is thirty (30) days following the Effective Date (unless extended by written
agreement of the parties hereto) this Agreement shall become null and void ab initio.
Unless and until the Settlement Date shall have occurred, nothing herein shall be
deemed to be an admission of liability by any party.
	 
	 	16.	 	Entire Agreement. This Agreement, together with the exhibits hereto,
contains the entire agreement and understanding of the parties, and supersedes all
prior and contemporaneous agreements, term sheets, letters, discussions, communications
and understandings, both oral and written, solely with respect to the sale, transfer,
conveyance and assignment of the Claim by Lessor to The COIN Parties, which the parties
acknowledge have been merged into this Agreement. For clarification purposes, the
Recitals are part of this Agreement.

Signatures to follow on next page

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IN WITNESS WHEREOF, the parties hereto have respectively signed and sealed this Agreement as of the
Effective Date.

	 	 	 	 	 	 	 	 	 
	RECYCLING TECHNOLOGY DEVELOPMENT, LLC	 	 	 	CONVERTED ORGANICS, INC.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Edward J. Gildea
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:
	 	Edward J. Gildea
	 

	 	 	 	 	 	Title:
	 	President
	By:

	 	/s/ Valerie Montecalvo
	 	 	 	 	 	 
	Name:

	 	Valerie Montecalvo	 	 	 	 	 	 
	Title:

	 	Managing Member	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	CONVERTED ORGANICS
OF WOODBRIDGE, LLC
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Edward J. Gildea
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:
	 	Edward J. Gildea
	 

	 	 	 	 	 	Title:
	 	President

7

 

EXHIBIT A

Bill of Sale

8

 

Exhibit A

Bill of Sale

KNOW ALL MEN BY THESE PRESENTS: That Converted Organics Inc. and Converted Organics of Woodbridge,
LLC, hereinafter “Seller”, for and in consideration of release and remise each of the Seller, from
any and all liabilities, claims, demands, debts, suits, controversies, obligations, damages or
causes of action in connection with the Lease, the Guaranty and the Agreement, both at law and in
equity, from the beginning of time to the present date, excluding only the Claims being assigned to
American Capital pursuant to the Claims Purchase Agreement dated October 15, 2010 and the claims
assigned to Buyer pursuant to Section 4 of the Mutual Release Agreement dated October 15, 2010,
conveyed by Recycling Technology Development, LLC, hereinafter “Purchaser”, whether one or more,
the receipt whereof is hereby acknowledged, do by these presents quitclaim unto Purchaser, the
following described personal property now located at Seller’s Woodbridge Facility with an address
of 75 Crow Mill Road, Keasby, NJ, as described in the list attached.

Seller quitclaims all interest in the property described to Purchaser.

IN WITNESS WHEREOF, the Seller has hereunto set his/her/their hand and seal this 15th
day Of October, 2010.

Converted Organics Inc.

/s/ Edward
J. Gildea                     

By: Edward J. Gildea

Title: President

Converted Organics of Woodbridge, LLC

/s/ Edward
J. Gildea                     

By: Edward J. Gildea

Title: President

State of Massachusetts Judicial District (or County of Suffolk) The foregoing instrument was
acknowledged before me this 15th day of October, 2010 by Edward J. Gildea, President
and CEO of Converted Organics Inc. a Delaware corporation of Converted Organics of Woodbridge, LLC,
a New Jersey limited liability company, on behalf of the corporation.

/s/ Mark
C.
Gildea                        

Notary Public

Print Name: Mark C. Gildea

My commission expires:

2/6/15

 

 

	 	 	 
	Asset #	 	Description
	AG430, AG432, AG324 Total

	 	Digestor mixer
	BA664 Total

	 	Bagger JEM
	BA665 Total

	 	Bagger standup pouches
	BA670 Total

	 	rotary band sealer
	BF600 Total

	 	Bin vent filter
	BF772 Total

	 	Bag filter
	BF774 Total

	 	Bag filter
	BI110 Total

	 	Walking floor
	BI600 Total

	 	Feathermeal live bottom augers
	BL560 Total

	 	Press feed tank aeration blower
	BL980 Total

	 	Boiler
	CB130 Total

	 	Conveyor to TK312
	CN460 Total

	 	Centrifuge and centrifuge control cabinet
	CR600, CA610A Total

	 	Particle sizer, cake breaker
	CS200, CS645 Total

	 	Feathermeal pneumatic conveyor, Recycle pneumatic conveyor
	CS300 Total

	 	Ribbon blender
	CS465 Total

	 	Screw conveyor
	CS614A Total

	 	Disk and dryer feed conveyors
	CS614B Total

	 	Disk and dryer feed conveyors
	CS651 Total

	 	Vibratory conveyor and aeromechanical conveyor
	CS651A Total

	 	Vibratory conveyor and aeromechanical conveyor
	CS670 Total

	 	Bagger conveyor
	CT750 Total

	 	Cooling tower
	DI434, DI436 Total

	 	CLF digestors
	DR614, SC648 Total

	 	Witte dryer, Witte vibratory screen
	FD200 Total

	 	Recycle feeder
	FD300 Total

	 	Feathermeal feeder
	FD400 Total

	 	Phosphorous feeder
	FD500 Total

	 	Potash feeder
	FD600 Total

	 	Bulk bag unloader feeder
	HEX430A Total

	 	Digestor heat exchanger
	Instrumentation Total

	 	Instrumentation
	MA312 Total

	 	Macerator pump and pulper
	OC850 Total

	 	Process odor control
	OC851 Total

	 	Odor control — Benzaco
	OC852 Total

	 	Odor control — Nalco
	PE640 Total

	 	Pin mill pelletizer
	PE641 Total

	 	Disk pelletizer
	PR574A Total

	 	Rotary press
	PU434 Total

	 	CLF digestor recirculation pump
	PU434, PU436, PU550 Total

	 	CLF digestor recirculation pumps, Primary screen pump
	PU436 Total

	 	CLF digestor recirculation pump
	PU550 Total

	 	Primary screen pump
	PU794 Total

	 	Mobile pump
	SC401, SC540 Total

	 	Smico centrifuge primary screen, Smico primary screen
	SI200 Total

	 	Dry product storage

 

 

	 	 	 
	Asset #	 	Description
	SW101 Total

	 	Stretch wrap machine
	TK312 Total

	 	Macerator
	TK550 Total

	 	Primary screen tank
	TK738 Total

	 	Met chemi clarifier
	TK802, TK560, TK720,
TK774 Total

	 	Liquid feed stock tank, Press feed tank, Filtrate tank, Liquid product storage tank
	TK808 Total

	 	Wastewater EQ tank
	YV100 Total
	 	 
	YV800 Total
	 	 
	YV801 Total
	 	 

 

 

EXHIBIT B

Form of General Release

 

 

Exhibit B

MUTUAL RELEASE

     This General Release is executed as of the 15h day of October, 2010 (the “Effective
Date”) by and between Converted Organics Inc. (“COIN”), Converted Organics of Woodbridge, LLC
(“Woodbridge”) and Recycling Technology Development, LLC (“Lessor”). Capitalized terms used and
not otherwise defined herein shall have the meanings ascribed to them in that certain Termination
and Surrender Agreement made as of October 15, 2010, by and between COIN, Woodbridge and Lessor
(the “Agreement”).

     In consideration of the parties’ mutual promises contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, upon the Effective
Date, Lessor does hereby release and remise each of the COIN Parties and their shareholders,
officers, directors, trustees, agents, heirs, employees and legal representatives, successors and
assigns, whether acting in their business, representative or individual capacities, from any and
all liabilities, claims, demands, debts, suits, controversies, obligations, damages or causes of
action in connection with the Lease, the Guaranty and the Agreement, both at law and in equity,
from the beginning of time to the present date, excluding only the Claims being assigned to
American Capital pursuant to the CPA and the claims assigned to Lessor pursuant to Section 4 of the
Agreement; provided, however, that Lessor shall retain and shall not be deemed to
have released any claims it may have arising from breach of the Agreement.

     In consideration of the Parties’ mutual promises contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, upon the Effective
Date, each of the COIN Parties does hereby release and remise Lessor and its shareholders,
officers, directors, trustees, agents, heirs, employees and legal representatives, successors and
assigns, whether acting in their business, representative or individual capacities, from any and
all liabilities, claims, demands, debts, suits, controversies, obligations, damages or causes of
action in connection with the Lease, the Guaranty and the Agreement, both at law and in equity,
from the beginning of time to the present date; provided, however, that each of the

 

 

COIN Parties shall retain and shall not be deemed to have released any claims arising from
breach of the Agreement.

     IN WITNESS WHEREOF, each of the parties hereto has caused this Release to be executed by its
duly authorized officer or representative as of the Effective Date.

	 	 	 	 	 
	 	RECYCLING TECHNOLOGY DEVELOPMENT, LLC

 	 
	 	By:  	/s/
Valerie Montecalvo 	 
	 	 	Name:  	Valerie Montecalvo 	 
	 	 	Title:  	Managing Member 	 
	 

	 	 	 	 	 
	 	CONVERTED ORGANICS INC.

 	 
	 	By:  	/s/ Edward J. Gildea 	 
	 	 	Name:  	Edward J. Gildea 	 
	 	 	Title:  	President 	 
	 

	 	 	 	 	 
	 	CONVERTED ORGANICS OF WOODBRIDGE, LLC

 	 
	 	By:  	/s/ Edward J. Gildea 	 
	 	 	Name:  	Edward J. Gildea 	 
	 	 	Title:  	President 	 

2exv10w2

EXHIBIT 10.2

[Letterhead of Primus Asset Management, Inc.]

February 2, 2011

Mr. Richard Claiden

[Address]

Re: Summary of Employment Terms — Letter of Understanding

Dear Richard:

On behalf of Primus Asset Management, Inc. (the “Company”), I am pleased to confirm the
terms and conditions relating of your continuing employment with the Company. This letter
agreement (“Agreement”) confirms our understanding of the terms and conditions of your
employment on and after January 1, 2011.

Position and Term

You will serve as the Chief Executive Officer of the Company and of Primus Guaranty, Ltd. and its
other subsidiaries (together with the Company, “Primus”). You will be a regular full-time
employee of the Company, and you will have the duties, authority and responsibilities associated
with your position, which may change from time to time.

You agree to use your best efforts to perform your assigned duties faithfully, to devote all of
your working time to the business of Primus, and while you remain employed with the Company, you
will not engage in any other business activity that is in conflict with your duties and obligations
to Primus.

Subject to earlier termination as provided below, this Agreement and your employment hereunder
shall terminate on December 31, 2013; provided that if the Company advises you in writing at least
90 days before such date that the term of the Agreement will be extended to a date not later than
December 31, 2014, this Agreement and your employment hereunder shall terminate on the date set
forth in such written notice from the Company. As used in this Agreement, the “End of the
Term” means December 31, 2013 or such later date as is set forth in the written notice from the
Company as described in the preceding sentence.

Compensation and Benefits

The salary for your position is $650,000 per annum (the “Base Salary”), commencing January
1, 2011 and payable semi-monthly in arrears or otherwise as the Company pays its employees. If the
Company elects to extend your employment as described above, your Base Salary will be increased to
$675,000 per annum for the extended period.

You shall be granted a long-term incentive award of 120,000 performance shares, which shall be
subject to the terms of the grant letter separately provided to you.

 

 

 

The Company does not intend to pay annual bonuses for years after 2010, but will pay you an annual
bonus in 2011 in respect of 2010.

During your employment, you will be entitled to participate in all employee benefit plans from time
to time in effect for employees of the Company generally. These benefits currently include:

	 	•	 	Medical, Drug and Dental Insurance, and Vision Coverage

	 	•	 	Vacation in accordance with Company policy

	 	•	 	A 401(k) plan with partial Company contribution matching

	 	•	 	Sick leave, granted on an as-needed basis. (Sick leave taken beyond five business days
per year will require medical explanation.)

All benefit plans are subject to amendment or termination by the Company at any time.

Termination of Employment

The Company may terminate your employment at any time without Cause by giving you 30 days’ advance
written notice. The Company may terminate your employment immediately in the event of Cause. You
may terminate your employment at any time by giving the Company 30 days’ advance written notice.

If you continue in employment through the End of the Term and your employment terminates without
Cause at the End of the Term, you will receive severance pay and reimbursement of COBRA Premiums as
described below, subject to your executing and not revoking a general release of claims against
Primus, in the form attached as Appendix A (the “Release”) and subject to your compliance
with the terms of this Agreement. Severance pay and reimbursement of COBRA Premiums will also be
paid if, before the End of the Term, (i) the Company terminates your employment without Cause, (ii)
your employment is terminated by you for Good Reason, (iii) your employment terminates upon your
death, or (iv) your employment terminates upon your Disability, subject to your executing and not
revoking the Release and subject to your compliance with the terms of this Agreement. The
severance pay and reimbursement of COBRA premiums will be as follows:

(i) The severance pay will be equal to one month of your Base Salary for each full year of
continuous service with the Company (the “Severance Period”). The severance pay will be
paid in a lump sum payment within 60 days following your termination date; provided that if such
60-day period begins in one calendar year and extends into a second calendar year, the payment will
be made in the second calendar year.

(ii) If you elect COBRA Coverage under the Company’s health plan, the Company shall reimburse
you for the COBRA Premium paid by you with respect to each month during the Severance Period,
provided that such reimbursement shall be reduced by the amount of any monthly co-premium payment
you would have been required to
make had you remained actively employed by the Company. The COBRA Premium reimbursement shall be
made on the first payroll day of each month following the termination date.

 

2

 

In the event of your termination of employment, all then-outstanding equity awards shall be
governed by the relevant equity compensation plan under which the awards were granted and the
applicable grant agreements. However, your outstanding options and restricted share units that
vest based solely on continued service will become fully vested if the Company terminates your
employment without Cause, (ii) your employment is terminated by you for Good Reason, (iii) your
employment terminates upon your death, or (iv) your employment terminates upon your Disability.
Any outstanding performance shares shall be governed by the terms of the applicable grant
agreement.

This Agreement supersedes and replaces any and all other severance plans or policies of Primus,
including, without limitation, the Primus Guaranty, Ltd. Senior Management Severance Pay Plan
(“Severance Pay Plan”). You hereby acknowledge that the Severance Pay Plan is terminated
as of the date of this Agreement, you hereby waive advance notice of such Severance Pay Plan
termination and you release Primus from all liabilities with respect to the Severance Pay Plan.

Defined Terms

For purposes of this Agreement, the following terms will have the respective meanings set forth
below:

“Board” means the Board of Directors of Primus Guaranty, Ltd.

“Cause” means a finding by a majority of the Board (excluding you, if you are a director)
at a meeting in which you will have an opportunity to participate that you have: (i) been charged
with a felony or a crime involving moral turpitude, (ii) committed an act of fraud or embezzlement
against Primus, (iii) materially failed, refused or neglected to perform your duties (other than by
reason of a physical or mental impairment) or to implement the directives of the Board or your
supervisor, or (iv) willfully engaged in conduct that is materially injurious to Primus, monetarily
or otherwise, including a material breach of the covenants described in this Agreement; provided
that, in the case of an event described in item (iii) or (iv), Primus has given you written notice
of such event, you have had an opportunity to cure such event during a period of at least ten
business days after receipt of such notice, and you have failed to cure such event to the
reasonable satisfaction of the Board.

“Change in Control” shall have the meaning prescribed in the Primus Guaranty, Ltd.
Incentive Compensation Plan, as amended and restated on January 1, 2011.

“COBRA Premium” means, if you are entitled to, and elect to receive, continued health
coverage (“COBRA Coverage”) under the Company’s health plans pursuant to Section 4980B of
the Code, the monthly premium paid by you for such coverage.

“Code” means the Internal Revenue Code of 1986, as amended.

 

3

 

“Disability” means your continuous inability by reason of a physical or mental illness,
injury or impairment to perform the duties assigned to you for a period of six consecutive calendar
months.

“Good Reason” shall mean, on or after January 1, 2011, a (i) material reduction of your
aggregate Base Salary and benefits, (ii) a relocation of your principal place of employment to a
location that is more than 40 miles from your principal place of employment on January 1, 2011 or
that is outside the states of New York and Connecticut, (iii) a material and adverse diminution of
your job duties or responsibilities or (iv) any failure of the Company to obtain the assumption of
this Agreement by any successor or assign of all or substantially all of the business or assets of
the Company as described under “Assignment” below. Notwithstanding the foregoing, Good Reason
shall not include a change or adjustment in the nature of your duties and responsibilities that
continues to allow you to have the same authority with respect to Primus’ functional area,
employees or products and services that you had immediately prior to such change or adjustment
(and, for the avoidance of doubt, a change in, or elimination of, duties or responsibilities caused
by reason of Primus Guaranty, Ltd. ceasing to be publicly traded shall not constitute Good Reason),
and changes resulting from a change in Primus’ strategy, business, assets or status shall not
constitute Good Reason. An event described in provisions (i) through (iv) shall not constitute a
termination for Good Reason unless you provide written notice of termination for Good Reason to the
Company within 30 days after the event constituting grounds for Good Reason occurs and the Company
does not correct the act or failure to act constituting grounds for Good Reason within 30 days
following its receipt of your written notice of termination for Good Reason. In order for a
termination to be on account of Good Reason, you must terminate employment within 30 days after the
end of the cure period with respect to the Good Reason event.

Change in Control

In the event of a Change in Control, if you become entitled to receive payments under this
Agreement, as well as other amounts payable by Primus that are described in Section
280G(b)(2)(A)(i) of the Code, and such benefits or payments would be subject to the excise tax
imposed by section 4999 of the Code (the “Excise Tax”), the aggregate present value of the payments
under this Agreement shall be reduced (but not below zero) to the Reduced Amount (as defined
below), if reducing the payments under this Agreement will provide you with a greater net after-tax
amount than would be the case if no reduction was made. The “Reduced Amount” shall be an amount
expressed in present value which maximizes the aggregate present value of payments without causing
any payment under this Agreement to be subject to the Excise Tax, determined in accordance with
section 280G(d)(4) of the Code. Reductions to be made under this paragraph shall first be applied
to amounts payable in cash, then to non-cash benefits other than acceleration of vesting, and then
to acceleration of vesting. Determinations of the Excise Tax and the amount of the payment or
reduction to be made pursuant to this section of this Agreement shall be made by the Board, based
on calculations made by an accounting or consulting firm selected by the Board. All of the fees and
expenses of the accounting or consulting firm in performing the determinations referred to in this
section shall be borne solely by the Company.

 

4

 

Other Terms

Proprietary Information; Non-Solicitation. As an employee, you will be subject to the
policies regarding Proprietary Information and Innovations as described in Appendix B to this
Agreement, among other policies applicable to the Company’s employees. You acknowledge that the
relationships of Primus with its employees are valuable business assets. You agree that, during
your employment and during the one-year period following termination of employment for any reason,
you will not directly or indirectly (for yourself or for any third party) solicit any then current
employee of Primus to leave the employ of Primus. Your agreement to comply with these policies and
covenants shall survive the termination of this Agreement.

Enforcement of Covenants. You acknowledge that the covenants contained in this Agreement,
in view of the nature of the businesses in which the Primus is engaged, are reasonable and
necessary in order to protect the legitimate interests of Primus and that any violation thereof
would result in irreparable injuries to Primus which would not be readily ascertainable or
compensable in terms of money, and therefore you further acknowledge that, in the event of
violation of any of these restrictions, Primus shall be entitled to obtain from any court of
competent jurisdiction temporary, preliminary and permanent injunctive relief as well as damages
and an equitable accounting of all earnings, profits and other benefits arising from such
violation, which rights shall be cumulative and in addition to any other rights or remedies to
which Primus may be entitled. You further agree that if it is determined by a court you have
breached the terms of the preceding “Proprietary Information; Non-Solicitation” paragraph, Primus
shall be entitled to seek to recover from you all costs and reasonable attorneys’ fees incurred as
a result of its attempts to redress such breach or to enforce its rights and protect its legitimate
interests.

Taxation. All payments and other benefits under this Agreement shall be subject to
applicable tax withholding. This Agreement is intended to meet the requirements of Section 409A of
the Code to the extent applicable, or an exception, including the requirement, if applicable, that
payments upon separation from service be delayed for six months if you are considered a “key
employee” of a public company for purposes of Section 409A. Payments to be made upon a termination
of employment under the Agreement may only be made upon a “separation for service” under Section
409A. In no event may you, directly or indirectly, designate the calendar year of a payment.

In the event that any payment made pursuant to this Agreement is taxable to you prior to the date
on which you receive such payment, by reason of Section 409A of the Code or Section 457A of the
Code, then, to the extent permitted by Sections 409A and 457A of the Code, the Company may, but
shall not be required to, determine that you may receive a distribution at the time the payment is
includible in your taxable income. Such distribution shall be equal to your U.S. federal, state,
and local tax obligations resulting from the inclusion in income of the payment under Section 409A
or 457A of the Code, as applicable, consistent with Sections 409A and 457A. Each subsequent
payment payable to you shall be reduced by the distribution made to you with respect to the early
taxation of such payment.

 

5

 

Amendment. This Agreement may be amended or modified only by a written instrument signed
by you and by an authorized representative of the Company, subject to prior approval by the Board
or the Compensation Committee of the Board.

Entire Agreement. This Agreement constitutes the entire agreement between you and Primus
with respect to the subject matter hereof, and supersedes all prior communications, agreements and
understandings, written or oral, with respect to the terms and conditions of your employment with
the Company on and after January 1, 2011 (including, without limitation, the Severance Pay Plan).
The language of this Agreement shall in all cases be construed as a whole, according to its fair
meaning, and not strictly for or against either of the parties.

No Mitigation. You shall not be required to mitigate the amount of any payment or benefit
provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of
any payment or benefit provided for herein be reduced by any compensation earned by other
employment or otherwise.

Assignment. The Company may assign this Agreement to any successor to its business or
assets. This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns and upon you and your legal representatives. The Company may require any
successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business or assets of the Company to expressly assume
this Agreement and agree to perform the obligations hereunder in the same manner and to the same
extent the Company would be required to perform if no such succession had taken place.

Nonalienation of Benefits. None of the payments, benefits or rights under this Agreement
shall be subject to any claim of any creditor of yours, and, in particular, to the fullest extent
permitted by law, all such payments, benefits and rights shall be free from attachment,
garnishment, trustee’s process, or any other legal or equitable process available to any creditor
of yours. You shall not have the right to alienate, anticipate, commute, pledge, encumber or
assign any of the benefits or payments which you may expect to receive, contingently or otherwise,
under this Agreement. This Agreement shall not be funded. You shall have no right to, or interest
in, any assets of Primus which may be applied to the payment of benefits.

No Contract of Employment. Neither the establishment of this Agreement, nor any
modification thereof, nor the creation of any fund, trust or account, nor the payment of any
benefits shall be construed as giving you the right to be retained in the service of the Company.

Death. In the event of your death following your termination of employment and after
having become entitled to benefits under the Agreement, any amounts owing but not yet paid pursuant
to this Agreement shall be paid to the personal representative of your estate.

 

6

 

Severability of Provisions. If any provision of this Agreement shall be held invalid or
unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof,
and this Agreement shall be construed and enforced as if such provisions had not been included.

Governing Law. This Agreement shall be construed and enforced under and be governed in all
respects by the laws of New York, without regard to the conflict of laws principles thereof.

Counterparts. This Agreement may be executed in one or more counterparts, all of which
shall be considered the same Agreement.

If the foregoing is acceptable to you, kindly sign and return to me a copy of this Agreement.

Very truly yours,

/s/ VINCENT B. TRITTO

Vincent B. Tritto

General Counsel

Primus Asset Management, Inc.

Agreed to and accepted by:

	 	 	 
	/s/ RICHARD CLAIDEN
 

Richard Claiden

	 	 

 

7

 

Appendix A

RELEASE

I,     
                  
                  , the
undersigned, agree that in return for the separation pay and
other benefits described in the letter agreement (“Agreement”), dated       
              , by and
between Primus Asset Management, Inc. (the “Company”) and myself, and for other good and valuable
consideration, to the fullest extent permitted by law, I hereby IRREVOCABLY AND UNCONDITIONALLY
RELEASE, REMISE AND FOREVER DISCHARGE the Company and Releasees (as defined below) from any and all
agreements, promises, liabilities, claims, demands, rights and entitlements of any kind whatsoever,
in law or equity, whether known or unknown, suspected or unsuspected, asserted or unasserted, fixed
or contingent, apparent or concealed (“Claims”), which I, my heirs, executors, administrators,
successors, assigns or legal representatives ever had, now have or hereafter can, shall or may have
for, upon, or by reason of any matter, cause or thing whatsoever existing, arising, occurring or
relating to my employment and/or termination thereof with the Company and Releasees, or my status
as an equity owner of the Company and Releasees, at any time on or prior to the date I execute this
Release, including, without limitation, any and all Claims arising out of or relating to
compensation, benefits, compensation that may be payable at any time and in any circumstance under
the Agreement, any and all contract claims, tort claims, fraud claims, claims for payments,
bonuses, commissions, sales credits, etc., defamation, disparagement, or other personal injury
claims, claims for accrued vacation pay, claims under any federal, state or municipal wage payment,
discrimination or fair employment practices law, statute or regulation, and claims for costs,
expenses and attorneys’ fees with respect thereto. This release and waiver specifically includes,
without limitation, any and all rights and claims under Title VII of the Civil Rights Act of 1964,
42 U.S.C. § 2000(e); the Civil Rights Acts of 1866, 1871 and 1991; the Americans with Disabilities
Act, 42 U.S.C. § 1201, et seq.; the Employee Retirement Income Security Act
(“ERISA”) (including, but not limited to, claims for breach of fiduciary duty under ERISA); the
Rehabilitation Act of 1973; the Worker Adjustment and Retraining Notification Act, 42 U.S.C. §
1981; the Family and Medical Leave Act of 1993; the Equal Pay Act of 1963; the Corporate and
Criminal Fraud Accountability Act of 2002, 18. U.S.C. § 1514A, also known as the Sarbanes-Oxley
Act; the Age Discrimination in Employment Act, 29 U.S.C. §621, et seq. (“ADEA”); the Older Workers’
Benefits Protection Act; the Rehabilitation Act of 1973; the Genetic Information Nondiscrimination
Act of 2008; and any similar New York state, local or municipal statute, including but not limited
to the New York State Human Rights Law; the New York Labor Law; the New York Civil Rights Law; the
New York City Human Rights Law; and the New York Executive Law; [add provisions with respect to
other applicable state laws relating to employment;] and all amendments to the foregoing, and any
other federal, state or local statutes, ordinances, regulations, common laws, or constitutional
provisions regarding employment, compensation, employee benefits, termination of employment or
discrimination in employment, and any and all claims for benefits under any compensation, bonus or
benefit plan, program or policy of the Company and the Releasees, and all claims for monetary or
personal relief.

 

8

 

Notwithstanding the generality of the foregoing, nothing herein constitutes a release or
waiver by me of: (i) any claim or right I may have under COBRA; (ii) any claim or right I may have
for unemployment insurance benefits; (iii) any claim to vested benefits under the written terms of
the Company’s 401(k) plan; (iv) any right to indemnification I may have as a director, officer or
employee pursuant to applicable law and/or the constituent documents of the Company and the
Releasees; (v) any claim or right not released above that may arise after the execution of this
Release; or (vi) any claim or right I may have under this Release.

This Release may not be cited as, and does not constitute any admission by the Company and the
Releasees of, any violation of any such law or legal obligation with respect to any aspect of my
employment or termination therefrom.

Further, I represent and affirm (i) that I have not filed any Claim against the Company and
Releasees and (ii) that to the best of my knowledge and belief, there are no outstanding Claims
within the meaning of this Release.

For the purpose of implementing a full and complete release and discharge of Claims, I
expressly acknowledge that this Release is intended to include in its effect, without limitation,
all the Claims described in the preceding paragraphs, whether known or unknown, apparent or
concealed, and that this Release contemplates the extinction of all such Claims, including Claims
for attorneys’ fees and expenses. I expressly waive any right to assert after the execution of
this Release that any such Claim has, through ignorance or oversight, been omitted from the scope
of the Release.

For purposes of this Release, the term “the Company and Releasees” includes the Company (and
its predecessors) and Primus Guaranty Ltd., and their past and/or present direct or indirect
subsidiaries, divisions, insurers, direct or indirect corporate parents, affiliates and related
business entities, assets, employee benefit plans or funds, and any of its and their past, present
and future predecessors, successors and assigns, and its and their current, former and future
partners, members, managers, officers, directors, fiduciaries, trustees, administrators, employees,
stockholders, representatives, agents, and attorneys, in their official and/or individual
capacities, and all other related individuals and entities, jointly and individually, and the
provisions of this Release shall inure to the benefit of and shall be binding and enforceable by
all such entities and individuals.

If any provision of this Release is held unenforceable by any court of law, and I proceed with
any Claim against the Company and the Releasees then I agree that the Company and/or the Releasees
may seek to recoup from me the separation pay and/or benefits, being provided under the Agreement,
and the Company and/or the Releasees will be relieved from any further obligation to provide me
with any further separation pay and/or benefits described in the Agreement.

I hereby acknowledge that:

 

9

 

	 	a.	 	The Company advises me to consult with an attorney before signing
this Release;

	 	b.	 	I have obtained independent legal advice from an attorney of my own
choice with respect to this Release, or I have knowingly and voluntarily chosen
not to do so;

	 	c.	 	I freely, voluntarily and knowingly entered into this Release after
due consideration;

	 	d.	 	I have had a minimum of twenty-one (21) days to review and consider
this Release;

	 	e.	 	If I knowingly and voluntarily choose to do so, I may accept the
terms of this Release before the twenty-one (21) day consideration period provided
for above has expired;

	 	f.	 	I have a right to revoke this Release by notifying the [General
Counsel of the Company] in writing within seven (7) days of my execution of this
Release;

	 	g.	 	In exchange for my waivers and releases and commitments set forth
herein, including my waiver and release of all claims arising under ADEA, the
payments, benefits and other considerations that I will receive pursuant to the
Agreement exceed any payment, benefit or other thing of value to which I would
otherwise be entitled, and are just and sufficient consideration for the waivers
and releases set forth herein.

I agree that if I fail to execute and return this Release to the Company within the twenty-one
(21) days provided for my review and consideration, or revoke my execution of the Release during
the seven (7) day revocation period, I will not be entitled to the separation pay and other
benefits provided for in the Agreement.

By executing this Release, I acknowledge that I have been afforded sufficient time to
understand the terms and effects of this Release, that my agreements 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 Release.

[Signatures to be added.]

 

10

 

Appendix B

Primus Asset Management, Inc. Proprietary Information and Innovations

Proprietary Information. You understand that your work as an employee of Primus Asset
Management, Inc. (the “Company”) shall involve access to and creation of confidential
(including trade secrets) and proprietary information (collectively, “Proprietary
Information”) and recognize that it is in the legitimate business interest of the Company to
restrict your disclosure or use of Proprietary Information. You therefore agree that you shall
maintain the confidentiality of, and shall never use or disclose, or authorize any other person or
entity to use or disclose, any Proprietary Information, other than in connection with your
employment as necessary to further the business objectives of the Company or as may be required by
law or legal process. The term Proprietary Information includes, by way of example and without
limitation, matters of a technical nature, such as software design and specifications, financial
models, scientific, trade and engineering secrets, “know-how”, formulas, secret processes,
drawings, works of authorship, machines, inventions, computer programs (including documentation of
such programs), services, materials, patent applications, new product plans, other plans, technical
information, technical improvements, manufacturing techniques, specifications, manufacturing and
test data, progress reports and research projects, and matters of a business nature, such as
business plans, prospects, financial information, proprietary information about costs, profits,
markets, sales, lists of customers and suppliers of the Company and its affiliates, the management,
operation and planning of the Company and its affiliates, procurement and promotional information,
credit and financial data concerning customers or suppliers of the Company and its affiliates, and
other information of a similar nature to the extent not available to the public, and plans for
future development, whether received by you prior to, on or after the date hereof from or on behalf
of the Company, or its affiliates but does not include any information that has been publicly
disclosed or was known to you prior to accepting your employment by the Company. You acknowledge
that your obligations under this paragraph shall survive the termination of your employment with
the Company, and that immediately after such termination (or during your employment if so requested
by the Company), you shall return all Proprietary Information to the Company. You agree that you
shall not divulge to the Company, its affiliates, or any of their employees, nor use during your
employment with the Company, any proprietary or confidential information acquired by you during any
previous employment or consulting arrangement.

You confirm that you are aware that the United States securities laws generally prohibit any
person who has material non-public information about a company from purchasing or selling
securities of such company on the basis of such information or from communicating such information
to any other person under circumstances in which it is reasonably foreseeable that such person may
purchase or sell such securities.

 

11

 

Innovations. You agree to promptly and fully disclose to the Company all ideas,
inventions, discoveries, creations, designs, materials, works of authorship, trademarks, and other
technology and rights (and any related improvements or modifications thereof),
whether patentable or not, copyrightable or not, or otherwise protectable or not under any
form of legal protection afforded to intellectual property (collectively, “Innovations”),
relating to any activities of the Company and its affiliates, conceived or developed by you alone
or with others during any period of employment by the Company or its affiliates (whether or not
conceived during regular business hours), or during the six month period immediately following
termination of your employment. Such Innovations shall be the sole property of the Company. To the
extent possible, such Innovations shall each be considered a Work Made For Hire by you for the
Company within the meaning of the U.S. Copyright Act. To the extent such Innovations may not be
considered such a Work Made For Hire, you hereby assign to the Company, without additional
consideration, all right, title, or interest you may now have in such Innovations, and going
forward, you agree to automatically assign to the Company at the time of creation of the
Innovations, without additional consideration, all right, title, or interest you may have in such
Innovations.

Any assignment of copyright hereunder (and any ownership of a copyright as a Work Made For
Hire) includes all rights of paternity, integrity, disclosure and withdrawal and any other rights
that may be known as or referred to as “moral rights” (collectively, “Moral Rights”). To
the extent such Moral Rights cannot be assigned under applicable law and to the extent the
following is allowed by the laws in the various countries where Moral Rights exist, you hereby
waive such Moral Rights and consent to any action of the Company that would violate such Moral
Rights in the absence of such consent.

You shall (whether during or after your employment with the Company) execute such written
instruments and do other such acts as may be necessary or appropriate in the reasonable opinion of
the Company to obtain a patent, register a copyright, or otherwise protect or enforce the Company’s
rights in such Innovations. You agree to assist the Company in obtaining or maintaining for itself
at its own expense United States and foreign patents, copyrights, trade secret protection or other
protection of any and all Innovations. You hereby irrevocably designate and appoint the Company
and its duly authorized officers and agents, as your agents and attorney-in-fact to act for and on
your behalf and instead of you, to execute and file any documents, applications or related findings
and to do all other lawfully permitted acts to further the purposes set forth above in this
Appendix, including, without limitation, the perfection of assignment and the prosecution and
issuance of patents, patent applications, copyright applications and registrations, trademark
applications and registrations or other rights in connection with such Innovations and improvements
thereto with the same legal force and effect as if executed by you.

Except as disclosed in a writing attached hereto, you represent that you do not claim
ownership to any Innovations that you may have conceived or developed alone or with others prior to
your employment by the Company or its affiliates. If any Innovations assigned hereunder are based
on, or incorporated, or are improvements or derivatives of, or cannot be reasonably made, used,
reproduced and distributed without using or violating technology or rights owned or licensed by you
and not assigned hereunder, you hereby grant the Company a perpetual, worldwide, royalty-free,
non-exclusive and sub-licensable right and license to exploit and exercise all such technology and
rights in support of the Company’s exercise or exploitation of any assigned Inventions (including
any modifications, improvements and derivatives thereof).

 

12

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