Exhibit 10.1
 
EMPLOYMENT AGREEMENT
 
This Employment Agreement (the “Agreement”) is entered into by and between Rauly
Gutierrez (“you” or “your”) and Innovus Pharmaceuticals, Inc., a Nevada
corporation (the “Company”). This Agreement has an effective date of September
23, 2016 (the “Effective Date”).
 
In consideration of the mutual covenants and promises made in this Agreement,
you and the Company agree as follows:
 
1. Position and Responsibilities. As of the Effective Date, you will be employed
by the Company as the Company’s Vice President of Finance (“VP Finance”). As
Vice President of Finance, you shall report directly to the Company’s Executive
Vice President and Chief Financial Officer (the “CFO”). Your office will be
located at the Company’s headquarters at 9171 Towne Centre Drive, Suite 440, San
Diego, CA 92122.
 
Nothing herein shall preclude you from (i) serving, with the prior written
consent of the Company as a member of the board of directors or advisory boards
(or their equivalents in the case of a non-corporate entity) of non-competing
businesses and charitable organizations, (ii) engaging in charitable activities
and community affairs, and (iii) managing your personal investments and affairs.
The Company hereby acknowledges your ownership of (or relationship with) the
entities identified in Exhibit A and consents to such ownership or relationship
for so long as such entities continue to be a non-competing business with the
Company.
 
2. Term. Your employment with the Company is at-will and either you or the
Company may terminate your employment at any time and for any reason, with or
without Cause/Good Reason (as each are defined below), in each case subject to
the terms and provisions of this Agreement.
 
3. Salary, Bonus, Equity Incentives, Benefits and Indemnification. For avoidance
of doubt, the Company’s Board of Directors (the “Board”) may delegate its
authority and responsibilities under this Section 3 to a committee of members of
the Board.
 
(a) Base Salary. Commencing on the Effective Date, you will be paid an annual
base salary of two hundred thousand dollars ($200,000.00) (the “Base Salary”)
for your services as VP Finance, payable in the time and manner that the Company
customarily pays its employees provided that you will receive pro-rata payments
of Base Salary at least once each calendar month. Your Base Salary will be
reviewed periodically by the Board and may be increased (but not decreased) by
the Board.
 
(b) Bonuses. You will be eligible to earn an annual cash bonus based on personal
performance objectives reasonably established by the Board [which will be
communicated in writing to you within the first 75 days of the applicable fiscal
year]. Your annual target cash bonus amount will be equal to 25% of your then
annual Base Salary rate (with such rate determined as of the day after the
applicable anniversary of the Effective Date for such fiscal year). The actual
amount of the annual bonus paid to you, if any, shall be determined by the Board
in its sole discretion and may be more or less than the target amount. If your
employment ends during any given fiscal year for any reason and whether or not
you execute the Mutual Release described in Section 6(e), you will be paid a
pro-rata amount of the target bonus determined by the percentage of time you
were employed during the fiscal year. The annual bonus, if any, will be paid to
you in cash by March 1 of the following fiscal year, the payment of which is
conditioned upon your continued employment to and through the date of payment.
 
(c) Compensatory Equity. Subject to approval by the Board, the Company will
grant you Restricted Stock Units (“RSU”) covering one million two hundred fifty
thousand (1,250,000) shares of the Company’s common stock (the “Initial RSU
Grant”). Three hundred and twelve thousand five hundred (312,500) shares of the
Initial RSU Grant shall be vested after one (1) year of employment. Subject to
your continued Service, the remaining shares of the Initial RSU shall vest in
eight (8) pro-rata equal installments on a quarterly basis over the following
two (2) years. In addition to the Initial RSU Grant, you will be eligible for
annual grants of either RSU or stock options at the elections of the Board.
These additional grants may occur more frequently than annually at the election
of the Board.
 
For purposes of this Agreement, the RSU Grant and any other Company compensatory
equity grants issued to you shall be collectively referred to herein as
“Compensatory Equity”. To the extent you receive any stock options, stock
appreciation rights or similar derivative securities, you shall be entitled to
according to the applicable plan in place. In connection with any award of
Compensatory Equity (including the RSU Grant), you shall be permitted at your
election to satisfy the applicable exercise price and/or tax withholding
obligations via share withholding with the shares that are surrendered to the
Company valued at their then fair market value as of the applicable vesting or
settlement date(s).
 
You shall be eligible for additional grants of Compensatory Equity in order to
ensure that you have competitive equity compensation. All grants of Compensatory
Equity shall be issued pursuant to: (i) a Board-approved employee stock
incentive plan (the “Plan”) and (ii) an effective registration statement filed
(and maintained) by the Company with the Securities and Exchange Commission in
accordance with the Securities Act of 1933, as amended.
 
 
 
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Additionally, all outstanding unvested Compensatory Equity awards shall fully
vest and become exercisable (to the extent exercise is required) upon a Change
in Control occurring during your Service (as defined below). You may also elect
to establish a trading plan for Company securities in accordance with Rule
10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
For purposes of this Agreement and your Compensatory Equity, “Service” shall
mean service by you as an employee, director and/or consultant of the Company
(or any subsidiary or parent or affiliated entity of the Company).
 
(d) Benefits. Commencing with the Effective Date, you will be entitled to
participate in all Company employee benefit plans and programs at the time or
thereafter made available to Company senior executive officers including,
without limitation and to the extent available, major medical and dental
coverage for you and your dependents, group life insurance, any savings or
profit sharing plans (such as a 401K plan), deferred compensation plans, stock
option incentive plans, long-term disability insurance, holidays, vacation, sick
time, and other employee benefit programs sponsored by the Company. The Company
intends to instate some of the foregoing plans and benefits in September 2016.
 
Notwithstanding the foregoing, commencing with the Effective Date and thereafter
on each anniversary of the Effective Date, you shall incrementally accrue 20
days of paid vacation time, three (3) sick days, and two (2) floating holidays.
Such accrued vacation and sick time will be subject to any maximum accrual
limits under the Company’s policies. Any unused portion shall be paid to you
upon termination of your employment with the Company in accordance with
applicable state and federal law
 
(e) Indemnification. In the event that you are made a party or threatened to be
made a party to any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (a “Proceeding”), by reason of your employment
with, or serving as an officer or director of, the Company, the Company shall
indemnify and hold you harmless, and defend you to the fullest extent authorized
by the laws of the state in which the Company is incorporated, as the same exist
and may hereafter be amended, against any and all claims, demands, suits,
judgments, assessments, and settlements (collectively the “Claims”), including
all expenses incurred or suffered by you in connection therewith and such
indemnification shall continue as to you even after you are no longer providing
Service, and shall inure to the benefit of your heirs, executors, and
administrators. The Company shall have the right to undertake, with counsel or
other representatives of its own choosing, the defense or settlement of any
Claims. In the event that the Company shall fail to notify you, within ten (10)
days of its receipt of your written notice, that the Company has elected to
undertake such defense or settlement, or if at any time the Company shall
otherwise fail to diligently defend or pursue settlement of such Claims, then
you shall have the right to undertake the defense, compromise, or settlement of
such Claims, in which event the Company shall hold you harmless from any legal
fees incurred by you for your counsel. Neither you nor the Company shall settle
any Claims without the prior written consent of the other, which consent shall
not be unreasonably withheld or delayed. Regardless of which party is conducting
the defense of any such Claims, the other party, with counsel or other
representatives of its own choosing and at its sole cost and expense, shall have
the right to consult with the party conducting the defense of such Claims and
its counsel or other representatives concerning such Claims and you and the
respective counsel or other representatives shall cooperate with respect to such
Claims. The party conducting the defense of any such Claims and its counsel
shall in any case keep the other party and its counsel (if any) fully informed
as to the status of such Claims and any matters relating thereto. You and the
Company shall provide to the other such records, books, documents, and other
materials as shall reasonably be necessary for each to conduct or evaluate the
defense of any Claims, and will generally cooperate with respect to any matters
relating thereto. This Section 3(e) shall remain in effect after this Agreement
is terminated, regardless of the reasons for such termination. The
indemnification provided to you pursuant to this Section 3(e) shall not
supersede or reduce any indemnification provided to you under any separate
agreement, or the By-Laws of the Company; in this regard, it is intended that
this Agreement shall expand and extend your rights to receive indemnification.
The Company shall maintain a directors and officers’ liability insurance policy
(including coverage through the sixth anniversary of cessation of all of your
services to the Company) covering you in your capacity as an officer and
director of the Company and any Company affiliate.
 
4. Expense Reimbursement. You are authorized to incur on behalf of the Company
only such reasonable expenses (including travel and entertainment) in connection
with the business of the Company as are in conformity with the Company’s
published guidelines. The Company shall reimburse you for all such reasonable
expenses incurred in connection with the business of the Company upon the
presentation by you, from time to time, of an itemized account of such
expenditures and receipts, which account shall be in form and substance in
conformity with the rules and regulations of the Internal Revenue Service.
 
 
 
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5. Change in Control
 
(a)  Definition. For purposes of this Agreement, “Change in Control” shall mean
a “change in control event” as defined under Treasury Regulation Section
1.409A-3(i)(5)) as in effect on the Effective Date or any change in control
definition provided by the Plan.
 
(a)           Code Section 280G. In the event that it is determined that any
payment or distribution of any type to or for your benefit made by the Company,
by any of its affiliates, by any person who acquires ownership or effective
control or ownership of a substantial portion of the Company’s assets (within
the meaning of Section 280G of the Code or by any affiliate of such person,
whether paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise (the “Total Payments”), would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties with
respect to such excise tax (such excise tax, together with any such interest or
penalties, are collectively referred to as the “Excise Tax”), then such payments
or distributions or benefits shall be payable either:
 
(i) in full; or
 
(ii)   as to the maximum value of such lesser amount which would result in no
portion of such payments or distributions or benefits being subject to the
Excise Tax.
 
You shall receive the greater, on an after-tax basis, of (i) or (ii) above.
 
If the Total Payments must be reduced as provided in the previous paragraph, the
reduction shall occur in the following order: (1) reduction of cash payments for
which the full amount is treated as a "parachute payment" (as defined under Code
Section 280G and its regulations); (2) cancellation of accelerated vesting (or,
if necessary, payment) of cash awards for which the full amount in not treated
as a parachute payment; (3) reduction of any continued employee benefits and (4)
cancellation of any accelerated vesting of equity awards. In selecting the
equity awards (if any) for which vesting will be reduced under clause (4) of the
preceding sentence, awards shall be selected in a manner that maximizes the
after-tax aggregate amount of reduced Total Payments provided to you, provided
that if (and only if) necessary in order to avoid the imposition of an
additional tax under Section 409A of the Code, awards instead shall be selected
in the reverse order of the date of grant. For the avoidance of doubt, for
purposes of measuring an equity compensation award's value to you when
performing the determinations under the preceding paragraph, such award's value
shall equal the then aggregate fair market value of the vested shares underlying
the award less any aggregate exercise price less applicable taxes. Also, if two
or more equity awards are granted on the same date, each award will be reduced
on a pro-rata basis.
 
All mathematical determinations and all determinations of whether any of the
Total Payments are parachute payments that are required to be made under this
Section 5(a), shall be made by a nationally recognized independent audit firm
selected by the Company (the “Accountants”), who shall provide their
determination, together with detailed supporting calculations regarding the
amount of any relevant matters, both to the Company and to you. Unless you
consent in writing, the Accountants may not be an audit firm that is then
providing services in any capacity to the person or entity that is acquiring the
Company. Such determinations shall be made by the Accountants using reasonable
good faith interpretations of the Code. As expressly permitted by Treasury
Regulations section 1.280G-1 Q/A-32, with respect to performing any present
value calculations that are required in connection with this Section 5(a), you
and the Company each affirmatively elect to utilize the Applicable Federal Rates
("AFR") that are in effect as of the Effective Date and the Accountants shall
therefore use such AFRs in their determinations and calculations. If the
Accountants determine that no excise tax under Section 4999 of the Code is
payable with respect to a Total Payment, it shall furnish the Company and you
with an opinion reasonably acceptable to you that no such excise tax under
Section 4999 of the Code will be imposed with respect to such Total Payments.
The Company shall pay the fees and costs of the Accountants which are incurred
in connection with this Section 5(a).
 
6. Consequences of Termination of Employment. For purposes of this Agreement,
your last day of employment with the Company is the “Termination Date”. Upon
termination of your employment for any reason, you shall receive payment or
benefits from the Company covering the following: (i) all unpaid salary and
unpaid vacation accrued through the Termination Date, (ii) any payments/benefits
to which you are entitled under the express terms of any applicable Company
employee benefit plan, (iii) any unreimbursed valid business expenses for which
you have submitted properly documented reimbursement requests and (iv) your then
outstanding Compensatory Equity as governed by their applicable plan
(collectively, (i) through (v) are the “Accrued Pay”).
 
After termination of your employment by the Company without cause or by you for
Good Reason, and whether or not the Mutual Release described in Section 6(e) is
executed by you, the Company shall pay the entire premiums for your Company
group medical, dental and vision insurance coverage for you and your dependents
for 6 months after the Termination Date with coverage no less favorable than as
of immediately before your Termination Date (the “Continuing Health Coverage”).
If it becomes unreasonable for the Company to continue to pay for this
Continuing Health Coverage for you (or imposes adverse tax consequences on you)
because of changes in applicable law then the Company shall make the premium
payments to you on an after-tax basis.
 
 
 
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You will also be paid all other post-employment payments and benefits as
provided in this Agreement including without limitation any unpaid bonus amounts
described in Section 3(b), which will be paid over six (6) months. Within no
later than 90 days after the later of your Termination Date or the date that you
are not considered to be a ten percent (10%) shareholder under Section 16 of the
Exchange Act, you shall no longer be considered a Company affiliate and the
Company shall use commercially reasonable efforts to facilitate the timely
removal of any restrictive legends on any shares of Company common stock then
held by you.
 
(a) For Cause. For purposes of this Agreement, your employment may be terminated
by the Company for “Cause” as a result of the occurrence of one (1) or more of
the following:
 
(i) Your commission of fraud or other unlawful conduct in or that affects your
performance of duties for the Company;
 
(ii) Your conviction of, or a plea of “guilty” or “no contest" to, a felony
under the laws of the United States or any state thereof, if such felony either
is work-related or materially impairs your ability to perform services for the
Company; or
 
(iii) Your willful material breach of this Agreement For purposes of the
foregoing, no act, or failure to act, on your part shall be considered “willful”
unless done, or omitted to be done, by you other than in good faith, and without
reasonable belief that your action or omission was in furtherance of the
interests of the Company. The foregoing shall is an exclusive list of the acts
or omissions that shall be considered “Cause” for the termination of your
employment by the Company. The Board shall provide you with 30 days advance
written notice specifically detailing the basis (and factual circumstances) for
the termination of your employment for Cause. During the 30 day period after you
have received such notice, you shall have an opportunity to cure or remedy such
alleged Cause events and to present your case to the full Board (with the
assistance of your own counsel). A termination shall be deemed for Cause only
if, following such 30 day period, at least 75% of the group consisting of the
members of the Board vote affirmatively that your termination is for Cause. You
shall continue to receive all of the compensation and benefits provided by this
Agreement during the 30 day cure/remedy period.
 
(b) Without Cause or for Good Reason or Death or Disability. The Company may
terminate your employment without Cause or for Disability at any time with 30
days advance written notice or you may resign your employment for Good Reason
(as defined below in Section 6(b)(iii)) with 30 days advanced written notice or
your employment may also be terminated due to your death or by you due to your
Disability (each of the foregoing, a “Qualifying Termination”). Any notice of
termination by the Company that is not covered by Section 6(a) must specify
whether it was a termination without Cause or due to your Disability. Without
your prior written consent, once the Company has provided you with such a notice
of termination under this Section 6(b) then it may not rescind such notice nor
may it modify the terms of your severance benefits described in this Agreement.
For purposes of this Agreement, “Disability” is defined to occur when you are
unable to engage in any substantial gainful activity for 30 or more consecutive
days, or 60 or more days within a 120 day period by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than twelve (12) months. If your employment is terminated due to a
Qualifying Termination, then you will receive the following benefits subject to
your timely compliance with Section 6(e) and further provided that no payments
for such Qualifying Termination shall be made until on or after the date of a
“separation from service” within the meaning of Code Section 409A:
 
(i) The Company shall provide you with a cash payment equal to six (6) months of
your then annual Base Salary and your annual target bonus amount (the “Severance
Payment”). The Severance Payment shall be paid to you in six (6) equal
installments after the effective date of the Mutual Release described in Section
6(e).
 
(ii) The Company shall provide the Continuing Health Coverage (or coverage no
less favorable to you than the Continuing Health Coverage) for 6 months after
the Termination Date. If it becomes unreasonable for the Company to continue to
pay for this Continuing Health Coverage for you (or it imposes adverse tax
consequences on you) because of changes in applicable law then the Company shall
make the premium payments to you on an after-tax basis. Additionally, all
outstanding unvested Compensatory Equity awards shall fully vest and become
exercisable (to the extent exercise is required) as of your Termination Date.
 
(iii) For purposes of this Agreement, you may resign your employment from the
Company for “Good Reason” within one (1) year after the date that any one of the
following events described in subparts (1) through (5) (any one of which will
constitute “Good Reason”) has first occurred without your written consent. Your
resignation for Good Reason will only be effective if the Company has not cured
or remedied the Good Reason event within 30 days after its receipt of your
written notice of the Good Reason event. Such notice of your intention to resign
for Good Reason must be provided to the Company within 90 days of the initial
existence of a Good Reason event. This “Good Reason” definition and process is
intended to comply with the safe harbor provided under Treasury Regulation
Section 1.409A-1(n)(2)(ii) and shall be interpreted accordingly.
 
(1)
You have incurred a material diminution in your responsibilities, duties or
authority or you are no longer the VP Finance of the Company (or if the Company
has a parent entity, then you must be its VP Finance of the Company’s ultimate
parent entity);
 
(2)
Your workplace has been relocated to a new location that is more than 100 miles
away from your work location that is specified in Section 1;
 
(3)
Any material reduction of your Base Salary.
 
 
 
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(c) Voluntary Termination. In the event you voluntarily terminate your
employment with the Company without Good Reason and not due to Disability, you
will not be entitled to the Severance Payment but will receive your Accrued Pay
plus the other post-termination payments that are not predicated on a Qualifying
Termination. You agree to use your best efforts to provide the Company with at
least 14 days advance written notice of your intention to resign without Good
Reason.
 
(d) Change of Control. If, within six (6) months following a Change in Control,
your employment is terminated pursuant to 6(b) or 6(c) (a “Change in Control
Termination”), then you will receive the following benefits subject to your
timely compliance with Section 6(e) and further provided that no payments for
such Change in Control Termination shall be made until on or after the date of a
“separation from service” within the meaning of Code Section 409A:
 
(i) The Company shall provide you with a cash payment equal to six (6) months of
your then annual Base Salary and your annual target bonus amount (the “Severance
Payment”). The Severance Payment shall be paid to you in six (6) equal
installments after the effective date of the Mutual Release described in Section
6(e).
 
(ii) The Company shall provide the Continuing Health Coverage (or coverage no
less favorable to you than the Continuing Health Coverage) for 6 months after
the Termination Date. If it becomes unreasonable for the Company to continue to
pay for this Continuing Health Coverage for you (or it imposes adverse tax
consequences on you) because of changes in applicable law then the Company shall
make the premium payments to you on an after-tax basis. Additionally, all
outstanding unvested Compensatory Equity awards shall fully vest and become
exercisable (to the extent exercise is required) as of your Termination Date.
 
(iii) All of your unvested RSUs and options granted prior to, on, or after the
date hereof (but only (i) such RSUs and options as have been granted to you by
Company as of the date of the Change in control or (ii) such RSUs and options as
have been assumed by an acquiring company at the time of a Change in Control or
such new RSUs and options that have been substituted by an acquiring company for
RSUs and options existing at the time of a Change in Control, each pursuant to
the terms of a company option plan) shall automatically become fully vested as
of the Termination Date. The parties hereto acknowledge that the terms of this
Agreement are intended to modify the terms of Employee's existing RSU and option
agreements and to be a supplement to future RSU and options agreements.
 
(e) Mutual Release of Claims. Subject to the next sentence, as a condition to
receiving (and continuing to receive) the payments and benefits provided in
Section 6(b), not later than forty-five (45) days after your Termination Date,
you execute (and not revoke) and deliver to the Company a Mutual Release Of All
Claims And Covenant Not To Sue agreement (the “Mutual Release”) in the form
attached as Exhibit B hereto. Payment of the forgoing may be deferred or delayed
until expiration of the revocation period. However, this requirement for you to
provide an executed Mutual Release shall not be applicable if your employment
was terminated due to your death or Disability. The Company shall have the
obligation to prepare and execute said Mutual Release and tender such
Company-executed Mutual Release to you on or before your Termination Date.
 
7. Proprietary Information and Inventions Agreement; Confidentiality. You will
be required, as a condition of your employment with the Company, to execute the
Company’s form of proprietary information and inventions agreement
(“Confidentiality Agreement”).
 
8. Assignability; Binding Nature. Commencing on the Effective Date, this
Agreement will be binding upon you and the Company and the parties’ respective
successors, heirs, and assigns. This Agreement may not be assigned by you except
that your rights to compensation and benefits hereunder, subject to the
limitations of this Agreement, may be transferred by will or operation of law.
No rights or obligations of the Company under this Agreement may be assigned or
transferred except in the event of a merger or consolidation in which the
Company is not the continuing entity, or the sale or liquidation of all or
substantially all of the assets of the Company provided that the assignee or
transferee is the successor to all or substantially all of the assets of the
Company and expressly in writing assumes the Company’s obligations under this
Agreement. The Company will require any such purchaser, successor or assignee to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform if no such
purchase, succession or assignment had taken place. Your rights and obligations
under this Agreement shall not be transferable by you by assignment or otherwise
provided, however, that if you die, all amounts then payable to you hereunder
shall be paid in accordance with the terms of this Agreement to your devisee,
legatee or other designee or, if there be no such designee, to your estate.
 
 
 
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9. Governing Law; Arbitration. This Agreement will be deemed a contract made
under, and for all purposes shall be construed in accordance with, the laws of
California, without regard to its conflicts of law provisions.
 
Except as may be permitted below on this Section 9, the parties agree that any
dispute between the parties arising out of or relating to the negotiation,
execution or performance of this Agreement shall be settled by expedited binding
arbitration in accordance with the Employment Arbitration Rules and Mediation
Procedures of the American Arbitration Association. The location for the
arbitration shall be San Diego, California. The arbitration award shall be made
within sixty (60) days of the filing of the notice of intention to arbitrate
(demand), and the arbitrator(s) shall agree to comply with this schedule before
accepting appointment. Any award made by such arbitrator(s) shall be final,
binding and conclusive on the parties for all purposes, and judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The parties each agree that the arbitration provisions of
this Agreement shall provide each party with its exclusive remedy, and each
party expressly waives any right it might have to seek redress in any other
forum, except as otherwise expressly provided in this Agreement. By electing
arbitration as the means for final settlement of all claims, the parties hereby
waive their respective rights to, and agree not to, sue each other in any action
in a Federal, State or local court with respect to such claims, but may seek to
enforce in court an arbitration award rendered pursuant to this Agreement. The
parties specifically agree to waive their respective rights to a trial by jury,
and further agree that no demand, request or motion will be made for trial by
jury. In the event that either party brings an action under Section 9 to enforce
or effect its rights under or relating to this Agreement (a “Proceeding”), the
prevailing party shall be entitled to recover its costs and expenses, including
the costs of mediation, arbitration, litigation, court fees, and reasonable
attorneys’ fees incurred in connection with such an action. The Company shall
pay for all arbitration-specific costs, including but not limited to the
arbitration filing fee.
 
If you are determined by the arbitrator to be the prevailing party in any
Proceeding where the Company was found to have materially breached this
Agreement, then, in addition to being awarded your costs and expenses, you shall
be entitled to: (i) interest on any late payments, calculated at a rate equal to
the statutory rate, compounded daily, and (ii) the acceleration of payment for
all remaining payments owed to you, so that the unpaid balance (including
accrued interest) shall be paid in a single lump sum within ten (10) business
days of the issuance of the arbitrator’s award. You may also be awarded any
economic damages arising from the Company’s breach, as may be determined in the
arbitrator in the Proceeding.
 
In addition to the remedies set forth above, the parties hereby agree that they
shall be entitled to enforce their rights under this Agreement specifically. All
such rights and remedies shall be cumulative and non-exclusive, and may be
exercised singularly or concurrently. The parties agree that irreparable harm
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
Each party agrees that, in the event of any breach or threatened breach by any
other party of any covenant or obligation contained in this Agreement, the
non-breaching party shall be entitled to seek and obtain: (i) a decree or order
of specific performance to enforce the observance and performance of such
covenant or obligation, and (ii) an injunction restraining such breach or
threatened breach.
 
10. Taxes. All compensation paid by the Company hereunder to you or your estate
or beneficiaries will be subject to tax withholding pursuant to any applicable
laws or regulations. This Agreement and its payments are intended to be exempt
from or comply with the requirements of Code Section 409A and the Company shall
use its best efforts to ensure that there are no violations of Code Section
409A. If any taxes under Code Section 409A are imposed on you, then the Company
shall within thirty days of the determination that there would be an imposition
of such taxes provide you with a payment that will cover the costs of any Code
Section 409A taxes, excise taxes, penalties and interest along with any taxes
imposed on such payment so that you will on an after-tax basis (applying the
then highest aggregate marginal tax rates) be no worse off than if no Code
Section 409A taxes, excise taxes, penalties or interest had been imposed.
Notwithstanding any provision in the Agreement to the contrary, if upon your
“separation from service” within the meaning of Code Section 409A, you are then
a “specified employee” (as defined in Code Section 409A), then to the extent
necessary to comply with Code Section 409A and avoid the imposition of taxes
under Code Section 409A, the Company shall defer payment of “nonqualified
deferred compensation” subject to Code Section 409A payable as a result of and
within six (6) months following such “separation from service” under this
Agreement until the earlier of (i) the first business day of the seventh month
following your “separation from service,” or (ii) ten (10) days after the
Company receives notification of your death. Additionally, the reimbursement of
expenses or in-kind benefits provided pursuant to this Agreement shall be
subject to the following conditions: (1) the expenses eligible for reimbursement
or in-kind benefits in one taxable year shall not affect the expenses eligible
for reimbursement or in-kind benefits in any other taxable year; (2) the
reimbursement of eligible expenses or in-kind benefits shall be made promptly,
subject to the Company’s applicable policies, but in no event later than the end
of the year after the year in which such expense was incurred; and (3) the right
to reimbursement or in-kind benefits shall not be subject to liquidation or
exchange for another benefit. The provisions of this Section 10 shall survive
any termination of this Agreement or your employment.
 
11. Entire Agreement. Except as otherwise specifically provided in this
Agreement, this Agreement contains all the legally binding understandings and
agreements between you and the Company pertaining to the subject matter of this
Agreement and supersedes all such agreements, whether oral or in writing,
previously entered into between the parties. In the event of any conflict in
terms between this Agreement and any other agreement executed by and between you
and the Company or any Company plan or policy, the terms of this Agreement shall
prevail and govern.
 
 
 
-6-

 
 
12. No Offset or Mitigation. No severance or other payments or benefits made to
you under this Agreement may be offset by the Company or by any other party. You
shall have no duty of mitigation with respect to any severance or other payments
or benefits made to you under this Agreement.
 
13. Notice. Any notice that the Company is required to or may desire to give you
shall be given by personal delivery, recognized overnight courier service,
email, telecopy or registered or certified mail, return receipt requested,
addressed to you at your address of record with the Company, or at such other
place as you may from time to time designate in writing. Any notice that you are
required or may desire to give to the Company hereunder shall be given by
personal delivery, recognized overnight courier service, email, telecopy or by
registered or certified mail, return receipt requested, addressed to the
Company’s General Counsel at its principal office, or at such other office as
the Company may from time to time designate in writing. The date of actual
delivery of any notice under this Section 13 shall be deemed to be the date of
delivery thereof.
 
14. Waiver; Severability. No provision of this Agreement may be amended or
waived unless such amendment or waiver is agreed to by you and the Company in a
writing that specifically references this Section 14. No waiver by you or the
Company of the breach of any condition or provision of this Agreement will be
deemed a waiver of a similar or dissimilar provision or condition at the same or
any prior or subsequent time. Except as expressly provided herein to the
contrary, failure or delay on the part of either party hereto to enforce any
right, power, or privilege hereunder will not be deemed to constitute a waiver
thereof. In the event any portion of this Agreement is determined to be invalid
or unenforceable for any reason, the remaining portions shall be unaffected
thereby and will remain in full force and effect to the fullest extent permitted
by law.
 
15. Voluntary Agreement, Nondisparagement. Each party represents that it has the
power and authority to enter into this Agreement. Each party acknowledges that
it has been advised to review this Agreement with its own legal counsel and
other advisors of its choosing and that prior to entering into this Agreement,
each has had the opportunity to review this Agreement with its attorney and
other advisors and have not asked (or relied upon) the other party or other
party’s counsel to represent it in this matter. Each party further represents
that each has carefully read and understands the scope and effect of the
provisions of this Agreement and that each is fully aware of the legal and
binding effect of this Agreement. This Agreement is executed voluntarily by each
party and without any duress or undue influence on the part or behalf of the
other party. The Company agrees that the Board and its executive officers will
not make (or direct the Company or any of its affiliates, employees or agents to
make) any written or oral communications that could reasonably be considered to
be disparaging of you (or your family members) in any respect including, but not
limited to, your personal performance, abilities or reputation.
 
 
 
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Please acknowledge your acceptance and understanding of this Agreement by
signing and returning it to the undersigned. A copy of this signed Agreement
will be sent to you for your records.
 
 
ACKNOWLEDGED AND AGREED:
 
 
 
 
 
INNOVUS PHARMACEUTICALS, INC.
RAULY GUTIERREZ
 
 
/s/ BASSAM DAMAJ 

/s/ RAULY GUTIERREZ 

BY: Bassam Damaj, Ph.D.
 
TITLE: President and CEO
 

 
 
 
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EXHIBIT A
 
 
 
 
 
A-1

 

 
EXHIBIT B
 
MUTUAL RELEASE OF ALL CLAIMS AND COVENANT NOT TO SUE PURSUANT
 
TO AGREEMENT
 
1. PARTIES. The parties to this Agreement and Release are Rauly Gutierrez
(“Executive”) and Innovus Pharmaceuticals, Inc., a Nevada corporation, (the
“Company”).
 
2. RECITALS. This Release is made with reference to the following facts:
 
Executive and Company are parties to an Employment Agreement dated September 23,
2016. That Employment Agreement provides that the Executive must execute a
mutual general release and covenant not to sue not later than forty-five (45)
days after Executive’s Termination Date (as defined in the Employment Agreement)
in order for Executive to receive the severance payment and benefits under the
Employment Agreement. This Release is the mutual general release and covenant
not to sue required by the Employment Agreement.
 
3. EXECUTIVE’S PROMISES. In consideration for the promises and payments
contained in the Employment Agreement, each party agrees as follows:
 
3.1 Executive hereby covenants not to sue and also waives, releases and forever
discharges Company, its parent company, divisions, subsidiaries, officers,
directors, agents, employees, stockholders, affiliates and successors from any
and all claims, causes of action, damages or costs of any type Executive may
have against Company or its current and former parent company, divisions,
subsidiaries, officers, directors, employees, agents, stockholders, successors
or affiliates (the “Released Parties”), and the Released Parties similarly
covenant not to sue and also waive, release and forever discharge Executive from
any and all claims, causes of action, damages or costs of any type that the
Released Parties may have against Executive, including without limitation those
arising out of or relating to Executive’s employment with Company, or
Executive’s separation of employment. This waiver and release includes, but is
not limited to, claims, causes of action, damages or costs arising under or in
relation to Company’s employee handbook and personnel policies, or any oral or
written representations or statements made by officers, directors, employees or
agents of Company, or under any state or federal law regulating wages, hours,
compensation or employment, or any claim for breach of contract or breach of the
implied covenant of good faith and fair dealing, or any claim for stock, stock
options, warrants, or phantom stock or equity of any kind or any claim for
wrongful termination, or any discrimination claim on the basis of race, sex,
sexual orientation, gender, age, religion, marital status, national origin,
physical or mental disability, medical condition, or any claim arising under the
federal Age Discrimination in Employment Act, the Equal Pay Act, the California
Family Rights Act, the Pregnancy Discrimination Act, the Family Medical Leave
Act, the California Labor Code, the California Wage Orders, Title VII of the
Civil Rights Act, the Fair Employment and Housing Act, the California Labor Code
Private Attorneys General Act of 2004, the California Wage Orders, and Business
and Professions Code Section 17200, et seq.
 
Notwithstanding the foregoing, with respect to Executive’s release, this Release
does not release (a) claims that cannot be released as a matter of law,
(b) claims arising after the effective date of this Release including those
under the Employment Agreement, (c) claims to enforce any of Executive’s rights
to post-termination benefits provided by the Employment Agreement, (d) claims
for indemnification or coverage under a directors and officers liability
insurance policy as provided in the Employment Agreement or under any other
contract or under applicable law, (e) claims to enforce any of Executive’s
vested benefits under any employee benefit plan of the Company including without
limitation his Compensatory Equity (as defined in the Employment Agreement), (f)
Executive’s right to file a charge, testify, assist, or cooperate with the EEOC
or to file a claim under the Fair Labor Standards Act, or (g) Executive’s rights
arising solely as a shareholder of the Company.
 
3.2 The waiver and release set forth in paragraph 3.1 applies to claims of which
either party does not currently have knowledge and each party specifically
waives the benefit of the provisions of Section 1542 of the Civil Code of the
State of California which reads as follows: “A general release does not extend
to claims which the creditor does not know or suspect to exist in his or her
favor at the time of executing the release, which if known by him or her must
have materially affected his or her settlement with the debtor.”
 
4. CONSULTATION, REVIEW, AND REVOCATION. In accordance with the Age
Discrimination in Employment Act of 1967 (“ADEA”) as amended by the Older
Workers Benefit Protection Act, Executive is advised to consult with an attorney
before signing this Release. Executive is given a period of 45 days in which to
consider whether to enter into this Release. Executive does not have to utilize
the entire 45 day period before signing this Release, and may waive this right.
If Executive does enter into this Release, Executive may revoke the Release
within 7 days after the execution of the Release. Any revocation must be in
writing and must be received by the Company no later than midnight of the
seventh day after execution by Executive. The Release is not effective or
enforceable until after this 7-day period has passed without revocation.
 
 
 
B-1

 
 
5. MISCELLANEOUS.
 
5.1 This Release shall be deemed to have been executed and delivered within the
State of California, and the rights and obligations of the parties hereunder
shall be construed and enforced in accordance with, and governed by, the laws of
the State of California.
 
5.2 This Release is the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous oral and
written agreements and discussions. This Release may be amended only by an
agreement in a writing signed by the parties.
 
5.3 This Release is binding upon and shall inure to the benefit of the parties
hereof, their respective agents, employees, representatives, officers,
directors, divisions, subsidiaries, affiliates, parent company, assigns, heirs,
partners, successors in interest and stockholders, including any successor
company of the Company.
 
5.4 Each party agrees that it has read this Release and has had the opportunity
to ask questions, seek counsel and time to consider the terms of the Release.
Each party has entered into this Release freely and voluntarily.
 
5.5 The parties agree that any dispute or controversy arising from or related to
this Release shall be decided by final and binding arbitration as provided in
the Employment Agreement.
 
 
 
RAULY GUTIERREZ (“Executive”)
 
_______________________________
 
Date:___________________________
 
INNOVUS PHARMACEUTICALS INC. (“Company”)
 
By:            ___________________________________
Its:            President & CEO
Date:            ___________________________________
 

 
 
 
 
 
 
 
 
 
 
 
B-2