Document:

Exhibit 10.2

 

Separation and Release of
Claims Agreement

 

This Separation and Release of Claims Agreement ("Agreement")
is entered into by and between Sonoma Pharmaceuticals, Inc., a Delaware corporation, its successors, assigns, employees, directors,
and agents (the "Company") and John Dal Poggetto (the "Employee"), (the Company and the Employee
are collectively referred to as the "Parties") as of April 14, 2020 (the "Execution Date").

 

Employee's last day of employment with the Company is April
24, 2020 (the "Termination Date"). After the Termination Date, the Employee will not represent himself as being
an employee, officer, attorney, agent, or representative of the Company for any purpose. Except as otherwise set forth in this
Agreement, the Termination Date is the employment termination date for the Employee for all purposes, meaning the Employee is not
entitled to any further compensation, monies, or other benefits from the Company, including coverage under any benefit plans or
programs sponsored by the Company, as of the Termination Date.

 

		1.	Employee
Representations. The Employee specifically represents, warrants, and confirms that the Employee:

 

		a.	has not filed any claims, complaints, or actions of any kind against the Company with any court of law, or local, state, or
federal government or agency;

 

		b.

                                                          
	has received all salary, accrued vacation, commissions, bonuses, compensation, shares of stock options therefore or other such
sums due to Employee other than the sums to be paid pursuant to Section 2 of this Agreement; and

 

		c.	has not engaged in any unlawful conduct relating to the business of the Company.

 

		2.	Consideration.
As consideration for the Employee's execution of and compliance with this Agreement, including the Employee's waiver and release
of claims in Section 5 and other post-termination obligations, the Company agrees to provide the following benefits to which the
Employee is not otherwise entitled:

 

		a.	The Company agrees to pay Employee a lump sum of $50,000.00 less applicable tax withholdings and other payroll deductions.
This payment will be made within 15 business days after Company receives a signed original of this Agreement. For the avoidance
of doubt, no bonus of any kind, payable in full or partial, has accrued.

 

If Employee violates Section 7, Section
8, Section 9, and/or Section 10 of this Agreement, the Company shall be entitled to repayment of all or part of the sum described
above.

 

		b.	The Company agrees to pay Employee a lump sum of $31,377.33 for his accrued and paid time off, less applicable tax withholdings
and other payroll deductions. This payment will be made within 15 business days after Company receives a signed original of this
Agreement.

 

		c.	The Company shall reimburse Employee for the monthly Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”)
premiums paid by the Employee for himself and his dependents for the first six (6) months following the Termination Date if Employee
elects COBRA coverage If Employee becomes eligible for health benefits through another employer, the Company’s obligation
shall cease.

 

		d.	The Company agrees to grant Employee 3,086 shares of common stock within 15 business days after Company receives a signed original
of this Agreement. Employee will be responsible for all local, state and/or federal taxes related to the stock grant.

 

 

 

 

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		e.	All outstanding unvested equity grants of Employee shall immediately cease vesting and be forfeit as of the Termination Date.
All outstanding vested equity grants shall remain exercisable until they expire on the earlier of (i) the 91st day following the
Termination Date, or (ii) the original expiration date. Employee is responsible for any local, state and/or federal taxes for these
equity grants, including but not limited to the exercise, vesting or expiration.

 

		f.	Business expenses incurred by Employee through the Termination Date will be reimbursed consistent with Company policy.

 

Employee understands, acknowledges,
and agrees that these benefits exceed what Employee is otherwise entitled to receive on termination from employment, and that these
benefits are being given as consideration in exchange for executing this Agreement and the general release and restrictive covenants
contained in it. Employee further acknowledges that Employee is not entitled to any additional payment or consideration not specifically
referenced in this Agreement. Nothing in this Agreement shall be deemed or construed as an express or implied policy or practice
of the Company to provide these or other benefits to any individuals other than the Employee.

 

		3.	Consideration Period. Employee shall have twenty-one (21) calendar
days from April 13, 2020 to consider signing this Agreement.

 

		4.	Revocation Period. Employee shall have seven (7) calendar days
after the date Employee signs this Agreement to revoke the Agreement (the “Revocation
Date”). If Employee opts to revoke the Agreement within Revocation period, Employee
must notify the Company of this revocation in writing via the form of the letter attached hereto prior to the Revocation Date.
Any revocation within this period must state “I hereby revoke my acceptance of our Separation Agreement and Release.”
The written revocation must be personally delivered to Jennifer Scott, HR consultant, at the Company, by overnight mail or facsimile,
and must be postmarked within seven (7) calendar days after Employee’s execution of this Agreement. This Agreement shall
not become effective or enforceable until the Revocation Date. If the Revocation Date is a Saturday, Sunday, or legal holiday,
then the revocation period shall not expire until the next following day that is not a Saturday, Sunday, or legal holiday. If the
Employee does not expressly notify the Company in writing of his/her revocation of this Agreement as set forth herein, the Agreement
will be deemed accepted upon expiration of the seven (7) day revocation period.

 

If
Employee properly and timely revokes his acceptance of this Agreement as set forth herein, Employee acknowledges Employee will
not be entitled to the payments from the Company described in Section 2(a) nor any other compensation due and owing, if any there
is.

 

		5.	Release.

 

		a.	Employee waives his rights to the grant of the signing bonus as stated in Section 3.3 of the Employment Agreement dated September
25, 2019, as amended (the “Employment Agreement”).

 

		b.	Employee waives his rights to a separate notice of termination as provided for in Section 5 of the Employment Agreement.

 

 

 

 

 

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		c.	Mutual General Release and Waiver of Claims

 

Subject to the terms of this Agreement,
and in exchange for the payments set forth in Section 2 herein, Employee on his own behalf and on behalf of his heirs, spouses,
executors, administrators, and agents, hereby releases and discharges the Company and current and former of its officers, directors,
owners, partners, employees, parent companies or entities, subsidiaries, affiliates, related entities, franchisor, affiliated entities,
successors-in-interest, predecessors-in-interest, advisors, legal counsel, representatives, and agents, individually and collectively
(“Releasees”), of and from any and all known or unknown liabilities, claims, demands for damages, costs, indemnification,
contribution, or any other thing for which Employee has or may have a known or unknown cause of action, claim, or demand for damages,
costs, indemnification, or contribution, whether certain or speculative, which may have at any time prior hereto come into existence
or which may be brought in the future in connection with any acts or omissions which have arisen at any time prior to the date
of execution of this Agreement, including, but not limited to, any and all claims Employee has or may have relating to, or arising
out of the employment of Employee by Company, including but not limited to any claims by Employee for breach of employment contract,
or unpaid wages, any and all claims relating to, or arising from, Employee's right to purchase, or actual purchase of shares of
stock of the Company, or that Employee has been wrongfully terminated by Company, including any claim for harassment or discrimination,
discharge in violation of public policy and/or violation of any state and federal laws, including without limitation, the Americans
With Disabilities Act, Title VII Of The Civil Rights Act Of 1964, as amended, the Fair Labor Standards Acts, as amended, the National
Labor Relations Act, as amended, the Labor-Management Relations Act, as amended, the Worker Adjustment And Retraining Notification
Act Of 1988, as amended, the Rehabilitation Act Of 1973, as amended, the Equal Pay Act, the Employee Retirement Income Security
Act Of 1974, as amended, the Family Medical Leave Act Of 1993, as amended, the Age Discrimination in Employment Act, the Older
Workers Benefit Protection Act, x the Civil Rights Act of 1991, Sections 1981 through 1988 of Title 42 of the United States Code,
as amended, the Immigration Reform and Control Act, as amended, the Occupational Safety and Health Act, as amended, all California
state civil rights, employment and wage and hour laws, including those pertaining to overtime pay, timely payment of compensation,
meal and rest period pay, and penalties and interest upon late or unpaid compensation; the California Equal Pay Law, as amended;
the California Unruh Act, as amended, the California Smokers’ Rights Law, as amended; any allegation for costs, fees, or
other expenses including attorneys’ fees incurred in these matters, and any other federal, state or local civil or human
rights law or any other local, state or federal law, regulation or ordinance, including any applicable contract, tort, constitutional
or common law based claims that Employee has or may have as of the date of execution of this Agreement, including but not limited
to, any applicable California state laws governing employee and employer rights and obligations.

 

However, the release set forth in
this section excludes, and the Employee does not waive, release, or discharge: (i) any right to file an administrative charge or
complaint with the Equal Employment Opportunity Commission, the California Department of Fair Employment and Housing or other similar
federal or state administrative agencies, although the Employee waives monetary relief related to such a charge or administrative
complaint; (ii) claims which cannot be waived by law; (iii) indemnification rights the Employee has against the Company; (iv) claims
for coverage under any D&O or other similar insurance policy; and (vi) any rights to vested benefits, such as pension or retirement
benefits.

 

The Company and Employee agree that
the release set forth in this section shall be and remain in effect in all respects as a complete and general release as to the
matters released. This release does not extend to any obligations incurred under the Agreement.

 

The Company expressly waives and releases
any and all claims against the Employee that may be waived and released by law with the exception of claims arising out of or attributable
to (a) events, acts or omissions taking place after the Parties’ execution of this Agreement; (b) the Employee’s breach
of any terms and conditions of this Agreement; and (c) the Employee’s criminal activities or intentional misconduct occurring
during the Employee’s employment with the Company.

 

 

 

 

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		6.	Knowing
and Voluntary Acknowledgment. The Employee specifically agrees and acknowledges that:

 

		a.	the Employee has read this Agreement in its entirety and understands all of its terms;

 

		b.	by this Agreement, the Employee has been advised to consult with an attorney before executing this Agreement and has consulted
with such counsel as the Employee believed was necessary before signing this Agreement;

 

		c.	the Employee knowingly, freely, and voluntarily assents to all of this Agreement's terms and conditions including, without
limitation, the waiver, release, and covenants contained in it;

 

		d.	the Employee is signing this Agreement, including the waiver and release, in exchange for good and valuable consideration in
addition to anything of value to which the Employee is otherwise entitled;

 

		e.	the Employee is not waiving or releasing rights or claims that may arise after the Employee signs this Agreement; and

 

		f.	the Employee understands that the waiver and release in this Agreement is being requested in connection with the Employee's
termination of employment from the Company.

 

		7.	Post-Separation
Obligations and Restrictive Covenants. 

 

		a.	Confidential Information

 

The Employee understands and acknowledges
that during the course of employment with the Company, the Employee has had access to and learned about confidential, secret, and
proprietary documents, materials, and other information, in tangible and intangible form, of and relating to the Company and its
businesses and existing and prospective customers, suppliers, investors, and other associated third parties ("Confidential
Information"). The Employee further understands and acknowledges that this Confidential Information and the Company's
ability to reserve it for the exclusive knowledge and use of the Company is of great competitive importance and commercial value
to the Company, and that improper use or disclosure of the Confidential Information by the Employee may cause the Company to incur
financial costs, loss of business advantage, liability under confidentiality agreements with third parties, civil damages, and
criminal penalties.

 

		i.	For purposes of this Agreement, Confidential Information includes, but is not limited to, all information not generally known
to the public, in spoken, printed, electronic, or any other form or medium, relating directly or indirectly to: business processes,
practices, methods, policies, plans, publications, documents, research, operations, services, strategies, techniques, agreements,
contracts, terms of agreements, transactions, potential transactions, negotiations, pending negotiations, know-how, trade secrets,
computer programs, computer software, applications, operating systems, software design, web design, work-in-process, databases,
device configurations, embedded data, compilations, metadata, algorithms, technologies, manuals, records, articles, systems, material,
sources of material, supplier information, vendor information, financial information, results, accounting information, accounting
records, legal information, marketing information, advertising information, pricing information, credit information, design information,
payroll information, staffing information, personnel information, employee lists, supplier lists, vendor lists, developments, reports,
internal controls, security procedures, graphics, drawings, sketches, market studies, sales information, revenue, costs, formulae,
notes, communications, product plans, designs, styles, models, ideas, audiovisual programs, inventions, unpublished patent applications,
original works of authorship, discoveries, experimental processes, experimental results, specifications, customer information,
customer lists, client information, client lists, manufacturing information, factory lists, distributor lists, and buyer lists
of the Company or its businesses, or of any other person or entity that has entrusted information to the Company in confidence.

 

 

 

 

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		ii.	The Employee understands that the above list is not exhaustive, and that Confidential Information also includes other information
that is marked or otherwise identified or treated as confidential or proprietary, or that would otherwise appear to a reasonable
person to be confidential or proprietary in the context and circumstances in which the information is known or used.

 

		iii.	The Employee understands and agrees that Confidential Information developed by the Employee in the course of the Employee's
employment by the Company is subject to the terms and conditions of this Agreement as if the Company furnished the same Confidential
Information to the Employee in the first instance. Confidential Information shall not include information that is generally available
to and known by the public at the time of disclosure to the Employee, provided that the disclosure is through no direct or indirect
fault of the Employee or person(s) acting on the Employee's behalf.

 

		b.	Disclosure and Use Restrictions.

 

		i.	Employee Covenants. The Employee agrees and covenants:

 

		1.	to treat all Confidential Information as strictly confidential;

 

		2.	not to directly or indirectly disclose, publish, communicate, or make available Confidential Information, or allow it to be
disclosed, published, communicated, or made available, in whole or part, to any entity or person whatsoever (including other employees
of the Company) not having a need to know and authority to know and use the Confidential Information in connection with the business
of the Company and, in any event, not to anyone outside of the direct employ of the Company; and

 

		3.	not to access or use any Confidential Information, and not to copy any documents, records, files, media, or other resources
containing any Confidential Information, or remove any such documents, records, files, media, or other resources from the premises
or control of the Company, except as allowed by applicable law.

 

The Employee understands and acknowledges
that the Employee's obligations under this Agreement regarding any particular Confidential Information begin immediately and shall
continue after the Employee's employment by the Company until the Confidential Information has become public knowledge other than
as a result of the Employee's breach of this Agreement or a breach by those acting in concert with the Employee or on the Employee's
behalf.

 

		ii.	Permitted Disclosures. Nothing in this Agreement shall be construed to prevent disclosure of Confidential Information as may
be required by applicable law or regulation, or pursuant to the valid order of a court of competent jurisdiction or an authorized
government agency, provided that the disclosure does not exceed the extent of disclosure required by such law, regulation, or order.

 

Nothing in this Agreement prohibits
or restricts the Employee (or Employee's attorney) from initiating communications directly with, responding to an inquiry from,
or providing testimony before the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA),
any other self-regulatory organization, or any other federal or state regulatory authority regarding this Agreement or its underlying
facts or circumstances or a possible securities law violation.

 

Nothing in this Agreement in any
way prohibits or is intended to restrict or impede the Employee from exercising protected rights under Section 7 of the National
Labor Relations Act (NLRA).

 

 

 

 

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		c.	Non-Solicitation of Employees

 

The Employee understands and acknowledges
that the Company has expended and continues to expend significant time and expense in recruiting and training its employees and
that the loss of employees would cause significant and irreparable harm to the Company. The Employee agrees and covenants not to
directly or indirectly solicit, hire, recruit, attempt to hire or recruit, or induce the termination of employment of any person
who is then, or at any time within six (6) months prior thereto, was an employee of the Company, who earned annually $25,000 or
more as an employee of such entity during the last six (6) months of his or her own employment to work for (as an employee, consultant
or otherwise) any business, individual, partnership, firm, corporation, or other entity whether or not engaged in competitive business
with the Company for two (2) years beginning on the Termination Date.

 

		d.	Non-Solicitation of Customers

 

The Employee understands and acknowledges
that the Company has expended and continues to expend significant time and expense in developing customer relationships, customer
information, and goodwill, and that because of the Employee's experience with and relationship to the Company, the Employee has
had access to and learned about much or all of the Company's customer information ("Customer Information"). Customer
Information includes, but is not limited to, names, phone numbers, addresses, email addresses, order history, order preferences,
chain of command, pricing information, and other information identifying facts and circumstances specific to the customer and relevant
to the Company’s sales or services.

 

The Employee understands and acknowledges
that loss of any of these customer relationships or goodwill will cause significant and irreparable harm to the Company.

 

The Employee agrees and covenants
for the period of two (2) years after the Termination Date, not to use the Company’s confidential information to, directly
or indirectly, individually or as a consultant to or as an employee, officer, shareholder, director or other owner or participant
in any business, influence or attempt to influence the customers, vendors, suppliers, joint ventures, associates, consultants,
agents or partners of any affiliated entity of the Company, either directly or indirectly, to divert their business away from the
Company, to any individual, partnership, firm, corporation or other entity then in competition with the business of the Company
and Employee will not otherwise materially interview with any business relationship of the Company.

 

		8.	Non-Disparagement.
The Employee agrees and covenants that the Employee shall not at any time make, publish, or communicate to any person or entity
or in any public forum any defamatory or disparaging remarks, comments, or statements concerning the Company or its businesses,
or any of its employees, officers, or directors and its existing and prospective customers, suppliers, investors, and other associated
third parties, now or in the future, including any references to the Company on any social media site which could be construed
as casting the Company in a negative light.

 

Employee further agrees to refrain
from communications with or disparagement to any regulatory agency about the Company, including, but not limited to, lodging complaints
about the Company or offering any testimony or evidence against the Company in any legal or administrative action unless compelled
to do so under the authority of law.

 

The Company agrees to refrain from
any defamation, slander, or tortious interference with the contracts and relationships of the Employee, whether in writing, verbally
or electronically, including any references to the Employee on any social media site which could be construed as casting the Employee
in a negative light.

 

 

 

 

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		9.	Confidentiality
of Agreement. The Employee agrees and covenants that the Employee shall not disclose any of the negotiations of, terms
of, or amount paid under this Agreement to any individual or entity; provided, however, that the Employee will not be prohibited
from making disclosures to the Employee's spouse or domestic partner, attorney, tax advisors, or as may be required by law.

 

This Section does not in any way
restrict or impede the Employee from exercising protected rights to the extent that such rights cannot be waived by agreement or
from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government
agency, provided that such compliance does not exceed that required by the law, regulation, or order.

 

		10.	Return
of Property. Employee acknowledges and agrees that all property owned or leased by the Company that is in Employee’s
possession or control, including but not limited to keys, equipment, computer hardware and software, telephones and mobile phones,
customer lists, files, accounts, records, materials, documents, drawings, designs, diagrams, plans, specifications, manuals, books,
forms, receipts, notes, reports, memoranda, studies, data, calculations, recordings, catalogues, compilations of information, correspondence,
in any form, including, but not limited to, paper and electronic form, and all copies, abstracts and summaries of the foregoing,
instruments, tools and equipment and all other physical items, whether of a public nature or not, and whether prepared by Employee
or not, shall remain the sole and exclusive property of the Company and have not and shall not be removed from the premises of
the Company and if so, have properly been returned to the Company by the Termination Date. Employee further agrees that Employee
has promptly surrendered and delivered to the Company all the foregoing property, and Employee will not take with her any description
containing or pertaining to any confidential and proprietary information which Employee made, produced or came into possession
of during the course of his employment with the Company.

 

		11.	Remedies.
In the event of a breach or threatened breach by the Employee of any provision of this Agreement, the Employee hereby acknowledges
and agrees that the Company shall be entitled to seek, in addition to other available remedies, a temporary or permanent injunction
or other equitable relief against such breach or threatened breach from any court of competent jurisdiction, and that money damages
would not afford an adequate remedy, without the necessity of showing any actual damages and without the necessity of posting any
bond or other security. Any equitable relief shall be in addition to, not instead of, legal remedies, monetary damages, or other
available relief. Nothing in this section shall be construed to limit the damages otherwise recoverable by the Company in any such
event.

 

In the event of a material breach
by the Employee of any of the provisions of this Agreement, and following written notice of such breach by the Company to Employee
and an opportunity to cure such breach within five (5) business days where such breach may be cured, in addition to any other remedies
the Company may have, the Company's obligations to provide payment pursuant to this Agreement to Employee immediately terminate.

The Company also reserves the right
to inform any Person, and the principals of any such Person, that the Company reasonably believes to be receiving or to be contemplating
receiving from Employee any assistance of confidential and proprietary information in violation of this Section 11, and of the
rights of the Company under this Section 10, that participation by such Person and Employee in activities in violation of this
Section 10 may give rise to claims by the Company against such Person.

 

		12.	Successors
and Assigns.  The Agreement may not be assigned by Employee or the Company without the prior written consent of
the other party. Notwithstanding the foregoing, the Agreement may be assigned by the Company to a corporation controlling, controlled
by or under common control with the Company without the consent of Employee.

 

		13.	Arbitration.
The Parties agree that any dispute, controversy, or claim arising out of or related to the Employee's employment with the Company
or termination of employment, this Agreement, or any alleged breach of this Agreement shall be governed by the Federal Arbitration
Act (FAA) and submitted to and decided by binding arbitration to be held in Sonoma County, CA. Arbitration shall be administered
before the Arbitration and Mediation Center, Santa Rosa, CA. Each Party shall pay its own costs of arbitration. Any arbitral award
determination shall be final and binding on the Parties and may be entered as a judgment in a court of competent jurisdiction.
By entering into this Agreement, the Parties are waiving all rights to have their disputes heard or decided by a jury or in a court
trial and the right to pursue any class or collective action or representative claims against the other in court, arbitration,
or any other proceeding.

 

 

 

 

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		14.	Governing
Law, Jurisdiction, and Venue. This Agreement, whether sounding in contract, tort, or statute, for all purposes shall
be governed by and construed in accordance with the laws of California without regard to any conflicts of laws principles that
would require the laws of any other jurisdiction to apply.

 

		15.	Tax Consequences. The Company makes no representations or warranties with respect to the tax consequences of the payment
of any sums to Employee under the terms of the Agreement. Employee agrees and understands that he/she is responsible for payment,
if any, of local, state and/or federal taxes on the sums paid hereunder by the Company or as a result of equity grants being accelerated
in accordance with Section 2(c) hereof and any penalties or assessments thereon. Employee further agrees to indemnify and hold
the Company harmless from any claims, demands, deficiencies, penalties, assessments, executions, judgments, or recoveries by any
government agency against the Company for any amounts claimed due on account of Employee's failure to pay federal or state taxes
or damages sustained by the Company by reason of any such claims.

 

		16.	Entire
Agreement. Unless specifically provided herein, this Agreement contains all of the understandings and representations
between Company and Employee relating to the Employee’s separation from the Company and supersedes all prior and contemporaneous
understandings, discussions, agreements, representations, and warranties, both written and oral, regarding such subject matter.

 

		17.	Modification
and Waiver. No provision of this Agreement may be amended or modified unless the amendment or modification is agreed
to in writing and signed by the Employee and by an authorized officer of the Company. No waiver by either Party of any breach by
the other party of any condition or provision of this Agreement to be performed by the other Party shall be deemed a waiver of
any similar or dissimilar provision or condition at the same or any prior or subsequent time, nor shall the failure of or delay
by either Party in exercising any right, power, or privilege under this Agreement operate as a waiver thereof to preclude any other
or further exercise thereof or the exercise of any other such right, power, or privilege.

 

		18.	Severability.
If any provision of this Agreement is found by a court or arbitral authority of competent jurisdiction to be invalid, illegal,
or unenforceable in any respect, or enforceable only if modified, such finding shall not affect the validity of the remainder of
this Agreement, which shall remain in full force and effect and continue to be binding on the Parties.

 

		19.	Captions.
Captions and headings of the sections and paragraphs of this Agreement are intended solely for convenience and no provision of
this Agreement is to be construed by reference to the caption or heading of any section or paragraph.

 

		20.	Counterparts.
The Parties may execute this Agreement in counterparts, each of which shall be deemed an original, and all of which taken together
shall constitute one and the same instrument.

 

		21.	No
Admission of Liability. Nothing in this Agreement shall be construed as an admission by the Company of any wrongdoing,
liability, or noncompliance with any federal, state, city, or local rule, ordinance, statute, common law, or other legal obligation.

 

 

 

 

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		22.	Notices.
All notices under this Agreement must be given in writing by personal delivery or regular mail at the addresses indicated in this
Agreement or any other address designated in writing by either Party.

 

Notice to Company:

 

Sonoma Pharmaceuticals, Inc.

1129 N. McDowell Blvd.

Petaluma, CA 94954

Direct Line 707-559-7381

Fax 415-462-5182

atrombly@sonomapharma.com

 

Notice to the Employee:

 

At the address on file with the
Company

 

		23.	Attorneys'
Fees and Costs. The Parties shall each bear their own costs, attorneys' fees and other fees incurred in connection with
the execution of the Agreement.

 

		24.	Section
409A. This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (Section
409A), including the exceptions thereto, and shall be construed and administered in accordance with such intent. Notwithstanding
any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that
complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A
either as separation pay due to an involuntary separation from service, as a short-term deferral, or as a settlement payment pursuant
to a bona fide legal dispute shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A,
any installment payments provided under this Agreement shall each be treated as a separate payment. To the extent required under
Section 409A, any payments to be made under this Agreement in connection with a termination of employment shall only be made if
such separation constitutes a "separation from service" under Section 409A. Notwithstanding the foregoing, Company makes
no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall
Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by Employee
on account of non-compliance with Section 409A.

 

		25.	Acknowledgment
of Full Understanding. THE EMPLOYEE ACKNOWLEDGES AND AGREES THAT THE EMPLOYEE HAS FULLY READ, UNDERSTANDS, AND VOLUNTARILY
ENTERS INTO THIS AGREEMENT. THE EMPLOYEE ACKNOWLEDGES AND AGREES THAT THE EMPLOYEE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS AND
CONSULT WITH AN ATTORNEY OF THE EMPLOYEE'S CHOICE BEFORE SIGNING THIS AGREEMENT. THE EMPLOYEE FURTHER ACKNOWLEDGES THAT THE EMPLOYEE'S
SIGNATURE BELOW IS AN AGREEMENT TO RELEASE COMPANY FROM ANY AND ALL CLAIMS THAT CAN BE RELEASED AS A MATTER OF LAW.

 

 

signature
page follows

 

 

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IN WITNESS WHEREOF, the Parties have executed
this Agreement as of the Execution Date above.

 

	 	Sonoma Pharmaceuticals, Inc.
	 	
        By: /s/ Amy Trombly

        Name: Amy Trombly

        Title: CEO

	EMPLOYEE	 
	
        Signature: /s/ John Dal Poggetto

        Print Name: John Dal Poggetto
	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	10NOTE

 

	 

SBA Loan #

	 

15790471-07

	SBA Loan Name

	CynergisTek, Inc.

	 

Date

	 

April 16, 2020

	 

Loan Amount

	 

$2,825,500.00

	 

Interest Rate

	 

1.00%

	Borrower

	CynergisTek, Inc.

	Operating Company

	N/A

	Lender

	BMO Harris Bank National Association

 

1.PROMISE TO PAY: 

In return for the Loan, Borrower promises to pay to the order of Lender the amount of $2,825,500.00, interest on the unpaid principal balance, and all other amounts required by this Note.

 

2.DEFINITIONS: 

 

“Collateral” means any property taken as security for payment of this Note or any guarantee of this Note.

“Guarantor” means each person or entity that signs a guarantee of payment of this Note.

“Loan” means the loan evidenced by this Note.

“Loan Documents” means the documents related to this loan signed by Borrower, any Guarantor, or anyone who pledges collateral.

“SBA” means the Small Business Administration, an Agency of the United States of America.

 

 

 

1.PAYMENT TERMS: 

Borrower must make all payments at the place Lender designates. The payment terms for this Note are:

 

Maturity: This Note will mature in 2 years and 0 months from date of Note.

 

Repayment terms:

 

The interest rate is 1% per year. The interest rate may only be changed in accordance with SOP 50 10.

 

Borrower must pay principal and interest payments of $159,004.86 every month, beginning 7 months from the date of the Note; payments must be made on the same day as the date of the Note in the months they are due.

 

Lender will apply each installment first to pay interest accrued to the day Lender receives the payment, then to bring principal current, then to pay any late fees, and will apply any remaining balance to reduce principal.

 

Loan Prepayment:

 

Notwithstanding any provision in this Note to the contrary:

 

Borrower may prepay this Note. Borrower may prepay 20 percent or less of the unpaid principal balance at any time without notice. If Borrower prepays more than 20 percent and the Loan has been sold on the secondary market, Borrower must:

 

a.Give Lender written notice; 

 

b.Pay all accrued interest; and 

 

c.If this prepayment is received less than 21 days from the date Lender receives the notice, pay an amount equal to 21 days' interest from the date lender receives the notice, less any interest accrued during the 21 days and paid under subparagraph b., above. 

 

If Borrower does not prepay within 30 days from the date Lender receives the notice, Borrower must give Lender a new notice.

 

All remaining principal and accrued interest is due and payable 2 years and 0 months from date of Note.

 

Late Charge: If payment on this Note is more than10 days late, Lender may charge Borrower a late fee of up to 5.00 % of the unpaid portion of the regularly scheduled payment.

 

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SBA Form 147 (06/03/02) Version 4.1

1.DEFAULT: 

 

Borrower is in default under this Note if Borrower does not make a payment when due under this Note, or if Borrower or Operating Company:

A.Fails to do anything required by this Note and other Loan Documents; 

B.Defaults on any other loan with Lender; 

C.Does not preserve, or account to Lender’s satisfaction for, any of the Collateral or its proceeds; 

D.Does not disclose, or anyone acting on their behalf does not disclose, any material fact to Lender or SBA; 

E.Makes, or anyone acting on their behalf makes, a materially false or misleading representation to Lender or SBA; 

F.Defaults on any loan or agreement with another creditor, if Lender believes the default may materially affect Borrower’s ability to pay this Note; 

G.Fails to pay any taxes when due; 

H.Becomes the subject of a proceeding under any bankruptcy or insolvency law; 

I.Has a receiver or liquidator appointed for any part of their business or property; 

J.Makes an assignment for the benefit of creditors; 

K.Has any adverse change in financial condition or business operation that Lender believes may materially affect Borrower’s ability to pay this Note; 

L.Reorganizes, merges, consolidates, or otherwise changes ownership or business structure without 

Lender’s prior written consent; or

M.Becomes the subject of a civil or criminal action that Lender believes may materially affect 

Borrower’s ability to pay this Note.

 

 

2.LENDER’S RIGHTS IF THERE IS A DEFAULT: 

 

Without notice or demand and without giving up any of its rights, Lender may:

A.Require immediate payment of all amounts owing under this Note; 

B.Collect all amounts owing from any Borrower or Guarantor; 

C.File suit and obtain judgment; 

D.Take possession of any Collateral; or 

E.Sell, lease, or otherwise dispose of, any Collateral at public or private sale, with or without advertisement. 

 

 

3.LENDER’S GENERAL POWERS: 

 

Without notice and without Borrower’s consent, Lender may:

 

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A.Bid on or buy the Collateral at its sale or the sale of another lienholder, at any price it chooses; 

B.Incur expenses to collect amounts due under this Note, enforce the terms of this Note or any other Loan Document, and preserve or dispose of the Collateral. Among other things, the expenses may include payments for property taxes, prior liens, insurance, appraisals, environmental remediation costs, and reasonable attorney’s fees and costs. If Lender incurs such expenses, it may demand immediate repayment from Borrower or add the expenses to the principal balance; 

C.Release anyone obligated to pay this Note; 

D.Compromise, release, renew, extend or substitute any of the Collateral; and 

E.Take any action necessary to protect the Collateral or collect amounts owing on this Note. 

 

4.WHEN FEDERAL LAW APPLIES: 

 

When SBA is the holder, this Note will be interpreted and enforced under federal law, including SBA regulations. Lender or SBA may use state or local procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax, or liability. As to this Note, Borrower may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal law.

 

 

5.SUCCESSORS AND ASSIGNS: 

 

Under this Note, Borrower and Operating Company include the successors of each, and Lender includes its successors and assigns.

 

 

6.GENERAL PROVISIONS: 

 

A.All individuals and entities signing this Note are jointly and severally liable. 

B.Borrower waives all suretyship defenses. 

C.Borrower must sign all documents necessary at any time to comply with the Loan Documents and to enable Lender to acquire, perfect, or maintain Lender’s liens on Collateral. 

D.Lender may exercise any of its rights separately or together, as many times and in any order it chooses. Lender may delay or forgo enforcing any of its rights without giving up any of them. 

E.Borrower may not use an oral statement of Lender or SBA to contradict or alter the written terms of this Note. 

F.If any part of this Note is unenforceable, all other parts remain in effect. 

G.To the extent allowed by law, Borrower waives all demands and notices in connection with this Note, including presentment, demand, protest, and notice of dishonor. Borrower also waives any defenses based upon any claim that Lender did not obtain any guarantee; did not obtain, perfect, or maintain a lien upon Collateral; impaired Collateral; or did not obtain the fair market value of Collateral at a sale. 

 

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SBA Form 147 (06/03/02) Version 4.1

1.STATE-SPECIFIC PROVISIONS: 

 

 

 

The following provision applies when a borrower is a resident of WISCONSIN:

Each Borrower who is married represents that this obligation is incurred in the interest of his or her marriage or family.

 

The following Confession of Judgment provision applies when a borrower is a resident of DELAWARE:

WARRANT OF ATTORNEY/CONFESSION OF JUDGMENT. In addition to any other remedies Lender may possess, Borrower knowingly, voluntarily and intentionally authorizes any attorney to appear on behalf of Borrower, from time to time, in any court of record possessing jurisdiction over this Note and to waive issuance and service of process and to confess judgment in favor of Lender against Borrower, for the unpaid principal, accrued interest, accrued charges, reasonable attorney fees and court costs and such other amount due under this Note.

 

The following Confession of Judgment provision applies when a borrower is a resident of MARYLAND: WARRANT OF ATTORNEY/CONFESSION OF JUDGMENT. Borrower authorizes an attorney to appear in a court of record and confess judgment, without process, against Borrower in favor of Lender for all indebtedness owed in connection with the loan, including but not limited to service charges, other charges and reasonable attorney's fees.

 

The following Confession of Judgment provision applies when a borrower is a resident of OHIO:

WARRANT OF ATTORNEY/CONFESSION OF JUDGMENT. In addition to any other remedies Lender may possess, Borrower knowingly, voluntarily and intentionally authorizes any attorney to appear on behalf of Borrower, from time to time, in any court of record possessing jurisdiction over this Note and to waive issuance and service of process and to confess judgment in favor of Lender against Borrower, for the unpaid principal, accrued interest, accrued charges, reasonable attorney fees and court costs and such other amount due under this Note. WARNING: BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF THE COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT OR ANY OTHER CAUSE.

 

The following Confession of Judgment provision applies when a borrower is a resident of PENNSYLVANIA: WARRANT OF ATTORNEY/CONFESSION OF JUDGMENT. Borrower irrevocably authorizes and empowers the prothonotary, any attorney or any clerk of any court of record, upon default, to appear for and confess judgment against Borrower for such sums as are due and/or may become due under this Note including costs of suit, without stay of execution, and for attorney's fees and costs as set forth in this Note and knowingly, voluntarily and intentionally waives any and all rights Borrower may have to notice and hearing under the state and federal laws prior to entry of a judgment. To the extent permitted by law, Borrower releases all errors in such proceedings. If a copy of this Note, verified by or on behalf of the holder shall have been filed in such action, it shall not be necessary to file the original Note as a warrant of attorney. The authority and power to appear for and confess judgment against Borrower shall not be exhausted by the initial exercise thereof and may be exercised as often as the holder shall find it necessary and desirable and this Note shall be a sufficient warrant for such authority and power.

 

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SBA Form 147 (06/03/02) Version 4.1

The following Confession of Judgment provision applies when a borrower is a resident of VIRGINIA: IMPORTANT NOTICE: THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR AND ALLOWS THE CREDITOR TO OBTAIN A JUDGMENT AGAINST YOU WITHOUT ANY FURTHER NOTICE. WARRANT OF ATTORNEY/CONFESSION OF JUDGMENT. In addition to

any other remedies Lender may possess, Borrower knowingly, voluntarily and intentionally authorizes to appear on behalf of Borrower, from time to time, in the District Court of Alexandria, Virginia and to waive issuance and service of process and to confess judgment in favor of Lender against Borrower, for the unpaid principal, accrued interest, accrued charges, reasonable attorney fees and court costs and such other amount due under this Note. The following Oral Agreements Disclaimer provision applies when the borrower is a resident of MISSOURI: Oral or unexecuted agreements or commitments to loan money, extend credit or to forbear from enforcing repayment of a debt including promises to extend or renew such debt are not enforceable, regardless of the legal theory upon which it is based that is in any way related to the credit agreement. To protect you (Borrowers(s)) and us (Creditor) from misunderstanding or disappointment, any agreements we reach covering such matters are contained in this writing, which is the complete and exclusive statement of the agreement between us, except as we may later agree in writing to modify it.

 

The following Oral Agreements Disclaimer provision applies when the borrower is a resident of MISSOURI: Oral or unexecuted agreements or commitments to loan money, extend credit or to forbear from enforcing repayment of a debt including promises to extend or renew such debt are not enforceable, regardless of the legal theory upon which it is based that is in any way related to the credit agreement. To protect you (Borrowers(s)) and us (Creditor) from misunderstanding or disappointment, any agreements we reach covering such matters are contained in this writing, which is the complete and exclusive statement of the agreement between us, except as we may later agree in writing to modify it.

 

The following Oral Agreements Disclaimer provision applies when the borrower is a resident of OREGON: UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY [BENEFICIARY]/ US CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY GRANTOR'S/BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY [AN AUTHORIZED REPRESENTATIVE OF BENEFICIARY]/US TO BE ENFORCEABLE.

 

The following Oral Agreements Disclaimer provision applies when the borrower is a resident of WASHINGTON:

Oral agreements or oral commitments to loan money, extend credit, or to forbear from enforcing repayment of a debt are not enforceable under Washington law.

 

The following provision applies when the borrower is a resident of ALASKA:

The Mortgagor or Trustor (Borrower) is personally obligated and fully liable for the amount due under the Note. The Mortgagee or Beneficiary (Lender) has the right to sue on the Note and obtain a personal judgment against the Mortgagor or Trustor for the satisfaction of the amount due under the Note either before or after a judicial foreclosure of the Mortgage or Deed of Trust as under AS 09.45.170-09.45.220.

 

The following Oral Agreements Disclaimer provision applies when the borrower is a resident of IOWA: IMPORTANT: READ BEFORE SIGNING. The terms of this agreement should be read carefully because only those terms in writing are enforceable. No other terms or oral promises not contained in this written contract may be legally enforced. You may change the terms of this agreement only by another written agreement.

 

The following Oral Agreements Disclaimer provision applies when the borrower is a resident of UTAH: This is a final expression of the agreement between the creditor and debtor and the written agreement may not be contradicted by evidence of any alleged oral agreement.

 

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SBA Form 147 (06/03/02) Version 4.1

1.BORROWER’S NAME(S) AND SIGNATURE(S): 

By signing below, each individual or entity becomes obligated under this Note as Borrower.

 

 

 

 

 

 

	CynergisTek, Inc.

	 

	 

	 

	 

	 

	/s/ Paul T. Anthony                                                                               

	 

	04-16-2020

	Signature of Authorized Representative of Borrower                  

	 

	Date

	 

	 

	 

	Paul T. Anthony            

	 

	Chief Financial Officer

	Name of Authorized Representative of Borrower                        

	 

	Title

	 

	 

	 

 

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SBA Form 147 (06/03/02) Version 4.1

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