Exhibit 10.1

 

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EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of June 2,
2017 (the “Effective Date”) by and between NovaBay Pharmaceuticals, Inc.
(“Company”) and Mark Sieczkarek (“Executive”).

 

RECITAL

 

The Company and Executive desire to formalize and reflect Executive’s employment
under the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing recital, the mutual covenants
herein contained and for other good and valuable consideration, the parties
hereby agree as follows:

 

I.           EMPLOYMENT.

 

A.     Position and Responsibilities. The Company hereby employs the Executive
as its Chief Executive Officer (“CEO”). Executive shall do and perform all such
services and acts as are necessary or advisable to fulfill the duties and
obligations of said position and/or such other and/or additional
responsibilities as are reasonably delegated to Executive by the Company’s Board
of Directors (the “Board”), consistent with the Company’s Bylaws.

 

B.     Term. Executive’s employment with the Company is at-will and shall be
governed by the terms of this Agreement, commencing on June 1, 2017 and
continuing for one (1) year (the “Term”), unless this Agreement is terminated at
some earlier time in accordance with the terms of this Agreement.

 

C.     Devotion. During the term of this Agreement, Executive (i) shall devote
the necessary skill, vision, and time and attention to the foregoing
responsibilities; (ii) Executive will continue to render commercial and
professional services as CEO of Fe3 Medical Inc., a privately-held company, with
full knowledge and approval by the Board of Directors, but shall not engage in
any other business or other activity which may materially interfere with
Executive’s performance of said responsibilities without the prior written
consent of the Company's Board of Directors; and (iii) except as to any
investment made in a publicly-traded entity not amounting to more than one
percent (1%) of its outstanding equity, shall not, directly or indirectly, as an
employee, consultant, partner, principal, director or in any other capacity,
engage or participate in any business that is in competition with the Company.

 

II.           PROPRIETARY RIGHTS, CONFIDENTIAL INFORMATION, NONSOLICITATION,
ETC.

 

Executive has executed an agreement relating to the treatment of (and
Executive’s obligations as to) proprietary rights, confidential information, and
certain non-solicitation and other matters. It is further understood and agreed
that said agreement is deemed to continue in full force and effect, binding and
not affected, in any manner, by the terms in this Agreement.

 

 
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III.           COMPENSATION AND BENEFITS.

 

Executive’s compensation and bonus rights are as follows:

 

A.     Salary. Executive shall be entitled to an annual cash salary of $440,000
(the “Base Salary”), subject to such deductions, withholding and other charges
as required by law, payable in accordance with the Company’s standard payroll
schedule.

 

B.     Stock Option Grant. At the first scheduled Board meeting after the later
of (1) the Effective Date of this Agreement; and, (2) such time as the pool of
stock options under the Company’s 2017 Omnibus Incentive Plan (the “Option
Plan”) is replenished to provide a sufficient pool from which to draw, the Board
shall approve a stock option grant to purchase 250,000 shares of the Company's
Common Stock at fair market value on the date of grant (the “Option”).
One-fourth (1/4) of the shares subject to the Option will vest on January 31,
2018 in direct proportion to the percentage achievement of the stated 2017
corporate goals, as approved and determined by the Board of Directors. The
remaining three fourths (3/4) of the shares subject to the Option shall vest in
equal parts on January 31, 2019, January 31, 2020, and January 31, 2021 in
direct proportion to the percentage achievement of the stated corporate goals
for the previous fiscal year. The Option will be fully vested and exercisable on
January 31, 2021, subject to Executive continuing to be an Employee (or
otherwise providing services to the Company) through the relevant vesting dates.
The Option will be subject to the terms, definitions and provisions of the
Company's Option Plan and the stock option agreement by and between Executive
and the Company (the “Option Agreement”), both of which documents will be
presented to Executive at the time of grant. Executive acknowledges and agrees
that he must execute the Company’s standard form of Option Agreement as an
additional condition precedent to being eligible for the Option.

 

D.     Annual Bonus. In addition to the Base Salary, for each fiscal year ending
during the Term, Executive shall have the opportunity to earn an annual
performance bonus (the "Annual Bonus") in an amount up to fifty percent (50%) of
Executive's Base Salary. The exact amount and composition of the Annual Bonus
will be determined by the Board of Directors or its Compensation Committee in
consultation with Executive, based upon mutually agreed, written performance
objectives, both personal and corporate. Such goals will be mutually agreed upon
by Executive and the Board at the beginning of each calendar year. The
Compensation Committee of the Board of Directors shall have the sole discretion
to pay any or all of the Annual Bonus in the form of equity compensation. Any
such equity compensation shall be issued from the Option Plan and shall be fully
vested upon payment.

 

E.     Long-Term Bonus. In addition to the Annual Bonus, for each fiscal year
ending during the Term, Executive shall have the opportunity to earn a
performance bonus (the "Long-Term Bonus"). The exact amount and composition of
the Long-Term Bonus will be determined by the Board of Directors or its
Compensation Committee in consultation with Executive, based upon mutually
agreed, written performance objectives of the Company. The objectives for the
Long-Term Bonus shall be distinct from those of the Annual Bonus and shall be
derived from the Company’s long-term strategic plan. The Compensation Committee
of the Board of Directors shall have the sole discretion to pay any or all of
the Long-Term Bonus in the form of equity compensation. Any such equity
compensation shall be issued from the Option Plan and shall be fully vested upon
payment.

 

 
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F.     Other Benefits. Executive shall be entitled to six (6) weeks of paid
vacation for each calendar year, which must be taken pursuant to the Company’s
vacation benefits policy. Executive, in lieu of benefits generally available to
the Company’s other similar, high-level executives, consisting of such medical,
retirement and similar benefits, will receive a car allowance of $13,500
annually, paid in equal monthly installments.

 

IV.          TERMINATION.

 

A.          At-Will Employment. It is understood and agreed by the Company and
Executive that this Agreement does not contain any promise or representation
concerning the duration of Executive's employment with the Company. Executive
specifically acknowledges that his employment with the Company is at-will and
may be altered or terminated by either Executive or the Company at any time,
with or without cause and with or without notice. In addition, the fact that
rate of salary, any bonuses, paid time off, other compensation, or vesting
schedules are stated in units of years or months or weeks does not alter the
at-will nature of the employment, and does not mean and should not be
interpreted to mean that Executive is guaranteed employment to the end of any
period of time or for any period of time. In the event of conflict between this
provision and any other statement, oral or written, present or future,
concerning terms and conditions of employment, the at-will relationship
confirmed by this provision shall control. This at-will status cannot be
altered, except in a writing signed by Executive and formally approved by the
Company’s Board of Directors.

 

B.           Termination of Employment. Although Executive’s employment
hereunder shall be deemed “at-will,” the following definitions will apply to any
termination:

 

1.     For Cause. In the event that Executive is Terminated For Cause (as
hereinafter defined), Executive shall only be entitled to Executive’s earned
wages through the date his employment with the Company is terminated, his
accrued but unused vacation, reimbursements of his outstanding expenses incurred
and submitted in compliance with Company policies and any other portion of his
compensation earned through the termination date.

 

2.     Change of Control. In the event that Executive is terminated in
connection with a Change of Control (as hereinafter below), 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 (i) an amount equal to
twice Executive’s Base Salary (“CoC Severance”) 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.

 

 
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a.     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.

 

3.           Termination Apart from Change of Control.

 

a.            Termination. If Executive's employment with the Company terminates
as a result of a Termination Without Cause (as hereinafter defined), Executive
will be entitled to receive the following severance and other benefits:

 

(i) Severance Pay. The Company shall pay to Executive an amount equal to (a)
eighteen (18) months of Executive's then-current Base Salary, plus (b) 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). Such severance
payment shall be paid in one lump sum thirty (30) calendar days following the
date of Executive's termination. In addition, Executive shall be eligible for
reimbursement of his COBRA premium for a period of eighteen (18) months
following Executive's termination; 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; provided, further, that upon the earlier to
occur of (c) the time that Executive no longer is a Qualified Beneficiary (as
such term is defined in Section 4980(B)(g)(l) of the Code) and (d) the date
eighteen (18) months following Executive's termination, the Company’s
obligations to reimburse Executive under this subsection shall cease.

 

(ii) Equity Award Acceleration. The vesting and exercisability of any
outstanding equity awards shall be automatically accelerated as to the amount of
the unvested shares subject thereto at the time of the termination that would
have vested had the Executive remained employed by the Company for eighteen (18)
months following the date of such termination. The foregoing provision is hereby
deemed to be a part of each agreement evidencing any equity award and to
supersede any contrary provision in any agreement relating thereto.

 

 
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C.           Related Provisions. The following terms, conditions and definitions
shall apply to the termination of Executive:

 

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 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 (as hereinafter defined) 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 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) calendar days out of any three hundred sixty-five (365) calendar 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 Executive’s residence: one to be selected by
each of Executive (or his authorized representative) and the Board, and the
third to be selected by such two designated physicians; or

 

(b)     is a Constructive Termination (as hereinafter defined) initiated by
Executive. "Constructive Termination" shall mean (i) the assignment or partial
assignment of any duties or responsibilities materially inconsistent in any
respect with those customarily associated with the position or those actually
provided in this Agreement (including status, offices, titles and reporting
requirements) to be held by Executive during the Term, or any other action by
the Company that results in a significant diminution or other material reduction
or any substantially adverse change in Executive’s position, title, authority,
duties or responsibilities; (ii) any failure by the Company to comply with any
material 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 material reduction in Executive’s Base Salary, target Annual
Bonus or target Long-Term Bonus, unless such reduction is part of a program
reducing the base salary and/or bonus opportunity of all C-level employees; (v)
a material reduction in the kind or level of benefits to which Executive was
entitled immediately prior to such reduction; (vi) a material reduction of the
facilities and perquisites (including office space and location) or secretarial
and administrative support available to Executive immediately prior to such
reduction; or (viii) the failure of any successor-in-interest to assume all of
the obligations of the Company under this Agreement. In order for Executive to
resign due to a Constructive Termination and be eligible for severance benefits,
he must provide the Company with written notification of the basis for his
belief that he is being Constructively Terminated and provide the Company with
an opportunity to cure any perceived deficiency as set forth below in Section
IV.E.

 

 
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2.           “Termination For Cause.” Subject to the notice requirement as
provided in Section IV.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; (ii) commits
willful gross acts of dishonesty, fraud, misrepresentation, or other acts of
moral turpitude in connection with Executive’s 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; or (iv) fails to achieve the stated milestones and
tasks as requested in writing by the Board, 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.

 

D.     Company Actions. All relevant determinations to be made by the Company
under paragraph IV.C.2(a) above shall be made in the reasonable discretion of
the Board (or, if so delegated by said Board, by a committee of the Board),
acting in good faith, and, except as otherwise specified herein, shall be
conclusive and binding, but shall be subject to arbitration in accordance with
Section V below. This Agreement is intended to comply with the requirements of
Internal Revenue Code Section 409A (“Section 409A”) and the Board or 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 salary continuation
payments specified herein (to the extent that they are subject to Section 409A
of the Code) will commence on the earlier of (A) the first business day
following expiration of the six (6)-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. 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 are 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 for 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.

 

 
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E.     Notice and Remedy. In the event that any reason for Termination For Cause
by the Company under paragraph IV.C.2(a) above, or by Executive in the case of a
Constructive Termination, may be cured by Executive or the Company, as the case
may be, then the Company or Executive, as applicable, shall first give a written
notice to the other party (by mail, email, or fax, to the last known address of
the recipient; said notice being deemed given, if by mail, as of the earlier of
four (4) calendar days after mailing or the date when actually received, or, if
by email or fax, when sent), specifying the reason for Termination For Cause or
Constructive Termination, as applicable, and providing a period of thirty (30)
calendar days to cure the fault or reason specified. Lacking such cure within
said thirty (30) calendar days, or if the notified party earlier refuses to
effect the cure, the Termination For Cause or Constructive Termination, as
applicable, shall then be deemed effective. If such cure is so made, the
Termination For Cause or Constructive Termination, as applicable, shall not then
be deemed effective, but any later conduct of a similar nature constituting a
reason for Termination For Cause or Constructive Termination, as applicable,
shall allow the Company or Executive, as the case may be, the right to cause the
Termination For Cause or Constructive Termination, as applicable, to become
effective without need for any further period of time to cure. All
communications shall be sent to the address as set forth on the signature page
hereof, or to such other address as a party may designate by ten (10) calendar
days’ advance written notice to the other party hereto.

 

V.           ARBITRATION.

 

A.     Arbitration. 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 binding arbitration in San
Francisco, California. Except for the right of the Company and Executive to seek
injunctive relief in court, any controversy, claim or dispute of any type
arising out of or relating to Executive’s employment or the provisions of this
Agreement shall be resolved in accordance with this Section V of the Agreement,
which will be the sole and exclusive procedure for the resolution of any such
disputes. This Agreement shall be enforced in accordance with the Federal
Arbitration Act, the enforcement provisions of which are incorporated herein by
reference. Matters subject to these provisions include, without limitation, any
and all claims or disputes whatsoever, including those claims based on statute,
contract, common law and tort and will include, for example, matters pertaining
to termination, discrimination, harassment, compensation and benefits. Matters
to be resolved under these procedures also include claims and disputes arising
out of statutes such as the Fair Labor Standards Act, Title VII of the Civil
Rights Act, the Age Discrimination in Employment Act, the California Labor Code,
and the California Fair Employment and Housing Act. Nothing in this provision is
intended to restrict Executive from submitting any matter to an administrative
agency with jurisdiction over such matter.

 

 
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Executive and the Company agree that any disputes related to or arising out of
Executive’s employment with the Company will be determined by arbitration in
accordance with the then-current JAMS employment arbitration rules and
procedures, except as modified herein. The arbitration will be conducted by a
sole neutral arbitrator. If the Company and Executive cannot agree on an
arbitrator, then the arbitrator will be selected by JAMS in accordance with the
JAMS employment arbitration rules and procedures. Reasonable discovery will be
permitted by both parties, and the arbitrator may decide any issue as to
discovery. The arbitrator may decide any issue as to whether or as to the extent
to which any dispute is subject to arbitration in this Section V and may award
any relief permitted by law. The arbitrator must render the award in writing,
including an explanation of the reasons for the award. Judgment upon the award
may be entered by any court having jurisdiction of the matter, and the decision
of the arbitrator will be final and binding. The parties hereby waive, to the
fullest extent permitted by law, any rights to appeal or to review of such award
by any court. The statute of limitations applicable to the commencement of a
lawsuit will apply to the commencement of arbitration under this Section V of
this Agreement. At the request of any party, the arbitrator, attorneys, parties
to the arbitration, witnesses, experts, court reporters or other persons present
at the arbitration shall agree in writing to maintain the strict confidentiality
of the arbitration proceedings. The arbitrator’s fees and cost of the
Arbitration will be paid in full by the Company.

 

B.     Acknowledgement. EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION V, WHICH
DISCUSSES ARBITRATION. 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 SET FORTH IN THIS SECTION V CONSTITUTE A WAIVER OF EXECUTIVE’S RIGHT
TO A JURY TRIAL.

 

C.     No Duty to Mitigate. Executive is under no contractual or legal
obligation to mitigate Executive’s damages in order to receive the severance
benefits provided in this Agreement.

 

VI.          LEGAL ADVICE.

 

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.

 

VII.         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.     contains the entire understanding of the parties as to its subject
matter, and replaces and supersedes any existing employment agreement and any
and all contrary prior understandings or agreements, whether written or verbal;

 

C.     may be amended or modified only by a written amendment or modification
signed by the Company and Executive that expressly references this Agreement;

 

 
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D.     is made in, and shall be construed under, the laws of the State of
California;

 

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 to violate 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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IN WITNESS WHEREOF, the Company and Executive have executed this Agreement as of
the day and year first above written.

 

 

COMPANY:      

 

NOVABAY PHARMACEUTICALS, INC.               By: /s/ Paul E. Freiman
                                            Name: Paul E. Freiman   Title:
Chairman of the Compensation Committee   Address: 2000 Powell Street, Suite 1150
    Emeryville, CA 94608   E-mail: At the email address most recently on the
books and records of the Company.      

 

EXECUTIVE:

 

              By: /s/ Mark Sieczkarek                                          
Name: Mark Sieczkarek   Address: At the address most recently on the books and
records of the Company.   Telephone No. At the telephone number most recently on
the books and records of the Company.   E-mail: At the email address most
recently on the books and records of the Company.

 

 

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