Document:

EXHIBIT 10.6

 

SEPARATION AGREEMENT AND RELEASE OF ALL
CLAIMS

 

This Separation Agreement
and Release of All Claims (“Agreement”) is made between Avid Bioservices, Inc. (“Company”) and Roger J.
Lias, Ph.D. (“Executive”) in the complete, final, and binding settlement of all claims and potential claims, if any,
with respect to their employment relationship.

 

RECITALS

 

		A.	Executive resigned as the President and Chief Executive Officer of the Company effective May 7,
2019 (the “Resignation Date”).

 

		B.	Executive’s employment was terminated effective on the Resignation Date as the result of
a mutual agreement to resign.

 

		C.	Pursuant to the terms of Executive’s employment with the Company, Executive is entitled to
certain severance benefits in exchange for a general release of all claims. This Agreement is therefore entered into by the Company
and Executive to document the parties’ agreement regarding the terms of Executive’s separation from the Company.

 

NOW, THEREFORE,
IN RELIANCE OF THE ABOVE RECITALS AND IN CONSIDERATION of the promises, covenants and agreements herein contained, the Company
and Executive agree as follows:

 

1.                 
Except as provided below, Executive acknowledges the receipt of all wages, salary, bonuses, benefits, expense reimbursement
or any other monies owed by Company to Executive. Aside from the severance benefits described below, Executive acknowledges that
he is not entitled to any additional future compensation other than (i) his earned bonus for fiscal year 2019, the amount of which
will be determined in connection with the audit of the Company’s financial statements and which shall be paid to Executive
concurrent with the Company’s payment of fiscal year 2019 bonuses to its other executive officers, and (ii) the reimbursement
of business expenses not submitted by Executive as of the Resignation Date. Executive agrees to submit all such remaining business
expenses for reimbursement within fourteen (14) days of the Resignation Date, which expenses shall be promptly reimbursed by the
Company.

 

2.                 
Executive has returned all Company property remaining in Executive’s possession, including but not limited to credit
cards, computer hardware, memory or storage devices, software, keys, and documents regardless of medium (and all copies). Executive
hereby represents that: (1) he has not knowingly retained in his possession any such property, including backups thereof in any
form (including, cloud-based, printed or electronic); (2) he did not upload/download any such property for any reason other than
for legitimate and proper purposes pursuant to his employment with the Company (and any property so legitimately uploaded/downloaded
has either been returned or destroyed); (3) he did not transfer such property to any other person or entity (who at the time was
not expressly authorized by the Company to have possession of such property) other than for legitimate and proper purposes pursuant
to his employment with the Company; and (4) any such property has either been returned to the Company or has been deleted/destroyed.
Executive also agrees to promptly return any subsequently discovered Company property.

 

3.                 
In consideration for the general release and promises and representations of Executive as described in this Agreement, the
Company will provide Executive the following severance benefits: (i) Executive shall continue to be a paid his base salary less
any applicable payroll taxes and withholdings on the Company’s regular paydays for a period of twelve months from the Resignation
Date; (ii) the Company shall provide and pay the cost of COBRA continuation coverage for Executive and his family at his current
coverage levels for a period of twelve (12) months until May 7, 2020 or until Executive is eligible for coverage with another employer,
whichever is earlier; (iii) per the terms of his employment, the Company shall (A) pay to Executive the fifty thousand dollar ($50,000)
relocation bonus, less required federal and California income tax withholdings and other payroll deductions within three business
days following written confirmation from Executive that his family has permanently relocated to Orange County, California and (B)
subject to Company’s receipt of invoices, reimburse Executive for actual relocation expenses incurred in an amount not to
exceed fifty thousand dollars ($50,000) plus the relocation of up to two cars from North Carolina to California, not to exceed
$2,000 per car; (iv) Executive shall have until May 7, 2020 to exercise any stock options that have vested as of Resignation Date;
and (v) the Company shall continue to pay the monthly rent on Executive’s temporary residence in Irvine, California, to September
12, 2019, which shall be grossed up for federal and California income taxes and included in his taxable earnings, consistent with
past practices (collectively the “Severance”). This Severance will only be paid (or received) if Executive signs and
returns this Agreement and does not exercise his right of revocation under paragraph 12 of this Agreement.

 

 

 

    
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4.                 
In exchange for the Severance benefits and the promises contained herein, Executive hereby irrevocably and unconditionally
releases, acquits, and forever discharges the Company, and all parent, subsidiary, sister, and affiliated corporations and entities
of the Company, as well as all of its past, present or future agents, officers, directors, shareholders, employees, representatives,
and attorneys, and all persons acting by, though, under or in concert with any of them, and each of their respective heirs, successors,
and assigns (collectively, “Releasees”), or any of them, from any and all charges, complaints, claims, liabilities,
obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts
and expenses (including attorneys’ fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected
or unsuspected that Executive can lawfully release, including, but not limited to, rights arising out of alleged violations of
any contracts, express or implied, any covenant of good faith and fair dealing, express or implied, or any tort including defamation,
or any legal restrictions on the Company’s right to terminate employees, or any federal, state or other governmental statute,
regulation or ordinance, including, without limitation: the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1866;
42 U.S.C. § 1981; the California Fair Employment and Housing Act; Section 503 of the Rehabilitation Act of 1973; the Americans
With Disabilities Act, as amended; the Fair Labor Standards Act (including the Equal Pay Act); the California Constitution; the
California Labor Code, including Labor Code section 132a; the Family Medical Leave Act; the California Family Rights Act; the Genetic
Information Non-Discrimination Act; the National Labor Relations Act; the Lilly Ledbetter Fair Pay Ac of 2009; the Fair Credit
Reporting Act; the False Claims Act; the Sarbanes-Oxley Act; the Uniformed Services Employment and Reemployment Rights Act; the
Labor Code Private Attorneys General Act of 2004; the California Business and Professions Code; the Executive Retirement Income
Security Act, as amended; the Workers Adjustment & Retraining Notification Act; the Age Discrimination in Employment Act; the
Older Workers Benefit Protection Act; wage claims of all types, whether for non-payment, late payment, overtime, rest periods,
meal periods, bonuses, deductions and/or penalties; wrongful termination in violation of public policy; and unfair business practices
(collectively, “claim” or “claims”) which Executive now has, or claims to have, or which Executive at any
time heretofore had, or claimed to have, or which Executive at any time hereafter may have, own or hold, claim to have, own or
hold against any of the Releasees, including but not limited to claims which arise out of or relate to Executive’s employment
by the Company or any matter or thing that was or could have been alleged as of the date this Agreement is fully executed. This
release expressly waives any and all claims Executive may now have against the Company regardless of the nature, source, or basis
for any such claim, including but not limited to claims for wages, salary, bonuses, commissions, expense reimbursement or any other
monies owed by the Company to Executive. Executive may participate in any manner in any charge or complaint, or any investigation
of a charge or complaint by any local, state, or federal agency, including the Equal Employment Opportunity Commission, the National
Labor Relations Board, the Occupational Safety and Health Administration, and the Securities and Exchange Commission (“SEC”).
This includes providing documents or other information, without notice to the Company. Executive waives any claim or right
to receive damages or compensation on the basis of any such charge, complaint or investigation, excluding an award for information
provided to the SEC under SEC Rule 21F-17. This release however does not waive Executive’s rights to unemployment or any
rights that may not be released by private agreement. Nothing in this Agreement affects any vested rights Executive has in any
retirement, welfare or benefit plans or programs of the Company as of Executive’s termination date. Further, this release
does not cover any claims the Executive may have arising from the Company’s breach of this Agreement, or any of the representations
or warranties contained herein.

 

5.                 
During the period in which Executive is receiving Severance, Executive agrees that, without the prior written consent of
the Board of Directors of the Company, he will not (i) engage in or have any direct interest in, as an employee, officer, director,
agent, subcontractor, consultant, security holder, partner, creditor or otherwise, any business in direct competition with the
Company other than as a 5% or less equity stakeholder; (ii) cause or attempt to cause any person who is, or was at any time during
the six months immediately preceding the Resignation Date, an employee of the Company to leave the employment of the Company; or
(iii) solicit, divert or take away, or attempt to take away, the business or patronage of any client, customer or account, or prospective
client, customer or account, of the Company. For purposes of this paragraph, a business will be deemed to be in competition with
the Company if it is in the business of providing services for contract development relating to and/or manufacturing of recombinant
protein/monoclonal bulk drug substance. Executive acknowledges that this paragraph survives the termination of Executive's employment
and is enforceable by the Company at any time as long as it remains in effect. For the avoidance of doubt, Executive and Company
agree that Executive may go to work for a business deemed to be a competitor with the Company, provided that Executive does not
use any of the Company’s proprietary or competitive information. In the event that Executive does go to work for a competitor,
Company shall have no further obligation to continue to provide to Executive the severance benefits set forth in clauses (i) and
(ii) of Section 3 above.

 

 

 

    
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(i)         Executive and the
Company agree that the covenant set forth in Section 5 above is a reasonable covenant under the circumstances with respect to both
scope and duration, and further agree that if in the opinion of any court of competent jurisdiction such restraint is not reasonable
in any respect, such court will have the right, power and authority to excise or modify such provision or provisions of this covenant
as to what the court determines is not reasonable and to enforce the remainder of the covenant as so amended.

 

(ii)        Executive agrees
that any breach of the covenants contained in this paragraph 5 and in paragraph 6 below would irreparably injure the Company. Accordingly,
Executive agrees that the Company may, in addition to pursuing any other remedies it may have in law and equity, obtain an injunction,
without the posting of a bond or other security, against Executive from any court having jurisdiction over the matter restraining
any further violation of this Agreement by Executive and cease making any payments otherwise required by this Agreement.

 

6.                 
Executive acknowledges that he continues to be bound by his ongoing obligations under the terms of his employment not to
use or disclose Company confidential information or trade secrets so long as the same have not become generally known to the public.
Confidential information includes all nonpublic information and material which is proprietary to the Company relating to its past,
present or future business activities. Trade secrets means any scientific or technical data, information, design, process, procedure,
formula or improvement that is commercially available to the Company and is not generally known in the industry.

 

7.                 
Executive understands that the severance benefits are additional benefits for which Executive is not eligible unless Executive
elects to sign this Agreement. Executive further acknowledges and agrees that the payment (or receipt) of the Severance satisfies
any obligations Company may have had to Executive pursuant to the terms of his employment.

 

8.                 
Executive hereby agrees and acknowledges that Executive may have had access to confidential and proprietary information
relating to the Company, including but not limited to customer lists, business strategies and plans, financial projections and
budgets, capital raising activities, confidential board of director and executive management deliberations and other material non-public
information, computer programs, source codes and other computer-stored data, accounts payable data, payroll information, personnel
information, pricing and other contract terms, as well as the existence of this Agreement and its terms. Executive acknowledges
that this information is confidential and proprietary and Executive agrees not to disclose it, nor allow it to be disclosed, communicated
or otherwise conveyed to any third parties except as may be required by law, excepting only necessary communication to Executive’s
attorney, accountant, or tax advisor, each of whom Executive agrees to notify of this confidentiality provision and receive their
agreement thereto before providing the necessary confidential or proprietary information. Executive further agrees to immediately
inform the Company in writing of any unauthorized disclosure of, or access to, the Company’s confidential or proprietary
information described above. Executive hereby agrees that the disclosure of the Company’s confidential or proprietary information
shall cause serious damage to the Company. The foregoing shall supplement any existing confidentiality agreement between the parties
hereto and shall survive the full payment of all sums paid hereunder.

 

9.                 
Executive acknowledges and agrees that Executive has no pending lawsuit, administrative charge, or complaint against the
Company or any of the other Releasees, in any court or with any governmental agency. Executive also agrees that, to the extent
permitted by law, Executive will not allow any lawsuit, administrative charge, or complaint to be pursued on Executive’s
behalf. Executive further agrees that Executive will not participate, cooperate, or assist in any litigation against the Releasees
in any manner, to the extent permitted by law. If lawfully subpoenaed by a court of this jurisdiction, Executive agrees to provide
the Company written notice of such a subpoena within five (5) days of receipt.

 

10.               
Executive affirms and warrants that, except as set forth in Section 1, he has appropriately received all compensation, wages,
overtime pay, breaks, benefits and other payments to which he was entitled, including, but not limited to, those under the Fair
Labor Standards Act and any other federal, state, or local wage and hour law, regulation or ordinance. Executive further affirms
and warrants that he has appropriately received any leave (paid and unpaid) to which he was entitled, including, but not limited
to, leave under the Family and Medical Leave Act and any other federal, state, or local leave or disability accommodation law,
regulation or ordinance.

 

 

 

    
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11.              
It is understood and agreed that this is a full, complete and final general release of any and all claims described as aforesaid,
and that Executive agrees that it shall apply to all unknown, unanticipated, unsuspected and undisclosed claims, demands, liabilities,
actions or causes of action, in law, equity or otherwise, as well as those which are now known, anticipated, suspected or disclosed.
This release includes a release under § 1542 of the Civil Code of the State of California, which reads as follows:

 

A general release does not extend
to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with the debtor.

 

Executive hereby expressly waives and relinquishes
all rights and benefits under that section and any law or legal principle of similar effect in any jurisdiction with respect to
the release granted in this Agreement.

 

12.               
This Agreement is intended to release and discharge any claims of Executive under the Age Discrimination in Employment Act.
To satisfy the requirements of the Older Workers’ Benefit Protection Act, 29 U.S.C. section 626(f), the parties agree as
follows:

 

		A.	Executive acknowledges that Executive has read and understands the terms
of this Agreement.

 

		B.	Executive acknowledges that Executive has been advised to consult with an
attorney, if desired, concerning this Agreement and has received all advice Executive deems necessary concerning this Agreement.

 

		C.	Executive acknowledges that Executive has been given twenty-one (21) days
to consider whether or not to enter into this Agreement, has taken as much of this time as necessary to consider whether to enter
into this Agreement, and has chosen to enter into this Agreement freely, knowingly, and voluntarily. The Parties agree that any
changes to the Agreement, whether material or immaterial, do not restart this twenty-one (21) day consideration period.

 

		D.	For a seven day period following the execution of this Agreement by Executive,
Executive may revoke this Agreement by delivering a written notice of revocation within that time to Lorna Larson at 2642 Michelle
Drive, Tustin, California 92780, if Executive so chooses. This Agreement shall not become effective until the seven days have passed
without a revocation being received. This Agreement will be revoked in its entirety if such notice is given, and the Company will
have no obligation to take any of the actions and/or make any payment provided by this Agreement.

 

13.               
The terms of the Agreement shall be confidential. Accordingly, Executive agrees to not make any public statement about,
not disclose to any third party, the fact of, or contents or terms of this Agreement, unless necessary to implement or enforce
its terms, or to seek tax or legal advice regarding this Agreement. Executive further agrees that Executive will not disparage,
defame, or otherwise detrimentally comment upon the Releasees, including their business practices or products in any manner. Similarly,
the Company agrees that it will not disparage, defame, or otherwise detrimentally comment upon Executive in any manner. Each of
Company and Executive acknowledges that such comment shall cause serious damage to the other party. Notwithstanding the foregoing,
Executive acknowledges and agrees that the Company has certain disclosure obligations under the Securities and Exchange Act of
1934, as amended, and intends to promptly file a Current Report on Form 8-K to disclose certain of the Severance benefits provided
Executive hereunder.

 

14.               
It is understood and agreed that this Agreement is not an admission of liability by the Company or any Releasee and shall
not be used or construed as such in any proceeding.

 

 

 

    
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15.              
Executive is not aware, to the best of Executive’s knowledge, of any conduct on Executive’s part or on the part
of another Company employee that violated the law or otherwise exposed the Company to any liability, whether criminal or civil,
whether to any government, individual or other entity. Further, Executive acknowledges that Executive is not aware of any material
violations by the Company and/or its employees, officers, directors and agents of any statute, regulation or other rules that have
not been addressed by Company through appropriate compliance and/or corrective action.

 

16.               
This Agreement is intended to comply with Section 409A of the Code, or with an exemption thereto, and, to the maximum extent
permitted, this Agreement shall be interpreted and administered consistent with that intent. Notwithstanding anything in this Agreement
to the contrary, if the Company concludes that the payments described in paragraph 3 are subject to Section 409A of the Code, no
such payments will be made prior to Executive’s “separation from service” as defined in Treasury Regulation Section
1.409A-1(h)(applying the default rules of Treasury Regulation Section 1.409A-1(h)). In addition, if the payments described paragraph
3 are subject to Section 409A of the Code, and if Executive is a “specified employee” as defined in Treasury Regulation
Section 1.409A-1(i)(1) on the date of his termination of employment, such payments shall not begin until the first day of the seventh
month following his “separation from service.” Installment payments shall be treated as separate payments for purposes
of Treasury Regulation Section 1.409A-2(b)(2)(iii). Executive acknowledges that the Company makes no representations or warranties
regarding the tax treatment or tax consequences of any compensation, benefits or other payments made pursuant to this Agreement,
including by operation of Section 409A of the Code. Neither the time nor schedule of any payment under this Agreement may be accelerated
or subject to further deferral except as permitted by Section 409A of the Code and Executive does not have any right to make any
election regarding the time or form of any payment due under this Agreement. Any expenses that are to be reimbursed pursuant to
this Agreement that are subject to Section 409A of the Code shall: (i) be paid no later than the last day of Executive’s
tax year following the tax year in which the expense was incurred; (ii) not affect or be affected by any other expenses that are
eligible for reimbursement in any other tax year of Executive; and (iii) not be subject to liquidation or exchange for any other
benefit.

 

17.               
This Agreement shall be construed under the laws of the State of California.

 

18.              
If any disagreement, controversy, claim, action, proceeding or dispute between Executive and any Releasee, is brought to
interpret or enforce the provisions of this Agreement, the prevailing party or parties shall recover his, her or its reasonable
attorneys’ fees and costs.

 

19.              
Executive agrees that this Agreement has been negotiated and that no provision contained herein shall be interpreted against
any party because that party drafted the provision.

 

20.              
In the event that any provision of this Agreement shall be found to be unenforceable, that provision shall be deemed deleted,
and the validity and enforceability of the remaining provisions shall not be affected.

 

21.              
This Agreement contains the entire agreement between the parties on the subjects addressed in this Agreement and replaces
any other prior agreements between the parties with the exception of Executive’s confidentiality agreements with the Company.
This Agreement may only be modified in a written in a written document signed by an officer of the Company.

 

22.              
Executive certifies that Executive has read and understands all of this Agreement, has received any advice or counsel Executive
deems necessary regarding this Agreement, and is entering into this Agreement freely and voluntarily, intending to be bound by
its terms.

 

By signing this
Agreement before the twenty-one (21) day period described above in paragraph 12(C) expires, Executive waives his right under the
ADEA and the OWBPA to twenty-one (21) days to consider the terms of this Agreement. In any case, however, Executive retains the
right to revoke this Agreement within seven days, as described above in paragraph 12(D).

 

 

 

    
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IN WITNESS WHEREOF, the parties have
executed this Agreement as of the dates set forth below.

 

 

	Dated: June 12, 2019	 	/s/
    Roger J. Lias                                                     
	 	 	Roger J. Lias, Ph.D.
	 	 	 
	 	 	 
	 	 	 
	 	 	Avid Bioservices, Inc.
	 	 	 
	 	 	 
	 	 	 
	Dated: June 12, 2019	 	/s/ Richard B. Hancock                                      
	 	 	Name: Richard B. Hancock
	 	 	Title: Interim President and Chief Executive Officer

 

 

 

 

 

 

 

    
	 	6EXHIBIT 10.7

 

EMPLOYMENT
AGREEMENT

 

THIS
EMPLOYMENT AGREEMENT (“Agreement”) is by and between Avid Bioservices, Inc., a Delaware corporation (“Employer”
or the “Company”) and Daniel R. Hart (“Executive”).

 

WHEREAS,
Executive has served as the Company’s Chief Financial Officer since August 1, 2018.

 

In
consideration of the promises and mutual covenants contained herein, and for other good and valuable consideration, receipt of
which is hereby acknowledged, the parties hereto do hereby agree as follows:

 

1.           
Employment. Upon the terms and conditions hereinafter set forth, Employer hereby agrees to continue to employ Executive
to serve as Chief Financial Officer, and Executive hereby accepts such continued employment under the terms and conditions set
forth herein.

 

2.           
Effective Date. The effective date of the Agreement shall be June 26, 2019(the “Effective Date”). The
employment relationship pursuant to this Agreement shall be for an initial two-year period commencing on the Effective Date
(“Initial Term”), unless sooner terminated in accordance with paragraph 7 below. On each anniversary of the Effective
Date, the term of this Agreement will automatically be extended for an additional one (1) year period (in each instance, as
so extended, the “Subsequent Term”), unless either party gives to the other written notice at least ninety (90) days
prior to the expiration of the then current year period, of such party’s intent not to extend this Agreement.

 

3.           
Duties. Executive shall perform such duties as are customarily performed by a Chief Financial Officer, and such other
duties and responsibilities that may be assigned to him by the Chief Executive Officer of the Company (the “CEO”).
Specifically, Executive shall manage the Company’s accounting and finance departments, and perform such duties and responsibilities
as set forth in the Chief Financial Officer job description.

 

Executive
shall report to the CEO and have such authority as is delegated by the CEO. Executive shall be governed by the policies and practices
established by the Company. Employer requires that: (i) Executive will devote his utmost knowledge and best skill to the performance
of his duties; (ii) Executive shall devote his full business time (not less than 40 hours per week) to the rendition of such
services, subject to absences for customary vacations and for temporary illness; and (iii) Executive will not engage in any
other gainful occupation which requires his personal attention and/or creates a conflict of interest with his job responsibilities
under this Agreement without the prior written consent of the CEO, with the exception that Executive may personally trade in stock,
bonds, securities, commodities or real estate investments for his own benefit to the extent permitted by the provisions herein
and applicable law.

 

Executive’s
job performance will be reviewed by the CEO annually. Executive acknowledges and understands that performance reviews do not necessitate
or correlate with salary increases and that a favorable performance review neither guarantees continued employment nor increased
compensation.

 

4.           
At-Will Employment. Executive and Employer agree that Executive’s employment may be terminated by Executive
or by Employer, with or without Cause (as defined below) in accordance with paragraph 7 of this Agreement. Executive and Employer
expressly agree that this provision is intended by Executive and Employer to be the complete and final expression of their understanding
regarding the terms and conditions under which Executive’s employment may be terminated. Executive and Employer further understand
and agree that no representation contrary to this provision is valid, and that this provision may not be augmented, contradicted
or modified in any way, except in writing signed by Executive and CEO.

 

 

 

    
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5.           
Compensation.

 

5.1 
Base Salary. Executive shall be paid an annual base salary of Three Hundred Ninety Six Thousand Five Hundred Forty
Nine Dollars and Ninety Two Cents ($396,549.92), payable according to Employer's payroll schedule and subject to applicable state
and federal withholdings and other payroll deductions.

 

5.2 
Annual Bonus. In addition to Executive’s base salary, Executive may be eligible to receive an additional discretionary
bonus of up to forty-five percent (45%) of his then in effect base salary, prorated for partial years of service, as determined
by the Compensation Committee of the Board of Directors in accordance with the Company’s cash bonus plan for executives then
in effect and in its sole discretion (“Target Bonus”). Executive acknowledges that although a discretionary bonus may
be provided by the Company, any such bonus is neither required nor guaranteed by this Agreement.

 

5.3 
Equity Awards. Executive may also be eligible to receive equity awards as determined by the Compensation Committee
of the Board in its sole discretion. Any such equity award will be granted pursuant to, and will be subject to the terms of Company’s
equity incentive plan then in effect, as such may be amended from time to time, or any successor plan thereto and the award agreement
that you must execute as a condition to receive such awards.

 

6.           
Fringe Benefits.

 

6.1 
Benefits. Executive shall, in accordance with Company policy and the terms of the applicable plan documents, be eligible
to participate in benefits under any Company benefit plan or arrangement which may be in effect from time to time and made available
to its executive management employees. The terms and conditions of Executive’s participation in such plans shall be set forth
in the relevant benefit plan documents.

 

6.2 
Paid-Time-Off (PTO). Executive shall earn and accrue paid-time-off covering vacation and sick time benefits at the
initial rate of twenty (20) days per year for employment periods of up to five (5) years of service. The PTO accrual rate shall
automatically increase by five (5) additional days for each additional five (5) years of service up to maximum of thirty (30) days
per year after ten (10) years of service. For example, after five years of service, the annual PTO accrual rate shall increase
to twenty-five (25) days. Accrued and unused PTO shall governed by the Employee Handbook, as such may be amended from time to time
in the Company’s sole discretion. Accrued and unused PTO days which are not in excess of maximum amount accruable under the
Employee Handbook shall be paid in a cash lump sum payment promptly after Executive’s termination of employment.

 

6.3 
Expenses. Employer shall reimburse Executive for travel and other business expenses incurred by Executive in the
performance of Executive’s duties hereunder, consistent with Employer’s normal expense reimbursement policy.

 

7.           
Termination.

 

7.1 
Termination With Cause. If Executive (a) breaches in any material respect or fails to fulfill in any material
respect fiduciary duty owed to Employer; (b) breaches in any material respect this Agreement or any other confidentiality
or non-solicitation, non-competition agreement between Employer and Executive; (c) pleads guilty to or is convicted of a felony;
(d) is found to have engaged in any reckless, fraudulent, dishonest or grossly negligent misconduct, (e) fails to perform
his duties to the Company, provided that Executive fails to cure any such failure within thirty (30) days after written notice
from Employer of such failure, provided further, however, that such right to cure shall not apply to any repetition of the same
failure previously cured hereunder; or (f) violates any material rule, regulation or policy of the Company that may be established
and made known to Employer's employees from time to time, including without limitation, the Company Employee Handbook, a copy of
which has been provided to Executive (collectively, “Cause”), Employer may terminate immediately his employment and
Executive shall have no right to receive any compensation or benefit hereunder after such termination other than base salary and
PTO earned or accrued but unpaid as of the date of termination (collectively “Standard Entitlements”). Notwithstanding
the foregoing, Executive shall not be terminated for Cause pursuant to paragraph 7.1, unless and until Executive has received written
notice of the proposed termination for Cause, including details of the bases for such termination, and Executive has had an opportunity
to be heard before at least a majority of the Board. Executive shall be deemed to have had such an opportunity if written notice
is given to him at least ten (10) days in advance of a meeting and Executive has the actual opportunity to be heard, at that
meeting, by no less than a majority of the Board on the issues of his proposed termination. For the avoidance of doubt, Executive
shall not be entitled to any bonus, or proration thereof, if terminated for Cause under this paragraph.

 

 

 

    
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7.2 
Termination without Cause. As stated in paragraph 4 of this Agreement, Executive or the Company may at any time
terminate Executive’s employment with or without Cause. If the Company terminates Executive’s employment without Cause
during the Initial Term or any Subsequent Term, Executive shall receive the Standard Entitlements. In addition, subject to Executive’s
execution (and non-revocation) of the general release as described in paragraph 7.6, Executive shall be entitled receive: (a) a
cash severance equal to the sum of twelve (12) months of Executive’s base salary in effect on the date of termination plus
twelve (12) times the monthly amount that is charged to COBRA qualified beneficiaries under the Company’s group health plan
for the same medical and dental coverage options elected by Executive and his family immediately prior to the date of termination,
with such severance payable in substantially equal installments over twelve (12) months according to Employer's payroll schedule;
(b) 100% of the Target Bonus pro rata portion for the year in which his termination occurs and payable at the time other executive
management employees receive their discretionary bonuses; and (c) any stock options that are vested and outstanding as of the date
of Executive’s termination of employment shall be amended to provide that such options will remain exercisable until the
earlier of the scheduled expiration date of the option or twelve (12) months following the date of Executive’s termination
of employment. All other Company obligations to Executive pursuant to this Agreement will become automatically terminated and completely
extinguished.

 

7.3 
Voluntary Resignation for Good Reason. If, within ninety (90) days of the initial existence of the condition(s)
that constitute Good Reason, Executive: (a) provides written notice to the Board of his intention to resign his employment for
Good Reason; (b) provides written notice to the Board of the grounds that Executive believes he has to resign for Good Reason
and within thirty (30) days of receipt of such written notice, the Board has not cured by eliminating the condition(s) that
constitute Good Reason; and (c) Executive actually terminates his employment within twelve (12) months following the initial
existence of the Good Reason condition, then, subject to Executive’s execution (and non-revocation) of the general release
as described in paragraph 7.6, Executive shall be entitled to receive the Standard Entitlements and the severance and benefits
described in paragraphs 7.2(a), (b), and (c) above, payable at the times set forth in paragraphs 7.2(a), (b), and (c) above. Executive
will be deemed to have resigned for “Good Reason” in the following circumstances: (a) provided Executive shall
have relocated to Orange County, California, Company relocates Executive’s principal place of work to a location more than
fifty (50) miles from the original location, without Executive’s prior written approval; (b) Executive’s position
and/or duties are modified so that Executive’s duties are no longer consistent with the position of Chief Financial Officer;
(c) Executive’s Base Salary as set forth in paragraph 5.1, as adjusted from time to time, is reduced without Executive’s
written authorization. All other Company obligations to Executive pursuant to this Agreement will become automatically terminated
and completely extinguished.

 

7.4 
Termination Upon Death or Disability. Executive’s employment shall terminate upon his death or Disability (with
"Disability" defined as any mental or physical condition which, in the reasonable opinion of a mutually agreed upon licensed
physician and/or psychiatrist (as the case may be), renders Executive unable or incompetent to carry out Executive's duties under
this Agreement, with or without reasonable accommodation, for a period of at least six (6) months). In the event of a termination
of Executive’s employment for death or Disability, Executive shall receive the Standard Entitlements and a cash payment equal
to twelve (12) times the monthly amount that is charged to COBRA qualified beneficiaries under the Company’s group health
plan for the same medical and dental coverage options elected by Executive and his family immediately prior to the date of termination,
with such amount paid in a single lump sum within thirty (30) days following Executive’s termination for death or Disability.
All other Company obligations to Executive pursuant to this Agreement will become automatically terminated and completely extinguished.

 

 

 

    
	 	3	 

     

    

 

7.5 
Change of Control. If Executive incurs a termination without Cause or terminates his employment for Good Reason during
the three (3) month period preceding or twenty-four (24) months following a “Change in Control” as defined below, then
subject to Executive’s execution (and non-revocation) of the general release as described in paragraph 7.6, Executive shall
be entitled receive: (a) a cash severance payment equal to the sum of twenty four (24) months of Executive’s base salary
in effect on the date of termination and twenty four (24) times the monthly amount that is charged to COBRA qualified beneficiaries
under the Company’s group health plan for the same medical and dental coverage options elected by Executive and his family
immediately prior to the date of termination, with such severance payable in substantially equal installments over twenty four
(24) months according to Employer's payroll schedule; (b) 100% of the Target Bonus for the year in which his termination occurs,
with the amount payable at the time other executive management employees receive their discretionary bonuses; and (c) any stock
options that are vested and outstanding as of the date of Executive’s termination of employment shall be amended to provide
for full vesting and that such options will remain exercisable until the earlier of the scheduled expiration date of the option
or twenty four (24) months following the date of Executive’s termination of employment. All other Company obligations to
Executive pursuant to this Agreement will become automatically terminated and completely extinguished. For purposes of this Agreement,
“Change in Control” shall mean the (i) acquisition by any one person, or more than one person acting as a group (as
determined in accordance with Treasury Regulation Section 1.409A-3(i)(5)), of stock of the Company that, together with stock held
by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company,
(ii) consummation of a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately
after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior
thereto do not own, directly or indirectly, either (A) outstanding voting securities representing more than 50% of the combined
outstanding voting power of the surviving entity in such merger, consolidation or similar transaction or (B) more than 50% of the
combined outstanding voting power of the parent of the surviving entity in such merger, consolidation or similar transaction, in
each case in substantially the same proportions as their ownership of the outstanding voting securities of the Company immediately
prior to such transaction, or (iii) sale of all or substantially all of the consolidated assets of the Company and its subsidiaries,
other than a sale of all or substantially all of the consolidated assets of the Company and its subsidiaries to an entity, more
than 50% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially
the same proportions as their ownership of the outstanding voting securities of the Company immediately prior to such sale.

 

7.6 
Release Required. In order to be entitled to the severance and other benefits described in paragraphs 7.2, 7.3, and
7.5, as applicable, Executive must, no later than sixty (60) days following his termination date, sign (and not revoke) a general
release of all claims known and unknown, against Employer, its officers and directors, agents and employees and any related entities
or persons. Notwithstanding anything in this Agreement to the contrary, if the consideration period described in the release, plus
the revocation period described in the release spans two (2) calendar years, the severance payments described in paragraphs 7.2,
7.3, and 7.5 that are subject to Section 409A of the Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)
shall not begin to be paid until the second calendar year. Nothing herein will be construed to limit or modify the duty of Executive
to mitigate Executive’s damages in the event Employer terminates Executive’s employment without Cause.

 

8.           
Trade Secrets, Confidential Information and Inventions.

 

8.1 
Trade Secrets In General. During the course of Executive's employment, Executive will have access to various trade
secrets, confidential information and inventions of Employer as defined below.

 

(i)       “Confidential
Information” means all information and material which is proprietary to the Company, whether or not marked as “confidential”
or “proprietary” and which is disclosed to or obtained from the Company by the Executive, which relates to the Company’s
past, present or future research, development or business activities. Confidential Information is all information or materials
prepared by or for the Company and includes, without limitation, all of the following: designs, drawings, specifications, techniques,
models, data, source code, object code, documentation, diagrams, flow charts, research, development, processes, systems, methods,
machinery, procedures, “know-how”, new product or new technology information, formulas, patents, patent applications,
product prototypes, product copies, cost of production, manufacturing, developing or marketing techniques and materials, cost of
production, development or marketing time tables, customer lists, strategies related to customers, suppliers or personnel, contract
forms, pricing policies and financial information, volumes of sales, and other information of similar nature, whether or not reduced
to writing or other tangible form, and any other Trade Secrets, as defined by subparagraph (iii), or non-public business information.
Confidential Information does not include any information which (1) was in the lawful and unrestricted possession of the Executive
prior to its disclosure by the Company, (2) is or becomes generally available to the public by acts other than those of the
Executive after receiving it, (3) becomes generally available to the public by acts of the Executive necessary to performing duties
associated with Executive’s job description, or (4) has been received lawfully and in good faith by the Executive from
a third party who did not derive it from the Company.

 

 

 

    
	 	4	 

     

    

 

(ii)       “Inventions”
means all discoveries, concepts and ideas, whether patentable or not, including but not limited to, processes, methods, formulas,
compositions, techniques, articles and machines, as well as improvements thereof or “know-how” related thereto, relating
at the time of conception or reduction to practice to the business engaged in by the Company, or any actual or anticipated research
or development by the Company.

 

(iii)       “Trade
Secrets” shall mean any scientific or technical data, information, design, process, procedure, formula or improvement that
is commercially available to the Company and is not generally known in the industry.

 

This
paragraph includes not only information belonging to Employer which existed before the date of this Agreement, but also information
developed by Executive for Employer or its employees during his employment and thereafter.

 

8.2 
Restriction on Use of Confidential Information. Executive agrees that his use of Trade Secrets and other Confidential
Information is subject to the following restrictions during the term of the Agreement and for an indefinite period thereafter so
long as the Trade Secrets and other Confidential Information have not become generally known to the public.

 

8.2.1       
Non-Disclosure. Except as required by the performance of the Executive’s services to the Company under the
terms of this Agreement, neither the Executive nor any of his agents or representatives, shall, directly or indirectly, publish
or otherwise disclose, or permit others to publish, divulge, disseminate, copy or otherwise disclose the Company’s Trade
Secrets, Confidential Information and/or Inventions as defined above.

 

8.2.2       
Use Restriction. Executive shall use the Trade Secrets, other Confidential Information and/or Inventions only for
the limited purpose for which they were disclosed. Executive shall not disclose the Trade Secrets, other Confidential Information
and/or Inventions to any third party without first obtaining written consent from the Board of Directors and shall disclose the
Trade Secrets, other Confidential Information and/or Inventions only to Employer's own employees having a need know. Executive
shall promptly notify the Board of Directors of any items of Trade Secrets prematurely disclosed.

 

8.2.3       
Surrender Upon Termination. Upon termination of his employment with Employer for any reason, Executive will surrender
and return to Employer all documents and materials in his possession or control which contain Trade Secrets, Inventions and other
Confidential Information. Executive shall immediately return to the Company all lists, books, records, materials and documents,
together with all copies thereof, and all other Company property in his possession or under his control, relating to or used in
connection with the past, present or anticipated business of the Company, or any affiliate or subsidiary thereof. Executive acknowledges
and agrees that all such lists, books, records, materials and documents, are the sole and exclusive property of the Company.

 

8.2.4       
Prohibition Against Unfair Competition. At any time after the termination of his employment with Employer for any
reason, Executive will not engage in competition with Employer while making use of the Trade Secrets of Employer.

 

8.2.5       
Patents and Inventions. The Executive agrees that any inventions made, conceived or completed by him during the term
of his service, solely or jointly with others, which are made with the Company’s equipment, supplies, facilities or Confidential
Information, or which relate at the time of conception or reduction to purpose of the invention to the business of the Company
or the Company’s actual or demonstrably anticipated research and development, or which result from any work performed by
the Executive for the Company, shall be the sole and exclusive property of the Company. The Executive promises to assign such inventions
to the Company. The Executive also agrees that the Company shall have the right to keep such inventions as trade secrets, if the
Company chooses. The Executive agrees to assign to the Company the Executive’s rights in any other inventions where the Company
is required to grant those rights to the United States government or any agency thereof. In order to permit the Company to claim
rights to which it may be entitled, the Executive agrees to disclose to the Company in confidence all inventions which the Executive
makes arising out of the Executive’s service and all patent applications filed by the Executive within one year after the
termination of his service. The Executive shall assist the Company in obtaining patents on all inventions, designs, improvements
and discoveries patentable by the Company in the United States and in all foreign countries, and shall execute all documents and
do all things necessary to obtain letters patent, to vest the Company with full and extensive title thereto.

 

 

 

    
	 	5	 

     

    

 

8.3 
This Agreement does not limit Executive’s ability to communicate with any government agencies regarding matters within
their jurisdiction or otherwise participate in any investigation or proceeding that may be conducted by any government agency,
including providing documents or other information, without notice, to the government agencies. Nothing in this Agreement shall
prevent Executive from the disclosure of Confidential Information or Trade Secrets that: (a) is made: (i) in confidence to a federal,
state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting
or investigating a suspected violation of law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding,
if such filing is made under seal. In the event that Executive files a lawsuit alleging retaliation by Company for reporting a
suspected violation of law, Executive may disclose Confidential Information or Trade Secrets related to the suspected violation
of law or alleged retaliation to Executive’s attorney and use the Confidential Information or trade secrets in the court
proceeding if Executive or Executive’s attorney: (a) files any document containing Confidential Information or trade secrets
under seal; and (b) does not disclose the Confidential Information or Trade Secrets, except pursuant to court order. The Company
provides this notice in compliance with, among others, the Defend Trade Secrets Act of 2016.

 

9.           
Solicitation of Employees or Customers.

 

9.1 
Information About Other Employees. Executive will be called upon to work closely with employees of Employer in performing
services under this Agreement. All information about such employees which becomes known to Executive during the course of his employment
with Employer, and which is not otherwise known to the public, including compensation or commission structure, is a Trade Secret
of Employer and shall not be used by Executive in soliciting employees of Employer at any time during or after termination of his
employment with Employer.

 

9.2 
Solicitation of Employees Prohibited. During Executive’s employment and for one year following the termination
of Executive’s employment, Executive shall not, directly or indirectly ask, solicit or encourage any employee(s) of Employer
to leave their employment with Employer. Executive further agrees that he shall make any subsequent employer aware of this non-solicitation
obligation.

 

9.3 
Solicitation of Customers Prohibited. For a period of one year following the termination of Executive’s employment,
Executive shall not, directly or indirectly solicit the business of any of Employer's customers in any way competitive with the
business or demonstrably anticipated business of the Company. Executive further agrees that he shall make any subsequent employer
aware of this non-solicitation obligation.

 

10.       
Non-Competition. During the course of Executive’s employment with the Company, Executive shall not directly
or indirectly own any interest in (other than owning less than 5% of a publicly held company), manage, control, participate in
(whether as an officer, director, employee, partner, agent, representative, volunteer or otherwise), consult with, render services
for or in any manner engage (whether or not during business hours) in any business activity that is in any way competitive with
the business or demonstrably anticipated business of the Company. Further, Executive will not during the course of his employment
with the Company, assist any other person or organization in competing or in preparing to compete with any business or demonstrably
anticipated business of the Company.

 

11.       
Unfair Competition, Misappropriation of Trade Secrets and Violation of Solicitation/Noncompetition Clauses. Executive
acknowledges that unfair competition, misappropriation of trade secrets or violation of any of the provisions contained in paragraphs 8
through 10 would cause irreparable injury to Employer, that the remedy at law for any violation or threatened violation thereof
would be inadequate, and that Employer shall be entitled to temporary and permanent injunctive or other equitable relief without
the necessity of proving actual damages.

 

12.       
Representation Concerning Prior Agreements. Executive represents to Employer that he is not bound by any non-competition
and/or non-solicitation agreement that would preclude, limit or in any manner affect his employment with Employer. Executive further
represents that he can fully perform the duties of his employment without violating any obligations he may have to any former employer,
including but not limited to, misappropriating any proprietary information acquired from a prior employer. Executive agrees that
he will indemnify and hold Employer harmless from any and all liability and damage, including attorneys’ fees and costs,
resulting from any breach of this provision.

 

13.       
Personnel Policies and Procedures. The Employer shall have the authority to establish from time to time personnel
policies and procedures to be followed by its employees. Executive agrees to comply with the policies and procedures of the Employer.
To the extent any provisions in Employer's personnel policies and procedures differ with the terms of this Agreement, the terms
of this Agreement shall apply.

 

 

 

    
	 	6	 

     

    

 

14.       
Amendments. No amendment or modification of the terms or conditions of this Agreement shall be valid unless in writing
and signed by the parties hereto.

 

15.       
Successors and Assigns. The rights and obligations of the Employer under this Agreement shall inure to the benefit
of and shall be binding upon the successors and assigns of Employer. Executive shall not be entitled to assign any of his rights
or delegate any of his obligations under this Agreement.

 

16.       
Governing Law. This Agreement shall be interpreted, construed, governed and enforced in accordance with the laws
of the State of California.

 

17.       
Severability. Each term, condition, covenant or provision of this Agreement shall be viewed as separate and distinct,
and in the event that any such term, covenant or provision shall be held by a court of competent jurisdiction to be invalid, the
remaining provisions shall continue in full force and effect.

 

18.       
Survival. The provisions in paragraphs 8 through 11, 14 through 23, inclusive, of this Agreement shall survive
termination of Executive's employment, regardless of who causes the termination and under what circumstances.

 

19.       
Waiver. Neither party's failure to enforce any provision or provisions of this Agreement shall be deemed or in any
way construed as a waiver of any such provision or provisions, nor prevent that party thereafter from enforcing each and every
provision of this Agreement. A waiver by either party of a breach of provision or provisions of this Agreement shall not constitute
a general waiver, or prejudice the other party's right otherwise to demand strict compliance with that provision or any other provisions
in this Agreement.

 

20.       
Notices. Any notice required or permitted to be given under this Agreement shall be sufficient, if in writing, sent
by mail to Executive's residence in the case of Executive, or hand delivered to the Executive, and, in the case of Employer, to
the Board of Directors at the principal corporate office.

 

21.       
Arbitration. The parties agree that disputes concerning the terms of this Agreement and Executive's employment under
this Agreement are subject to arbitration in accordance with the Employee Arbitration Agreement attached hereto as Exhibit "A"
and incorporated by this reference as though fully set forth herein.

 

22.       
Entire Agreement. Executive acknowledges receipt of this Agreement and agrees that this Agreement represents the
entire agreement with Employer concerning the subject matter hereof, and supersedes any previous oral or written communications,
representations, understandings or agreements with Employer or any officer or agent thereof through the date the Agreement is executed
by the parties, except the Employee Arbitration Agreement which is incorporated herein as set forth in paragraph 21 of this
Agreement and attached hereto as Exhibit "A." Executive understands that no representative of the Employer has been
authorized to enter into any agreement or commitment with Executive which is inconsistent in any way with the terms of this Agreement.

 

23.       
Construction. This Agreement shall not be construed against any party on the grounds that such party drafted the
Agreement or caused it to be drafted.

 

24.       
Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed
to be an original, but all of which together shall constitute one and the same instrument. Further, facsimiles of signatures may
be taken as the actual signatures, and each party agrees to furnish the other with documents bearing the original signatures within
ten days of the facsimile transmission.

 

25.       
Acknowledgment. Executive acknowledges that he has been advised by Employer to consult with independent counsel of
his own choice, at his expense, concerning this Agreement, that he has had the opportunity to do so, and that he has taken advantage
of that opportunity to the extent that he desires. Executive further acknowledges that he has read and understands this Agreement,
is fully aware of its legal effect, and has entered into it freely based on his own judgment.

 

 

 

    
	 	7	 

     

    

 

26. 
Code Section 280G.

 

26.1         
Sections 280G and 4999 of the Code may place significant tax burdens on both Executive and the Company if the total payments
made to Executive due to certain change in control events described in Section 280G of the Code (the “Total Change in Control
Payments”) equal or exceed Executive’s 280G Cap. For this purpose, Executive’s “280G Cap” is equal
to Executive’s average annual compensation in the five (5) calendar years preceding the calendar year in which the change
in control event occurs (the “Base Period Income Amount”) times three (3). If the Total Change in Control Payments
equal or exceed the 280G Cap, Section 4999 of the Code imposes a 20% excise tax (the “Excise Tax”) on all amounts in
excess of one (1) times Executive’s Base Period Income Amount. In determining whether the Total Change in Control Payments
will equal or exceed the 280G Cap and result in the imposition of an Excise Tax, the provisions of Sections 280G and 4999 of the
Code and the applicable Treasury Regulations will control over the general provisions of this paragraph 26. All determinations
and calculations required to implement the rules set forth in this paragraph 26 shall take into account all applicable federal,
state, and local income taxes and employment taxes (and for purposes of such calculations, Executive shall be deemed to pay income
taxes at the highest combined federal, state and local marginal tax rates for the calendar year in which the Total Change in Control
Payments are to be made, less the maximum federal income tax deduction that could be obtained as a result of a deduction for state
and local taxes (the “Assumed Taxes”)).

 

26.2         
Subject to the “best net” exception described in paragraph 26.3), in order to avoid the imposition of the Excise
Tax, the total payments to which Executive is entitled under this Agreement or otherwise will be reduced to the extent necessary
to avoid equaling or exceeding the 280G Cap, with such reduction first applied to the cash severance payments that Executive would
otherwise be entitled to receive pursuant to this Agreement and thereafter applied in a manner that will not subject Executive
to tax and penalties under Section 409A of the Code.

 

26.3         
If Executive’s Total Change in Control Payments minus the Excise Tax and the Assumed Taxes (payable with respect to
the amount of the Total Change in Control Payments) exceeds the 280G Cap minus the Assumed Taxes (payable with respect to the amount
of the 280G Cap), then the total payments to which Executive is entitled under this Agreement or otherwise will not be reduced
pursuant to paragraph 26.2. If this “best net” exception applies, Executive shall be fully responsible for paying any
Excise Tax (and income or other taxes) that may be imposed on Executive pursuant to Section 4999 of the Code or otherwise.

 

26.4         
The Company will engage a law firm, a certified public accounting firm, and/or a firm of reputable executive compensation
consultants (the “Consultant”) to make any necessary determinations and to perform any necessary calculations required
in order to implement the rules set forth in this paragraph 26. The Consultant shall provide detailed supporting calculations to
both the Company and Executive and all fees and expenses of the Consultant shall be borne by the Company. If the provisions of
Section 280G and 4999 of the Code are repealed without succession, this paragraph 26 shall be of no further force or effect. In
addition, if this provision does not apply to Executive for whatever reason, this paragraph shall be of no further force or effect.

 

27.  Code
Section 409A. This Agreement is intended to comply with Section 409A of the Code, or with an exemption thereto, and, to
the maximum extent permitted, this Agreement shall be interpreted and administered consistent with that intent.
Notwithstanding anything in this Agreement to the contrary, if the Company concludes that the payments described in paragraph
7 are subject to Section 409A of the Code, no such payments will be made prior to Executive’s “separation from
service” as defined in Treasury Regulation Section 1.409A-1(h)(applying the default rules of Treasury Regulation
Section 1.409A-1(h)). In addition, if the payments described paragraph 7 are subject to Section 409A of the Code, and if
Executive is a “specified employee” as defined in Treasury Regulation Section 1.409A-1(i)(1) on the date of his
termination of employment, such payments shall not begin until the first day of the seventh month following his
“separation from service.” Installment payments shall be treated as separate payments for purposes of Treasury
Regulation Section 1.409A-2(b)(2)(iii). Executive acknowledges that the Company makes no representations or warranties
regarding the tax treatment or tax consequences of any compensation, benefits or other payments made pursuant to this
Agreement, including by operation of Section 409A of the Code. Neither the time nor schedule of any payment under this
Agreement may be accelerated or subject to further deferral except as permitted by Section 409A of the Code and Executive
does not have any right to make any election regarding the time or form of any payment due under this Agreement. Any expenses
that are to be reimbursed pursuant to this Agreement that are subject to Section 409A of the Code shall: (i) be paid no later
than the last day of Executive’s tax year following the tax year in which the expense was incurred; (ii) not affect or
be affected by any other expenses that are eligible for reimbursement in any other tax year of Executive; and (iii) not
be subject to liquidation or exchange for any other benefit.

 

Signature page follows

 

 

    
	 	8	 

     

    

 

Signature page to Employment Agreement

 

IN
WITNESS HEREOF, the parties have executed this Agreement as of the date set forth below.

 

	 	EXECUTIVE
	 	 
	Dated: June 26, 2019	/s/
    Daniel
R. Hart                                                                   
	 	Daniel
R. Hart
	 	 
	 	 
	 	AVID
BIOSERVICES, INC.
	 	 
	 	 
	Dated: June 26, 2019	By: /s/
    Richard B. Hancock                                                   
	 	Name: Richard B. Hancock
	 	Title: Interim President and Chief Executive Officer

 

 

 

 

 

 

    
	 	9	 

     

    

 

EXHIBIT
A

 

EXECUTIVE ARBITRATION
AGREEMENT

 

THIS
ARBITRATION AGREEMENT (“Agreement”) is made by and between Avid Bioservices, Inc. (“Employer”) and Daniel
R. Hart (“Executive”).

 

The
purpose of this Agreement is to establish final and binding arbitration for all disputes arising out of Executive’s relationship
with Employer, including without limitation Executive’s employment or the termination of Executive’s employment. Executive
and Employer desire to arbitrate their disputes on the terms and conditions set forth below to gain the benefits of a speedy, impartial
dispute-resolution procedure. Executive and Employer agree to the following:

 

1.           
Claims Covered by the Agreement. Executive and Employer mutually consent to the resolution by final and binding arbitration
of all claims or controversies (“claims”) that Employer may have against Executive or that Executive may have against
Employer or against its officers, directors, partners, employees, agents, pension or benefit plans, administrators, or fiduciaries,
or any subsidiary or affiliated company or corporation (collectively referred to as “Employer”), relating to, resulting
from, or in any way arising out of Executive’s relationship with Employer, Executive’s employment relationship with
Employer and/or the termination of Executive’s employment relationship with Employer, to the extent permitted by law. The
claims covered by this Agreement include, but are not limited to, claims for wages or other compensation due; claims for breach
of any contract or covenant (express or implied); tort claims; claims for unfair competition, misappropriation of trade secrets,
breach of fiduciary duty, usurpation of corporate opportunity or similar claims; claims for discrimination and harassment (including,
but not limited to, race, sex, religion, national origin, age, marital status or medical condition, disability, sexual orientation,
or any other characteristic protected by federal, state or local law); claims for benefits (except where an employee benefit or
pension plan specifies that its claims procedure shall culminate in an arbitration procedure different from this one); and claims
for violation of any public policy, federal, state or other governmental law, statute, regulation or ordinance.

 

2.           
Required Notice of Claims and Statute of Limitations. Executive may initiate arbitration by serving or mailing a
written notice to the Board of Directors. Employer may initiate arbitration by serving or mailing a written notice to Executive
at the last address recorded in Executive’s personnel file. The written notice must specify the claims asserted against the
other party. Notice of any claim sought to be arbitrated must be served within the limitations period established by applicable
federal or state law.

 

3.           
Arbitration Procedures.

 

a.                   After
demand for arbitration has been made by serving written notice under the terms of paragraph 2 of this Agreement, the party
demanding arbitration shall file a demand for arbitration with the American Arbitration Association (“AAA”) in
Orange County.

 

b.                 
Except as provided herein, all rules governing the arbitration shall be the then applicable rules set forth by the AAA.
If the dispute is employment-related, the dispute shall be governed by the AAA’s then current version of the national rules
for the resolution of employment disputes. The AAA’s then applicable rules governing the arbitration may be obtained from
the AAA’s website which currently is www.adr.org.

 

c.                  
The arbitrator shall apply the substantive law (and the law of remedies, if applicable) of the state in which the claim
arose, or federal law, or both, as applicable to the claim(s) asserted. The arbitrator shall have exclusive authority to resolve
any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement, including but not limited
to any claim that all or any part of this Agreement is void or voidable.

 

 

 

    
	 	10	 

     

    

 

d.                 
Either party may file a motion for summary judgment with the arbitrator. The arbitrator is entitled to resolve some or all
of the asserted claims through such a motion. The standards to be applied by the arbitrator in ruling on a motion for summary judgment
shall be the applicable laws as specified in paragraph 4(c) of this Agreement.

 

e.                  
Discovery shall be allowed and conducted pursuant to the then applicable arbitration rules of the AAA. The arbitrator is
authorized to rule on discovery motions brought under the applicable discovery rules.

 

4.           
Application for Emergency Injunctive and/or Other Equitable Relief. Claims by Employer or Executive for emergency
injunctive and/or other equitable relief relating to unfair competition and/or the use and/or unauthorized disclosure of trade
secrets or confidential information shall be subject to the then current version of the AAA’s Optional Rules for Emergency
Measures of Protection set forth within the AAA’s Commercial Dispute Resolution Procedures. The AAA shall appoint a single
emergency arbitrator to handle the claim(s) for emergency relief. The emergency arbitrator selected by the AAA shall be either
a retired judge or an individual experienced in handling matters involving claims for emergency injunctive and/or other equitable
relief relating to unfair competition and the use or unauthorized disclosure of trade secrets and/or confidential information.

 

5.           
Arbitration Decision. The arbitrator’s decision will be final and binding. The arbitrator shall issue a written
arbitration decision revealing the essential findings and conclusions upon which the decision and/or award is based. A party’s
right to appeal the decision is limited to grounds provided under applicable federal or state law.

 

6.           
Place of Arbitration. The arbitration will be at a mutually convenient location that must be within 50 miles of Executive’s
last company employment location. If the parties cannot agree upon a location, then the arbitration will be held at the AAA’s
office nearest to Executive’s last employment location.

 

7.           
Administrative Agencies. Nothing in this Agreement is intended to prohibit Employee from filing a claim or communicating
with the United States Equal Employment Opportunity Commission (“EEOC”), the National Labor Relations Board (“NLRB”)
or the California Department of Fair Employment and Housing (“DFEH”).

 

8.           
Construction. Should any portion of this Agreement be found to be unenforceable, such portion will be severed from
this Agreement, and the remaining portions shall continue to be enforceable.

 

9.           
Representation, Fees and Costs. Each party may be represented by an attorney or other representative selected by
the party. Except as otherwise provided for by statute, the arbitrator shall award reasonable attorneys’ fees and costs (including
without limitation, costs for depositions, experts, etc.) to Executive provided Executive is the prevailing party except that Employer
shall be responsible for the arbitrator’s fees and costs, or any fees or costs charged by the AAA, to the extent they exceed
any fee or cost that Executive would be required to bear if the action were brought in court. In no event shall Executive be responsible
for attorneys’ fees and costs of Employer.

 

10.       
Waiver of Jury Trial/Exclusive Remedy. EXECUTIVE AND EMPLOYER KNOWINGLY AND VOLUNTARILY WAIVE ANY CONSTITUTIONAL
RIGHT TO HAVE ANY DISPUTE BETWEEN THEM DECIDED BY A COURT OF LAW AND/OR BY A JURY IN COURT.

 

11.       
Sole and Entire Agreement. This Agreement expresses the entire Agreement of the parties and shall supersede any and
all other agreements, oral or written, concerning arbitration. This Agreement is not, and shall not be construed to create, any
contract of employment, express or implied.

 

 

 

    
	 	11	 

     

    

 

12.       
Requirements for Modification or Revocation. This Agreement to arbitrate shall survive the termination of Executive’s
employment. It can only be revoked or modified by a writing signed by the Chairperson of the Compensation Committee of the Board
of Directors of Employer and Executive that specifically states an intent to revoke or modify this Agreement.

 

13.       
Voluntary Agreement. EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS CAREFULLY READ THIS AGREEMENT, UNDERSTANDS ITS TERMS,
AND AGREES THAT ALL UNDERSTANDINGS AND AGREEMENTS BETWEEN EMPLOYER AND EXECUTIVE RELATING TO THE SUBJECTS COVERED IN THE AGREEMENT
ARE CONTAINED IN IT. EXECUTIVE HAS KNOWINGLY AND VOLUNTARILY ENTERED INTO THE AGREEMENT WITHOUT RELIANCE ON ANY PROVISIONS OR REPRESENTATIONS
BY EMPLOYER, OTHER THAN THOSE CONTAINED IN THIS AGREEMENT.

 

EXECUTIVE
FURTHER ACKNOWLEDGES THAT EXECUTIVE HAS BEEN GIVEN THE OPPORTUNITY TO DISCUSS THIS AGREEMENT WITH EXECUTIVE’S PRIVATE LEGAL
COUNSEL AND EXECUTIVE HAS UTILIZED THAT OPPORTUNITY TO THE EXTENT DESIRED.

 

 

	EXECUTIVE:	EMPLOYER:
	 	 
	/s/
    Daniel R. Hart                                                                	AVID BIOSERVICES,
        INC., a Delaware corporation
	Daniel R. Hart	 
	 	 
	 	By: /s/ Richard B. Hancock                          
	 	Name: Richard B. Hancock
	 	Title: Interim President and Chief Executive Officer

 

 

 

 

 

 

    
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