Exhibit 10.2

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is entered into by and
between ArTara Therapeutics, Inc. (the “Company”), and Jesse Shefferman
(“Executive”) (collectively referred to as the “Parties” or individually
referred to as a “Party”).

 

R E C I T A L S

 

WHEREAS, the Company, Proteon Therapeutics, Inc., and REM 1 Acquisition, Inc.
have entered into that certain Agreement and Plan of Merger and Reorganization
(as amended, modified, or supplemented from time to time in accordance with its
terms, the “Merger Agreement”). The effective date of this Agreement will be the
date upon which the Parties fully execute this Agreement (the “Effective Date”).
If the anticipated transactions contemplated in the Merger Agreement are not
consummated, then this Agreement will have no effect, will not be binding on the
Company (or any of its affiliates) or on Executive, shall terminate as of the
termination of the Merger Agreement, and neither Executive nor the Company (or
any of its affiliates) shall have rights or obligations hereunder;

 

WHEREAS, subject to the foregoing, the Company desires to employ Executive as
its Chief Executive Officer, and to enter into an agreement embodying the terms
of such employment; the Company desires for Executive to serve as a member of
its Board of Directors during the Employment Term; and Executive desires to
accept such employment and enter into such an agreement.

 

A G R E E M E N T

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein and
for other good and valuable consideration, the Parties agree as follows:

 

1.            Duties and Scope of Employment.

 

(a) Positions and Duties. As of the Effective Date, Executive will serve as
Chief Executive Officer of the Company. Executive will render such business and
professional services in the performance of Executive’s duties, consistent with
Executive's position within the Company, as shall reasonably be assigned to
Executive by the Company’s Board of Directors (the “Board”). The period of
Executive’s at-will employment under the terms of this Agreement is referred to
herein as the “Employment Term.”

 

(b) Board Membership. During the Employment Term, Executive will serve as a
member of the Board, subject to any required Board and/or stockholder approval.

 

(c) Obligations. During the Employment Term, Executive will perform Executive’s
duties faithfully and to the best of Executive’s ability and will devote
Executive’s full business efforts and time to the Company. For the duration of
the Employment Term, Executive agrees not to actively engage in any other
employment, occupation or consulting activity for any direct or indirect
remuneration without the prior approval of the Company’s Board.

 

2.            At-Will Employment. Subject to Sections 7, 8, and 9 below, the
parties agree that Executive's employment with the Company will be “at-will”
employment and may be terminated at any time with or without cause or notice,
for any reason or no reason. Executive understands and agrees that neither
Executive’s job performance nor promotions, commendations, bonuses or the like
from the Company give rise to or in any way serve as the basis for modification,
amendment, or extension, by implication or otherwise, of Executive’s employment
with the Company.

 

 

 

 

3.            Compensation.

 

(a) Base Salary. During the Employment Term prior to the Closing (as defined in
the Merger Agreement), the Company will pay Executive as compensation for
Executive’s services a base salary at a rate of $365,000 per year, as modified
from time to time at the discretion of the Board or a duly constituted committee
of the Board (the “Base Salary”). During the Employment Term on and after the
Closing Date, the Base Salary will increase to a rate of $510,000 per year, as
modified from time to time at the discretion of the Board or a duly constituted
committee of the Board (the “Base Salary”). The Base Salary will be paid in
regular installments in accordance with the Company’s normal payroll practices
(subject to required withholding). Any increase in Base Salary (together with
the then existing Base Salary) shall serve as the “Base Salary” for future
employment under this Agreement. The first and last payment will be adjusted, if
necessary, to reflect a commencement or termination date other than the first or
last working day of a pay period.

 

(b) Annual Bonus. During the Employment Term prior to the Closing (as defined in
the Merger Agreement), Executive will be eligible to earn an annual
discretionary bonus with a target amount equal to 35% of the Base Salary. During
the Employment Term on and after the Closing Date, the target amount will
increase to 50% of the Base Salary. The amount of this bonus, if any, will be
determined in the sole discretion of the Board and based on the performance of
the Company during the calendar year. The Company will pay Executive this bonus,
if any, on or about February 1st of the following calendar year. The bonus is
not earned until paid and no pro-rated amount will be paid if Executive’s
employment terminates for any reason prior to the payment date.

 

(c) Special Bonus: Pursuant to terms agreed to by the Board of Directors at the
March 5, 2019 Board meeting, Executive will receive a special bonus of
$100,000.00, less applicable withholdings, upon successful close of a capital
raise totaling $20,000,000 in new capital in ArTara

 

(d) Equity. As of the Closing Date, it will be recommended to the Board that the
Company grants Executive an option to purchase the greater of 222,500 shares or
the number of shares equal to 9.0% of the Company’s fully-diluted, pro-forma
shares on an as-converted basis giving consideration to the anticipated reverse
split and adjustments to exchange ratio and closing cash, of the Company’s
common stock at the fair market value as determined by the Board as of the date
of grant (the “Option”). To be eligible, Executive must still be employed by the
Company when the Board grants the Option. It is intended that the Option shall,
to the extent it so qualifies, be an incentive stock option as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and
any regulations promulgated thereunder. Subject to the accelerated vesting
provisions set forth herein, the Option will vest as to 25% of the shares
subject to the Option one year after the date of grant, and as to 1/48th of the
shares subject to the Option monthly thereafter, so that the Option will be
fully vested and exercisable four (4) years from the date of grant, subject to
Executive’s Continuous Service Status (as defined in the Plan) to the Company
through the relevant vesting dates. The Option will be subject to the terms,
definitions and provisions of the Proteon Therapeutics, Inc. Amended and
Restated 2014 Equity Incentive Plan or any successor plan of the Company (the
“Option Plan”) and the stock option agreement by and between Executive and the
Company (the “Option Agreement”), both of which documents are incorporated
herein by reference.

 

(i)       Executive will be eligible to receive awards of stock options,
restricted stock or other equity awards pursuant to any plans or arrangements
the Company may have in effect from time to time. The Board or a committee of
the Board shall determine in its discretion whether Executive shall be granted
any such equity awards and the terms of any such award in accordance with the
terms of any applicable plan or arrangement that may be in effect from time to
time.

 

4.            Employee Benefits. During the Employment Term, Executive will be
eligible to participate in the employee benefit plans currently and hereafter
maintained by the Company of general applicability to other senior executives of
the Company, including, without limitation, the Company’s group medical, dental,
vision, disability, life insurance, and flexible-spending account plans. The
Company reserves the right to cancel or change the benefit plans and programs it
offers to its employees at any time.

 

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5.            Business Expenses. During the Employment Term, the Company will
reimburse Executive for reasonable business travel, entertainment or other
business expenses incurred by Executive in the furtherance of or in connection
with the performance of Executive’s duties hereunder, in accordance with the
Company’s expense reimbursement policy as in effect from time to time.

 

6.            Termination on Death or Disability.

 

(a) Effectiveness. Executive’s employment will terminate automatically upon
Executive’s Death or, upon fourteen (14) days prior written notice from the
Company, in the event of Disability.

 

(b) Effect of Termination. Upon any termination for death or Disability,
Executive or his dependents shall be entitled to: (i) Executive’s Base Salary
through the effective date of termination; (ii) the right to continue health
care benefits under Title X of the Consolidated Budget Reconciliation Act of
1985, as amended (“COBRA”), at the Company’s expense for a period of six (6)
months (for the benefit of his estate to obtain alternative benefits coverage
and to the extent required and available by law); (iii) reimbursement of
expenses for which Executive is entitled to be reimbursed pursuant to Section 5
above, but for which Executive has not yet been reimbursed; and (iv) no other
severance or benefits of any kind, unless required by law or pursuant to any
other written Company plans or policies, as then in effect.

 

7.            Involuntary Termination for Cause; Resignation Without Good
Reason.

 

(a) Effectiveness. Notwithstanding any other provision of this Agreement, the
Company may terminate Executive’s employment at any time for Cause or Executive
may resign from Executive’s employment with the Company at any time without Good
Reason. Termination for Cause, or Executive’s resignation without Good Reason,
shall be effective on the date either Party gives notice to the other Party of
such termination in accordance with this Agreement unless otherwise agreed by
the Parties. In the event that the Company accelerates the effective date of a
resignation, such acceleration shall not be construed as a termination of
Executives employment by the Company or deemed Good Reason for such resignation.

 

(b) Effect of Termination. In the case of the Company’s termination of
Executive’s employment for Cause, or Executive’s resignation without Good
Reason, Executive shall be entitled to receive: (i) Base Salary through the
effective date of the termination or resignation, as applicable; (ii)
reimbursement of all business expenses for which Executive is entitled to be
reimbursed pursuant to Section 5 above, but for which Executive has not yet been
reimbursed; (iii) the right to continue health care benefits under COBRA, at
Executive’s cost, to the extent required and available by law; and (iv) no other
severance or benefits of any kind, unless required by law or pursuant to any
other written Company plans or policies, as then in effect.

 

8.            Involuntary Termination Without Cause; Resignation for Good
Reason.

 

(a) Effect of Termination. The Company shall be entitled to terminate Executive
with or without Cause at any time, subject to the following:

 

(i) If Executive is terminated by the Company involuntarily without Cause
(excluding any termination due to death or Disability) or Executive resigns for
Good Reason, then, subject to the limitations of Sections 8(b) and 25 below,
Executive shall be entitled to receive: (A) Executive’s Base Salary through the
effective date of the termination or resignation; (B) a lump sum severance pay
equal to eighteen (18) months of Executive’s Base Salary; (C) a lump sum payment
equal to 12 months of Executive’s bonus at 100% of target (D) reimbursement of
all business expenses for which Executive is entitled to be reimbursed pursuant
to Section 5 above, but for which Executive has not yet been reimbursed; (E)
reimbursement of COBRA premium costs paid by the Company for the same level of
coverage Executive had during employment for twelve (12) months; (F) pro-rata
vesting of any outstanding equity awards to the extent that Executive is not
employed through the one-year anniversary of the applicable grant date of such
outstanding equity awards; (G) any unused and accrued vacation; and (H) no other
severance or benefits of any kind, unless required by law or pursuant to any
written Company plans or policies, as then in effect.

 

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(b) Conditions Precedent. Any severance payments contemplated by Section 8(a)
above are conditional on Executive: (i) continuing to comply with the terms of
this Agreement and the Confidential Information Agreement; and (ii) signing and
not revoking a separation agreement and release of known and unknown claims in
the form provided by the Company (including nondisparagement and no cooperation
provisions) (the “Release”) and provided that such Release becomes effective and
irrevocable no later than sixty (60) days following the termination date or such
earlier date required by the release (such deadline, the “Release Deadline”). If
the Release does not become effective by the Release Deadline, Executive will
forfeit any rights to severance or benefits under this Section 8 or elsewhere in
this Agreement. Any severance payments or other benefits under this Agreement
that would be considered Deferred Compensation Separation Benefits (as defined
in Section 25) will be paid on, or, in the case of installments, will not
commence until, the sixtieth (60th) day following Executive’s separation from
service, or, if later, such time as required by Section 25(b). Except as
required by Section 25(b), any installment payments that would have been made to
Employee during the sixty (60) day period immediately following Executive’s
separation from service but for the preceding sentence will be paid to Executive
on the sixtieth (60th) day following Executive’s separation from service and the
remaining payments will be made as provided in this Agreement, unless subject to
the 6-month payment delay described herein. Any severance payments under this
Agreement that would not be considered Deferred Compensation Separation Benefits
will be paid on, or, in the case of installments, will not commence until, the
first payroll date that occurs on or after the date the Release becomes
effective and any installment payments that would have been made to Executive
during the period prior to the date the Release becomes effective following
Executive’s separation from service but for the preceding sentence will be paid
to Executive on the first payroll date that occurs on or after the date the
Release becomes effective. Notwithstanding the foregoing, this Section 8(b)
shall not limit Executive’s ability to obtain expense reimbursements under
Section 5 or any other compensation or benefits otherwise required by law or in
accordance with written Company plans or policies, as then in effect.

 

9.            Definitions.

 

(a) Cause. For purposes of this Agreement, “Cause” shall mean: (i) Executive’s
willful and continued failure to substantially perform the material duties and
obligations under this Agreement (for reasons other than death or Disability),
which failure, if curable within the discretion of the Company, is not cured to
the reasonable satisfaction of the Company within thirty (30) days after receipt
of written notice from the Company of such failure; (ii) Executive’s failure or
refusal to comply with the policies, standards and regulations established by
the Company from time to time which results in a material loss, damage or injury
directly to the Company, and, if curable in the discretion of the Company, is
not cured to the reasonable satisfaction of the Company within thirty (30) days
after receipt of written notice of such failure from the Company; (iii) any act
of personal dishonesty, fraud, embezzlement, misrepresentation, or other
unlawful act committed by Executive that benefits Executive at the expense of
the Company; (iv) the Executive’s violation of a federal or state law or
regulation applicable to the Company’s business; (v) the Executive’s violation
of, or a plea of nolo contendre or guilty to, a felony under the laws of the
United States or any state; or (vi) the Executive’s material breach of the terms
of this Agreement or the Confidential Information Agreement (defined below).

 

(b) Change in Control. For purposes of this Agreement, “Change in Control” shall
have the meaning attributed to such term in the Option Plan but shall not
include the transaction contemplated by the Merger Agreement.

 

 -4- 

 

 

(c) Disability. For purposes of this Agreement, “Disability” means that
Executive, at the time notice is given, has been unable to substantially perform
Executive’s duties under this Agreement for not less than one-hundred and twenty
(120) work days within a twelve (12) consecutive month period as a result of
Executive’s incapacity due to a physical or mental condition and, if reasonable
accommodation is required by law, after any reasonable accommodation.

 

(d) Good Reason. For purposes of this Agreement, “Good Reason” means Executive’s
written notice of Executive’s intent to resign for Good Reason with a reasonable
description of the grounds therefor within 10 days after the occurrence of one
or more of the following without Executive’s consent, and subsequent resignation
within 30 days following the expiration of any Company cure period (discussed
below): (i) a material reduction of Executive’s duties, position or
responsibilities; (ii) a material reduction in Executive’s Base Salary (other
than a reduction of not more than 10% that is applicable to similarly situated
executives of the Company); (iii) a material breach of this Agreement by the
Company; or (iv) a material change in the geographic location of Executive’s
primary work facility or location; provided, that a relocation of less than 50
miles from Executive’s then present location will not be considered a material
change in geographic location. Executive will not resign for Good Reason without
first providing the Company with written notice of the acts or omissions
constituting the grounds for “Good Reason” within 30 days of the initial
existence of the grounds for “Good Reason” and a reasonable cure period of not
less than 30 days following the date of such notice if such act or omission is
capable of cure.

 

10.           Acceleration of Options; Change in Control. If within twelve (12)
months following a Change in Control (as defined above) the Company or the
successor corporation terminates Executive’s employment with the Company or
successor corporation for other than Cause, death or Disability, then Executive
shall be entitled to acceleration of 100% of Executive’s then-unvested and
outstanding equity awards.

 

11.          Company Matters.

 

(a) Proprietary Information and Inventions. In connection with Executive’s
employment with the Company, Executive will receive and have access to Company
confidential information and trade secrets. Accordingly, enclosed with this
Agreement is an Employee Confidential Information and Inventions Assignment
Agreement (the “Confidential Information Agreement”) which contains restrictive
covenants and prohibits unauthorized use or disclosure of the Company’s
confidential information and trade secrets, among other obligations. Executive
agrees to review the Confidential Information Agreement and only sign it after
careful consideration.

 

(b) Resignation on Termination. On termination of Executive’s employment,
regardless of the reason for such termination, Executive shall immediately (and
with contemporaneous effect) resign any directorships, offices or other
positions that Executive may hold in the Company or any affiliate, unless
otherwise agreed in writing by the Parties.

 

(c) Notification of New Employer. In the event that Executive leaves the employ
of the Company, Executive grants consent to notification by the Company to
Executive’s new employer about Executive’s rights and obligations under this
Agreement and the Confidential Information Agreement.

  

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12.          Arbitration. To ensure the timely and economical resolution of
disputes that may arise in connection with Executive’s employment with the
Company, Executive and the Company agree that any and all disputes, claims, or
causes of action arising from or relating to the enforcement, breach,
performance, negotiation, execution, or interpretation of this Agreement,
Confidential Information Agreement, or Executive’s employment, or the
termination of Executive’s employment, including but not limited to all
statutory claims, will be resolved pursuant to the Federal Arbitration Act, 9
U.S.C. §1-16, and to the fullest extent permitted by law, by final, binding and
confidential arbitration by a single arbitrator conducted in New York, New York
by Judicial Arbitration and Mediation Services Inc. (“JAMS”) under the then
applicable JAMS rules (at the following web address:
https://www.jamsadr.com/rules-employment-arbitration/); provided, however, this
arbitration provision shall not apply to sexual harassment claims to the extent
prohibited by applicable law. A hard copy of the rules will be provided to
Executive upon request. A hard copy of the rules will be provided to Executive
upon request. By agreeing to this arbitration procedure, both Executive and the
Company waive the right to resolve any such dispute through a trial by jury or
judge or administrative proceeding. In addition, all claims, disputes, or causes
of action under this Section, whether by Executive or the Company, must be
brought in an individual capacity, and shall not be brought as a plaintiff (or
claimant) or class member in any purported class or representative proceeding,
nor joined or consolidated with the claims of any other person or entity. The
Arbitrator may not consolidate the claims of more than one person or entity, and
may not preside over any form of representative or class proceeding. To the
extent that the preceding sentences regarding class claims or proceedings are
found to violate applicable law or are otherwise found unenforceable, any
claim(s) alleged or brought on behalf of a class shall proceed in a court of law
rather than by arbitration. The Company acknowledges that Executive will have
the right to be represented by legal counsel at any arbitration proceeding.
Questions of whether a claim is subject to arbitration under this Agreement)
shall be decided by the arbitrator. Likewise, procedural questions which grow
out of the dispute and bear on the final disposition are also matters for the
arbitrator. The arbitrator shall: (a) have the authority to compel adequate
discovery for the resolution of the dispute and to award such relief as would
otherwise be permitted by law; (b) issue a written arbitration decision, to
include the arbitrator’s essential findings and conclusions and a statement of
the award; and (c) be authorized to award any or all remedies that Executive or
the Company would be entitled to seek in a court of law. Executive and the
Company shall equally share all JAMS’ arbitration fees. Except as modified in
the Confidential Information Agreement, each party is responsible for its own
attorneys’ fees. Nothing in this Agreement is intended to prevent either
Executive or the Company from obtaining injunctive relief in court to prevent
irreparable harm pending the conclusion of any such arbitration. Any awards or
orders in such arbitrations may be entered and enforced as judgments in the
federal and state courts of any competent jurisdiction. To the extent applicable
law prohibits mandatory arbitration of sexual harassment claims, in the event
Executive intend to bring multiple claims, including a sexual harassment claim,
the sexual harassment may be publicly filed with a court, while any other claims
will remain subject to mandatory arbitration.

 

13.           Assignment. This Agreement will be binding upon and inure to the
benefit of (a) the heirs, executors and legal representatives of Executive upon
Executive's death and (b) any successor of the Company. Any such successor of
the Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes. For this purpose, “successor” means any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of the rights
of Executive to receive any form of compensation payable pursuant to this
Agreement may be assigned or transferred except by will or the laws of descent
and distribution. Any other attempted assignment, transfer, conveyance or other
disposition of Executive’s right to compensation or other benefits will be null
and void.

 

14.           Notices. All notices, requests, demands and other communications
called for under this Agreement shall be in writing and shall be delivered via
e-mail, personally by hand or by courier, mailed by United States first-class
mail, postage prepaid, or sent by facsimile directed to the Party to be notified
at the address or facsimile number indicated for such Party on the signature
page to this Agreement, or at such other address or facsimile number as such
Party may designate by ten (10) days’ advance written notice to the other
Parties hereto. All such notices and other communications shall be deemed given
upon personal delivery, three (3) days after the date of mailing, or upon
confirmation of facsimile transfer or e- mail. Notices sent via e-mail under
this Section shall be sent to either the e-mail address in this Agreement, or
for e-mails sent by the Company to Executive, to the last e-mail address on file
with the Company.

 

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15.           Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement will continue in full force and effect without said
provision.

 

16.           Integration. This Agreement, together with the Option Plan, Option
Agreement, and the Confidential Information Agreement represents the entire
agreement and understanding between the parties as to the subject matter herein
and supersedes all prior or contemporaneous agreements whether written or oral.
No waiver, alteration, or modification of any of the provisions of this
Agreement will be binding unless in writing and signed by duly authorized
representatives of the parties hereto.

 

17.           Tax Withholding. All payments made pursuant to this Agreement will
be subject to withholding of applicable taxes.

 

18.           Waiver. No Party shall be deemed to have waived any right, power
or privilege under this Agreement or any provisions hereof unless such waiver
shall have been duly executed in writing and acknowledged by the Party to be
charged with such waiver. The failure of any Party at any time to insist on
performance of any of the provisions of this Agreement shall in no way be
construed to be a waiver of such provisions, nor in any way to affect the
validity of this Agreement or any part hereof. No waiver of any breach of this
Agreement shall be held to be a waiver of any other subsequent breach

 

19.           Governing Law. This Agreement will be governed by the laws of the
State of New York (with the exception of its conflict of laws provisions).

 

20.           Acknowledgment. Executive acknowledges that Executive has had the
opportunity to discuss this matter with and obtain advice from Executive’s legal
counsel, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.

 

21.           Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, and all such
counterparts shall constitute but one instrument.

 

22.           Effect of Headings. The section and subsection headings contained
herein are for convenience only and shall not affect the construction hereof.

 

23.           Construction of Agreement. This Agreement has been negotiated by
the respective Parties, and the language shall not be construed for or against
either Party.

 

24.           Parachute Payments. If any payment or benefit Executive would
receive from the Company or otherwise in connection with a Change in Control or
other similar transaction (a “280G 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 any such 280G Payment (a “Payment”) shall be equal to the
Reduced Amount. The “Reduced Amount” shall be either (x) the largest portion of
the Payment that would result in no portion of the Payment (after reduction)
being subject to the Excise Tax or (y) the largest portion, up to and including
the total, of the Payment, whichever amount (i.e., the amount determined by
clause (x) or by clause (y)), 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 Executive’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
a Payment is required pursuant to the preceding sentence and the Reduced Amount
is determined pursuant to clause (x) of the preceding sentence, the reduction
shall occur in the manner (the “Reduction Method”) that results in the greatest
economic benefit for Executive. If more than one method of reduction will result
in the same economic benefit, the items so reduced will be reduced pro rata (the
“Pro Rata Reduction Method”). Notwithstanding the foregoing, if the Reduction
Method or the Pro Rata Reduction Method would result in any portion of the
Payment being subject to taxes pursuant to Section 409A of the Code that would
not otherwise be subject to taxes pursuant to Section 409A of the Code, then the
Reduction Method and/or the Pro Rata Reduction Method, as the case may be, shall
be modified so as to avoid the imposition of taxes pursuant to Section 409A of
the Code as follows: (A) as a first priority, the modification shall preserve to
the greatest extent possible, the greatest economic benefit for Executive as
determined on an after-tax basis; (B) as a second priority, Payments that are
contingent on future events (e.g., being terminated without cause), shall be
reduced (or eliminated) before Payments that are not contingent on future
events; and (C) as a third priority, Payments that are “deferred compensation”
within the meaning of Section 409A of the Code shall be reduced (or eliminated)
before Payments that are not deferred compensation within the meaning of Section
409A of the Code.

 

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(a) Unless Executive 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 Change in Control transaction
triggering the Payment 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 Control transaction,
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. The Company shall use commercially reasonable efforts to cause the
accounting firm engaged to make the determinations hereunder to provide its
calculations, together with detailed supporting documentation, to Executive and
the Company within 15 calendar days after the date on which Executive’s right to
a 280G Payment becomes reasonably likely to occur (if requested at that time by
Executive or the Company) or such other time as requested by Executive or the
Company.

 

(b) If Executive receive a Payment for which the Reduced Amount was determined
pursuant to clause (x) of the first paragraph of this Section and the Internal
Revenue Service determines thereafter that some portion of the Payment is
subject to the Excise Tax, Executive shall promptly return to the Company a
sufficient amount of the Payment (after reduction pursuant to clause (x) of the
first paragraph of this Section so that no portion of the remaining Payment is
subject to the Excise Tax. For the avoidance of doubt, if the Reduced Amount was
determined pursuant to clause (y) in the first paragraph of this Section,
Executive shall have no obligation to return any portion of the Payment pursuant
to the preceding sentence.

 

25.          Section 409A.

 

(a) Notwithstanding anything to the contrary in this Agreement, no severance pay
or benefits to be paid or provided to Executive, if any, pursuant to this
Agreement, when considered together with any other severance payments or
separation benefits that are considered deferred compensation under Section 409A
(together, the “Deferred Compensation Separation Benefits”) will be paid or
otherwise provided until Executive has a “separation from service” within the
meaning of Section 409A.

 

(b) Notwithstanding anything to the contrary in this Agreement, if Executive is
a “specified employee” within the meaning of Section 409A at the time of
Executive’s termination (other than due to death), then the Deferred
Compensation Separation Benefits that are payable within the first six (6)
months following Executive’s separation from service, will become payable on the
first payroll date that occurs on or after the date six (6) months and one (1)
day following the date of Executive’s separation from service. All subsequent
Deferred Compensation Separation Benefits, if any, will be payable in accordance
with the payment schedule applicable to each payment or benefit. Notwithstanding
anything herein to the contrary, if Executive dies following Executive’s
separation from service, but prior to the six (6) month anniversary of the
separation from service, then any payments delayed in accordance with this
paragraph will be payable in a lump sum as soon as administratively practicable
after the date of Executive’s death and all other Deferred Compensation
Separation Benefits will be payable in accordance with the payment schedule
applicable to each payment or benefit. Each payment and benefit payable under
this Agreement is intended to constitute separate payments for purposes of
Section 1.409A-2(b)(2) of the Treasury Regulations.

 

 -8- 

 

  

(c) Any amount paid under this Agreement that satisfies the requirements of the
“short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury
Regulations will not constitute Deferred Compensation Separation Benefits for
purposes of clause (a) above.

 

(d) Any amount paid under this Agreement that qualifies as a payment made as a
result of an involuntary separation from service pursuant to Section
1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the Section
409A Limit will not constitute Deferred Compensation Separation Benefits for
purposes of clause (a) above. For purposes of this Agreement, “Section 409A
Limit” will mean the lesser of two (2) times: (i) Executive’s annualized
compensation based upon the annual rate of pay paid to Executive during the
Executive’s taxable year preceding Executive’s taxable year of Executive’s
termination of employment as determined under Treasury Regulation Section
1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with
respect thereto; or (ii) the maximum amount that may be taken into account under
a qualified plan pursuant to Section 401(a)(17) of the Code for the year in
which Executive’s employment is terminated.

 

(e) The foregoing provisions are intended to comply with the requirements of
Section 409A so that none of the severance payments and benefits to be provided
hereunder will be subject to the additional tax imposed under Section 409A, and
any ambiguities herein will be interpreted to so comply. The Company and
Executive agree to work together in good faith to consider amendments to this
Agreement and to take such reasonable actions which are necessary, appropriate
or desirable to avoid imposition of any additional tax or income recognition
prior to actual payment to Executive under Section 409A.

 

[Remainder of page is intentionally blank; Signature page follows]

 

 -9- 

 

 

IN WITNESS WHEREOF, each of the Parties has executed this Agreement as of the
day and year first above written.

 

  

  “COMPANY”         ArTara Therapeutics, Inc.         By: /s/ Luke Beshar      
  Title: ArTara Chairperson               “EXECUTIVE”         Jesse Shefferman  
      /s/ Jesse Shefferman   Executive Name

 

Enclosures

Duplicate Executive Employment Agreement

Employee Confidential Information and Inventions Assignment Agreement

New York Wage Notice Form (LS 59)

New York City Pregnancy Notice

New York City Earned Safe and Sick Time Act – Notice of Rights

New York City Notice Regarding Sexual Harassment

 

 

ARTARA THERAPEUTICS, INC.

EXECUTIVE EMPLOYMENT AGREEMENT

SIGNATURE PAGE

 

 -10- 

 

 

ARTARA THERAPEUTICS, INC.

 

 

December 4, 2019

 

 

Jesse Shefferman

c/o ArTara Therapeutics, Inc.

1 Little West 12th Street

New York, NY 10014

 

Re: Amendment to Employment Agreement

 

Dear Jesse:

 

Reference is hereby made to the Executive Employment Agreement (the
“Agreement”), dated November 5, 2019, by and between you and ArTara
Therapeutics, Inc. (the “Company”). The purpose of this letter is to clarify the
intent of certain sections of the Agreement.

 

Section 3(c) of the Agreement is hereby deleted and replaced with the following:

 

“(c) Special Bonus. Pursuant to terms agreed to by the Board of Directors at its
March 5, 2019 Board meeting, Executive shall be entitled to receive a special
bonus of $100,000.00, less applicable withholdings, upon successful close of a
capital raise totaling $20,000,000.00 in new capital in the Company (which, for
clarity, shall include both the pre-Merger Company and the surviving corporation
in the Merger).”

 

The first sentence of Section 3(d) of the Agreement is hereby deleted and
replaced with the following:

 

“(d) Equity. As of the Closing (as defined in the Merger Agreement), it will be
recommended to the Board of Directors of the Company (which, for clarity, shall
be the surviving corporation in the Merger) that the Company grant to Executive
an option to purchase a number of shares of the Company’s (which, for clarity,
shall be the surviving corporation in the Merger) Common Stock equal to the
greater of (x) 222,500 shares or (y) such number of shares of Common Stock, such
that, following the grant, Executive shall hold an aggregate number of shares
(directly or indirectly, and including shares subject to outstanding stock
options and other equity compensation awards then outstanding) equal to 9.0% of
the Company’s fully-diluted shares, measured as of immediately following the
Closing and after giving consideration to any stock splits and adjustments made
in connection with the Merger, in either case, at the fair market value as
determined by the Board as of the date of grant (the “Option”).”

 

 

 

 

Except as otherwise set forth in this letter, the Agreement shall remain in full
force and effect in accordance with its terms and conditions. This letter
constitutes the entire agreement between you and the Company regarding the
subject matter hereof and supersedes all prior negotiations, representations or
agreements, whether written or oral, concerning the clarification of the
Agreement described herein.

 

 

 

 

Please execute this letter where indicated below to confirm such amendment to
and clarification of the Agreement as described in this letter.

 

 

 Best regards,       ARTARA THERAPEUTICS, INC.            By: /s/ Luke Beshar  
Name: Luke Beshar    Title: Director

 

 

Agreed and Accepted:           /s/ Jesse Shefferman   Jesse Shefferman          
December 4, 2019   Date: