Separation Agreement by and between Sienna Biopharmaceuticals, Inc. and Todd Harris, dated as of November 5, 2018
This Separation Agreement (the Agreement) is made by and between Todd Harris (Executive) and Sienna Biopharmaceuticals, Inc., a Delaware corporation (the Company and, together with Executive, the Parties) is made effective as of the date Executive signs this Agreement (the Effective Date), with reference to the following facts:
A. Executives employment with the Company and status as an officer of the Company and each of its affiliates terminated effective as of November 5, 2018 (the Separation Date).
B. Executive and the Company desire to end their employment relationship amicably and to establish the obligations of the parties including, without limitation, all amounts due and owing to Executive in connection with Executives employment.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the parties agree as follows:
1. Employment Separation. Executive acknowledges and agrees that his status as an officer and employee of the Company terminated effective as of the Separation Date. Executive hereby agrees to execute such further document(s) as shall be determined by the Company as necessary or desirable to give effect to the termination of Executives status as an officer of the Company; provided, that such documents shall not be inconsistent with any of the terms of this Agreement.
2. Board of Directors Service.
(a) Board Membership. Notwithstanding Executives separation of employment with the Company, Executive shall continue to serve as a member of the Companys Board of Directors (the Board) at the discretion of the Board and the Companys stockholders in accordance with the Companys bylaws.
(b) Board Compensation. Following the Separation Date, Executive shall be eligible for compensation as a member of the Board in accordance with the Non-Employee Director Compensation Program (the Director Compensation Program). Executive acknowledges that, in accordance with the Director Compensation Program, Executive shall not be eligible for an Initial Option (as defined in the Director Compensation Program) but shall be eligible for an Annual Option (as defined in the Director Compensation Program) at the first annual meeting of the Companys stockholders following the Separation Date.
(c) Stock Options. Executives options to purchase Company common stock that are outstanding as of the Separation Date shall remain outstanding and continue to vest and remain or become exercisable based on Executives continued Board service in accordance with their terms. Executive acknowledges that any such options which constitute incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the Code), as of the Separation Date shall cease to constitute incentive stock options on the three-month anniversary of the Separation Date. Executive further acknowledges that to the extent Executive exercises any option that vested while Executive served the Company as an employee and does not constitute an incentive stock option on the date of exercise, the excess of the fair market value of the Companys common stock on the date of such exercise over the exercise price of the option shall constitute wages subject to withholding taxes that must be satisfied prior to the completion of such exercise.
3. Final Paycheck; Expenses; Options.
(a) Final Paycheck. Executive acknowledges that on or about the Separation Date Executive was paid all accrued but unpaid base salary and paid time off earned through the Separation Date, less payroll deductions and withholdings. Executive is entitled to retain these payments regardless of whether Executive executes this Agreement.
(b) Business Expenses. Executive agrees that, within five (5) business days after the Separation Date, Executive will submit Executives final documented expense reimbursement statement reflecting all business expenses Executive incurred through the Separation Date, if any, for which Executive seeks reimbursement. The Company will reimburse Executive for these expenses pursuant to its regular business practice.
4. Separation Payments and Benefits. Without admission of any liability, fact or claim, the Company hereby agrees to provide the severance benefits below, subject to the execution of this Agreement and Executives performance of his continuing obligations pursuant to this Agreement and his proprietary information and inventions assignment agreement with the Company (the Confidentiality Agreement).
(a) Healthcare Continuation Coverage. If Executive is eligible for and timely elects to receive continued healthcare coverage pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA), the Company shall pay the cost of monthly premiums for Executive and Executives covered dependents, if any, for coverage under the Companys group health plans during the period beginning on the Separation Date and ending on the earlier of (i) the six-month anniversary of the Separation Date or (ii) the date Executive becomes eligible for comparable coverage under another employers group health plan(s), provided, however, that if (1) any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the continuation coverage period to be, exempt from the application of Section 409A of the Code under Treasury Regulation Section 1.409A-1(a)(5), (2) the Company is otherwise unable to continue to cover Executive under its group health plans, or (3) the Company cannot provide the benefit without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then, in any such case, an amount equal to each remaining premium shall thereafter be paid to Executive in substantially equal monthly installments over the remaining period the Company would otherwise pay the premiums. After the Company ceases to pay premiums pursuant to the preceding sentence, Executive may, if eligible, elect to continue healthcare coverage at Executives expense in accordance with the provisions of COBRA. Executive acknowledges that he shall be solely responsible for all matters relating to Executives continuation of coverage pursuant to COBRA, including, without limitation, Executives election of such coverage and his timely payment of premiums.
(b) Sole Separation Benefit. Executive agrees that the benefits provided by this Section 4 are not required under the Companys normal policies and procedures and are provided as a severance solely in connection with this Agreement. Executive acknowledges and agrees that the benefits referenced in this Section 4 constitute adequate and valuable consideration, in and of themselves, for the promises contained in this Agreement.
5. Full Payment. Executive acknowledges that the payment and arrangements herein shall constitute full and complete satisfaction of any and all amounts properly due and owing to Executive as a result of his employment with the Company and the termination thereof. Executive further acknowledges that, other than the Confidentiality Agreement and the agreements evidencing Executives outstanding options to purchase Company common stock (collectively, the Option Agreements), this Agreement shall supersede each agreement entered into between Executive and the Company regarding Executives employment, including, without limitation, that certain employment agreement between Executive and the Company effective as of July 26, 2017 (the Employment Agreement). Each such agreement superseded hereby shall be deemed terminated and of no further effect as of the Separation Date.
6. Executives Release of the Company. Executive understands that by agreeing to the release provided by this Section 6, Executive is agreeing not to sue, or otherwise file any claim against, the Company or any of its directors, officers, employees, investors or other agents for any reason whatsoever based on anything that has occurred as of the date Executive signs this Agreement.
(a) On behalf of Executive and Executives heirs, assigns, executors, administrators, trusts, spouse and estate, Executive hereby releases and forever discharges the Releasees hereunder, consisting of the Company and each of its owners, affiliates, subsidiaries, predecessors, successors, assigns, agents, directors, officers, partners, employees, and insurers, and all persons acting by, through, under or in concert with them, or any of them, of and from any and all manner of action or actions, cause or causes of action, in law or in equity, suits, debts, liens, contracts, agreements, promises, liability, claims, demands, damages, loss, cost or expense, of any nature whatsoever, known or unknown, fixed or contingent (hereinafter called Claims), which Executive now has or may hereafter have against the Releasees, or any of them, by reason of any matter, cause, or thing whatsoever from the beginning of time to the date hereof, including, without limiting the generality of the foregoing, any Claims arising out of, based upon, or relating to Executives hire, employment, remuneration or termination by the Releasees, or any of them, Claims arising under federal, state, or local laws relating to employment, Claims of any kind that may be brought in any court or administrative agency, including any Claims arising under the Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000, et seq.; Americans with Disabilities Act, as amended, 42 U.S.C. § 12101 et seq.; the Rehabilitation Act of 1973, as amended, 29 U.S.C. § 701 et seq.; Civil Rights Act of 1866, and Civil Rights Act of 1991; 42 U.S.C. § 1981, et seq.; Equal Pay Act, as amended, 29 U.S.C. § 206(d); regulations of the Office of Federal Contract Compliance, 41 C.F.R. Section 60, et seq.; the Family and Medical Leave Act, as amended, 29 U.S.C. § 2601 et seq.; the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq.; the Employee Retirement Income Security Act, as amended, 29 U.S.C. § 1001 et seq.; the Worker Adjustment and Retraining Notification Act, as amended, 29 U.S.C. § 2101 et seq.; the Fair Credit Reporting Act and all similar state laws regarding background checks, the California Fair Employment and Housing Act, as amended, Cal. Lab. Code § 12940 et seq.; the California Equal Pay Law, as amended, Cal. Lab. Code §§ 1197.5(a),199.5; the Moore-Brown-Roberti Family Rights Act of 1991, as amended, Cal. Govt Code §§12945.2, 19702.3; California Labor Code §§ 1101, 1102; the California WARN Act, California Labor Code §§ 1400 et. seq; California Labor Code §§ 1102.5(a),(b); claims for wages under the California Labor Code and any other federal, state or local laws of similar effect; the employment and civil rights laws of California; Claims for breach of contract; Claims arising in tort, including, without limitation, Claims of wrongful dismissal or discharge, discrimination, harassment, retaliation, fraud, misrepresentation, defamation, libel, infliction of emotional distress, violation of public policy, and/or breach of the implied covenant of good faith and fair dealing; and Claims for damages or other remedies of any sort, including, without limitation, compensatory damages, punitive damages, injunctive relief and attorneys fees.
(b) Notwithstanding the generality of the foregoing, Executive does not release the following claims:
(i) Claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law;
(ii) Claims for workers compensation insurance benefits under the terms of any workers compensation insurance policy or fund of the Company;
(iii) Claims to continued participation in certain of the Companys group benefit plans pursuant to the terms and conditions of COBRA;
(iv) Claims to any benefit entitlements vested as the date of Executives employment termination, pursuant to written terms of any Company employee benefit plan;
(v) Claims for indemnification under the Companys Bylaws, California Labor Code Section 2802 or any other applicable law;
(vi) Executives right to bring to the attention of the Equal Employment Opportunity Commission claims of discrimination; provided, however, that Executive does release Executives right to secure any damages for alleged discriminatory treatment; and
(vii) Claims relating to Companys obligations pursuant to this Agreement.
(c) EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS BEEN ADVISED OF AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES 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.
BEING AWARE OF SAID CODE SECTION, EXECUTIVE HEREBY EXPRESSLY WAIVES ANY RIGHTS EXECUTIVE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.
7. Non-Disparagement and Transfer of Company Property. The Company and Executive further agree that:
(a) Non-Disparagement. Executive agrees that he shall not disparage, criticize or defame the Company, its affiliates and their respective affiliates, directors, officers, agents, partners, stockholders, employees, products, services, technology or business, either publicly or privately. Notwithstanding the foregoing, nothing in this Section 7(a) shall prevent
Executive from making any truthful statement to the extent (i) necessary with respect to any litigation, arbitration or mediation involving this Agreement and the enforcement thereof; or (ii) required by law or by any court, arbitrator, mediator or administrative or legislative body (including any committee thereof) with jurisdiction over the Company.
(b) Transfer of Company Property. Executive warrants and represents that Executive has returned to the Company all Personal Property (as defined below) which are the property of the Company and which he had in his possession, custody or control on the Separation Date except for any such Personal Property that is reasonably necessary for Executive to discharge his duties as a member of the Board. Within ten days following the Separation Date, Executive shall provide a written notice to the Company detailing any Personal Property Executive deemed reasonably necessary to discharge his duties as a member of the Board. For purposes of this Agreement, Personal Property includes, without limitation, all emails, books, manuals, records, reports, notes, contracts, lists, blueprints, and other documents, or materials, or copies thereof, whether printed or electronic (including computer files and passwords), keys, building card keys, company credit cards, telephone calling cards, computer hardware and software, docking stations, cellular and portable telephone equipment, personal digital assistant (PDA) devices and all other proprietary information relating to the business of the Company or its subsidiaries or affiliates.
8. Executive Representations. Executive warrants and represents that (a) he has not filed or authorized the filing of any complaints, charges or lawsuits against the Company, or any affiliate of the Company with any governmental agency or court, and that if, unbeknownst to Executive, such a complaint, charge or lawsuit has been filed on his behalf, he will immediately cause it to be withdrawn and dismissed, (b) he has reported all hours worked as of the date of this Agreement and has been paid all compensation, wages, bonuses, commissions, and/or benefits to which he may be entitled and no other compensation, wages, bonuses, commissions and/or benefits are due to him, except as provided in this Agreement, (c) he has no known workplace injuries or occupational diseases and has been provided and/or has not been denied any leave requested under the Family and Medical Leave Act or any similar state law, (d) the execution, delivery and performance of this Agreement by Executive does not and will not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject, and (e) upon the execution and delivery of this Agreement by the Company and Executive, this Agreement will be a valid and binding obligation of Executive, enforceable in accordance with its terms.
9. No Assignment by Executive. Executive warrants and represents that no portion of any of the matters released herein, and no portion of any recovery or settlement to which Executive might be entitled, has been assigned or transferred to any other person, firm or corporation not a party to this Agreement, in any manner, including by way of subrogation or operation of law or otherwise. If any claim, action, demand or suit should be made or instituted against the Company or any other Releasee because of any actual assignment, subrogation or transfer by Executive, Executive agrees to indemnify and hold harmless the Company and all other Releasees against such claim, action, suit or demand, including necessary expenses of investigation, attorneys fees and costs. In the event of Executives death, this Agreement shall inure to the benefit of Executive and Executives executors, administrators, heirs, distributees, devisees, and legatees. None of Executives rights or obligations may be assigned or transferred by Executive, other than Executives rights to payments hereunder, which may be transferred only upon Executives death by will or operation of law.
10. Governing Law. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of California or, where applicable, United States federal law, in each case, without regard to any conflicts of laws provisions or those of any state other than California.
11. Miscellaneous. This Agreement, collectively with the Confidentiality Agreement, the Option Agreements, the Director Compensation Program and the Companys bylaws, constitutes the entire agreement between the parties with regard to the subject matter hereof and supersedes, in their entirety, any other agreements between Executive and the Company with regard to the subject matter hereof, including, without limitation, the Employment Agreement. Executive acknowledges that there are no other agreements, written, oral or implied, and that he may not rely on any prior negotiations, discussions, representations or agreements. This Agreement may be modified only in writing, and such writing must be signed by Executive and a duly authorized officer of the Company or member of the Board and recited that it is intended to modify this Agreement. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.
12. Company Assignment and Successors. The Company shall assign its rights and obligations under this Agreement to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise). This Agreement shall be binding upon and inure to the benefit of the Company and its successors, assigns, personnel and legal representatives.
13. Maintaining Confidential Information. Executive reaffirms his obligations under his Confidentiality Agreement. Executive acknowledges and agrees that the benefits provided in Section 4 shall be subject to Executives continued compliance with Executives obligations under the Confidentiality Agreement. For the avoidance of doubt, nothing in the Confidentiality Agreement or this Agreement will be construed to prohibit Executive from filing a charge with, reporting possible violations to, or participating or cooperating with any governmental agency or entity, including but not limited to the EEOC, the Department of Justice, the Securities and Exchange Commission, Congress, or any agency Inspector General, or making other disclosures that are protected under the whistleblower, anti-discrimination, or anti-retaliation provisions of federal, state or local law or regulation. Executive does not need the prior authorization of the Company to make any such reports or disclosures, and Executive is not required to notify the Company that he has made such reports or disclosures. Furthermore, in accordance with 18 U.S.C. § 1833, notwithstanding anything to the contrary in the Confidentiality Agreement or this Agreement: (i) Executive shall not be in breach of this Agreement, and shall not be held criminally or civilly liable under any federal or state trade secret law (x) for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (y) for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (ii) if Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Executive may disclose the trade secret to Executives attorney, and may use the trade secret information in the court proceeding, if Executive files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order.
14. Executives Cooperation. After the Separation Date, Executive shall cooperate with the Company and its affiliates, upon the Companys reasonable request, with respect to any internal investigation or administrative, regulatory or judicial proceeding involving matters within the scope of
Executives duties and responsibilities to the Company or its affiliates during his employment with the Company (including, without limitation, Executive being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Companys reasonable request to give testimony without requiring service of a subpoena or other legal process, and turning over to the Company all relevant Company documents which are or may have come into Executives possession during his employment); provided, however, that any such request by the Company shall not be unduly burdensome or interfere with Executives personal schedule or ability to engage in gainful employment.
15. Section 409A of the Code. The Company and Executive acknowledge that the separation of the Executives employment with the Company is intended to constitute an involuntary separation from service for the purposes of Section 409A of Code and the related Department of Treasury regulations and other interpretative guidance issued thereunder (Section 409A). This Agreement is intended, to the greatest extent permitted under law, to comply with the short-term deferral exemption and the separation pay exemption provided in Section 409A such that no benefits or payments under this Agreement are subject to Section 409A. Notwithstanding anything herein to the contrary, the timing of any payments under this Agreement shall be made consistent with such exemption. To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A, including without limitation any such regulations or other guidance that may be issued after the Separation Date. Notwithstanding any provision of this Agreement to the contrary, in the event that the Company determines that any amounts payable hereunder may be subject to Section 409A, the Company may, to the extent permitted under Section 409A cooperate in good faith to adopt such amendments to this Agreement or adopt other appropriate policies and procedures, including amendments and policies with retroactive effect, that the Company determines are necessary or appropriate to avoid the imposition of taxes under Section 409A; provided, however, that this paragraph shall not create an obligation on the part of the Company to adopt any such amendment, policy or procedure or take any such other action, nor shall the Company have any liability for failing to do so. To the extent that any reimbursements payable pursuant to this Agreement are subject to the provisions of Section 409A, such reimbursements shall be paid to Executive no later than December 31 of the year following the year in which the expense was incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and Executives right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned have caused this Separation Agreement to be duly executed and delivered as of the date indicated next to their respective signatures below, which such dates shall be on or after the Separation Date and prior to the fourteenth (14th) day following the Separation Date.
|DATED: November 5, 2018|
|/s/ Todd Harris|
|Sienna Biopharmaceuticals, Inc.|
|DATED: November 5, 2018|
|By:||/s/ Frederick C. Beddingfield III|
|Frederick C. Beddingfield III|
[Signature Page to Todd Harris Separation Agreement]