EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of May 4, 2020 by and between NovaBay Pharmaceuticals, Inc. (“Company”) and Xxxxxx X. Xxxxx (“Executive”).
II. PROPRIETARY RIGHTS, CONFIDENTIAL INFORMATION, NONSOLICITATION, ETC.
As a condition of his employment, Executive agrees to execute the At-Will Employment, Confidential Information, and Invention Assignment and Arbitration Agreement (the “Confidentiality Agreement”) with the Company attached hereto as Exhibit A, and incorporated by reference.
III. COMPENSATION AND BENEFITS.
Executive’s compensation and bonus rights are as follows:
In the event that Executive is terminated in connection with a Change of Control (as hereinafter below), the Executive shall be entitled to a Change of Control Severance (“CoC Severance”) in place of the standard Severance Amount described above. In exchange for Executive signing and not revoking a general Release of claims in a form acceptable to the Company, Executive shall be entitled to the CoC Severance, payable in a lump sum within sixty (60) days following Executive’s separation from service, which includes: (i) an amount equal to twice Executive’s Base Salary in effect on the date of termination or separation from service, and (ii) an amount equal to the cash portion of Executive’s target annual bonus for the fiscal year in which the termination occurs (with it deemed that all performance goals have been met at one hundred percent (100%) of budget or plan) multiplied by one hundred fifty percent (150%). For a period of eighteen (18) months, Executive may elect coverage for, and the Company shall reimburse Executive for, the amount of his premium payments for group health coverage, if any, elected by Executive pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”); provided, however, that Executive shall be solely responsible for all matters relating to his continuation of coverage pursuant to COBRA, including (without limitation) his election of such coverage and his timely payment of premiums.
In the event of either a termination without cause or a termination in connection with a Change of Control, and subject to Executive’s signing and not revoking a Release as described above, all outstanding equity awards held by Executive will be subject to full accelerated vesting as of the date of termination. The exercise period shall also be extended to three (3) years from the date of termination.
1. “Termination Without Cause.” For purposes of Section IV.B above, a termination without cause shall be deemed to constitute any termination of Executive’s employment hereunder by the Company, or by Executive as set forth in (b) below, other than a termination for cause as defined below. Notwithstanding any contrary provision herein, it is understood that a termination without cause also shall include a termination which:
(a) occurs due to the death of Executive or to any physical or mental Long-Term Disability that would prevent the performance of Executive’s duties under this Agreement. For the purposes of this Agreement, a “Long-Term Disability” shall mean a long-term disability that after consideration and implementation of reasonable accommodations (provided that no accommodation that imposes undue hardship on the Company will be required), renders or will render Executive unable to perform his essential job functions for one hundred eighty (180) days out of any three hundred sixty-five (365) -day period or for four consecutive months. The determination of Executive’s Long-Term Disability shall be made by Executive’s attending physician unless the Board disagrees with such determination, in which case Executive’s Long-Term Disability shall be determined by a majority of three physicians qualified to practice medicine in the state of the Executive’s residence, one to be selected by each of the Executive (or his authorized representative) and the Board and the third to be selected by such two designated physicians;
(b) is a Constructive Termination (as defined below) initiated by Executive. “Constructive Termination” shall mean (i) any action by the Company that results in a material adverse change in Executive’s authority, duties or responsibilities taking into account the Company’s size, status, and capitalization as of the date of the Notice required in Section E below; (ii) any failure by the Company to comply with any provision of this Agreement; (iii) a relocation of Executive’s principal place of employment more than thirty-five (35) miles from its current location; (iv) any reduction in Executive’s base salary or bonus opportunity other than a general reduction in Base Salary that affects all similarly situated executives in substantially the same proportions; or (vi) the failure of any successor-in-interest to assume all of the obligations of the Company under this Agreement; or
(c) occurs due to a Change of Control. A “Change of Control” means the occurrence of any of the following events: (i) any sale or exchange of the capital stock by the shareholders of the Company in one transaction or series of related transactions where more than fifty percent (50%) of the outstanding voting power of the Company is acquired by a person or entity or group of related persons or entities; or (ii) any reorganization, consolidation or merger of the Company where the outstanding voting securities of the Company immediately before the transaction represent or are converted into less than fifty percent (50%) of the outstanding voting power of the surviving entity (or its parent corporation) immediately after the transaction; or (iii) the consummation of any transaction or series of related transactions that results in the sale of all or substantially all of the assets of the Company; or (iv) a reverse merger; or (v) any “person” or “group” (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) becoming the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly of securities representing more than fifty percent (50%) of the voting power of the Company then outstanding; or (vi) less than a majority of the current Board of Directors are persons who were either nominated for election by the current Board of Directors or were elected by the current Board of Directors.
2. “Termination For Cause.” Subject to the notice requirement as provided in paragraph E below, for purposes of Section IV.B.2 (and Section IV.C.1) above, a termination for cause shall be a termination of Executive’s employment hereunder made:
(a) by the Company, if Executive:
(i) materially breaches any material terms of this Agreement which has caused demonstrable injury to the Company;
(ii) commits willful gross acts of dishonesty, fraud, misrepresentation, or other acts of moral turpitude taken by Executive in connection with Executive responsibilities as an employee provided that no act or failure to act shall be considered “willful” under this definition unless Executive acted, or failed to act, with an absence of good faith and without a reasonable belief that his action, or failure to act, was in the best interest of the Company;
(iii) is convicted of any felony or any crime involving moral turpitude resulting in either case in significant and demonstrable harm to the Company; or
(iv) fails to achieve the stated milestones and tasks as requested in writing by the Board of Directors, including but not limited to failure to perform, or continuing to neglect the performance of duties assigned to Executive, which failure or neglect will significantly and adversely affect the Company’s business or business prospects and which failure is due to circumstances within Executive’s reasonable control.
(b) by Executive, unless such termination by Executive is for Constructive Termination.
(c) by the Company for any reason within ninety (90) days of Executive commencing employment.
Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, or any of the rights, benefits or obligations resulting from its terms, shall be settled by arbitration pursuant to the provisions of the Confidentiality Agreement, attached hereto as Exhibit A.
EXECUTIVE HAS READ AND UNDERSTANDS THE ARBITRATION PROVISION OF THE CONFIDENTIALITY AGREEMENT. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO ARBITRATION, AND THAT THE PROVISIONS CONSTITUTE A WAIVER OF EXECUTIVE’S RIGHT TO A JURY TRIAL.
This Agreement is intended to comply with the requirements of Internal Revenue Code Section 409A (“Section 409A”) and the Board and the Board committee will interpret its provisions accordingly. If, at the time of Executive’s termination, any stock of the Company is publicly-traded and the Company determines that Executive is a “specified employee” within the meaning of Section 409A of the Code at such time, then (i) the Severance Amount, or the CoC Severance payment, as applicable specified herein (to the extent that they or it are subject to Section 409A of the Code) will commence, or be paid as applicable, on the earlier of (A) the first business day following expiration of the six-month period measured from Executive’s separation or (B) the date of Executive’s death and (ii) the installments that otherwise would have been paid prior to such date will be paid in a lump sum when the salary continuation payments commence. Any installment payments provided for in this Agreement shall be, and shall be treated as, a series of separate payments for purposes of Section 409A.Executive understands and agrees that the Company makes no assurances with respect to the tax consequences arising as a result of this Agreement and the payment of any tax liabilities or related penalties arising out of this Agreement is solely and exclusively the responsibility of Executive, without any expectation or understanding that the Company will pay or reimburse Executive for such taxes or other items. Concerning any Section 409A taxes or related penalties the Company will use its best efforts in good faith to reduce or eliminate such tax liabilities or penalties including but not limited to a delay of such payments the minimum time necessary to avoid tax liabilities or penalties. If any payment is delayed pursuant to this paragraph on the date of payment the Company shall pay in a lump sum all payments that otherwise would have been paid during the period of the delayed payments.
To the extent that any benefits or reimbursements pursuant are taxable to Executive, any reimbursement payment due to Executive shall be paid to Executive on or before the last day of Executive’s taxable year following the taxable year in which the related expense was incurred. The benefits and reimbursements pursuant to this Agreement are not subject to liquidation or exchange for another benefit and the amount of such benefits and reimbursements that Executive receives in one taxable year shall not affect the amount of such benefits or reimbursements that Executive receives in any other taxable year.
Executive acknowledges that an opportunity has been afforded to Executive to consult with legal counsel with respect to this Agreement and that no individual representing the Company has given legal advice with respect to this Agreement.
VIII. MISCELLANEOUS AND CONSTRUCTION.
Except as otherwise specifically provided herein, this Agreement:
A. and any benefits or obligations herein may not be assigned or delegated by Executive (but may be so assigned or delegated by the Company);
B. together with Confidentiality Agreement and the Company’s equity incentive plans, constitutes the entire agreement of the parties hereto and supersedes in their entirety all prior representations, understandings, undertakings or agreements (whether oral or written and whether expressed or implied) of the parties with respect to the subject matter hereof. No future agreements between the Company and Executive may supersede this Agreement, unless they are in writing and specifically mention this Section VIII.B.;
C. may be amended or modified only by a written amendment or modification signed by the Company and Executive;
D. is made in, and shall be construed under the laws of, the State of California (with the exception of its conflict of laws provisions);
E. inures to the benefit of, and is binding upon, the permitted successors, assigns, distributees, personal representatives, heirs and other successors-in-interest to and of the parties hereto;
F. shall not be interpreted by reference to any of the captions or headings of the paragraphs herein, which captions or headings have been inserted for convenience purposes only;
G. shall be fully effectuated in accordance with its tenor, effect and purposes by each of the parties hereto by executing such further documents or taking such other actions as may be reasonably requested by the other party hereto;
H. shall be interpreted, as to its remaining provisions, to be fully lawful and operative, to the extent reasonably required to fulfill its principal tenor, effect and purposes, in the event that any provision either is found by any court of competent jurisdiction to be unlawful or inoperative or violates any statutory or legal requirement, and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms; and
I. may be executed in more than one counterpart, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
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COMPANY:
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| By: | /s/ Xxxx Xxxxxxx | ||
| Name: | Xxxx Xxxxxxx | ||
| Title: | Chairman | ||
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EXECUTIVE: |
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| By: | /s/ Xxxxxx X. Xxxxx | ||
| Name: | Xxxxxx X. Xxxxx | ||
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Address:
Telephone No. [Redacted]
E-mail: [Redacted] |
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