Exhibit 10.2

 

Execution Copy (12/30/16)

 

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made between Nuvectra
Corporation, a Delaware corporation (the “Company” or “Nuvectra”) and Walter Z.
Berger (“Executive”).

 

In consideration of the below mutual covenants and other good and valuable
consideration, the parties agree as follows:

 

1.     Employment Period. The Company shall employ Executive, and Executive
hereby accepts employment with the Company, upon the terms and conditions set
forth in this Agreement effective as of March 7, 2016 (the “Effective Date”)
until the third anniversary of the Effective Date (the “Term”). Thereafter,
unless written notification is given at least ninety (90) days before the
expiration of the Term or any subsequent renewal term, this Agreement will
automatically renew for successive one-year periods (each, a “Renewal Term”).
Notwithstanding the foregoing, Executive’s employment hereunder may be earlier
terminated in accordance with Section 4.1 below. The period of time between the
Effective Date and the termination of Executive’s employment hereunder shall be
referred to herein as the “Employment Period.” For the avoidance of doubt,
subject to the terms and provisions of this Agreement, including Section 4
below, the Employment Period may be terminated by either the Company or
Executive at will.

 

2.     Position and Duties.

 

2.1     During the Employment Period, Executive shall serve as Executive Vice
President and the Chief Operating Officer and Chief Financial Officer (“CFO”) of
Nuvectra and shall have the normal duties, responsibilities, functions and
authority of such position, reporting to the Chief Executive Officer (“CEO”) and
as legally required, the Company’s Board of Directors (“Board”), and such other
duties as the CEO and Board shall designate and assign from time to time that
are not inconsistent with Executive’s position as Executive Vice President and
CFO of the Company. Executive shall render such services to the Company and its
Subsidiaries, if any, at the offices currently located at 5830 Granite Parkway,
Plano, Texas 75024 (“Executive’s Office”).

 

2.2     During the Employment Period, Executive shall devote substantially all
of Executive’s business time, efforts, energy and skill (except for Company
holidays, permitted vacation periods and reasonable periods of illness or other
incapacity) to the business and affairs of the Company and shall comply with the
Company’s published policies and procedures in all material respects.
Notwithstanding the foregoing, nothing shall prevent Executive from: (i) serving
on the board of directors of no more than two (2) for-profit entities with the
prior approval of the CEO and Governance Committee of the Board; (ii) serving on
the board of directors of charitable, non-profit organizations and, (iii)
participating in charitable, civic, educational, professional, community or
industry affairs; and (iv) managing Executive’s passive personal investments;
provided, however, such permitted activities shall not in any material respect
interfere or conflict with the Executive’s duties under this Agreement or create
a potential business or fiduciary conflict.

 

 
 

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2.3     For purposes of this Agreement, a “Subsidiary” shall mean any subsidiary
corporation of the Company within the meaning of Section 424(f) of the Internal
Revenue Code of 1986, as amended (the “Code”).

 

3.     Compensation and Benefits.

 

3.1     During the Employment Period, the Company agrees to pay Executive a base
salary at a rate of not less than $375,000.00 per annum, payable by the Company
in regular installments in accordance with the Company’s general payroll
practices in effect from time to time, but not less frequently than monthly.
Executive’s base salary and performance shall be subject to annual review by the
CEO and the salary may be increased, but not decreased, by the Board in the
first quarter of each year during the Employment Period. The base salary as
determined herein from time to time shall constitute “Base Salary” for purposes
of this Agreement. During any partial years of employment during the Employment
Period, the Base Salary shall be prorated on an annualized basis.

 

3.2     Executive shall be eligible to earn a discretionary performance bonus
each fiscal year based upon specific annual objectives that the Board or its
Compensation Committee will develop in consultation with the CEO. The bonus will
be targeted at not less than 60% of Executive’s Base Salary, with actual payment
to range from 0 to 120%, depending on Executive’s and the Company’s actual
performance. The general objectives of the bonus plan and its goals will be
consistent with the plans provided to other executives of the Company.

 

3.3     On or about April 5, 2016 Executive was granted certain shares (options
shares and restricted stock units) under the Plan, as defined below. Executive
will be eligible for a grant of equity stock under the 2016 Equity Incentive
Plan, as may be amended from time to time (“Plan”). Such grant will be
determined by the Compensation Committee of the Board of Directors whose
considerations for such grant will include comparable market data for CFO equity
grants in companies within Nuvectra’s peer group companies, as determined by the
Compensation Committee with input from Management. All such grants shall be
subject to approval by the Board and the terms and conditions concerning such
grant(s) will be controlled by and subject to the terms of the Plan unless
specifically set forth for in this Agreement.

 

3.4     Executive and Company shall execute the Company’s current form
indemnification agreement for officers as such form exists as on file with the
Securities and Exchange Commission as of the execution date of this Agreement.

 

3.5     In addition, during the Employment Period, Executive shall be entitled
to participate in all of the Company’s employee benefit programs for which
executive employees of the Company are generally eligible. Further, Executive
will be eligible for not less than four weeks of paid vacation per year and may
undergo an annual executive physical which cost will be reimbursed by the
Company.

 

 
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3.6     During the Employment Period, the Company shall reimburse Executive for
all reasonable business expenses incurred by Executive in the course of
performing Executive’s duties and responsibilities under this Agreement which
are consistent with the Company’s policies in effect from time to time with
respect to travel, entertainment and other business expenses, subject to the
Company’s requirements with respect to reporting and documentation of such
expenses.

 

3.7     All amounts payable to Executive hereunder and as may be required by
this Agreement in the future shall be subject to all required and customary
withholdings by the Company.

 

4.     Termination of Employment.

 

4.1     Executive’s employment and the Employment Period shall terminate on the
first of the following to occur:

 

4.1.1     Automatically on the date of Executive’s death.

 

4.1.2     Immediately upon written notice by the Company to Executive for any
termination by the Company, including a termination due to Disability (which the
Company may, in its sole discretion, make effective on any date later than the
notice date).

 

4.1.3     Immediately upon written notice by Executive to the Company of a
resignation for any reason.

 

4.1.4     The expiration of the Term or Renewal Term in accordance with Section
1 above.

 

4.2     Upon a termination of Executive’s employment for any reason in Section
4.1 above, Executive shall be entitled to the “Accrued Benefits,” which shall
mean: (i) any unpaid Base Salary through the date of termination, payable on the
next Company payroll date following termination; (ii) reimbursement for any
unreimbursed business expenses incurred through the date of termination, payable
on the next Company payroll date following termination and Executive submission
of documentation of such expenses; and (iii) all other payments, benefits or
fringe benefits earned but unpaid through the date of termination to which
Executive may then be entitled under the terms of any applicable compensation
arrangement or benefit, equity or fringe benefit plan or program or grant or
this Agreement.

 

4.3     If Executive’s employment is terminated by the Company without Cause or
for Good Reason then, in addition to the Accrued Benefits, Executive shall be
entitled to receive:

 

4.3.1     Lump sum payment of Executive’s annual Base Salary as in effect on the
date of termination and the target bonus for the current year, payable within 15
days of Executive’s execution and non-revocation of the General Release
specified in Section 4.5;

 

 
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4.3.2     Lump sum payment for 12 months of COBRA continuation coverage premiums
under the Company’s group medical plans as in effect from time to time based on
Executive coverage as of the date of termination and provided Executive timely
elects COBRA continuation coverage, payable within 15 days of Executive’s
execution and non-revocation of the General Release specified in Section 4.5;

 

4.3.3     Lump sum payment of any unpaid annual bonus for any then completed
fiscal year, cash LTIP amounts for completed performance measurement periods,
and, if terminated after July 1 of the year and payment of a pro-rata annual
bonus based on the Company’s and Executive’s actual performance through the date
of termination. Each lump sum payment payable within fifteen (15) days of
Executive’s execution and non-revocation of the General Release specified in
Section 4.5 or, if later, as soon as reasonably practicable following
determination of such LTIP or bonus amounts; and

 

4.3.4     Vesting of all stock held by Executive will continue to vest through
the later of: (i) the one year anniversary of the Term, or (ii) the end of the
quarter following the date of termination. Further, performance based vesting
and awards shall be paid based on the performance of the Company and Executive
at and through the time of termination.

 

4.4     If Executive’s employment is terminated (i) by the Company without Cause
three (3) months prior or twelve (12) months after a Change of Control (as that
term is defined in the 2016 Equity Incentive Plan, as may be amended), (ii) by
the Executive for Good Reason within 6 months after a Change of Control; or,
(iii) by Executive for any reason in the period beginning six (6) months after
and ending twelve (12) months after the effective date of the Change in Control,
Executive shall be entitled to receive:

 

4.4.1     Lump sum payment of two times (i) Executive’s annual Base Salary as in
effect on the date of termination and (ii) Executive’s target bonus for the
year, payable within fifteen (15) days of Executive’s execution and
non-revocation of the General Release specified in Section 4.5;

 

4.4.2     Lump sum payment for eighteen (18) months (or if Executive would
qualify for continuation coverage under COBRA in excess of eighteen (18) months,
then the number of months in such extended period not to exceed a total of
twenty-four (24) months) of COBRA continuation coverage premiums under the
Company’s group medical plans as in effect from time to time based on Executive
coverage as of the date of termination and provided Executive timely elects
COBRA continuation coverage, payable within fifteen (15) days of Executive’s
execution and non-revocation of the General Release specified in Section 4.5;

 

4.4.3     Payment of any unpaid annual bonus for any then completed fiscal year
and, payment of a pro-rata annual bonus based on the Company’s and Executive’s
actual performance through the date of termination, payable within fifteen (15)
days of Executive’s execution and non-revocation of the General Release
specified in Section 4.5 or, if later, as soon as reasonably practicable
following determination of such LTIP or bonus amounts, and

 

4.4.4     Vesting of all stock held by Executive pursuant to the Plan and
vesting of all LTIP.as of the Change in Control, provided that if such
termination occurs within ninety (90) days before the Change of Control,
Executive will be treated as though he were employed through the date of Change
of Control for vesting purposes.

 

 
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4.4.5     Notwithstanding anything set forth herein to the contrary, if any
payment or benefit Executive would receive from the Company or any other party
whether in connection with the provisions herein or otherwise (the “Payment”)
would (i) constitute a “parachute payment” within the meaning of Section 280G of
Code, and (ii) but for this sentence, be subject to the excise tax imposed by
Section 4999 of the Code (the “Excise Tax”), then such Payment shall be equal to
the Best Results Amount. The “Best Results Amount” shall be either (x) the full
amount of such Payment or (y) such lesser amount as would result in no portion
of the Payment being subject to the Excise Tax, whichever of the foregoing
amounts, taking into account the applicable federal, state and local employment
taxes, income taxes and the Excise Tax, results in Executive’s receipt, on an
after-tax basis, of the greater amount notwithstanding that all or some portion
of the Payment may be subject to the Excise Tax. If a reduction in payments or
benefits constituting “parachute payments” is necessary so that the Payment
equals the Best Results Amount, reduction shall occur in the following order:
reduction of cash payments; cancellation of accelerated vesting of stock awards;
reduction of employee benefits. In the event that acceleration of vesting of
stock award compensation is to be reduced, such acceleration of vesting shall be
cancelled in the reverse order of the date of grant of Executive’s stock awards
unless Executive elects in writing a different order for cancellation. Executive
shall be solely responsible for the payment of all personal tax liability that
is incurred as a result of the payments and benefits received under this
Agreement, and Executive will not be reimbursed by the Company for any such
payments. The Company shall select a professional services firm to make all of
the determinations required to be made under this Section 4.4.5. The Company
shall request that firm provide detailed supporting calculations both to the
Company and Executive prior to the date on which the event that triggers the
Payment occurs if administratively feasible, or subsequent to such date if
events occur that result in parachute payments to Executive at that time. For
purposes of making the calculations required under this Section 4.4.5, the firm
may make reasonable assumptions and approximations concerning applicable taxes
and may rely on reasonable, good faith determinations concerning the application
of the Code. The Company and Executive shall furnish to the firm such
information and documents as the firm may reasonably request in order to make a
determination under this Section 4.4.5. The Company shall bear all costs the
firm may reasonably incur in connection with any calculations contemplated by
this Section 4.4.5 Any such determination by the firm shall be binding upon the
Company and Executive, and the Company shall have no liability to Executive for
the determinations of the firm.

 

4.5     Notwithstanding Sections 4.3 and 4.4 above, Executive shall only be
entitled to the payments and benefits described in Section 4.3 or 4.4 if and
only if, within twenty-one (21) days following termination of employment or
Executive’s receipt of the General Release, whichever is later, Executive: (x)
has executed and delivered to the Company the General Release substantially in
form and substance as set forth in Exhibit A attached hereto and has not revoked
such General Release within seven (7) days of execution; and (y) has not: (i)
breached the provisions of the General Release, (ii) materially breached Section
5 or 6 or (iii) breached Section 7.

 

 
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4.6     If Executive’s employment and the Employment Period is terminated by the
Company for Cause, then Executive shall only be entitled to the Accrued
Benefits. For purposes of this Agreement, “Cause” shall mean with respect to
Executive one or more of the following: (i) Executive’s conviction of, or
pleading guilty or no contest or its equivalent, to a felony (other than minor
traffic-related offenses) or other crime involving moral turpitude (acts
involving dishonesty, fraud, deceit, misrepresentation, deliberate violence, or
that reflect adversely on a CFO’s honesty, trustworthiness, or fitness as a
CFO); (ii) Executive’s committing fraud, malfeasance, material dishonesty or
material theft in connection with the performance of Executive’s duties to the
Company; (iii) reporting to work under the influence of alcohol or illegal
drugs, provided, that Executive’s consumption of alcoholic beverages at
Company-related social events or client- (or potential-client-) related events
shall not be deemed as a Cause event; (iv) substantial and repeated failure to
perform duties as reasonably and lawfully directed by the Company’s Board, in
each case in accordance with Section 2 (other than due to physical or mental
incapacity), after notice of such breach and, if curable, an opportunity to cure
such breach within 10 days; (v) breach of fiduciary duty, gross negligence or
willful misconduct with respect to the business of the Company; (vi) any
material breach of the Company’s personnel policies (e.g., sexual harassment) or
(vii) any material breach of this Agreement, including, without limitation, a
material breach of Sections 5 or 6; or (vii) any breach of Section 7 of this
Agreement, after written notice of such breach, and, if curable, an opportunity
to cure such breach, if curable, within 10 days.

 

4.7     If Executive’s employment and the Employment Period are terminated due
to Executive’s death or Disability as that term is defined for purposes of
Section 409A of the Internal Revenue Code (“Section 409A”), then Executive (or
Executive’s legal representative or estate, if applicable) shall be entitled to
the Accrued Benefits. In the event Executive is terminated due to Executive’s
Disability, Executive shall also be paid any prior year’s bonus and a pro-rata
bonus for the then current year. Such bonus payment shall be paid to Executive
as soon as practicable following the Disability determination and the Company’s
calculation of the bonus amount(s). Except as specifically provided for in the
Company’s employee benefit plans or as otherwise expressly provided for herein
or as required by applicable law, Executive (or Executive’s legal representative
or estate, if applicable) shall not be entitled to any other salary,
compensation or benefits after termination of Executive’s employment and the
Employment Period due to death or Disability.

 

 
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4.8     For purposes of this Agreement, “Good Reason” shall mean, with respect
to Executive, the occurrence of one or more of the following without Executive’s
prior written consent: (i) the assignment to Executive of any duties, authority
or responsibilities (including reporting responsibilities) or an adverse change
in Executive’s title(s) that is materially inconsistent with Executive’s
position; (ii) a material reduction by the Company in Executive’s then Base
Salary or bonus opportunity unless such reduction is made, with Executive’s
input, pursuant to an across-the-board base salary or bonus opportunity
reduction applicable to all or substantially all executives of the Company
(excluding any executive, including Executive, hired within the 12-month period
prior to the effective date of such base salary reduction); (iii) the relocation
of Employee’s office by more than thirty-five (35) miles; (iv) a material
reduction of Executive’s annual Long Term Incentive Pay opportunity; or (v) a
material breach by the Company of this Agreement; provided, that in order for
Executive’s resignation for Good Reason to be effective: (x) Executive must
deliver to the Company written notice detailing the specific circumstances
alleged to constitute Good Reason within 60 days after the first occurrence of
any such event, (y) the Company shall have 30 days after receipt of such notice
during which the Company may remedy the occurrence giving rise to the claim for
“Good Reason” termination, and if the Company cures such occurrence within such
30-day period there shall be no “Good Reason”.

 

4.9     In no event shall Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to Executive
under any of the provisions of this Agreement.

 

4.10     In the event Executive dies after termination of employment, but prior
to the payment of any amounts due under this Section 4, such amounts shall be
paid to Executive’s estate, except that if the Executive provides written notice
to the Company’s senior human resources personnel of a designated beneficiary or
designated beneficiaries then such amount shall be paid to such designated
beneficiary or designated beneficiaries.

 

4.11     Notwithstanding any other provision of this Agreement, if following the
termination of Executive’s employment and while Executive is entitled to
payments under Section 4.3 or 4.4, but (i) the Company later determines that
Cause with respect to Executive exists or existed on or prior to such
termination of Executive’s employment or (ii) Executive materially breaches
Section 5 or 6 of this Agreement or breaches Section 7, then except for Accrued
Benefits that Executive is entitled to receive (x) Executive shall not be
entitled to any additional payments pursuant to Section 4.3 or 4.4 or (y) any
and all additional payments to be made by the Company to Executive pursuant to
Section 4.3 or 4.4 shall be subject to full recourse and recovery by the
Company.

 

4.12     Notwithstanding anything to the contrary herein, at all times the
Company shall have the right to terminate the Employment Period.

 

5.     Confidential Information.

 

 
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5.1     Executive acknowledges that the information, observations and data
(including trade secrets) obtained by Executive while employed by the Company
and its predecessors (including those obtained by Executive prior to the date of
this Agreement) concerning the business or affairs of the Company, any of its
Subsidiaries, joint ventures (“Joint Ventures”) or affiliates (“Confidential
Information”), which Confidential Information the Executive shall have access to
and shall be provided during the Employment Period, are the property of the
Company or such Subsidiary, Joint Venture or affiliate. Therefore, Executive
agrees that, other than for the execution of the duties and responsibilities
required by this Agreement, Executive shall not disclose to any person or entity
or use for Executive’s own benefit or purposes, or the benefit or purposes of
any other person or entity, any Confidential Information or any confidential or
proprietary information of other persons or entities in the possession of the
Company and its Subsidiaries and affiliates (“Third Party Information”), without
the prior written consent of the CEO of the Company. Confidential Information or
Third Party Information shall not apply to information that (i) was known to the
public prior to its disclosure to Executive; (ii) becomes generally known to the
public subsequent to disclosure to Executive through no wrongful act of
Executive or any representative of the Executive; or (iii) Executive is required
to disclose by applicable law, regulation or legal process. Executive shall
deliver to the Company at the termination of the Employment Period, or at any
other time the Company may request, all memoranda, notes, plans, records,
reports, computer files, disks and tapes, printouts and software and other
documents and data (and copies thereof) embodying or relating to Third Party
Information, Confidential Information, Work Product (as defined below) or the
business of the Company or any Subsidiary, joint venture or affiliate which
Executive may then possess or have under Executive’s control. Upon Termination,
Executive may retain Executive’s cell phone, rolodex and similar address books
provided that such items only include contact information; provided further that
the Executive shall provide a copy of any Company related business contact
information in such rolodex or similar address books to the Company promptly
following the termination of the Employment Period.

 

5.2     Executive shall not use or disclose any confidential information or
trade secrets of any former employers or any person or entity to whom Executive
owes an obligation of confidentiality. If at any time during the Employment
Period Executive believes Executive is being asked to engage in work that will,
or will be likely to, jeopardize any confidentiality or other obligations
Executive may have to former employers or other persons or entities, Executive
shall immediately advise the CEO of the Company so that Executive’s duties can
be modified appropriately. Executive represents and warrants to the Company that
Executive took nothing with Executive which belonged to any former employer when
Executive left Executive’s prior employment positions and that Executive has
nothing that contains any information which belongs to any former employer, and,
if at any time Executive discovers that the foregoing is incorrect, Executive
shall promptly return any such materials to Executive’s former employer. The
Company refuses access to any such materials, and Executive shall not be
permitted to use or refer to any such materials in the performance of
Executive’s duties hereunder.

 

 
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6.     Intellectual Property, Inventions and Patents. Executive acknowledges
that all discoveries, concepts, ideas, inventions, innovations, improvements,
developments, methods, designs, analyses, drawings, reports, patent
applications, copyrightable work and mask work (whether or not including any
Confidential Information) and all registrations or applications related thereto,
all other proprietary information and all similar or related information
(whether or not patentable) which relate to the Company’s or any of its
Subsidiaries’ or affiliates’ actual or anticipated business, research and
development or existing or future products or services and which were or are
conceived, developed, contributed to or made or reduced to practice by Executive
(whether alone or jointly with others) while employed by the Company and any of
its predecessors, whether before or after the date of this Agreement (“Work
Product”), belong to the Company. Executive shall promptly disclose such Work
Product to the CEO and, at the Company’s expense, perform all actions reasonably
requested by the CEO of the Company (whether during or after the Employment
Period) to establish and confirm such ownership (including assignments,
consents, powers of attorney and other instruments). Executive acknowledges that
all copyrightable Work Product shall be deemed to constitute “works made for
hire” under the U.S. Copyright Act of 1976, as amended, and that the Company or
such Company Affiliate shall own all rights therein. To the extent that any such
copyrightable work is not a “work made for hire,” Executive hereby assigns and
agrees to assign to the Company or such Company Affiliate all right, title and
interest, including a copyright, in and to such copyrightable work. The
foregoing provisions of this Section 6 shall not apply to any invention that
Executive developed entirely on Executive’s own time without using the Company’s
equipment, supplies, facilities or trade secret information, except for those
inventions that (i) relate to the Company’s business or actual or demonstrably
anticipated research or development, or (ii) result from any work performed by
Executive for the Company.

 

7.     Non-Compete, Non-Solicitation; Mutual Non-Disparagement.

 

7.1     In consideration for (1) the agreement by Company to commence and
continue Executive’s employment for the Employment Period, (2) the compensation
to be paid to Executive hereunder, (3) Executive’s access to and receipt of
Confidential Information of the Company as described herein; (4) the promise to
provide Executive with equity opportunities in the Company; and (5) the
Company’s promise to provide Executive with Confidential Information during the
Employment Period, Executive agrees to the provisions of this Section 7. It is
expressly understood and agreed that the Company and Executive consider the
restrictions contained in this Section 7 to be reasonable and necessary for the
purposes of preserving and protecting the Confidential Information and other
legitimate business interests of the Company.

 

7.2     Executive further acknowledges that during the course of Executive’s
employment with the Company, Executive has and shall continue to become familiar
with the Company’s trade secrets and with other Confidential Information
concerning the Company and that Executive’s services have been and shall
continue to be of special, unique and extraordinary value to the Company, and
therefore, Executive agrees that, during the Employment Period and during the
Non-Compete Period (as defined below), Executive shall not, except as approved
in advance by the Company’s Board Chairman, directly or indirectly own any
interest in, manage, control, participate in, consult with, render services for,
be employed in an executive, managerial or administrative capacity by, or in any
manner engage in, any business or entity engaged in (i) any business that is
conducted by the Company, on the Effective Date, which provides similar services
or products in connection therewith, or (ii) the same or similar business
entered into by the Company after the Effective Date during the Employment
Period, (each of clauses (i) or (ii) a “Competing Business”) within the United
States. Competing Business shall include all neurostimulation indications and
other therapy areas that the Company is actively engaged at the time of
Executive’s separation from employment, including but not limited to, product
design, development and manufacturing, regulatory body clinical studies and
submissions, distributions and marketing and partnerships, joint ventures and
co-developments. Competing Business shall not include any business that is not
the same or similar to the type of business conducted by the Company while
Executive is CFO. Nothing herein shall prohibit Executive from being a passive
owner of not more than 2% of any class of stock of a corporation engaged in a
Competing Business, which class of stock is publicly traded, so long as
Executive has no active participation in the business of such corporation. For
purposes of this Agreement, the “Non-Compete Period” shall mean a period of time
greater of one (1) year following termination of the Employment Period for any
reason.

 

 
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7.3     In addition, during the Non-Compete Period, Executive shall not directly
or indirectly through another person or entity (i) induce or attempt to induce
any employee of the Company to leave the employ of the Company, or in any way
interfere with the relationship between the Company and any employee thereof,
(ii) hire any person who was an employee of the Company at any time during the
six-month period prior to Executive’s termination or (iii) induce or attempt to
induce any customer, supplier, licensee, licensor, franchisee or other business
relation of the Company to cease doing business with the Company, or in any way
interfere with the relationship between any such customer, supplier, licensee or
business relation and the Company. Notwithstanding the foregoing, the provisions
of this Section 7.3 shall not be violated by (A) general advertising or
solicitation not specifically targeted at Company, Subsidiary or Joint Venture
related persons or entities, (B) Executive serving as a reference, upon request,
for any employee of the Company or any Subsidiary, or (C) actions taken by any
person or entity with which Executive is associated if Executive is not
personally involved in any manner in the matter and has not identified such
Company, Subsidiary or Joint Venture related person or entity for soliciting or
hiring

 

7.4     In addition, during the Employment Period and for two years thereafter
(the “Non-Disparage Period”), Executive shall not make any negative or
disparaging statements or communications regarding the Company, any of their
respective products or practices, or any of their respective directors,
officers, agents, representatives, direct or indirect equity holders or
affiliates, either orally or in writing; provided that Executive may confer in
confidence with Executive’s legal counsel and make truthful statements as
required by law or legal process. During the Employment Period and the
Non-Disparage Period, the Company and its respective directors and officers,
while employed by the Company or serving as a director of the Company, as the
case may be, shall not make any negative or disparaging statements or
communications regarding Executive or Executive’s business or personal
reputation. The foregoing shall not be violated by truthful statements in
response to legal process, required governmental testimony or filings, or
administrative or arbitral proceedings (including, without limitation,
depositions in connection with such proceedings) or as otherwise may be
protected by legal privilege.

 

 
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8.     Enforcement. If, at the time of enforcement of Sections 5, 6 and 7, a
court holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum period,
scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law. Because Executive’s services are unique and
because Executive has access to Confidential Information and Work Product, the
parties hereto agree that the Company would suffer irreparable harm from a
breach of Sections 5, 6 and 7 by Executive and that money damages would not be
an adequate remedy for any such breach of this Agreement. Therefore, in the
event a breach or threatened breach of this Agreement, Executive or the Company,
in addition to other rights and remedies existing in their favor, shall be
entitled to specific performance and/or injunctive or other equitable relief
from a court of competent jurisdiction in order to enforce, or prevent any
violations of, the provisions hereof. In addition, in the event of a breach or
violation by Executive or the Company of Section 7, the Non-Compete Period
and/or the Non-Disparage Period shall be automatically extended by the amount of
time between the initial occurrence of the breach or violation and when such
breach or violation has been resolved. Executive and the Company acknowledge
that the restrictions contained in Section 7 are reasonable and that each party
has reviewed the provisions of this Agreement with Executive’s or its legal
counsel.

 

9.     Additional Acknowledgments. In addition, Executive acknowledges that the
provisions of Sections 5, 6 and 7 are in consideration of employment with the
Company and additional good and valuable consideration as set forth in this
Agreement. Executive also acknowledges that (i) the restrictions contained in
Sections 5, 6 and 7 do not preclude Executive from earning a livelihood, nor do
they unreasonably impose limitations on Executive’s ability to earn a living,
(ii) the business of the Company and its Subsidiaries and affiliates will be
national in scope and (iii) notwithstanding the state of formation or principal
office of the Company or residence of any of its executives or employees
(including Executive), it is expected that the Company and its Subsidiaries and
affiliates will have business activities and have valuable business
relationships within its industry throughout the United States of America.
Executive agrees and acknowledges that the potential harm to the Company and its
Subsidiaries and affiliates of the non-enforcement of Sections 5, 6 and 7
outweighs any potential harm to Executive of its enforcement by injunction or
otherwise. Executive acknowledges that Executive has carefully read this
Agreement and consulted with legal counsel of Executive’s choosing regarding its
contents, has given careful consideration to the restraints imposed upon
Executive by this Agreement and is in full accord as to their necessity for the
reasonable and proper protection of confidential and proprietary information of
the Company and its Subsidiaries and affiliates now existing or to be developed
in the future. Executive and the Company expressly agree and acknowledge that
each and every restraint imposed by this Agreement is reasonable with respect to
subject matter, time period and geographical area.

 

 
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10.     Executive’s Cooperation. During the Employment Period and thereafter,
Executive shall reasonably cooperate with the Company and its Subsidiaries in
any internal investigation, any administrative, regulatory or judicial
investigation or proceeding or any dispute with a third party as reasonably
requested by the Company to the extent that such investigation, proceeding or
dispute may relate to matters in which Executive has knowledge as a result of
Executive’s employment with the Company or its Subsidiaries (including Executive
being available to the Company upon reasonable notice for interviews and factual
investigations, appearing at the Company’s request to give testimony without
requiring service of a subpoena or other legal process, volunteering to the
Company all pertinent information and turning over to the Company all relevant
documents which are or may come into Executive’s possession, all at times and on
schedules that are reasonably consistent with Executive’s other permitted
activities and commitments). Without limiting the generality of the foregoing,
to the extent that the Company seeks such assistance, the Company shall use
reasonable business efforts, whenever possible, to provide Executive with
reasonable advance notice of its need for Executive’s assistance and will
attempt to coordinate with Executive the time and place at which Executive’s
assistance will be provided with the goal of minimizing the impact of such
assistance on any other material pre-scheduled business commitment that
Executive may have. In the event the Company requires Executive’s reasonable
assistance or cooperation in accordance with this Section 10, the Company shall
reimburse Executive for reasonable travel expenses (including lodging and meals)
upon submission of receipts and the fees and expenses of counsel for Executive.
If the cooperation needed by the Company is not for attendance at a legal
proceeding, the Parties shall mutually agree on compensation to be paid to
Executive for his time and expenses associated with his assistance on the
particular matter.

 

11.     Executive’s Representations. Executive hereby represents and warrants to
the Company that (i) the execution, delivery and performance of this Agreement
by Executive do not and shall not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which Executive is a party or by which Executive is bound, (ii) Executive is not
a party to or bound by any employment agreement, non-compete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms. Executive hereby acknowledges and represents that Executive has
consulted with independent legal counsel regarding Executive’s rights and
obligations under this Agreement and that Executive fully understands the terms
and conditions contained herein.

 

12.     Corporate Opportunity. Executive shall submit to the CEO of the Company
all material business, commercial and investment opportunities, or offers
presented to Executive or of which Executive becomes aware at any time during
the Employment Period which relate to the business of the Company (“Corporate
Opportunities”). Unless approved by the CEO of the Company, Executive shall not
accept or pursue, directly or indirectly, any Corporate Opportunities on
Executive’s own behalf.

 

13.     Insurance for Company’s Own Behalf. The Company may, at its discretion,
apply for and procure in its own name and for its own benefit life and/or
disability insurance on Executive in any amount or amounts considered advisable.
Further to applicable law restricting disclosure of protected health and genetic
information, Executive agrees to cooperate in any medical or other examination,
supply any information and execute and deliver any applications or other
instruments in writing as may be reasonably necessary to obtain and constitute
such insurance.

 

 
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14.     Indemnification and Reimbursement of Payments on Behalf of Executive.
The Company and its Subsidiaries shall be entitled to deduct or withhold from
any amounts owing from the Company or any of its Subsidiaries to Executive any
federal, state, local or foreign withholding taxes, excise tax, or employment
taxes (“Taxes”) imposed with respect to Executive’s compensation or other
payments from the Company or any of its Subsidiaries or Executive’s ownership
interest in the Company (including wages, bonuses, dividends, the receipt or
exercise of equity options and/or the receipt or vesting of restricted equity).
In the event the Company or any of its Subsidiaries does not make such
deductions or withholdings, Executive shall indemnify the Company and its
Subsidiaries for any amounts paid with respect to any such Taxes, together with
any interest, penalties and related expenses thereto. The Company and Executive
shall discuss in good faith and agree to a mutually acceptable and reasonable
payment schedule with respect to any amounts due to the Company from Executive
pursuant to the immediately preceding sentence.

 

15.     Survival. The rights and obligations of the parties under this Agreement
shall survive as provided herein or if necessary or desirable to accomplish the
purposes of other surviving provisions following the termination of Executive’s
employment with the Company or any Subsidiary, regardless of the manner of or
reasons for such termination.

 

16.     Notices. All notices, requests and other communications hereunder must
be in writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission against
facsimile confirmation or mailed by prepaid first class certified mail, return
receipt requested, or mailed by overnight courier prepaid, to the Parties at the
following addresses or facsimile numbers:

 

Notices to Executive:

Walter Z. Berger

3505 Turtle Creek Blvd., 18D

Dallas, TX 75219

 

Notices to the Company:

Nuvectra Corporation
Chief Executive Officer
5830 Granite Parkway, 11th Floor
Plano, TX 75024

 

 

 
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All such notices, requests and other communications will (a) if delivered
personally to the address as provided in this Section 16 or by facsimile
transmission to the facsimile number as provided for in this Section 16, be
deemed given on the day so delivered, or, if delivered after 5:00 p.m. local
time or on a day other than a Saturday, Sunday or any day on which banks located
in the State of Texas are authorized or obligated to close (a “Business Day”),
then on the next proceeding Business Day, (b) if delivered by mail in the manner
described above to the address as provided in this Section 16, be deemed given
on the earlier of the third Business Day following mailing or upon receipt and
(c) if delivered by overnight courier to the address as provided for in this
Section 16, be deemed given on the earlier of the first Business Day following
the date sent by such overnight courier or upon receipt, in each case regardless
of whether such notice, request or other communication is received by any other
Person to whom a copy of such notice is to be delivered pursuant to this Section
16. Any party hereto from time to time may change its address, facsimile number
or other information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto.

 

17.     Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any action in any other jurisdiction,
but this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.

 

18.     Complete Agreement. Unless otherwise specifically stated herein, this
Agreement embodies the complete agreement and understanding among the parties
and supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof or thereof in any way.

 

19.     No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.

 

20.     Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.

 

21.     Successors and Assigns. This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive, the Company and their respective
heirs, successors and assigns, except that Executive may not assign Executive’s
rights or delegate Executive’s duties or obligations hereunder without the prior
written consent of the Company. The Company may only assign this Agreement to a
successor to all or substantially all of the business and/or assets of the
Company. As used in this Agreement, “Company” shall mean the Company and any
successor to its business and/or assets, which assumes and agrees to perform the
duties and obligations of the Company under this Agreement by operation of law
or otherwise. This Agreement and the Company’s rights hereunder may be enforced
by Parent.

 

 
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22.     Choice of Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of Texas, without giving effect to any choice-of-law or
conflict-of-law rules or provisions (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas.

 

23.     Amendment and Waiver. The provisions of this Agreement may be amended or
waived only with the prior written consent of the Company (as approved by the
Chairman of the Board) and Executive, and no course of conduct or course of
dealing or failure or delay by any party hereto in enforcing or exercising any
of the provisions of this Agreement (including the Company’s right to terminate
the Employment Period for Cause) shall affect the validity, binding effect or
enforceability of this Agreement or be deemed to be an implied waiver of any
provision of this Agreement.

 

24.     Consent to Jurisdiction. EACH OF THE PARTIES IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE STATE
OF TEXAS, COUNTY OF COLLIN, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER
PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY OR THEREBY. EACH OF THE PARTIES HERETO FURTHER
AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S.
REGISTERED MAIL TO SUCH PARTY’S RESPECTIVE ADDRESS SET FORTH ABOVE SHALL BE
EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR PROCEEDING IN THE STATE OF
TEXAS WITH RESPECT TO ANY MATTERS TO WHICH IT HAS SUBMITTED TO JURISDICTION IN
THIS SECTION 24. EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING
ARISING OUT OF THIS AGREEMENT, ANY RELATED DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY IN THE STATE AND FEDERAL COURTS LOCATED IN THE
STATE OF TEXAS, COUNTY OF COLLIN, AND HEREBY AND THEREBY FURTHER IRREVOCABLY AND
UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT
ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.

 

25.     Waiver of Jury Trial. AS A SPECIFICALLY BARGAINED-FOR INDUCEMENT FOR
EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE
OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE
RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN
ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

 

 
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26.     Arbitration.

 

26.1     Except with respect to disputes and claims under Sections 5, 6 and 7
(which the parties hereto may pursue in any court of competent jurisdiction and
which may be pursued in any court of competent jurisdiction as specified herein
and with respect to which each party shall bear the cost of its own attorneys’
fees and expenses, except to the extent otherwise required by applicable law),
each party hereto agrees that arbitration, pursuant to the procedures set forth
in the National Rules for the Resolution of Employment Disputes of the American
Arbitration Association (as adopted and effective as of June 1, 1997 or such
later version as may then be in effect) (the “AAA Rules”), shall be the sole and
exclusive method for resolving any claim or dispute (“Claim”) arising out of or
relating to the rights and obligations of the parties under this Agreement and
the employment of Executive by the Company (including any Claim regarding
employment discrimination, sexual harassment, termination and discharge),
whether such Claim arose or the facts on which such Claim is based occurred
prior to or after the execution and delivery of this Agreement.

 

26.2     The parties hereto agree that (i) one arbitrator shall be appointed
pursuant to the AAA Rules to conduct any such arbitration, (ii) all meetings of
the parties and all hearings with respect to any such arbitration shall take
place in Plano, Texas and (iii) each party to the arbitration shall bear its own
costs and expenses (including all attorneys’ fees and expenses, except to the
extent otherwise required by applicable law) and all costs and expenses of the
arbitration proceeding (such as filing fees, the arbitrator’s fees, hearing
expenses, etc.) shall be borne equally by the parties hereto.

 

26.3     In addition, the parties hereto agree that (i) the arbitrator shall
have no authority to make any decision, judgment, ruling, finding, award or
other determination that does not conform to the terms and conditions of this
Agreement (as executed and delivered by the parties hereto), (ii) the arbitrator
shall have no greater authority to award any relief than a court having proper
jurisdiction pursuant to Section 24 and (iii) the arbitrator shall have no
authority to commit an Error of Law (as defined below) in its decision,
judgment, ruling, finding, award or other determination, and on appeal from or
motion to vacate or confirm such decision, judgment, ruling, finding, award or
other determination, a court having proper jurisdiction pursuant to Section 24
may vacate any such decision, judgment, ruling, finding, award or other
determination to the extent containing an Error of Law. For purposes of this
Agreement, an “Error of Law” means any decision, judgment, ruling, finding,
award or other determination that is inconsistent with the laws governing this
Agreement pursuant to Section 22. Any decision, judgment, ruling, finding, award
or other determination of the arbitrator and any information disclosed in the
course of any arbitration hereunder (collectively, the “Arbitration
Information”) shall be kept confidential by the parties subject to Section 26.4,
and any appeal from or motion to vacate or confirm such decision, judgment,
ruling, finding, award or other determination shall be filed under seal.

 

 
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26.4     In the event that any party or such party’s affiliates, associates or
representatives is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Arbitration
Information (the “Disclosing Party”), such Disclosing Party shall notify the
other party promptly of the request or requirement so that the other party may
seek an appropriate protective order or waive compliance with the provisions of
this Section 26. If, in the absence of a protective order or the receipt of a
waiver hereunder, the Disclosing Party or any of its affiliates, associates or
representatives believes in good faith, upon the advice of legal counsel, that
it is compelled to disclose any such Arbitration Information, such Disclosing
Party may disclose such portion of the Arbitration Information as it believes in
good faith, upon the advice of legal counsel, it is required to disclose;
provided that the Disclosing Party shall use reasonable efforts to obtain, at
the request and expense of the other party, an order or other assurance that
confidential treatment shall be accorded to such portion of the Arbitration
Information required to be disclosed as the other party shall designate.
Notwithstanding anything in this Section 26 to the contrary, the parties shall
have no obligation to keep confidential any Arbitration Information that becomes
generally known to and available for use by the public other than as a result of
the disclosing party’s acts or omissions or the acts or omissions of such
party’s affiliates, associates or representatives. The parties agree that,
subject to the right of any party to appeal or move to vacate or confirm any
decision, judgment, ruling, finding, award or other determination of an
arbitration as provided in this Section 26, the decision, judgment, ruling,
finding, award or other determination of any arbitration under the AAA Rules
shall be final, conclusive and binding on all of the parties hereto; provided,
however, nothing in this Section 26 shall prohibit any party hereto from
instituting litigation to enforce any final decision, judgment, ruling, finding,
award or other determination of the arbitration.

 

27.     Deferred Compensation Provisions. Notwithstanding any other provision
herein:

 

27.1     The parties hereto intend that payments and benefits under this
Agreement comply with or be exempt from Section 409A and, accordingly, to the
maximum extent permitted, this Agreement shall be interpreted to be in
compliance therewith or exempt therefrom. In no event whatsoever shall the
Company be liable for any additional tax, interest or penalty that may be
imposed on Executive by Section 409A or damages for failing to comply with
Section 409A.

 

27.2     A termination of employment shall not be deemed to have occurred for
purposes of any provision of this Agreement providing for the payment of any
amounts or benefits that are considered nonqualified deferred compensation under
Section 409A upon or following a termination of employment unless such
termination is also a “separation from service” within the meaning of Section
409A and the payment thereof prior to a “separation from service” would violate
Section 409A. For all purposes of this Agreement, references herein to
“termination,” “termination of the Employment Period,” “resignation” or other
terms of similar import shall in each case mean a “separation from service”
within the meaning of Section 409A.

 

 
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27.3     For purposes of Section 409A, Executive’s right to receive any
installment payment pursuant to this Agreement shall be treated as a right to
receive a series of separate and distinct payments. Whenever a payment under
this Agreement specifies a payment period with reference to a discrete length of
time (e.g., “within 15 days”), the actual date of payment within the specified
period shall be within the sole discretion of the Company.

 

27.4     In no event shall any payment under this Agreement that constitutes
nonqualified deferred compensation subject to Section 409A be subject to offset
unless otherwise permitted by Section 409A.

 

27.5     To the extent that reimbursements or other in-kind benefits under this
Agreement constitute “nonqualified deferred compensation” for purposes of
Section 409A, (i) all expenses or other reimbursements hereunder shall be made
on or prior to the last day of the taxable year following the taxable year in
which such expenses were incurred by Executive, (ii) any right to reimbursement
or in-kind benefits shall not be subject to liquidation or exchange for another
benefit, and (iii) no such reimbursement, expenses eligible for reimbursement,
or in-kind benefits provided in any taxable year shall in any way affect the
expenses eligible for reimbursement, or in-kind benefits to be provided, in any
other taxable year.

 

27.6     To the extent that Executive is a “specified employee,” as defined in
Section 409A(a)(2)(B)(i) of the Code and Treasury Regulations and other Internal
Revenue Service guidance promulgated thereunder and any elections made by the
Company in accordance therewith, notwithstanding the timing of payments provided
in any other Section of this Agreement, no payment, distribution or benefit
under this Agreement that constitutes a payment of nonqualified deferred
compensation (within the meaning of Treasury Regulation Section 1.409A-1(b))
upon separation from service (within the meaning of Treasury Regulation Section
1.409A-1(h)), after taking into account all available exemptions that would
otherwise be payable, distributable or settled during the six-month period after
separation from service, shall not be made during such six-month period, and any
such payment, distribution or benefit instead shall be paid, distributed or
settled on the first business day after such six-month period; provided that if
Executive dies following the date of separation from service and prior to the
payment, distribution, settlement or provision of any payments, distributions or
benefits delayed on account of Section 409A of the Code, such payments,
distributions or benefits shall be paid or provided to the personal
representative of the Executive’s estate within thirty (30) days after the date
of the Executive’s death.

 

* * * * *

 

 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date indicated below.

 

 

 NUVECTRA CORPORATION

 

     

 

 

 

 

 

 

 

 

 

By:

/s/ Scott F. Drees

 

 

Scott F. Drees 

 

 

 

Chief Executive Officer

 

 

 

 

 

  /s/ Walter Z. Berger     Walter Z. Berger  

 

 

 

  1/13/2017     Date  

 

 

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