EX-10.7





 Exhibit 10.7 

April 24, 2021 
  

	Re:	 Employment Agreement 



Dear Nikolaos: 
 The Honest Company, Inc. (the
“Company”) is pleased to offer you continuing at-will employment in the position of Chief Executive Officer (“CEO”) on the terms and conditions set forth in this letter
agreement (the “Agreement”). 
 1. Employment by the Company. This Agreement and your continuing employment
under the terms hereunder shall take effect upon the effectiveness of the S-1 registration statement relating to the Company’s initial public offering (the “Effective Date”). This is an
exempt position, and during your employment with the Company, you will devote your best efforts and substantially all of your business time and attention to the business of the Company, except for approved vacation periods and reasonable periods of
illness or other incapacities permitted by the Company’s general employment policies. You shall perform such duties as are required by the Company’s Board of Directors (“Board”), to whom you will report. During your
employment, if acceptable to you, the Board or appropriate committee will nominate you to serve as a member of the Board at each annual meeting at which you are subject to re-election, as permitted by the
Company’s bylaws and applicable law. Your primary work location shall be the Company’s office located in Los Angeles, California. The Company reserves the right to reasonably require you to perform your duties at places other than your
primary office location from time to time, and to require reasonable business travel. 
 2. Compensation. 

2.1 Base Salary. For services to be rendered hereunder, you shall receive a base salary at the rate of $825,000 per year (the
“Base Salary”), subject to standard payroll deductions and withholdings and payable in accordance with the Company’s regular payroll schedule. Your Base Salary shall be subject to periodic review for any increase in the
Board’s discretion. Any such increased amount shall be your “Base Salary” for all purposes thereafter. 
 2.2 Annual
Bonus. You will be eligible for an annual discretionary bonus with a target amount of 50% of your then current annual Base Salary (the “Annual Bonus”). Whether you receive an Annual Bonus for any given year, and the
amount of any such Annual Bonus, will be determined by the Board of Directors of the Company and/or its Compensation Committee (the “Board”) in its discretion based upon the achievement of corporate and/or individual objectives and
milestones that are determined in the sole discretion of the Board and other criteria to be determined by the Board in consultation with you. You must continue to be employed through the date the Annual Bonus is paid in order to earn such bonus. If
your employment terminates for any reason prior to the payment date, you will not have earned, and will not be paid, any pro-rated bonus. The Annual Bonus, if earned, shall be paid to you in a lump sum no
later than March 15th of the calendar year that follows the performance year, subject to applicable payroll deductions and withholdings. 

  
 1. 













 2.3 Equity. You have previously been granted various equity interests in the Company
(the “Awards”). The Awards will continue to be governed by the terms and conditions of the applicable existing plan documents, award agreements and grant notices. You will be eligible for future equity awards as determined by the
Board from time to time in its sole discretion. 
 3. Business Expenses. You will be eligible for reimbursement of all
reasonable, necessary and documented out-of-pocket business, entertainment, and travel expenses incurred by you in connection with the performance of your duties
hereunder in accordance with the Company’s expense reimbursement policies and procedures. 
 4. Company Policies; Standard
Company Benefits. The employment relationship between the parties shall be governed by the general employment policies and practices of the Company, except that when the terms of this Agreement differ from or are in conflict with the
Company’s general employment policies or practices, this Agreement shall control. You shall remain eligible to participate in all employee benefit programs for which you are eligible under the terms and conditions of the benefit plans that may
be in effect from time to time and provided by the Company to its employees (medical, dental, and vision benefits paid at 100% by the Company). The Company reserves the right to cancel or change the benefit plans or programs it offers to its
employees at any time. You shall be reimbursed up to $20,000 annually for expenses related to tax and financial planning advice, contingent upon submission of receipts to the Company with respect thereto. The Company shall promptly pay or reimburse
the legal fees incurred by the CEO in negotiating and preparing this Agreement and related documents, up to a maximum of $25,000. The Company shall purchase and maintain, at the Company’s expense (including annual premiums) a $5,000,000
“key man” life insurance policy, for the benefit of the Company, during the tenure of your employment by the Company. 
 5.
At-Will Employment. Your employment relationship is at-will. Either you or the Company may terminate the employment relationship at any time, with or without
cause or advance notice. Subject to the “Good Reason” provision set forth in Section 7 and Section 8.3, the Company may, in its sole discretion, adjust salaries, incentive compensation, stock plans, benefits, job titles,
locations, duties, responsibilities, and reporting relationships. Upon termination of your employment for any reason, you shall resign from all positions and terminate any relationships as an employee, advisor, officer or director with the Company
and any of its affiliates, each effective on the date of termination.  
 6. Outside Activities During Employment.
Except with the prior written consent of the Board, you will not during the term of your employment with the Company undertake or engage in any other employment, occupation or business enterprise, other than ones in which you are a passive investor.
You may engage in civic and not-for-profit activities so long as such activities do not materially interfere with the performance of your duties hereunder. You agree not
to acquire, assume or participate in, directly or indirectly, any position, investment or interest known to be adverse or antagonistic to the Company, its business or prospects, financial or otherwise. 

  
 2. 













 7. Termination; Severance. 

7.1 Involuntary Termination. If you are subject to an Involuntary Termination and provided that you remain in compliance with
the terms of this Agreement applicable following a termination of employment (including the conditions described in Section 7.3 below), the Company shall provide you with the following Severance Benefits: 

(a) Cash Severance. The Company shall pay you, as severance, the equivalent of twenty four (24) months (the “Severance
Period”) of your Base Salary in effect as of the date of your employment termination, subject to standard payroll deductions and withholdings (the “Severance”). The Severance shall also include a pro rata bonus amount
calculated from the achievement of identified corporate goals, with any personal goals deemed achieved, under the Company’s bonus plan as of the date of your employment termination (“Pro Rata Bonus”). The Severance will be paid
as a continuation on the Company’s regular payroll, beginning no later than the first regularly-scheduled payroll date following the sixtieth (60th) day after your Separation from Service,
provided the Separation Agreement (as provided in Section 7.3) has become effective. 
 (b) Payment of Continued Group Health Plan
Benefits. If you are eligible for and timely elect continued group health plan coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 or any state law of similar effect (“COBRA”) following your
Involuntary Termination, the Company will pay your COBRA group health insurance premiums for you and your eligible dependents directly to the insurer until the earliest of (A) the end of the period immediately following your Involuntary
Termination that is equal to the Severance Period (the “COBRA Payment Period”), (B) the expiration of your eligibility for continuation coverage under COBRA, or (C) the date when you become eligible for
substantially equivalent health insurance coverage in connection with new employment or self-employment. For purposes of this Section, references to COBRA premiums shall not include any amounts payable by you under a Section 125 health
care reimbursement plan under the Code. Notwithstanding the foregoing, if at any time the Company determines, in its sole discretion, that it cannot pay the COBRA premiums without potentially incurring financial costs or penalties under
applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then regardless of whether you elect continued health coverage under COBRA, and in lieu of providing the COBRA premiums, the Company will instead pay
you on the last day of each remaining month of the COBRA Payment Period, a fully taxable cash payment equal to the COBRA premiums for that month, subject to applicable tax withholdings (such amount, the “Special Severance
Payment”), which payments shall continue until the earlier of expiration of the COBRA Payment Period or the date when you become eligible for substantially equivalent health insurance coverage in connection with new employment or
self-employment. On the first payroll date following the effectiveness of the Release, the Company will make the first payment to the insurer under this clause (and, in the case of the Special Severance Payment, such payment will be to you, in
a lump sum) equal to the aggregate amount of payments that the Company would have paid through such date had such payments instead commenced on the date of your Involuntary Termination, with the balance of the payments paid thereafter on the
schedule described above. If you become eligible for coverage under another employer’s group health plan, you must immediately notify the Company of such event, and all payments and obligations under this subsection shall cease. 

  
 3. 













 7.2 Termination for Cause; Resignation Without Good Reason; Death or Disability. If
you resign without Good Reason, or the Company terminates your employment for Cause, or upon your death or disability, then all payments of compensation by the Company to you hereunder will terminate immediately (except as to amounts already
earned), and you will not be entitled to any Severance Benefits. Notwithstanding the foregoing, in the event of your death or disability you or your estate will be entitled to a Pro Rata Bonus. 

7.3 Conditions to Receipt of Severance Benefits. The receipt of the Severance Benefits will be subject to you signing and not revoking
a separation agreement and release of claims in a form reasonably satisfactory to you and the Company (the “Separation Agreement”) by no later than the sixtieth (60th) day after your employment termination (“Release
Deadline”). No Severance Benefits will be paid or provided until the Separation Agreement becomes effective. You shall also resign from all positions and terminate any relationships as an employee, advisor, officer or director with the
Company and any of its affiliates, each effective on the date of termination. 
 7.4 Accrued Obligations. Upon a termination of your
employment for any reason, (i) you shall receive payment for all Base Salary accrued as of the date of your termination and you shall also be entitled to reimbursement for all business expenses incurred through the date of termination in
accordance with the Company’s expense reimbursement policy as applicable to executives. Your participation in the Company’s then-existing benefit plans shall be governed by the terms and conditions of such plans in effect on the date of
termination and in accordance with applicable law. 
 8. Definitions. 

8.1 Cause. For purposes of this Agreement, “Cause” means any one of the following: (a) willful material breach by
you of any material Company policy (including, but not limited to, the Company’s policies on nondiscrimination, anti-harassment, and confidential information) or your duties or obligations hereunder; (b) your willful engagement in conduct
materially injurious to the Company, monetarily or otherwise; (c) acts of fraud, theft or other willful illegal acts calling into question your personal integrity, or conviction on a felony charge, whether or not related to your employment
hereunder; or (d) your willful refusal to follow lawful instructions of the Board. In order to terminate your employment for Cause pursuant to (a) or (d), but only to the extent the Board determines in its reasonable discretion that such
breach is amenable to cure, the Board must provide you written notice within thirty (30) days after the first occurrence of the event giving rise to Cause setting forth the basis for the existence of Cause, allow you thirty (30) days from
receipt of such written notice to cure such event, and if such event is not reasonably cured within such period, the Company must terminate your employment not later than thirty (30) days after the expiration of the cure period. No act, or
failure to act, on your part shall be considered “willful” if done, or omitted to be done, by you in good faith and with a reasonable belief that your action or omission was in the best interests of the Company. 

  
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 8.2 Code. For purposes of this Agreement, “Code” means the U.S.
Internal Revenue Code of 1986 (as it has been and may be amended from time to time) and any regulations and guidance that has been promulgated or may be promulgated from time to time thereunder and any state law of similar effect. 

8.3 Good Reason. For purposes of this Agreement, “Good Reason” means any one of the following without your consent:
(a) an assignment of duties or responsibilities (including reporting responsibilities) materially inconsistent with, or which materially reduce, your duties, authority, responsibilities and status with the Company; (b) an adverse
change in your title; (c) any material reduction in your Base Salary, other than a reduction, generally applicable to other executives of the Company, by not more than 25%; (d) the relocation of your principal place of employment to a location
that is more than twenty-five (25) miles away from its current location; or (e) the uncured breach of any material provision of this Agreement (or any other agreement with you) by the Company. In order to resign for Good Reason, you must
provide written notice to the Company’s Board within thirty (30) days after the first occurrence of the event giving rise to Good Reason setting forth the basis for your resignation, allow the Company thirty (30) days from receipt of
such written notice to cure such event, and if such event is not reasonably cured within such period, you must resign from all positions you then hold with the Company not later than thirty (30) days after the expiration of the cure period.

 8.4 Involuntary Termination. For purposes of this Agreement, “Involuntary Termination” means a termination of
your employment with the Company pursuant to either (i) a termination initiated by the Company without Cause, or (ii) your resignation for Good Reason, and provided in either case such termination constitutes a Separation from Service. An
Involuntary Termination does not include any other termination of your employment, including a termination due to your death or disability. 

8.5 Separation from Service. For purposes of this Agreement, “Separation from Service” means a “separation from
service”, as defined under Treasury Regulation Section 1.409A-1(h). 
 9.
Proprietary Information Obligations. As a condition of your continued employment, you shall execute and abide by the Company’s standard form of Employee Confidential Information and Invention Assignment Agreement, attached as
Exhibit A. In your work for the Company, you will be expected not to use or disclose any confidential information, including trade secrets, of any former employer or other person to whom you have an obligation of confidentiality.
Rather, you will be expected to use only that information which is generally known and used by persons with training and experience comparable to your own, which is common knowledge in the industry or otherwise legally in the public domain, or which
is otherwise provided or developed by the Company. You acknowledge that you have not brought onto Company premises any unpublished documents or property belonging to any former employer or other person to whom you have an obligation of
confidentiality and have disclosed to the Company any contract you have signed that may restrict your activities on behalf of the Company. 

  
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 10. Section 409A. It is intended that all of the severance
benefits and other payments payable under this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Code Section 409A provided under Treasury Regulations Sections 1.409A 1(b)(4), 1.409A 1(b)(5) and 1.409A
1(b)(9), and this Agreement will be construed to the greatest extent possible as consistent with those provisions, and to the extent not so exempt, this Agreement (and any definitions hereunder) will be construed in a manner that complies with
Section 409A. For all purposes of Code Section 409A (including, without limitation, for purposes of Treasury Regulations Sections 1.409A 2(b)(2)(i) and (iii)), your right to receive any installment payments under this Agreement (whether
severance payments, reimbursements or otherwise) shall be treated as a right to receive a series of separate payments and, accordingly, each installment payment hereunder shall at all times be considered a separate and distinct payment.
Notwithstanding any provision to the contrary in this Agreement, if you are deemed by the Company at the time of your Separation from Service to be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i), and if any of
the payments upon Separation from Service set forth herein and/or under any other agreement with the Company are deemed to be “deferred compensation,” then to the extent delayed commencement of any portion of such payments is required in
order to avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i) and the related adverse taxation under Section 409A, such payments shall not be provided to you prior to the earliest of (i) the first date following
expiration of the six-month period following the date of your Separation from Service with the Company, (ii) the date of your death or (iii) such earlier date as permitted under Section 409A
without the imposition of adverse taxation. Upon the first business day following the expiration of such applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this Paragraph shall be paid in a lump sum to you, and
any remaining payments due shall be paid as otherwise provided herein or in the applicable agreement. No interest shall be due on any amounts so deferred. If the severance benefits are not covered by one or more exemptions from the application of
Section 409A and the Release Deadline occurs in the calendar year following the calendar year of your Separation from Service, the Release will not be deemed effective any earlier than the Release Deadline for purposes of determining the timing
of provision of any severance benefits. 
 11. Arbitration of All Disputes. 

11.1 Agreement to Arbitrate. To ensure the timely and economical resolution of disputes that may arise between you and the Company, both
you and the Company mutually agree that pursuant to the Federal Arbitration Act, 9 U.S.C. §1-16, and to the fullest extent permitted by applicable law, you and the Company will submit solely to final,
binding and confidential arbitration any and all disputes, claims, or causes of action arising from or relating to: (i) the negotiation, execution, interpretation, performance, breach or enforcement of this Agreement; or
(ii) your application, hiring, and employment with the Company (including but not limited to all statutory claims); or (iii) the termination of your employment with the Company (including but not limited to all statutory
claims). BY AGREEING TO THIS ARBITRATION PROCEDURE, BOTH YOU AND THE COMPANY WAIVE THE RIGHT TO RESOLVE ANY SUCH DISPUTES THROUGH A TRIAL BY JURY OR JUDGE OR THROUGH AN ADMINISTRATIVE PROCEEDING.

  
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 11.2 Arbitrator Authority. The arbitrator shall have the sole and exclusive authority
to determine whether a dispute, claim or cause of action is subject to arbitration under this Section and to determine any procedural questions which grow out of such disputes, claims or causes of action and bear on their final disposition. 

11.3 Individual Capacity Only. All claims, disputes, or causes of action under this Section, whether by you or the Company, must be
brought solely in an individual capacity, and shall not be brought as a plaintiff (or claimant) or class member in any purported class or representative proceeding, nor joined or consolidated with the claims of any other person or entity. The
arbitrator may not consolidate the claims of more than one person or entity, and may not preside over any form of representative or class proceeding. To the extent that the preceding sentences in this Section are found to violate applicable law
or are otherwise found unenforceable, any claim(s) alleged or brought on behalf of a class shall proceed in a court of law rather than by arbitration.

11.4 Arbitration Process. Any arbitration proceeding under this Section shall be presided over by a single arbitrator and conducted by
Judicial Arbitration and Mediation Services, Inc. (“JAMS”) in Los Angeles County, California, or as otherwise agreed to by you and the Company, under the then applicable JAMS rules for the resolution of employment disputes
(available upon request and also currently available at http://www.jamsadr.com/rules-employment-arbitration/). You and the Company both have the right to be represented by legal counsel at any arbitration proceeding, at each
party’s own expense. The Arbitrator shall: (i) have the authority to compel adequate discovery for the resolution of the dispute; (ii) issue a written arbitration decision, to include the arbitrator’s essential
findings and conclusions and a statement of the award; and (iii) be authorized to award any or all remedies that you or the Company would be entitled to seek in a court of law. The Company shall pay all JAMS arbitration fees in excess of
the amount of court fees that would be required of you if the dispute were decided in a court of law.
 11.5 Excluded Claims. This
Arbitration section shall not apply to any action or claim that cannot be subject to mandatory arbitration as a matter of law, including, without limitation, claims brought pursuant to the California Private Attorneys General Act of 2004, as
amended, to the extent such claims are not permitted by applicable law to be submitted to mandatory arbitration and such applicable law is not preempted by the Federal Arbitration Act or otherwise invalid (collectively, the “Excluded
Claims”). In the event you intend to bring multiple claims, including any Excluded Claims, the Excluded Claims may be filed with a court, while any other claims will remain subject to mandatory arbitration. 

  
 7. 













 11.6 Injunctive Relief and Final Orders. Nothing in this Section is intended to
prevent either you or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration. Any final award in any arbitration proceeding hereunder may be entered as a judgment in the
federal and state courts of any competent jurisdiction and enforced accordingly. 
 12. General Provisions. This Agreement,
together with the Confidential Information and Inventions Assignment Agreement, constitutes the entire agreement between you and the Company with regard to this subject matter and is the complete, final, and exclusive embodiment of the parties’
agreement with regard to this subject matter. This Agreement is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or
representations, including, but not limited to, your employment agreement with the Company dated March 13, 2017 (the “Prior Agreements”). You agree and acknowledge that you are not eligible for, and will not receive, any
compensation, benefits, or severance pursuant to the Prior Agreements. You also agree and acknowledge that there are no circumstances as of the date of this Agreement that constitute, and nothing contemplated in this Agreement or otherwise shall be
deemed for any purpose to be or to create, an involuntary termination without Cause or a Good Reason resignation right, including for purposes of the Prior Agreements, or any other severance or change in control plan, agreement or policy maintained
by the Company or its affiliates.    This Agreement cannot be modified or amended except in a writing signed by you and a duly authorized officer of the Company. Whenever possible, each provision of this Agreement will 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 will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction to the extent possible in keeping with the intent of the
parties. Any waiver of any breach of any provisions of this Agreement must be in writing to be effective, and it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement. This
Agreement is intended to bind and inure to the benefit of and be enforceable by you and the Company, and their respective successors, assigns, heirs, executors and administrators. The Company may freely assign this Agreement, without your prior
written consent. You may not assign any of your duties hereunder and you may not assign any of your rights hereunder without the written consent of the Company. This Agreement shall become effective as of the Start Date and shall terminate upon your
termination of employment with the Company. The obligations as forth under Sections 7, 8, 9, 10, 11, and 12 will survive the termination of this Agreement. All questions concerning the construction, validity and interpretation of this Agreement will
be governed by the laws of the State of California. 
 13. Indemnification; D&O Insurance. The Company
shall indemnify and hold you harmless, to the full extent permitted under the Company’s charter, bylaws and applicable law (including advances of legal expenses subject to an undertaking to refund in the event that a final determination is
entered that you are not eligible for indemnification) relating to or arising out of your employment and service as a member of the Board. You shall at all relevant times be covered as an insured under any director and officer liability insurance
that covers members of the Board. This Section 13 shall survive any termination of this Agreement or termination of your employment and service as a member of the Board. 

  
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 Accepted and agreed: 

Best regards, 
 THE HONEST
COMPANY, INC. 
 /s/ Brendan Sheehey 

	
	  
 Name: Brendan Sheehey

	Title: General Counsel

 Accepted and agreed: 

/s/ Nikolaos Vlahos 

	
	  
 Nikolaos Vlahos


 Date: April 24, 2021 

  
 9. 













 Exhibit A 

Employee Confidential Information and Invention Assignment Agreement 

  
 10.