Exhibit 10.4

 

EMPLOYEE SEVERANCE AGREEMENT

THIS EMPLOYEE SEVERANCE AGREEMENT (this “Agreement”) is entered into as of the
14th day of March, 2019, by and between Protagonist Therapeutics, Inc., a
Delaware corporation (the “Company”), and Suneel Gupta, Ph.D. (the “Employee”).

Statement of Purpose

WHEREAS, Employee is currently employed by the Company as an at-will employee;

WHEREAS, notwithstanding the at-will nature of the employment relationship
between Employee and the Company, the Company has agreed to provide Employee
with severance pay if Employee's employment with the Company is terminated by
the Company without Cause pursuant to the terms set forth below.

Now, THEREFORE, in consideration of the foregoing, the mutual agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

1.      At-Will Employment. Employee acknowledges and agrees that Employee’s
employment relationship with the Company is at will. This Agreement does not in
any way alter Employee’s at-will status or limit the Company’s or Employee’s
right to terminate Employee’s employment with the Company at any time, with or
without cause.

2.      Effect of Termination of Employment.

(a)      Accrued Obligations. When Employee’s employment with the Company is
terminated for any reason, Employee, or Employee’s estate, as the case may be,
will be entitled to receive (i) an amount in cash equal to any accrued but
unpaid base salary owing by the Company to Employee as of the date of
termination, (ii) any unpaid reimbursements relating to business expenses
incurred by Employee prior to the date of termination, (iii) any accrued but
unused vacation time in accordance with Company policy and (iv) vested
entitlements under any other Company benefit plan or program as determined
thereunder.

(b)     Separation Benefits upon Certain Terminations. If the Company terminates
Employee’s employment without Cause or Employee terminates employment for Good
Reason, then conditioned upon Employee satisfying the Release conditions set
forth below, the Company will provide Employee with the following benefits (the
“Separation Benefits”): (i) payment of Employee’s then-current base salary for a
period of 9 months (12 months in the case of a Change in Control Termination);
(ii) conditioned upon Employee’s proper and timely election to continue his
health insurance benefits under COBRA after the termination of Employee’s
employment, reimbursement of Employee’s applicable COBRA premiums for the lesser
of 9 months (12 months in the case of a Change in Control Termination) following
termination or until Employee becomes eligible for insurance benefits from
another employer, provided, however, that the Company has the right to terminate
such payment of COBRA premium reimbursement to Employee and instead pay Employee
a lump sum amount equal to the applicable COBRA premium multiplied by the

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number of months remaining in the specified period if the Company determines in
its discretion that continued payment of the COBRA premiums is or may be
discriminatory under Section 105(h) of the Internal Revenue Code; (iii) in the
case of a Change in Control Termination, payment of an amount equal to
one-twelfth of Employee’s then-current target bonus per month for the number of
months during which Employee is receiving salary continuation under clause (i)
above; and (iv) in the case of a Change in Control Termination, acceleration of
the vesting (and exercisability, as relevant) of all unvested and/or
unexercisable equity awards held by Employee as of immediately prior to
termination. The Separation Benefits are conditioned upon Employee executing a
general release of claims in a form acceptable to the Company (the “Release”)
within the time specified therein, which Release is not revoked within any time
period allowed for revocation under applicable law. The Separation Benefits will
be payable to Employee over time in accordance with the Company’s payroll
practices and procedures, subject to required withholding, beginning as soon as
practicable (but no more than thirty (30) days) following the Release becoming
irrevocable; provided, however, that if the Release revocation period spans two
calendar years, payments will begin in the second of those calendar years to the
extent required to avoid adverse taxation under Section 409A of the Internal
Revenue Code (the “Code”).

(c)      Definitions.

(i)        Picture 6290 [ptgx20190331ex10415180f001.jpg]Cause. For purposes of
this Agreement, “Cause” means: (A) Employee’s fraud, embezzlement or
misappropriation with respect to the Company; (B) Employee’s material breach of
fiduciary duties to the Company; (C) Employee’s willful or negligent misconduct
that has or may reasonably be expected to have a material adverse effect on the
property, business, or reputation of the Company; (D) Employee’s material breach
of any employment agreement or other agreement between Employee and Company; (E)
Employee’s willful failure or refusal to perform his/her material duties as an
employee of the Company or failure to follow any specific lawful instructions of
the Chief Executive Officer of the Company; (F) Employee’s conviction or plea of
nolo contendere in respect of a felony or of a misdemeanor involving moral
turpitude; (G) Employee’s alcohol or substance abuse which has a material
adverse effect on Employee’s ability to perform his duties to the Company or the
property, business, or reputation of the Company; or (H) Employee’s failure to
comply with the Company's workplace rules, policies, or procedures. In the event
that the Company concludes that Employee has engaged in acts constituting in
Cause as defined in clause (C), (D), (E), or (G) above, prior to terminating
Employee’s employment for Cause the Company will provide Employee with at least
fifteen (15) days’ advance notice of the specific circumstances constituting
such Cause, and an opportunity to correct such circumstances to the extent
correctable.

(ii)       Good Reason. For purposes of this Agreement, “Good Reason” means the
occurrence of any of the following without Employee’s express written
permission: (A) material diminution of Employee’s duties, authority or
responsibilities, relative to Employee’s duties authority or responsibilities as
in effect immediately prior to such reduction; provided, however, that the
acquisition of the Company and subsequent conversion  of the Company to a
division or unit of the acquiring company will not by itself result in a
material diminution under this clause (A); (B) material diminution in Employee’s
base salary; or (C) a change by more than Picture 6291
[ptgx20190331ex10415180f002.jpg]50 miles in the primary geographic location at
which Employee is required to perform services hereunder;

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provided that Employee has given prompt notice to the Company of the existence
of such condition (but in no event later than ninety (90) days after its initial
existence), Employee has provided the Company with a minimum of thirty (30) days
following such notice to cure such condition, and, if the Company fails to cure
such condition, Employee then terminates employment within thirty (30) days of
the end of such cure period.

(iii)   Change in Control. For purposes of this Agreement, “Change in Control”
 has the meaning set forth in the Company’s 2016 Equity Incentive Plan, as it
may be amended, or any successor plan thereto.

(iv)   Change in Control Termination. For purposes of this Agreement, “Change in
Control Termination” means a termination of Employee’s employment by the Company
without Cause or by Employee for Good Reason, in each case within 12 months
following a Change in Control.

(d)     Certain Terminations Excluded. For avoidance of doubt, the termination
of Employee’s employment: (i) by the Company for Cause; (ii) as a result of
Employee’s resignation other than for Good Reason; or (iii) as a result of
Employee’s death or disability (meaning the inability of Employee, due to the
condition of his physical, mental or emotional health, effectively to perform
the essential functions of his job with or without reasonable accommodation for
a continuous period of more than 90 days or for 90 days in any period of 180
consecutive days, as determined by the Company in its sole discretion in
consultation with a physician retained by the Company), will not constitute a
termination without Cause triggering the rights described in Section 2(b) above.

(e)       Picture 10021 [ptgx20190331ex10415180f003.jpg]Application of Internal
Revenue Code Section 409A. The intent of the parties is that payments and
benefits under this Agreement comply with or be exempt from Section 409A of the
Code and the regulations and other guidance thereunder and any state law of
similar effect (collectively “Section 409A”), and this Agreement shall be
interpreted and construed in a manner that establishes an exemption from (or
compliance with) the requirements of Section 409A. Notwithstanding anything to
the contrary set forth herein, any payments and benefits provided under this
Section 2 that constitute “deferred compensation” within the meaning of Section
409A will not commence in connection with Employee’s termination of employment
unless and until Employee has also incurred a “separation from service” (as such
term is defined in Treasury Regulation Section 1.409A-1(h) (a “Separation From
Service”), unless the Company reasonably determines that such amounts may be
provided to Employee without causing Employee to incur additional taxes under
Section 409A. The parties intend that each installment of the Separation
Benefits payments provided for in this Agreement is a separate “payment” for
purposes of Treasury Regulation Section 1.409A-2(b)(2)(i). For the avoidance of
doubt, the parties intend that payments of the Separation Benefits set forth in
this Agreement satisfy, to the greatest extent possible, the exemptions from the
application of Section 409A provided under Treasury Regulation Sections
1.409A-1(b)(4) and 1.409A-1(b)(9). However, if the Company determines that the
Separation Benefits constitute “deferred compensation” under Section 409A and
Employee is, on the termination of service, a “specified employee” of the
Company or any successor entity thereto, as such term is defined in Section
409A, then, solely to the extent

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necessary to avoid the incurrence of the adverse personal tax consequences under
Section 409A, the timing of the Separation Benefits payments will be delayed
until the earlier to occur of: (i) the date that is six months and one day after
Employee’s Separation From Service, or (ii) the date of Employee's death (such
applicable date, the “Specified Employee Initial Payment Date”), and the Company
(or the successor entity thereto, as applicable) will (A) pay to Employee a lump
sum amount equal to the sum of the Separation Benefits payments that Employee
would otherwise have received through the Specified Employee Initial Payment
Date if the commencement of the payment of the Separation Benefits had not been
so delayed pursuant to this Section, and (B) commence paying the balance of the
Separation Benefits in accordance with the applicable payment schedules set
forth in this Agreement. With respect to any reimbursement or in-kind benefit
plans, policies or arrangements of the Company that constitute deferred
compensation for purposes of Section 409A, except as otherwise permitted by
Section 409A, the following conditions shall be applicable: (i) the amount
eligible for reimbursement, or in-kind benefits provided, under any such plan,
policy or arrangement in one calendar year may not affect the amount eligible
for reimbursement, or in-kind benefits to be provided, under such plan, policy
or arrangement in any other calendar year (except that the health and dental
plans may impose a limit on the amount that may be reimbursed or paid), (ii) any
reimbursement must be made on or before the last day of the calendar year
following the calendar year in which the expense was incurred, and (iii) the
right to reimbursement or in-kind benefits is not subject to liquidation or
exchange for another benefit.

(f)      Application of Internal Revenue Code Section 280G. Notwithstanding
anything to the contrary contained in this Agreement, to the extent that any of
the payments and benefits provided for under this Agreement or any other
agreement or arrangement between Employee and the Company or its affiliates
(collectively, the “Payments”) (i) constitute a “parachute payment” within the
meaning of Section 280G of the Code and (ii) but for this paragraph, would be
subject to the excise tax imposed by Section 4999 of the Code, then the Payments
shall be payable either (i) in full or (ii) as to such lesser amount which would
result in no portion of such Payments being subject to an excise tax under
Section 4999 of the Code, whichever of the foregoing amounts, taking into
account the applicable federal, state and local income taxes and the excise tax
imposed by Section 4999, results in Employee’s receipt on an after-tax basis, of
the greatest amount of benefits, notwithstanding that all or some portion of
such benefits may be taxable under Section 4999 of the Code. Unless Employee and
the Company otherwise agree in writing, any determination required under this
paragraph shall be made in writing by the Company’s independent public
accountants, whose determination shall be conclusive and binding upon Employee
and the Company for all purposes. If a reduction in payments or benefits
constituting “parachute payments” is necessary, reduction shall occur in the
following order: (A) cash payments shall be reduced first and in reverse
chronological order such that the cash payment owed on the latest date following
the occurrence of the event triggering such excise tax will be the first cash
payment to be reduced; (B) accelerated vesting of equity awards shall be
cancelled/reduced next and in the reverse order of the date of grant for such
stock awards (i.e., the vesting of the most recently granted stock awards will
be reduced first); and (C) employee benefits shall be reduced last and in
reverse chronological order such that the benefit owed on the latest date
following the occurrence of the event triggering such excise tax will be the
first benefit to be reduced.

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3.      Miscellaneous.

(a)      Entire Agreement; No Further Obligations. This Agreement constitutes
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all prior agreements (whether written or oral and whether
express or implied) between the parties to the extent related to such subject
matter. Except as expressly provided above or as otherwise required by law, the
Company will have no obligations to Employee in the event of the termination of
Employee's employment with the Company for any reason.

(b)     Successors and Assigns. This Agreement will be binding upon and inure to
the benefit of the parties and their respective successors, permitted assigns
and, in the case of Employee, heirs, executors, and/or personal representatives.
Employee may not assign, delegate or otherwise transfer any of Employee’s
rights, interests or obligations in this Agreement without the prior approval of
the Company.

(c)      Notices. Any notice pursuant to this Agreement must be in writing and
will be deemed effectively given to the other party on (i) the date it is
actually delivered by overnight courier service (such as FedEx) or personal
delivery of such notice in person; or (ii) five days after the date it is mailed
by certified mail, return receipt requested, postage prepaid; in the case of
Employee, to his/her most recent address as shown in the records of the Company,
and in the case of the Company, to its then-current corporate headquarters,
addressed to the attention of the Chief Executive Officer.

(d)     Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement. Facsimile or PDF
reproductions of original signatures will be deemed binding for the purpose of
the execution of this Agreement.

(e)      Amendments and Waivers. No amendment of any provision of this Agreement
will be valid unless the amendment is in writing and signed by the Company and
Employee. No waiver of any provision of this Agreement will be valid unless the
waiver is in writing and signed by the waiving party. The failure of a party at
any time to require performance of any provision of this Agreement will not
affect such party's rights at a later time to enforce such provision. No waiver
by a party of any breach of this Agreement will be deemed to extend to any other
breach hereunder or affect in any way any rights arising by virtue of any other
breach.

(f)      Severability. Each provision of this Agreement is severable from every
other provision of this Agreement. Any provision of this Agreement that is
determined by any court of competent jurisdiction to be invalid or unenforceable
will not affect the validity or enforceability of any other provision. Any
provision of this Agreement held invalid or unenforceable only in part or degree
will remain in full force and effect to the extent not held invalid or
unenforceable.

(g)     Construction. The section headings in this Agreement are inserted for
convenience only and are not intended to affect the interpretation of this
Agreement. Any reference in this Agreement to any “Section” refers to the
corresponding Section of this Agreement. The word

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“including” in this Agreement means “including without limitation.” All words in
this Agreement will be construed to be of such gender or number as the
circumstances require.

(h)     Governing Law. This Agreement will be governed by the laws of the State
of California without giving effect to any choice or conflict of law principles
of any jurisdiction.

 

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.

 

 

 

 

EMPLOYEE:

    

COMPANY:

 

 

 

/s/ Suneel Gupta, Ph.D.

 

Protagonist Therapeutics, Inc.

Suneel Gupta, Ph.D.

 

By:

/s/ Dinesh V. Patel

 

 

Dinesh V. Patel, Ph.D.

 

 

President and Chief Executive Officer

 

 

Signature Page to

Employee Severance Agreement

 

 

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