SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 13, 2013

 

 

PURE BIOSCIENCE, INC.

(Exact name of registrant as specified in its charter)

 

 

 

DELAWARE   001-14468   33-0530289

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification Number)

1725 Gillespie Way

El Cajon, California 92020

(Address of Principal Executive Offices)

(619) 596-8600

(Registrant’s telephone number including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 1.01 Entry into a Material Definitive Agreement.

On 13 August 2013 PURE Bioscience, Inc. (the “Company”) completed a private placement pursuant to which it sold 5,500,000 shares of its common stock. The shares were sold at a per share purchase price of $0.20, resulting in approximately $1,100,000 in aggregate proceeds to the Company.

The shares were sold pursuant to a Stock Purchase Agreement under which the Company granted certain registration rights. The Company agreed to file a registration statement covering the resale of the shares of common stock sold in this financing within sixty days of the closing date.

The shares of common stock were offered and sold without registration under the Securities Act of 1933, as amended (the “Securities Act”), or state securities laws, in reliance on the exemptions from the registration and prospectus delivery requirements of the Securities Act pursuant to Section 4(2) of the Securities Act and Rule 506 thereunder as a transaction not involving any public offering. Each purchaser of the common stock represented to us that it is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act, and that it was receiving the securities for investment for its own account and without a view to distribute them.

The foregoing descriptions of the Stock Purchase Agreement do not purport to be complete and are qualified in their entirety by the terms and conditions of the Stock Purchase Agreement. A copy of the form of the Securities Purchase Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

On 13 August 2013 the Company entered into a Services Agreement with Pillar Marketing Group, Inc. (“Pillar”). The Services Agreement provides, among other things, that Pillar shall serve as the Company’s exclusive provider of general advisory services regarding corporate finance, capital raising activities, merger and acquisition transactions, and other related endeavors. Pillar shall be paid the sum of $25,000 per month plus additional contingent compensation based upon the occurrence of certain enumerated events. The Company will also immediately issue to Pillar 250,000 shares of common stock. Pillar has the right to demand that the shares be included in a registration statement if and when filed by the Company. The shares of common stock were offered and issued to Pillar without registration under the Securities Act, or state securities laws, in reliance on the exemptions from the registration and prospectus delivery requirements of the Securities Act pursuant to Section 4(2) of the Securities Act and Rule 506 thereunder as a transaction not involving any public offering. Pillar represented to us that it is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act, and that it was receiving the securities for investment for its own account and without a view to distribute them.

The foregoing descriptions of the Services Agreement do not purport to be complete and are qualified in their entirety by the terms and conditions of the Services Agreement. A copy of the form of the Services Agreement is attached hereto as Exhibit 10.2 and is incorporated herein by reference.

 

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Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

On 13 August 2013 the Company received a notice from the NASDAQ Listing Qualifications Panel (the “Panel”) that the NASDAQ Stock Market will issue a press release 19 August 2013 announcing that a Form 25 will be filed with the Securities and Exchange Commission on that date to complete the delisting of the Company’s stock. As we have previously reported, trading in our stock was suspended on NASDAQ on 17 May 2013. The Company’s stock has not traded on NASDAQ since that time, and instead has traded on the OTCQB, an electronic quotation service operated by OTC Markets Group Inc. for eligible securities traded over-the-counter.

The current notice from the Panel merely completes the delisting process. The Company’s common stock will continue to trade on the OTCQB under the symbol PURE.

 

Item 3.02. Unregistered Sales of Equity Securities.

The information set forth in Item 1.01 of this Current Report on Form 8-K with regard to the issuance of shares is incorporated by reference into this Item 3.02 in its entirety.

The information set forth in Item 5.02(e) of this Current Report on Form 8-K with regard to the issuance of shares to Michael L. Krall and Donna Singer is incorporated by reference into this Item 3.02 in its entirety.

 

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(a) On 13 August 2013 Michael L. Krall, Donna Singer, and Dennis Brovarone resigned as directors of the Company by mutual agreement with the Company. Mr. Brovarone served on our Compensation Committee.

The Company has provided the resigned directors with a copy of this current report prior to the filing thereof and informed them that they had the opportunity to provide the registrant with correspondence stating whether they agree or disagree with the disclosure contained in this current report which the Company would also file such correspondence as an exhibit to this current report or an amendment thereto.

A copy of the Mr. Krall’s resignation is attached hereto as Exhibit 17.1 and is incorporated herein by reference. A copy of the Ms. Singer’s resignation is attached hereto as Exhibit 17.2 and is incorporated herein by reference. A copy of the Mr. Brovarone’s resignation is attached hereto as Exhibit 17.3 and is incorporated herein by reference.

(b) On 13 August 2013 Michael L. Krall, Donna Singer, and Dennis Atchley resigned all positions respectively held by them as officers of the Company by mutual agreement with the Company. A copy of the Mr. Atchley’s resignation is attached hereto as Exhibit 17.4 and is incorporated herein by reference.

 

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(c) On 13 August 2013 the Board of Directors of the Company (the “Board”) appointed Dave Pfanzelter to serve as Chief Executive Officer. His appointment was immediately effective as of 13 August 2013. Mr. Pfanzelter previously served on the Company’s Board from 06 February 2013 until his resignation on 19 July 2013.

Mr. Pfanzelter, 59, previously served as senior vice president of Kellogg Company, president of Kellogg’s Specialty Channels and president of Kellogg Canada since May 2004, while also serving as part of the Kellogg Executive Committee and Global Leadership Team. Mr. Pfanzelter began his career in the food service industry in 1975 with Oscar Mayer Foods Corporation, serving in several key sales and marketing positions, including director of marketing and national sales manager. In 1995 he was appointed vice president of sales of Kraft Foodservice, representing the combined manufactured brands of Oscar Mayer, General Foods, and Kraft Foods. In 1998 Mr. Pfanzelter joined Keebler, serving as vice president and general manager of the food service division prior to Keebler’s acquisition by Kellogg in 2001. Since 1998 Mr. Pfanzelter has been on the board of directors of Doctor’s Associates, the parent company of Subway Restaurants, the nation’s largest restaurant chain. In February 2012, Mr. Pfanzelter joined the Advisory Board of Wrigley Foods. He also served on the Board of the International Food Service Manufacturer’s Association as chairman and member of its executive committee.

There is no family relationship between Mr. Pfanzelter and any of the Company’s officers or directors, and there have been no related transactions, and none are contemplated, between Mr. Pfanzelter or his immediate family members and the Company that would require disclosure pursuant to Item 404(a) of Regulation S-K promulgated by the Securities and Exchange Commission.

On 13 August 2013 the Board of Directors of the Company (the “Board”) appointed Peter C. Wulff to serve as Chief Financial Officer, Chief Operating Officer, and Corporate Secretary. With his appointment, Mr. Wulff will also serve as the Company’s Principal Financial Officer and Principal Accounting Officer. His appointment was immediately effective as of 13 August 2013. Mr. Wulff previously served as the Company’s Chief Financial Officer from 05 November 2012 until his departure on 13 May 2013.

Prior to joining the Company, Mr. Wulff, 54, was the principal of Wulff Services Inc. from 2011 until October 2012, a consulting services firm focusing on development stage companies in the medical technology industry. From June 2008 until April 2011 Mr. Wulff provided services for Alphatec Holdings, Inc. (NASDAQ: ATEC) and Alphatec Spine, a developer and manufacturer of spinal implant products, serving as its Chief Financial Officer, Vice President and Treasurer from June 2008 until October 2010, and its Senior Vice President, Strategic Initiatives, from October 2010 until April 2011. From January 2005 until May 2008 he served as the Chief Financial Officer, and from February 2007 until May 2008 he also served as the Executive Vice President, of Artes Medical, Inc., a formerly publicly traded medical device company. Artes Medical is no longer publicly traded and filed for bankruptcy protection within two years after the departure of Mr. Wulff. From June 2004 until December 2004, Mr. Wulff was a managing partner of Acumen Biomedical, a consulting services firm that specialized in providing services to medical technology companies. From May 2001 to May 2004, Mr. Wulff served as Vice President Finance, Chief

 

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Financial Officer, Treasurer and Assistant Secretary of CryoCor, Inc., a medical device company. From November 1999 to May 2001, Mr. Wulff served as Chief Financial Officer and Treasurer of Natural Alternatives International, Inc., a publicly-traded and international nutritional supplement manufacturer. Mr. Wulff earned an M.B.A in Finance and a bachelor’s degree in Economics and Germanic Languages, each from Indiana University.

There is no family relationship between Mr. Wulff and any of the Company’s officers or directors, and there have been no related transactions, and none are contemplated, between Mr. Wulff or his immediate family members and the Company that would require disclosure pursuant to Item 404(a) of Regulation S-K promulgated by the Securities and Exchange Commission.

(d) On 13 August 2013 the Board of Directors of the Company (the “Board”) appointed Dave Pfanzelter to serve as a member of the Board and to be its Chairman of the Board. His appointment was immediately effective as of 13 August 2013. Mr. Pfanzelter previously served on the Company’s Board from 06 February 2013 until his separation on 19 July 2013.

The information set forth in Item 5.02(c) of this Current Report on Form 8-K regarding Mr. Pfanzelter’s experience and background is incorporated by reference into this Item 5.02(d) in its entirety.

There are no arrangements or understandings between Mr. Pfanzelter and any other person pursuant to which Mr. Pfanzelter was appointed as a director of the Company, and there are no transactions in which Mr. Pfanzelter has an interest requiring disclosure under Item 404(a) of Regulation S-K.

On 13 August 2013 the Board of Directors of the Company (the “Board”) appointed Gary D. Cohee to serve as a member of the Board. His appointment was immediately effective as of 13 August 2013. It is anticipated that Mr. Cohee will serve on the Audit Committee of the Board.

Mr. Cohee, 67, is an Investment Banker with over 40 years of experience, having started his career in 1973 with Blyth, Eastman Dillon. Since 2004 Mr. Cohee has served as President and CEO of PMB Securities Corp. From 2011 until 2012 Mr. Cohee served on the Advisory Board of Force Fuels, Inc., which at that time was on the OTC Bulletin Board. During his career in the investment banking business Mr. Cohee worked for a number of prestigious firms, including Bateman Eichler and Paulson Investment Company. Mr. Cohee graduated from California State University-Long Beach in 1968 with a BS degree in Business Administration. He is Past President of Long Beach Bond Club; Southern California Options Society; and, Long Beach Century Club. He is a member of the Directors Circle at California State University at Long Beach- Athletics Department.

There are no arrangements or understandings between Mr. Cohee and any other person pursuant to which Mr. Cohee was appointed as a director of the Company, and there are no transactions in which Mr. Cohee has an interest requiring disclosure under Item 404(a) of Regulation S-K.

(e) In connection with Mr. Krall’s separation from the Company, we entered into a Purchase, Severance, and Release Agreement effective 13 August 2013 with Mr. Krall (the “Krall Release

 

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Agreement”). The Krall Release Agreement provides for a mutual release of all claims between Mr. Krall and the Company. Mr. Krall is also prohibited from engaging in certain competitive activities for the next four years. Mr. Krall shall be paid (i) $25,000 on 13 August 2013; and, (ii) $30,000 per month for the next 18-months, during which time Mr. Krall shall provide consulting services to the Company. In consideration of Mr. Krall’s transfer to the Company of certain enumerated intellectual property rights, the Company shall also (i) pay Mr. Krall the sum of ($125,000) on 13 August 2013; and, (ii) issue to Mr. Krall 850,000 shares of common stock on 21 August 2013 (the “Krall Shares”). The Krall Shares are subject to certain registration rights intended to register the Krall Shares within 30-days after issuance. The Krall Shares are also subject to a Voting Support Agreement and Irrevocable Proxy (the “Krall Proxy”). The Krall Proxy gives our CEO the right to vote the Krall Shares for so long as Mr. Krall owns the Krall Shares.

The foregoing descriptions of the Krall Release Agreement and the Krall Proxy do not purport to be complete and are qualified in their entirety by the terms and conditions of the Krall Release Agreement and the Krall Proxy, respectively. A copy of the Krall Release Agreement is attached hereto as Exhibit 10.3 and is incorporated herein by reference. A copy of the Krall Proxy is attached hereto as Exhibit 10.4 and is incorporated herein by reference.

In connection with Ms. Singer’s separation from the Company, we entered into a Purchase, Severance, and Release Agreement effective 13 August 2013 with Ms. Singer (the “Singer Release Agreement”). The Singer Release Agreement provides for a mutual release of all claims between Ms. Singer and the Company. Ms. Singer is also prohibited from engaging in certain competitive activities for the next four years. Ms. Singer shall be paid (i) $45,000 on 13 August 2013; (ii) the amount of her continued health insurance coverage for the next 12-months; and, (iii) $17,000 per month for the next 12-months, during which time Ms. Singer shall provide consulting services to the Company. In consideration of Ms. Singer’s transfer to the Company of certain enumerated intellectual property rights, the Company shall also issue to Ms. Singer 300,000 shares of common stock on 21 August 2013 (the “Singer Shares”). The Singer Shares are subject to certain registration rights intended to register the Singer Shares within 30-days after issuance. The Singer Shares are also subject to a Voting Support Agreement and Irrevocable Proxy (the “Singer Proxy”). The Singer Proxy gives our CEO the right to vote the Singer Shares for so long as Ms. Singer owns the Singer Shares.

The foregoing descriptions of the Singer Release Agreement and the Singer Proxy do not purport to be complete and are qualified in their entirety by the terms and conditions of the Singer Release Agreement and the Singer Proxy, respectively. A copy of the Singer Release Agreement is attached hereto as Exhibit 10.5 and is incorporated herein by reference. A copy of the Singer Proxy is attached hereto as Exhibit 10.6 and is incorporated herein by reference.

In connection with Mr. Brovarone’s separation from the Company, we entered into a Settlement and Release Agreement effective 13 August 2013 with Mr. Brovarone (the “Brovarone Release Agreement”). The Brovarone Release Agreement provides for a mutual release of all claims between Mr. Brovarone and the Company. Mr. Brovarone shall be paid $91,332.77 (the “Brovarone Amount”) as follows: (i) starting 90-days after 13 August 2013 the Brovarone Amount shall be subject to 2% interest per annum; (ii) starting 120-days after 13 August 2013 and continuing on the same day of each month for 60-months the Company shall pay $1,600.86; (iii)

 

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the Company shall have the right to prepay without penalty upon 30-days’ notice; and, (iv) Brovarone shall have the right to convert the then outstanding balance of the Brovarone Amount, at any time and with 10-days’ advance notice, into common stock at a conversion price equal to the average closing price for our common stock on the principal market on which our common stock is then listed or quoted for the ten trading days immediately preceding the date of the conversion notice.

The foregoing descriptions of the Brovarone Release Agreement do not purport to be complete and are qualified in their entirety by the terms and conditions of the Brovarone Release Agreement. A copy of the Brovarone Release Agreement is attached hereto as Exhibit 10.7 and is incorporated herein by reference.

 

Item 8.01 Other Events.

On 13 August 2013 the Company issued a press release announcing the separation of Mr. Krall, Ms. Singer, and Mr. Brovarone, and the appointment of Mr. Pfanzelter and Mr. Cohee. A copy of the press release is attached hereto as Exhibit 99.1.

SECTION 9 – FINANCIAL STATEMENTS AND EXHIBITS

 

Item 9.01 Financial Statements and Exhibits

The following exhibits are furnished with this report:

 

Exhibit No.

  

Exhibit Description

10.1    Stock Purchase Agreement
10.2    Services Agreement
10.3    Krall Release Agreement
10.4    Krall Proxy
10.5    Singer Release Agreement
10.6    Singer Proxy
10.7    Brovarone Release Agreement
17.1    Resignation of Michael L. Krall dated 13 August 2013
17.2    Resignation of Donna Singer dated 13 August 2013
17.3    Resignation of Dennis Brovarone dated 13 August 2013
17.4    Resignation of Dennis Atchley dated 13 August 2013
99.1    Press Release Issued by the Company on 13 August 2013

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    PURE BIOSCIENCE, INC.
Dated: 19 August 2013     By:    /S/ Dave Pfanzelter
      Dave Pfanzelter,
      Chief Executive Officer

 

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Exhibit 10.1

COMMON STOCK PURCHASE AGREEMENT

THIS COMMON STOCK PURCHASE AGREEMENT (this “ Agreement ”) is dated as of              , 2013, among Pure Bioscience, Inc., a Delaware corporation (the “ Company ”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “ Purchaser ” and collectively the “ Purchasers ”).

WHEREAS, subject to the terms and conditions set forth in this Agreement, and pursuant to Section 4(2) of the Securities Act (as defined below) and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:

ARTICLE I.

DEFINITIONS

1.1 Definitions . In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:

Action ” shall have the meaning ascribed to such term in Section 3.1(j).

Affiliate ” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act.

Board of Directors ” means the board of directors of the Company.

Business Day ” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

Closing ” means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

Closing Date ” means the Trading Day when all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchaser’s obligation to pay the Subscription Amount has been satisfied or waived; and, (ii) the Company’s obligations to deliver the Securities have been satisfied or waived.

Commission ” means the United States Securities and Exchange Commission.

Common Stock ” means the common stock of the Company, $0.01 par value, and any other class of securities into which such securities may hereafter be reclassified or changed.

Common Stock Equivalents ” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including,

 

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without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

Company Counsel ” means Spectrum Law Group, LLP with offices located at 1900 Main Street, Suite 300, Irvine, CA 92614.

Company Party ” shall have the meaning ascribed to such term in Section 4.4.

Disclosure Schedules ” means the Disclosure Schedules of the Company delivered concurrently herewith.

Evaluation Date ” shall have the meaning ascribed to such term in Section 3.1(r).

Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

FDA ” shall have the meaning ascribed to such term in Section 3.1(ee).

FDCA ” shall have the meaning ascribed to such term in Section 3.1(ee).

GAAP ” shall have the meaning ascribed to such term in Section 3.1(h).

Intellectual Property Rights ” shall have the meaning ascribed to such term in Section 3.1(o).

Liens ” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

Material Adverse Effect ” shall have the meaning assigned to such term in Section 3.1(b).

Material Permits ” shall have the meaning ascribed to such term in Section 3.1(m).

Per Share Purchase Price ” equals Twenty Cents ($0.20), subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

Person ” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

Pharmaceutical Product ” shall have the meaning ascribed to such term in Section 3.1(ee).

Proceeding ” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

Purchaser Party ” shall have the meaning ascribed to such term in Section 4.3.

 

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Required Approvals ” shall have the meaning ascribed to such term in Section 3.1(e).

Registrable Securities ” means the Shares, including all Common Stock of the Company issued or issuable upon any stock split, stock dividend, recapitalization, or similar event. The terms “ register ,” “ registered ” and “ registration ” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.

Rule 144 ” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

SEC Reports ” shall have the meaning ascribed to such term in Section 3.1(h).

Securities ” means the Shares.

Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

Shares ” means the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement.

Subscription Amount ” means, as to each Purchaser, the aggregate amount to be paid for Shares purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds.

Subsidiary ” means any subsidiary of the Company as set forth on Schedule 3.1(a) , and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

Trading Day ” means a day on which the principal Trading Market is open for trading.

Trading Market ” means the public market or exchange on which the Common Stock is listed or quoted for trading on the date in question.

Transaction Documents ” means this Agreement and any other documents or agreements executed in connection with the transactions contemplated hereunder.

Transfer Agent ” means Computershare Trust Company, N.A., the current transfer agent of the Company, with a mailing address of 350 Indiana Street, Suite 800, Golden Colorado 90401 and a facsimile number of 303.962.0604, and any successor transfer agent of the Company.

ARTICLE II.

PURCHASE AND SALE

2.1 Closing . On the Closing Date, the Company shall sell, and the Purchasers, severally and not jointly, shall purchase, up to an aggregate of $1,100,000 of Shares. Each Purchaser shall deliver to the Company, via wire transfer or a certified check of immediately available funds equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such

 

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Purchaser. Upon receipt of the wire transfer or settlement of certified check for such Purchaser’s Subscription Amount, the Company shall deliver to each Purchaser its respective Shares as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing, as appropriate. The Closing shall occur at the offices of the Company or such other location as the parties shall mutually agree.

2.2 Deliveries .

(a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser this Agreement duly executed by the Company.

(b) As soon as practicable after the Closing Date, though in no event more than five (5) Business Days, the Company shall deliver the respective Purchaser a stock certificate for an amount of Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price, registered in the name of such Purchaser as set forth on the signature pages hereto.

(c) On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:

(i) this Agreement duly executed by such Purchaser; and

(ii) such Purchaser’s Subscription Amount by wire transfer or a certified check.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company . Except as set forth in the Disclosure Schedules and in the SEC Reports, which Disclosure Schedules and SEC Reports shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules or in the SEC Reports, the Company hereby makes the following representations and warranties to each Purchaser as of the date of this Agreement:

(a) Subsidiaries . All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable, and free of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries, then references in the Transaction Documents to the Subsidiaries shall be disregarded.

(b) Organization and Qualification . The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly

 

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qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

(c) Authorization; Enforcement . The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s shareholders in connection therewith other than in connection with the Required Approvals. Each Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(d) No Conflicts . The execution, delivery and performance by the Company of the Transaction Documents, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby to which it is a party do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

 

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(e) Filings, Consents, and Approvals . The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filing of a Report on Form 8-K describing the material terms of the transactions contemplated hereby, and including the Transaction Documents as exhibits thereto, (ii) the filing with the Commission of a notice of exempt offering on Form D, (iii) application(s) to each applicable Trading Market for the listing of the Securities for trading thereon in the time and manner required thereby and (iv) such filings as are required to be made under applicable state securities laws (collectively, the “ Required Approvals ”).

(f) Issuance of the Securities . The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement.

(g) Capitalization . The capitalization of the Company is as described in the Company’s most recent periodic report filed with the Commission. The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as described in the Company’s most recent periodic report filed with the Commission or as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any shareholder, the Board of Directors, or others is required for the issuance and sale of the Securities. Except as disclosed in the SEC reports, there are no shareholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s shareholders.

(h) SEC Reports; Financial Statements . The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under

 

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the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company has never been an issuer subject to, or identified in, Rule 144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“ GAAP ”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

(i) Material Changes; Undisclosed Events, Liabilities or Developments . Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective business, prospects, properties, operations, assets or financial condition that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.

(j) Litigation . There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county,

 

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local or foreign) (collectively, an “ Action ”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

(k) Labor Relations . No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. No executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local, and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(l) Compliance . Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or governmental body or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the environment, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

(m) Regulatory Permits . The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“ Material Permits ”), and neither the Company nor any Subsidiary has

 

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received any notice of proceedings relating to the revocation or modification of any Material Permit.

(n) Title to Assets . The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting, and enforceable leases with which the Company and the Subsidiaries are in compliance.

(o) Patents and Trademarks . The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or material for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “ Intellectual Property Rights ”). Neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality, and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(p) Insurance . The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription Amount. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

(q) Transactions With Affiliates and Employees . Except as set forth in the SEC Reports, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for

 

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expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.

(r) Sarbanes-Oxley; Internal Accounting Controls . The Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange Act (such date, the “ Evaluation Date ”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

(s) Certain Fees . No brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.

(t) Investment Company . The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.

(u) Listing and Maintenance Requirements . The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration.

 

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(v) Application of Takeover Protections . The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.

(w) Disclosure . All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

(x) No Integrated Offering . Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of any Trading Market.

(y) Solvency . Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will

 

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file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date.

(z) Tax Status . Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been asserted or threatened against the Company or any Subsidiary.

(aa) Foreign Corrupt Practices . Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

(bb) Accountants . The Company’s accounting firm is set forth on Schedule 3.1(bb) of the Disclosure Schedules. To the knowledge and belief of the Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the year ended July 31, 2011.

(cc) Acknowledgment Regarding Purchasers’ Purchase of Securities . The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

(dd) FDA . As to each product subject to the jurisdiction of the U.S. Food and Drug Administration (“ FDA ”) under the Federal Food, Drug and Cosmetic Act, as amended, and the regulations thereunder (“ FDCA ”) that is manufactured, packaged, labeled, tested, distributed, sold, and/or marketed by the Company or any of its Subsidiaries (each such product, a “ Pharmaceutical Product ”), such Pharmaceutical Product is being manufactured, packaged, labeled, tested, distributed, sold and/or marketed by the Company in compliance with all applicable requirements under FDCA and similar laws, rules and regulations relating to registration, investigational use, premarket clearance, licensure, or application approval, good manufacturing practices, good laboratory practices, good clinical practices, product listing, quotas, labeling, advertising, record keeping and filing of reports, except where the failure to be in compliance would not have a Material Adverse Effect. There is no pending, completed or,

 

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to the Company’s knowledge, threatened, action (including any lawsuit, arbitration, or legal or administrative or regulatory proceeding, charge, complaint, or investigation) against the Company or any of its Subsidiaries, and none of the Company or any of its Subsidiaries has received any notice, warning letter or other communication from the FDA or any other governmental entity, which (i) contests the premarket clearance, licensure, registration, or approval of, the uses of, the distribution of, the manufacturing or packaging of, the testing of, the sale of, or the labeling and promotion of any Pharmaceutical Product, (ii) withdraws its approval of, requests the recall, suspension, or seizure of, or withdraws or orders the withdrawal of advertising or sales promotional materials relating to, any Pharmaceutical Product, (iii) imposes a clinical hold on any clinical investigation by the Company or any of its Subsidiaries, (iv) enjoins production at any facility of the Company or any of its Subsidiaries, (v) enters or proposes to enter into a consent decree of permanent injunction with the Company or any of its Subsidiaries, or (vi) otherwise alleges any violation of any laws, rules or regulations by the Company or any of its Subsidiaries, and which, either individually or in the aggregate, would have a Material Adverse Effect. The properties, business, and operations of the Company have been and are being conducted in all material respects in accordance with all applicable laws, rules, and regulations of the FDA. The Company has not been informed by the FDA that the FDA will prohibit the marketing, sale, license or use in the United States of any product proposed to be developed, produced or marketed by the Company nor has the FDA expressed any concern as to approving or clearing for marketing any product being developed or proposed to be developed by the Company.

3.2 Representations and Warranties of the Purchasers . Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the execution of this Agreement on date hereof to the Company as follows (unless as of a specific date therein):

(a) Organization; Authority . Such Purchaser is either an individual or an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and performance by such Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(b) Own Account . Such Purchaser is acquiring the Securities 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 Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities 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 Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s

 

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right to sell the Securities in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

(c) Purchaser Status . At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(5), (a)(6), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

(d) Experience of Such Purchaser . Such Purchaser, either alone or together with its representatives, 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 Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

(e) Certain Transactions and Confidentiality . Other than consummating the transactions contemplated hereunder, such Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any purchases or sales of the securities of the Company during the period commencing as of the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Other than to other Persons party to this Agreement, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).

(f) Restricted Securities . Such Purchaser understands that the Securities it is purchasing are characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Act only in certain limited circumstances. In this connection, such Purchaser represents that it is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Act. Such Purchaser understands that such Securities have not been and will not be registered under the Act and have not been and will not be registered or qualified in any state in which they are offered, and thus the Purchaser will not be able to resell or otherwise transfer such Securities unless they are registered under the Act and registered or qualified under applicable state securities laws, or an exemption from such registration or qualification is available. Such Purchaser has no immediate need for liquidity in connection with this investment, and does not anticipate that the Purchaser will be required to sell such Securities in the foreseeable future.

(g) Reliance on Exemptions . The Purchaser understands that the Shares are being offered and sold to it in reliance upon specific exemptions from the registration requirements of the Securities Act, the Rules and Regulations and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Shares.

 

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(h) Residency . The Purchaser is domiciled in the jurisdiction set forth immediately below the Purchaser’s name on the signature pages hereto.

(i) Legends . It is understood that the certificates evidencing the Securities may bear a legend substantially as follows:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.”

The Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1 Furnishing of Information . Until the time that no Purchaser owns Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act, and the Company shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would no longer require or otherwise permit such termination. As long as any Purchaser owns Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c) such information as is required for the Purchasers to sell the Securities, including without limitation, under Rule 144. The Company further covenants that it will take such further action as any holder of Securities may reasonably request, to the extent required from time to time to enable such Person to sell such Securities without registration under the Securities Act, including without limitation, within the requirements of the exemption provided by Rule 144.

4.2 Use of Proceeds . The Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes.

4.3 Indemnification of Purchasers . Subject to the provisions of this Section 4.3, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “ Purchaser Party ”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of

 

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investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against a Purchaser in any capacity, or any of them or their respective Affiliates, by any shareholder of the Company who is not an Affiliate of such Purchaser, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser may have with any such shareholder or any violations by such Purchaser of state or federal securities laws or any conduct by such Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents.

4.4 Indemnification of Company . Subject to the provisions of this Section 4.4, each Purchaser will severally, but not jointly, indemnify and hold the Company and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Company Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Company Party may suffer or incur as a result of or relating to any breach of any of the representations, warranties, covenants or agreements made by such Purchaser in this Agreement or in the other Transaction Documents.

4.5 Reservation of Common Stock . As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Shares pursuant to this Agreement.

4.6 Listing of Common Stock . The Company hereby agrees to use best efforts to maintain the listing or quotation of the Common Stock on the Trading Market on which it is currently listed, and concurrently with the execution hereof, the Company shall list or quote all of the Shares on such

 

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Trading Market and promptly secure the listing of all of the Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will then include in such application all of the Shares, and will take such other action as is necessary to cause all of the Shares to be listed or quoted on such other Trading Market as promptly as possible. The Company will then take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of such Trading Market.

4.7 Equal Treatment of Purchasers . No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.

4.8 Certain Transactions and Confidentiality . Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any transactions involving any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced by the Company. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Disclosure Schedules. Notwithstanding the foregoing, each Purchaser shall continue to be subject to that certain letter agreement concerning the Company’s confidential information entered into by such Purchaser prior to the execution of this Agreement (each, a “ Non-Disclosure Agreement ”).

4.9 Further Limitations on Disposition . Without in any way limiting the representations of the Purchasers set forth in Section 3.2 above, each Purchaser further agrees not to make any disposition of all or any portion of the Securities unless and until the transferee has agreed in writing for the benefit of the Company to be bound by this Section 4, and

(a) There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement (it being expressly understood that the Company is under no obligation to file such a registration statement); or

(b) (i) Such Purchaser shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) if reasonably requested by the Company, such Purchaser shall have furnished the Company with an opinion of counsel reasonably satisfactory to the Company that such disposition will not require registration of such shares under the Act. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances.

 

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(c) Notwithstanding the provisions of paragraphs (a) and (b) above, no such registration statement or opinion of counsel shall be necessary for a transfer by a Purchaser that is a partnership or limited liability company to a partner of such partnership or a member of such limited liability company to an affiliated venture capital fund, or a retired partner of such partnership who retires after the date hereof or a retired member of such limited liability company who retires after the date hereof, or to the estate of any such partner, retired partner, member or retired member or the transfer by gift, will or intestate succession by any partner or member to his or her spouse or to the siblings, lineal descendants or ancestors of such partner or member or his or her spouse, if the transferee agrees in writing to be subject to the terms hereof to the same extent as if he or she were an original Purchaser hereunder.

4.10 Registration Rights . On or prior to sixty (60) days after the Closing Date the Company shall prepare and file with the Commission a “Shelf” Registration Statement covering the resale of the Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form S-1 and shall contain (unless otherwise directed by the Purchasers) a “Plan of Distribution” reasonably agreed upon the Purchasers and the Company. Subject to the terms of this Agreement, the Company shall use its best efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, and shall use its best efforts to keep such Registration Statement continuously effective under the Securities Act until all Registrable Securities covered by such Registration Statement have been sold or may be sold without volume restrictions pursuant to Rule 144(k) as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company’s transfer agent and the affected Purchasers (the “Effectiveness Period”). The Company shall immediately notify the Purchasers via facsimile or E-Mail of the effectiveness of the Registration Statement not later than 2-days after the Company receives notification of the effectiveness from the Commission.

ARTICLE V.

MISCELLANEOUS

5.1 Fees and Expenses . Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.

5.2 Entire Agreement . The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

5.3 Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages

 

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attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2 nd ) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

5.4 Amendments; Waivers . No provision of this Agreement or any other Transaction Document may be waived, modified, supplemented, or amended except in a written instrument signed by the Company and the Purchasers holding at least 50% in interest of the Shares then outstanding. No 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.

5.5 Headings . 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.

5.6 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”

5.7 No Third-Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto 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, except as otherwise set forth in Section 4.3 and Section 4.4.

5.8 Governing Law . All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the County of San Diego. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the County of San Diego, State of California, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process

 

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in any other manner permitted by law. If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.3 and the obligations of a Purchaser under Section 4.4, the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

5.9 Survival . The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.

5.10 Execution . This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

5.11 Severability . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

5.12 Rescission and Withdrawal Right . Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.

5.13 Replacement of Securities . If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

5.14 Remedies . In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in

 

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the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

5.15 Payment Set Aside . To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

5.16 Independent Nature of Purchasers’ Obligations and Rights . The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in their review and negotiation of the Transaction Documents. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers.

5.17 Saturdays, Sundays, Holidays, etc . If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

5.18 Construction . The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

5.19 WAIVER OF JURY TRIAL . IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

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5.20 Acknowledgment . Each Purchaser acknowledges that: (a) it has read this Agreement; (b) it has been represented in the preparation, negotiation and execution of this Agreement by legal counsel of its own choice or has voluntarily declined to seek such counsel; and (c) it understands the terms and consequences of this Agreement and is fully aware of the legal and binding effect of this Agreement.

(Signature Pages Follow)

 

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IN WITNESS WHEREOF, the parties hereto have caused this Common Stock Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

PURE BIOSCIENCE, INC.   

Address for Notice:

1725 Gillespie Way

El Cajon, CA 92020

By:        Fax: (619) 596-8791
  Name:   
 

Title: President and CEO

  
 

Dated:

  

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

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[PURCHASER SIGNATURE PAGES TO PURE COMMON STOCK PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Common Stock Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Name of Purchaser:                                                      

Signature of Authorized Signatory of Purchaser :                                                      

Name of Authorized Signatory:                                                          

Title of Authorized Signatory:                                                              

Email Address of Authorized Signatory:                                              

Facsimile Number of Authorized Signatory:                                         

 

Address for Notice of Purchaser:
   
   
   
   

Address for Delivery of Securities for Purchaser (if not same as address for notice):

   
   
   
   

Subscription Amount: $                     

Shares:                     

 

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DISCLOSURE SCHEDULES

Schedule 3.1(a) Subsidiaries .

ETIH2O Corporation, a Nevada corporation

 

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Exhibit 10.2

SERVICES AGREEMENT

THIS SERVICES AGREEMENT (this “Agreement”) dated as of August 13, 2013 (the “ Effective Date ”), is entered into between PURE BIOSCIENCE INC., a Delaware corporation (“ Company ”), with a place of business at 1725 Gillespie Way, El Cajon, CA California, 92020; and, PILLAR MARKETING GROUP, INC., a California Corporation (“ PILLAR ”), with a place of business at 4570 Campus Drive #2, Newport Beach, California, 92660. Company and PILLAR are sometimes referred to collectively herein as the “Parties”, and each individually as a “Party”. In consideration of the promises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

1. Exclusive Engagement for Services . Company hereby engages PILLAR to perform those services described in Exhibit “A” (the “Services”), attached hereto and incorporated herein by reference. The Services may be amended and revised at any time only by mutual written consent of the Parties. The engagement of PILLAR hereunder is “exclusive” and during the Term of this Agreement Company shall not hire any other person to perform the Services.

2. Independent Contractor Relationship . PILLAR’s relationship with Company is that of an independent contractor, and nothing in this Agreement is intended to, or shall be construed to, create a partnership, agency, joint venture, employment, or similar relationship. PILLAR will not be entitled to any of the benefits that Company may make available to its employees, including, but not limited to, group health or life insurance, profit-sharing or retirement benefits. PILLAR is not authorized to make any representation, contract, or commitment on behalf of Company unless specifically requested or authorized in writing to do so by a Company manager. PILLAR is solely responsible for, and will file, on a timely basis, all tax returns and payments required to be filed with, or made to, any federal, state, or local tax authority with respect to the performance of services and receipt of fees under this Agreement. PILLAR is solely responsible for, and must maintain adequate records of, expenses incurred in the course of performing services under this Agreement. No part of PILLAR’s compensation will be subject to withholding by Company for the payment of any social security, federal, state or any other employee payroll taxes.

3. Information . In connection with the Services, Company will furnish PILLAR and its designated agents with all materials and information regarding the business and financial condition of Company and any company identified as a potential acquisition target which Company believes are relevant to the Services or which PILLAR requests (all such information is collectively referred to herein as the “Information”). Company recognizes and confirms that PILLAR: (a) will use and rely solely on the Information and on information available from generally recognized public sources in performing the Services without having independently verified the same; (b) is authorized, as Company’s exclusive provider of the Services, to transmit to any prospective participant in a proposed transaction envisioned under the Services (a “ Transaction”) copy or copies of the Information and all other legal documentation necessary or advisable in connection with the Services or a Transaction; and, (c) does not assume responsibility for the accuracy or completeness of the Information.

4. Accuracy of the Information . Company agrees that the Information will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Company shall advise PILLAR promptly of the occurrence of any event or any other change prior to the closing of a Transaction which could reasonably be expected to result in the Information containing any untrue statement of a material fact or omitting to state any material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading.

5. Confidentiality .

 

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5.1 Nondisclosure and Nonuse Obligations . Except as otherwise permitted in this Agreement, PILLAR shall not use, disseminate, or in any way disclose the Confidential Information (as defined below). PILLAR may use the Confidential Information solely to perform the Services. PILLAR shall treat all Confidential Information with the same degree of care as PILLAR accords to PILLAR’s own confidential information, but in no case shall PILLAR use less than reasonable care. PILLAR shall disclose Confidential Information only to those persons who have a need to know such Confidential Information. PILLAR certifies that each such recipient will have agreed to be bound by terms and conditions at least as protective as those terms and conditions applicable to PILLAR under this Agreement. PILLAR shall immediately give notice to Company of any unauthorized use or disclosure of the Confidential Information. PILLAR shall reasonably assist Company in remedying any such unauthorized use or disclosure of the Confidential Information. For purposes of this Agreement “ Confidential Information ” means (a) any technical and non-technical information related to Company’s business and current, future, and proposed products and services of Company, and Company’s information concerning research, development, design details and specifications, financial information, procurement requirements, engineering and manufacturing information, customer lists, business forecasts, sales information, and marketing plans; and, (b) any information that may be made known to PILLAR and that Company has received from others that Company is obligated to treat as confidential or proprietary.

5.2 Exclusions from Nondisclosure and Nonuse Obligations . PILLAR’s obligations under Section 5.1 shall not apply to any Confidential Information that PILLAR can demonstrate (a) was in the public domain at or subsequent to the time such Confidential Information was communicated to PILLAR by Company through no fault of PILLAR; (b) was rightfully in PILLAR’s possession free of any obligation of confidence at or subsequent to the time such Confidential Information was communicated to PILLAR by Company; or (c) was developed by employees or agents of PILLAR independently of and without reference to any Confidential Information communicated to PILLAR by Company. A disclosure of any Confidential Information by PILLAR (i) in response to a valid order by a court or other governmental body; or, (ii) as otherwise required by law shall not be considered to be a breach of this Agreement or a waiver of confidentiality for other purposes; provided, however, that PILLAR shall provide prompt prior written notice thereof to Company to enable Company to seek a protective order or otherwise prevent such disclosure.

5.3 Ownership and Return of Confidential Information and Company Property . All Confidential Information and any materials (including, without limitation, documents, drawings, papers, diskettes, tapes, models, apparatus, sketches, designs and lists) furnished to PILLAR by Company, whether delivered to PILLAR by Company or made by PILLAR in the performance of services under this Agreement and whether or not they contain or disclose Confidential Information (collectively, the “Company Property”), are the sole and exclusive property of Company or Company’s suppliers or customers. Within five (5) days after any request by Company, PILLAR shall destroy or deliver to Company, at Company’s option, (a) all Company Property; and, (b) all materials in PILLAR’s possession or control that contain or disclose any Confidential Information. PILLAR will provide Company a written certification of PILLAR’s compliance with PILLAR’s obligations under this Section 5.3.

6. Non-Circumvention . At no time shall Company directly or indirectly call on, engage, contract with, bargain with, agree to agree, solicit, or attempt to do any of the foregoing, in any manner, for any reason, any person or their respective principals introduced to Company by PILLAR. Specifically, Company shall not, under any circumstance, without the prior, express written agreement of PILLAR, directly or indirectly circumvent, bypass, or otherwise deny, limit, evade, equivocate, or reduce the interest, profit, share, or participation of PILLAR in any proposed transaction related to the Services.

7. Compensation . In payment for Services rendered and to be rendered hereunder, Company agrees to pay PILLAR as follows:

(a) Upon execution of this Agreement, Company shall pay to PILLAR a nonrefundable engagement fee of Twenty Five Thousand Dollars ($25,000).

 

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(b) Upon execution of this Agreement, Company shall issue to PILLAR two hundred fifty thousand (250,000) shares of the Company’s common stock.

(c) On the fifteenth day of each calendar month during the Term Company shall pay to PILLAR a “ Service Fee ” in the amount of Twenty Five Thousand Dollars ($25,000).

(d) Immediately upon the start of a Renewal Term under Section 8.2, below, Company shall issue to Pillar an additional two hundred fifty thousand (250,000) shares of the Company’s common stock.

(e) Upon consummation of any transaction involving either (i) the acquisition, merger, or combination, or similar transaction of or with another company; or, (ii) a transaction which results in Company “ Up Listing ”, as that term is commonly defined in a business context, Company shall issue to PILLAR common stock of Company for that number of shares equal to three percent (3%) of the issued and outstanding shares of Company determined on a fully diluted basis post-transaction. In the event of the termination of this Agreement for any reason and Company completes a transaction described in this subparagraph (c) within twelve (12) months of such termination, then Company issue to PILLAR the shares in accordance with this subparagraph (e).

(f) In addition to all other fees paid hereunder, Company shall also pay to, or on behalf of, PILLAR, promptly as billed, all reasonable fees, disbursements and out-of-pocket expenses incurred by PILLAR in connection the Services, including, without limitation, the fees and disbursements of PILLAR’s counsel, travel and lodging expenses, messenger and duplicating services, and other customary expenditures.

(g) All cash fees payable to PILLAR pursuant to this Section 7 shall be payable via wire transfer to an account designated by PILLAR.

(h) If at any time or from time to time Company shall determine to register any of its equity securities, either for its own account or for the account of a security holder or holders, other than (i) a registration relating solely to employee benefit plans; or, (ii) a registration relating solely to a Rule 145 transaction, Company will promptly give PILLAR written notice thereof, and, include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, that number of shares of common stock issued to PILLAR under this Agreement.

8. Term and Termination .

8.1 Term . This Agreement is effective as of the Effective Date and will terminate twenty-four (24) months thereafter, unless terminated earlier as set forth below (the “ Initial Term ”).

8.2 Renewal Term . This Agreement shall automatically renew for an additional twenty-four (24) months unless either Party provides written notice to the other at least ninety (90) days prior to the end of the Initial Term of its decision to not renew (the “ Renewal Term ”). The “ Term ” hereunder shall refer to the Initial Term and the Renewal Term, if any.

8.3 Early Termination by Company . Company may terminate this Agreement upon a material breach of the Agreement by PILLAR and said breach is not cured by PILLAR within twenty (20) days after receipt of written notice from Company detailing the nature of the material breach.

8.4 Termination by PILLAR . PILLAR may terminate this Agreement at any time, with termination effective thirty (30) days after PILLAR’s delivery to Company of written notice of termination. PILLAR also may terminate this Agreement immediately for a material breach by Company if Company’s material breach of any provision of this Agreement is not cured within twenty (20) days after the date of PILLAR’s written notice of breach.

 

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8.5 Survival of Certain Provisions . Sections 5, 7, 9, and 11, inclusive, shall remain operative and in full force and effect regardless of the expiration or termination of this Agreement.

9. Indemnity; Limitation of Liability . Since PILLAR will be acting on behalf of Company as set forth in this Agreement, and as an integral part of the consideration of the Services to be rendered hereunder, Company shall indemnify PILLAR and its shareholder, directors, officers, attorneys, employees, and authorized agents (collectively, the “Indemnified Persons”) in accordance with Exhibit “B”, attached hereto and incorporated herein by reference. Company shall not and shall cause its affiliates and their respective directors, officers, managers, members, employees, shareholders and agents not to, initiate any action or proceeding against PILLAR or any other Indemnified Person in connection with this Agreement or the Services unless such action or proceeding is based solely upon the gross negligence or willful misconduct of PILLAR or any such Indemnified Person. PILLAR and the Indemnified Persons shall not be deemed agents or fiduciaries of Company or its stockholders, and will not have the authority to legally bind Company. PILLAR will not make an appraisal or valuation of any assets or liabilities of Company in connection with the Services hereunder.

10. Representations of Company . Company hereby represents and warrants as follows: (i) it has all requisite power and authority to enter into this Agreement; (ii) this Agreement has been duly and validly authorized by all necessary action on the part of Company; and, (iii) this Agreement has been duly executed and delivered by Company and constitutes a legal, valid, and binding agreement, enforceable in accordance with its terms.

11. General Provisions .

11.1 Press Announcements . At any time after the consummation or other public announcement of any transaction resulting from the Services, PILLAR may place an announcement in such newspapers, publications, and on its website and marketing materials as it may choose, stating that PILLAR has acted as set forth herein in connection with the transaction, and may use, from time-to-time, Company’s name and logo and a brief description of the transaction in publications and/or marketing materials prepared and/or distributed by PILLAR.

11.2 Executed Counterparts . This Agreement may be executed in any number of counterparts, when taken together shall be considered one and the same agreement, it being understood that all Parties need not sign the same counterpart. In the event that any signature is delivered by fax or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

11.3 Successors and Assigns . Except as expressly provided in this Agreement, each and all of the covenants, terms, provisions, conditions, and agreements herein contained shall be binding upon and shall inure to the benefit of the successors and assigns of the Parties hereto.

11.4 Governing Law . This Agreement shall be governed by the laws of the State of California, without giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than California. If any court action is necessary to enforce the terms and conditions of this Agreement, the Parties hereby agree that the Superior Court of California, County of Orange, shall be the sole jurisdiction and venue for the bringing of such action. If any legal action (including arbitration) is necessary to enforce the terms and conditions of this Agreement, the prevailing Party shall be entitled to costs and reasonable attorney’s fees.

11.5 Entire Agreement . This Agreement and all references herein contains the entire agreement and understanding of the Parties in respect to the subject matter contained herein. The Parties have expressly not relied upon any promises, representations, warranties, agreements, covenants, or undertakings, other than those expressly set forth or referred to herein. This Agreement supersedes any and all prior written or

 

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oral agreements, understandings, and negotiations between the Parties with respect to the subject matter contained herein.

11.6 Severability . Each and every provision of this Agreement is severable and independent of any other term or provision of this Agreement. If any term or provision hereof is held void or invalid for any reason by a court of competent jurisdiction, such invalidity shall not affect the remainder of this Agreement.

11.7 Amendment . This Agreement may be amended or modified only by a writing signed by all Parties.

11.8 Notices .

(a) Method and Delivery . All notices, requests and demands hereunder shall be in writing and delivered by hand, by Electronic Transmission, by mail, by telegram, or by recognized commercial over-night delivery service (such as Federal Express, UPS, or DHL), and shall be deemed given (a) if by hand delivery, upon such delivery; (b) if by Electronic Transmission, upon telephone confirmation of receipt of same; (c) if by mail, forty-eight (48) hours after deposit in the United States mail, first class, registered or certified mail, postage prepaid; (d) if by telegram, upon telephone confirmation of receipt of same; or, (e) if by recognized commercial over-night delivery service, upon such delivery.

(b) Consent to Electronic Transmissions . Each Party hereby expressly consents to the use of Electronic Transmissions for communications and notices under this Agreement. For purposes of this Agreement, “Electronic Transmissions” means a communication (i) delivered by facsimile telecommunication or electronic mail when directed to the facsimile number or electronic mail address, respectively, for that recipient on record with the sending Party; and, (ii) that creates a record that is capable of retention, retrieval, and review, and that may thereafter be rendered into clearly legible tangible form.

11.9 Disputes . The Parties agree to cooperate and meet in order to resolve any disputes or controversies arising under this Agreement. Should they be unable to do so, then either may elect arbitration under the rules of the American Arbitration Association, and both Parties are obligated to proceed thereunder. Arbitration shall proceed in Orange County, and the Parties agree to be bound by the arbitrator’s award, which may be filed in the Superior Court of California, County of Orange. The Parties consent to the jurisdiction of California Courts for enforcement of this determination by arbitration. The prevailing Party shall be entitled to reimbursement for his attorney’s fees and all costs associated with arbitration. In any arbitration proceeding conducted pursuant to the provisions of this Section, both Parties shall have the right to conduct discovery, to call witnesses and to cross-examine the opposing Party’s witnesses, either through legal counsel, expert witnesses or both, and the provisions of the California Code of Civil Procedure (Right to Discovery; Procedure and Enforcement) are hereby incorporated into this Agreement by this reference and made a part hereof. EACH PARTY HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTER CLAIM BROUGHT BY ANY OF THEM AGAINST THE OTHER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, OR ANY OTHER AGREEMENTS EXECUTED IN CONNECTION HEREWITH OR THE ADMINISTRATION THEREOF OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN.

11.10 Provision Not Construed Against Party Drafting Agreement . This Agreement is the result of negotiations by and between the Parties, and each Party has had the opportunity to be represented by independent legal counsel of its choice. This Agreement is the product of the work and efforts of all Parties, and shall be deemed to have been drafted by all Parties. In the event of a dispute, no Party hereto shall be entitled to claim that any provision should be construed against any other Party by reason of the fact that it was drafted by one particular Party.

11.11 Best Efforts . The Parties shall use and exercise their best efforts, taking all reasonable, ordinary and necessary measures to ensure an orderly and smooth relationship under this Agreement, and further

 

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agree to work together and negotiate in good faith to resolve any differences or problems which may arise in the future.

12. Execution . IN WITNESS WHEREOF, this Agreement has been duly executed by the Parties and shall be effective as of and on the Effective Date set forth above.

 

COMPANY :     PILLAR:

PURE BIOSCIENCE, INC.,

a Delaware corporation

   

PILLAR MARKETING GROUP, INC.,

a California corporation

BY:   /s/ Dave Pfanzelter     BY:   /s/ Thomas Hemingway
NAME: DAVE PFANZELTER     NAME: THOMAS HEMINGWAY
TITLE: CEO     TITLE: CEO
DATED: 13 August 2013     DATED: 13 August 2013

 

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EXHIBIT “A”

SERVICES

PILLAR shall serve as the exclusive advisor to Company with regard to general advisory services with respect to corporate finance and capital raising activities, merger and acquisition transactions, and other related endeavors. The Services shall include, though not be limited to, the following:

Advisor to Company in connection with a potential purchase of any other company or assets through any structure or form of transaction including, but not limited to, a direct or indirect acquisition, purchase of assets, merger, consolidation, restructuring, transfer of securities or any similar or related transaction.

Advisor to Company in connection with the provision of any financing transaction.

Advisor to Company in connection with Company’s new management and positioning.

In connection with the Services, provide from time-to-time and as appropriate:

 

   

One-on-Ones with key banking and/or investment fund contacts

 

   

Key business introductions.

 

   

Identification of potential investors for any offering of securities

 

   

Media Coverage

 

   

Analyst Coverage

 

   

Consulting with the Company’s management regarding structuring of capital formation programs

 

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EXHIBIT “B”

INDEMNIFICATION

Unless otherwise noted, all capitalized terms used herein shall have the same meanings as set forth in the Agreement. In furtherance of Section 9 of the Agreement, the Parties hereby agree as follows:

As part of the consideration for PILLAR to furnish the Services Company agrees to indemnify and hold harmless PILLAR and the Indemnified Persons to the fullest extent from and against all claims, liabilities, losses, damages and expenses (or actions in respect thereof), as incurred, related to or arising out of or in connection with (i) actions taken or omitted to be taken by Company, its affiliates, employees or agents; (ii) actions taken or omitted to be taken by any Indemnified Person (including acts or omissions constituting ordinary negligence) pursuant to the terms of, or in connection with the Services or any Indemnified Person’s role in connection therewith, provided, however, that Company shall not be responsible for any losses, claims, damages, liabilities or expenses of any Indemnified Person to the extent, and only to the extent, that it is finally judicially determined that they are due solely to such Indemnified Person’s gross negligence or willful misconduct; and/or, (iii) any untrue statement or alleged untrue statement of a material fact contained in any of the Information, or arising out of or based upon any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading.

Company shall not settle or compromise or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened action, claim, suit or proceeding in which any Indemnified Person is or could be a party and as to which indemnification or contribution could have been sought by such Indemnified Person hereunder (whether or not such Indemnified Person is a party thereto), unless such Indemnified Person has given its prior written consent or the settlement, compromise, consent or termination includes an express unconditional release of such Indemnified Person, satisfactory in form and substance to such Indemnified Person, from all losses, claims, damages or liabilities arising out of such action, claim, suit or proceeding.

If for any reason (other than the gross negligence or willful misconduct of an Indemnified Person as provided above) the foregoing indemnity is unavailable to an Indemnified Person or insufficient to hold an Indemnified Person harmless, then Company, to the fullest extent permitted by law, shall contribute to the amount paid or payable by such Indemnified Person as a result of such claims, liabilities, losses, damages or expenses in such proportion as is appropriate to reflect the relative benefits received by Company on the one hand and by PILLAR on the other, from the proposed transaction under the Agreement or, if allocation on that basis is not permitted under applicable law, in such proportion as is appropriate to reflect not only the relative benefits received by Company on the one hand and PILLAR on the other, but also the relative fault of Company and PILLAR, as well as any relevant equitable considerations. Notwithstanding the provisions hereof, the aggregate contribution of all Indemnified Persons to all claims, liabilities, losses, damages, and expenses shall not exceed the amount of fees actually received by PILLAR pursuant to the Agreement. It is hereby further agreed that the relative benefits to the Company on the one hand and PILLAR on the other with respect to any proposed transaction contemplated by the Agreement shall be deemed to be in the same proportion as (i) the total value paid or contemplated to be paid or received or contemplated to be received by Company or the Company’s shareholders, as the case may be, in the transaction or transactions that are within the scope of the Agreement, whether or not any such transaction is consummated, bears to (ii) the fees actually paid to PILLAR with respect to such transaction. The relative fault of Company on the one hand and PILLAR on the other with respect to the transaction shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by Company or by PILLAR and the Parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

No Indemnified Person shall have any liability to Company or any officer, director, employee or affiliate thereof in connection with the Services except for any liability for claims, liabilities, losses, or damages finally judicially determined to have resulted solely as a result of such Indemnified Person’s gross negligence or willful misconduct. In no event shall any Indemnified Person be responsible for any special, indirect, punitive,

 

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or consequential damages. In addition, Company agrees to reimburse the Indemnified Persons for all expenses (including, without limitation, fees and expenses of counsel) as they are incurred in connection with investigating, preparing, defending or settling any action or claim for which indemnification or contribution may be sought by the Indemnified Person, whether or not in connection with litigation in which any Indemnified Person is a named party.

The indemnity, contribution, and expense reimbursement obligations set forth herein (i) shall be in addition to any liability Company may have to any Indemnified Person at common law or otherwise; (ii) shall survive the expiration of the Term; (iii) shall apply to any modification of PILLAR’s engagement and shall remain in full force and effect following the completion or termination of the Agreement; (iv) shall remain operative and in full force and effect regardless of any investigation made by or on behalf of PILLAR or any other Indemnified Person; and, (v) shall be binding on any successor or assign of Company and successors or assigns to Company’s business and assets.

 

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Exhibit 10.3

PURCHASE, SEVERANCE, AND RELEASE

AGREEMENT

MICHAEL L. KRALL

and

PURE BIOSCIENCE, INC.

EFFECTIVE DATE:

13 August 2013


PURCHASE, SEVERANCE, AND RELEASE AGREEMENT

I

PARTIES

THIS PURCHASE, SEVERANCE, AND RELEASE AGREEMENT (the “ Agreement ”) is entered into effective as of the 13 th day of August, 2013 (the “ Effective Date ”), by and between MICHAEL L. KRALL, an individual residing in the State of California (“ Krall ”); and , PURE BIOSCIENCE, INC., a Delaware corporation (“ PURE ”). Krall and PURE are sometimes referred to collectively herein as the “ Parties ”, and each individually as a “ Party ”.

II

RECITALS

A. Krall serves as the CEO of PURE, in addition to holding a number of additional officer positions and acting as the Chairman of PURE’s Board of Directors.

B. Krall’s employment as the CEO of PURE is subject to that certain Amended and Restated Employment Agreement dated 12 October 2009 and amended October 26, 2011 (the “ Employment Agreement ”).

C. As part of a reorganization and restructuring of PURE’s business, Krall’s employment relationship with PURE is hereby acknowledged to be terminated effective immediately.

D. As a result of and in conjunction with the termination of employment and commencement of the subsequent consulting relationship under Section 4.6, below (the “Consulting Relationship”), PURE desires ongoing access to all of Krall’s Intellectual Property regarding PURE and PURE’s technologies and products, including Trade Secrets, Inventions, Ownership Rights and Developments which were not previously assigned to PURE by Krall or where the effectiveness of such assignment might be contestable

E. Subject to strict and timely performance by PURE of each and all of its obligations to Krall hereinafter specified, Krall is willing to and hereby does provide assurances to PURE that he will not assert any claims of any kind against PURE and specifically identified related parties, whether arising out of (i) Krall’s previous employment with PURE, or (ii) with the exception of rights of the Parties created in this Agreement, any other relationship or claim of right whatsoever arising out of or any manner or form related to the relationship between the Parties.

F. This Agreement is to specifically encompass all of the claims and related factual and legal circumstances noted above, including though not limited to all rights, duties, and obligations arising under the Employment Agreement (collectively referred to as the “ Employment Relationship ”). As such, it is the intent of the Parties that their respective rights and obligations to each other from this day forward shall be determined exclusively under the terms of this Agreement.

G. All Parties are desirous of settling all rights under the Employment Relationship and releasing each other from all future liability, except as otherwise expressly provided herein to the contrary.

H. NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

 

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III

RELEASE AND PAYMENT OBLIGATIONS

3.1 Exchange . In consideration of (i) the execution of this Agreement; (ii) the satisfaction of PURE’s obligations described below; (iii) the satisfaction of Krall’s obligations described below; (iv) ongoing access to Krall’s Intellectual Property transferred from Krall to PURE through the assignment of rights herein and by way of the Consulting Relationship; and, (v) other good and valuable consideration, the receipt and value of which is hereby confirmed, Krall on the one hand, and PURE on the other hand, shall hereby fully, finally, and forever settle and release each other from any and all claims, losses, fines, penalties, damages, demands, judgments, debts, obligations, interests, liabilities, causes of action, breaches of duty, costs, expenses, judgments and injunctions of any nature whatsoever, whether known or unknown, from all relationships between the Parties, specifically including, but not limited to, those arising under, in connection with, or as a result of the Employment Relationship (cumulatively referred to as the “ Released Claims ”).

3.2 Payment Obligations .

3.2.1. Separation Payment . Upon execution and delivery of this Agreement by Krall and the satisfaction of the conditions under Section 3.12, below, PURE shall pay to Krall as a “ Separation Payment ” the sum of Twenty-five Thousand Dollars ($25,000.00). Said Separation Payment shall be in the form of check or wire transfer in accordance with written instructions provided by Krall. Krall hereby acknowledges and agrees that the Separation Payment represents payment in full of all salary, wages, compensation, unreimbursed business expenses, vacation pay, and any and all other amounts due and owing to Krall as of the Separation Date. Krall further acknowledges and agrees that except as otherwise expressly provided for herein, no additional compensation or amounts of any kind are or will be due to Krall from PURE. It is intended that the tax treatment of said Separation Payment is to be governed by Section 3.2.5, below.

3.2.2 Purchase of Intellectual Property . Upon execution and delivery of this Agreement by Krall and the satisfaction of the conditions under Section 3.13, below, PURE shall pay to Krall as an “ Intellectual Property Purchase Payment ” the sum of One Hundred Twenty-five Thousand Dollars ($125,000.00). Said Intellectual Property Purchase Payment shall be in the form of check or wire transfer in accordance with written instructions provided by Krall. In addition, PURE will issue to Krall 850,000 shares of common stock in accordance with the terms contained in Section 3.3. Krall hereby acknowledges and agrees that the Intellectual Property Purchase Payment represents payment in full by PURE for the purchase of all Intellectual Property from Krall and that future access to this Intellectual Property will be provided by Krall as additional consideration for the Severance Payment provided in Section 3.2.3 and through the Consulting Relationship detailed in Section 4.6. Krall further acknowledges and agrees that except as otherwise expressly provided for herein, no additional compensation or amounts of any kind are or will be due to Krall from PURE.

3.2.3. Severance Payment . PURE shall also pay to Krall, as an independent contractor, the sum of Five Hundred Forty Dollars ($540,000.00) as the “Severance Payment”. The Severance Payment shall be payable in eighteen (18) equal monthly installments of Thirty Thousand Dollars ($30,000.00) each, commencing on the 30 th day after Separation Date and continuing month-to-month on the same day of each successive calendar month until the Severance Payment is paid in full. All monthly payments shall be in the form of check or wire transfer in accordance with written instructions provided by Krall.

3.2.4. Escrow Trust Account . Upon the earlier of (i) PURE receiving a total of Three Million Dollars ($3,000,000.00); or, (ii) sixty (60) days from Separation Date, PURE will deposit Five Hundred Thousand Dollars ($500,000.00) into an escrow account established at a commercial bank, exclusively dedicated to the purpose of ensuring availability of the funds necessary to pay the monthly Severance Payment to Krall.

3.2.5. Taxes, Withholdings, and Related Offsets . PURE shall withhold required state, federal and social security taxes and other standard or specific deductions from the payment of Krall’s $25,000.00 Separation Payment addressed in Section 3.2.1 above. The Separation Payment hereunder will be considered

 

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“earnings” or “compensation”, as those terms are commonly defined.

3.3 Stock Issuance .

3.3.1. Intellectual Property Purchase Shares . Within eight (8) days after the Separation Date, PURE shall issue to Krall eight hundred fifty thousand (850,000) shares of its restricted common stock (the “ Purchase Shares ”) for the purposes specifically expressed in Section 3.2.2. As such, as additional consideration for the Purchase Shares, upon issuance Krall hereby irrevocably sells, assigns, and transfers to PURE all of Krall’s clients, contacts, and personal goodwill not previously assigned to PURE and to be developed in the future by Krall with regard to the business and products of PURE. The issuance of the Purchase Shares shall be further governed by the additional terms and conditions noted below.

3.3.2. Registration/Piggyback Rights . Within thirty (30) days of the Separation Date, PURE will either (i) include the Purchase Shares in an S-1 registration statement to be filed by PURE; or, if available, (ii) register the Purchase Shares on a duly prepared Form S-8 to be filed with the SEC. PURE will use its best efforts to have any such Registration Statement(s) including Krall’s shares become effective, and to keep such registration statement effective until the earlier of (i) the date on which all Purchase Shares covered by such registration statement have been sold; or, (ii) the date on which all Purchase Shares covered by such registration statement may be sold without volume restrictions pursuant to Rule 144(b)(1); or, (iii) three (3) years from the Separation Date.

3.3.3. Lock-up Restriction . The Purchase Shares shall be subject to “lock up”, as that term in commonly defined in a securities context. Krall shall sell no more than eighty-five thousand (85,000) shares of the Purchase Shares in any thirty (30)-day period.

3.3.4. Irrevocable Proxy . Concurrent with the execution of this Agreement, Krall shall also execute that certain Irrevocable Proxy, in the form attached hereto as Exhibit A, which shall grant to a person to be designated the right to vote the Purchase Shares for as long as they remain in the name of Krall.

3.3.5. Agreement Not to Short . Krall hereby agrees that at no time after the Effective Date shall he directly, indirectly, or cause, “short” the stock of PURE, as that term is commonly defined in a securities context.

3.3.6 Address for Stockholder Notice and Records . Krall will provide to PURE the address for stockholder notice and records and instructions for delivery of stock within 5 business days following the Separation Date.

3.4 Health Insurance Coverage . The health insurance, including medical, dental and vision coverage, currently in place and provided for Krall and his eligible family members by PURE shall continue uninterrupted, at the sole cost and expense of PURE, for a period of eighteen (18) months following the Separation Date (the “ Extended Coverage Period ”). If PURE cannot provide direct coverage for Krall as a consultant, then upon timely election by Krall of continued group coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), PURE shall either pay directly or reimburse Krall for the COBRA premium payments for Krall and his eligible family members under PURE’s group medical, dental and vision plans. In the event that PURE discontinues or changes group insurance coverage, the obligation to provide or reimburse Krall for substantially similar coverage will continue through the Extended Coverage Period. At the end of the Extended Coverage Period, health insurance coverage for Krall and his eligible family members shall cease unless pursuant to applicable law Krall makes a proper election to further continue such coverage, if available. All such coverage beyond the Extended Coverage Period, if any, will be solely at the expense of Krall and subject to the terms and conditions of the documents governing the health insurance plan.

3.5 Complete Release and Hold Harmless . Krall, on behalf of himself, his spouse, his heirs, personal representatives, successors, assigns and all others claiming through or under him, and PURE, for itself and its

 

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successors and assigns, hereby agree to release, discharge, and hold harmless each other and their respective directors, officers, affiliates, and attorneys, and each of their successors and assigns, from any and all known and unknown claims of every nature and kind whatsoever which they now or hereafter may have with respect to each other and/or the Released Claims, notwithstanding Section 1542 of the California Civil Code, which provides that:

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

All rights under §1542 of the California Civil Code are hereto expressly, fully, knowingly and intentionally forever waived and relinquished by the Parties. All Parties hereby acknowledge that each understands the significance and consequences of such specific waiver under §1542 of the California Civil Code, and that each has had the opportunity to seek the advice of legal counsel of their choosing.

3.6 Scope of Krall’s Release . Krall further expressly understands that the rights being waived hereunder specifically include, but are not limited to, any and all claims under (as any of the same may be amended from time to time) Title VII of the Civil Rights Act of 1964; Sections 1981 and 1983 of the Civil Rights Act of 1866; Equal Pay Act; Americans with Disabilities Act; Age Discrimination in Employment Act; Krall Retirement Income Security Act; Fair Labor Standards Act; Family and Medical Leave Act; WARN Act; the United States and California Constitutions; California Fair Employment and Housing Act; California Family Rights Act; California Labor Code; any applicable California Industrial Welfare Commission Wage Order; with respect to the foregoing constitutional and statutory references, any comparable constitution, statute or regulation of any other state; all claims of discrimination or harassment on account of race, sex, sexual orientation, national origin, religion, disability, age, pregnancy, veteran’s status, or any other protected status under any federal or state statute; any federal, state or local law enforcing express or implied employment contracts or covenants of good faith and fair dealing; any federal, state or local laws providing recourse for alleged wrongful discharge or constructive discharge, termination in violation of public policy, tort, physical or personal injury, emotional distress, fraud, negligent misrepresentation, defamation, and any similar or related claim; together with any claim under any other local, state or federal law or constitution governing employment, discrimination or harassment in employment, or the payment of wages or benefits, whether or not now known, suspected or claimed, which Krall ever had, now has, or may claim to have as of the date of this Agreement. This Agreement and the scope of the release by Krall hereunder expressly includes any statutory claims, including, but not limited to, claims under the Age Discrimination in Employment Act (the “ ADEA ”) and the Older Workers’ Benefit Protection Act (“ OWBPA ”), except that this Agreement does not waive rights or claims under the ADEA, or otherwise, which may arise after the Effective Date of this Agreement.

3.7 After Acquired Information . The Parties acknowledge that they may hereafter discover information, facts, or circumstances different from or in addition to those which they now know or believe to be true. Except as otherwise provided herein to the contrary, this Agreement shall remain in full force and effect in all respects notwithstanding such discovery, and in accordance with the irrevocable waiver and relinquishment of provisions of California Civil Code Section 1542 or otherwise, the Parties expressly accept and assume the risk of such possible additions to or differences from those facts now known or believed to be true.

3.8 Enforceability . The enforceability of this Agreement is conditioned upon each respective Party satisfying its respective obligations hereunder.

3.9 Assignment of Released Claims . The Parties hereby covenant that none of the Released Claims has been assigned to any other person, and that no other person has any interest in any of the Released Claims. In the event any other person asserts any interest with respect to the Released Claims, then the Party breaching this covenant shall indemnify the Party against whom such claim is asserted for any and all damages, costs, and fees.

3.10 Specific Exclusion . It is expressly understood that the release contained in this Agreement does not

 

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encompass the promises and obligations of the Parties under this Agreement. This Agreement also does not contemplate or include within the release hereunder post-Effective Date intentionally willful, tortious, or criminal acts of either Party, such acts being expressly excluded from this Agreement.

3.11 No Admission of Liability . Notwithstanding the terms and conditions of this Agreement, execution hereof shall in no manner or form constitute the admission of liability or of responsibility by either Party in respect to the Employment Relationship or otherwise.

3.12 Closing . The transactions and initial payments envisioned hereunder shall be held at a closing (the “Closing”) as part of a meeting of the Board of Directors of PURE. All terminations and appointments shall be effected at the Closing. The obligation to make payments under Sections 3.2.1. and 3.2.2 (collectively, the “Closing Payments”) are expressly dependent and arise on the termination and appointments provided for herein. It is further expressly agreed by the Parties:

(a) All terminations and appointments at the Closing shall be made in advance of the Closing Payments. However, such terminations and appointments shall be null and void in the event of the failure to timely satisfy the Closing Payments.

(b) The Parties recognize that the funds to satisfy the Closing Payments will be transferred to PURE as of the date of the Closing (the “Closing Date”). PURE shall provide to Krall evidence of the transfer of the funds on the Closing Date.

(c) So long as evidence is presented to Krall that the funds have been transferred to PURE as of the Closing Date then Krall agrees to delay receipt of the Closing Payments until the funds have been cleared by PURE’s bank as being available for payment by PURE, but in no case more than seventy-two (72) hours after the Closing.

IV

EMPLOYMENT RELATED PROVISION

4.1 Termination . The Parties hereby agree that Krall’s termination of employment with PURE of the Parties and is effective 13 August 2013, and that his last day of employment by and with PURE shall be deemed to be the 13 th day of August, 2013 (the “ Separation Date ”).

4.2 Termination of Positions . As of the Separation Date and as additional consideration hereunder, any and all positions held by Krall in and with PURE have been terminated, including though not limited to the positions of CEO and Chairman of the Board of PURE.

4.3 Employment Agreement . The Parties hereby agree that all payment and related compensation obligations arising under the Employment Agreement are hereby null and void.

4.4 Express Waiver of Any Other Amounts . Krall hereby acknowledges that he is not entitled to receive, and will not claim, any damages, rights, benefits, or compensation other than as expressly set forth in this Agreement.

4.5 Return of Materials . Upon execution of this Agreement Krall shall promptly deliver to PURE all equipment, notebooks, documents, memoranda, reports, files, samples, books, correspondence, lists, computer disks and data bases, computer programs and reports, computer software, and all other written, graphic and computer generated or stored records relating to the business of PURE which are or have been in the possession or under the control of Krall, in addition to all property owned by PURE which is in his possession or under his control, including though not limited to credit cards, entry cards, identification badges and keys. The Parties have agreed that certain electronics will be retained by Krall after having been properly cleared by PURE.

 

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4.6 Consulting Relationship . As additional consideration in exchange for the Severance Payment and Purchase of Intellectual Property, Krall agrees to provide consulting services to PURE for no additional charge from the Separation Date up to and until twelve (12) months thereafter (the “ Consulting Period ”). It is the express intention of PURE that Krall performs services during the Consulting Period as an independent contractor to PURE. Nothing in this Agreement shall in any way be construed to constitute Krall as an agent, employee, or representative of PURE. Without limiting the generality of the foregoing, Krall is not authorized to bind PURE to any liability or obligation or to represent that Krall has any such authority. During the Consulting Period, upon the request of PURE, Krall shall be reasonably available to consult with PURE for no more than 10-hours per week, without carryovers. Throughout the term of the Consulting Period, PURE agrees that its requests of Krall for specific blocks of consulting time will reasonably accommodate Krall’s anticipated business obligations independent of PURE. As part of the consulting services, Krall shall be obligated to, among other things, provide ongoing access to his Intellectual Property as described below and to reasonably assist and advise PURE on all aspects of PURE’s business and obligations whether arising prior to or after the Separation Date. As such, as additional consideration for the Purchase Shares upon issuance Krall hereby irrevocably sells, assigns, and transfers to PURE all of Krall’s clients, contacts, and personal goodwill not previously assigned to PURE or that developed in the course of the Consulting Relationship as referred to in Section 4.6.

V

CONFIDENTIALITY AND BUSINESS RELATED COVENANTS

5.1 Non-Disclosure of Business Information . Krall shall not at any time, either directly or indirectly, use, divulge, disclose or communicate to any person, firm, or corporation, in any manner whatsoever, any confidential information concerning any matters affecting or relating to the business of PURE, including, without limitation, the names, buying habits or practices of any of its customers, its marketing methods and related data, the names of any of its vendors or suppliers, costs of materials, the prices it obtains or has obtained or at which it sells or has sold its products or services, manufacturing and sales, costs, lists or other written records used in PURE’s business, compensation paid to employees and other terms of employment, business plans, financial projections and reports, business strategies, internal operating procedures and other confidential business information from which the PURE might derive an economic or competitive advantage, or any other confidential information of, about or concerning the business of PURE, its manner of operation, or other confidential data of any kind, nature, or description, whether or not labeled “secret” or “confidential”. The Parties hereby stipulate that as between them, the foregoing matters are important, material, and confidential trade secrets and affect the successful conduct of the PURE’s business and its goodwill, and that any breach of any term of this paragraph is a material breach of this Agreement.

5.2 Trade Secrets . Krall shall not at any time, either directly or indirectly, use, divulge, disclose or communicate to any person, firm, or corporation, in any manner whatsoever, any of PURE’s trade secrets, including without limitation, confidential information; customer lists; information concerning current or any future and proposed work, services or products; the fact that any such work, services or products are planned, under consideration, or in production, as well as any description thereof, computer programs or computer software. Krall agrees that these restrictions shall also apply to (i) trade secrets belonging to third parties in the possession of PURE; and, (ii) trade secrets conceived, originated, discovered, or developed by PURE during the term of his employment.

5.3 Competition Covenant . Krall hereby agrees that during and throughout the forty-eight (48) months immediately following the Separation Date he shall not:

(a) Directly or indirectly, in an individual or representative capacity, own an interest in, operate, join, control, finance (whether as a lender or investor), share in the earnings of, participate in, engage in or be connected as an officer, employee, agent, independent contractor, partner, shareholder, member, consultant, employer, investor, or principal of any corporation, partnership, proprietorship, firm, association, person, or any other entity engaged in any aspect of the business of PURE, or which is otherwise in competition with PURE, notwithstanding the location of said other business; and

 

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(b) Permit his name to be used, directly or indirectly, by any person, corporation, partnership or other business entity engaged in the business of PURE.

5.4 Non-Solicitation of Employees . During and throughout the forty-eight (48) months immediately following the Separation Date Krall shall not, directly or indirectly, cause or induce, or attempt to cause or induce, any employee of PURE to terminate his or her employment with PURE, as such employment exists at any time following the Effective Date.

5.5 Non-Solicitation of Business . During and throughout the forty-eight (48) months immediately following the Separation Date Krall shall not, directly or indirectly, (i) solicit business from any customer of PURE, to the extent such business relates to a product or service competitive with an PURE product or service; or, (ii) otherwise attempt to induce any such customer of PURE to cease doing business with, or to decrease the amount of business such customer does with, PURE.

5.6 Intellectual Property . The Parties agree that all trade secrets, inventions, ownership rights, developments, and all ideas, techniques, inventions, systems, formulas, discoveries, technical information, programs, prototypes and similar developments (collectively, the “ Developments ”) developed, created, discovered, made, written, or obtained by Krall in the course of or as a result, directly or indirectly, of performance of his duties to the Company, and all related intellectual property, copyrights, patent rights, trade secrets and other forms of protection thereof, shall be and remain the property of PURE (collectively, the “ Intellectual Property ”). Krall agrees to execute or cause to be executed such assignments and applications, registrations and other documents and to take such other action as may be requested by PURE to enable PURE to protect its rights in and to any such Intellectual Property and Developments. Under the Consulting Relationship, Krall further agrees, pursuant to the Consulting agreement hereunder, to provide ongoing access to all of Krall’s knowledge including, but not limited to, research and development, manufacturing, marketing, finance, general management, legal, regulatory, and corporate history and circumstances related to the Intellectual Property.

5.7 Mutual Non-Disparagement . Following the Separation Date: (i) Krall will not make or cause to be made any statements or remarks (including, without limitation, the repetition or distribution of disparaging, derogatory or damaging rumors, allegations, negative reports or comments), whether written, electronic or oral, that are directly or indirectly disparaging, derogatory or damaging to PURE or any of its respective past, current or future affiliates, officers, directors, shareholders, employees, consultants, advisors, representatives, trustees, subsidiaries, divisions, parent companies, clients or customers or their policies and procedures, business, practices or financial condition; and, (ii) PURE will not make or cause to be made any statements or remarks (including, without limitation, the repetition or distribution of disparaging, derogatory or damaging rumors, allegations, negative reports or comments), whether written, electronic or oral, that are directly or indirectly disparaging, derogatory or damaging to Krall. However , the foregoing restrictions shall not apply to any statements by Krall or by PURE that are made truthfully in response to a subpoena or as otherwise required by applicable law or other compulsory legal process, or those made in the context of a confidential professional relationship such as between the Parties and legal counsel, accountants and/or financial advisors.

VI

ADDITIONAL REPRESENTATIONS AND OBLIGATIONS

6.1 Consideration Period . This Agreement has been delivered to Krall on the 2 nd day of August, 2013. Pursuant to law, Krall has twenty-one (21) days to consider this Agreement. Pursuant to Section 6.3, below, Krall has been encouraged to seek legal counsel to consider and review this Agreement and based on said review is waiving entitlement to said twenty-one day Consideration Period.

6.2 Revocation Period . Upon execution of this Agreement, Krall shall have seven (7) days to revoke the Agreement. Any such revocation by Krall must be in writing and delivered to PURE pursuant to the notice requirements of this Agreement. If timely revoked by Krall, this Agreement will not be effective or enforceable, and

 

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all Parties shall be immediately released of all obligations hereunder, with no effect on any of the claims each Party may otherwise possess.

6.3 Independent Legal Counsel . The Parties to this Agreement warrant, represent, and agree that in executing this Agreement, they do so with full knowledge of the rights each may have with respect to the other Party, and that each has received, or has had the opportunity to receive, independent legal advice as to these rights. Each of the Parties has executed this Agreement with full knowledge of these rights, and under no fraud, duress, or undue influence.

6.4 Waiver of Age Discrimination Claim . Krall understands that the release contained in this Agreement had to meet certain requirements to constitute a valid release of any claims under the Age Discrimination in Employment Act (“ADEA”), and Krall hereby represents that all such requirements were in fact satisfied. These requirements required the following, each of which has in fact been satisfied: (i) execution of this Agreement by Krall has been knowing and voluntary, and free from duress, coercion and mistake of fact; (ii) this Agreement is in writing and is understandable; (iii) this Agreement has waived current ADEA claims explicitly; (iv) this Agreement has not waived future ADEA claims; (v) the release by Krall hereunder of ADEA claims has been paid for with something to which Krall was not already entitled; (vi) this Agreement has advised Krall to consult an attorney; (vii) this Agreement has given Krall twenty-one (21) days to consider the ADEA release contained in this Agreement; and, (viii) this Agreement has given Krall seven (7) days within which to revoke the ADEA release contained in this Agreement after execution.

6.5 Execution and Effect of Agreement .

6.5.1. By PURE . PURE hereby warrants and represents to Krall the following:

(a) It has the requisite power and authority to enter into and carry out the terms and conditions of this Agreement, as well as all transactions contemplated hereunder. All proceedings have been taken and all authorizations have been secured which are necessary to authorize the execution, delivery, and performance by PURE of this Agreement. This Agreement has been duly and validly executed and delivered by PURE and constitutes the valid and binding obligations of PURE, enforceable in accordance with the respective terms.

(b) The consummation by PURE of the transactions herein contemplated, including the execution, delivery and consummation of this Agreement, will not violate any judgment, law, order, writ, rule or regulation, or determination or decree of any arbitrator, court, or other governmental agency or administrative body (collectively, “Requirement of Law”) applicable or binding upon PURE.

6.5.2. By Krall . Krall hereby warrants and represents to PURE the following:

(a) He has the requisite power and authority to enter into and carry out the terms and conditions of this Agreement, as well as all transactions contemplated hereunder. All proceedings have been taken and all authorizations have been secured which are necessary to authorize the execution, delivery, and performance by Krall of this Agreement. This Agreement has been duly and validly executed and delivered by Krall and constitutes the valid and binding obligations of Krall, enforceable in accordance with the respective terms.

(b) The consummation by Krall of the transactions herein contemplated, including the execution, delivery, and consummation of this Agreement, will not violate any Requirement of Law applicable or binding upon Krall.

6.6 Investment Representations . Krall is an “accredited investor”, as that term is defined under Rule 501(a) of Regulation D under the Securities Act of 1933. Krall shall execute and deliver all documentation prepared and reasonably requested by PURE in order to confirm Krall’s status as an accredited investor.

6.7 No Cooperation . Krall will not act in any manner that might damage the business of PURE.

 

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Krall will not counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against PURE and/or any officer, director, employee, agent, representative, shareholder or attorney of PURE, unless under a subpoena or other court order to do so or upon the express written consent of PURE. Krall further agrees both to immediately notify PURE upon receipt of any court order, subpoena, or any legal discovery device that seeks or might require the disclosure or production of the existence or terms of this Agreement, and to furnish, within two (2) business days of its receipt, a copy of such subpoena or legal discovery device to PURE.

6.8 Expenses . Each Party shall pay the fees and expenses of such Party’s advisers, counsel, accountants, and other experts, if any, and all other expenses incurred by such Party incident to the negotiation, preparation, execution, delivery and performance of this Agreement, and shall hold the other Party hereto harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any claim for such fees and expenses.

6.9 Tax Liability . Krall represents and warrants that neither PURE nor its attorneys nor anyone affiliated with PURE has made any representations regarding the taxability of the payments and issuance of stock hereunder and that Krall has not relied upon any such representation in entering into this Agreement. Krall further represents and warrants that he shall be solely responsible for the payment of any and all federal, state and local taxes which may become due, if any, as a result of the payments and issuance of stock hereunder. Krall shall hold PURE harmless from and indemnify it for the payment of any taxes (including interest) or penalties, and any costs or attorneys’ fees related to such payment, if any, that may be asserted against it by any government agency at any time as a result of the payments or issuance of stock hereunder.

6.10 Death or Disability . In the event of Krall’s death or Complete Disability, PURE will continue all commitments under this Agreement, including but not limited to all payments to Krall, his estate, successors, or assigns, provided for hereunder including but not limited to those in connection with the purchase, severance, common stock and insurance obligations hereunder. The term Complete Disability shall mean the inability of Krall to perform his duties under this Agreement by reason of any incapacity, physical or mental, based upon medical advice or an opinion provided by two licensed physicians acceptable to PURE, determines to have incapacitated Krall from satisfactorily performing his usual services for PURE under this Agreement.

6.11 Directors and Officers Insurance. For a period of five (5) years commencing with the Separation Date, PURE shall continue to maintain directors and officers insurance coverage or by tail/run off coverage or otherwise on terms no less favorable than those in place on the Separation Date. If for any reason PURE determines to discontinue such coverage within said five year period, Krall shall be provided sixty (60) days advanced written notice of that event.

6.12 Public Disclosures . The Parties agree that with regard to the public disclosure of the transactions envisioned hereunder: (i) PURE shall issue a press release in the form attached hereto as Exhibit “B”; and (ii) the Form 8-K to be filed by PURE will be approved by Krall prior to filing, with approval not to be unreasonably withheld.

VII

INTENDED TAX RESULTS

7.1 Excise Tax . The Parties believe that the payments and issuance under this Agreement do not constitute “excess parachute payments” under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), or any successor provision. Notwithstanding such belief and intent, if any payment or benefit due under this Agreement, together with all other payments and benefits (including, without limitation, equity-based compensation awards) to which Krall is entitled from PURE, would (if paid or provided) constitute an “excess parachute payment”, the amounts otherwise payable and benefits otherwise due under this Agreement will either (i) be delivered in full, or (ii) be limited to the minimum extent necessary to ensure that no portion thereof will fail to be tax-deductible to PURE by reason of Section 280G of the Code, whichever of the foregoing amounts,

 

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taking into account the applicable federal, state or local income and employment taxes and the excise tax imposed under Section 4999 of the Code, results in Krall’s receipt, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be subject to the excise tax imposed under Section 4999 of the Code. In the event that the payments and/or benefits are to be reduced pursuant to this Section 7.1, such payments and benefits shall be reduced such that the reduction of compensation to be provided to Krall as a result of this Section 7.1 is minimized. In applying this principle, the reduction shall be made in a manner consistent with the requirements of Section 409A of the Code and where two economically equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro rata basis but not below zero. No reduction or limitation under this Section 7.1 shall apply to payments made for the purchase of intellectual property from Krall by PURE.

7.2 Compliance with Section 409A .

7.2.1. Intent . The intent of the Parties is that payments and benefits under this Agreement comply with Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively “ Section 409A ”). Accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. If Krall notifies PURE (with reasonable specificity as to the reason therefor) that Krall believes that any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause Krall to incur any additional tax or interest under Section 409A and PURE concurs with such belief or PURE (without any obligation whatsoever to do so) independently makes such determination, PURE shall, after consulting with Krall, reform such provision to attempt to comply with Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Section 409A. To the extent that any provision hereof is modified in order to comply with Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit/burden to Krall and PURE of the applicable provision without violating the provisions of Section 409A.

7.2.2. Specific Provisions . A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service”. If Krall is deemed on the date of termination to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B) of the Code, then with regard to any payment or the provision of any benefit that is specified as subject to this Section or that is otherwise considered deferred compensation under Section 409A payable on account of a “separation from service,” and that is not exempt from Section 409A as involuntary separation pay or a short-term deferral (or otherwise), such payment or benefit shall be made or provided at the date which is the earlier of (i) the expiration of the six (6)-month period measured from the date of such “separation from service” of Krall, and (ii) the date of Krall’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 7.2.2. (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to Krall in a lump sum without interest, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

7.2.3. Reimbursement . With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that the foregoing clause (ii) shall not be violated without regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect and (iii) such payments shall be made on or before the last day of Krall’s taxable year following the taxable year in which the expense occurred.

 

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7.2.4. Date of Payment . Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of PURE.

7.3 Tax Cooperation and Exchange of Information . Each Party shall cooperate fully at such time and to the extent reasonably requested by the other Party in connection with the preparation and filing of any tax return or claim for refund, or the conduct of any audit, dispute, proceeding, suit, or action concerning any tax issues or other tax matters considered in this Agreement. Such cooperation shall include, without limitation, the following: (i) the retention and provision on reasonable demand of books, records, documentation, or other information relating to the tax matters under this Agreement; (ii) the provision of additional information, including an explanation of material provided under subparagraph (i), to the extent such information is necessary or reasonably helpful in connection with the foregoing; (iii) the execution of any document that may be necessary or reasonably helpful in connection with the filing of a tax return or in connection with any audit, dispute, proceeding, suit or action; and, (iv) such Party’s commercially reasonable efforts to obtain any documentation from a governmental authority or a third party that may be necessary or reasonably helpful in connection with any of the foregoing. Each Party further agrees: (i) not to take any action reasonably expected to result in a new or changed position on a tax issues under this Agreement that is detrimental to the other Party; and, (ii) to take any action reasonably requested by the other Party that would reasonably be expected to result in or produce a benefit or avoids a detriment to such other Party with regard to tax issues under this Agreement. However , the preceding sentence and corresponding obligation shall not apply to any situation in which a Party’s tax and/or legal advisors determine in good faith that taking a position consistent with the position of the other Party would violate any applicable state or federal rule or law, including without limitation generally accepted accounting principles, SEC reporting rules, and state or federal tax laws and regulations.

VIII

ADDITIONAL PROVISIONS

8.1 Executed Counterparts . This Agreement may be executed in any number of counterparts, all of which when taken together shall be considered one and the same agreement, it being understood that all Parties need not sign the same counterpart. In the event that any signature is delivered by fax or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof. Each of the Parties hereby expressly forever waives any and all rights to raise the use of a fax machine or E-Mail to deliver a signature, or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a fax machine or E-Mail, as a defense to the formation of a contract.

8.2 Successors and Assigns . Except as expressly provided in this Agreement, each and all of the covenants, terms, provisions, conditions and agreements herein contained shall be binding upon and shall inure to the benefit of the successors and assigns of the Parties hereto.

8.3 Article and Section Headings . The article and section headings used in this Agreement are inserted for convenience and identification only and are not to be used in any manner to interpret this Agreement.

8.4 Severability . Each and every provision of this Agreement is severable and independent of any other term or provision of this Agreement. If any term or provision hereof is held void or invalid for any reason by a court of competent jurisdiction, such invalidity shall not affect the remainder of this Agreement. Similarly, the obligations of the Parties shall remain in full force and effect in the event any of the intended tax results hereunder shall be denied or otherwise become unavailable.

8.5 Governing Law . This Agreement shall be governed by the laws of the State of California, without giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of

 

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California. If any court action is necessary to interpret and or enforce the terms and conditions of this Agreement, the Parties hereby agree that the Superior Court of California, San Diego, shall be the sole jurisdiction and venue for the bringing of such action.

8.6 Entire Agreement . This Agreement, and all references, documents, or instruments referred to herein, contains the entire agreement and understanding of the Parties hereto in respect to the subject matter contained herein. The Parties have expressly not relied upon any promises, representations, warranties, agreements, covenants, or undertakings, other than those expressly set forth or referred to herein. This Agreement supersedes any and all prior written or oral agreements, understandings, and negotiations between the Parties with respect to the subject matter contained herein.

8.7 Additional Documentation . The Parties hereto agree to execute, acknowledge, and cause to be filed and recorded, if necessary, any and all documents, amendments, notices, and certificates which may be necessary or convenient under the laws of the State of California.

8.8 Attorney’s Fees . If any legal action (including arbitration) is necessary to interpret and or enforce the terms and conditions of this Agreement, the prevailing Party shall be entitled to costs and reasonable attorney’s fees.

8.9 Amendment . This Agreement may be amended or modified only by a writing signed by all Parties.

8.10 Remedies .

8.10.1. Specific Performance . The Parties hereby declare that it is impossible to measure in money the damages which will result from a failure to perform any of the obligations under this Agreement. Therefore, each Party waives the claim or defense that an adequate remedy at law exists in any action or proceeding brought to enforce the provisions hereof.

8.10.2. Cumulative . The remedies of the Parties under this Agreement are cumulative and shall not exclude any other remedies to which any person may be lawfully entitled.

8.11 Waiver . No failure by any Party to insist on the strict performance of any covenant, duty, agreement, or condition of this Agreement or to exercise any right or remedy on a breach shall constitute a waiver of any such breach or of any other covenant, duty, agreement, or condition.

8.12 Assignability . This Agreement is not assignable by either Party without the expressed written consent of all Parties.

8.13 Notices .

8.13.1. Method and Delivery . All notices, requests and demands hereunder shall be in writing and delivered by hand, by registered or certified mail, or by recognized commercial over-night delivery service (such as Federal Express, UPS, or DHL), and shall be deemed given (a) if by hand delivery, upon such delivery; (b) if by mail, upon delivery of registered or certified mail, postage prepaid; (c) if by recognized commercial over-night delivery service, upon such delivery.

8.13.2 Addresses for Notice.

If to PURE:

Attn: Chairman of the Board, Chief Executive Officer and Chief Financial Officer

1725 Gillespie Way

El Cajon, CA 92020

 

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If to Krall:

Address to be provided to PURE within 5 business days following the Separation Date.

8.14 Time . All Parties agree that time is of the essence as to this Agreement.

8.15 Provision Not Construed Against Party Drafting Agreement . This Agreement is the result of negotiations by and between the Parties, and each Party has had the opportunity to be represented by independent legal counsel of its choice. This Agreement is the product of the work and efforts of all Parties, and shall be deemed to have been drafted by all Parties. In the event of a dispute, no Party hereto shall be entitled to claim that any provision should be construed against any other Party by reason of the fact that it was drafted by one particular Party.

8.16 Incorporation of Exhibits and Schedules . The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof as if set out in full herein.

8.17 Recitals . The facts recited in Article II, above, are hereby conclusively presumed to be true as between and affecting the Parties.

8.18 Definitional Provisions . For purposes of this Agreement, (i) those words, names, or terms which are specifically defined herein shall have the meaning specifically ascribed to them; (ii) wherever from the context it appears appropriate, each term stated either in the singular or plural shall include the singular and plural; (iii) wherever from the context it appears appropriate, the masculine, feminine, or neuter gender, shall each include the others; (iv) the words “hereof”, “herein”, “hereunder”, and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, and not to any particular provision of this Agreement; (v) all references to designated “Articles”, “Sections”, and to other subdivisions are to the designated Articles, Sections, and other subdivisions of this Agreement as originally executed; (vi) all references to “Dollars” or “$” shall be construed as being United States dollars; (vii) the term “including” is not limiting and means “including without limitation”; and, (viii) all references to all statutes, statutory provisions, regulations, or similar administrative provisions shall be construed as a reference to such statute, statutory provision, regulation, or similar administrative provision as in force at the date of this Agreement and as may be subsequently amended.

VIII

EXECUTION

IN WITNESS WHEREOF , this PURCHASE, SEVERANCE, AND RELEASE AGREEMENT has been duly executed by the Parties in San Diego, California, and shall be effective as of and on the Effective Date set forth in Article I of this Agreement. Each of the undersigned Parties hereby represents and warrants that it (i) has the requisite power and authority to enter into and carry out the terms and conditions of this Agreement, as well as all transactions contemplated hereunder; and, (ii) it is duly authorized and empowered to execute and deliver this Agreement.

THE PARTIES HAVE CAREFULLY READ THIS ENTIRE AGREEMENT. ITS CONTENTS AND THE RELEASE CONTAINED HEREIN HAVE BEEN FULLY EXPLAINED TO THEM BY THEIR ATTORNEYS, OR THEY HAVE VOLUNTARILY ELECTED NOT TO SEEK THE ADVICE OF AN ATTORNEY. THE PARTIES FULLY UNDERSTAND THE FINAL AND BINDING EFFECT OF THIS AGREEMENT. THE ONLY PROMISES OR REPRESENTATIONS MADE TO EACH OF THE PARTIES ABOUT THIS AGREEMENT, OR TO INDUCE THEM TO SIGN THIS AGREEMENT, ARE CONTAINED IN THIS AGREEMENT. THE PARTIES ARE SIGNING THIS AGREEMENT KNOWINGLY AND VOLUNTARILY.

 

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EXECUTION PAGE TO PURCHASE, SEVERANCE, AND RELEASE AGREEMENT

 

KRALL :    PURE :
  

PURE BIOSCIENCE, INC.,

a Delaware corporation

 

/s/ Michael L. Krall
MICHAEL L. KRALL

 

DATED: 13 August 2013     BY:   /s/ Dennis Atchley
    NAME:   DENNIS ATCHLEY
    TITLE:   Secretary
    DATED:   13 August 2013

 

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EXHIBIT A

IRREVOCABLE PROXY

 

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EXHIBIT B

PRESS RELEASE

 

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Exhibit 10.4

VOTING SUPPORT AGREEMENT AND IRREVOCABLE PROXY

I

PARTIES

THIS VOTING SUPPORT AGREEMENT AND IRREVOCABLE PROXY (the “ Agreement ”) is entered into effective as of the 13 th day of August, 2013 (the “Effective Date”), by and between MICHAEL L. KRALL, an individual residing in the State of California (“ Krall ”); and , PURE BIOSCIENCE, INC., a Delaware corporation (“ PURE ”). Krall and PURE are sometimes referred to collectively herein as the “ Parties ”, and each individually as a “ Party ”.

II

RECITALS

A. Concurrent with the execution and delivery of this Agreement, the Parties have entered into that certain Purchase, Severance, and Release Agreement dated as of the date hereof (the “ Release Agreement ”).

B. This Agreement is the irrevocable proxy referred to in Section 3.3.4. of the Release Agreement and attached to the Release Agreement as Exhibit A.

C. All defined terms not otherwise defined in this Agreement shall have the same meaning ascribed to them as in the Release Agreement.

D. Under the terms of the Release Agreement Krall will receive the Purchase Shares.

E. As an inducement and an essential condition to the Parties entering into the Release Agreement the Parties have agreed to enter into this Agreement and have the Purchase Shares be subject to this Agreement.

F. NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

III

VOTING AND PROXY PROVISIONS

3.1 Voting Support . Krall covenants and agrees that, prior to the Expiration Date, upon request by PURE Krall shall support all actions recommended by the management of PURE and which require a vote of the stockholders of PURE. Krall further agrees not to enter into any agreement or commitment or arrangement with any person the effect of which would be inconsistent with or otherwise violate the provisions and agreements set forth in this Section 3.1.

3.2 Grant of Irrevocable Proxy . Krall hereby appoints the then acting CEO of PURE and any designee of such CEO, and each of them individually, as Krall’s agent, proxy, and attorney-in-fact, with full power of substitution, for and in the name, place and stead of Krall, to vote all Purchase Shares at any meeting of PURE stockholders however called and any adjournment thereof, or to execute one or more written consents in respect of such Purchase Shares. This proxy shall (i) be valid and irrevocable until the Expiration Date; and, (ii) automatically terminate upon the Expiration Date. Krall represents and warrants that foregoing proxy is: (A) given in connection with the execution of the Release Agreement; (B) given to secure the performance of Krall’s duties under the Release Agreement; (C) coupled with an interest and may not be revoked except as otherwise provided in this Agreement; and, (D) intended to be irrevocable prior to the Expiration Date. To the extent permitted by under Delaware law, all authority herein conferred shall survive the death or incapacity of Krall and shall be binding upon the heirs, estate, administrators, personal representatives, successors, and assigns of Krall.

 

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3.3 Additional Shares . In the event that Krall acquires record or beneficial ownership of, or the power to vote or direct the voting of, any additional voting interest with respect to PURE, such voting interests shall, without further action of the Parties, be subject to the provisions of this Agreement and the number of Purchase Shares shall be deemed to have been adjusted accordingly.

3.4 No Inconsistent Agreements . Krall has not entered into any agreement or commitment with any person that is inconsistent with this Agreement.

3.5 Information for Public Filings . Krall hereby authorizes PURE to publish and disclose in any public filing required to be made by PURE his identity and ownership of the Purchase Shares and the nature of his commitments, arrangements, and understandings under this Agreement.

3.6 Notices of Certain Events . Krall shall promptly notify PURE of any development occurring after the Effective Date which causes, or that would reasonably be expected to cause, Krall to invoke this Agreement so as to not take any action requested of him.

3.7 No Ownership Interest . Nothing contained in this Agreement shall be deemed to vest in PURE any direct or indirect ownership or incidence of ownership of or with respect to any Purchase Shares. Except as otherwise provided for herein, all rights, ownership, and economic benefits of and relating to the Purchase Shares shall remain vested in and belong to Krall.

IV

TERMINATION

This Agreement shall terminate immediately upon Krall no longer directly or indirectly owning any of the Purchase Shares (the “ Expiration Date ”). However, Article V shall survive the termination of this Agreement. No Party shall be relieved of any liability or damages incurred or suffered by the other Party to the extent such liabilities or damages were the result of fraud or the material or intentional breach by a Party of any of its representations, warranties, covenants, or other agreements set forth herein.

V

ADDITIONAL PROVISIONS

5.1 Specific Performance . The Parties agree that irreparable damage would occur and that the Parties would not have an adequate remedy at law in the event that any of the provisions of this Agreement, including the irrevocable proxy, were not performed in accordance with their specific terms or were otherwise breached. Accordingly, the Parties further agree that each Party shall be entitled to an injunction or restraining order to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, without proof of actual damages (and each Party hereby waives any requirement for the securing or posting of any bond or other security in connection therewith), this being in addition to any other right or remedy to which such Party may be entitled under this Agreement, at law or in equity. Krall shall pay all costs and expenses of collection or enforcement of this Agreement by or on behalf of PURE, including reasonable attorneys’ fees to the extent PURE is successful in such collection or enforcement.

5.2 No Partnership, Agency, or Joint Venture . This Agreement is intended to create, and creates, a contractual relationship and is not intended to create, and does not create, any agency, partnership, joint venture or other like relationship between the Parties.

5.3 Consultation with Counsel . Each Party acknowledges and represents that, in executing this Agreement, it has had the opportunity to seek advice as to its legal rights from legal counsel and that such Party has read and understood all of the terms and provisions of this Agreement.

 

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5.4 Incorporation By Reference . The Parties hereby agree that the following provisions of the Release Agreement are hereby incorporated by reference as if actually set forth in full herein: Section 6.5; and, Article VIII.

VI

EXECUTION

IN WITNESS WHEREOF , this VOTING SUPPORT AGREEMENT AND IRREVOCABLE PROXY has been duly executed by the Parties in San Diego County, California, and shall be effective as of and on the Effective Date set forth in Article I of this Agreement. Each of the undersigned Parties hereby represents and warrants that it (i) has the requisite power and authority to enter into and carry out the terms and conditions of this Agreement, as well as all transactions contemplated hereunder; and, (ii) it is duly authorized and empowered to execute and deliver this Agreement.

 

KRALL:     PURE:
   

PURE BIOSCIENCE, INC.,

a Delaware corporation

/s/ Michael L. Krall

     
MICHAEL L. KRALL      
DATED: 13 August 2013     BY:   /s/ Dennis Atchley
    NAME: Dennis Atchley
    TITLE: Secretary
    DATED: 13 August 2013

 

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SPOUSAL CONSENT

I am the spouse of MICHAEL L. KRALL. On behalf of myself, my heirs, and legatees, I hereby:

1. Confirm that I have read and clearly understand the VOTING SUPPORT AGREEMENT AND IRREVOCABLE PROXY (the “ Proxy Agreement ”) to which this Spousal Consent is attached and which has been executed by my spouse;

2. Join in and consent to the terms of the Proxy Agreement between my spouse and PURE Bioscience, Inc. (“ PURE ”);

3. Join in and consent to the irrevocable proxy granted by my spouse in favor of the then acting CEO of PURE pursuant to the Proxy Agreement;

4. Consent to the treatment of all Purchase Shares (as defined in the Proxy Agreement) as provided for under the Proxy Agreement; and

5. Further confirm that with regard to the Proxy Agreement:

a. I have had the opportunity to be represented in the preparation of this Spousal Consent by counsel of my own choosing;

b. I have read this Spousal Consent, the Proxy Agreement, and the Purchase, Severance, and Release Agreement (referred to as the Release Agreement in the Proxy Agreement), and have had the opportunity to have independent legal counsel fully explain the contents of these documents to me; and,

c. I am aware of the legal effect of the documents referenced in subparagraph b, above.

 

Dated: 13 August 2013       /s/ Connie Krall
      CONNIE KRALL

 

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Exhibit 10.5

PURCHASE, SEVERANCE, AND RELEASE AGREEMENT

DONNA SINGER

and

PURE BIOSCIENCE, INC.

EFFECTIVE DATE:

13 August 2013


PURCHASE, SEVERANCE, AND RELEASE AGREEMENT

I

PARTIES

THIS PURCHASE, SEVERANCE, AND RELEASE AGREEMENT (the “ Agreement ”) is entered into effective as of the 13 th day of August, 2013 (the “ Effective Date ”), by and between DONNA SINGER, an individual residing in the State of California (“ Singer ”); and , PURE BIOSCIENCE, INC., a Delaware corporation (“ PURE ”). Singer and PURE are sometimes referred to collectively herein as the “ Parties ”, and each individually as a “ Party ”.

II

RECITALS

A. Singer serves as the Executive Vice President of PURE, in addition to holding a number of additional positions and acting as a member of PURE’s Board of Directors.

B. Singer’s employment as the Executive Vice President of PURE is subject to that certain Employment Agreement dated 12 October 2009 and amended October 26, 2011 (the “ Employment Agreement ”).

C. As part of a reorganization and restructuring of PURE’s business, Singer’s employment relationship with PURE is hereby acknowledged to be terminated effective immediately.

D. As a result of and in conjunction with the termination of employment and commencement of the subsequent consulting relationship under Section 4.6, below (the “Consulting Relationship”), PURE desires ongoing access to all of Singer’s Intellectual Property regarding PURE and PURE’s technologies and products, including Trade Secrets, Inventions, Ownership Rights and Developments which were not previously assigned to PURE by Singer or where the effectiveness of such assignment might be contestable.

E. Subject to strict and timely performance by PURE of each and all of its obligations to Singer hereinafter specified, Singer is willing to and hereby does provide assurances to PURE that she will not assert any claims of any kind against PURE and specifically identified related parties, whether arising out of (i) Singer’s previous employment with PURE, or (ii) with the exception of rights of the Parties created in this Agreement, any other relationship or claim of right whatsoever arising out of or any manner or form related to the relationship between the Parties.

F. This Agreement is to specifically encompass all of the claims and related factual and legal circumstances noted above, including though not limited to all rights, duties, and obligations arising under the Employment Agreement (collectively referred to as the “ Employment Relationship ”). As such, it is the intent of the Parties that their respective rights and obligations to each other from this day forward shall be determined exclusively under the terms of this Agreement.

G. All Parties are desirous of settling all rights under the Employment Relationship and releasing each other from all future liability, except as otherwise expressly provided herein to the contrary.

H. NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

 

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III

RELEASE AND PAYMENT OBLIGATIONS

3.1 Exchange . In consideration of (i) the execution of this Agreement; (ii) the satisfaction of PURE’s obligations described below; (iii) the satisfaction of Singer’s obligations described below; (iv) ongoing access to Singer’s Intellectual Property transferred from Singer to PURE through the assignment of rights herein and by way of the Consulting Relationship; and, (v) other good and valuable consideration, the receipt and value of which is hereby confirmed, Singer on the one hand, and PURE on the other hand, shall hereby fully, finally, and forever settle and release each other from any and all claims, losses, fines, penalties, damages, demands, judgments, debts, obligations, interests, liabilities, causes of action, breaches of duty, costs, expenses, judgments and injunctions of any nature whatsoever, whether known or unknown, from all relationships between the Parties, specifically including, but not limited to, those arising under, in connection with, or as a result of the Employment Relationship (cumulatively referred to as the “ Released Claims ”).

3.2 Payment Obligations .

3.2.1. Separation Payment . Upon execution and delivery of this Agreement by Singer and the satisfaction of the conditions under Section 3.12, below, PURE shall pay to Singer as a “ Separation Payment ” the sum of Forty Five Thousand Dollars ($45,000.00). Said Separation Payment shall be in the form of check or wire transfer in accordance with written instructions provided by Singer. Singer hereby acknowledges and agrees that the Separation Payment represents payment in full of all salary, wages, compensation, unreimbursed business expenses, vacation pay, and any and all other amounts due and owing to Singer as of the Separation Date. Singer further acknowledges and agrees that except as otherwise expressly provided for herein, no additional compensation or amounts of any kind are or will be due to Singer from PURE. It is intended that the tax treatment of said Separation Payment is to be governed by Section 3.2.3, below.

3.2.2. Severance Payment . PURE shall also pay to Singer, as an independent contractor, the sum of Two Hundred Four Thousand Dollars ($204,000.00) as the “Severance Payment”. The Severance Payment shall be payable in twelve (12) equal monthly installments of Seventeen Thousand Dollars ($17,000.00) each, commencing on the 30 th day after the Separation Date and continuing month-to-month on the same day of each successive calendar month until the Severance Payment is paid in full. All monthly payments shall be in the form of check or wire transfer in accordance with written instructions provided by Singer.

3.2.3. Taxes, Withholdings, and Related Offsets . PURE shall withhold required state, federal and social security taxes and other standard or specific deductions from the payment of Singer’s $45,000.00 Separation Payment addressed in Section 3.2.1 above. The Separation Payment hereunder will be considered “earnings” or “compensation”, as those terms are commonly defined.

3.3 Stock Issuance .

3.3.1. Intellectual Property Purchase Shares . Within eight (8) days after the Separation Date, PURE shall issue to Singer three hundred thousand (300,000) shares of its restricted common stock (the “ Purchase Shares ”) in exchange for the purchase of all Intellectual Property from Singer and future access to this Intellectual Property to be provided by Singer as additional consideration for the Consulting Relationship detailed in Section 4.6. As such, as consideration for the Purchase Shares, upon issuance Singer hereby irrevocably sells, assigns, and transfers to PURE all of Singer’s clients, contacts, and personal goodwill not previously assigned to PURE and to be developed in the future by Singer with regard to the business and products of PURE. The issuance of the Purchase Shares shall be further governed by the additional terms and conditions noted below.

3.3.2. Registration/Piggyback Rights . Within thirty (30) days of the Separation Date, PURE will either (i) include the Purchase Shares in an S-1 registration statement to be filed by PURE; or, if available, (ii) register the Purchase Shares on a duly prepared Form S-8 to be filed with the SEC. PURE will use its best efforts to have any such Registration Statement(s) including Singer’s shares become effective, and to keep such

 

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registration statement effective until the earlier of (i) the date on which all Purchase Shares covered by such registration statement have been sold; or, (ii) the date on which all Purchase Shares covered by such registration statement may be sold without volume restrictions pursuant to Rule 144(b)(1); or, (iii) three (3) years from the Separation Date.

3.3.3. Lock-up Restriction . The Purchase Shares shall be subject to “lock up”, as that term in commonly defined in a securities context. Singer shall sell no more than thirty thousand (30,000) shares of the Purchase Shares in any thirty (30)-day period.

3.3.4. Irrevocable Proxy . Concurrent with the execution of this Agreement, Singer shall also execute that certain Irrevocable Proxy, in the form attached hereto as Exhibit A, which shall grant to a person to be designated the right to vote the Purchase Shares for as long as they remain in the name of Singer.

3.3.5. Agreement Not to Short . Singer hereby agrees that at no time after the Effective Date shall she directly, indirectly, or cause, “short” the stock of PURE, as that term is commonly defined in a securities context.

3.3.6 Address for Stockholder Notice and Records. Singer will provide to PURE the address for stockholder notice and records and instructions for delivery of stock within 5 business days following the Separation Date.

3.4 Health Insurance Coverage . The health insurance, including medical, dental and vision coverage, currently in place and provided for Singer and her eligible family members by PURE shall continue uninterrupted, at the sole cost and expense of PURE, for a period of twelve (12) months following the Separation Date (the “ Extended Coverage Period ”). If PURE cannot provide direct coverage for Singer as a consultant, then upon timely election by Singer of continued group coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), PURE shall either pay directly or reimburse Singer for the COBRA premium payments for Singer and her eligible family members under PURE’s group medical, dental and vision plans. In the event that PURE discontinues or changes group insurance coverage, the obligation to provide or reimburse Singer for substantially similar coverage will continue through the Extended Coverage Period. At the end of the Extended Coverage Period, health insurance coverage for Singer and her eligible family members shall cease unless pursuant to applicable law Singer makes a proper election to further continue such coverage, if available. All such coverage beyond the Extended Coverage Period, if any, will be solely at the expense of Singer and subject to the terms and conditions of the documents governing the health insurance plan.

3.5 Complete Release and Hold Harmless . Singer, on behalf of herself, her spouse, her heirs, personal representatives, successors, assigns and all others claiming through or under her, and PURE, for itself and its successors and assigns, hereby agree to release, discharge, and hold harmless each other and their respective directors, officers, affiliates, and attorneys, and each of their successors and assigns, from any and all known and unknown claims of every nature and kind whatsoever which they now or hereafter may have with respect to each other and/or the Released Claims, notwithstanding Section 1542 of the California Civil Code, which provides that:

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

All rights under §1542 of the California Civil Code are hereto expressly, fully, knowingly and intentionally forever waived and relinquished by the Parties. All Parties hereby acknowledge that each understands the significance and consequences of such specific waiver under §1542 of the California Civil Code, and that each has had the opportunity to seek the advice of legal counsel of their choosing.

3.6 Scope of Singer’s Release . Singer further expressly understands that the rights being waived

 

3


hereunder specifically include, but are not limited to, any and all claims under (as any of the same may be amended from time to time) Title VII of the Civil Rights Act of 1964; Sections 1981 and 1983 of the Civil Rights Act of 1866; Equal Pay Act; Americans with Disabilities Act; Age Discrimination in Employment Act; Singer Retirement Income Security Act; Fair Labor Standards Act; Family and Medical Leave Act; WARN Act; the United States and California Constitutions; California Fair Employment and Housing Act; California Family Rights Act; California Labor Code; any applicable California Industrial Welfare Commission Wage Order; with respect to the foregoing constitutional and statutory references, any comparable constitution, statute or regulation of any other state; all claims of discrimination or harassment on account of race, sex, sexual orientation, national origin, religion, disability, age, pregnancy, veteran’s status, or any other protected status under any federal or state statute; any federal, state or local law enforcing express or implied employment contracts or covenants of good faith and fair dealing; any federal, state or local laws providing recourse for alleged wrongful discharge or constructive discharge, termination in violation of public policy, tort, physical or personal injury, emotional distress, fraud, negligent misrepresentation, defamation, and any similar or related claim; together with any claim under any other local, state or federal law or constitution governing employment, discrimination or harassment in employment, or the payment of wages or benefits, whether or not now known, suspected or claimed, which Singer ever had, now has, or may claim to have as of the date of this Agreement. This Agreement and the scope of the release by Singer hereunder expressly includes any statutory claims, including, but not limited to, claims under the Age Discrimination in Employment Act (the “ ADEA ”) and the Older Workers’ Benefit Protection Act (“ OWBPA ”), except that this Agreement does not waive rights or claims under the ADEA, or otherwise, which may arise after the Effective Date of this Agreement.

3.7 After Acquired Information . The Parties acknowledge that they may hereafter discover information, facts, or circumstances different from or in addition to those which they now know or believe to be true. Except as otherwise provided herein to the contrary, this Agreement shall remain in full force and effect in all respects notwithstanding such discovery, and in accordance with the irrevocable waiver and relinquishment of provisions of California Civil Code Section 1542 or otherwise, the Parties expressly accept and assume the risk of such possible additions to or differences from those facts now known or believed to be true.

3.8 Enforceability . The enforceability of this Agreement is conditioned upon each respective Party satisfying its respective obligations hereunder.

3.9 Assignment of Released Claims . The Parties hereby covenant that none of the Released Claims has been assigned to any other person, and that no other person has any interest in any of the Released Claims. In the event any other person asserts any interest with respect to the Released Claims, then the Party breaching this covenant shall indemnify the Party against whom such claim is asserted for any and all damages, costs, and fees.

3.10 Specific Exclusion . It is expressly understood that the release contained in this Agreement does not encompass the promises and obligations of the Parties under this Agreement. This Agreement also does not contemplate or include within the release hereunder post-Effective Date intentionally willful, tortious, or criminal acts of either Party, such acts being expressly excluded from this Agreement.

3.11 No Admission of Liability . Notwithstanding the terms and conditions of this Agreement, execution hereof shall in no manner or form constitute the admission of liability or of responsibility by either Party in respect to the Employment Relationship or otherwise.

3.12 Closing . The transactions and initial payments envisioned hereunder shall be held at a closing (the “Closing”) as part of a meeting of the Board of Directors of PURE. All terminations and appointments shall be effected at the Closing. The obligation to make the payment of the Separation Payment under Section 3.2.1. is expressly dependent upon and arises on the terminations and appointments provided for herein. It is further expressly agreed by the Parties:

(a) All terminations and appointments at the Closing shall be made in advance of the

 

4


Separation Payment. However, such terminations and appointments shall be null and void in the event of the failure to timely satisfy the Separation Payment.

(b) The Parties recognize that the funds to satisfy the Separation Payment will be transferred to PURE as of the date of the Closing (the “Closing Date”). PURE shall provide to Singer evidence of the transfer of the funds on the Closing Date.

(c) So long as evidence is presented to Singer that the funds have been transferred to PURE as of the Closing Date then Singer agrees to delay receipt of the Separation Payment until the funds have been cleared by PURE’s bank as being available for payment by PURE, but in no case more than seventy-two (72) hours after the Closing.

IV

EMPLOYMENT RELATED PROVISION

4.1 Termination . The Parties hereby agree that Singer’s termination of employment with PURE of the Parties and is effective 13 August 2013, and that her last day of employment by and with PURE shall be deemed to be the 13 th day of August, 2013 (the “ Separation Date ”).

4.2 Termination of Positions . As of the Separation Date and as additional consideration hereunder, any and all positions held by Singer in and with PURE have been terminated, including though not limited to the positions of Executive Vice President and member of the Board of PURE.

4.3 Employment Agreement . The Parties hereby agree that all payment and related compensation obligations arising under the Employment Agreement are hereby null and void.

4.4 Express Waiver of Any Other Amounts . Singer hereby acknowledges that she is not entitled to receive, and will not claim, any damages, rights, benefits, or compensation other than as expressly set forth in this Agreement.

4.5 Return of Materials . Upon execution of this Agreement Singer shall promptly deliver to PURE all equipment, notebooks, documents, memoranda, reports, files, samples, books, correspondence, lists, computer disks and data bases, computer programs and reports, computer software, and all other written, graphic and computer generated or stored records relating to the business of PURE which are or have been in the possession or under the control of Singer, in addition to all property owned by PURE which is in her possession or under her control, including though not limited to credit cards, entry cards, identification badges and keys. The Parties have agreed that certain electronics will be retained by Singer after having been properly cleared by PURE.

4.6 Consulting Relationship . As additional consideration in exchange for the Severance Payment and Purchase of Intellectual Property, Singer agrees to provide consulting services to PURE for no additional charge from the Separation Date up to and until twelve (12) months thereafter (the “ Consulting Period ”). It is the express intention of PURE that Singer performs services during the Consulting Period as an independent contractor to PURE. Nothing in this Agreement shall in any way be construed to constitute Singer as an agent, employee, or representative of PURE. Without limiting the generality of the foregoing, Singer is not authorized to bind PURE to any liability or obligation or to represent that Singer has any such authority. During the Consulting Period, upon the request of PURE, Singer shall be reasonably available to consult with PURE for no more than 10-hours per week, without carryovers. Throughout the term of the Consulting Period, PURE agrees that its requests of Singer for specific blocks of consulting time will reasonably accommodate Singer’s anticipated business obligations independent of PURE. As part of the consulting services, Singer shall be obligated to, among other things, provide ongoing access to her Intellectual Property as described below and to reasonably assist and advise PURE on all aspects of PURE’s business and obligations whether arising prior to or after the Separation Date. As such, as additional consideration for the Purchase Shares upon issuance Singer

 

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hereby irrevocably sells, assigns, and transfers to PURE all of Singer’s clients, contacts, and personal goodwill not previously assigned to PURE or that developed in the course of the Consulting Relationship as referred to in Section 4.6.

V

CONFIDENTIALITY AND BUSINESS RELATED COVENANTS

5.1 Non-Disclosure of Business Information . Singer shall not at any time, either directly or indirectly, use, divulge, disclose or communicate to any person, firm, or corporation, in any manner whatsoever, any confidential information concerning any matters affecting or relating to the business of PURE, including, without limitation, the names, buying habits or practices of any of its customers, its marketing methods and related data, the names of any of its vendors or suppliers, costs of materials, the prices it obtains or has obtained or at which it sells or has sold its products or services, manufacturing and sales, costs, lists or other written records used in PURE’s business, compensation paid to employees and other terms of employment, business plans, financial projections and reports, business strategies, internal operating procedures and other confidential business information from which the PURE might derive an economic or competitive advantage, or any other confidential information of, about or concerning the business of PURE, its manner of operation, or other confidential data of any kind, nature, or description, whether or not labeled “secret” or “confidential”. The Parties hereby stipulate that as between them, the foregoing matters are important, material, and confidential trade secrets and affect the successful conduct of the PURE’s business and its goodwill, and that any breach of any term of this paragraph is a material breach of this Agreement.

5.2 Trade Secrets . Singer shall not at any time, either directly or indirectly, use, divulge, disclose or communicate to any person, firm, or corporation, in any manner whatsoever, any of PURE’s trade secrets, including without limitation, confidential information; customer lists; information concerning current or any future and proposed work, services or products; the fact that any such work, services or products are planned, under consideration, or in production, as well as any description thereof, computer programs or computer software. Singer agrees that these restrictions shall also apply to (i) trade secrets belonging to third parties in the possession of PURE; and, (ii) trade secrets conceived, originated, discovered, or developed by PURE during the term of her employment.

5.3 Competition Covenant . Singer hereby agrees that during and throughout the forty-eight (48) months immediately following the Separation Date she shall not:

(a) Directly or indirectly, in an individual or representative capacity, own an interest in, operate, join, control, finance (whether as a lender or investor), share in the earnings of, participate in, engage in or be connected as an officer, employee, agent, independent contractor, partner, shareholder, member, consultant, employer, investor, or principal of any corporation, partnership, proprietorship, firm, association, person, or any other entity engaged in any aspect of the business of PURE, or which is otherwise in competition with PURE, notwithstanding the location of said other business; and

(b) Permit her name to be used, directly or indirectly, by any person, corporation, partnership or other business entity engaged in the business of PURE.

5.4 Non-Solicitation of Employees . During and throughout the forty-eight (48) months immediately following the Separation Date Singer shall not, directly or indirectly, cause or induce, or attempt to cause or induce, any employee of PURE to terminate his or her employment with PURE, as such employment exists at any time following the Effective Date.

5.5 Non-Solicitation of Business . During and throughout the forty-eight (48) months immediately following the Separation Date Singer shall not, directly or indirectly, (i) solicit business from any customer of PURE, to the extent such business relates to a product or service competitive with an PURE product or service; or, (ii) otherwise attempt to induce any such customer of PURE to cease doing business with, or to decrease the amount of business such customer does with, PURE.

 

6


5.6 Intellectual Property . The Parties agree that all trade secrets, inventions, ownership rights, developments, and all ideas, techniques, inventions, systems, formulas, discoveries, technical information, programs, prototypes and similar developments (collectively, the “ Developments ”) developed, created, discovered, made, written, or obtained by Singer in the course of or as a result, directly or indirectly, of performance of her duties to the Company, and all related intellectual property, copyrights, patent rights, trade secrets and other forms of protection thereof, shall be and remain the property of PURE (collectively, the “ Intellectual Property ”). Singer agrees to execute or cause to be executed such assignments and applications, registrations and other documents and to take such other action as may be requested by PURE to enable PURE to protect its rights in and to any such Intellectual Property and Developments. Under the Consulting Relationship, Singer further agrees, pursuant to the Consulting agreement hereunder, to provide ongoing access to all of Singer’s knowledge including, but not limited to, research and development, manufacturing, marketing, finance, general management, legal, regulatory, and corporate history and circumstances related to the Intellectual Property.

5.7 Mutual Non-Disparagement . Following the Separation Date: (i) Singer will not make or cause to be made any statements or remarks (including, without limitation, the repetition or distribution of disparaging, derogatory or damaging rumors, allegations, negative reports or comments), whether written, electronic or oral, that are directly or indirectly disparaging, derogatory or damaging to PURE or any of its respective past, current or future affiliates, officers, directors, shareholders, employees, consultants, advisors, representatives, trustees, subsidiaries, divisions, parent companies, clients or customers or their policies and procedures, business, practices or financial condition; and, (ii) PURE will not make or cause to be made any statements or remarks (including, without limitation, the repetition or distribution of disparaging, derogatory or damaging rumors, allegations, negative reports or comments), whether written, electronic or oral, that are directly or indirectly disparaging, derogatory or damaging to Singer. However , the foregoing restrictions shall not apply to any statements by Singer or by PURE that are made truthfully in response to a subpoena or as otherwise required by applicable law or other compulsory legal process, or those made in the context of a confidential professional relationship such as between the Parties and legal counsel, accountants and/or financial advisors.

VI

ADDITIONAL REPRESENTATIONS AND OBLIGATIONS

6.1 Consideration Period . This Agreement has been delivered to Singer on the 5 th day of August, 2013. Pursuant to law, Singer has twenty-one (21) days to consider this Agreement. Pursuant to Section 6.3, below, Singer has been encouraged to seek legal counsel to consider and review this Agreement and based on said review is waiving entitlement to said twenty-one day Consideration Period.

6.2 Revocation Period . Upon execution of this Agreement, Singer shall have seven (7) days to revoke the Agreement. Any such revocation by Singer must be in writing and delivered to PURE pursuant to the notice requirements of this Agreement. If timely revoked by Singer, this Agreement will not be effective or enforceable, and all Parties shall be immediately released of all obligations hereunder, with no effect on any of the claims each Party may otherwise possess.

6.3 Independent Legal Counsel . The Parties to this Agreement warrant, represent, and agree that in executing this Agreement, they do so with full knowledge of the rights each may have with respect to the other Party, and that each has received, or has had the opportunity to receive, independent legal advice as to these rights. Each of the Parties has executed this Agreement with full knowledge of these rights, and under no fraud, duress, or undue influence.

6.4 Waiver of Age Discrimination Claim . Singer understands that the release contained in this Agreement had to meet certain requirements to constitute a valid release of any claims under the Age Discrimination in Employment Act (“ADEA”), and Singer hereby represents that all such requirements were in fact satisfied. These requirements required the following, each of which has in fact been satisfied: (i) execution

 

7


of this Agreement by Singer has been knowing and voluntary, and free from duress, coercion and mistake of fact; (ii) this Agreement is in writing and is understandable; (iii) this Agreement has waived current ADEA claims explicitly; (iv) this Agreement has not waived future ADEA claims; (v) the release by Singer hereunder of ADEA claims has been paid for with something to which Singer was not already entitled; (vi) this Agreement has advised Singer to consult an attorney; (vii) this Agreement has given Singer twenty-one (21) days to consider the ADEA release contained in this Agreement; and, (viii) this Agreement has given Singer seven (7) days within which to revoke the ADEA release contained in this Agreement after execution.

6.5 Execution and Effect of Agreement .

6.5.1. By PURE . PURE hereby warrants and represents to Singer the following:

(a) It has the requisite power and authority to enter into and carry out the terms and conditions of this Agreement, as well as all transactions contemplated hereunder. All proceedings have been taken and all authorizations have been secured which are necessary to authorize the execution, delivery, and performance by PURE of this Agreement. This Agreement has been duly and validly executed and delivered by PURE and constitutes the valid and binding obligations of PURE, enforceable in accordance with the respective terms.

(b) The consummation by PURE of the transactions herein contemplated, including the execution, delivery and consummation of this Agreement, will not violate any judgment, law, order, writ, rule or regulation, or determination or decree of any arbitrator, court, or other governmental agency or administrative body (collectively, “Requirement of Law”) applicable or binding upon PURE.

6.5.2. By Singer . Singer hereby warrants and represents to PURE the following:

(a) She has the requisite power and authority to enter into and carry out the terms and conditions of this Agreement, as well as all transactions contemplated hereunder. All proceedings have been taken and all authorizations have been secured which are necessary to authorize the execution, delivery, and performance by Singer of this Agreement. This Agreement has been duly and validly executed and delivered by Singer and constitutes the valid and binding obligations of Singer, enforceable in accordance with the respective terms.

(b) The consummation by Singer of the transactions herein contemplated, including the execution, delivery, and consummation of this Agreement, will not violate any Requirement of Law applicable or binding upon Singer.

6.6 Investment Representations . Singer is an “accredited investor”, as that term is defined under Rule 501(a) of Regulation D under the Securities Act of 1933. Singer shall execute and deliver all documentation prepared and reasonably requested by PURE in order to confirm Singer’s status as an accredited investor.

6.7 No Cooperation . Singer will not act in any manner that might damage the business of PURE. Singer will not counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against PURE and/or any officer, director, employee, agent, representative, shareholder or attorney of PURE, unless under a subpoena or other court order to do so or upon the express written consent of PURE. Singer further agrees both to immediately notify PURE upon receipt of any court order, subpoena, or any legal discovery device that seeks or might require the disclosure or production of the existence or terms of this Agreement, and to furnish, within two (2) business days of its receipt, a copy of such subpoena or legal discovery device to PURE.

6.8 Expenses . Each Party shall pay the fees and expenses of such Party’s advisers, counsel, accountants, and other experts, if any, and all other expenses incurred by such Party incident to the negotiation, preparation, execution, delivery and performance of this Agreement, and shall hold the other Party hereto harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys’ fees and out-

 

8


of-pocket expenses) arising in connection with any claim for such fees and expenses.

6.9 Tax Liability . Singer represents and warrants that neither PURE nor its attorneys nor anyone affiliated with PURE has made any representations regarding the taxability of the payments and issuance of stock hereunder and that Singer has not relied upon any such representation in entering into this Agreement. Singer further represents and warrants that she shall be solely responsible for the payment of any and all federal, state and local taxes which may become due, if any, as a result of the payments and issuance of stock hereunder. Singer shall hold PURE harmless from and indemnify it for the payment of any taxes (including interest) or penalties, and any costs or attorneys’ fees related to such payment, if any, that may be asserted against it by any government agency at any time as a result of the payments or issuance of stock hereunder.

6.10 Death or Disability . In the event of Singer’s death or Complete Disability, PURE will continue all commitments under this Agreement, including but not limited to all payments to Singer, her estate, successors, or assigns, provided for hereunder including but not limited to those in connection with the purchase, severance, common stock and insurance obligations hereunder. The term Complete Disability shall mean the inability of Singer to perform her duties under this Agreement by reason of any incapacity, physical or mental, based upon medical advice or an opinion provided by two licensed physicians acceptable to PURE, determines to have incapacitated Singer from satisfactorily performing her usual services for PURE under this Agreement.

6.11 Directors and Officers Insurance . For a period of five (5) years commencing with the Separation Date, PURE shall continue to maintain directors and officers insurance coverage or by tail/run off coverage or otherwise on terms no less favorable than those in place on the Separation Date. If for any reason PURE determines to discontinue such coverage within said five year period, Singer shall be provided sixty (60) days advanced written notice of that event.

6.12 Public Disclosures . The Parties agree that with regard to the public disclosure of the transactions envisioned hereunder: (i) PURE shall issue a press release in the form attached hereto as Exhibit “B”; and (ii) the Form 8-K to be filed by PURE will be approved by Singer prior to filing, with approval not to be unreasonably withheld.

VII

INTENDED TAX RESULTS

7.1 Excise Tax . The Parties believe that the payments and issuance under this Agreement do not constitute “excess parachute payments” under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), or any successor provision. Notwithstanding such belief and intent, if any payment or benefit due under this Agreement, together with all other payments and benefits (including, without limitation, equity-based compensation awards) to which Singer is entitled from PURE, would (if paid or provided) constitute an “excess parachute payment”, the amounts otherwise payable and benefits otherwise due under this Agreement will either (i) be delivered in full, or (ii) be limited to the minimum extent necessary to ensure that no portion thereof will fail to be tax-deductible to PURE by reason of Section 280G of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state or local income and employment taxes and the excise tax imposed under Section 4999 of the Code, results in Singer’s receipt, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be subject to the excise tax imposed under Section 4999 of the Code. In the event that the payments and/or benefits are to be reduced pursuant to this Section 7.1, such payments and benefits shall be reduced such that the reduction of compensation to be provided to Singer as a result of this Section 7.1 is minimized. In applying this principle, the reduction shall be made in a manner consistent with the requirements of Section 409A of the Code and where two economically equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro rata basis but not below zero. No reduction or limitation under this Section 7.1 shall apply to payments made for the purchase of intellectual property from Singer by PURE.

7.2 Compliance with Section 409A .

 

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7.2.1. Intent . The intent of the Parties is that payments and benefits under this Agreement comply with Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively “ Section 409A ”). Accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. If Singer notifies PURE (with reasonable specificity as to the reason therefor) that Singer believes that any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause Singer to incur any additional tax or interest under Section 409A and PURE concurs with such belief or PURE (without any obligation whatsoever to do so) independently makes such determination, PURE shall, after consulting with Singer, reform such provision to attempt to comply with Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Section 409A. To the extent that any provision hereof is modified in order to comply with Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit/burden to Singer and PURE of the applicable provision without violating the provisions of Section 409A.

7.2.2. Specific Provisions . A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service”. If Singer is deemed on the date of termination to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B) of the Code, then with regard to any payment or the provision of any benefit that is specified as subject to this Section or that is otherwise considered deferred compensation under Section 409A payable on account of a “separation from service,” and that is not exempt from Section 409A as involuntary separation pay or a short-term deferral (or otherwise), such payment or benefit shall be made or provided at the date which is the earlier of (i) the expiration of the six (6)-month period measured from the date of such “separation from service” of Singer, and (ii) the date of Singer’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 7.2.2. (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to Singer in a lump sum without interest, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

7.2.3. Reimbursement . With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that the foregoing clause (ii) shall not be violated without regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect and (iii) such payments shall be made on or before the last day of Singer’s taxable year following the taxable year in which the expense occurred.

7.2.4. Date of Payment . Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of PURE.

7.3 Tax Cooperation and Exchange of Information . Each Party shall cooperate fully at such time and to the extent reasonably requested by the other Party in connection with the preparation and filing of any tax return or claim for refund, or the conduct of any audit, dispute, proceeding, suit, or action concerning any tax issues or other tax matters considered in this Agreement. Such cooperation shall include, without limitation, the following: (i) the retention and provision on reasonable demand of books, records, documentation, or other information relating to the tax matters under this Agreement; (ii) the provision of additional information, including an explanation of material provided under subparagraph (i), to the extent such information is

 

10


necessary or reasonably helpful in connection with the foregoing; (iii) the execution of any document that may be necessary or reasonably helpful in connection with the filing of a tax return or in connection with any audit, dispute, proceeding, suit or action; and, (iv) such Party’s commercially reasonable efforts to obtain any documentation from a governmental authority or a third party that may be necessary or reasonably helpful in connection with any of the foregoing. Each Party further agrees: (i) not to take any action reasonably expected to result in a new or changed position on a tax issues under this Agreement that is detrimental to the other Party; and, (ii) to take any action reasonably requested by the other Party that would reasonably be expected to result in or produce a benefit or avoids a detriment to such other Party with regard to tax issues under this Agreement. However , the preceding sentence and corresponding obligation shall not apply to any situation in which a Party’s tax and/or legal advisors determine in good faith that taking a position consistent with the position of the other Party would violate any applicable state or federal rule or law, including without limitation generally accepted accounting principles, SEC reporting rules, and state or federal tax laws and regulations.

VIII

ADDITIONAL PROVISIONS

8.1 Executed Counterparts . This Agreement may be executed in any number of counterparts, all of which when taken together shall be considered one and the same agreement, it being understood that all Parties need not sign the same counterpart. In the event that any signature is delivered by fax or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof. Each of the Parties hereby expressly forever waives any and all rights to raise the use of a fax machine or E-Mail to deliver a signature, or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a fax machine or E-Mail, as a defense to the formation of a contract.

8.2 Successors and Assigns . Except as expressly provided in this Agreement, each and all of the covenants, terms, provisions, conditions and agreements herein contained shall be binding upon and shall inure to the benefit of the successors and assigns of the Parties hereto.

8.3 Article and Section Headings . The article and section headings used in this Agreement are inserted for convenience and identification only and are not to be used in any manner to interpret this Agreement.

8.4 Severability . Each and every provision of this Agreement is severable and independent of any other term or provision of this Agreement. If any term or provision hereof is held void or invalid for any reason by a court of competent jurisdiction, such invalidity shall not affect the remainder of this Agreement. Similarly, the obligations of the Parties shall remain in full force and effect in the event any of the intended tax results hereunder shall be denied or otherwise become unavailable.

8.5 Governing Law . This Agreement shall be governed by the laws of the State of California, without giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California. If any court action is necessary to interpret and or enforce the terms and conditions of this Agreement, the Parties hereby agree that the Superior Court of California, San Diego, shall be the sole jurisdiction and venue for the bringing of such action.

8.6 Entire Agreement . This Agreement, and all references, documents, or instruments referred to herein, contains the entire agreement and understanding of the Parties hereto in respect to the subject matter contained herein. The Parties have expressly not relied upon any promises, representations, warranties, agreements, covenants, or undertakings, other than those expressly set forth or referred to herein. This Agreement supersedes any and all prior written or oral agreements, understandings, and negotiations between the Parties with respect to the subject matter contained herein.

8.7 Additional Documentation . The Parties hereto agree to execute, acknowledge, and cause to be

 

11


filed and recorded, if necessary, any and all documents, amendments, notices, and certificates which may be necessary or convenient under the laws of the State of California.

8.8 Attorney’s Fees . If any legal action (including arbitration) is necessary to interpret and or enforce the terms and conditions of this Agreement, the prevailing Party shall be entitled to costs and reasonable attorney’s fees.

8.9 Amendment . This Agreement may be amended or modified only by a writing signed by all Parties.

8.10 Remedies .

8.10.1. Specific Performance . The Parties hereby declare that it is impossible to measure in money the damages which will result from a failure to perform any of the obligations under this Agreement. Therefore, each Party waives the claim or defense that an adequate remedy at law exists in any action or proceeding brought to enforce the provisions hereof.

8.10.2. Cumulative . The remedies of the Parties under this Agreement are cumulative and shall not exclude any other remedies to which any person may be lawfully entitled.

8.11 Waiver . No failure by any Party to insist on the strict performance of any covenant, duty, agreement, or condition of this Agreement or to exercise any right or remedy on a breach shall constitute a waiver of any such breach or of any other covenant, duty, agreement, or condition.

8.12 Assignability . This Agreement is not assignable by either Party without the expressed written consent of all Parties.

8.13 Notices .

8.13.1. Method and Delivery . All notices, requests and demands hereunder shall be in writing and delivered by hand, by registered or certified mail, or by recognized commercial over-night delivery service (such as Federal Express, UPS, or DHL), and shall be deemed given (a) if by hand delivery, upon such delivery; (b) if by mail, upon delivery of registered or certified mail, postage prepaid; (c) if by recognized commercial over-night delivery service, upon such delivery.

8.13.2 Addresses for Notice.

If to PURE:

Attn: Chairman of the Board, Chief Executive Officer and Chief Financial Officer

1725 Gillespie Way

El Cajon, CA 92020

If to Singer:

Address to be provided to PURE within 5 business days following the Separation Date.

8.14 Time . All Parties agree that time is of the essence as to this Agreement.

8.15 Provision Not Construed Against Party Drafting Agreement . This Agreement is the result of negotiations by and between the Parties, and each Party has had the opportunity to be represented by independent legal counsel of its choice. This Agreement is the product of the work and efforts of all Parties, and shall be deemed to have been drafted by all Parties. In the event of a dispute, no Party hereto shall be entitled to claim that any provision should be construed against any other Party by reason of the fact that it was drafted by one particular Party.

8.16 Incorporation of Exhibits and Schedules . The Exhibits and Schedules identified in this

 

12


Agreement are incorporated herein by reference and made a part hereof as if set out in full herein.

8.17 Recitals . The facts recited in Article II, above, are hereby conclusively presumed to be true as between and affecting the Parties.

8.18 Definitional Provisions . For purposes of this Agreement, (i) those words, names, or terms which are specifically defined herein shall have the meaning specifically ascribed to them; (ii) wherever from the context it appears appropriate, each term stated either in the singular or plural shall include the singular and plural; (iii) wherever from the context it appears appropriate, the masculine, feminine, or neuter gender, shall each include the others; (iv) the words “hereof”, “herein”, “hereunder”, and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, and not to any particular provision of this Agreement; (v) all references to designated “Articles”, “Sections”, and to other subdivisions are to the designated Articles, Sections, and other subdivisions of this Agreement as originally executed; (vi) all references to “Dollars” or “$” shall be construed as being United States dollars; (vii) the term “including” is not limiting and means “including without limitation”; and, (viii) all references to all statutes, statutory provisions, regulations, or similar administrative provisions shall be construed as a reference to such statute, statutory provision, regulation, or similar administrative provision as in force at the date of this Agreement and as may be subsequently amended.

VIII

EXECUTION

IN WITNESS WHEREOF , this PURCHASE, SEVERANCE, AND RELEASE AGREEMENT has been duly executed by the Parties in San Diego, California, and shall be effective as of and on the Effective Date set forth in Article I of this Agreement. Each of the undersigned Parties hereby represents and warrants that it (i) has the requisite power and authority to enter into and carry out the terms and conditions of this Agreement, as well as all transactions contemplated hereunder; and, (ii) it is duly authorized and empowered to execute and deliver this Agreement.

THE PARTIES HAVE CAREFULLY READ THIS ENTIRE AGREEMENT. ITS CONTENTS AND THE RELEASE CONTAINED HEREIN HAVE BEEN FULLY EXPLAINED TO THEM BY THEIR ATTORNEYS, OR THEY HAVE VOLUNTARILY ELECTED NOT TO SEEK THE ADVICE OF AN ATTORNEY. THE PARTIES FULLY UNDERSTAND THE FINAL AND BINDING EFFECT OF THIS AGREEMENT. THE ONLY PROMISES OR REPRESENTATIONS MADE TO EACH OF THE PARTIES ABOUT THIS AGREEMENT, OR TO INDUCE THEM TO SIGN THIS AGREEMENT, ARE CONTAINED IN THIS AGREEMENT. THE PARTIES ARE SIGNING THIS AGREEMENT KNOWINGLY AND VOLUNTARILY.

 

SINGER :      

PURE:

 

PURE BIOSCIENCE, INC.,

a Delaware corporation

/s/ Donna Singer

        
DONNA SINGER         

 

DATED: 13 August 2013

     

 

BY:

  

/s/ Dennis Atchley

      NAME:    Dennis Atchley
      TITLE:    Secretary
      DATED:    13 August 2013

 

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EXHIBIT A

IRREVOCABLE PROXY

 

14


EXHIBIT B

PRESS RELEASE

 

15

Exhibit 10.6

VOTING SUPPORT AGREEMENT AND IRREVOCABLE PROXY

I

PARTIES

THIS VOTING SUPPORT AGREEMENT AND IRREVOCABLE PROXY (the “ Agreement ”) is entered into effective as of the 13 th day of August, 2013 (the “Effective Date”), by and between DONNA SINGER, an individual residing in the State of California (“ Singer ”); and , PURE BIOSCIENCE, INC., a Delaware corporation (“ PURE ”). Singer and PURE are sometimes referred to collectively herein as the “ Parties ”, and each individually as a “ Party ”.

II

RECITALS

A. Concurrent with the execution and delivery of this Agreement, the Parties have entered into that certain Purchase, Severance, and Release Agreement dated as of the date hereof (the “ Release Agreement ”).

B. This Agreement is the irrevocable proxy referred to in Section 3.3.4. of the Release Agreement and attached to the Release Agreement as Exhibit A.

C. All defined terms not otherwise defined in this Agreement shall have the same meaning ascribed to them as in the Release Agreement.

D. Under the terms of the Release Agreement Singer will receive the Purchase Shares.

E. As an inducement and an essential condition to the Parties entering into the Release Agreement the Parties have agreed to enter into this Agreement and have the Purchase Shares be subject to this Agreement.

F. NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

III

VOTING AND PROXY PROVISIONS

3.1 Voting Support . Singer covenants and agrees that, prior to the Expiration Date, upon request by PURE Singer shall support all actions recommended by the management of PURE and which require a vote of the stockholders of PURE. Singer further agrees not to enter into any agreement or commitment or arrangement with any person the effect of which would be inconsistent with or otherwise violate the provisions and agreements set forth in this Section 3.1.

3.2 Grant of Irrevocable Proxy . Singer hereby appoints the then acting CEO of PURE and any designee of such CEO, and each of them individually, as Singer’s agent, proxy, and attorney-in-fact, with full power of substitution, for and in the name, place and stead of Singer, to vote all Purchase Shares at any meeting of PURE stockholders however called and any adjournment thereof, or to execute one or more written consents in respect of such Purchase Shares. This proxy shall (i) be valid and irrevocable until the Expiration Date; and, (ii) automatically terminate upon the Expiration Date. Singer represents and warrants that foregoing proxy is: (A) given in connection with the execution of the Release Agreement; (B) given to secure the performance of Singer’s duties under the Release Agreement; (C) coupled with an interest and may not be revoked except as otherwise provided in this Agreement; and, (D) intended to be irrevocable prior to the Expiration Date. To the extent permitted by under Delaware law, all authority herein conferred shall survive the death or incapacity of Singer and shall be binding upon the heirs, estate, administrators, personal representatives, successors, and assigns of Singer.

 

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3.3 Additional Shares . In the event that Singer acquires record or beneficial ownership of, or the power to vote or direct the voting of, any additional voting interest with respect to PURE, such voting interests shall, without further action of the Parties, be subject to the provisions of this Agreement and the number of Purchase Shares shall be deemed to have been adjusted accordingly.

3.4 No Inconsistent Agreements . Singer has not entered into any agreement or commitment with any person that is inconsistent with this Agreement.

3.5 Information for Public Filings . Singer hereby authorizes PURE to publish and disclose in any public filing required to be made by PURE his identity and ownership of the Purchase Shares and the nature of his commitments, arrangements, and understandings under this Agreement.

3.6 Notices of Certain Events . Singer shall promptly notify PURE of any development occurring after the Effective Date which causes, or that would reasonably be expected to cause, Singer to invoke this Agreement so as to not take any action requested of him.

3.7 No Ownership Interest . Nothing contained in this Agreement shall be deemed to vest in PURE any direct or indirect ownership or incidence of ownership of or with respect to any Purchase Shares. Except as otherwise provided for herein, all rights, ownership, and economic benefits of and relating to the Purchase Shares shall remain vested in and belong to Singer.

IV

TERMINATION

This Agreement shall terminate immediately upon Singer no longer directly or indirectly owning any of the Purchase Shares (the “ Expiration Date ”). However, Article V shall survive the termination of this Agreement. No Party shall be relieved of any liability or damages incurred or suffered by the other Party to the extent such liabilities or damages were the result of fraud or the material or intentional breach by a Party of any of its representations, warranties, covenants, or other agreements set forth herein.

V

ADDITIONAL PROVISIONS

5.1 Specific Performance . The Parties agree that irreparable damage would occur and that the Parties would not have an adequate remedy at law in the event that any of the provisions of this Agreement, including the irrevocable proxy, were not performed in accordance with their specific terms or were otherwise breached. Accordingly, the Parties further agree that each Party shall be entitled to an injunction or restraining order to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, without proof of actual damages (and each Party hereby waives any requirement for the securing or posting of any bond or other security in connection therewith), this being in addition to any other right or remedy to which such Party may be entitled under this Agreement, at law or in equity. Singer shall pay all costs and expenses of collection or enforcement of this Agreement by or on behalf of PURE, including reasonable attorneys’ fees to the extent PURE is successful in such collection or enforcement.

5.2 No Partnership, Agency, or Joint Venture . This Agreement is intended to create, and creates, a contractual relationship and is not intended to create, and does not create, any agency, partnership, joint venture or other like relationship between the Parties.

5.3 Consultation with Counsel . Each Party acknowledges and represents that, in executing this Agreement, it has had the opportunity to seek advice as to its legal rights from legal counsel and that such Party has read and understood all of the terms and provisions of this Agreement.

 

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5.4 Incorporation By Reference . The Parties hereby agree that the following provisions of the Release Agreement are hereby incorporated by reference as if actually set forth in full herein: Section 6.5; and, Article VIII.

VI

EXECUTION

IN WITNESS WHEREOF , this VOTING SUPPORT AGREEMENT AND IRREVOCABLE PROXY has been duly executed by the Parties in San Diego County, California, and shall be effective as of and on the Effective Date set forth in Article I of this Agreement. Each of the undersigned Parties hereby represents and warrants that it (i) has the requisite power and authority to enter into and carry out the terms and conditions of this Agreement, as well as all transactions contemplated hereunder; and, (ii) it is duly authorized and empowered to execute and deliver this Agreement.

 

SINGER:     PURE:
   

PURE BIOSCIENCE, INC.,

a Delaware corporation

/s/ Donna Singer

   
DONNA SINGER    
DATED: 13 August 2013     BY:   /s/ Dennis Atchley
    NAME: Dennis Atchley
    TITLE: Secretary
    DATED: 13 August 2013

 

3


SPOUSAL CONSENT

I am the spouse of DONNA SINGER. On behalf of myself, my heirs, and legatees, I hereby:

1. Confirm that I have read and clearly understand the VOTING SUPPORT AGREEMENT AND IRREVOCABLE PROXY (the “ Proxy Agreement ”) to which this Spousal Consent is attached and which has been executed by my spouse;

2. Join in and consent to the terms of the Proxy Agreement between my spouse and PURE Bioscience, Inc. (“ PURE ”);

3. Join in and consent to the irrevocable proxy granted by my spouse in favor of the then acting CEO of PURE pursuant to the Proxy Agreement;

4. Consent to the treatment of all Purchase Shares (as defined in the Proxy Agreement) as provided for under the Proxy Agreement; and

5. Further confirm that with regard to the Proxy Agreement:

a. I have had the opportunity to be represented in the preparation of this Spousal Consent by counsel of my own choosing;

b. I have read this Spousal Consent, the Proxy Agreement, and the Purchase, Severance, and Release Agreement (referred to as the Release Agreement in the Proxy Agreement), and have had the opportunity to have independent legal counsel fully explain the contents of these documents to me; and,

c. I am aware of the legal effect of the documents referenced in subparagraph b, above.

 

Dated: 13 August 2013       /s/ Tracey Singer
      TRACEY SINGER

 

4

Exhibit 10.7

SETTLEMENT AND RELEASE

AGREEMENT

DENNIS BROVARONE

and

PURE BIOSCIENCE, INC.

EFFECTIVE DATE:

13 August 2013


SETTLEMENT AND RELEASE AGREEMENT

I

PARTIES

THIS SETTLEMENT AND RELEASE AGREEMENT (the “ Agreement ”) is entered into effective as of the 13 th day of August, 2013 (the “ Effective Date ”), by and between DENNIS BROVARONE, an individual residing in the State of California (“ Brovarone ”); and , PURE BIOSCIENCE, INC., a Delaware corporation (“ PURE ”). Brovarone and PURE are sometimes referred to collectively herein as the “ Parties ”, and each individually as a “ Party ”.

II

RECITALS

A. Brovarone serves as a member of the Board of Directors of PURE (the “ Board ”).

B. Brovarone has previously provided legal services to PURE in his capacity as an attorney.

C. As part of a reorganization and restructuring of PURE’s business, Brovarone’s position as a member of the Board and as an attorney for PURE is hereby terminated effective immediately by the mutual agreement of the Parties.

D. Subject to the terms and conditions of this Agreement, Brovarone is willing to and hereby does provide assurances to PURE that he will not assert any claims of any kind against PURE and specifically identified related parties, whether arising out of (i) Brovarone’s status as a member of the Board; or, (ii) with the exception of rights of the Parties created in this Agreement, any other relationship or claim of right whatsoever arising out of or any manner or form related to the relationship between the Parties.

E. This Agreement is to specifically encompass all of the claims and related factual and legal circumstances noted above, including though not limited to all rights, duties, and obligations arising under Brovarone’s rendering of legal services to PURE (collectively referred to as the “ Working Relationship ”). As such, it is the intent of the Parties that their respective rights and obligations to each other from this day forward shall be determined exclusively under the terms of this Agreement.

F. All Parties are desirous of settling all rights under the Working Relationship and releasing each other from all future liability, except as otherwise expressly provided herein to the contrary.

G. NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

III

RELEASE AND PAYMENT OBLIGATIONS

3.1 Exchange . In consideration of (i) the execution of this Agreement; (ii) the satisfaction of PURE’s obligations described below; (iii) the satisfaction of Brovarone’s obligations described below; and, (iv) other good and valuable consideration, the receipt and value of which is hereby confirmed, Brovarone on the one hand, and PURE on the other hand, shall hereby fully, finally, and forever settle and release each other from any and all claims, losses, fines, penalties, damages, demands, judgments, debts, obligations, interests, liabilities, causes of action, breaches of duty, costs, expenses, judgments and injunctions of any nature whatsoever, whether known or unknown, from all relationships between the Parties, specifically including, but not limited to, those arising under or as a result of the Working Relationship (cumulatively referred to as the “ Released Claims ”).

 

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3.2 Payment Obligations . Upon execution and delivery of this Agreement by Brovarone and Brovarone’s termination of positions as envisioned hereunder, PURE shall pay to Brovarone as a “ Separation Payment ” the sum of Ninety One Thousand Three Hundred Thirty Two Dollars and Seventy Seven Cents ($91,332.77). Said Separation Payment shall be payable as follows:

(a) No interest shall be accrued and no payments shall be made for the first 90-days after the Separation Date.

(b) After the first 90-days after the Separation Date two percent (2%) simple interest per annum shall be applied to the Separation Payment.

(c) Payments of principal and interest shall be made in sixty (60) monthly installments of One Thousand Six Hundred Dollars and Eighty Six Cents ($1,600.86) commencing one hundred twenty (120) days after the Separation Date, and continuing thereafter on the same day of each month until the entire Separation Payment and all accrued interest have been paid in full.

(d) PURE shall have the right to make payment on the Separation Payment, in whole or in part, at any time and from time to time without penalty; however, PURE shall provide Brovarone with thirty (30) days prior notice of prepayment greater than the monthly installment.

(e) All payments of the Separation Payment, whether of principal or interest, or both, shall be made by PURE to Brovarone in the form of check or wire transfer in accordance with written instructions provided by Brovarone.

(f) Brovarone hereby acknowledges and agrees that the Separation Payment represents payment in full of all salary, wages, compensation, unreimbursed business expenses, pay, and any and all other amounts due and owing to Brovarone as of the Separation Date. Brovarone further acknowledges and agrees that except as otherwise expressly provided for herein, no additional compensation or amounts of any kind are or will be due to Brovarone from PURE.

3.3 Conversion Right . Brovarone may at any time, in his sole and absolute discretion upon ten (10) days written notice to PURE (the “Conversion Notice”), convert the Separation Payment and accrued interest, in whole or in part (though in no event for an amount less than Five Thousand Dollars), without any further action by Brovarone (other than the Conversion Notice), into common stock of PURE at a conversion price equal to the average closing price for PURE common stock on the principal market on which PURE common stock is then listed or quoted for the ten trading (10) days immediately preceding the date of the Conversion Notice. Not later than five (5) business days after receipt of the Conversion Notice PURE shall deliver, or cause to be delivered, to Brovarone the number of shares of PURE common stock being acquired under the Conversion Notice.

3.4 Complete Release and Hold Harmless . Brovarone, on behalf of himself, his spouse, his heirs, personal representatives, successors, assigns and all others claiming through or under him, and PURE, for itself and its successors and assigns, hereby agree to release, discharge, and hold harmless each other and their respective directors, officers, affiliates, and attorneys, and each of their successors and assigns, from any and all known and unknown claims of every nature and kind whatsoever which they now or hereafter may have with respect to each other and/or the Released Claims, notwithstanding Section 1542 of the California Civil Code, which provides that:

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

 

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All rights under §1542 of the California Civil Code are hereto expressly, fully, knowingly and intentionally forever waived and relinquished by the Parties. All Parties hereby acknowledge that each understands the significance and consequences of such specific waiver under §1542 of the California Civil Code, and that each has had the opportunity to seek the advice of legal counsel of their choosing.

3.5 Scope of Brovarone’s Release . Brovarone further expressly understands that the rights being waived hereunder specifically include, but are not limited to, any and all claims under (as any of the same may be amended from time to time) Title VII of the Civil Rights Act of 1964; Sections 1981 and 1983 of the Civil Rights Act of 1866; Equal Pay Act; Americans with Disabilities Act; Age Discrimination in Employment Act; Brovarone Retirement Income Security Act; Fair Labor Standards Act; Family and Medical Leave Act; WARN Act; the United States and California Constitutions; California Fair Employment and Housing Act; California Family Rights Act; California Labor Code; any applicable California Industrial Welfare Commission Wage Order; with respect to the foregoing constitutional and statutory references, any comparable constitution, statute or regulation of any other state; all claims of discrimination or harassment on account of race, sex, sexual orientation, national origin, religion, disability, age, pregnancy, veteran’s status, or any other protected status under any federal or state statute; any federal, state or local law enforcing express or implied employment contracts or covenants of good faith and fair dealing; any federal, state or local laws providing recourse for alleged wrongful discharge or constructive discharge, termination in violation of public policy, tort, physical or personal injury, emotional distress, fraud, negligent misrepresentation, defamation, and any similar or related claim; together with any claim under any other local, state or federal law or constitution governing employment, discrimination or harassment in employment, or the payment of wages or benefits, whether or not now known, suspected or claimed, which Brovarone ever had, now has, or may claim to have as of the date of this Agreement. This Agreement and the scope of the release by Brovarone hereunder expressly includes any statutory claims, including, but not limited to, claims under the Age Discrimination in Employment Act (the “ ADEA ”) and the Older Workers’ Benefit Protection Act (“ OWBPA ”), except that this Agreement does not waive rights or claims under the ADEA which may arise after the Effective Date of this Agreement.

3.6 After Acquired Information . The Parties acknowledge that they may hereafter discover information, facts, or circumstances different from or in addition to those which they now know or believe to be true. Except as otherwise provided herein to the contrary, this Agreement shall remain in full force and effect in all respects notwithstanding such discovery, and in accordance with the irrevocable waiver and relinquishment of provisions of California Civil Code Section 1542 or otherwise, the Parties expressly accept and assume the risk of such possible additions to or differences from those facts now known or believed to be true.

3.7 Enforceability . The enforceability of this Agreement is conditioned upon each respective Party satisfying its respective obligations hereunder.

3.8 Assignment of Released Claims . The Parties hereby covenant that none of the Released Claims has been assigned to any other person, and that no other person has any interest in any of the Released Claims. In the event any other person asserts any interest with respect to the Released Claims, then the Party breaching this covenant shall indemnify the Party against whom such claim is asserted for any and all damages, costs, and fees.

3.9 Specific Exclusion . It is expressly understood that the release contained in this Agreement does not encompass the promises and obligations of the Parties under this Agreement. This Agreement also does not contemplate or include within the release hereunder post-Effective Date intentionally willful, tortious, or criminal acts of either Party, such acts being expressly excluded from this Agreement.

3.10 No Admission of Liability . Notwithstanding the terms and conditions of this Agreement, execution hereof shall in no manner or form constitute the admission of liability or of responsibility by either Party in respect to the Working Relationship or otherwise.

 

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IV

TERMINATION RELATED PROVISIONS

4.1 Termination By Mutual Agreement . The Parties hereby agree that Brovarone’s termination of all position with PURE is by mutual agreement of the Parties and is effective 13 August 2013 and that his last day as a member of the Board shall be deemed to be the 13th day of August, 2013 (the “Separation Date”).

4.2 Termination of Positions By Mutual Agreement . As of the Separation Date and as additional consideration hereunder, any and all positions held by Brovarone in and with PURE have been terminated by the mutual agreement of the Parties.

4.3 Express Waiver of Any Other Amounts . Brovarone hereby acknowledges that he is not entitled to receive, and will not claim, any damages, rights, benefits, or compensation other than as expressly set forth in this Agreement.

4.4 Return of Materials . Upon execution of this Agreement and reasonable request of PURE Brovarone shall deliver to PURE, at PURE’s expense, all equipment, notebooks, documents, memoranda, reports, files, samples, books, correspondence, lists, computer disks and data bases, computer programs and reports, computer software, and all other written, graphic and computer generated or stored records relating to the business of PURE which are or have been in the possession or under the control of Brovarone.

4.5 Additional Information . As additional consideration in exchange for the Separation Payment, Brovarone agrees to provide additional information concerning PURE upon reasonable request of PURE for no additional charge from the Separation Date up to and until eighteen (18) months thereafter (the “ Consulting Period ”). It is the express intention of PURE that Brovarone performs services during the Consulting Period as an independent contractor to PURE. Nothing in this Agreement shall in any way be construed to constitute Brovarone as an agent, employee, or representative of PURE. Without limiting the generality of the foregoing, Brovarone is not authorized to bind PURE to any liability or obligation or to represent that Brovarone has any such authority. During the Consulting Period, upon the request of PURE, Brovarone shall be reasonably available to consult with PURE for no more than 1-hour per week, without carryovers.

V

CONFIDENTIALITY AND BUSINESS RELATED COVENANTS

5.1 Non-Disclosure of Business Information . Brovarone shall not at any time, either directly or indirectly, use, divulge, disclose or communicate to any person, firm, or corporation, in any manner whatsoever, any confidential information concerning any matters affecting or relating to the business of PURE, including, without limitation, the names, buying habits or practices of any of its customers, its marketing methods and related data, the names of any of its vendors or suppliers, costs of materials, the prices it obtains or has obtained or at which it sells or has sold its products or services, manufacturing and sales, costs, lists or other written records used in PURE’s business, compensation paid to employees and other terms of employment, business plans, financial projections and reports, business strategies, internal operating procedures and other confidential business information from which the PURE might derive an economic or competitive advantage, or any other confidential information of, about or concerning the business of PURE, its manner of operation, or other confidential data of any kind, nature, or description, whether or not labeled “secret” or “confidential”. The Parties hereby stipulate that as between them, the foregoing matters are important, material, and confidential trade secrets and affect the successful conduct of the PURE’s business and its goodwill, and that any breach of any term of this paragraph is a material breach of this Agreement.

5.2 Trade Secrets . Brovarone shall not at any time, either directly or indirectly, use, divulge, disclose or communicate to any person, firm, or corporation, in any manner whatsoever, any of PURE’s trade secrets, including without limitation, confidential information; customer lists; information concerning current or any future

 

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and proposed work, services or products; the fact that any such work, services or products are planned, under consideration, or in production, as well as any description thereof, computer programs or computer software. Brovarone agrees that these restrictions shall also apply to (i) trade secrets belonging to third parties in the possession of PURE; and, (ii) trade secrets conceived, originated, discovered, or developed by PURE during the term of his relationship with PURE.

5.3 Competition Covenant . Brovarone hereby agrees that during and throughout the forty-eight (48) months immediately following the Separation Date he shall not:

(a) Directly or indirectly, in an individual or representative capacity, own an interest in, operate, join, control, finance (whether as a lender or investor), share in the earnings of, participate in, engage in or be connected as an officer, employee, agent, independent contractor, partner, shareholder, member, consultant, employer, investor, or principal of any corporation, partnership, proprietorship, firm, association, person, or any other entity engaged in any aspect of the business of PURE, or which is otherwise in competition with PURE, notwithstanding the location of said other business; and

(b) Permit his name to be used, directly or indirectly, by any person, corporation, partnership or other business entity engaged in the business of PURE.

5.4 Non-Solicitation of Employees . During and throughout the forty-eight (48) months immediately following the Separation Date Brovarone shall not, directly or indirectly, cause or induce, or attempt to cause or induce, any employee of PURE to terminate his or her employment with PURE, as such employment exists at any time following the Effective Date.

5.5 Non-Solicitation of Business . During and throughout the forty-eight (48) months immediately following the Separation Date Brovarone shall not, directly or indirectly, (i) solicit business from any customer of PURE, to the extent such business relates to a product or service competitive with an PURE product or service; or, (ii) otherwise attempt to induce any such customer of PURE to cease doing business with, or to decrease the amount of business such customer does with, PURE.

5.6 Mutual Non-Disparagement . Following the Separation Date: (i) Brovarone will not make or cause to be made any statements or remarks (including, without limitation, the repetition or distribution of disparaging, derogatory or damaging rumors, allegations, negative reports or comments), whether written, electronic or oral, that are directly or indirectly disparaging, derogatory or damaging to PURE or any of its respective past, current or future affiliates, officers, directors, shareholders, employees, consultants, advisors, representatives, trustees, subsidiaries, divisions, parent companies, clients or customers or their policies and procedures, business, practices or financial condition; and, (ii) PURE will not make or cause to be made any statements or remarks (including, without limitation, the repetition or distribution of disparaging, derogatory or damaging rumors, allegations, negative reports or comments), whether written, electronic or oral, that are directly or indirectly disparaging, derogatory or damaging to Brovarone. However , the foregoing restrictions shall not apply to any statements by Brovarone or by PURE that are made truthfully in response to a subpoena or as otherwise required by applicable law or other compulsory legal process, or those made in the context of a confidential professional relationship such as between the Parties and legal counsel, accountants and/or financial advisors.

VI

ADDITIONAL REPRESENTATIONS AND OBLIGATIONS

6.1 Consideration Period . This Agreement has been delivered to Brovarone on the 11th day of August, 2013. Pursuant to law, Brovarone has twenty-one (21) days to consider this Agreement. Pursuant to Section 6.3, below, Brovarone has been encouraged to seek legal counsel to consider and review this Agreement and based on said review is waiving entitlement to said twenty-one day Consideration Period.

 

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6.2 Revocation Period . Upon execution of this Agreement, Brovarone shall have seven (7) days to revoke the Agreement. Any such revocation by Brovarone must be in writing and delivered to PURE pursuant to the notice requirements of this Agreement. If timely revoked by Brovarone, this Agreement will not be effective or enforceable, and all Parties shall be immediately released of all obligations hereunder, with no effect on any of the claims each Party may otherwise possess.

6.3 Independent Legal Counsel . The Parties to this Agreement warrant, represent, and agree that in executing this Agreement, they do so with full knowledge of the rights each may have with respect to the other Party, and that each has received, or has had the opportunity to receive, independent legal advice as to these rights. Each of the Parties has executed this Agreement with full knowledge of these rights, and under no fraud, duress, or undue influence.

6.4 Waiver of Age Discrimination Claim . Brovarone understands that the release contained in this Agreement had to meet certain requirements to constitute a valid release of any claims under the Age Discrimination in Employment Act (“ADEA”), and Brovarone hereby represents that all such requirements were in fact satisfied. These requirements required the following, each of which has in fact been satisfied: (i) execution of this Agreement by Brovarone has been knowing and voluntary, and free from duress, coercion and mistake of fact; (ii) this Agreement is in writing and is understandable; (iii) this Agreement has waived current ADEA claims explicitly; (iv) this Agreement has not waived future ADEA claims; (v) the release by Brovarone hereunder of ADEA claims has been paid for with something to which Brovarone was not already entitled; (vi) this Agreement has advised Brovarone to consult an attorney; (vii) this Agreement has given Brovarone twenty-one (21) days to consider the ADEA release contained in this Agreement; and, (viii) this Agreement has given Brovarone seven (7) days within which to revoke the ADEA release contained in this Agreement after execution.

6.5 Execution and Effect of Agreement .

6.5.1. By PURE . PURE hereby warrants and represents to Brovarone the following:

(a) It has the requisite power and authority to enter into and carry out the terms and conditions of this Agreement, as well as all transactions contemplated hereunder. All proceedings have been taken and all authorizations have been secured which are necessary to authorize the execution, delivery, and performance by PURE of this Agreement. This Agreement has been duly and validly executed and delivered by PURE and constitutes the valid and binding obligations of PURE, enforceable in accordance with the respective terms.

(b) The consummation by PURE of the transactions herein contemplated, including the execution, delivery and consummation of this Agreement, will not violate any judgment, law, order, writ, rule or regulation, or determination or decree of any arbitrator, court, or other governmental agency or administrative body (collectively, “Requirement of Law”) applicable or binding upon PURE.

6.5.2. By Brovarone . Brovarone hereby warrants and represents to PURE the following:

(a) He has the requisite power and authority to enter into and carry out the terms and conditions of this Agreement, as well as all transactions contemplated hereunder. All proceedings have been taken and all authorizations have been secured which are necessary to authorize the execution, delivery, and performance by Brovarone of this Agreement. This Agreement has been duly and validly executed and delivered by Brovarone and constitutes the valid and binding obligations of Brovarone, enforceable in accordance with the respective terms.

(b) The consummation by Brovarone of the transactions herein contemplated, including the execution, delivery, and consummation of this Agreement, will not violate any Requirement of Law applicable or binding upon Brovarone.

 

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6.6 Investment Representations . Brovarone is an “accredited investor”, as that term is defined under Rule 501(a) of Regulation D under the Securities Act of 1933. Brovarone shall execute and deliver all documentation prepared and reasonably requested by PURE in order to confirm Brovarone’s status as an accredited investor.

6.7 No Cooperation . Brovarone will not act in any manner that might damage the business of PURE. Brovarone will not counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against PURE and/or any officer, director, employee, agent, representative, shareholder or attorney of PURE, unless under a subpoena or other court order to do so or upon the express written consent of PURE. Brovarone further agrees both to immediately notify PURE upon receipt of any court order, subpoena, or any legal discovery device that seeks or might require the disclosure or production of the existence or terms of this Agreement, and to furnish, within two (2) business days of its receipt, a copy of such subpoena or legal discovery device to PURE.

6.8 Expenses . Each Party shall pay the fees and expenses of such Party’s advisers, counsel, accountants, and other experts, if any, and all other expenses incurred by such Party incident to the negotiation, preparation, execution, delivery and performance of this Agreement, and shall hold the other Party hereto harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any claim for such fees and expenses.

6.9 Tax Liability . Brovarone represents and warrants that neither PURE nor its attorneys nor anyone affiliated with PURE has made any representations regarding the taxability of the payments and issuance of stock hereunder and that Brovarone has not relied upon any such representation in entering into this Agreement. Brovarone further represents and warrants that he shall be solely responsible for the payment of any and all federal, state and local taxes which may become due, if any, as a result of the payments and issuance of stock hereunder. Brovarone shall hold PURE harmless from and indemnify it for the payment of any taxes (including interest) or penalties, and any costs or attorneys’ fees related to such payment, if any, that may be asserted against it by any government agency at any time as a result of the payments or issuance of stock hereunder.

6.10 Death or Disability . In the event of Brovarone’s death or Complete Disability, PURE will continue all commitments under this Agreement, including but not limited to payments to Brovarone, his estate, successors, or assigns. The term Complete Disability shall mean the inability of Brovarone to perform his duties under this Agreement by reason of any incapacity, physical or mental, based upon medical advice or an opinion provided by two licensed physicians acceptable to PURE, determines to have incapacitated Brovarone from satisfactorily performing his usual services for PURE under this Agreement.

6.11 Directors and Officers Insurance . For a period of five (5) years commencing with the Separation Date, PURE shall continue to maintain directors and officers insurance coverage on terms no less favorable than those in place on the Separation Date. If for any reason PURE determines to discontinue such coverage within said five year period, Brovarone shall be provided advanced written notice of that event.

VII

INTENDED TAX RESULTS

7.1 Excise Tax . The Parties believe that the payments and issuance under this Agreement do not constitute “excess parachute payments” under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), or any successor provision. Notwithstanding such belief and intent, if any payment or benefit due under this Agreement, together with all other payments and benefits (including, without limitation, equity-based compensation awards) to which Brovarone is entitled from PURE, would (if paid or provided) constitute an “excess parachute payment”, the amounts otherwise payable and benefits otherwise due under this Agreement will either (i) be delivered in full, or (ii) be limited to the minimum extent necessary to ensure that no portion

 

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thereof will fail to be tax-deductible to PURE by reason of Section 280G of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state or local income and employment taxes and the excise tax imposed under Section 4999 of the Code, results in Brovarone’s receipt, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be subject to the excise tax imposed under Section 4999 of the Code. In the event that the payments and/or benefits are to be reduced pursuant to this Section 7.1, such payments and benefits shall be reduced such that the reduction of compensation to be provided to Brovarone as a result of this Section 7.1 is minimized. In applying this principle, the reduction shall be made in a manner consistent with the requirements of Section 409A of the Code and where two economically equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro rata basis but not below zero.

7.2 Compliance with Section 409A .

7.2.1. Intent . The intent of the Parties is that payments and benefits under this Agreement comply with Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively “ Section 409A ”). Accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. If Brovarone notifies PURE (with reasonable specificity as to the reason therefor) that Brovarone believes that any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause Brovarone to incur any additional tax or interest under Section 409A and PURE concurs with such belief or PURE (without any obligation whatsoever to do so) independently makes such determination, PURE shall, after consulting with Brovarone, reform such provision to attempt to comply with Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Section 409A. To the extent that any provision hereof is modified in order to comply with Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit/burden to Brovarone and PURE of the applicable provision without violating the provisions of Section 409A.

7.2.2. Specific Provisions . A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service”. If Brovarone is deemed on the date of termination to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B) of the Code, then with regard to any payment or the provision of any benefit that is specified as subject to this Section or that is otherwise considered deferred compensation under Section 409A payable on account of a “separation from service,” and that is not exempt from Section 409A as involuntary separation pay or a short-term deferral (or otherwise), such payment or benefit shall be made or provided at the date which is the earlier of (i) the expiration of the six (6)-month period measured from the date of such “separation from service” of Brovarone, and (ii) the date of Brovarone’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 7.2.2. (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to Brovarone in a lump sum without interest, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

7.2.3. Reimbursement . With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that the foregoing clause (ii) shall not be violated without regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the

 

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arrangement is in effect and (iii) such payments shall be made on or before the last day of Brovarone’s taxable year following the taxable year in which the expense occurred.

7.2.4. Date of Payment . Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of PURE.

VIII

ADDITIONAL PROVISIONS

8.1 Executed Counterparts . This Agreement may be executed in any number of counterparts, all of which when taken together shall be considered one and the same agreement, it being understood that all Parties need not sign the same counterpart. In the event that any signature is delivered by fax or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof. Each of the Parties hereby expressly forever waives any and all rights to raise the use of a fax machine or E-Mail to deliver a signature, or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a fax machine or E-Mail, as a defense to the formation of a contract.

8.2 Successors and Assigns . Except as expressly provided in this Agreement, each and all of the covenants, terms, provisions, conditions and agreements herein contained shall be binding upon and shall inure to the benefit of the successors and assigns of the Parties hereto.

8.3 Article and Section Headings . The article and section headings used in this Agreement are inserted for convenience and identification only and are not to be used in any manner to interpret this Agreement.

8.4 Severability . Each and every provision of this Agreement is severable and independent of any other term or provision of this Agreement. If any term or provision hereof is held void or invalid for any reason by a court of competent jurisdiction, such invalidity shall not affect the remainder of this Agreement. Similarly, the obligations of the Parties shall remain in full force and effect in the event any of the intended tax results hereunder shall be denied or otherwise become unavailable.

8.5 Governing Law . This Agreement shall be governed by the laws of the State of California, without giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California. If any court action is necessary to interpret and or enforce the terms and conditions of this Agreement, the Parties hereby agree that the Superior Court of California, San Diego, shall be the sole jurisdiction and venue for the bringing of such action.

8.6 Entire Agreement . This Agreement, and all references, documents, or instruments referred to herein, contains the entire agreement and understanding of the Parties hereto in respect to the subject matter contained herein. The Parties have expressly not relied upon any promises, representations, warranties, agreements, covenants, or undertakings, other than those expressly set forth or referred to herein. This Agreement supersedes any and all prior written or oral agreements, understandings, and negotiations between the Parties with respect to the subject matter contained herein.

8.7 Additional Documentation . The Parties hereto agree to execute, acknowledge, and cause to be filed and recorded, if necessary, any and all documents, amendments, notices, and certificates which may be necessary or convenient under the laws of the State of California.

 

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8.8 Attorney’s Fees . If any legal action (including arbitration) is necessary to interpret and or enforce the terms and conditions of this Agreement, the prevailing Party shall be entitled to costs and reasonable attorney’s fees.

8.9 Amendment . This Agreement may be amended or modified only by a writing signed by all Parties.

8.10 Remedies .

8.10.1. Specific Performance . The Parties hereby declare that it is impossible to measure in money the damages which will result from a failure to perform any of the obligations under this Agreement. Therefore, each Party waives the claim or defense that an adequate remedy at law exists in any action or proceeding brought to enforce the provisions hereof.

8.10.2. Cumulative . The remedies of the Parties under this Agreement are cumulative and shall not exclude any other remedies to which any person may be lawfully entitled.

8.11 Waiver . No failure by any Party to insist on the strict performance of any covenant, duty, agreement, or condition of this Agreement or to exercise any right or remedy on a breach shall constitute a waiver of any such breach or of any other covenant, duty, agreement, or condition.

8.12 Assignability . This Agreement is not assignable by either Party without the expressed written consent of all Parties.

8.13 Notices .

8.13.1. Method and Delivery . All notices, requests and demands hereunder shall be in writing and delivered by hand, by registered or certified mail, or by recognized commercial over-night delivery service (such as Federal Express, UPS, or DHL), and shall be deemed given (a) if by hand delivery, upon such delivery; (b) if by mail, upon delivery of registered or certified mail, postage prepaid; (c) if by recognized commercial over-night delivery service, upon such delivery.

8.13.2 Addresses for Notice.

If to PURE:

Attn: Chairman of the Board, Chief Executive Officer and Chief Financial Officer

1725 Gillespie Way

El Cajon, CA 92020

If to Brovarone:

35 Pinyon Pine Road

Littleton, CO 80127

8.14 Time . All Parties agree that time is of the essence as to this Agreement.

8.15 Provision Not Construed Against Party Drafting Agreement . This Agreement is the result of negotiations by and between the Parties, and each Party has had the opportunity to be represented by independent legal counsel of its choice. This Agreement is the product of the work and efforts of all Parties, and shall be deemed to have been drafted by all Parties. In the event of a dispute, no Party hereto shall be entitled to claim that any provision should be construed against any other Party by reason of the fact that it was drafted by one particular Party.

 

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8.16 Incorporation of Exhibits and Schedules . The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof as if set out in full herein.

8.17 Recitals . The facts recited in Article II, above, are hereby conclusively presumed to be true as between and affecting the Parties.

8.18 Definitional Provisions . For purposes of this Agreement, (i) those words, names, or terms which are specifically defined herein shall have the meaning specifically ascribed to them; (ii) wherever from the context it appears appropriate, each term stated either in the singular or plural shall include the singular and plural; (iii) wherever from the context it appears appropriate, the masculine, feminine, or neuter gender, shall each include the others; (iv) the words “hereof”, “herein”, “hereunder”, and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, and not to any particular provision of this Agreement; (v) all references to designated “Articles”, “Sections”, and to other subdivisions are to the designated Articles, Sections, and other subdivisions of this Agreement as originally executed; (vi) all references to “Dollars” or “$” shall be construed as being United States dollars; (vii) the term “including” is not limiting and means “including without limitation”; and, (viii) all references to all statutes, statutory provisions, regulations, or similar administrative provisions shall be construed as a reference to such statute, statutory provision, regulation, or similar administrative provision as in force at the date of this Agreement and as may be subsequently amended.

VIII

EXECUTION

IN WITNESS WHEREOF , this SETTLEMENT AND RELEASE AGREEMENT has been duly executed by the Parties in San Diego, California, and shall be effective as of and on the Effective Date set forth in Article I of this Agreement. Each of the undersigned Parties hereby represents and warrants that it (i) has the requisite power and authority to enter into and carry out the terms and conditions of this Agreement, as well as all transactions contemplated hereunder; and, (ii) it is duly authorized and empowered to execute and deliver this Agreement.

THE PARTIES HAVE CAREFULLY READ THIS ENTIRE AGREEMENT. ITS CONTENTS AND THE RELEASE CONTAINED HEREIN HAVE BEEN FULLY EXPLAINED TO THEM BY THEIR ATTORNEYS, OR THEY HAVE VOLUNTARILY ELECTED NOT TO SEEK THE ADVICE OF AN ATTORNEY. THE PARTIES FULLY UNDERSTAND THE FINAL AND BINDING EFFECT OF THIS AGREEMENT. THE ONLY PROMISES OR REPRESENTATIONS MADE TO EACH OF THE PARTIES ABOUT THIS AGREEMENT, OR TO INDUCE THEM TO SIGN THIS AGREEMENT, ARE CONTAINED IN THIS AGREEMENT. THE PARTIES ARE SIGNING THIS AGREEMENT KNOWINGLY AND VOLUNTARILY.

 

     
BROVARONE :       PURE :
     

PURE BIOSCIENCE, INC.,

a Delaware corporation

/s/ Dennis Brovarone       BY:   /s/ Dennis Atchley
DENNIS BROVARONE       NAME:   Dennis Atchley
      TITLE:   Secretary
DATED: 13 August 2013       DATED: 13 August 2013
       
     
       
       
       

 

11

Exhibit 17.1

RESIGNATION OF ALL POSITIONS

I, MICHAEL L. KRALL, hereby resign, effective as of and on the date noted below, any and all positions I hold in PURE Bioscience, Inc., a Delaware corporation (“PURE”), including but not limited to that as an officer, director, employee, and authorized agent. In resigning from all said positions, I hereby renounce and irrevocably waive any and all future rights I might have to otherwise retain any or all said positions, except as otherwise provided for in the PURCHASE, SEVERANCE, AND RELEASE AGREEMENT concurrently executed by me.

My resignation is not due to any disagreement with PURE or its directors on any matter, including or relating to PURE’s operations, policies, or practices.

 

DATED: 13 August 2013    

/s/ Michael L. Krall

    MICHAEL L. KRALL

Exhibit 17.2

RESIGNATION OF ALL POSITIONS

I, DONNA SINGER, hereby resign, effective as of and on the date noted below, any and all positions I hold in PURE Bioscience, Inc., a Delaware corporation (“PURE”), including but not limited to that as an officer, director, employee, and authorized agent. In resigning from all said positions, I hereby renounce and irrevocably waive any and all future rights I might have to otherwise retain any or all said positions, except as otherwise provided for in the PURCHASE, SEVERANCE, AND RELEASE AGREEMENT concurrently executed by me.

My resignation is not due to any disagreement with PURE or its directors on any matter, including or relating to PURE’s operations, policies, or practices.

 

DATED: 13 August 2013                   

/s/ Donna Singer

      DONNA SINGER

Exhibit 17.3

RESIGNATION OF ALL POSITIONS

I, DENNIS BROVARONE, hereby resign, effective as of and on the date noted below, any and all positions I hold in PURE Bioscience, Inc., a Delaware corporation (“PURE”), including but not limited to that as an officer, director, employee, and authorized agent. In resigning from all said positions, I hereby renounce and irrevocably waive any and all future rights I might have to otherwise retain any or all said positions, except as otherwise provided for in the SETTLEMENT AND RELEASE AGREEMENT concurrently executed by me.

My resignation is not due to any disagreement with PURE or its directors on any matter, including or relating to PURE’s operations, policies, or practices.

 

DATED: 13 August 2013      

/s/ Dennis Brovarone             

      DENNIS BROVARONE

Exhibit 17.4

RESIGNATION OF ALL POSITIONS

I, DENNIS ATCHLEY, hereby resign, effective as of and on the date noted below, any and all positions I hold in PURE Bioscience, Inc., a Delaware corporation (“PURE”), including but not limited to that as an officer, employee, and authorized agent. In resigning from all said positions, I hereby renounce and irrevocably waive any and all future rights I might have to otherwise retain any or all said positions.

My resignation is not due to any disagreement with PURE or its directors on any matter, including or relating to PURE’s operations, policies, or practices.

 

DATED: 13 August 2013                   

/s/ Dennis Atchley            

      DENNIS ATCHLEY

Exhibit 99.1

 

LOGO

PURE Bioscience Appoints New Board Members and Management Team

SAN DIEGO (August 13, 2013) – PURE Bioscience (OTCQB: PURE) , creator of the patented silver dihydrogen citrate (SDC) antimicrobial, today announced a leadership reorganization beginning with the return of Dave Pfanzelter as chairman of the board of directors. Mr. Pfanzelter will also serve as interim chief executive officer while the company initiates the process of recruiting a new CEO. The company’s former chief financial officer, Peter C. Wulff, also agreed to return to the company to serve as both its CFO and chief operating officer. In addition, the company has appointed Gary Cohee to the board of directors.

Mr. Pfanzelter replaces Michael L. Krall, the company’s founder, who had served as chief executive officer, president and a member of the board of directors for more than 20 years since its inception in 1992.

“I am as excited as ever about the future of SDC and PURE Bioscience. I believe the SDC-based products are well positioned to make a difference in multiple industries, including the food service, food processing, hospital and personal care markets, by providing a safe and effective antimicrobial solution to dangerous pathogens. It’s been an honor to lead PURE Bioscience. I am proud of our team’s achievements and grateful for its commitment to bringing our amazing technology to fruition. I wish PURE Bioscience and its new management team the utmost success as they advance the company to the next stage of commercialization,” stated Mr. Krall.

“I am pleased to be named chairman of PURE’s board and serve as its interim CEO. I am confident in the company’s future prospects with our new management team who has laser focused discipline and experience to commercialize PURE’s technology and strengthen its financial condition,” said Mr. Pfanzelter, “In addition, we appreciate and recognize Michael Krall’s vision and creation of the intellectual property portfolio, product innovation and market strategy foundation upon which the company was built. Throughout his tenure, Mr. Krall transformed the company from its original phase as a pharmaceutical dispensing equipment company through acquisition of the unrefined version of SDC to the current point of commercialization of sophisticated SDC-based products. We thank Mr. Krall for his decades of hard work, dedication, tenacity and numerous other contributions as the founding visionary by developing the SDC technology platform as a unique and proprietary next-generation antimicrobial.”

“On behalf of Redwood Investment Group, I am pleased to have facilitated with key members of the management team the strategy and execution of Pure Bioscience’s transition,” said Mr. Tom Hemingway, President and CEO of Redwood Investment Group, “We are at an exciting inflection point of taking the business to the next level of development and look forward to shaping its future prospects.”

 

www.purebio.com

voice: 619.596.8600         facsimile: 619.596.8790

1725 Gillespie Way  >  El Cajon, California 92020


The management reorganization also includes the departure of Dennis Brovarone and Donna Singer from the company and its board of directors.

About PURE Bioscience, Inc.

PURE Bioscience, Inc. develops and markets technology-based bioscience products that provide solutions to numerous global health challenges, including Staph (MRSA) and Carbapenem-resistant Enterobacteriaceae (CRE)/NDM-1+. PURE’s proprietary high efficacy/low toxicity bioscience technologies, including its silver dihydrogen citrate-based antimicrobials, represent innovative advances in diverse markets and lead today’s global trend toward industry and consumer use of “green” products while providing competitive advantages in efficacy and safety. Patented SDC is an electrolytically generated source of stabilized ionic silver, which formulates well with other compounds. As a platform technology, SDC is distinguished from competitors in the marketplace because of its superior efficacy, reduced toxicity and the inability of bacteria to form a resistance to it. PURE is headquartered in El Cajon, California (San Diego metropolitan area). Additional information on PURE is available at www.purebio.com.

Forward-looking Statements

This press release includes statements that may constitute “forward-looking” statements, usually containing the words “believe,” “estimate,” “expect,” “intend,” “project” or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, the Company’s cash position and liquidity requirements, the Company’s failure to implement or otherwise achieve the benefits of its proposed initiatives and business plans, acceptance of the Company’s current and future products and services in the marketplace, the ability of the Company to develop effective new products and receive regulatory approvals of such products, competitive factors, dependence upon third-party vendors, and other risks detailed in the Company’s periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.

Contact:

Investor Relations

Tom Hemingway

Redwood Investment Group

714.927.9118

 

www.purebio.com

voice: 619.596.8600         facsimile: 619.596.8790

1725 Gillespie Way  >  El Cajon, California 92020


Peter C. Wulff, CFO

Pure Bioscience, Inc.

619.596.8600 ext.111

 

www.purebio.com

voice: 619.596.8600         facsimile: 619.596.8790

1725 Gillespie Way  >  El Cajon, California 92020