Execution Copy



	Exhibit 10.27







 





Amended
and Restated EMPLOYMENT AGREEMENT


 


This Amended and Restated
Employment Agreement (“Restated Agreement”) is executed on the 11th day of March, 2018 (the “Effective
Date”) by and between Innovate Biopharmaceuticals, Inc., a Delaware corporation (the “Company”), and
Jay P. Madan (the “Executive”). The Executive and the Company may be referred to herein as a “Party”
or collectively as the “Parties.”


  


W I T N E S S E T H:


 


Executive has been
employed by privately held Innovate Biopharmaceuticals Inc. (“Private Innovate”)
in the role of the President of the Company subject to the terms of an Executive Employment Agreement, dated October 28,
2015, as amended on February 26, 2016, March 1, 2017, and August 31, 2017 (collectively the “Prior Agreement”).


 


On
January 29, 2018, Monster Digital, Inc. (“Monster”), and Private Innovate completed a reverse recapitalization
in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated July 3, 2017 (the “Merger Agreement”),
by and among Monster, Monster Merger Sub, Inc. (“Merger Sub”) and Private Innovate, which changed its name in
connection with the transaction to IB Pharmaceuticals Inc. (“IB Pharmaceuticals”). Pursuant to the Merger
Agreement, Merger Sub merged with and into IB Pharmaceuticals with IB Pharmaceuticals surviving as the wholly owned subsidiary
of Monster (the “Merger”).  Immediately following the Merger, Monster changed its name to the
Company.


 


Both Executive and
the Company wish to continue the employment relationship on the updated terms set forth in this Restated Agreement, which provide
Executive with greater benefits than those under his Prior Agreement. This Restated Agreement is intended to replace and supersede
the Prior Employment Agreement.


 


In consideration of
the foregoing, of the mutual promises herein, and of other good and valuable consideration, including the continued employment
of the Executive by the Company and the compensation to be received by the Executive from the Company from time to time, and specifically
the compensation to be received by the Executive pursuant to Section 4 hereof, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending legally to be bound, hereby agree as follows:


 


1.       Employment.
As of the Effective Date, the Company hereby continues to employ the Executive and the Executive hereby accepts employment as the
President and Chief Business Officer (“CBO”) of the Company upon the terms and conditions of this Restated Agreement.
The Executive shall report to the Chief Executive Officer (“CEO”) of the Company. As of the Effective Date,
the parties agree that the Prior Agreement between the Parties shall terminate.


 






    	 	 	 



     


    

 


2.       Duties.


 


(a)       The
Executive shall faithfully perform all duties of the Company related to the position or positions held by the Executive, including
but not limited to all duties set forth in this Restated Agreement and/or in the Bylaws of the Company related to the position
or positions held by the Executive and all additional duties that are prescribed from time to time by the Board. The Executive
shall devote the Executive’s full time and attention to the performance of the Executive’s duties and responsibilities
on behalf of the Company and in furtherance of its best interests; provided, however, that the Executive, subject to the Executive’s
obligations hereunder, shall also be permitted to make personal investments, perform reasonable volunteer services and, with the
written prior consent of the Company, serve on outside boards of directors for non-profit or for profit corporations. The Executive
shall comply with all written Company policies, standards, rules and regulations (the “Company Policies”) and
all applicable government laws, rules and regulations that are now or hereafter in effect. The Executive acknowledges receipt of
copies of all written Company Policies that are in effect as of the date of this Restated Agreement.


 


(b)       Executive’s
base of operation shall be Raleigh, North Carolina, subject to reasonable business travel.


 


3.       Term.
The term of this Restated Agreement shall continue until terminated by either party as set forth in Section 5 of this Restated
Agreement (the “Term”).


 


4.       Compensation.
During the Term, as compensation for the services rendered by the Executive under this Restated Agreement, the Executive shall
be entitled to receive the following (all payments are subject to applicable withholdings):


 


(a)       Base
Salary. Executive shall be paid an annual salary in the amount of $285,000 (less applicable withholdings), to be retroactively
effective as of March 1, 2018, which shall be payable in accordance with the then-current payroll schedule of the Company (the
“Base Salary”). The Executive’s salary will be reviewed periodically and may be increased from time to
time by the Company at its discretion.


 


(b)       Bonuses.
Executive shall be eligible to participate in any bonus or similar incentive plan adopted by the Company as approved by the Board
of Directors (“Board”) for executives at Executive’s level. The amount awarded, if any, to the Executive
under any bonus or incentive plan shall be in the discretion of the Board or any committee administering such plan. Executive’s
bonus, if any, shall be subject to the terms and conditions of any plan or program adopted or approved by the Board.


 


(c)       Equity.
Executive shall be eligible to participate in any equity compensation plan or similar program adopted by the Company when approved
by the Board and, if applicable, the Company’s shareholders, for executives at Executive’s level. The amount awarded,
if any, to the Executive under any such plan shall be in the discretion of the Board or any committee administering such plan and
shall be subject to the terms and conditions of any plan or program adopted or approved by the Board.


 


(d)       Benefits.
The Executive shall be entitled to receive those benefits provided from time to time to other executive employees of the Company,
in accordance with the terms and conditions of the applicable plan documents; provided that the Executive meets the eligibility
requirements thereof. All such benefits are subject to amendment or termination from time to time by the Company without the consent
of the Executive or any other employee of the Company.


 






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(e)       Paid
Time Off. The Executive shall be entitled to four weeks of paid time off (“PTO”) to be taken in accordance
with the Company’s standard PTO policies.


 


(f)       Business
Expenses. The Company will reimburse Executive for reasonable travel, entertainment, and other expenses incurred by Executive
in the furtherance of the performance of Executive’s duties hereunder, in accordance with the Company’s expense reimbursement
policy for senior executives as in effect from time to time. Provided, however, that the Company will make the reimbursement only
if the corresponding expense is incurred during the term of this Restated Agreement and the reimbursement is made on or before
the last day of the calendar year following the calendar year in which the expense is incurred, the amount of expenses eligible
for such reimbursement during a calendar year will not affect the amount of expenses eligible for such reimbursement in another
calendar year, and the right to such reimbursement is not subject to liquidation or exchange for another benefit from the Company.


 


5.       Termination.
This Restated Agreement and the Executive’s employment by the Company shall or may be terminated, as the case may be, as
follows:


 


(a)       Termination
by the Executive. The Executive may terminate this Restated Agreement and Executive’s employment by the Company:


 


(i)       for
“Good Reason” (as defined herein). For purposes of this Restated Agreement, “Good Reason” shall
mean, the existence, without the consent of the Executive, of any of the following events: (A) the Executive’s duties and
responsibilities are substantially reduced or diminished; (B) the Executive’s base salary is reduced by more than 15% from
the level prior to such reduction, except for an across the board reduction in base salary for all executive officers (C) the Company
materially breaches its obligations under this Restated Agreement; or (D) the Executive’s place of employment is relocated
by more than 50 miles. In addition to any requirements set forth above, in order for any of the above events to constitute “Good
Reason”, the Executive must (X) inform the Company of the existence of the event within 90 days of the initial existence
of the event, after which date the Company shall have no less than 30 days to cure the event which otherwise would constitute “Good
Reason” hereunder and (Y) the Executive must terminate employment with the Company for such “Good Reason” no
later than two years after the initial existence of the event which prompted the Executive’s termination.


 


(ii)       Other
than for Good Reason 30 days after notice to the Company.


 


(b)       Termination
by the Company. The Company may terminate this Restated Agreement and the Executive’s employment by the Company upon
notice to the Executive (or personal representative):


(i)       at
any time and for any reason;


 


(ii)       upon
the death of the Executive, in which case this Restated Agreement shall terminate immediately; provided that, such termination
shall not prejudice any benefits payable to the Executive’s spouse or beneficiaries which are fully vested as of the date
of death;


 






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(iii)       if
the Executive is “permanently disabled” (as defined herein), in which case this Restated Agreement shall terminate
immediately; provided that, such termination shall not prejudice any benefits payable to the Executive, the Executive’s spouse
or beneficiaries which are fully vested as of the date of the termination of this Restated Agreement. For purposes of this Restated
Agreement, the Executive shall be considered “permanently disabled” when a qualified medical doctor mutually
acceptable to the Company and the Executive or the Executive’s personal representative shall have certified in writing that:
(A) the Executive is unable, because of a medically determinable physical or mental disability, to perform substantially all of
the Executive’s duties, with or without a reasonable accommodation, for more than 180 calendar days measured from the last
full day of work; or (B) by reason of mental or physical disability, it is unlikely that the Executive will be able, within 180
calendar days, to resume substantially all business duties and responsibilities in which the Executive was previously engaged and
otherwise discharge the Executive’s duties under this Restated Agreement; or


 


(iv)       "for
cause" (as defined herein). “For cause” shall be determined by the Company and shall mean:


 


A.       Any
material breach of the terms of this Restated Agreement by the Executive, or the material failure of the Executive to diligently
perform the Executive’s duties for the Company or the Executive’s material failure to achieve her objectives specified
by the Board; provided, however, that the Company must first provide Executive with written notice of the grounds under this Section
5(b)(iv)(A) and a period of ten (10) business days in which to cure such grounds;


 


B.       The
Executive’s unauthorized use of the Company’s tangible or intangible property (excluding incidental use) or Executive’s
breach of the Proprietary Information Agreement (as defined herein) or any other similar agreement regarding confidentiality, intellectual
property rights, non-competition or non-solicitation;


 


C.       Any
material failure to comply with material Company Policies, applicable government laws, rules and regulations and/or directives
of the Board;


 


D.       The
Executive’s use of illegal drugs or any illegal substance, or the Executive’s use of alcohol in any manner that materially
interferes with the performance of the Executive’s duties under this Restated Agreement;


 


E.       Any
dishonest or illegal action (including, without limitation, embezzlement) or any other action whether or not dishonest or illegal
by the Executive which is materially detrimental to the interest and well-being of the Company, including, without limitation,
harm to its reputation;


 


F.       The
Executive’s failure to fully disclose any material conflict of interest that the Executive may have with the Company in a
transaction between the Company and any third party which is materially detrimental to the interest and well-being of the Company;
or


 






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G.       Any
adverse action or omission by the Executive which would be required to be disclosed pursuant to public securities laws or which
would limit the ability of the Company or any entity affiliated with the Company to sell securities under any Federal or state
law or which would disqualify the Company or any affiliated entity from any exemption otherwise available to it.


 


(c)       Obligations
of the Company Upon Termination.


 


(i)       Upon
the termination of this Restated Agreement: (A) by the Executive pursuant to paragraph 5(a)(ii); or (B) by the Company pursuant
to paragraph 5(b)(ii), (iii), or (iv) the Company shall have no further obligations hereunder other than the payment of all compensation
and other benefits payable to the Executive through the date of such termination which shall be paid on or before the Company’s
next regularly scheduled payday unless such amount is not then-calculable, in which case payment shall be made on the first regularly
scheduled payday after the amount is calculable.


 


(ii)       Upon
termination of this Restated Agreement: (A) by the Executive pursuant to paragraph 5(a)(i); or (B) by the Company pursuant to paragraph
5(b)(i) and provided that the Executive first executes and does not revoke a release and settlement agreement in the form acceptable
to the Company within the time period then-specified by the Company but in any event no later than sixty (60) days after the date
of termination (the “Release”): (1) the Company shall pay the Executive an amount equal to twelve (12) months
of Executive’s then-current Base Salary (less all applicable deductions) payable in installments in accordance with the then-current
generally applicable payroll schedule of the Company commencing on the first regularly scheduled pay date of the Company processed
after Executive has executed, delivered to the Company and not revoked the Release; (2) conditioned on Executive’s proper
and timely election to continue the Company’s health insurance benefits under COBRA, or under applicable state law, reimbursement
of the additional costs incurred by Executive for continuing such benefits at the same level in which Executive participated prior
to the date Executive’s employment terminated for the shorter of (a) to twelve (12) months from the date of termination or
(b) until the Executive obtains reasonably comparable coverage, with such reimbursements to begin at the same time as severance
pay set forth in Section 5(c)(ii)(A).


 


(d)       Resignation
as Officer and Director. Upon termination of this Restated Agreement and the Executive’s employment hereunder for any
reason by either party, the Executive shall be deemed to have resigned from all offices and positions the Executive may hold with
the Company at such time including without limitation Board membership and/or positions as an officer of the Company.


 


6.       
Proprietary Information Agreement. The terms of the Proprietary Information, Inventions, Non-Competition and Non-Solicitation
Agreement by and between the Company and the Executive, entered into simultaneously herewith (the “Proprietary Information
Agreement”) and any other similar agreement regarding confidentiality, intellectual property rights, non-competition
or non-solicitation between the Company and the Executive, are hereby incorporated by reference and are a material part of this
Restated Agreement.


 






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7.       Representations
and Warranties.


 


(a)       The
Executive represents and warrants to the Company that the Executive’s performance of this Restated Agreement and as an employee
of the Company does not and will not breach any noncompetition agreement or any agreement to keep in confidence proprietary information
acquired by the Executive in confidence or in trust prior to the Executive's employment by the Company. The Executive represents
and warrants to the Company that the Executive has not entered into, and agrees not to enter into, any agreement that conflicts
with or violates this Restated Agreement.


 


(b)       The
Executive represents and warrants to the Company that the Executive has not brought and shall not bring with the Executive to the
Company, or use in the performance of the Executive's responsibilities for the Company, any materials or documents of a former
employer which are not generally available to the public or which did not belong to the Executive prior to the Executive’s
employment with the Company, unless the Executive has obtained written authorization from the former employer or other owner for
their possession and use and provided the Company with a copy thereof.


 


8.       Indemnification.


 


(a)       By
the Employee. The Executive shall indemnify and hold harmless the Company, its directors, officers, stockholders, agents, and
employees against all claims, costs, expenses, liabilities, and lost profits, including amounts paid in settlement, incurred by
any of them as a result of Executive engaging in actions that constitute Cause under Section 5(b)(iv)B, E, F or G of this Restated
Agreement or the breach by the Executive of any provision of Section 6 and/or 7 of this Restated Agreement.


 


(b)       By
the Company. The Company will indemnify and hold harmless the Executive from any liabilities and expenses arising from Executive’s
actions as an officer, director or employee of the Company to the fullest extent permitted by law, excepting any unauthorized acts,
intentional or illegal conduct which breaches the terms of this or any other agreement or Company policy, including but not limited
to the Proprietary Information Agreement.


 


9.       Notices.
All notices, requests, consents, approvals, and other communications to, upon, and between the parties shall be in writing and
shall be deemed to have been given, delivered, made, and received when: (a) personally delivered; (b) deposited for next day delivery
by Federal Express, or other similar overnight courier services; (c) transmitted via telefacsimile or other similar device to the
attention of the Company President with receipt acknowledged; or (d) three days after being sent or mailed by certified mail, postage
prepaid and return receipt requested, addressed to the Company at 8480 Honeycutt Road, Suite 120, Raleigh, NC 27615, and to the
Executive at the address set forth by the signature page below.


 






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10.       Effect.
This Restated Agreement may be assigned by the Company to its successors in interests. This Restated Agreement shall be binding
on and inure to the respective benefit of the Company and its successors and assigns and the Executive and Executive’s personal
representatives.


 


11.       Entire
Agreement. This Restated Agreement and the Proprietary Information Agreement and any other similar agreement regarding confidentiality,
intellectual property rights, non-competition or non-solicitation constitute the entire agreement between the parties with respect
to the matters set forth herein and supersede all prior agreements and understandings between the parties with respect to the same.


 


12.       Severability.
The invalidity or unenforceability of any provision of this Restated Agreement shall not affect the validity or enforceability
of any other provision.


 


13.       Amendment
and Waiver. A waiver of any breach of this Restated Agreement shall not constitute a waiver of any other provision of this
Restated Agreement or any subsequent breach of this Restated Agreement. No provision of this Restated Agreement may be amended,
modified, deleted, or waived in any manner except by a written agreement executed by the parties.


 


14.       Section
409A Matters. This Restated Agreement is intended to comply with the requirements of Section 409A of the Internal Revenue Code
of 1986, as amended and the Treasury Regulations and other applicable guidance thereunder (“Section 409A”).
To the extent that there is any ambiguity as to whether this Restated Agreement (or any of its provisions) contravenes one or more
requirements of Section 409A, such provision shall be interpreted and applied in a matter that does not result in a Section 409A
violation. Without limiting the generality of the above:


 


(a)       For
clarity, the severance benefits specified in this Restated Agreement (the “Severance Benefits”) are only payable
upon a “separation from service” as defined in Section 409A. The Severance Benefits shall be deemed to be series of
separate payments, with each installment being treated as a separate payment. The time and form of payment of any compensation
may not be deferred or accelerated to the extent it would result in an impermissible acceleration or deferral under Section 409A.


 


(b)       To
the extent this Restated Agreement contains payments which are subject to Section 409A (as opposed to exempt from Section 409A),
the Executive’s rights to such payments are not subject to anticipation, alienation, sale, transfer, pledge, encumbrance,
attachment or garnishment and, where applicable, may only be transferred by will or the laws of descent and distribution.


 


(c)       To
the extent the Severance Benefits are intended to be exempt from Section 409A as a result of an “involuntary separation from
service” under Section 409A, if all conditions necessary to establish the Executive’s entitlement to such Severance
Benefits have been satisfied, all Severance Benefits shall be paid or provided in full no later than December 31st of
the second calendar year following the calendar year in which the Executive’s employment terminated unless another time period
is applicable.


 






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(d)       If
the Employee is a “specified employee” (as defined in Section 409A) on the termination date and a delayed payment is
required by Section 409A to avoid a prohibited distribution under Section 409A, then no Severance Benefits that constitute “non-qualified
deferred compensation” under Section 409A shall be paid until the earlier of (i) the first day of the 7th month
following the date of Employee’s “separation from service” as defined in Section 409A, or (ii) the date of Employee’s
death. Upon the expiration of the applicable deferral period, all payments deferred under this clause shall be paid in a lump sum
and any remaining severance benefits shall be paid per the schedule specified in this Restated Agreement.


 


(e)       The
Company makes no representation that this Restated Agreement will be exempt from or compliant with Section 409A and makes no affirmative
undertaking to preclude Section 409A from applying, but does reserve the right to unilaterally amend this Restated Agreement as
may be necessary or advisable to permit the Agreement to be in documentary and operational compliance with Section 409A which determination
will be made in the sole discretion of the Company.


 


15.       Governing
Law. This Restated Agreement shall be construed, interpreted, and governed in accordance with and by North Carolina law and
the applicable provisions of federal law (“Applicable Federal Law”). Any and all claims, controversies, and
causes of action arising out of or relating to this Restated Agreement, whether sounding in contract, tort, or statute, shall be
governed by the laws of the state of North Carolina, including its statutes of limitations, except for Applicable Federal Law,
without giving effect to any North Carolina conflict-of-laws rule that would result in the application of the laws of a different
jurisdiction. Both Executive and the Company acknowledge and agree that the state or federal courts located in North Carolina
have personal jurisdiction over them and over any dispute arising under this Restated Agreement, and both Executive and the Company
irrevocably consent to the jurisdiction of such courts.


 


16.       Consent
to Jurisdiction and Venue. Each of the parties agrees that any suit, action, or proceeding arising out of this Restated Agreement
may be instituted against it in the state or federal courts located in Wake County, North Carolina. Each of the parties hereby
waives any objection that it may have to the venue of any such suit, action, or proceeding, and each of the parties hereby irrevocably
consents to the personal jurisdiction of any such court in any such suit, action, or proceeding.


 


17.       Counterparts.
This Restated Agreement may be executed in more than one counterpart, each of which shall be deemed an original, and all of which
shall be deemed a single agreement.


 


18.       Headings.
The headings herein are for convenience only and shall not affect the interpretation of this Restated Agreement.


 


 


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IN WITNESS WHEREOF,
the parties have executed this Restated Agreement as of the day and year first above written.


 


 


	 	COMPANY:
	 	 
	 	INNOVATE BIOPHARMACEUTICALS, INC.
	 	 
	 	 
	 	By: 	/s/ Christopher P. Prior, Ph.D.	 
	 	Name: Christopher P. Prior, Ph.D.
	 	Title: Chief Executive Officer
	 	 
	 	 
	 	 
	 	JAY P. MADAN
	 	 
	 	 
	 	/s/ Jay P. Madan	 
	 	 
	 	Address:


 


 


 



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