Chairman and Consulting Agreement

This agreement (the “Agreement”), effective August 22, 2019 (the “Effective
Date”), between David Epstein, and Axcella Health Inc. (the “Company”) (each, a
“Party” and together the “Parties”) and sets the terms of and compensation for
Mr. Epstein’s position as Chairman of the Company’s Board of Directors
(“Chairman”) and additional consulting services.
 
1.                                    Chair Position and Compensation.  You will
serve as Chairman, in which capacity you will undertake a strategic leadership
role for the Company and provide guidance and oversight for the chief executive
officer of the Company, who will have responsibility for the Company’s
day-to-day operations.  As Chairman, you are a non-employee director of the
Company.  As the Company’s Chairman, you will report to and serve at the
pleasure of the Company’s Board of Directors (the “Board”). The Board will
review and approve your compensation for your services in the role of Chair of
the Board, taking into account market information from the Company’s independent
compensation consultants.
 
2.                                     Consulting Services and Compensation. In
addition to your duties as Chairman, the Company hereby engages you for
consulting services in connection with various Company activities including,
strategic initiatives, financings, investor relations, business development
efforts and support with attraction of talent and recruitment of senior
management roles at the Company (“Consulting Services”). For your Consulting
Services, the Company shall pay annually to Remedii LLC, a limited liability
company for which you are the Managing Member, a base retainer at the rate of
$300,000 (“Consulting Retainer”) and, subject to approval of terms by the Board
annually, will issue you an option to purchase 65,000 shares of the Company’s
common stock with an exercise price equal to the closing price of the Company’s
common stock on Nasdaq Global Market on the date the Board approves and grants
this option (the “Consulting Options”). For services performed in 2019, as soon
as practicable after the Effective Date, the Company shall pay an installment of
$150,000 and the rest of the 2019 Consulting Retainer shall be paid in two equal
installments payable on the last day business day of the third and fourth
calendar quarters of 2019. Fifty percent of the Consulting Options granted in
2019 shall be fully vested on the day it is granted by the Board and the
remainder shall vest in equal monthly installments thereafter so that the
Consulting Options granted in 2019 shall be fully vested within one year of the
grant date. Beginning in 2020 (i) the Consulting Retainer shall be paid in four
quarterly installments on the last business day of each calendar quarter and
(ii) the Consulting Option shall be granted during the first quarter of the
calendar year, with one-twelfth of the Consulting Option vesting monthly so that
the Consulting Option is fully vested within one year of the grant date, subject
to you continuing to provide Consulting Services on each such vesting date. Your
Consulting Retainer and Consulting Option will be subject to periodic review and
adjustments at the Company’s discretion.
 
3.                                      Time Commitment; Non-Competition.  It is
understood and agreed that you will dedicate approximately 50 working days per
year to the Company in your role as Chair and for Consulting Services.  With
respect to your time during which you are not engaged with the Company, you
retain the right to provide services to other companies or entities; provided,
that during your engagement with the Company and for a period of one (1) year
after
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any termination of your status as Chairman or director, or of your Consulting
Services hereunder, for any reason, you may not provide services to any
business, commercial entity, or enterprise that competes with any business
developing or marketing amino acids for therapeutic or health purposes or that
competes directly or indirectly with the Company (“Competing Services”).  The
foregoing shall not prevent you from conducting academic research, teaching or
related non-commercial activity. Notwithstanding any other agreement with the
Company to the contrary, neither the Company nor any of its affiliates shall
have any ownership interest, license or other rights in respect to any work
product that you produce, create, develop or otherwise contribute to by reason
of your permitted service for any person other than the Company or any of its
affiliates, that does not relate to the business of the Company, or the products
or services being researched, developed, manufactured or sold by the Company,
result from services you provide to the Company, or result from the use of
premises or personal property (whether tangible or intangible) owned, leased or
contracted for by the Company. You understand that the restrictions contained in
this Agreement are necessary for the protection of the business and goodwill of
the Company and you consider them to be reasonable for such purpose. Any breach
of this Agreement is likely to cause the Company substantial and irrevocable
damage and therefore, in the event of such breach, the Company, in addition to
such other remedies which may be available, will be entitled to specific
performance and other injunctive relief, without the posting of a bond. You
further acknowledge that a court may render an award extending the one-year
restricted period as one of the remedies in the event of your violation of this
Agreement. If you violate this Agreement, in addition to all other remedies
available to the Company at law (including, without limitation, the Company’s
right to discontinue any payments you may receive pursuant to the Agreement), in
equity, and under contract, you agree that you are obligated to pay all the
Company’s costs of enforcement of this Agreement, including reasonable
attorneys’ fees and expenses.
 
4.                                      On-Site Presence.  It is understood
that, from time to time, your presence might be necessary on site at the
Company’s office in Massachusetts; however, it is agreed and understood that you
shall not be required to relocate to Massachusetts.  To the extent that you are
required to travel in the performance of your duties, you will be reimbursed for
the reasonable costs incurred in connection therewith, and shall be permitted to
fly business class or equivalent.
 
5.                                      Additional Terms applicable to
Consulting Options
 
You will be able to exercise each Consulting Options until the earlier of
(i) one year following the termination of the Consulting Services and (ii) the
expiration of the term of the applicable Consulting Option.  Notwithstanding the
foregoing, any outstanding Consulting Options shall terminate immediately in the
event that your services as Chairman are terminated for Cause.
 
(a)  Except as otherwise expressly provided herein, the terms of the Company’s
applicable equity incentive plan and each option agreement issued in connection
with the Consulting Options (such documents, together with the equity incentive
plan(s) and equity award agreements governing any other stock-based awards held
by you, the “Equity Documents”) shall apply to the Consulting Options.

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(b)  With respect to the Consulting Options, Cause shall be defined to mean
(A) your continuing failure (except where due to physical or mental incapacity)
to substantially perform your duties hereunder; (B) your willful misconduct,
malfeasance or gross neglect in the performance of your duties hereunder;
(C) your commission of a felony or a misdemeanor involving moral turpitude;
(D) your material breach of Section 2, 3 or 7 of this Agreement; or (E) your
failure to cooperate with a bona fide internal investigation or an investigation
by regulatory or law enforcement authorities, after being instructed by the
Company to cooperate, or the willful destruction or failure to preserve
documents or other materials known to be relevant to such investigation or the
inducement of others to fail to cooperate or to produce documents or other
materials in connection with such investigation.
 
6.                                      Independent Contractor; Termination of
Consulting Services. Your provision of Consulting Services under this Agreement
shall at all times be as an independent contractor, and nothing herein shall be
construed to create a partnership, joint venture, or employment/agency
relationship between you and the Company. Neither Party shall have any authority
to enter into agreements of any kind on behalf of the other Party and shall not
have the power or authority to bind or obligate the other Party in any manner to
any third party. Each Party agrees that it is not, and shall not represent
itself as, a partner, joint venturer, agent, employee, or general representative
of the other Party or to make any representations on the other Party’s behalf.
You shall not for any purpose be deemed an employee of the Company within the
meaning of any Federal or State income tax law, unemployment insurance law,
workers' compensation law or similar law. You and Remedii LLC shall have sole
responsibility for withholding and/or payment, on behalf of yourself, of all
federal, state, and local taxes or contributions imposed or required under
unemployment and workers compensation insurance, social security and income tax
laws and for the filing of all required tax forms. You agree that you shall not
be entitled to any benefits, coverages, or other privileges, including, without
limitation, workers compensation, unemployment, medical, pension, or other
employee welfare benefits and payments provided to the Company’s employees.

Your provision of Consulting Services may be terminated by either Party at any
time for any or no reason, upon written notice to the other Party.  In the event
of any such termination of the Consulting Services, the Company shall pay
Remedii LLC (i) the pro-rated Consulting Retainer through the date of your
termination and (ii) the amount of any documented expenses properly incurred by
you on behalf of the Company prior to any such termination and not yet
reimbursed.
 
7.                                      Confidential Information and Restricted
Activities.  By signing this Agreement, you represent that you have carefully
read and considered all the terms and conditions of this Agreement, including
the restraints imposed on you pursuant to the Company’s form confidential
information agreement (the “Confidentiality Agreement”) attached as Exhibit 1,
the terms of which are incorporated by reference herein.  You agree without
reservation that these restraints are necessary for the reasonable and proper
protection of the Company and its affiliates, and that each and every one of the
restraints is reasonable in respect to subject matter, length of time and
geographic area.  For avoidance of doubt, nothing in this Agreement shall be
interpreted or applied to prohibit you from making any good faith report to
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any governmental agency or other governmental entity concerning any act or
omission that you reasonably believe constitutes a possible violation of federal
or state law or making other disclosures that are protected under the
anti-retaliation or whistleblower provisions of applicable federal or state law
or regulation.  In addition, for the avoidance of doubt, pursuant to the federal
Defend Trade Secrets Act of 2016, you shall not be held criminally or civilly
liable under any federal or state trade secret law for the disclosure of a trade
secret that (i) is made (A) in confidence to a federal, state or local
government official, either directly or indirectly, or to an attorney and
(B) solely for the purpose of reporting or investigating a suspected violation
of law; or (ii) is made in a complaint or other document filed in a lawsuit or
other proceeding, if such filing is made under seal.
 
8.                                      Taxes.  You hereby acknowledge that the
Company does not have a duty to design its compensation policies in a manner
that minimizes your tax liabilities, and you will not make any claim against the
Company or the Board related to tax liabilities arising from your compensation.
 
9.                                      Interpretation, Amendment and
Enforcement.  This Agreement, including the Confidentiality Agreement and the
Equity Documents, constitutes the complete agreement between you and the
Company, contains all of the terms of your relationship with the Company and
supersedes any prior agreements, representations or understandings (whether
written, oral or implied) between you and the Company.  The terms of this
Agreement and the resolution of any disputes as to the meaning, effect,
performance or validity of this Agreement or arising out of, related to, or in
any way connected with this Agreement, your relationship with the Company (the
“Disputes”) will be governed by Florida law, excluding laws relating to
conflicts or choice of law.  You and the Company submit to the exclusive
personal jurisdiction of the federal and state courts located in the State of
Florida in connection with any Dispute or any claim related to any Dispute.
 
10.                               Assignment.  Neither you nor the Company may
make any assignment of this Agreement or any interest in it, by operation of law
or otherwise, without the prior written consent of the other; provided, however,
that the Company may assign its rights and obligations under this Agreement
(including the Confidentiality Agreement) without your consent to any affiliate
or to any person or entity with whom the Company shall hereafter effect a
reorganization, consolidate with, or merge into or to whom it transfers all or
substantially all of its properties or assets.  This Agreement shall inure to
the benefit of and be binding upon you and the Company, and each of your and its
respective successors, executors, administrators, heirs and permitted assigns.
 
11.                               Miscellaneous.  This Agreement may not be
modified or amended, and no breach shall be deemed to be waived, unless agreed
to in writing by you and a Board member of the Company.  The headings and
captions in this Agreement are for convenience only and in no way define or
describe the scope or content of any provision of this Agreement.  The words
“include,” “includes” and “including” when used herein shall be deemed in each
case to be followed by the words “without limitation.”  This Agreement may be
executed in two or more
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counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument.
 
12.                               Other Terms.  By signing this Agreement, you
represent to the Company that, except as referenced in Section 3 hereof, you
have no contractual commitments or other legal obligations that would or may
prohibit you from performing your duties for the Company.  With respect to your
services for the Company, you shall be entitled to be indemnified in accordance
with any indemnification policies established by the Company for the benefit of
officers and directors of the Company, including being eligible for coverage
under any director and officer liability insurance policies that the Company may
have in effect from time to time, on the same terms as apply to the Company’s
other officers and directors.
 

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Please acknowledge, by signing below, that you have accepted this amended and
restated Agreement.
 

 Very truly yours,     By:
/s/ William Hinshaw
William Hinshaw

Chief Executive Officer
Date:August 22, 2019

 
I have read and accept this Chairman and Consulting Agreement on behalf of
myself and in my capacity as the Managing Member of Remedii LLC:
 
/s/ David Epstein
 
August 22, 2019
David Epstein Datec/o Axcella Health Inc.  
840 Memorial Drive
Cambridge MA 02139
  

 

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