Exhibit 10.12

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of September 25,
2018, by and between Ruben Tommasi (“Executive”) and Entasis Therapeutics
Holdings Inc. (the “Company”), and which shall become effective upon the
effectiveness of the registration statement for the Company’s initial public
offering (the “Effective Date”).

Executive previously entered into an Offer Letter with the Company effective as
of May 11,  2015, as amended on August 28, 2017 (the “Prior Agreement”);

The parties desire to amend, restate and replace the Prior Agreement;

The Company desires to continue to employ Executive and, in connection with such
employment, to compensate Executive for Executive’s personal services to the
Company; and

Executive desires to continue to be employed by the Company and to provide
personal services to the Company in return for certain compensation.

Accordingly, in consideration of the mutual promises and covenants contained
herein, the parties agree to the following:

1.         EMPLOYMENT BY THE COMPANY.

1.1       At-Will Employment.  Executive will continue to be employed by the
Company on an “at-will” basis, meaning either the Company or Executive may
terminate Executive’s employment at any time, with or without cause or advanced
notice.  Any contrary representations that may have been made to Executive are
superseded by this Agreement.  This Agreement is the full and complete agreement
between Executive and the Company on the “at-will” nature of Executive’s
employment with the Company, which may be changed only in an express written
agreement signed by Executive and a duly authorized officer of the
Company.  Executive’s rights to any compensation following a termination are
only as set forth in Section 6.

 

1.2       Position.  Subject to the terms of this Agreement, the Company agrees
to continue to employ Executive, as Chief Scientific Officer, and Executive
hereby accepts such continued employment.  During the term of Executive’s
employment with the Company, Executive will devote Executive’s best efforts and
substantially all of Executive’s business time and attention to the business of
the Company.

1.3       Duties.  As Chief Scientific Officer, Executive will report to the
Chief Executive Officer (the “CEO”) performing such duties as are normally
associated with Executive’s position and such duties as are assigned to
Executive from time to time by the CEO, subject to the oversight and direction
of the CEO.  Executive will perform Executive’s duties under this Agreement
principally out of the Company’s corporate headquarters.  In addition, Executive
will make such business trips to such places as may be necessary or advisable
for the efficient operations of the Company.

1.4       Company Policies and Benefits.  The employment relationship between
the parties is also subject to the Company’s personnel and compliance policies
and procedures as

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they may be interpreted, adopted, revised or deleted from time to time in the
Company’s sole discretion.  Executive will continue to be eligible to
participate on the same basis as similarly situated executives in the Company’s
benefit plans in effect from time to time during Executive’s employment.  All
matters of eligibility for coverage or benefits under any benefit plan will be
determined in accordance with the provisions of the plan.  The Company reserves
the right to change, alter, or terminate any benefit plan in its sole
discretion.  Notwithstanding the foregoing, in the event that the terms of this
Agreement differ from, or are in conflict with, the Company’s general employment
policies or practices, this Agreement will control.

2.         COMPENSATION.

2.1       Salary.  Executive will receive for Executive’s services to be
rendered hereunder an initial annualized base salary of US$311,042, subject to
review and adjustment from time to time by the Company in its sole discretion,
payable subject to standard payroll withholding requirements in accordance with
Company’s standard payroll practices (“Base Salary”).

2.2       Bonus.  While this Agreement is in effect, Executive will continue to
be eligible for a discretionary annual cash bonus with a target of thirty-five
percent (35%) of Executive’s then current Base Salary, subject to review and
adjustment from time to time by the Company in its sole discretion, payable
subject to standard payroll withholding requirements (“Target Bonus”).  Whether
or not Executive earns any bonus will be dependent upon (a) the actual
achievement by Executive and the Company of the applicable individual and
corporate performance goals, as determined by the Board of Directors of the
Company (the “Board”) in its sole discretion, and (b) Executive’s continuous
performance of services to the Company through December 31 of the year any bonus
may be earned.  The bonus may be greater or lesser than the Target Bonus and may
be zero.  In all events, any bonus earned pursuant to this Section 2.2 will be
paid on or before March 15 of the year following the year for which it is
earned.

2.3       Equity.  Executive has been granted options to purchase shares of the
Company’s Common Stock (the “Options”), the terms of which will continue to be
governed in all respects by the governing plan documents, grant notices and
stock option agreements.  Executive will be eligible to receive further stock
grants and/or stock option awards in the sole discretion of the Board or its
Compensation Committee.

2.4       Expense Reimbursement.  The Company will reimburse Executive for
reasonable business expenses with proper documentation and in accordance with
the Company’s standard expense reimbursement policy.  For the avoidance of
doubt, to the extent that any reimbursements payable to Executive are subject to
the provisions of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”): (a) any such reimbursements will be paid no later than December 31
of the year following the year in which the expense was incurred, (b) the amount
of expenses reimbursed in one year will not affect the amount eligible for
reimbursement in any subsequent year, and (c) the right to reimbursement under
this Agreement will not be subject to liquidation or exchange for another
benefit.

3.         CONFIDENTIALITY AND PROPRIETARY RIGHTS OBLIGATIONS.   The parties
have entered into a Confidentiality & Proprietary Rights Agreement and a
Restrictive Covenant (collectively, “Confidential Information Agreement”), which
may be amended by the parties

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from time to time without regard to this Agreement.  The Confidential
Information Agreement contains provisions that are intended by the parties to
survive and do survive termination or expiration of this Agreement.

 

4.         OUTSIDE ACTIVITIES DURING EMPLOYMENT.  Except with the prior written
consent of the Chairman of the Board and the Company’s CEO, Executive will not,
while employed by the Company, undertake or engage in any other employment,
occupation or business enterprise that would interfere with Executive’s
responsibilities and the performance of Executive’s duties hereunder except for
(i) reasonable time devoted to volunteer services for or on behalf of such
religious, educational, non-profit and/or other charitable organization as
Executive may wish to serve, (ii) reasonable time devoted to activities in the
non-profit and business communities consistent with Executive’s duties, and
(iii) such other activities as may be specifically approved by the Chairman of
the Board and the CEO.  This restriction will not, however, preclude Executive
(x) from owning less than one percent (1%) of the total outstanding shares of a
publicly traded company, or (y) from employment or service in any capacity with
Affiliates of the Company.  As used in this Agreement, “Affiliates” means an
entity under common management or control with the Company.  Notwithstanding
this Section 4, the Chairman of the Board and the CEO will continue to permit
Executive to serve as a board member of one  (1) other company or entity, such
company or entity whose identity Executive has disclosed or will disclose to the
Chairman of the Board and the CEO, unless such company or entity is reasonably
deemed by the Chairman of the Board and the CEO to be competitive with the
Company, and further provided that Executive’s service as a board member of that
company or entity will not in any way materially limit or adversely impact
Executive’s compliance with the duties and obligations that Executive has and
owes to the Company, including under this Agreement or the Confidential
Information Agreement.

5.         NO CONFLICT WITH EXISTING OBLIGATIONS.  Executive represents that
Executive’s performance of all the terms of this Agreement and as an Executive
of the Company does not and will not breach any agreement or obligation of any
kind made prior to Executive’s employment by the Company, including agreements
or obligations Executive may have with prior employers or entities for which
Executive has provided services.  Executive has not entered into, and Executive
agrees that Executive will not enter into, any agreement or obligation, either
written or oral, in conflict with his obligations under this Agreement.

 

6.         TERMINATION OF EMPLOYMENT.  Executive and the Company each
acknowledge that, pursuant to Section 1 of this Agreement, either party has the
right to terminate Executive’s employment with the Company at any time for any
reason whatsoever, with or without cause or advance notice.  The provisions in
this Section 6 govern the amount of compensation, if any, to be provided to
Executive upon termination of employment and do not alter this at-will status.

 

6.1       Termination by the Company without Cause or Resignation by Executive
for Good Reason (Other Than in Connection with a Change in Control).

(a)        The Company will have the right to terminate Executive’s employment
with the Company at any time without Cause (as defined below).  Likewise,
Executive may resign for Good Reason (as defined below).  In the absence of a
Change in Control

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(as defined below) and in the event Executive is terminated by the Company
without Cause, but not in the event of a termination due to death or Disability
under Section 6.4, or Executive resigns for Good Reason (as defined below), then
Executive will be entitled to receive the Accrued Obligations (as defined below)
and in addition, provided such termination constitutes a “separation from
service” (as defined under Treasury Regulation Section 1.409A-1(h), without
regard to any alternative definition thereunder, a “Separation from Service”),
and further provided Executive complies with the obligations in Section 6.1(b)
below, Executive will also be eligible to receive the following “Severance
Benefits”:

(i)         The Company will pay Executive an amount equal to Executive’s then
current Base Salary for twelve (12) months, less standard withholdings and
deductions, paid in installments on the Company’s regular payroll dates.

(ii)       If Executive is participating in the Company’s group health plans as
of the date of termination, and if  Executive timely elects continued coverage
under COBRA or, if applicable, state continuation coverage laws, the Company
will pay the premiums necessary to continue Executive and Executive’s covered
dependents’ health insurance coverage in effect on the termination date until
the earliest of:  (i) twelve (12) months following the termination date; (ii)
the date when Executive becomes eligible for health insurance coverage in
connection with new employment or self-employment; or (iii) the date Executive
ceases to be eligible for continuation coverage for any reason, including plan
termination (such period from the termination date through the earlier of
(i)-(iii), (the “COBRA Payment Period”).  Notwithstanding the foregoing, if at
any time the Company determines that its payment of continuation coverage
premiums on Executive’s behalf would result in a violation of applicable law
(including, but not limited to, the 2010 Patient Protection and Affordable Care
Act, as amended by the 2010 Health Care and Education Reconciliation Act), then
in lieu of paying premiums pursuant to this Section, the Company will pay
Executive on the last day of each remaining month of the COBRA Payment Period, a
fully taxable cash payment equal to the premium it would have paid for such
month, subject to applicable tax withholding (such amount, the “Special
Severance Payment”), for the remainder of the COBRA Payment Period.

(b)       Executive will receive the Severance Benefits pursuant to Section
6.1(a) of this Agreement if:  (i) within the timeframe provided by the Company,
Executive has signed and delivered to the Company a separation agreement
containing an effective, general release of claims in favor of the Company and
its affiliates and representatives, in a form presented by the Company (the
“Release”), which cannot be revoked in whole or part by such date (the date that
the Release can no longer be revoked is referred to as the “Release Effective
Date”); and (ii) if Executive holds any other positions with the Company or any
affiliate, including a position on the Board, Executive resigns such position(s)
to be effective no later than the date of Executive’s Separation from Service
(or such other date as requested by the Board); (iii) Executive returns all
Company property; (iv) Executive complies with Executive’s post-termination
obligations under this Agreement and the Confidential Information Agreement; and
(v) Executive complies with the terms of the Release, including without
limitation any non-disparagement and confidentiality provisions contained in the
Release.

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(c)        The Company will not make any payments to Executive with respect to
any of the benefits pursuant to Section 6.1(a) prior to the 60th day following
Executive’s date of termination.  On the 60th day following Executive’s date of
termination, and provided that Executive has delivered an effective Release, the
Company will make the first payment to Executive under Section 6.1(a)(i) in a
lump sum equal to the aggregate amount of payments that the Company would have
paid Executive through such date had the payments commenced on Executive’s date
of termination through such 60th day, with the balance of the payments paid
thereafter on the schedule described above.

 

(d)       For purposes of this Agreement, “Accrued Obligations” are
(i) Executive’s accrued but unpaid salary through the date of termination, (ii)
any unreimbursed business expenses incurred by Executive payable in accordance
with the Company’s standard expense reimbursement policies, (iii) benefits owed
to Executive under any qualified retirement plan or health and welfare benefit
plan in which Executive was a participant in accordance with applicable law and
the provisions of such plan, and (iv) Executive’s accrued but unused vacation
through the date of termination.

(e)        The Severance Benefits provided to Executive pursuant to Section
6.1(a) are in lieu of, and not in addition to, any benefits to which Executive
may otherwise be entitled under any Company severance plan, policy or program.

(f)        Any damages caused by the termination of Executive’s employment
without Cause would be difficult to ascertain; therefore, the Severance Benefits
for which Executive is eligible pursuant to Section 6.1(a) above in exchange for
the Release is agreed to by the parties as liquidated damages, to serve as full
compensation, and not a penalty.

(g)        For purposes of this Agreement, “Good Reason”  means any of the
following actions taken by the Company without Executive’s consent:  (i) any
material diminution of Executive’s authority, duties or responsibilities; (ii) a
material (greater than ten percent (10%)) reduction by the Company of
Executive’s Base Salary except in the case of across-the-board salary reductions
based on the Company’s financial performance similarly affecting all or
substantially all similarly-situated employees of the Company; (iii) a
relocation of Executive’s place of employment to a location in excess of fifty
(50) miles from the Company’s current principal place of employment; (iv) any
material breach of this Agreement by the Company;  provided, however, that it
will only be deemed Good Reason if (1)  the Company has not previously notified
Executive of its intention to terminate his employment; (2)  the Company is
given written notice from Executive within ninety (90) days following the first
occurrence of a condition that Executive considers to constitute Good Reason
(with such notice including a description of the condition); (3)  the Company
fails to remedy such condition within thirty (30) days following such written
notice; and (4) Executive resigns from employment with the Company effective not
later than thirty (30) days after the end of the Company’s cure period. 
Notwithstanding the foregoing, any actions taken by the Company to accommodate a
Disability of Executive or pursuant to the Family and Medical Leave Act or an
applicable state leave law will not be a Good Reason for purposes of this
Agreement.

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6.2       Termination by the Company for Cause or Resignation by Executive
(Other Than for Good Reason).

(a)        If the Company terminates Executive’s employment for Cause or
Executive resigns from employment with the Company without Good Reason,
regardless of whether or not such termination is in connection with a Change in
Control, then Executive will be entitled to the Accrued Obligations, but
Executive will not receive the Severance Benefits or any other severance
compensation or benefit.

(b)       “Cause” for termination will mean that the Board has determined in its
sole discretion that Executive has engaged in any of the following:  (i) a
material breach of this Agreement or any other written agreement between
Executive and the Company; (ii) gross negligence or gross misconduct in the
performance of Executive’s duties; (iii) the commission of any act or omission
constituting dishonesty or fraud that is injurious to the Company or any
affiliate thereof; (iv) any conduct which constitutes a felony under applicable
law; (v) conduct by Executive which demonstrates gross unfitness to serve; (vi)
failure to attempt in good faith to implement a clear, reasonable and legal
directive of the Company’s CEO, the Board or any Board committee; or (vii)
breach of a fiduciary duty.

6.3       Change in Control Severance Benefits.

(a)        In the event that the Company (or any surviving or acquiring
corporation) terminates Executive’s employment without Cause or Executive
resigns for Good Reason on or within eighteen (18) months following the
effective date of a Change in Control (“Change in Control Termination”),
Executive will be entitled to the Accrued Obligations,  and upon executing and
allowing to become effective the Release, Executive will be eligible to receive
the following Change in Control severance benefits:

(i)         a lump-sum cash payment in an amount equal to twelve (12) months of
Executive’s Base Salary then in effect (the “Lump Sum Severance”);

(ii)       a lump-sum cash payment in an amount equal to one (1) times
Executive’s Target Bonus for the year in which Executive’s employment terminates
(the “Bonus Severance”);

(iii)      if Executive is participating in the Company’s group health plans as
of a Change in Control Termination, and if Executive timely elects continued
coverage under COBRA or, if applicable, state continuation coverage laws, the
Company will pay the premiums necessary to continue Executive and Executive’s
covered dependents’ health insurance coverage in effect on the Change in Control
Termination date until the earliest of:  (A)  twelve (12) months following a
Change in Control Termination; (B) the date when Executive becomes eligible for
health insurance coverage in connection with new employment or self-employment;
or (C) the date Executive ceases to be eligible for continuation coverage for
any reason, including plan termination, provided, however, if at any time the
Company determines that its payment of continuation coverage premiums on
Executive’s behalf would result in a violation of applicable law (including, but
not limited to, the 2010 Patient Protection and Affordable Care Act, as amended
by the 2010 Health Care and Education Reconciliation Act), then in lieu of
paying premiums

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pursuant to this Section, the Company will pay Executive on the last day of each
remaining month of the COBRA Payment Period, a fully taxable cash payment equal
to the premium it would have paid for such month, subject to applicable tax
withholding, for the remainder of the COBRA Payment Period; and

(iv)       effective as of the later of Executive’s Change in Control
Termination date or the effective date of the Change in Control, the vesting and
exercisability of all outstanding stock options and other stock awards covering
the Company’s Common Stock that are held by Executive as of immediately prior to
the Change in Control Termination date, to the extent such awards are subject to
time-based vesting requirements, will be accelerated (and lapse, in the case of
reacquisition or repurchase rights) in full.  Executive’s stock options and
stock awards will remain outstanding following Executive’s Change in Control
Termination date if and to the extent necessary to give effect to this Section
6.3(a)(iv) subject to earlier termination under the terms of the equity plan and
award agreements under which such awards were granted and the original maximum
term of the award (without regard to Executive’s termination).

(b)       To receive the payments and benefits under (a) above, Executive’s
termination or resignation must constitute a “separation from service” (as
defined under Treasury Regulation Section 1.409A-1(h)) and Executive must
execute and allow the Release to become effective within the time period
provided by the Company, which shall be no later than 60 days following
Executive’s termination or resignation.  The Lump Sum Severance and Bonus
Severance will be paid, subject to deductions and withholdings, by the 60th day
following Executive’s termination or resignation, provided Executive has timely
delivered the effective Release.  For the avoidance of doubt, in the event of a
Change in Control Termination, Executive only will be eligible to receive the
severance benefits under this Section 6.3 and not those severance benefits under
Section 6.1.

(c)        For purposes of this Agreement, “Change in Control” will have the
meaning ascribed to such term in the Company’s 2018 Equity Incentive Plan.

6.4       Termination by Virtue of Death or Disability of Executive.

(a)        In the event of Executive’s death while employed pursuant to this
Agreement, all obligations of the parties hereunder will terminate immediately. 
Executive’s legal representatives will not receive the Severance Benefits, or
any other severance compensation or benefit, except that, pursuant to the
Company’s standard payroll policies, the Company will provide to Executive’s
legal representatives the Accrued Obligations.

(b)       Subject to applicable state and federal law, the Company will at all
times have the right, upon written notice to Executive, to terminate this
Agreement based on Executive’s Disability (as defined below).  Termination by
the Company of Executive’s employment based on “Disability”  will mean
termination because Executive is unable due to a physical or mental condition to
perform the essential functions of Executive’s position with or without
reasonable accommodation for six (6) months in the aggregate during any twelve
(12) month period or based on the written certification by two licensed
physicians of the likely continuation of such condition for such period.  This
definition will be interpreted and applied consistent with the Americans with
Disabilities Act, the Family and Medical Leave Act, and other

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applicable law. In the event Executive’s employment is terminated based on
Executive’s Disability, Executive will not receive the Severance Benefits, or
any other severance compensation or benefit, except that, pursuant to the
Company’s standard payroll policies, the Company will provide to Executive the
Accrued Obligations.

6.5       Cooperation with the Company after Termination of Employment.
 Following termination of Executive’s employment for any reason, Executive will
fully cooperate with the Company in all matters relating to the winding up of
Executive’s pending work including, without limitation, any litigation in which
the Company is involved or such other inquiry concerning the Company that
Executive may have knowledge, the signing of routine documents for
administrative or compliance purposes, announcements concerning termination and
the orderly transfer of any pending work to such other executives or Executives
as may be designated by the Company.

6.6       Section 409A.

(a)        Notwithstanding anything to the contrary herein, the following
provisions apply to the extent severance benefits provided herein are subject to
Section 409A of the Internal Revenue Code (the “Code”) and the regulations and
other guidance thereunder and any state law of similar effect (collectively
“Section 409A”).  Severance benefits will not commence until Executive has a
“separation from service” (as defined under Treasury Regulation Section
1.409A-1(h), without regard to any alternative definition thereunder, a
“separation from service”).   Each installment of  severance benefits is a
separate “payment” for purposes of Treas. Reg. Section 1.409A-2(b)(2)(i), and
the severance benefits are intended to satisfy the exemptions from application
of Section 409A provided under Treasury Regulations Sections 1.409A-1(b)(4),
1.409A-1(b)(5) and 1.409A-1(b)(9).  Notwithstanding any provision to the
contrary in this Agreement, if Executive is deemed by the Company at the time of
Executive’s separation from service to be a “specified employee” for purposes of
Section 409A(a)(2)(B)(i) of the Code, and if any of the payments due upon
separation from service set forth herein and/or under any other agreement with
the Company are deemed to be “deferred compensation,” then to the extent delayed
commencement of any portion of such payments is required to avoid a prohibited
distribution under Section 409A(a)(2)(B)(i) of the Code and the related adverse
taxation under Section 409A, such payments will not be provided to Executive
prior to the earliest of (i) the expiration of the six (6)-month period measured
from the date of Executive’s separation from service with the Company, (ii) the
date of Executive’s death or (iii) such earlier date as permitted under Section
409A without the imposition of adverse taxation.  Upon the first business day
following the expiration of such applicable Code Section 409A(a)(2)(B)(i)
period, all payments deferred pursuant to this paragraph will be paid in a lump
sum to Executive, and any remaining payments due will be paid as otherwise
provided in this Agreement or in the applicable agreement.  No interest will be
due on any amounts so deferred.  To the extent that any severance payments are
deferred compensation under Section 409A, and are not otherwise exempt from the
application of Section 409A, then, if the period during which Executive may
consider and sign the Release spans two calendar years, the payment of severance
will not be made or begin until the later calendar year.  The parties
acknowledge that the exemptions from application of Section 409A to severance
benefits are fact specific, and any later amendment of this Agreement to alter
the timing,

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amount or conditions that will trigger payment of severance benefits may
preclude the ability of severance benefits provided under this Agreement to
qualify for an exemption.

(b)       Notwithstanding anything in this Agreement to the contrary or
otherwise, with respect to any expense, reimbursement or in-kind benefit
provided pursuant to this Agreement that constitutes a “deferral of
compensation” within the meaning of Section 409A and its implementing
regulations and guidance, (a) the expenses eligible for reimbursement or in-kind
benefits provided to Executive must be incurred during the term of the Agreement
(or applicable survival period), (b) the amount of expenses eligible for
reimbursement or in-kind benefits provided to Executive during any calendar year
will not affect the amount of expenses eligible for reimbursement or in-kind
benefits provided to Executive in any other calendar year, (c) the
reimbursements for expenses for which Executive is entitled to be reimbursed
shall be made on or before the last day of the calendar year following the
calendar year in which the applicable expense is incurred and (d) the right to
payment or reimbursement or in-kind benefits hereunder may not be liquidated or
exchanged for any other benefit.

(c)        It is intended that this Agreement will comply with the requirements
of Section 409A, and any ambiguity contained herein will be interpreted in such
manner so as to avoid adverse personal tax consequences under Section
409A.  Notwithstanding the foregoing, the Company will in no event be obligated
to indemnify Executive for any taxes or interest that may be assessed by the
Internal Revenue Service pursuant to Section 409A of the Code to payments made
pursuant to this Agreement.

6.7       Section 280G.

(a)        If any payment or benefit Executive will or may receive from the
Company or otherwise (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 pursuant to this Agreement or
otherwise (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”).

(b)       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 that would not otherwise be subject to taxes
pursuant to Section 409A, then the Reduction Method and/or the Pro Rata
Reduction Method, as the case may be, shall be modified

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so as to avoid the imposition of taxes pursuant to Section 409A 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 shall be reduced (or eliminated) before Payments that are not
deferred compensation within the meaning of Section 409A.

(c)        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 of 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 fifteen (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.

(d)       If Executive receives a Payment for which the Reduced Amount was
determined pursuant to clause (x) of Section 6.7(a) 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 Section 6.7(a)) 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 Section 6.7(a), Executive shall have no obligation to return any portion of
the Payment pursuant to the preceding sentence.

7.         GENERAL PROVISIONS.

7.1       Notices.  Any notices required hereunder to be in writing will be
deemed effectively given:  (a) upon personal delivery to the party to be
notified, (b) when sent by electronic mail or confirmed facsimile, if sent
during normal business hours of the recipient, and if not, then on the next
business day, (c) three (3) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of delivery.  All communications will be
sent to the Company at its primary office location and to Executive at
Executive’s then current address as listed in Company records, or at such other
address as the Company or Executive may designate by ten (10) days advance
written notice to the other.

 

7.2       Severability.  Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable

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law or rule in any jurisdiction, such invalidity, illegality or unenforceability
will not affect any other provision or any other jurisdiction, but this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provisions had never been contained
herein.

7.3       Survival.  Provisions of this Agreement which by their terms must
survive the termination of this Agreement in order to effectuate the intent of
the parties will survive any such termination, whether by expiration of the
term, termination of Executive’s employment, or otherwise, for such period as
may be appropriate under the circumstances.

7.4       Waiver.  If either party should waive any breach of any provisions of
this Agreement, Executive or the Company will not thereby be deemed to have
waived any preceding or succeeding breach of the same or any other provision of
this Agreement.

7.5       Complete Agreement.  This Agreement constitutes the entire agreement
between Executive and the Company with regard to the subject matter
hereof.  This Agreement is the complete, final, and exclusive embodiment of
their agreement with regard to this subject matter and supersedes any prior oral
discussions or written communications and agreements, including the Prior
Agreement.  This Agreement is entered into without reliance on any promise or
representation other than those expressly contained herein, and it cannot be
modified or amended except in writing signed by Executive and an authorized
officer of the Company.  The parties have entered into a separate Confidential
Information Agreement and may have entered into other agreements governing stock
option(s) or other equity awards.  Any such separate agreements govern other
aspects of the relationship between the parties, have or may have provisions
that survive termination of Executive’s employment under this Agreement, may be
amended or superseded by the parties without regard to this agreement and are
enforceable according to their terms without regard to the enforcement provision
of this Agreement.

7.6       Counterparts.  This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.

7.7       Headings.  The headings of the sections hereof are inserted for
convenience only and will not be deemed to constitute a part hereof nor to
affect the meaning thereof.

7.8       Successors and Assigns.  The Company will assign this Agreement and
its rights and obligations hereunder in whole, but not in part, to any Company
or other entity with or into which the Company may hereafter merge or
consolidate or to which the Company may transfer all or substantially all of its
assets, if in any such case said Company or other entity will by operation of
law or expressly in writing assume all obligations of the Company hereunder as
fully as if it had been originally made a party hereto, but may not otherwise
assign this Agreement or its rights and obligations hereunder.  Executive may
not assign or transfer this Agreement or any rights or obligations hereunder,
other than to Executive’s estate upon Executive’s death.

7.9       Choice of Law.  All questions concerning the construction, validity
and interpretation of this Agreement will be governed by the law of the
Commonwealth of Massachusetts.

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7.10     Resolution of Disputes.  To ensure timely and economical resolution of
any disputes that may arise in connection with Executive’s employment with the
Company, as a condition of Executive’s employment, Executive and the Company
hereby agree that any and all claims, disputes or controversies of any nature
whatsoever arising out of, or relating to, this Agreement, or its
interpretation, enforcement, breach, performance or execution, Executive’s
employment with the Company, or the termination of such employment, will be
resolved, to the fullest extent permitted by law, by final, binding and
confidential arbitration conducted before a single arbitrator by Judicial
Arbitration and Mediation Services, Inc. (“JAMS”) or its successor, under then
applicable JAMS rules.  The arbitration will take place in Boston,
Massachusetts; provided, however, that if the arbitrator determines there will
be an undue hardship to Executive to have the arbitration in such location, the
arbitrator will choose an alternative appropriate location.  Executive and the
Company each acknowledge that by agreeing to this arbitration procedure, both
Executive and the Company waive the right to resolve any such dispute, claim or
demand through a trial by jury or judge or by administrative
proceeding.  Executive will have the right to be represented by legal counsel at
Executive’s expense at any arbitration proceeding.  The arbitrator will:  (i)
have the authority to compel adequate discovery for the resolution of the
dispute and to award such relief as would otherwise be available under
applicable law in a court proceeding; and (ii) issue a written statement signed
by the arbitrator regarding the disposition of each claim and the relief, if
any, awarded as to each claim, the reasons for the award, and the arbitrator’s
essential findings and conclusions on which the award is based.  The arbitrator,
and not a court, will also be authorized to determine whether the provisions of
this paragraph apply to a dispute, controversy, or claim sought to be resolved
in accordance with these arbitration procedures.  The Company will pay all costs
and fees in excess of the amount of court fees that Executive would be required
to incur if the dispute were filed or decided in a court of law.  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 arbitration.

IN WITNESS WHEREOF, the parties have executed this Employment Agreement
effective as of the day and year first written above.

 

 

 

 

 

ENTASIS THERAPEUTICS HOLDINGS INC.

 

 

 

By:

/s/ Manoussos Perros, Ph.D.

 

 

Manoussos Perros, Ph.D.

 

 

President and Chief Executive Officer

 

 

 

EXECUTIVE

 

 

 

/s/  Ruben Tommasi, Ph.D.

 

Ruben Tommasi, Ph.D.

 

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