Exhibit 10.1
Execution Version
CHROMADEX CORPORATION
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT
AGREEMENT
for
XXXXXX XXXXX
This
Amended and Restated Executive Employment Agreement (this
“Agreement”) is
entered into as of June 22, 2018 (the “Effective Date”), by and between
Xxxxxx Xxxxx (“Executive”) and ChromaDex
Corporation, a Delaware corporation (the “Company”).
2.2 Annual
Bonus. Commencing with fiscal year 2019, Executive will be
eligible to earn annual incentive compensation (the
“Performance
Bonus”), based on the achievement of individual and
corporate performance targets and metrics to be determined and
approved by the Board or the Compensation Committee thereof after
reasonable consultation with Executive. Executive’s target
Performance Bonus opportunity shall be 60% of Base Salary for the
applicable year (based on performance achievement at the 100%
level), with a maximum Performance Bonus opportunity of 90% of Base
Salary (based on performance achievement at the 150% level) and a
threshold Performance Bonus opportunity of 30% of Base Salary
(based on performance achievement at the 75% level), with payout
for performance to be interpolated on a straight-line basis between
threshold and target and between target and maximum. For the
avoidance of doubt, Executive will not be eligible to receive a
Performance Bonus for an applicable year in the event of
performance achievement below the 75% level. The Performance Bonus,
if earned, will be paid on an annual basis, less standard payroll
deductions and withholdings, after the close of the fiscal year and
after determination by the Board (or the Compensation Committee
thereof) of the level of achievement of the applicable performance
targets and metrics and the level of the bonus amount, but not
later than March 15 of the following calendar year. No Performance
Bonus amount is guaranteed and, in addition to the other conditions
for earning such Performance Bonus, Executive must remain an
employee in good standing of the Company on the scheduled annual
Performance Bonus payment date in order to earn any Performance
Bonus, except as otherwise provided in Section 7 herein. For fiscal
year 2018, Executive’s Performance Bonus shall be determined
and payable, in accordance with (and subject to) the terms and
conditions of Section 2.2 (Annual
Bonus) of the Prior Agreement.
2.3.1 Stock
Options. In consideration of Executive entering into this
Agreement, on the Effective Date, Company will grant Executive an
option (the “Promotion
Option”) under the Company’s 2017 Equity
Incentive Plan, as amended (the “Plan”) to purchase a number of
shares of the Company’s common stock (the “Common Stock”) having a value
equal to $2,000,000, with the number of shares of Common Stock
underlying the Promotion Option to be determined in accordance with
the Financial Accounting Standards Board’s Accounting
Standards Codification (FASB ASC) Topic 718, Compensation –
Stock Compensation (employing the same assumptions and
methodologies that are applied for purposes of the Company’s
financial accounting statements). The Promotion Option shall have an
exercise price equal to the Fair Market Value (as such term is
defined in the Plan) of a share of Common Stock on the date of
grant. In addition, the Promotion Option shall vest over a 3-year
period, with one-third (1/3rd) of the shares subject the Promotion
Option vesting on the one-year anniversary of the date of grant,
and the remaining shares subject to the Promotion Option vesting in
a series of twenty-four (24) equal monthly installments thereafter,
subject to Executive’s Continuous Service (as such term is
defined in the Plan) on each such vesting date. Notwithstanding the
foregoing or anything to the contrary set forth in the Plan or any
award agreement, in the event Executive’s employment with the
Company is terminated without Cause (as such term is defined below)
(and other than as a result of Executive’s death or
Disability (as such term is defined below)) or if Executive resigns
his employment for Good Reason (as such term is defined below), all
of the unvested shares of Common Stock subject to the Promotion
Option shall become immediately vested and exercisable, and shall
remain exercisable for the period as set forth in the last sentence
of Section 7.2.3 of
this Agreement. For the avoidance of doubt, the preceding sentence
applies only to the Promotion Option grant (and does not apply to
any equity grants previously made to Executive or any equity grants
that may be made in the future to Executive).
5.2 Third-Party
Agreements and Information. Executive represents and
warrants that Executive’s employment by the Company does not
conflict with any prior employment or consulting agreement or other
agreement with any third party, and that Executive will perform
Executive’s duties to the Company without violating any such
agreement. Executive represents and warrants that, except as gained
in connection with Healthspan Research LLC, Executive does not
possess confidential information arising out of prior employment,
consulting, or other third party relationships, that would be used
in connection with Executive’s employment by the Company,
except as expressly authorized by that third party. During
Executive’s employment by the Company, Executive will use in
the performance of Executive’s duties only information that
is generally known and used by persons with training and experience
comparable to Executive’s own, common knowledge in the
industry, otherwise legally in the public domain, or obtained or
developed by the Company or by Executive in the course of
Executive’s work for the Company.
6.1 Outside
Activities. Throughout Executive’s employment with the
Company, Executive may engage in civic and not-for-profit
activities and manage his and his family’s passive
investments, so long as such activities do not materially interfere
with the performance of Executive’s duties hereunder or
present a conflict of interest with the Company or its affiliates.
Subject to the restrictions set forth herein, and only with prior
written disclosure to and consent of the Board, Executive may
engage in other types of business or public activities. The Board
may rescind such consent, if the Board determines, in its good
faith discretion, that such activities compromise or threaten to
compromise the Company’s or its affiliates’ business
interests or conflict or compete with Executive’s duties to
the Company or its affiliates. Notwithstanding the foregoing,
Executive shall be permitted to perform outside business and other
activities, including without limitation business activities in the
film and entertainment industries, to the extent such activities do
not violate the first sentence of this Section 6.1.
6.2 Non-Competition
During Employment. Except as otherwise provided in this
Agreement, during Executive’s employment with the Company,
Executive will not, without the prior written consent of the Board,
directly or indirectly serve as an officer, director, stockholder,
employee, partner, proprietor, investor, joint venturer, associate,
representative or consultant of any person or entity engaged in, or
planning or preparing to engage in, business activity competitive
with any line of business engaged in (or planned to be engaged in)
by the Company; provided, however, that Executive may
purchase or otherwise acquire up to (but not more than) one percent
(1%) of any class of securities of any competitive enterprise
(without participating in the activities of such enterprise) if
such securities are listed on any national or regional securities
exchange or if Executive makes a passive investment in private
equity firms.
7.2.3 Equity
Acceleration upon Termination. Except as provided in Section 2.3.1
with respect to the Promotion Option
and notwithstanding anything to the contrary set forth in the
Plan or any award agreement, effective as of
Executive’s employment termination date, the vesting and
exercisability of the then unvested time-based vesting equity
awards that would have otherwise become vested had Executive
performed Continuous Service (as that term is defined in the Plan)
through the one year anniversary of Executive’s employment
termination date then held by Executive shall accelerate and become
immediately vested and exercisable, if applicable, by Executive
upon such termination and shall remain exercisable, if applicable,
following Executive’s termination as set forth in the
applicable equity award documents. With respect to any
performance-based vesting equity award, such award shall continue
to be governed in all respects by the terms of the applicable
equity award documents. Upon any such termination, Executive shall
have three (3) years to exercise any options or stock appreciation
rights, but no later than ten (10) years from the date of grant or
the date when the options or stock appreciation rights would
otherwise terminate under the Plan other than as a result of
termination of employment (e.g., if all of the Company’s
options are accelerated and terminate if not exercised in
connection with a Change in Control (as that term is defined in the
Plan), then Executive’s options will also terminate if not
exercised in connection with the Change in Control).
10. Section
409A. It is intended that all of the severance benefits and
other payments payable under this Agreement satisfy, to the
greatest extent possible, the exemptions from the application of
Code Section 409A provided under Treasury Regulations
1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9), and this
Agreement will be construed to the greatest extent possible as
consistent with those provisions, and to the extent not so exempt,
this Agreement (and any definitions hereunder) will be construed in
a manner that complies with Section 409A. For purposes of Code
Section 409A (including, without limitation, for purposes of
Treasury Regulation Section 1.409A-2(b)(2)(iii)), Executive’s
right to receive any installment payments under this Agreement
(whether severance payments, reimbursements or otherwise) shall be
treated as a right to receive a series of separate payments and,
accordingly, each installment payment hereunder shall at all times
be considered a separate and distinct payment. Any reference to
termination or similar words shall mean a separation from service
under the meaning of Code Section 409A. Notwithstanding any
provision to the contrary in this Agreement, if Executive is deemed
by the Company at the time of Executive’s Separation from
Service to be a “specified employee” for purposes of
Code Section 409A(a)(2)(B)(i), and if any of the payments upon
Separation from Service set forth herein and/or under any other
agreement with the Company are deemed to be “deferred
compensation”, then to the extent delayed commencement of any
portion of such payments is required in order to avoid a prohibited
distribution under Code Section 409A(a)(2)(B)(i) and the related
adverse taxation under Section 409A, such payments shall not be
provided to Executive prior to the earliest of (i) the expiration
of the six-month and one day period measured from the date of
Executive’s Separation from Service with the Company, (ii)
the date of Executive’s death or (iii) such earlier date as
permitted under Section 409A without the imposition of adverse
taxation. Upon the first business day following the expiration of
such applicable Code Section 409A(a)(2)(B)(i) period, all payments
deferred pursuant to this Section 10 shall be paid in a
lump sum to Executive, and any remaining payments due shall be paid
as otherwise provided herein or in the applicable agreement. No
interest shall be due on any amounts so deferred. If any severance
benefits provided under this Agreement constitute “deferred
compensation” under Section 409A, for purposes of determining
the schedule for payment of the severance benefits, the effective
date of the Release will be the sixtieth (60th) date following the
Separation From Service, regardless of when the Release actually
becomes effective. To the extent required to avoid accelerated
taxation and/or tax penalties under Code Section 409A, amounts
reimbursable to Executive under this Agreement shall be paid to
Executive on or before the last day of the year following the year
in which the expense was incurred, amounts shall not be subject to
liquidation or exchange for another benefit, and the amount of
expenses eligible for reimbursement (and in-kind benefits provided
to Executive) during any one year may not effect amounts
reimbursable or provided in any subsequent year. The Company makes
no representation that any or all of the payments described in this
Agreement will be exempt from or comply with Code Section
409A.
11.1 If
any payment or benefit Executive will or may receive from the
Company or otherwise (a “280G
Payment”) would (i) constitute a “parachute
payment” within the meaning of Section 280G of the Code, and
(ii) but for this sentence, be subject to the excise tax
imposed by Section 4999 of the Code (the “Excise Tax”), then any such 280G
Payment provided pursuant to this Agreement (a “Payment”) shall be equal to the
Reduced Amount. The “Reduced
Amount” shall be either (x) the largest portion
of the Payment that would result in no portion of the Payment
(after reduction) being subject to the Excise Tax or (y) the
largest portion, up to and including the total, of the Payment,
whichever amount (i.e., the amount determined by clause (x) or by
clause (y)), after taking into account all applicable federal,
state and local employment taxes, income taxes, and the Excise Tax
(all computed at the highest applicable marginal rate), results in
Executive’s receipt, on an after-tax basis, of the greater
economic benefit notwithstanding that all or some portion of the
Payment may be subject to the Excise Tax. If a reduction in a
Payment is required pursuant to the preceding sentence, the
reduction shall occur in the manner (the “Reduction Method”) that results in
the greatest after tax economic benefit for Executive. If more than
one method of reduction will result in the same after tax economic
benefit, the items so reduced will be reduced pro rata (the
“Pro Rata Reduction
Method”).
11.2 Notwithstanding
any provision of Section 11.1 to the
contrary, if the Reduction Method or the Pro Rata Reduction Method
would result in any portion of the Payment being subject to taxes
pursuant to Section 409A that would not otherwise be subject to
taxes pursuant to Section 409A, then the Reduction Method and/or
the Pro Rata Reduction Method, as the case may be, shall be
modified so as to avoid the imposition of taxes pursuant to Section
409A as follows: (A) as a first priority, the modification
shall preserve to the greatest extent possible, the greatest after
tax economic benefit for Executive as determined on an after-tax
basis; (B) as a second priority, Payments that are contingent
on future events (e.g.,
being terminated without Cause), shall be reduced (or eliminated)
before Payments that are not contingent on future events; and
(C) as a third priority, Payments that are “deferred
compensation” within the meaning of Section 409A shall be
reduced (or eliminated) before Payments that are not deferred
compensation within the meaning of Section 409A.
11.3 Unless
Executive and the Company agree on an alternative accounting firm
or law firm, the accounting firm engaged by the Company for general
tax compliance purposes as of the day prior to the effective date
of the Change in Control transaction shall perform the foregoing
calculations. If the accounting firm so engaged by the Company is
serving as accountant or auditor for the individual, entity or
group effecting the Change in Control transaction, the Company
shall appoint a nationally recognized accounting or law firm to
make the determinations required by this Section 11. The Company shall
bear all expenses with respect to the determinations by such
accounting or law firm required to be made hereunder. The Company shall use commercially reasonable
efforts to cause the accounting or law firm engaged to make the
determinations hereunder to provide its calculations, together with
detailed supporting documentation, to Executive and the Company within fifteen (15) calendar days
after the date on which Executive’s right to a 280G Payment becomes reasonably likely
to occur (if requested at that time by Executive
or the Company) or such other time as
requested by Executive or the
Company.
11.4 If
Executive receives a Payment for which the Reduced Amount was
determined pursuant to clause (x) of Section 11.1 and the Internal
Revenue Service determines thereafter that some portion of the
Payment is subject to the Excise Tax, Executive agrees, to the
extent not in violation of the Xxxxxxxx-Xxxxx Act, to promptly
return to the Company a sufficient amount of the Payment (after
reduction pursuant to clause (x) of Section 11.1) so that no
portion of the remaining Payment is subject to the Excise Tax. For
the avoidance of doubt, if the Reduced Amount was determined
pursuant to clause (y) of Section 11.1, Executive shall
have no obligation to return any portion of the Payment pursuant to
the preceding sentence.
12.1 Cause.
For the purposes of this Agreement, “Cause” means the occurrence of any
one or more of the following: (a) Executive’s conviction of
or plea of guilty or nolo
contendere to any felony (other than traffic violations);
(b) Executive’s willful and continued failure or refusal to
follow lawful and reasonable instructions of the Board or lawful,
reasonable, material and internally published policies and
regulations of the Company or its affiliates; (c) Executive’s
willful and continued failure to perform the assigned duties of
Executive’s employment with the Company or its affiliates;
(d) unethical or fraudulent conduct by Executive in connection with
the performance of Executive’s duties for the Company or its
affiliates; (e) conduct by Executive that materially discredits the
Company or any affiliate or that is materially detrimental to the
reputation, character and standing of the Company or any affiliate;
or (f) Executive’s material breach of this Agreement or the
Proprietary Information Agreement. An event described in
clauses (b) through
(f) shall not be treated as “Cause” until after
Executive has been given written notice of such event, failure,
conduct or breach, and Executive fails to cure such event, failure,
conduct or breach within 30 days from such written notice;
provided,
however, that such
30-day cure period shall not be required if the event, failure,
conduct or breach is incapable of being cured.
13. Dispute
Resolution. To ensure the rapid and economical resolution of
disputes that may arise in connection with Executive’s
employment with the Company, Executive and the Company agree that
any and all disputes, claims, or causes of action, in law or
equity, including but not limited to statutory claims, arising from
or relating to the enforcement, breach, performance, or
interpretation of this Agreement, Executive’s employment with
the Company, or the termination of Executive’s employment
with the Company, will be resolved pursuant to the Federal
Arbitration Act, 9 U.S.C. §1-16, and to the fullest extent
permitted by law, by final, binding and confidential arbitration
conducted in Irvine, California by JAMS, Inc. (“JAMS”) or its successors by a
single arbitrator. Both Executive and the
Company acknowledge that by agreeing to this arbitration procedure,
they each waive the right to resolve any such dispute through a
trial by jury or judge or administrative
proceeding. Any
such arbitration proceeding will be governed by JAMS’ then
applicable rules and procedures for employment disputes, which will
be provided to Executive upon request. In any such proceeding, the
arbitrator shall: (i) have the authority to compel adequate
discovery for the resolution of the dispute and to award such
relief as would otherwise be permitted by law; and (ii) issue a
written arbitration decision including the arbitrator’s
essential findings and conclusions and a statement of the award.
Executive and the Company each shall be entitled to all rights and
remedies that either would be entitled to pursue in a court of law.
Nothing in this Agreement is intended to prevent either the Company
or Executive from obtaining injunctive relief in court to prevent
irreparable harm pending the conclusion of any such arbitration
pursuant to applicable law. The Company shall pay all filing fees
in excess of those which would be required if the dispute were
decided in a court of law, and shall pay the arbitrator’s
fees and any other fees or costs unique to arbitration. The parties
shall pay their own legal fees. Any awards or orders in such
arbitrations may be entered and enforced as judgments in the
federal and state courts of any competent
jurisdiction.
14.4 Complete
Agreement. This Agreement, together with the Proprietary
Information Agreement, the Indemnity Agreement, dated as of
December 13, 2016, between the Company and Executive (the
“Indemnity
Agreement”), the Purchase Agreement (as such term is
defined in the Prior Agreement), with respect to Sections 5.4(a)
and Section 5.4(b) therein only, and to the extent referenced in
this Agreement, the Plan, constitutes the entire agreement between
Executive and the Company with regard to the subject matter hereof
and is the complete, final, and exclusive embodiment of the
Company’s and Executive’s agreement with regard to this
subject matter; provided, however, that any of
Executive’s rights to receive performance stock under Section
2.3.4 (Performance Stock)
of the Prior Agreement shall survive and remain enforceable in
accordance with the applicable terms of the Prior Agreement;
provided,
further, that any
of Executive’s rights as a holder of options to acquire
shares of Common Stock existing immediately prior to the Effective
Date shall survive and remain enforceable in accordance with the
terms of the applicable agreements. This Agreement is entered into
without reliance on any promise or representation, written or oral,
other than those expressly contained herein, and it supersedes and
replaces any other agreements or promises made to Executive by
anyone concerning Executive’s employment terms, compensation
or benefits, whether oral or written, including but not limited any
agreements or promises with or from the Company or any of its
affiliates or predecessors and the Prior Agreement, except as
otherwise expressly set forth in the prior sentence. It cannot be
modified or amended except in a writing signed by a duly authorized
officer of the Company, with the exception of those changes
expressly reserved to the Company’s discretion in this
Agreement.
14.7 Successors
and Assigns. This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive and the Company, and
their respective successors, assigns, heirs, executors and
administrators, except that Executive may not assign any of
Executive’s duties hereunder, Executive may not assign any of
Executive’s rights hereunder without the written consent of
the Company, which shall not be withheld unreasonably, and the
Company may not assign this Agreement, except to a successor in
connection with a Change in Control (as that term is defined in the
Plan), who assumes this Agreement in writing.
[Signature page follows]
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ChromaDex Corporation
By: /s/ Xxxx
Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: General Counsel and Secretary
Executive
/s/ Xxxxxx Xxxxx
Xxxxxx Xxxxx
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