Exhibit 10.1

 

SEPARATION AGREEMENT AND RELEASE

 

This Separation Agreement and Release (“Agreement”) is made by and between Scott
F. Drees (“Executive”) and Nuvectra Corporation (the “Company”) (collectively
referred to as the “Parties” or individually referred to as a “Party”).

 

RECITALS

 

WHEREAS, Executive was employed by the Company as its Chief Executive Officer;

 

WHEREAS, Executive signed an Employment Agreement with the Company on January
13, 2017 (the “Employment Agreement”) and Amendment to the Employment Agreement
on December 10, 2018;

 

WHEREAS, Executive separated from his employment with the Company on January 31,
2019 (the “Separation Date”); and

 

WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints,
grievances, charges, actions, petitions, and demands that the Executive may have
against the Company and any of the Releasees as defined below, including, but
not limited to, any and all claims arising out of or in any way related to
Executive’s employment with or separation from the Company;

 

WHEREAS, the consideration and terms herein are intended to be in line with the
payments and benefits specified under the Employment Agreement based upon the
nature of Executive’s separation from employment with the Company;

 

NOW, THEREFORE, in consideration of the mutual promises made herein, the Company
and Executive hereby agree as follows:

 

COVENANTS

 

1.     Conditions. Executive agrees to resign any seat he holds on the Company’s
Board of Directors by submitting a letter of resignation to its Chairman as soon
as practicable after the Separation Date.

 

2.     Consideration. In consideration of Executive’s execution of this
Agreement and Executive’s fulfillment of all of its terms and conditions, and
provided that Executive does not revoke the Agreement under Section 6 below, the
Company agrees as follows:

 

a.     Lump Sum Payment, Termination Without Cause. The Company agrees to pay
Executive a lump sum payment of Seven Hundred Ninety Two Thousand Five Hundred
Forty Dollars ($792,540.00), less applicable withholdings, which amount
constitutes Executive’s annual Salary and his 2019 Target Bonus. Said payment
will be made to Executive no earlier than after the seven (7) day revocation
period in Section 6 below and no later than fifteen days after that revocation
period. The Company also understands and acknowledges that it is responsible for
all salary ($16,934.62) and benefits that have accrued, but have not yet been
paid, through the Separation Date, and that such amounts are not the subject of
this Agreement.

 

 

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b.     2018 Bonus. Executive shall be paid a lump sum amount of Three Hundred
Fifty-Nine Thousand Five Hundred Forty Eight Dollars and 54/100 ($359,548.54),
less applicable taxes, which represents Executive’s 2018 Bonus. Said bonus will
be paid to Executive no earlier than after the seven (7) day revocation period
in Section 6 below and no later than 15 days after the revocation period.

 

c.     Treatment of Stock Options and RSU’s. Executive’s restricted stock units
and stock options will continue to be subject to the terms of their underlying
grant agreements and their associated plans. The RSU’s and options will vest in
accordance with such agreements and plans through March 7, 2020. Currently, the
Parties agree that Executive has been granted the following restricted stock
units and stock options with vesting dates as follows:

 

Grant Date

Type

Quantity

Vest Date

       

4/8/2016

RSU

16,024

4/7/2019

4/8/2016

Option

5,341

4/7/2019

4/9/2018

RSU

2,890

5/12/2019

4/9/2018

Option

5,779

5/12/2019

4/9/2018

RSU

723

11/12/2019

4/9/2018

Option

1,445

11/12/2019

 

 

d.     Salary Continuation. In addition to the other consideration in this
Section 2, the Company will continue to pay Executive his regular Salary from
February 1, 2019 through March 7, 2019, less applicable deductions, further to
the Company’s regular payroll schedule. Through March 7, 2019, the Company may
contact Executive, at reasonable times, and Executive agrees to cooperate and
respond to Company inquiries by providing the Company with answers to questions
and requests for information to the extent that Executive has knowledge of such
information.

 

3.     COBRA Benefits. Executive shall be paid a lump of Sixteen Thousand Four
Hundred Two Dollars and 58/100 ($16,402.58) which amount equals the premiums for
12 months of COBRA continuation coverage. Said payment will be made to Executive
no earlier than after the seven (7) day revocation period in Section 6 below and
no later than fifteen days after that revocation period.

 

4.     Payment of Salary and Receipt of All Benefits. Executive acknowledges and
represents that, other than the consideration set forth in this Agreement, the
Company and its agents have paid, or will pay, or provided all salary, wages,
bonuses, accrued vacation/paid time off, notice periods, premiums, leaves,
housing allowances, relocation costs, interest, severance, outplacement costs,
fees, reimbursable expenses, commissions, stock, stock options, vesting, and any
and all other benefits and compensation due to Executive that have accrued
through the Separation Date.

 

 

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5.     Release of Claims. Executive agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to Executive
by the Company and its current and former officers, directors, executives,
agents, investors, attorneys, shareholders, administrators, affiliates, benefit
plans, plan administrators, insurers, trustees, divisions, and subsidiaries, and
predecessor and successor corporations and assigns (including, but not limited
to, the Company’s professional employer organization, if applicable) and the
Company, (collectively, the “Releasees”). Executive and the Company, on their
own behalf and on behalf of their respective heirs, family members, executors,
agents, and assigns, hereby and forever releases the Executive and Releasees
from, and agrees not to sue concerning, or in any manner to institute,
prosecute, or pursue, any claim, complaint, charge, duty, obligation, demand, or
cause of action relating to any matters of any kind, whether presently known or
unknown, suspected or unsuspected, that they may possess against any of the
Releasees arising from any omissions, acts, facts, or damages that have occurred
up until and including the Effective Date of this Agreement, including, without
limitation:

 

a.     any and all claims relating to or arising from Executive’s employment
relationship with the Company and the termination of that relationship;

 

b.     any and all claims relating to, or arising from, Executive’s right to
purchase, or actual purchase of shares of stock of the Company, including,
without limitation, any claims for fraud, misrepresentation, breach of fiduciary
duty, breach of duty under applicable state corporate law, and securities fraud
under any state or federal law;

 

c.     any and all claims for wrongful discharge of employment; termination in
violation of public policy; discrimination; harassment; retaliation; breach of
contract, both express and implied; breach of covenant of good faith and fair
dealing, both express and implied; promissory estoppel; negligent or intentional
infliction of emotional distress; fraud; negligent or intentional
misrepresentation; negligent or intentional interference with contract or
prospective economic advantage; unfair business practices; defamation; libel;
slander; negligence; personal injury; assault; battery; invasion of privacy;
false imprisonment; conversion; and disability benefits;

 

d.     any and all claims for violation of any federal, state, or municipal
statute, including, but not limited to, Title VII of the Civil Rights Act of
1964; the Civil Rights Act of 1991; the Rehabilitation Act of 1973; the
Americans with Disabilities Act of 1990; the Equal Pay Act; the Fair Labor
Standards Act; the Fair Credit Reporting Act; the Age Discrimination in
Employment Act of 1967; the Older Workers Benefit Protection Act; the Executive
Retirement Income Security Act of 1974; the Worker Adjustment and Retraining
Notification Act; the Family and Medical Leave Act; the Sarbanes-Oxley Act of
2002; the Uniformed Services Employment and Reemployment Rights Act; Texas
Employment Discrimination Law, as amended, Tex. Lab. Code Ann. §§ 21.001 to
21.405; Texas Disability Discrimination Law, as amended, Tex. Hum. Res. Code
Ann. § 121.003; Texas Minimum Wage Act, Tex. Lab. Code Ann. §§ 62.001 to 62.205;
Texas Wage Payment Law, Tex. Lab. Code Ann. §§ 61.001 to 61.095;

 

e.     any and all claims for violation of the federal or any state
constitution;

 

f.     any and all claims arising out of any other laws and regulations relating
to employment or employment discrimination;

 

 

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g.     any claim for any loss, cost, damage, or expense arising out of any
dispute over the non-withholding or other tax treatment of any of the proceeds
received by Executive as a result of this Agreement; and

 

h.     any and all claims for attorneys’ fees and costs.

 

The parties agree that the releases set forth in this paragraph 5 shall be and
remain in effect in all respects as a complete general release as to the matters
released. This release does not release claims that cannot be released as a
matter of law, including, but not limited to, Executive’s right to file a charge
with or participate in a charge by the Equal Employment Opportunity Commission,
or any other local, state, or federal administrative body or government agency
that is authorized to enforce or administer laws related to employment, against
the Company (with the understanding that any such filing or participation does
not give Executive the right to recover any monetary damages against the
Company; Executive’s release of claims herein bars Executive from recovering
such monetary relief from the Company). This release does not extend to any
right Executive may have to workers’ compensation benefits or other vested right
under a Company health and welfare plan. Executive represents that he has made
no assignment or transfer of any right, claim, complaint, charge, duty,
obligation, demand, cause of action, or other matter waived or released by this
Section. The Company shall indemnify Executive to the extent provided for in the
Company’s by-laws and as covered in the Company’s Directors and Officers
liability coverage as was applicable to Executive while serving in his capacity
as CEO and member of the Board of Directors.

 

6.     Acknowledgment of Waiver of Claims under ADEA. Executive acknowledges
that he is waiving and releasing any rights he may have under the Age
Discrimination in Employment Act of 1967 ("ADEA"), and that this waiver and
release is knowing and voluntary. Executive agrees that this waiver and release
does not apply to any rights or claims that may arise under the ADEA after the
Effective Date of this Agreement. Executive acknowledges that the consideration
given for this waiver and release is in addition to anything of value to which
Executive was already entitled. Executive further acknowledges that he has been
advised by this writing that: (a) he should consult with an attorney prior to
executing this Agreement; (b) he has twenty-one (21) days within which to
consider this Agreement; (c) he has seven (7) days following his execution of
this Agreement to revoke this Agreement; (d) this Agreement shall not be
effective until after the revocation period has expired; and (e) nothing in this
Agreement prevents or precludes Executive from challenging or seeking a
determination in good faith of the validity of this waiver under the ADEA, nor
does it impose any condition precedent, penalties, or costs for doing so, unless
specifically authorized by federal law. In the event Executive signs this
Agreement and returns it to the Company in less than the 21-day period
identified above, Executive hereby acknowledges that he has freely and
voluntarily chosen to waive the time period allotted for considering this
Agreement. Executive acknowledges and understands that revocation must be
accomplished by a written notification to the Chairman of the Board of Directors
that is received prior to the Effective Date.

 

7.     No Pending or Future Lawsuits. Executive and the Company represent that
they have no lawsuits, claims, or actions pending in their name, or on behalf of
any other person or entity, against the Company, Employee or any of the other
Releasees. Executive and the Company also represent that they do not intend to
bring any claims on their own behalf or on behalf of any other person or entity
against the Company, the Employee or any of the other Releasees.

 

 

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8.     Confidentiality. To the extent that its terms are not otherwise publicly
disclosed, Executive agrees to maintain in complete confidence the existence of
this Agreement, the contents and terms of this Agreement, the consideration for
this Agreement and any meetings, discussions or events associated with the
finalizing of this Agreement (hereinafter collectively referred to as
“Separation Information”). Except as required by law, Executive may disclose
Separation Information only to his immediate family members, the Court in any
proceedings to enforce the terms of this Agreement, Executive’s counsel, and
Executive’s accountant, any professional tax advisor or other professional
advisor to the extent that they need to know the Separation Information in order
to provide advice on tax treatment, prepare tax returns, or to render financial
advice. Executive agrees that he will not publicize, directly or indirectly, any
Separation Information. For avoidance of doubt, this paragraph 8 does not extend
to Executive’s representations to any other person that he was formerly an
executive of the Company.

 

9.     Trade Secrets and Confidential Information/Company Property. Executive
reaffirms and agrees to observe and abide by the Employment Agreement and its
provisions (“Surviving Provisions”) relating to trade secrets, confidential
information, non-competition and non-recruitment, specifically including the
provisions therein regarding nondisclosure of the Company’s trade secrets and
confidential and proprietary information, noncompetition, and non-solicitation
of Company executives. Executive agrees that the above reaffirmation and
agreement with the Surviving Provisions shall constitute a new and separately
enforceable agreement to abide by the terms of the Surviving Provisions, entered
and effective as of the Effective Date. Executive specifically acknowledges and
agrees that any violation of the restrictive covenants in the Surviving
Provisions shall constitute a material breach of this Agreement. Executive’s
signature below constitutes his certification under penalty of perjury that he
has returned or will promptly return all documents and other items provided to
Executive by the Company, developed or obtained by Executive in connection with
his employment with the Company, or otherwise belonging to the Company,
including, but not limited to, all passwords to any software or other programs
or data that Executive used in performing services for the Company and all other
property of the Company. For avoidance of doubt, it is a material condition of
this Agreement that (a) Executive agrees that he shall retain no rights,
ownership, or other interest in, and must cooperate in transferring control over
Company property and (b) Executive promptly assist the Company in transferring
control of all Company assets to the Company.

 

10.    No Cooperation. Executive agrees that he will not knowingly encourage,
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 any of the Releasees, unless under a
subpoena or other court order to do so or as related directly to the ADEA waiver
in this Agreement or as otherwise required by applicable law. Executive agrees
both to immediately notify the Company upon receipt of any such subpoena or
court order, and to furnish, within three (3) business days of its receipt, a
copy of such subpoena or other court order. If approached by anyone for counsel
or assistance in the presentation or prosecution of any disputes, differences,
grievances, claims, charges, or complaints against any of the Releasees,
Executive shall state no more than that he cannot provide counsel or assistance.
Nothing in this paragraph 10 shall be deemed to prohibit Executive from making
disclosures or taking such actions which are otherwise required by applicable
law.

 

 

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11.     Non-disparagement. Executive agrees to refrain from any disparaging
statements about the Company or any of the other Releasees including, without
limitation, the business, products, intellectual property, financial standing,
future, or employment/compensation/benefit practices of the Company. The Company
agrees to refrain from any disparaging statements about Executive. Executive
understands that the Company’s obligations under this paragraph extend only to
the Company’s current executive officers and members of its Board of Directors
and only for so long as each officer or member is an executive or Director of
the Company.

 

12.     Breach. Executive acknowledges and agrees that any substantial and
material breach of this Agreement, unless such breach constitutes a legal action
by Executive challenging or seeking a determination in good faith of the
validity of the waiver herein under the ADEA, or of any provision of the
Confidentiality Agreement shall entitle the Company immediately to recover
and/or cease providing the consideration provided to Executive under this
Agreement and to obtain damages, except as provided by law, provided, however,
that the Company shall not recover One Hundred Dollars ($100.00) of the
consideration already paid pursuant to this Agreement and such amount shall
serve as full and complete consideration for the promises and obligations
assumed by Executive under this Agreement and the Confidentiality Agreement;
provided further, Company shall provide Executive with written notice of such
breach and Executive shall have ten (10) days in which to fully cure the breach,
but only if the breach is subject to being cured.

 

13.     No Admission of Liability. Executive understands and acknowledges that
this Agreement constitutes a compromise and settlement of any and all actual or
potential disputed claims by Executive. No action taken by the Company hereto,
either previously or in connection with this Agreement, shall be deemed or
construed to be (a) an admission of the truth or falsity of any actual or
potential claims or (b) an acknowledgment or admission by the Company of any
fault or liability whatsoever to Executive or to any third party.

 

14.      Costs. The Parties shall each bear their own costs, attorneys’ fees,
and other fees incurred in connection with the preparation of and counsel
regarding this Agreement.

 

15.    ARBITRATION. THE PARTIES AGREE THAT ANY AND ALL DISPUTES ARISING OUT OF
THE TERMS OF THIS AGREEMENT, THEIR INTERPRETATION, AND ANY OF THE MATTERS HEREIN
RELEASED, SHALL BE SUBJECT TO ARBITRATION IN TRAVIS COUNTY, BEFORE THE JUDICIAL
ARBITRATION AND MEDIATION SERVICE (“ JAMS”) UNDER ITS COMPREHENSIVE ARBITRATION
RULES (“JAMS RULES”) AND TEXAS LAW. THE ARBITRATOR MAY GRANT INJUNCTIONS AND
OTHER RELIEF IN SUCH DISPUTES. THE ARBITRATOR SHALL ADMINISTER AND CONDUCT ANY
ARBITRATION IN ACCORDANCE WITH TEXAS LAW, AND THE ARBITRATOR SHALL APPLY
SUBSTANTIVE AND PROCEDURAL TEXAS LAW TO ANY DISPUTE OR CLAIM, WITHOUT REFERENCE
TO ANY CONFLICT-OF-LAW PROVISIONS OF ANY JURISDICTION. TO THE EXTENT THAT THE
JAMS RULES CONFLICT WITH TEXAS LAW, TEXAS LAW SHALL TAKE PRECEDENCE. THE
DECISION OF THE ARBITRATOR SHALL BE FINAL, CONCLUSIVE, AND BINDING ON THE
PARTIES TO THE ARBITRATION. THE PARTIES AGREE THAT THE PREVAILING PARTY IN ANY
ARBITRATION SHALL BE ENTITLED TO INJUNCTIVE RELIEF IN ANY COURT OF COMPETENT
JURISDICTION TO ENFORCE THE ARBITRATION AWARD. THE PARTIES TO THE ARBITRATION
SHALL EACH PAY HALF THE COSTS AND EXPENSES OF SUCH ARBITRATION, AND EACH PARTY
SHALL SEPARATELY PAY FOR ITS RESPECTIVE COUNSEL FEES AND EXPENSES; PROVIDED,
HOWEVER, THAT THE ARBITRATOR SHALL AWARD ATTORNEYS’ FEES AND COSTS TO THE
PREVAILING PARTY, EXCEPT AS PROHIBITED BY LAW. THE PARTIES AGREE THAT PUNITIVE
DAMAGES SHALL BE UNAVAILABLE IN ARBITRATION. THE PARTIES HEREBY AGREE TO WAIVE
THEIR RIGHT TO HAVE ANY DISPUTE BETWEEN THEM RESOLVED IN A COURT OF LAW BY A
JUDGE OR JURY. NOTWITHSTANDING THE FOREGOING, THIS SECTION WILL NOT PREVENT
EITHER PARTY FROM SEEKING INJUNCTIVE RELIEF (OR ANY OTHER PROVISIONAL REMEDY)
FROM ANY COURT HAVING JURISDICTION OVER THE PARTIES AND THE SUBJECT MATTER OF
THEIR DISPUTE RELATING TO THIS AGREEMENT AND THE AGREEMENTS INCORPORATED HEREIN
BY REFERENCE. SHOULD ANY PART OF THE ARBITRATION AGREEMENT CONTAINED IN THIS
PARAGRAPH CONFLICT WITH ANY OTHER ARBITRATION AGREEMENT BETWEEN THE PARTIES, THE
PARTIES AGREE THAT THIS ARBITRATION AGREEMENT SHALL GOVERN.

 

 

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16.     Authority. The Company represents and warrants that the undersigned has
the authority to act on behalf of the Company and to bind the Company and all
who may claim through it to the terms and conditions of this Agreement.
Executive represents and warrants that he has the capacity to act on his own
behalf and on behalf of all who might claim through him to bind them to the
terms and conditions of this Agreement. Each Party warrants and represents that
there are no liens or claims of lien or assignments in law or equity or
otherwise of or against any of the claims or causes of action released herein.

 

17.     No Representations. Executive represents that he has had an opportunity
to consult with an attorney, and has carefully read and understands the scope
and effect of the provisions of this Agreement. Executive has not relied upon
any representations or statements made by the Company that are not specifically
set forth in this Agreement.

 

18.     Severability. In the event that any provision or any portion of any
provision hereof or any surviving agreement made a part hereof becomes or is
declared by a court of competent jurisdiction or arbitrator to be illegal,
unenforceable, or void, this Agreement shall continue in full force and effect
without said provision or portion of provision.

 

19.     Entire Agreement. This Agreement represents the entire agreement and
understanding between the Company and Executive concerning the subject matter of
this Agreement and Executive’s employment with and separation from the Company
and the events leading thereto and associated therewith, and supersedes and
replaces any and all prior agreements and understandings concerning the subject
matter of this Agreement and Executive’s relationship with the Company, with the
exception of those provisions explicitly referenced as surviving herein.

 

20.      No Oral Modification. This Agreement may only be amended in a writing
signed by Executive and the Company’s Chairman of the Board of Directors.

 

21.     Governing Law. This Agreement shall be governed by the laws of the State
of Texas, without regard for choice-of-law provisions. Executive and the Company
consent to personal and exclusive jurisdiction and venue in the State of Texas.

 

 

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22.     Effective Date. Executive understands that this Agreement shall be null
and void if not executed by him within the twenty-one (21) day period set forth
above. Executive Party has seven (7) days after signing this Agreement to revoke
it. This Agreement will become effective on the eighth (8th) day after Executive
signed this Agreement, so long as it has been signed by the Parties and has not
been revoked before that date (the “Effective Date”).

 

23.     Counterparts. This Agreement may be executed in counterparts and by
facsimile, and each counterpart and facsimile shall have the same force and
effect as an original and shall constitute an effective, binding agreement on
the part of each of the undersigned.

 

24.    Voluntary Execution of Agreement. Executive understands and agrees that
he executed this Agreement voluntarily, without any duress or undue influence on
the part or behalf of the Company or any third party, with the full intent of
releasing all of his claims against the Company and any of the other Releasees.
Executive acknowledges that:

 

 

(a)

he has read this Agreement;

 

 

(b)

he has been represented in the preparation, negotiation, and execution of this
Agreement by legal counsel of his own choice;

 

 

(c)

he understands the terms and consequences of this Agreement and of the releases
it contains; and

 

 

(d)

he is fully aware of the legal and binding effect of this Agreement.

 

 

IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective
dates set forth below.

 

Dated: January 31, 2019

SCOTT F. DREES, an individual

 

 

 

 

 

       

 

/s/ Scott F. Drees

 

 

Scott F. Drees

 

 

 

 

 

        Dated: January 31, 2019  NUVECTRA CORPORATION                    
/s/ Joseph A. Miller, Jr.     Dr. Joseph A. Miller, Jr.     Title: Chairman of
the Board of Directors