Exhibit 10.1

 

Eloxx Pharmaceuticals, Inc.

Change in Control Severance Benefit Plan

Approved by the Board of Directors:  September 17, 2019

 

Section 1.Introduction.

The Eloxx Pharmaceuticals, Inc. Change in Control Severance Benefit Plan (the
“Plan”) is hereby established effective September 17, 2019 (the “Effective
Date”). The purpose of the Plan is to provide for the payment of severance
benefits to eligible employees of the Company in the event that such employees
become subject to involuntary or constructive employment terminations in
connection with a Change in Control. This Plan document also is the Summary Plan
Description for the Plan.

For purposes of the Plan, the following terms are defined as follows:

(a)“Affiliate” means any corporation (other than the Company) in an “unbroken
chain of corporations” beginning with the Company, if each of the corporations
other than the last corporation in the unbroken chain owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

(b)“Base Salary” means base pay (excluding incentive pay, premium pay,
commissions, overtime, bonuses and other forms of variable compensation, in each
case, unless required to be included as “base pay” under applicable law) as in
effect immediately prior to a Covered Termination and prior to any reduction
that would give rise to an employee’s right to resign for Good Reason.

(c)“Board” means the Board of Directors of the Company; provided, however, that
if the Board has delegated authority to administer the Plan to a committee of
the Board, then “Board” shall also mean such committee.

(d)“Cause” means, with respect to a Participant, the meaning ascribed to such
term in any written agreement between the Participant and the Company defining
such term and, in the absence of such agreement, such term means, with respect
to a Participant, the occurrence of any of the following events: (i) such
Participant’s commission of any felony or any crime involving fraud,
embezzlement, dishonesty or moral turpitude under the laws of the United States
or any state thereof; (ii) such Participant’s attempted commission of, or
participation in, a fraud, embezzlement or act of dishonesty against the Company
or an Affiliate; (iii) such Participant’s intentional, material violation of any
contract or agreement between the Participant and the Company or an Affiliate or
of any statutory duty owed to the Company or an Affiliate; (iv) such
Participant’s unauthorized use or disclosure of the Company’s or an Affiliate’s
confidential information or trade secrets; (v) the refusal or omission by the
Participant to perform any duties required of him or her if such duties are
consistent with duties customary for the position held with the Company or an
Affiliate or persistent unsatisfactory performance or neglect of his or her job
duties; or (vi) such Participant’s gross misconduct. The determination whether a
termination is for Cause shall be made by the Plan Administrator in its sole and
exclusive judgment and discretion. Any determination by the Plan Administrator
that the employment of a Participant was terminated with or without Cause
hereunder will have no effect upon any determination of the rights or
obligations of the Company or such Participant for any other purpose.in any
written agreement between such employee and the Company defining such term.

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(e)“Change in Control” means the occurrence, in a single transaction or in a
series of related transactions, of any one or more of the following events:

(1)any Exchange Act Person becomes the Owner, directly or indirectly, of
securities of the Company representing more than 50% of the combined voting
power of the Company’s then outstanding securities other than by virtue of a
merger, consolidation or similar transaction. Notwithstanding the foregoing, a
Change in Control will not be deemed to occur (A) on account of the acquisition
of securities of the Company directly from the Company, (B) on account of the
acquisition of securities of the Company by an investor, any affiliate thereof
or any other Exchange Act Person that acquires the Company’s securities in a
transaction or series of related transactions the primary purpose of which is to
obtain financing for the Company through the issuance of equity securities, or
(C) solely because the level of Ownership held by any Exchange Act Person (the
“Subject Person”) exceeds the designated percentage threshold of the outstanding
voting securities as a result of a repurchase or other acquisition of voting
securities by the Company reducing the number of shares outstanding, provided
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of voting securities by the Company, and after
such share acquisition, the Subject Person becomes the Owner of any additional
voting securities that, assuming the repurchase or other acquisition had not
occurred, increases the percentage of the then outstanding voting securities
Owned by the Subject Person over the designated percentage threshold, then a
Change in Control will be deemed to occur;

(2)there is consummated 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;

(3)the stockholders of the Company approve or the Board approves a plan of
complete dissolution of liquidation of the Company, or a complete dissolution or
liquidation of the Company will otherwise occur, except for a liquidation into a
parent corporation;

(4)there is consummated a sale, lease, exclusive license or other disposition of
all or substantially all of the consolidated assets of the Company and its
Subsidiaries, other than a sale, lease, license or other disposition 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, lease, license or other disposition;
or

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(5)individuals who, on the date the Plan is adopted by the Board, are members of
the Board (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the members of the Board; provided, however, that if the appointment
or election (or nomination for election) of any new Board member was approved or
recommended by a majority vote of the members of the Incumbent Board then still
in office, such new member will, for purposes of this Plan, be considered as a
member of the Incumbent Board.

Notwithstanding the foregoing or any other provision of this Plan, the term
Change in Control will not include a sale of assets, merger or other transaction
effected exclusively for the purpose of changing the domicile of the Company. To
the extent required for compliance with Section 409A, in no event will a Change
in Control be deemed to have occurred if such transaction is not also a “change
in the ownership or effective control of” the Company or “a change in the
ownership of a substantial portion of the assets of” the Company as determined
under Treasury Regulations Section 1.409A-3(i)(5) (without regard to any
alternative definition thereunder). The Board may, in its sole discretion and
without a Participant’s consent, amend the definition of “Change in Control” to
conform to the definition of “Change in Control” under Section 409A.

(f)“Change in Control Period” means the period commencing upon a Change in
Control and ending twelve (12) months following the Closing of a Change in
Control.

(g)“Closing” means the initial closing of the Change in Control as defined in
the definitive agreement executed in connection with the Change in Control. In
the case of a series of transactions constituting a Change in Control, “Closing”
means the first closing that satisfies the threshold of the definition for a
Change in Control.

(h)“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985.

(i)“Code” means the Internal Revenue Code of 1986, as amended.

(j)“Company” means Eloxx Pharmaceuticals, Inc. or, following a Change in
Control, the surviving entity resulting from such event; provided, that the term
“Company” as used in this Plan shall be deemed to include, as applicable, the
Designated Subsidiaries.

(k)“Covered Termination” means an Involuntary Termination that occurs within the
Change in Control Period.

(l)“Designated Subsidiaries” means each Subsidiary of the Company on the
Effective Date and future Subsidiaries of the Company, in each case, that are
not specifically excluded from participation by the Plan Administrator from time
to time in its sole discretion. In the event that the Company has Subsidiaries
located in jurisdictions outside of the United States, any such Subsidiary shall
not be a Designated Subsidiary unless the Plan Administrator specifically
designates such Subsidiary as a Designated Subsidiary.

(m)“Director” means a member of the Board.

(n)“Eligible Employee” means an employee of the Company who meets the
requirements to be eligible to receive Plan benefits as set forth in Section 2.

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(o)“Entity” means a corporation, partnership, limited liability company or other
entity.

(p)“Equity Plan” means, as applicable, the Company’s 2018 Equity Incentive Plan,
the Company’s Share Ownership and Option Plan (2013) or any successor or other
equity incentive plan(s) adopted by the Company which govern a Participant’s
stock or stock-based awards.

(q)“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

(r)“Exchange Act Person” means any natural person, Entity or “group” (within the
meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange
Act Person” will not include (i) the Company or any Subsidiary of the Company,
(ii) any employee benefit plan of the Company or any Subsidiary of the Company
or any trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any Subsidiary of the Company, (iii) an underwriter
temporarily holding securities pursuant to a registered public offering of such
securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their Ownership of stock of
the Company; or (v) any natural person, Entity or “group” (within the meaning of
Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is
the Owner, directly or indirectly, of securities of the Company representing
more than 50% of the combined voting power of the Company’s then outstanding
securities.

(s)“Good Reason” for an employee’s resignation means the occurrence of any of
the following events, conditions or actions taken by the Company without Cause
and without such employee’s consent; provided that any resignation by the
employee due to any of the following conditions shall only be deemed for Good
Reason if:  (i) the employee gives the Company written notice of the intent to
terminate for Good Reason within thirty (30) days following the first occurrence
of the condition(s) that the employee believes constitutes Good Reason, which
notice shall describe such condition(s); (ii) the Company fails to remedy, if
remediable, such condition(s) within thirty (30) days following receipt of the
written notice (the “Cure Period”) of such condition(s) from the employee; and
(iii) the employee actually resigns the employee’s employment within the first
thirty (30) days after expiration of the Cure Period:  (1)  any material
reduction by the Company of the employee’s base salary, as the same may be
increased from time to time; or (2) a requirement that the employee relocate to
a principal place of employment more than seventy-five (75) miles from their
current place of employment.

(t)“Involuntary Termination” means a termination of employment that is due to:
(1) a termination by the Company without Cause or (2) an employee’s resignation
for Good Reason.

(u)“Own,” “Owned,” “Owner,” “Ownership” means a person or Entity will be deemed
to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership”
of securities if such person or Entity, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or shares
voting power, which includes the power to vote or to direct the voting, with
respect to such securities.

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(v)“Participant” means an Eligible Employee who, on the date of the Covered
Termination fulfils the eligibility and participation requirements, as provided
herein.

(w)“Plan Administrator” means the Board, or a duly authorized committee thereof.

(x)“Section 409A” means Section 409A of the Code and the regulations and other
guidance thereunder and any state law of similar effect.

(y)“Subsidiary” means, with respect to the Company, (i) any corporation of which
more than 50% of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether, at the time, stock of any other class or classes of such corporation
will have or might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, Owned by the Company, and
(ii) any partnership, limited liability company or other entity in which the
Company has a direct or indirect interest (whether in the form of voting or
participation in profits or capital contribution) of more than 50%.

(z)“Target Bonus” means with respect to a Participant, if there is a cash bonus
plan applicable to such Participant for the year in which such Covered
Termination occurs (“Cash Bonus Plan”), the cash bonus payable to such
Participant under such Cash Bonus Plan as if all the applicable performance
goals for such year were attained at a level of 100%. If no Cash Bonus Plan is
in effect for the year in which such Covered Termination occurs, the Target
Bonus Amount will be the target bonus, if any, in such Participant’s
then-effective employment agreement or offer letter with the Company, as if all
of the applicable performance goals for such year were attained at a level of
100%.

Section 2.Eligibility for benefits.

(a)Eligible Employee. An employee of the Company is eligible to participate in
the Plan if (i) as of immediately prior to a Covered Termination, such employee
is a full-time employee of the Company other than any officer of the Company who
is subject to the reporting rules under Section 16 of the Exchange Act; (ii) the
Plan Administrator has designated such employee as eligible to participate in
the Plan; (iii) such employee’s employment with the Company terminates due to a
Covered Termination; (iv) such employee meets the other Plan eligibility
requirements set forth in this Section 2; (v) unless otherwise determined by the
Plan Administrator in its discretion, such employee is not entitled to severance
payments or benefits under any severance benefit plan, policy or practice
previously maintained by the Company, including any severance benefits set forth
in any individually negotiated employment contract or agreement between the
Company and an employee; and (vii) such employee is not covered by a collective
bargaining agreement, unless the collective bargaining agreement expressly
requires that such employee is eligible to participate in the Plan.
Notwithstanding anything in the Plan to the contrary, (A) individuals who
provide services to the Company whom the Company does not classify under its
customary worker classification procedures as employees, including, but not
limited to, independent contractors, contractor’s employees and leased employees
(irrespective of whether such individuals are common law employees) shall not be
eligible to participate in the Plan, and (B) individuals who are absent from
work on unpaid leaves of absence shall not be

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eligible to participate in the Plan except to the extent eligibility is required
by applicable law.  The determination of whether an employee is an Eligible
Employee shall be made by the Plan Administrator, in its sole discretion, and
such determination shall be binding and conclusive on all persons. After the
Effective Date, the Plan Administrator may, in its sole and absolute discretion,
designate additional employees of the Company as Eligible Employees, and may
exclude an employee from participating in the Plan or exclude an Eligible
Employee who is a Participant from continuing to participate in the Plan.  If a
Participant is promoted to an employee group or salary band title with a higher
tier of benefits pursuant to Section 3 of the Plan, in each case as determined
by the Plan Administrator in its sole discretion, then, except as otherwise
determined by the Plan Administrator in its sole discretion, the benefits to be
received by such Participant will automatically adjust.

(b)Release Requirement; Additional Agreements. In order to be eligible to
receive benefits under the Plan, a Participant also must timely execute and
return to the Company a general waiver and release of all claims in a form
acceptable to the Company (the “Release”), within the applicable time period set
forth therein, but in no event more than fifty (50) days following the date of
the applicable Covered Termination, and such Release must become effective in
accordance with its terms. As a condition of being eligible to receive benefits
under the Plan, a Participant shall be required to be in full compliance with a
non-compete/confidentiality and trade secrets/inventions undertaking agreement
or similar agreement as may be required or requested by the Company from time to
time.

(c)Plan Benefits Provided in Lieu of Individual Agreement Severance Benefits.
Unless otherwise determined by the Plan Administrator in its discretion, a
Participant shall not be eligible to receive severance benefits under this Plan
if the Participant is otherwise eligible to receive severance benefits under the
terms of an individually negotiated employment contract or agreement with the
Company or any other severance arrangement with the Company.

(d)Exceptions to Benefit Entitlement. An employee who otherwise is an Eligible
Employee will not receive benefits under the Plan in the following
circumstances, as determined by the Plan Administrator in its sole discretion:

(1)The employee voluntarily terminates employment with the Company without Good
Reason or terminates employment due to the employee’s death or disability.
Voluntary terminations include, but are not limited to, resignation, retirement
or failure to return from a leave of absence on the scheduled date.

(2)The employee voluntarily terminates employment with the Company in order to
accept employment with another entity that is wholly or partly owned (directly
or indirectly) by the Company or an Affiliate.

(3)The employee is offered an identical or substantially equivalent or
comparable position with the Company or an Affiliate. For purposes of the
foregoing, a “substantially equivalent or comparable position” is one that
provides the employee substantially the same level of responsibility and
compensation and would not give rise to the employee’s right to resign for Good
Reason.

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(4)The employee is offered immediate reemployment by a successor to the Company
or an Affiliate or by a purchaser of the Company’s assets, as the case may be,
following a Change in Control and the terms of such reemployment would not give
rise to the employee’s right to resign for Good Reason. For purposes of the
foregoing, “immediate reemployment” means that the employee’s employment with
the successor to the Company or an Affiliate or the purchaser of its assets, as
the case may be, results in uninterrupted employment such that the employee does
not incur a lapse in pay or benefits as a result of the change in ownership of
the Company or the sale of its assets.

(5)The employee is rehired by the Company or an Affiliate and recommences
employment prior to the date benefits under the Plan are scheduled to commence.

(6)Upon a termination of employment other than a Covered Termination.

Section 3.Amount of Benefit.

(a)Severance Benefit. Upon a Covered Termination, benefits under the Plan shall
be provided to each Participant as follows:

(1)Cash Severance Benefit.  The Participant will be entitled to:

(i)continue to receive the Participant’s then-current Base Salary for the
following number of months set forth in the following table (such period of
months, the “Severance Period”):

Employee Group / Salary Band Title

Severance Period

Vice President

12 months

Senior Director/Director

9 months

Associate Director/Manager

6 months

All Other Participants

3 months

 

Such payments shall be payable in substantially equal installments in accordance
with the Company’s payroll practices, as in effect from time to time, with the
first payment commencing on the first payroll date following the effective date
of the Participant’s Release, and the first payment to include any payments that
are due to be paid between the date of the Participant’s Covered Termination and
the date of the first payment; and

(ii)the Participant will additionally be entitled to a portion of the
Participant’s Target Bonus, if any, for the year in which the Participant’s
Covered Termination occurs, in an amount equal to the Participant’s annual
Target Bonus for such year, if any, multiplied by the quotient of the Severance
Period divided by twelve (12), which shall be payable in a lump sum payment
within ten (10) business days following the effective date of the Participant’s
Release.

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(2)Accelerated Vesting of Stock Awards.

(i)Effective as of the effective date of the Participant’s Release, to the
extent not previously vested:  (A) the vesting and exercisability of all
outstanding stock options under an Equity Plan to purchase the Company’s common
stock that are held by the Participant on such date shall be accelerated in
full, (B) any reacquisition or repurchase rights held by the Company in respect
of common stock issued pursuant to any other stock award granted to the
Participant by the Company under an Equity Plan shall lapse in full, and (C) the
vesting of any other stock awards granted to the Participant by the Company
under an Equity Plan, and any issuance of shares triggered by the vesting of
such stock awards, shall be accelerated in full.  Notwithstanding the foregoing,
this Section 3(a)(2)(i) shall not apply to stock awards issued under or held in
any plan sponsored by the Company or an Affiliate that is intended to be
qualified under Section 401(a) of the Internal Revenue Code. For purposes of
determining the number of shares that will vest pursuant to the foregoing
provision with respect to any performance based vesting award that has multiple
vesting levels depending upon the level of performance, vesting acceleration
shall occur with respect to the number of shares subject to the award as if the
applicable performance criteria had been attained at a 100% level.

(3)Notwithstanding anything to the contrary set forth herein, the Participant’s
stock awards shall remain subject to earlier termination in connection with a
“Corporate Transaction” or “Significant Event”, as applicable, as provided in
the applicable Equity Plan or substantially equivalent provisions applicable to
the Participant’s stock award.

(4)Payment of Continued Group Health Plan Benefits.

(i)If applicable, if the Participant timely elects continued group health plan
continuation coverage under COBRA the Company shall pay the full amount of the
Participant’s COBRA premiums, or shall provide coverage under any self-funded
plan, on behalf of the Participant for the Participant’s continued coverage
under the Company’s group health plans, including coverage for the Participant’s
eligible dependents, for the Severance Period (the “COBRA Payment
Period”).  Upon the conclusion of such period of insurance premium payments made
by the Company, or the provision of coverage under a self-funded group health
plan, the Participant will be responsible for the entire payment of premiums (or
payment for the cost of coverage) required under COBRA for the duration of the
Participant’s eligible COBRA coverage period.  For purposes of this Section, (A)
references to COBRA shall be deemed to refer also to analogous provisions of
state law and (B) any applicable insurance premiums that are paid by the Company
shall not include any amounts payable by the Participant under an Internal
Revenue Code Section 125 health care reimbursement plan, which amounts, if any,
are the Participant’s sole responsibility.

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(ii)Notwithstanding the foregoing, if at any time the Company determines, in its
sole discretion, that it cannot provide the COBRA premium benefits without
potentially incurring financial costs or penalties under applicable law
(including, without limitation, Section 2716 of the Public Health Service Act),
then in lieu of paying COBRA premiums on the Participant’s behalf, the Company
will instead pay to the Participant on the last day of each remaining month of
the COBRA Payment Period a fully taxable cash payment equal to the COBRA premium
for that month, subject to applicable tax withholding (such amount, the “Special
Severance Payment”), such Special Severance Payment to be made without regard to
the Participant’s election of COBRA coverage or payment of COBRA premiums and
without regard to the Participant’s continued eligibility for COBRA coverage
during the COBRA Payment Period.  Such Special Severance Payment shall end upon
expiration of the COBRA Payment Period.

(b)Additional Benefits. Notwithstanding the foregoing, the Company may, in its
sole discretion, provide benefits to employees or consultants who are not
Eligible Employees (“Non-Eligible Employees”) chosen by the Plan Administrator,
in its sole discretion, and the provision of any such benefits to a Non-Eligible
Employee shall in no way obligate the Company to provide such benefits to any
other Non- Eligible Employee, even if similarly situated. If benefits under the
Plan are provided to a Non-Eligible Employee, references in the Plan to
“Eligible Employee” or “Participant” (and similar references) shall be deemed to
refer to such Non-Eligible Employee.

(c)Certain Reductions. The Company, in its sole discretion, shall have the
authority to reduce a Participant’s severance benefits, in whole or in part, by
any other severance benefits, pay and benefits provided during a period
following written notice of a plant closing or mass layoff, pay and benefits in
lieu of such notice, or other similar benefits payable to a Participant by the
Company or an Affiliate that become payable in connection with a Participant’s
Covered Termination pursuant to (i) any applicable legal requirement, including,
without limitation, the Worker Adjustment and Retraining Notification Act or any
other similar state law, (ii) any individually negotiated employment contract or
agreement or any other written employment or severance agreement with the
Company, or (iii) any Company policy or practice providing for a Participant to
remain on the payroll for a limited period of time after being given notice of
the termination of a Participant’s employment, and the Plan Administrator shall
so construe and implement the terms of the Plan. Any such reductions that the
Company determines to make pursuant to this Section 3(c) shall be made such that
any benefit under the Plan shall be reduced solely by any similar type of
benefit under such legal requirement, agreement, policy or practice (i.e., any
cash severance benefits under the Plan shall be reduced solely by any cash
payments or severance benefits under such legal requirement, agreement, policy
or practice, and any continued insurance benefits under the Plan shall be
reduced solely by any continued insurance benefits under such legal requirement,
agreement, policy or practice). The Company’s decision to apply such reductions
to the severance benefits of one Participant and the amount of such reductions
shall in no way obligate the Company to apply the same reductions in the same
amounts to the severance benefits of any other Participant, even if similarly
situated. In the Company’s sole discretion, such reductions may be applied on a
retroactive basis, with severance benefits previously paid being
re-characterized as payments pursuant to the Company’s statutory obligation.

 

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(d)Parachute Payments.

(1)Any provision of the Plan to the contrary notwithstanding, if any payment or
benefit a Participant would receive from the Company pursuant to the Plan or
otherwise (“Payment”) would (i) constitute a “parachute payment” within the
meaning of Section 280G of the Code, and (ii) but for this sentence, be subject
to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then
such Payment will be equal to the Reduced Amount (defined below). The “Reduced
Amount” shall be either (x) the largest portion of the Payment that would result
in no portion of the Payment being subject to the Excise Tax or (y) the largest
portion, up to and including the total, of the Payment, whichever amount, after
taking into account all applicable federal, state and local employment taxes,
income taxes, and the Excise Tax (all computed at the highest applicable
marginal rate), results in the Participant’s receipt, on an after-tax basis, of
the greater economic benefit notwithstanding that all or some portion of the
Payment may be subject to the Excise Tax. If a reduction in payments or benefits
constituting “parachute payments” is necessary so that the Payment equals the
Reduced Amount, reduction shall occur in the manner that results in the greatest
economic benefit for the Participant. If more than one method of reduction will
result in the same economic benefit, the items so reduced will be reduced pro
rata.

(2)In the event it is subsequently determined by the Internal Revenue Service
that some portion of the Reduced Amount as determined pursuant to clause (x) in
the preceding paragraph is subject to the Excise Tax, the Participant agrees to
promptly return to the Company a sufficient amount of the Payment so that no
portion of the Reduced Amount is subject to the Excise Tax. For the avoidance of
doubt, if the Reduced Amount is determined pursuant to clause (y) in the
preceding paragraph, the Participant will have no obligation to return any
portion of the Payment pursuant to the preceding sentence.

(3)Unless the Participant and the Company agree on an alternative accounting
firm, the accounting firm engaged by the Company for general tax compliance
purposes as of the day prior to the effective date of the a change in ownership
or control shall perform the foregoing calculations. If the accounting firm so
engaged by the Company is serving as accountant or auditor for the individual,
entity or group effecting the change in ownership or control, the Company shall
appoint a nationally recognized accounting firm to make the determinations
required hereunder. The Company shall bear all expenses with respect to the
determinations by such accounting firm required to be made hereunder.

Section 4.Return of Company Property.

A Participant will not be entitled to any severance benefit under the Plan
unless and until the Participant returns all Company Property. For this purpose,
“Company Property” means all Company documents (and all copies thereof) and
other Company property which the Participant had in his or her possession at any
time, including, but not limited to, Company files, notes, drawings, records,
plans, forecasts, reports, studies, analyses, proposals, agreements, financial
information, research and development information, sales and marketing
information, operational and personnel information, specifications, code,
software, databases, computer-recorded information, tangible property and
equipment (including, but not limited to, computers, facsimile machines, mobile
telephones, servers), credit cards, entry cards, identification badges and keys;
and any materials of any kind which contain or embody any proprietary or
confidential information of the Company (and all reproductions thereof in whole
or in part).

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Section 5.Time of Payment and Form of Benefit; Withholding.

The Company reserves the right to specify whether severance payments under the
Plan will be paid in a single sum, in installments, or in any other form and to
determine the timing of such payments. All such payments under the Plan will be
subject to applicable withholding for federal, state and local taxes. All
severance benefits provided under the Plan are intended to satisfy the
requirements for an exemption from application of Section 409A of the Code to
the maximum extent that an exemption is available and any ambiguities herein
shall be interpreted accordingly; provided, however, that to the extent such an
exemption is not available, the severance benefits provided under the Plan are
intended to comply with the requirements of Section 409A to the extent necessary
to avoid adverse personal tax consequences and any ambiguities herein shall be
interpreted accordingly.

Notwithstanding anything to the contrary set forth herein, any payments and
benefits provided under the Plan that constitute “deferred compensation” within
the meaning of Section 409A shall not commence in connection with a
Participant’s termination of employment unless and until the Participant has
also incurred a “separation from service,” as such term is defined in Treasury
Regulations Section 1.409A-1(h) (“Separation from Service”), unless the Company
reasonably determines that such amounts may be provided to the Participant
without causing the Participant to incur the adverse personal tax consequences
under Section 409A.

It is intended that (i) each installment of any benefits payable under the Plan
to a Participant be regarded as a separate “payment” for purposes of Treasury
Regulations Section 1.409A-2(b)(2)(i), (ii) all payments of any such benefits
under the Plan satisfy, to the greatest extent possible, the exemptions from the
application of Section 409A provided under Treasury Regulations Sections
1.409A-1(b)(4) and 1.409A-1(b)(9)(iii), and (iii) any such benefits consisting
of COBRA premiums also satisfy, to the greatest extent possible, the exemption
from the application of Section 409A provided under Treasury Regulations Section
1.409A-1(b)(9)(v). However, if the Company determines that any such benefits
payable under the Plan constitute “deferred compensation” under Section 409A and
the Participant is a “specified employee” of the Company, as such term is
defined in Section 409A(a)(2)(B)(i), then, solely to the extent necessary to
avoid the imposition of the adverse personal tax consequences under Section
409A, (A) the timing of such benefit payments shall be delayed until the earlier
of (1) the date that is six (6) months and one (1) day after the Participant’s
Separation from Service and (2) the date of the Participant’s death (such
applicable date, the “Delayed Initial Payment Date”), and (B) the Company shall
(1) pay the Participant a lump sum amount equal to the sum of the benefit
payments that the Participant would otherwise have received through the Delayed
Initial Payment Date if the commencement of the payment of the benefits had not
been delayed pursuant to this paragraph and (2) commence paying the balance, if
any, of the benefits in accordance with the applicable payment schedule.

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In no event shall payment of any benefits under the Plan be made prior to a
Participant’s termination date or prior to the effective date of the Release. If
the Company determines that any payments or benefits provided under the Plan
constitute “deferred compensation” under Section 409A, and the Participant’s
Separation from Service occurs at a time during the calendar year when the
Release could become effective in the calendar year following the calendar year
in which the Participant’s Separation from Service occurs, then regardless of
when the Release is returned to the Company and becomes effective, the Release
will not be deemed effective any earlier than the latest permitted effective
date (the “Release Deadline”). If the Company determines that any payments or
benefits provided under the Plan constitute “deferred compensation” under
Section 409A, then except to the extent that payments may be delayed until the
Delayed Initial Payment Date pursuant to the preceding paragraph, on the first
regular payroll date following the effective date of a Participant’s Release,
the Company shall (1) pay the Participant a lump sum amount equal to the sum of
the benefit payments that the Participant would otherwise have received through
such payroll date but for the delay in payment related to the effectiveness of
the Release and (2) commence paying the balance, if any, of the benefits in
accordance with the applicable payment schedule.

All severance payments under the Plan shall be subject to applicable withholding
for federal, state and local taxes, as determined by the Plan Administrator in
its sole discretion. If a Participant is indebted to the Company at his or her
termination date, the Company reserves the right to offset any severance
payments under the Plan by the amount of such indebtedness.

Section 6.Reemployment.

In the event of a Participant’s reemployment by the Company during the period of
time in respect of which severance benefits pursuant to the Plan have been paid,
the Company, in its sole and absolute discretion, may require such Participant
to repay to the Company all or a portion of such severance benefits as a
condition of reemployment.

Section 7.Right to Interpret and Administer Plan; Amendment and Termination.

(a)Interpretation and Administration. The Board, or a duly authorized committee
thereof, shall be the Plan Administrator. The Plan Administrator (or its
designee) has full discretion and exclusive right, power and authority in its
sole discretion to administer, apply, and interpret the Plan and any other Plan
documents and to decide any and all matters (including legal and factual issues)
arising under, or in connection with, the operation or administration of the
Plan, including without limitation the right to (i) make findings of fact; (ii)
take all actions and make all decisions with respect to and to otherwise
determine eligibility for participation, benefits, and other rights under the
Plan and the amount payable under the Plan; (iii) determine whether any notice
requirement or other administrative procedure under the Plan has been adequately
observed; (iv) determine the proper recipient(s) of any Plan benefits; (v)
formulate, interpret and apply rules, regulations and policies necessary to
administer the Plan in accordance with its terms; (vi) remedy, resolve and/or
clarify any possible ambiguities, inconsistencies, or omissions arising under
the Plan or other Plan documents by general rule or particular decision; (vii)
decide questions (including legal or factual questions) relating to the
calculation and payment of benefits under the Plan; (viii) process and approve
or deny benefit claims and rule on any exclusions therefrom; (ix)

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decide for purposes of paying benefits hereunder, whether, based on the terms of
the Plan, a termination of employment is a Covered Termination; (x) determine
the standard of proof required in any case; and (xi) otherwise to interpret the
Plan in accordance with its terms. The Plan Administrator’s (or its designee’s)
interpretations, determinations, and decisions with respect to any matter
arising under the Plan and any other relevant documents and on any and all
questions arising out of the interpretation or administration of the Plan shall
be final, conclusive and binding on all parties, including all Eligible
Employees, all Participants, all beneficiaries and any other individuals
claiming benefits under the Plan.

(b)Delegation of Authority.  Prior to the Closing, the Plan Administrator, in
its sole discretion, may delegate to other persons responsibilities for
performing certain of the duties of the Plan Administrator under the terms of
the Plan.

(c)Retention of Professional Assistance.  The Plan Administrator may employ such
legal counsel, accountants and other persons as may be required in carrying out
its work in connection with the Plan.

(d)Indemnification.  Neither the Plan Administrator nor any of its designees
will be liable for any action or determination made in good faith with respect
to the Plan.  The Company will, to the extent permitted by law, by the purchase
of insurance or otherwise, indemnify and hold harmless the Plan Administrator
and each director, officer and employee of the Company and its Affiliates for
liabilities or expenses they and each of them incur in carrying out their
respective duties under this Plan, other than for any liabilities or expenses
arising out of such individual’s willful misconduct or fraud.

(e)Amendment. Although the Plan is designed to provide severance and other
benefits to selected employees as provided herein, the Board may amend or
terminate the Plan in whole or in part at any time upon at least sixty (60)
days’ prior written notice to Participants; provided, however, that any
amendment of the Plan shall not adversely affect the benefits to which a
Participant is entitled on the Participant’s Covered Termination, if such
Covered Termination occurred prior to the date of the amendment of the Plan,
without the Participant’s written consent; and provided, further, that no
amendment that has the effect of reducing or diminishing the right of any
Participant shall be effective during the Change in Control Period, without the
written consent of a majority of the Participants.

(f)Termination. The Board may amend or terminate the Plan at any time in its
sole discretion; provided, however, that any termination of the Plan shall not
adversely affect the benefits to which a Participant is entitled on the
Participant’s Covered Termination, if such Covered Termination occurred prior to
the date of the termination of the Plan, without the Participant’s written
consent; and provided, further, that no termination that has the effect of
reducing or diminishing the right of any Participant shall be effective during
the Change in Control Period, without the written consent of a majority of the
Participants.

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(g)Successors and Assigns.  The Plan shall be binding on all successors and
permitted assigns of a Participant including, without limitation, the estate of
such Participant and the executor, administrator or trustee of such estate.
Except in the event of death, a Participant does not have the power to transfer,
assign, anticipate, mortgage or otherwise encumber any rights or any amounts
payable under the Plan; nor will any such rights or amounts payable under the
Plan be subject to seizure, attachment, execution, garnishment or other legal or
equitable process, or for the payment of any debts, judgments, alimony, or
separate maintenance, or be transferable by operation of law in the event of
bankruptcy, insolvency, or otherwise.  In the event a Participant attempts to
assign, transfer or dispose of such right, or if an attempt is made to subject
such right to such process, such assignment, transfer or disposition will be
null and void.  If a Participant dies while any amount would still be payable to
the Participant hereunder had the Participant continued to live, all such
amounts, unless otherwise provided in the Plan, shall be paid in accordance with
the terms of the Plan to the Participant’s beneficiary.  If the Participant has
not named a beneficiary, then such amounts shall be paid to the Participant’s
devisee, legatee, or other designee, or if there is no such designee, to the
Participant’s estate. Each Participant may designate one or more persons or
entities as the primary and/or contingent beneficiaries of any amounts owing to
the Participant under the Plan. Such designation must be in the form of a signed
writing acceptable to the Plan Administrator.  A Participant may make or change
such designations at any time.

(h)Severability.  In case any provision of the Plan shall be deemed or held to
be unlawful or invalid for any reason, such fact shall not adversely affect the
other provisions of the Plan unless such determination shall render impossible
or impracticable the functioning of the Plan, and in such case, an appropriate
provision or provisions shall be adopted so that the Plan may continue to
function properly.

(i)Foreign Participants. Notwithstanding any provision of the Plan to the
contrary, in order to comply with the laws in other countries in which the
Company and its Subsidiaries operate or have employees, or in order to comply
with the requirements of any foreign stock exchange, the Plan Administrator, in
its discretion, shall have the power and authority to: (i) determine which
Subsidiaries shall be covered by the Plan; (ii) determine which Eligible
Employees outside the United States are eligible to be Participants in the Plan;
(iii) establish subplans and modify terms and procedures, to the extent such
actions may be necessary or advisable (any such subplans and/or modifications
shall be attached to the Plan as appendices); and (iv) take any action that it
deems advisable to obtain approval or comply with any necessary local
governmental regulatory exemptions or approvals or listing requirements of any
such foreign stock exchange. Notwithstanding the foregoing, the Plan
Administrator may not take any actions hereunder that would violate the Code or
any other applicable law.

Section 8.Rights of Participants.

The Plan shall not be deemed (i) to give any employee or other person any right
to be retained in the employ of the Company or (ii) to interfere with the right
of the Company to discharge any employee or other person at any time, with or
without cause, which right is hereby reserved. Any amount(s) payable hereunder
will not be taken into account in computing the amount of salary or compensation
for purposes of any severance plan, 401(k), pension, or other employee benefit
plan(s) in which the Company or its Affiliates is a participating employer.

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Section 9.Legal Construction.

This Plan is intended to be governed by and shall be construed in accordance
with the Employee Retirement Income Security Act of 1974 (“ERISA”) and, to the
extent not preempted by ERISA, the laws of the State of California.

Section 10.Claims, Inquiries And Appeals.

(a)Applications for Benefits and Inquiries. Any application for benefits,
inquiries about the Plan or inquiries about present or future rights under the
Plan must be submitted to the Plan Administrator in writing by an applicant (or
his or her authorized representative). The Plan Administrator is:

Eloxx Pharmaceuticals, Inc.
Board of Directors
950 Winter Street
Waltham, Massachusetts 02451
(781) 577-5300

(b)Denial of Claims. In the event that any application for benefits is denied in
whole or in part, the Plan Administrator must provide the applicant with written
or electronic notice of the denial of the application, and of the applicant’s
right to review the denial. Any electronic notice will comply with the
regulations of the U.S. Department of Labor. The notice of denial will be set
forth in a manner designed to be understood by the applicant and will include
the following:

(1)the specific reason or reasons for the denial;

(2)references to the specific Plan provisions upon which the denial is based;

(3)a description of any additional information or material that the Plan
Administrator needs to complete the review and an explanation of why such
information or material is necessary; and

(4)an explanation of the Plan’s review procedures and the time limits applicable
to such procedures, including a statement of the applicant’s right to bring a
civil action under Section 502(a) of ERISA following a denial on review of the
claim, as described in Section 10(d) below.

This notice of denial will be given to the applicant within ninety (90) days
after the Plan Administrator receives the application, unless special
circumstances require an extension of time, in which case, the Plan
Administrator has up to an additional ninety (90) days for processing the
application. If an extension of time for processing is required, written notice
of the extension will be furnished to the applicant before the end of the
initial ninety (90) day period.

This notice of extension will describe the special circumstances necessitating
the additional time and the date by which the Plan Administrator is to render
its decision on the application.

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(c)Request for a Review. Any person (or that person’s authorized representative)
for whom an application for benefits is denied, in whole or in part, may appeal
the denial by submitting a request for a review to the Plan Administrator within
sixty (60) days after the application is denied. A request for a review shall be
in writing and shall be addressed to:

Eloxx Pharmaceuticals, Inc.
Board of Directors
950 Winter Street
Waltham, Massachusetts 02451
(781) 577-5300

A request for review must set forth all of the grounds on which it is based, all
facts in support of the request and any other matters that the applicant feels
are pertinent. The applicant (or his or her representative) shall have the
opportunity to submit (or the Plan Administrator may require the applicant to
submit) written comments, documents, records, and other information relating to
his or her claim. The applicant (or his or her representative) shall be
provided, upon request and free of charge, reasonable access to, and copies of,
all documents, records and other information relevant to his or her claim. The
review shall take into account all comments, documents, records and other
information submitted by the applicant (or his or her representative) relating
to the claim, without regard to whether such information was submitted or
considered in the initial benefit determination.

(d)Decision on Review. The Plan Administrator will act on each request for
review within sixty (60) days after receipt of the request, unless special
circumstances require an extension of time (not to exceed an additional sixty
(60) days), for processing the request for a review. If an extension for review
is required, written notice of the extension will be furnished to the applicant
within the initial sixty (60) day period. This notice of extension will describe
the special circumstances necessitating the additional time and the date by
which the Plan Administrator is to render its decision on the review. The Plan
Administrator will give prompt, written or electronic notice of its decision to
the applicant. Any electronic notice will comply with the regulations of the
U.S. Department of Labor. In the event that the Plan Administrator confirms the
denial of the application for benefits in whole or in part, the notice will set
forth, in a manner calculated to be understood by the applicant, the following:

(1)the specific reason or reasons for the denial;

(2)references to the specific Plan provisions upon which the denial is based;

(3)a statement that the applicant is entitled to receive, upon request and free
of charge, reasonable access to, and copies of, all documents, records and other
information relevant to his or her claim; and

(4)a statement of the applicant’s right to bring a civil action under Section
502(a) of ERISA.

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(e)Rules and Procedures. The Plan Administrator will establish rules and
procedures, consistent with the Plan and with ERISA, as necessary and
appropriate in carrying out its responsibilities in reviewing benefit claims.
The Plan Administrator may require an applicant who wishes to submit additional
information in connection with an appeal from the denial of benefits to do so at
the applicant’s own expense.

(f)Exhaustion of Remedies. No legal action for benefits under the Plan may be
brought until the applicant (i) has submitted a written application for benefits
in accordance with the procedures described by Section 10(a) above, (ii) has
been notified by the Plan Administrator that the application is denied, (iii)
has filed a written request for a review of the application in accordance with
the appeal procedure described in Section 10(c) above, and (iv) has been
notified that the Plan Administrator has denied the appeal. Notwithstanding the
foregoing, if the Plan Administrator does not respond to an Participant’s claim
or appeal within the relevant time limits specified in this Section 10, the
Participant may bring legal action for benefits under the Plan pursuant to
Section 502(a) of ERISA. In addition, no lawsuit may be commenced more than two
(2) years after the date on which the Plan Administrator renders a decision
denying the applicant’s benefit upon review under Section 10(a) (or the date the
cause of action first arose, if earlier).

Section 11.Basis of Payments to and From Plan.

The Plan shall be unfunded, and all cash payments under the Plan shall be paid
only from the general assets of the Company.

Section 12.Other Plan Information.

(a)Employer and Plan Identification Numbers. The Employer Identification Number
assigned to the Company (which is the “Plan Sponsor” as that term is used in
ERISA) by the Internal Revenue Service is 84-1368850. The Plan Number assigned
to the Plan by the Plan Sponsor pursuant to the instructions of the Internal
Revenue Service is 501-002.

(b)Ending Date for Plan’s Fiscal Year. The date of the end of the fiscal year
for the purpose of maintaining the Plan’s records is December 31.

(c)Agent for the Service of Legal Process. The agent for the service of legal
process with respect to the Plan is:

Eloxx Pharmaceuticals, Inc.
General Counsel
950 Winter Street
Waltham, Massachusetts 02451

In addition, service of legal process may be made upon the Plan Administrator.

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(d)Plan Sponsor. The “Plan Sponsor” is:

Eloxx Pharmaceuticals, Inc.
950 Winter Street
Waltham, Massachusetts 02451
(781) 577-5300

(e)Plan Administrator. The Plan Administrator is the Board (or a duly appointed
committee thereof). The Plan Administrator’s contact information is:

Eloxx Pharmaceuticals, Inc.
Board of Directors – CIC Plan Administrator
950 Winter Street
Waltham, Massachusetts 02451
(781) 577-5300

The Plan Administrator is the named fiduciary charged with the responsibility
for administering the Plan.

 

Section 13.Statement of ERISA Rights.

Participants in this Plan (which is a welfare benefit plan sponsored by Eloxx
Pharmaceuticals, Inc.) are entitled to certain rights and protections under
ERISA. If you are an Eligible Employee, you are considered a Participant in the
Plan and, under ERISA, you are entitled to:

(a)Receive Information About Your Plan and Benefits.

(1)Examine, without charge, at the Plan Administrator’s office and at other
specified locations, such as worksites, all documents governing the Plan and a
copy of the latest annual report (Form 5500 Series), if applicable, filed by the
Plan with the U.S. Department of Labor and available at the Public Disclosure
Room of the Employee Benefits Security Administration;

(2)Obtain, upon written request to the Plan Administrator, copies of documents
governing the operation of the Plan and copies of the latest annual report (Form
5500 Series), if applicable, and an updated (as necessary) Summary Plan
Description. The Administrator may make a reasonable charge for the copies; and

(3)Receive a summary of the Plan’s annual financial report, if applicable. The
Plan Administrator is required by law to furnish each Participant with a copy of
this summary annual report.

(b)Prudent Actions by Plan Fiduciaries. In addition to creating rights for Plan
Participants, ERISA imposes duties upon the people who are responsible for the
operation of the employee benefit plan. The people who operate the Plan, called
“fiduciaries” of the Plan, have a duty to do so prudently and in the interest of
you and other Participants and beneficiaries. No one, including your employer,
your union or any other person, may fire you or otherwise discriminate against
you in any way to prevent you from obtaining a Plan benefit or exercising your
rights under ERISA.

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(c)Enforce Your Rights. If your claim for a Plan benefit is denied or ignored,
in whole or in part, you have a right to know why this was done, to obtain
copies of documents relating to the decision without charge, and to appeal any
denial, all within certain time schedules.

Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request a copy of Plan documents or the latest annual report
from the Plan, if applicable, and do not receive them within thirty (30) days,
you may file suit in a Federal court. In such a case, the court may require the
Plan Administrator to provide the materials and pay you up to $110 a day until
you receive the materials, unless the materials were not sent because of reasons
beyond the control of the Plan Administrator.

If you have a claim for benefits which is denied or ignored, in whole or in
part, you may file suit in a state or Federal court; provided that, no lawsuit
may be commenced more than two (2) years after the date on which the Plan
Administrator renders a decision denying your benefit upon review under Section
10(a) (or the date the cause of action first arose, if earlier).

If you are discriminated against for asserting your rights, you may seek
assistance from the U.S. Department of Labor, or you may file suit in a Federal
court. The court will decide who should pay court costs and legal fees. If you
are successful, the court may order the person you have sued to pay these costs
and fees. If you lose, the court may order you to pay these costs and fees, for
example, if it finds your claim is frivolous.

(d)Assistance with Your Questions. If you have any questions about the Plan, you
should contact the Plan Administrator. If you have any questions about this
statement or about your rights under ERISA, or if you need assistance in
obtaining documents from the Plan Administrator, you should contact the nearest
office of the Employee Benefits Security Administration, U.S. Department of
Labor, listed in your telephone directory or the Division of Technical
Assistance and Inquiries, Employee Benefits Security Administration, U.S.
Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You
may also obtain certain publications about your rights and responsibilities
under ERISA by calling the publications hotline of the Employee Benefits
Security Administration.

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