Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (“Agreement”) is made between
Karuna Therapeutics, Inc., a Delaware corporation (the “Company”), and Troy
Ignelzi (the “Executive”) and is made effective as of the closing of the
Company’s first underwritten public offering of its equity securities pursuant
to an effective registration statement under the Securities Act of 1933, as
amended (the “Effective Date”).

WHEREAS, the Company (formerly, Karuna Pharmaceuticals, Inc.) and the Executive
are parties to an employment offer letter, dated February 12, 2019 (the “Prior
Agreement”), which the Company and the Executive intend to amend and restate in
its entirety; and

 

WHEREAS, the Company desires to continue to employ the Executive and the
Executive desires to continue to be employed by the Company on the new terms and
conditions contained herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree to amend and restate the
Prior Agreement in its entirety as follows:

 

1.Employment.

(a)Term.  The term of this Agreement shall commence on the Effective Date and
continue until terminated in accordance with the provisions hereof (the
“Term”).  The Executive’s employment with the Company shall be “at will,”
meaning that the Executive’s employment may be terminated by the Company or the
Executive at any time and for any reason, subject to the terms of this
Agreement.

(b)Position and Duties.  During the Term, the Executive shall serve as the Chief
Financial Officer of the Company (“CFO”) and shall have such powers and duties
as may from time to time be prescribed by the Board of Directors (the “Board”)
or the Chief Executive Officer of the Company (the “CEO”).  The Executive shall
devote his full time efforts to the business and affairs of the Company;
provided that he will be required to travel as necessary for business-related
purposes.  Notwithstanding the foregoing, the Executive may serve on other
boards of directors, with the approval of the Board, or engage in religious,
charitable or other community activities or other business activities as long as
such services and activities are disclosed to the Board and do not interfere
with the Executive’s performance of his duties to the Company, provided the
Executive shall not perform an operational or fundraising role for another
for-profit entity.

2.Compensation and Related Matters.

(a)Base Salary.  During the Term, the Executive’s initial base salary shall be
paid at the rate of $400,000 per year. The Executive’s base salary shall be
reviewed annually by the Board or the Compensation Committee of the Board (the
“Compensation Committee”).  The base salary in effect at any given time is
referred to herein as “Base Salary.”  The Base Salary shall be payable in a
manner that is consistent with the Company’s usual payroll practices for
executive officers.

(b)Incentive Compensation.  During the Term, the Executive shall be eligible to
receive cash incentive compensation as determined by the Board or the
Compensation Committee from time to time.  The Executive’s initial target annual
incentive compensation shall be 40 percent of his Base Salary (the “Target
Bonus”) and be based on predetermined metrics as determined by the Board or the
Compensation Committee.  Except as otherwise provided herein, to earn incentive
compensation, the Executive must be employed by the Company on the day such
incentive compensation is paid.

 

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(c)Expenses.  The Executive shall be entitled to receive prompt reimbursement
for all reasonable expenses incurred by him during the Term in performing
services hereunder, in accordance with the policies and procedures then in
effect and established by the Company for its executive officers.

(d)Other Benefits.  During the Term, the Executive shall be eligible to
participate in or receive benefits under the Company’s employee benefit plans in
effect from time to time, subject to the terms of such plans.

(e)Vacations.  During the Term, the Executive shall be entitled to take paid
time off in accordance with the Company’s applicable paid time off policy for
executives as may be in effect from time to time.  The Executive shall also be
entitled to all paid holidays given by the Company to its executive officers.

(f)Equity. The equity awards held by the Executive shall continue to be governed
by the terms and conditions of the Company’s applicable equity incentive plan(s)
and the applicable award agreement(s) governing the terms of such equity awards
held by the Executive (collectively, the “Equity Documents”); provided, however,
and notwithstanding anything to the contrary in the Equity Documents, Section
6(a)(ii) of this Agreement shall apply in the event of a termination by the
Company without Cause or by the Executive for Good Reason in either event within
the Change in Control Period (as such terms are defined below).

(g)Commuting and Moving Expenses.  The Company shall reimburse you for all
reasonable and properly documented commuting expenses incurred by you in
connection with your commute to Boston, Massachusetts from your current
residence, including temporary housing in Boston, Massachusetts through the
earlier of (1) your establishment of a residence in Massachusetts or (2) October
31, 2019, in accordance with the Company’s regular reimbursement procedures and
practices in effect at the time such expenses are incurred.  Within ten (10)
days of establishing your residence in Massachusetts, the Company shall provide
you with a one-time lump sum relocation bonus of $50,000 to use for your move
from your current residence to Cambridge.  This reflects your twelve (12) month
commitment to the Company, and should you decide to leave the Company within the
first year of your employment, you will be expected to repay the bonus back on a
pro-rated basis, according to the Company’s relocation policy.  All payments are
subject to legally required tax withholdings.    

3.Termination.  During the Term, the Executive’s employment hereunder may be
terminated without any breach of this Agreement under the following
circumstances:

(a)Death.  The Executive’s employment hereunder shall terminate upon his death.

(b)Disability.  The Company may terminate the Executive’s employment if he is
disabled and unable to perform the essential functions of the Executive’s then
existing position or positions under this Agreement with or without reasonable
accommodation for a period of 180 days (which need not be consecutive) in any
12-month period.  If any question shall arise as to whether during any period
the Executive is disabled so as to be unable to perform the essential functions
of the Executive’s then existing position or positions with or without
reasonable accommodation, the Executive may, and at the request of the Company
shall, submit to the Company a certification in reasonable detail by a physician
selected by the Company to whom the Executive or the Executive’s guardian has no
reasonable objection as to whether the Executive is so disabled or how long such
disability is expected to continue, and such certification shall for the
purposes of this Agreement be conclusive of the issue.  The Executive shall
cooperate with any reasonable request of the physician in connection with such
certification.  If such question shall arise and the Executive shall fail to
submit such certification, the Company’s determination of such issue shall be
binding on the Executive.  Nothing in this Section 3(b) shall be construed to
waive the Executive’s rights, if any, under existing law including, without
limitation, the Family and Medical Leave Act of 1993, 29 U.S.C. §2601 et seq.
and the Americans with Disabilities Act, 42 U.S.C. §12101 et seq.  

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(c)Termination by Company for Cause.  The Company may terminate the Executive’s
employment hereunder for Cause.  For purposes of this Agreement, “Cause” shall
mean:  (i) conduct by the Executive constituting a material act of misconduct in
connection with the performance of his duties, including, without limitation,
willful failure or refusal to perform material responsibilities that have been
requested by the Board, misappropriation of funds or property of the Company or
any of its subsidiaries or affiliates other than the occasional, customary and
de minimis use of Company property for personal purposes, or dishonesty to the
Board with respect to any material matter; (ii) the commission by the Executive
of any acts satisfying the elements of felony or a misdemeanor involving moral
turpitude, deceit, dishonesty or fraud, or any conduct by the Executive that
would reasonably be expected to result in material injury or reputational harm
to the Company or any of its subsidiaries or affiliates if he were retained in
his position; (iii) continued non-performance by the Executive of his duties
hereunder (other than by reason of the Executive’s physical or mental illness,
incapacity or disability) which has continued for more than 30 days following
written notice of such non-performance from the CEO; (iv) a breach by the
Executive of any of the provisions contained in Section 8 of this Agreement or
the Restrictive Covenants Agreements; (v) a material violation by the Executive
of the Company’s written employment policies; or (vi) 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.

(d)Termination without Cause.  The Company may terminate the Executive’s
employment hereunder at any time without Cause.  Any termination by the Company
of the Executive’s employment under this Agreement which does not constitute a
termination for Cause under Section 3(c) and does not result from the death or
disability of the Executive under Section 3(a) or (b) shall be deemed a
termination without Cause.

(e)Termination by the Executive.  The Executive may terminate his employment
hereunder at any time for any reason, including but not limited to Good
Reason.  For purposes of this Agreement, “Good Reason” shall mean that the
Executive has complied with the “Good Reason Process” (hereinafter defined)
following the occurrence of any of the following events:  (i) a material
diminution in the Executive’s responsibilities, authority or duties; (ii) a
material diminution in the Executive’s Base Salary except for across-the-board
salary reductions based on the Company’s financial performance similarly
affecting all or substantially all senior management employees of the Company;
(iii) a material change in the geographic location at which the Executive
provides services to the Company; or (iv) the material breach of this Agreement
by the Company.  “Good Reason Process” shall mean that (i) the Executive
reasonably determines in good faith that a “Good Reason” condition has occurred;
(ii) the Executive notifies the Company in writing of the first occurrence of
the Good Reason condition within 60 days of the first occurrence of such
condition; (iii) the Executive cooperates in good faith with the Company’s
efforts, for a period not less than 30 days following such notice (the “Cure
Period”), to remedy the condition; (iv) notwithstanding such efforts, the Good
Reason condition continues to exist; and (v) the Executive terminates his
employment within 60 days after the end of the Cure Period.  If the Company
cures the Good Reason condition during the Cure Period, Good Reason shall be
deemed not to have occurred.

4.Notice and Date of Termination.

(a)Notice of Termination.  Except for termination as specified in Section 3(a),
any termination of the Executive’s employment by the Company or any such
termination by the Executive shall be communicated by written Notice of
Termination to the other party hereto.  For purposes of this Agreement, a
“Notice of Termination” shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon.

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(b)Date of Termination.  “Date of Termination” shall mean:  (i) if the
Executive’s employment is terminated by his death, the date of his death; (ii)
if the Executive’s employment is terminated on account of disability under
Section 3(b) or by the Company for Cause under Section 3(c), the date on which
Notice of Termination is given; (iii) if the Executive’s employment is
terminated by the Company under Section 3(d), the date on which a Notice of
Termination is given or another date as specified in the Notice of Termination;
(iv) if the Executive’s employment is terminated by the Executive under Section
3(e) without Good Reason, 30 days after the date on which a Notice of
Termination is given, and (v) if the Executive’s employment is terminated by the
Executive under Section 3(e) for Good Reason, the date on which a Notice of
Termination is given after the end of the Cure Period.  Notwithstanding the
foregoing, in the event that the Executive gives a Notice of Termination to the
Company, the Company may unilaterally accelerate the Date of Termination and
such acceleration shall not result in a termination by the Company for purposes
of this Agreement.

5.Compensation Upon Termination.

(a)Termination Generally.  If the Executive’s employment with the Company is
terminated for any reason, the Company shall pay or provide to the Executive (or
to his authorized representative or estate) (i) any Base Salary earned through
the Date of Termination, unpaid expense reimbursements (subject to, and in
accordance with, Section 2(c) of this Agreement) and unused vacation that
accrued through the Date of Termination on or before the time required by law
but in no event more than 30 days after the Executive’s Date of Termination; and
(ii) any vested benefits the Executive may have under any employee benefit plan
of the Company through the Date of Termination, which vested benefits shall be
paid and/or provided in accordance with the terms of such employee benefit plans
(collectively, the “Accrued Benefit”).

(b)Termination by the Company without Cause or by the Executive with Good
Reason.  During the Term, if the Executive’s employment is terminated by the
Company without Cause as provided in Section 3(d), or the Executive terminates
his employment for Good Reason as provided in Section 3(e), then the Company
shall pay the Executive his Accrued Benefit.  In addition, subject to (i) the
Executive signing a separation agreement in a form and manner satisfactory to
the Company, which shall contain, among other provisions, a general release of
claims in favor of the Company and related persons and entities,
confidentiality, return of property and non-disparagement and a reaffirmation of
all of the Executive’s Continuing Obligations (as defined below) (the
“Separation Agreement and Release”) and (ii) the Separation Agreement and
Release becoming fully irrevocable, all within 60 days after the Date of
Termination (or such shorter period as set forth in the Separation Agreement and
Release), which shall include a seven (7) business day revocation period:

(i)the Company shall pay the Executive an amount equal to nine (9) months of the
Executive’s then current Base Salary; and

(ii)the Company shall pay the Executive a pro-rata amount of the Executive’s
Target Bonus based on the performance of the Company and consistent with bonuses
paid to other Company executives, both as determined by the Board in its
reasonable good faith discretion; and

(iii)if the Executive was participating in the Company’s group health plan
immediately prior to the Date of Termination and elects COBRA health
continuation, then the Company shall pay to the Executive a monthly cash payment
for nine (9) months or the Executive’s COBRA health continuation period,
whichever ends earlier, in an amount equal to the monthly employer contribution
that the Company would have made to provide health insurance to the Executive if
the Executive had remained employed by the Company; and

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The amounts payable under Sections 5(b)(i) and (iii) shall be paid out in
substantially equal installments in accordance with the Company’s payroll
practice over nine (9) months commencing within 60 days after the Date of
Termination; provided, however, that if the 60-day period begins in one calendar
year and ends in a second calendar year, such payments, to the extent they
qualify as “non-qualified deferred compensation” within the meaning of Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”), shall begin
to be paid in the second calendar year by the last day of such 60-day period;
provided, further, that the initial payment shall include a catch-up payment to
cover amounts retroactive to the day immediately following the Date of
Termination.  Each payment pursuant to this Agreement is intended to constitute
a separate payment for purposes of Treasury Regulation Section
1.409A-2(b)(2).  The amount payable under Section 4(b)(ii) shall be paid on the
date bonuses are paid to the Company’s other executives but no later than March
15 following the year in which the Date of Termination occurs.  

Notwithstanding the foregoing, if the Executive breaches any of the provisions
contained in Section 8 of this Agreement or the Restrictive Covenants Agreements
(as defined below), all payments under this Sections 5(b) shall immediately
cease.  

6.Change in Control Payment.  The provisions of this Section 6 set forth certain
terms of an agreement reached between the Executive and the Company regarding
the Executive’s rights and obligations upon the occurrence of a Change in
Control of the Company.  These provisions are intended to assure and encourage
in advance the Executive’s continued attention and dedication to his assigned
duties and his objectivity during the pendency and after the occurrence of any
such event.  These provisions shall apply in lieu of, and expressly supersede,
the provisions of Section 5(b) regarding severance pay and benefits upon a
termination of employment, if such termination of employment occurs within
twelve (12) months after the occurrence of the first event constituting a Change
in Control (the “Change in Control Period”).  These provisions shall terminate
and be of no further force or effect beginning after the Change in Control
Period.

(a)Change in Control.  During the Term, if during the Change in Control Period,
the Executive’s employment is terminated by the Company without Cause as
provided in Section 3(d) or the Executive terminates his employment for Good
Reason as provided in Section 3(e), then, subject to the Executive signing a
Separation Agreement and Release that conforms with the requirements of Section
5(b)(i) and the Separation Agreement and Release becoming fully
irrevocable,  all within 60 days after the Date of Termination (or such shorter
period as set forth in the Separation Agreement and Release), which shall
include a seven (7) business day revocation period:

(i)the Company shall pay the Executive a lump sum in cash in an amount equal to
one times the sum of (A) the Executive’s then current Base Salary (or the
Executive’s Base Salary in effect immediately prior to the Change in Control, if
higher) plus (B) the Executive’s Target Bonus for the then current year; and

(ii)notwithstanding anything to the contrary in any applicable option agreement
or other equity award agreement, all outstanding equity grants subject to
time-based vesting held by the Executive shall immediately accelerate and become
fully exercisable or nonforfeitable as of the Date of Termination; and

(iii)if the Executive was participating in the Company’s group health plan
immediately prior to the Date of Termination and elects COBRA health
continuation, then the Company shall pay to the Executive a monthly cash payment
for twelve (12) months or the Executive’s COBRA health continuation period,
whichever ends earlier, in an amount equal to the monthly employer contribution
that the Company would have made to provide health insurance to the Executive if
the Executive had remained employed by the Company; and

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The amounts payable under Sections 6(a)(i) and (iii) shall be paid or commence
to be paid within 60 days after the Date of Termination; provided, however, that
if the 60-day period begins in one calendar year and ends in a second calendar
year, such payments, to the extent they qualify as “non-qualified deferred
compensation” within the meaning of Section 409A of the Code, shall be paid or
commence to be paid in the second calendar year by the last day of such 60-day
period.  Notwithstanding the foregoing, if the Executive breaches any of the
provisions contained in Section 8 of this Agreement, all payments under this
Section 6(a) shall immediately cease.

(b)Additional Limitation.

(i)Anything in this Agreement to the contrary notwithstanding, in the event that
the amount of any compensation, payment or distribution by the Company to or for
the benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, calculated
in a manner consistent with Section 280G of the Code and the applicable
regulations thereunder (the “Aggregate Payments”), would be subject to the
excise tax imposed by Section 4999 of the Code, then the Aggregate Payments
shall be reduced (but not below zero) so that the sum of all of the Aggregate
Payments shall be $1.00 less than the amount at which the Executive becomes
subject to the excise tax imposed by Section 4999 of the Code; provided that
such reduction shall only occur if it would result in the Executive receiving a
higher After Tax Amount (as defined below) than the Executive would receive if
the Aggregate Payments were not subject to such reduction.  In such event, the
Aggregate Payments shall be reduced in the following order, in each case, in
reverse chronological order beginning with the Aggregate Payments that are to be
paid the furthest in time from consummation of the transaction that is subject
to Section 280G of the Code:  (1) cash payments not subject to Section 409A of
the Code; (2) cash payments subject to Section 409A of the Code; (3)
equity-based payments and acceleration; and (4) non-cash forms of benefits;
provided that in the case of all the foregoing Aggregate Payments all amounts or
payments that are not subject to calculation under Treas. Reg. §1.280G-1,
Q&A-24(b) or (c) shall be reduced before any amounts that are subject to
calculation under Treas. Reg. §1.280G-1, Q&A-24(b) or (c).

(ii)For purposes of this Section 6(b), the “After Tax Amount” means the amount
of the Aggregate Payments less all federal, state, and local income, excise and
employment taxes imposed on the Executive as a result of the Executive’s receipt
of the Aggregate Payments.  For purposes of determining the After Tax Amount,
the Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation applicable to individuals for the
calendar year in which the determination is to be made, and state and local
income taxes at the highest marginal rates of individual taxation in each
applicable state and locality, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and local taxes.

(iii)The determination as to whether a reduction in the Aggregate Payments shall
be made pursuant to Section 6(b)(i) shall be made by a nationally recognized
accounting firm selected by the Company (the “Accounting Firm”), which shall
provide detailed supporting calculations both to the Company and the Executive
within 15 business days of the Date of Termination, if applicable, or at such
earlier time as is reasonably requested by the Company or the Executive.  Any
determination by the Accounting Firm shall be binding upon the Company and the
Executive.

(c)Definitions.  For purposes of this Section 5, the following terms shall have
the following meanings:

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“Change in Control” shall mean any of the following:

(i)any “person,” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Act”) (other than the Company,
any of its subsidiaries, or any trustee, fiduciary or other person or entity
holding securities under any employee benefit plan or trust of the Company or
any of its subsidiaries), together with all “affiliates” and “associates” (as
such terms are defined in Rule 12b-2 under the Act) of such person, shall become
the “beneficial owner” (as such term is defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Company representing 50 percent or
more of the combined voting power of the Company’s then outstanding securities
having the right to vote in an election of the Board (“Voting Securities”) (in
such case other than as a result of an acquisition of securities directly from
the Company); or

(ii)the date a majority of the members of the Board is replaced during any
12-month period by directors whose appointment or election is not endorsed by a
majority of the members of the Board before the date of the appointment or
election; or

(iii)the consummation of (A) any consolidation or merger of the Company where
the stockholders of the Company, immediately prior to the consolidation or
merger, would not, immediately after the consolidation or merger, beneficially
own (as such term is defined in Rule 13d-3 under the Act), directly or
indirectly, shares representing in the aggregate more than 50 percent of the
voting shares of the Company issuing cash or securities in the consolidation or
merger (or of its ultimate parent corporation, if any), or (B) any sale or other
transfer (in one transaction or a series of transactions contemplated or
arranged by any party as a single plan) of all or substantially all of the
assets of the Company.

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have
occurred for purposes of the foregoing clause (i) solely as the result of an
acquisition of securities by the Company which, by reducing the number of shares
of Voting Securities outstanding, increases the proportionate number of Voting
Securities beneficially owned by any person to 50 percent or more of the
combined voting power of all of the then outstanding Voting Securities;
provided, however, that if any person referred to in this sentence shall
thereafter become the beneficial owner of any additional shares of Voting
Securities (other than pursuant to a stock split, stock dividend, or similar
transaction or as a result of an acquisition of securities directly from the
Company) and immediately thereafter beneficially owns 50 percent or more of the
combined voting power of all of the then outstanding Voting Securities, then a
“Change in Control” shall be deemed to have occurred for purposes of the
foregoing clause (i).

7.Section 409A.

(a)Anything in this Agreement to the contrary notwithstanding, if at the time of
the Executive’s separation from service within the meaning of Section 409A of
the Code, the Company determines that the Executive is a “specified employee”
within the meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent
any payment or benefit that the Executive becomes entitled to under this
Agreement on account of the Executive’s separation from service would be
considered deferred compensation otherwise subject to the 20 percent additional
tax imposed pursuant to Section 409A(a) of the Code as a result of the
application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be
payable and such benefit shall not be provided until the date that is the
earlier of (A) six months and one day after the Executive’s separation from
service, or (B) the Executive’s death.  If any such delayed cash payment is
otherwise payable on an installment basis, the first payment shall include a
catch-up payment covering amounts that would otherwise have been paid during the
six-month period but for the application of this provision, and the balance of
the installments shall be payable in accordance with their original schedule.  

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(b)All in-kind benefits provided and expenses eligible for reimbursement under
this Agreement shall be provided by the Company or incurred by the Executive
during the time periods set forth in this Agreement.  All reimbursements shall
be paid as soon as administratively practicable, but in no event shall any
reimbursement be paid after the last day of the taxable year following the
taxable year in which the expense was incurred.  The amount of in-kind benefits
provided or reimbursable expenses incurred in one taxable year shall not affect
the in-kind benefits to be provided or the expenses eligible for reimbursement
in any other taxable year (except for any lifetime or other aggregate limitation
applicable to medical expenses).  Such right to reimbursement or in-kind
benefits is not subject to liquidation or exchange for another benefit.

(c)To the extent that any payment or benefit described in this Agreement
constitutes “non-qualified deferred compensation” under Section 409A of the
Code, and to the extent that such payment or benefit is payable upon the
Executive’s termination of employment, then such payments or benefits shall be
payable only upon the Executive’s “separation from service.”  The determination
of whether and when a separation from service has occurred shall be made in
accordance with the presumptions set forth in Treasury Regulation Section
1.409A‑1(h).

(d)The parties intend that this Agreement will be administered in accordance
with Section 409A of the Code.  To the extent that any provision of this
Agreement is ambiguous as to its compliance with Section 409A of the Code, the
provision shall be read in such a manner so that all payments hereunder comply
with Section 409A of the Code.  Each payment pursuant to this Agreement is
intended to constitute a separate payment for purposes of Treasury Regulation
Section 1.409A‑2(b)(2).  The parties agree that this Agreement may be amended,
as reasonably requested by either party, and as may be necessary to fully comply
with Section 409A of the Code and all related rules and regulations in order to
preserve the payments and benefits provided hereunder without additional cost to
either party.

(e)The Company makes no representation or warranty and shall have no liability
to the Executive or any other person if any provisions of this Agreement are
determined to constitute deferred compensation subject to Section 409A of the
Code but do not satisfy an exemption from, or the conditions of, such Section.

8.Continuing Obligations.

(a)Restrictive Covenants Agreement.  The Executive has previously entered into
the Employee Invention and Non-Disclosure Agreement dated March 11, 2019,
attached hereto as Exhibit A and the Non-Competition and Non-Solicitation
Agreement dated March 11, 2019, attached hereto as Exhibit B (together, the
“Restrictive Covenants Agreements”). The terms of the Restrictive Covenants
Agreements continue to remain in full force and effect.  For purposes of this
Agreement, the obligations in this Section 8 and those that arise in the
Restrictive Covenants Agreements and any other agreement relating to
confidentiality, assignment of inventions, or other restrictive covenants shall
collectively be referred to as the “Continuing Obligations.”

(b)Protected Disclosures and Other Protected Action.  Nothing in this Agreement
shall be interpreted or applied to prohibit the Executive from making any good
faith report to any governmental agency or other governmental entity (a
“Government Agency”) concerning any act or omission that the Executive
reasonably believes 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, nothing contained in this Agreement limits the Executive’s ability to
communicate with any Government Agency or otherwise participate in any
investigation or proceeding that may be conducted by any Government Agency,
including the Executive’s ability to provide documents or other information,
without

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notice to the Company. In addition, for the avoidance of doubt, pursuant to the
federal Defend Trade Secrets Act of 2016, the Executive shall not be held
criminally or civilly liable under any federal or state trade secret law or
under this Agreement or the Restrictive Covenants Agreements for the disclosure
of a trade secret that (a) is made (i) in confidence to a federal, state, or
local government official, either directly or indirectly, or to an attorney; and
(ii) solely for the purpose of reporting or investigating a suspected violation
of law; or (b) is made in a complaint or other document filed in a lawsuit or
other proceeding, if such filing is made under seal.

9.Consent to Jurisdiction.  The parties hereby consent to the jurisdiction of
the state and federal courts of the Commonwealth of Massachusetts. Accordingly,
with respect to any such court action, the Executive (a) submits to the personal
jurisdiction of such courts; (b) consents to service of process; and (c) waives
any other requirement (whether imposed by statute, rule of court, or otherwise)
with respect to personal jurisdiction or service of process.

10.Integration.  This Agreement, along with the Restrictive Covenants
Agreements, constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements between the
parties concerning such subject matter, including the Prior Agreement, provided
that the Restrictive Covenants Agreement and the Equity Documents remain in full
force and effect.

11.Withholding; Tax Effect.  All payments made by the Company to the Executive
under this Agreement shall be net of any tax or other amounts required to be
withheld by the Company under applicable law.  Nothing in this Agreement shall
be construed to require the Company to make any payments to compensate the
Executive for any adverse tax effect associated with any payments or benefits or
for any deduction or withholding from any payment or benefit.

12.Successor to the Executive.  This Agreement shall inure to the benefit of and
be enforceable by the Executive’s personal representatives, executors,
administrators, heirs, distributees, devisees and legatees.  In the event of the
Executive’s death after his termination of employment but prior to the
completion by the Company of all payments due him under this Agreement, the
Company shall continue such payments to the Executive’s beneficiary designated
in writing to the Company prior to his death (or to his estate, if the Executive
fails to make such designation).

13.Enforceability.  If any portion or provision of this Agreement (including,
without limitation, any portion or provision of any section of this Agreement)
shall to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.

14.Survival.  The provisions of this Agreement shall survive the termination of
this Agreement and/or the termination of the Executive’s employment to the
extent necessary to effectuate the terms contained herein.

15.Waiver.  No waiver of any provision hereof shall be effective unless made in
writing and signed by the waiving party.  The failure of any party to require
the performance of any term or obligation of this Agreement, or the waiver by
any party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.

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16.Notices.  Any notices, requests, demands and other communications provided
for by this Agreement shall be sufficient if in writing and delivered in person
or sent by a nationally recognized overnight courier service or by registered or
certified mail, postage prepaid, return receipt requested, to the Executive at
the last address the Executive has filed in writing with the Company or, in the
case of the Company, at its main offices, attention of the Board.

17.Amendment.  This Agreement may be amended or modified only by a written
instrument signed by the Executive and by a duly authorized representative of
the Company.

18.Effect on Other Plans and Agreements.   An election by the Executive to
resign for Good Reason under the provisions of this Agreement shall not be
deemed a voluntary termination of employment by the Executive for the purpose of
interpreting the provisions of any of the Company's benefit plans, programs or
policies. Nothing in this Agreement shall be construed to limit the rights of
the Executive under the Company’s benefit plans, programs or policies except as
otherwise provided in Section 8 hereof, and except that the Executive shall have
no rights to any severance benefits under any Company severance pay plan, offer
letter or otherwise. In the event that the Executive is party to an agreement
with the Company providing for payments or benefits under such agreement and
this Agreement, the terms of this Agreement shall govern and the Executive may
receive payment under this Agreement only and not both. Further, Section 5 and
Section 6 of this Agreement are mutually exclusive and in no event shall the
Executive be entitled to payments or benefits pursuant to Section 5 and Section
6 of this Agreement.

19.Governing Law.  This is a Massachusetts contract and shall be construed under
and be governed in all respects by the laws of the Commonwealth of
Massachusetts, without giving effect to the conflict of laws principles
thereof.  With respect to any disputes concerning federal law, such disputes
shall be determined in accordance with the law as it would be interpreted and
applied by the United States Court of Appeals for the First Circuit.

20.Counterparts.  This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be taken to be an original;
but such counterparts shall together constitute one and the same document.

21.Successor to Company.  The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company expressly to assume
and agree to perform this Agreement to the same extent that the Company would be
required to perform it if no succession had taken place.  Failure of the Company
to obtain an assumption of this Agreement at or prior to the effectiveness of
any succession shall be a material breach of this Agreement.

22.Gender Neutral.  Wherever used herein, a pronoun in the masculine gender
shall be considered as including the feminine gender unless the context clearly
indicates otherwise.

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IN WITNESS WHEREOF, the parties have executed this Agreement effective on the
date and year first above written.

 

KARUNA THERAPEUTICS, INC.

 

 

 

 

 

 

 

By:

 

 

Its:

 

 

 

 

EXECUTIVE

 

 

 

 

 

 

 

 

 

 

Troy Ignelzi

 

 

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