Exhibit 10.1

  

EXECUTIVE EMPLOYMENT AGREEMENT

 

This EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) is entered into effective
October 1, 2020 (the “Effective Date”), by and between Tom Reilly (“Executive”)
and Cara Therapeutics, Inc. (the “Company”).

 

WHEREAS, the Company desires to employ Executive and, in connection therewith,
to compensate Executive for Executive’s personal services to the Company; and

 

WHEREAS, Executive wishes to be employed by the Company and 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          Position. Subject to the terms set forth herein, the Company agrees
to employ Executive in the position of Chief Financial Officer (“CFO”), and
Executive hereby accepts such employment. The Company reserves the right to
change or modify Executive’s title and/or duties as business needs may require.
During the term of Executive’s employment with the Company, Executive will
devote his best efforts and substantially all of his business time and attention
to the business of the Company.

 

1.2          Duties. Executive will report to the Chief Executive Officer of the
Company (the “CEO”) performing such duties as are normally associated with
Executive’s position, and as more fully described on Exhibit A hereto, 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 shall perform Executive’s duties
under this Agreement principally out of the Company’s corporate headquarters
which are currently located in Stamford, Connecticut. Where required, the
Company will provide an overnight accommodation at a local hotel. In addition,
Executive shall make such business trips to such places as may be necessary or
advisable for the efficient operations of the Company.

 

1.3          At-Will Employment. Executive’s employment relationship with the
Company is, and shall at all times remain, at-will. This means that either
Executive or the Company may terminate the employment relationship at any time,
for any reason or for no reason, with or without cause or advance notice.

 

1.4          Company Policies and Benefits. The employment relationship between
the parties shall also be subject to the Company’s personnel policies and
procedures as they may be interpreted, adopted, revised or deleted from time to
time in the Company’s sole discretion. Executive will be eligible to participate
on the same basis as similarly situated employees in the Company’s benefit plans
in effect from time to time during his employment. All matters of eligibility
for coverage or benefits under any benefit plan shall be determined in
accordance with the provisions of such 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 shall control.

 

  

 

 

1.5          Start Date. Executive’s employment with the Company shall commence
on October 1, 2020 (the “Start Date”).

 

2.COMPENSATION.

 

2.1          Salary. Executive shall receive for Executive’s services to be
rendered hereunder an initial annualized base salary of $400,000, subject to
review and adjustment from time to time by the Board of Directors of the Company
(the “Board”) in its sole discretion and payable subject to standard federal and
state payroll withholding requirements in accordance with Company’s standard
payroll practices (“Base Salary”). The Base Salary shall be prorated for any
partial year of employment on the basis of a 365-day year.

 

2.2Target Bonus.

 

(a)            During Employment. Executive shall be eligible for an annual cash
bonus with the initial target amount of such bonus equal to forty percent (40%)
of Executive’s Base Salary during the then current bonus year (“Target Bonus”),
subject to review and adjustment from time to time by the CEO and Compensation
Committee in their sole discretion, payable subject to standard federal and
state payroll withholding requirements. Whether or not Executive is eligible for
any annual 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 Company, and (b) Executive’s continuous performance of
services to the Company through the date any annual bonus is paid. Executive
will be eligible for a pro-rated annual bonus for 2020, subject to the
eligibility criteria in this Section 2.2 and provided that the annual bonus for
2020 (if any) will be prorated based upon the number of days during which he was
employed by the Company in 2020. In all events, any bonus awarded pursuant to
this Section 2.2 will be paid on or before March 15 of the year following the
year for which is awarded.

 

(b)            Upon Termination. Except as otherwise set forth in Section 6
herein, in the event Executive leaves the employ of the Company for any reason
prior to payment of any bonus, Executive is not eligible for such bonus,
prorated or otherwise.

 

2.3            Signing and Retention Payment. The Company will make a one-time
payment to Executive of $30,000 (the “Signing and Retention Payment”), less
applicable withholding taxes, which will be earned upon Executive remaining in
employment through the one (1) year anniversary of the Start Date. The Signing
and Retention Payment will be paid as an advance, in a lump sum within thirty
(30) days following Executive’s Start Date, subject to Executive’s continued
employment through and including the date on which the Signing and Retention
Payment is paid. If at any time prior to the one (1) year anniversary of
Executive’s Start Date, Executive’s service to the Company terminates for any
reason (other than a termination by the Company without Cause (as defined
below), Executive will be required to, and hereby agrees to, repay to the
Company 100% of the Signing and Retention Payment (on a net of tax basis).
Executive agrees that if he is obligated to repay the Signing and Retention
Payment, the Company may deduct, in accordance with applicable law, the amount
from any payments the Company owes Executive, including but not limited to any
regular payroll amount and any expense payments. Executive further agrees to pay
to the Company, within thirty (30) days of the termination date, any remaining
unpaid balance of the unearned Signing and Retention Payment not covered by such
deductions.

 

  

 

 

2.4          Expense Reimbursement. The Company will reimburse Executive for
reasonable business expenses in accordance with the Company’s standard expense
reimbursement policy. These will include any expenses incurred by Executive with
respect to travel to the Stamford, CT office when requested by the Company. To
the extent that any reimbursements payable to Executive under this Agreement are
subject to the provisions of Section 409A of the Code, then (i) any such
reimbursements will be paid no later than December 31 of the year following the
year in which the expense was incurred or, with respect to any tax
reimbursement, the year in which the taxes were paid, (ii) the amount of
expenses reimbursed in one year will not affect the amount eligible for
reimbursement in any subsequent year, and (iii) the right to reimbursement under
this Agreement will not be subject to liquidation or exchange for another
benefit.

 

2.5           Stock Option. Subject to approval by the Board and subject to the
terms of the Company’s 2014 Equity Incentive Plan (the “Plan”), Executive will
be granted an option (the “Option”) to purchase 175,000 shares of the Company’s
Common Stock (the “Option Shares”). Subject to Executive’s continuous service
through each applicable vesting date, the Option will vest and become
exercisable with respect to twenty-five percent of the Option Shares on the
first anniversary of the Start Date and will vest with respect to the remaining
75% of the Option Shares in equal amounts at the end of each calendar month for
the 36-month period following the first anniversary of the Start Date. The
exercise price of the Option will be equal to the fair market value of the
Company’s Common Stock on the date of grant of the Option, as determined by the
Company. The Option will be governed by the Plan and other documents issued in
connection with the grant.

 

3.            CONFIDENTIAL INFORMATION, INVENTIONS, NON-COMPETITION AND NON-
SOLICITATION OBLIGATIONS. As a condition of employment Executive agrees to
execute and abide by the Cara Therapeutics, Inc., At Will Employment,
Confidential Information, Invention Assignment, And Arbitration Agreement,
attached as Exhibit B which may be amended by the parties from time to time
without regard to this Agreement (the “Confidential Information Agreement”).

 

4.            OUTSIDE ACTIVITIES. Except with the prior written consent of the
Company’s Board, 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 Board. This restriction shall not, however, preclude Executive
from owning less than one percent (1%) of the total outstanding shares of a
publicly traded company.

 

  

 

 

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 herewith.

 

6.            TERMINATION OF EMPLOYMENT. The parties acknowledge that either
Executive or the Company may terminate the employment relationship at any time
for any reason by giving notice as described in Sections 6.6 and 7.1. 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 restrict the
right of either party to terminate the employment relationship.

 

6.1          Termination by the Company Without Cause.

 

(a)           The Company shall have the right to terminate Executive’s
employment with the Company pursuant to this Section 6.1 at any time without
“Cause” (as defined in Section 6.2(b) below) by giving notice as described in
Section 6.6 of this Agreement. A termination pursuant to Section 6.5 below is
not a termination without “Cause” for purposes of receiving the benefits
described in this Section 6.1.

 

(b)           In the event Executive’s employment is terminated without Cause on
or after the first anniversary of the Start Date, then provided that Executive
executes a general release in favor of the Company, in substantially the form
attached as Exhibit C (the “Release”), and subject to Section 6.1(c) (the date
that the Release becomes effective and may no longer be revoked by Executive is
referred to as the “Release Date”), then the Company shall provide the following
severance benefits to Executive (the “Severance Benefits”):

 

(i)            an amount equal to Executive’s then current Base Salary for a
period of nine (9) months following the Release Date (such applicable period is
referred to as the “Severance Period”), less applicable withholdings and
deductions, on the Company’s regular payroll dates;

 

(ii)            an amount equal to 50% of the Target Bonus that Executive was
eligible to receive during the calendar year in which Executive is terminated
without Cause (if any) prorated for any partial year of employment on the basis
of a 365-day year, less applicable withholdings and deductions, payable in a
lump sum on the later of (x) the date that annual performance bonuses are
normally paid to other executives at the Company for that calendar year or
(y) the Release Date, but in no event later than March 15 of the year following
the year for which the Target Bonus is paid; and

 

  

 

 

(iii)            provided Executive timely elects and remains eligible for
continued coverage under COBRA, the Company will pay Executive COBRA premiums
for the coverage that Executive and Executive’s eligible dependents had at the
time of the separation from the Company until the earliest of: (x) nine
(9) months following the separation from the Company (the “COBRA Period”);
(y) the date when Executive becomes eligible for substantially equivalent health
insurance coverage in connection with new employment or self-employment; or
(z) the date Executive cease to be eligible for COBRA continuation coverage for
any reason (such period from the termination date through the earlier of
(x)-(z), (the “COBRA Payment Period”). Notwithstanding the foregoing, if at any
time the Company determines that its payment of COBRA 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 such
portion of the premiums pursuant to this Section, the Company shall pay
Executive on the last day of each remaining month of the COBRA Payment Period, a
fully taxable cash payment equal to the portion of such COBRA premium that would
have been paid by the Company for such month, subject to applicable tax
withholding, for the remainder of the COBRA Payment Period. Nothing in this
Agreement shall deprive Executive of his rights under COBRA or ERISA for
benefits under plans and policies arising under his employment by the Company.
For the avoidance of doubt, COBRA premiums paid by Executive before the Release
Date, if any, will be reimbursed by the Company through a lump-sum payment to
Executive on the Release Date, contingent upon Executive’s submission of any
required documentation of proof of payment.

 

In the event Executive’s employment is terminated without Cause before the first
anniversary of the Start Date, then provided that Executive executes and does
not revoke the Release, and subject to Section 6.1(c) then the Company shall
provide the Executive with the Severance Benefits, except that the Severance
Period under Sections 6.1(b)(i) shall be reduced to three (3) months and the
COBRA Period set forth in Section 6.1(b)(iii)(x) shall be reduced to three
(3) months. To receive any Severance Benefits under this Section 6.1,
Executive’s termination 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 sixty (60) days of Executive’s
termination (or sooner in accordance with the consideration period specified in
the Release).

 

(c)            Executive shall not receive any of the benefits pursuant to
Section 6.1(b) or Section 6.4 unless he executes the Release within the
consideration period specified therein, which shall in no event be more than 60
days, and until the Release becomes effective and can no longer be revoked by
Executive under its terms. If the consideration period for signing the Release
spans two calendar years, then, notwithstanding when Executive signs the Release
and the Release becomes effective, no payments under Sections 6.1(b) or 6.4 will
occur until the subsequent calendar year if necessary to avoid the imposition of
taxes under Section 409A (with such payments beginning or being made, as
applicable, on the later of the Company’s first regularly scheduled payroll date
in the subsequent calendar year or the first payroll date after the Release
Date). Executive’s ability to receive benefits pursuant to Section 6.1(b) or
Section 6.4 is further conditioned upon his: returning all Company property;
complying with his post-termination obligations under this Agreement and the
Confidential Information Agreement; and complying with the Release, including
without limitation any non- disparagement and confidentiality provisions
contained therein.

 

(d)            In the event Executive’s employment is terminated at any time
without Cause, in addition to the severance benefits in Section 6.1(b) or in
Section 6.4, the Company shall pay to Executive the accrued but unpaid salary of
Executive through the date of termination, in accordance with the Company’s
standard payroll policies, together with all compensation and benefits payable
to Executive based on his participation in any compensation or benefit plan,
program or arrangement through the date of termination. The Company will also
reimburse Executive for reasonable business expenses in accordance with the
Company’s standard expense reimbursement policy.

 

  

 

 

(e)            The damages caused by the termination of Executive’s employment
without Cause would be difficult to ascertain; therefore, the severance for
which Executive is eligible pursuant to Section 6.1(b) or Section 6.4 in
exchange for the Release is agreed to by the parties as liquidated damages, to
serve as full compensation, and not a penalty.

 

6.2Termination by the Company for Cause.

 

(a)            Subject to Section 6.2(c) below, the Company shall have the right
to terminate Executive’s employment with the Company at any time for Cause by
giving notice as described in Sections 6.6 and 7.1 of this Agreement.

 

(b)            “Cause” for termination shall mean that the Company has
determined in its sole discretion that Executive has engaged in any one or more
of the following:

 

(i) Executive’s commission of a felony; (ii) any act or omission of Executive
constituting dishonesty, fraud, immoral, or disreputable conduct that causes
material harm to the Company; (iii) Executive’s violation of Company policy that
causes material harm to the Company; (iv) Executive’s material breach of any
written agreement between Executive and the Company which, if curable, remains
uncured for thirty (30) days after notice; or (v) breach of fiduciary duty.

 

(c)            In the event Executive’s employment is terminated at any time for
Cause, Executive will not receive severance benefits in Sections 6.1(b) or 6.4,
or any other severance compensation or benefit, except that, pursuant to the
Company’s standard payroll policies, the Company shall pay to Executive the
accrued but unpaid salary of Executive through the date of termination, together
with all compensation and benefits payable to Executive based on his
participation in any compensation or benefit plan, program or arrangement
through the date of termination. The Company will also reimburse Executive for
reasonable business expenses in accordance with the Company’s standard expense
reimbursement policy.

 

6.3Resignation by Executive.

 

(a)            Executive may resign from Executive’s employment with the Company
at any time by giving notice as described in Sections 6.6 and 7.1.

 

(b)            In the event Executive resigns from Executive’s employment with
the Company, Executive will not receive severance benefits under Section 6.1(b),
Section 6.4 or any other severance compensation or benefit, except that,
pursuant to the Company’s standard payroll policies, the Company shall pay to
Executive the accrued but unpaid salary of Executive through the date of
resignation, together with all compensation and benefits payable to Executive
through the date of resignation under any compensation or benefit plan, program
or arrangement during such period and Executive shall be eligible for any
benefit continuation or conversion rights provided by the provisions of a
benefit plan or by law. The Company will also reimburse Executive for reasonable
business expenses in accordance with the Company’s standard expense
reimbursement policy.

 

  

 

 

6.4            Termination in Connection With a Change in Control. In the event
that the Company terminates Executive without Cause within the three month
period immediately prior to a Change in Control (“Change in Control” to have the
same meaning and effect as “Change in Control” is defined in the Plan, as may be
amended from time to time ) or during the twelve month period after any such
Change in Control (a “Change in Control Termination”), then provided that
Executive executes the Release and allows it to become effective and subject to
Section 6.1(c), the Company shall provide the following “Change in Control
Severance Benefits”:

 

(a)            The Severance Benefits described in Section 6.1(b); and

 

(b)            Notwithstanding anything contained in Executive’s stock option or
other equity award agreements to the contrary, upon a Change in Control
Termination, provided that the Executive executes the Release and allows it to
become effective and, provided further, if such termination occurs after a
Change in Control, that Executive’s equity awards have been continued, assumed
or substituted for by the Company or the acquirer or the surviving entity in
such Change in Control, then effective as of the later of the effective date of
the Change in Control or the termination date, any unvested portion of the
equity awards will vest in full.

 

6.5Termination 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 shall terminate immediately,
and the Company shall, pursuant to the Company’s standard payroll policies, pay
to Executive’s legal representatives Executive’s accrued but unpaid salary
through the date of death together with all legally required compensation and
benefits payable to Executive based on Executive’s participation in any
compensation or benefit plan, program or arrangement through the date of
termination.

 

(b)            Subject to applicable state and federal law, the Company shall 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” shall 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 one hundred twenty (120) consecutive calendar days 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 shall be interpreted and applied
consistent with the Americans with Disabilities Act, the Family and Medical
Leave Act, and other applicable law. In the event Executive’s employment is
terminated based on Executive’s Disability, Executive will not receive severance
payments, or any other severance compensation or benefit, except that, pursuant
to the Company’s standard payroll policies, the Company shall pay to Executive
the accrued but unpaid salary of Executive through the date of termination,
together with all compensation and benefits payable to Executive based on
Executive’s participation in any compensation or benefit plan, program or
arrangement through the date of termination.

 

  

 

 

6.6Notice; Effective Date of Termination.

 

(a)           Termination of Executive’s employment pursuant to this Agreement
shall be effective on the earliest of:

 

(i)              immediately after the Company gives notice to Executive of
Executive’s termination, with or without Cause (except for a termination for
“Cause” under Section 6.2(b)(iv)), unless the Company specifies a later date, in
which case, termination shall be effective as of such later date;

 

(ii)           thirty (30) days after the Company gives notice to Executive of
Executive’s termination for Cause under Section 6.2(b)(iv) and Executive fails
to cure such breach;

 

(iii)          immediately upon Executive’s death;

 

(iv)           ten (10) days after the Company gives notice to Executive of
Executive’s termination on account of Executive’s Disability, unless the Company
specifies a later date, in which case, termination shall be effective as of such
later date, provided that Executive has not returned to the full time
performance of Executive’s duties prior to such date; or

 

(v)             thirty (30) days after Executive gives written notice to the
Company of Executive’s resignation, provided that the Company may set a
termination date at any time between the date of notice and the date of
resignation, in which case Executive’s resignation shall be effective as of such
other date. Executive will receive compensation through any required notice
period.

 

(b)            In the event notice of a termination under subsections (a)(i),
(ii), (iv), and (v) is given orally, at the other party’s request, the party
giving notice must provide written confirmation of such notice within five
(5) business days of the request in compliance with the requirement of
Section 7.1 below.

 

6.7          Cooperation With Company. During Executive’s employment and
following termination of Executive’s employment for any reason, Executive shall
reasonably cooperate with the Company in all matters relating to the winding up
of Executive’s pending work including, but not limited to, any litigation in
which the Company is involved, and the orderly transfer of any such pending work
to such other employees as may be designated by the Company. To the extent
Executive is required to spend more than ten (10) total hours following
Executive’s termination , the Company shall reasonably compensate Executive for
any additional time spent.

 

  

 

 

6.8           Application of Section 409A. It is intended that all of the
benefits and payments under this Agreement satisfy, to the greatest extent
possible, the exemptions from the application of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) provided under Treasury
Regulations 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9), and this
Agreement will be construed to the greatest extent possible as consistent with
those provisions. If not so exempt, this Agreement (and any definitions
hereunder) will be construed in a manner that complies with Section 409A of the
Code, and incorporates by reference all required definitions and payment terms.
For purposes of Section 409A of the Code (including, without limitation, for
purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), Executive’s right
to receive any installment payments under this Agreement (whether severance
payments, reimbursements or otherwise) will be treated as a right to receive a
series of separate payments and, accordingly, each installment payment hereunder
will at all times be considered a separate and distinct payment. Notwithstanding
any provision to the contrary in this Agreement, if Executive is deemed by the
Company at the time of his 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
upon Separation from Service set forth herein and/or under any other agreement
with the Company are deemed to be “deferred compensation”, then if 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 of the Code, the timing of the payments upon a
Separation from Service will be delayed as follows: on the earlier to occur of
(i) the date that is six months and one day after the effective date of
Executive’s Separation from Service, and (ii) the date of Executive’s death
(such earlier date, the “Delayed Initial Payment Date”), the Company will
(A) pay to Executive a lump sum amount equal to the sum of the payments upon
Separation from Service that Executive would otherwise have received through the
Delayed Initial Payment Date if the commencement of the payments had not been
delayed pursuant to this paragraph, and (B) commence paying the balance of the
payments in accordance with the applicable payment schedules set forth above. No
interest will be due on any amounts so deferred.

 

6.9Parachute Taxes.

 

(a)            If any payment or benefit Executive would receive from the
Company or otherwise in connection with a Change in Control or other similar
transaction (“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
such Payment will be equal to the Reduced Amount. The “Reduced Amount” will be
either (x) the largest portion of the Payment that would result in no portion of
the Payment being subject to the Excise Tax, or (y) the largest portion, up to
and including the total, of the Payment, whichever amount ((x) or (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 of the greater economic benefit
notwithstanding that all or some portion of the Payment may be subject to the
Excise Tax. If a Reduced Amount will give rise to the greater after tax benefit,
the reduction in the Payments will occur in the following order: (a) reduction
of cash payments; (b) cancellation of accelerated vesting of equity awards other
than stock options; (c) cancellation of accelerated vesting of stock options;
and (d) reduction of other benefits paid to Executive. Within any such category
of payments and benefits (that is, (a), (b), (c) or (d)), a reduction will occur
first with respect to amounts that are not “deferred compensation” within the
meaning of Section 409A of the Code and then with respect to amounts that are
“deferred compensation” within the meaning of Section 409A of the Code. In the
event that acceleration of compensation from Executive’s equity awards is to be
reduced, such acceleration of vesting will be canceled, subject to the
immediately preceding sentence, in the reverse order of the date of grant.

 

  

 

 

(b)            The registered public accounting firm engaged by the Company for
general audit purposes as of the day prior to the effective date of the event
described in Section 280G(b)(2)(A)(i) of the Code will perform the foregoing
calculations. If the registered public accounting firm so engaged by the Company
is serving as accountant or auditor for the acquirer or is otherwise unable or
unwilling to perform the calculations, the Company will appoint a nationally
recognized firm that has expertise in these calculations to make the
determinations required hereunder. The Company will bear all expenses with
respect to the determinations by such independent registered public accounting
firm required to be made hereunder. The Company will use reasonable efforts to
cause firm engaged to make the determinations hereunder will provide its
calculations, together with detailed supporting documentation, to the Company
and Executive within 30 calendar days after the date on which Executive’s right
to a Payment is triggered (if requested at that time by the Company or
Executive) or such other time as reasonably requested by the Company or
Executive. Any good faith determinations of the independent registered public
accounting firm made hereunder will be final, binding and conclusive upon the
Company and Executive.

 

7.GENERAL PROVISIONS.

 

7.1            Notices. Any notices required hereunder to be in writing shall 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) five (5) 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 receipt. All communications shall be sent to the
Company, “Attention Chairman of the Board,” at its primary office location and
to Executive at Executive’s address as listed on the Company payroll, 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 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            Waiver. If either party should waive any breach of any provisions
of this Agreement, Executive or the Company shall not thereby be deemed to have
waived any preceding or succeeding breach of the same or any other provision of
this Agreement.

 

  

 

 

7.4            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. 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
have or may enter into separate agreements related to stock awards. These
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.

 

7.5            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.

 

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

 

7.7            Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive and the Company, and
their respective successors, assigns, heirs, executors and administrators,
except that Executive may not assign any of his duties hereunder and he may not
assign any of his rights hereunder without the written consent of the Company,
which shall not be withheld unreasonably.

 

7.8            Choice of Law. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the law of the
State of Connecticut, without giving effect to choice of law principles.

 

  

 

 

 

7.9            Resolution of Disputes. The parties recognize that litigation in
federal or state courts or before federal or state administrative agencies of
disputes arising out of Executive’s employment with the Company or out of this
Agreement, or Executive’s termination of employment or termination of this
Agreement, may not be in the best interests of either Executive or the Company,
and may result in unnecessary costs, delays, complexities, and uncertainty. The
parties agree that any dispute between the parties arising out of or relating to
the negotiation, execution, performance or termination of this Agreement or
Executive’s employment, including, but not limited to, any claim arising out of
this Agreement, claims under Title VII of the Civil Rights Act of 1964, as
amended, the Civil Rights Act of 1991, the Age Discrimination in Employment Act
of 1967, the Americans with Disabilities Act of 1990, Section 1981 of the Civil
Rights Act of 1966, as amended, the Family Medical Leave Act, the Employee
Retirement Income Security Act, and any similar federal, state or local law,
statute, regulation, or any common law doctrine, whether that dispute arises
during or after employment, shall be settled by binding arbitration in
accordance with the National Rules for the Resolution of Employment Disputes of
the American Arbitration Association; provided however, that this dispute
resolution provision shall not apply to any separate agreements between the
parties that do not themselves specify arbitration as an exclusive remedy. The
location for the arbitration shall be in Fairfield County, Connecticut. Any
award made by such panel shall be final, binding and conclusive on the parties
for all purposes, and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. The arbitrators’ fees and
expenses and all administrative fees and expenses associated with the filing of
the arbitration shall be borne by the Company; provided however, that at
Executive’s option, Executive may voluntarily pay up to one-half the costs and
fees. The parties acknowledge and agree that their obligations to arbitrate
under this Section survive the termination of this Agreement and continue after
the termination of the employment relationship between Executive and the
Company. The parties each further agree that the arbitration provisions of this
Agreement shall provide each party with its exclusive remedy, and each party
expressly waives any right it might have to seek redress in any other forum,
except as otherwise expressly provided in this Agreement. By election
arbitration as the means for final settlement of all claims, the parties hereby
waive their respective rights to, and agree not to, sue each other in any action
in a Federal, State or local court with respect to such claims, but may seek to
enforce in court an arbitration award rendered pursuant to this Agreement. The
parties specifically agree to waive their respective rights to a trial by jury,
and further agree that no demand, request or motion will be made for trial by
jury.

 

IN WITNESS WHEREOF, the parties have executed this Executive Employment
Agreement on the day and year first written above.

 

CARA THERAPEUTICS, INC.   EXECUTIVE:              /s/ Derek Chalmers, Ph.D.,
D.Sc.   /s/ Tom Reilly (Signature)   (Signature)       By: Derek Chalmers,
Ph.D., D.Sc.   By: Tom Reilly             Title: President & CEO    

 

  

 

 

 

Exhibit A

 

CFO POSITION DESCRIPTION

 

In this position, you will be a strategic partner to the President and CEO and
will work closely with the CEO, management team, and members of the Board of
Directors to further create and build value at the Company. As CFO, you will
have primary responsibility for planning, implementing, managing and controlling
all financial-related activities of the Company, which include overall
responsibility for finance, accounting, treasury, tax, foreign exchange,
forecasting and strategic planning, particularly with respect to investor
relations (IR). You will also:

 

·Ensure that effective internal controls are in place and ensure effective cost
controls and compliance with GAAP and applicable federal, state and local
regulatory laws and rules for financial and tax reporting.

 

·Work closely with the CEO, Audit Committee of the Board of Directors, outside
accountants and outside counsel in the preparation and coordination of all
timely and accurate public company filings and documents.

 

·Ensure Company compliance with all Sarbanes-Oxley Section 404 requirements.

 

·Ensure audit coordination and public reporting in the U.S. under GAAP
(principal accounting officer for SEC filings).

 

·Establish and manage key banking relationships.

 

·Act to provide oversight of financial operations to include regular financial
statements, income statements, balance sheets and cash flow statements, and the
reporting of operational results as required to management, the Board of
Directors, public shareholders and the SEC.

 

·Work with the CEO and management team in preparing presentations to the Board
of Directors, investors and other stakeholders and work to effectively represent
the Company both internally and externally to the investor and business
communities, including the Board of Directors, investors, partners, auditors,
regulators and advisors.

 

·In coordination with the CEO, design and implement on overall IR strategy which
will aim to derive a more institutionally – related investor base and coordinate
NDR activity which will raise Cara’s profile amongst the investment community.

 

·Participate in Cara’s business development activities related to out-licensing
and in- licensing agreements as needed.

 

·Other duties consistent with the CFO position as assigned.

 

  

 

 

Exhibit B

 

Cara Therapeutics, Inc., At Will Employment, Confidential Information, Invention
Assignment, And Arbitration Agreement

 

  

 

 

Exhibit C

 

Release Agreement

 

This Release Agreement (“Release”) is made by and between Cara
Therapeutics, Inc. (the “Company”) and Tom Reilly (“you”).   You and the Company
entered into an Employment Agreement dated                               (the
“Employment Agreement”). You and the Company hereby further agree as follows:

 

1.            A blank copy of this Release was attached to the Employment
Agreement as Exhibit C.

 

2.            Severance Benefits. In connection with your separation from the
Company, you are eligible for certain severance benefits under Section 6 of the
Employment Agreement for a termination without Cause [and a Change in Control
Termination]. In consideration for your execution, return and non-revocation of
this Release, following the Release Date (as defined in Section 4 below) the
Company will provide severance benefits, in accordance with Section 6 of the
Employment Agreement, to you as follows:

 

(i)              an amount equal to your current Base Salary for a period of
[nine (9)] [three (3)] months following the Release Date (such applicable period
is referred to as the “Severance Period”), less applicable withholdings and
deductions, on the Company’s regular payroll dates;

 

(ii)              an amount equal to 50% of the Target Bonus that you were
eligible to receive during the year in which you were terminated without Cause
(if any) prorated for any partial year of employment on the basis of a 365-day
year, payable in a lump sum on the later of (x) the date annual performance
bonuses are normally paid to other executives at the Company for that calendar
year, or (y) the Release Date, but in no event later than March 15 of the year
following the year for which the Target Bonus is paid;

 

(iii)           provided you timely elect and remain eligible for continued
coverage under COBRA, the Company will pay you COBRA premiums for the coverage
that you and your eligible dependents had at the time of the separation from the
Company until the earliest of: (x) [nine (9)] [three (3)] months following the
separation from the Company; (y) the date when you become eligible for
substantially equivalent health insurance coverage in connection with new
employment or self-employment; or (z) the date you cease to be eligible for
COBRA continuation coverage for any reason; [and

 

(iv)            Notwithstanding anything contained in your stock option or other
equity award agreements to the contrary, upon a Change in Control Termination,
provided that your equity awards have been continued, assumed or substituted for
by the Company or the acquirer or the surviving entity in such Change in Control
if such termination occurs after a Change in Control, then, effective as of the
later of the effective date of the Change in Control or the termination date,
any unvested portion of the equity awards will vest in full. For the purposes of
this Release, “Change in Control” will have the same meaning and effect as
“Change in Control” is defined in the Company’s 2014 Equity Incentive Plan, as
may be amended from time to time].

  

 1. 

 

 

3.            Release. In exchange payments and other consideration under this
Release, to which you would not otherwise be entitled, and except as otherwise
set forth in this Release, you, on behalf of yourself and, to the extent
permitted by law, on behalf of your spouse, heirs, executors, administrators,
assigns, insurers, attorneys and other persons or entities, acting or purporting
to act on your behalf (collectively, the “Employee Parties”), hereby generally
and completely release, acquit and forever discharge the Company, its parents
and subsidiaries, and its and their officers, directors, managers, partners,
agents, representatives, employees, attorneys, shareholders, predecessors,
successors, assigns, insurers and affiliates (the “Company Parties”) of and from
any and all claims, liabilities, demands, contentions, actions, causes of
action, suits, costs, expenses, attorneys’ fees, damages, indemnities, debts,
judgments, levies, executions and obligations of every kind and nature, in law,
equity, or otherwise, both known and unknown, suspected and unsuspected,
disclosed and undisclosed, arising out of or in any way related to agreements,
events, acts or conduct at any time prior to and including the execution date of
this Release, including but not limited to: all such claims and demands directly
or indirectly arising out of or in any way connected with your employment with
the Company or the termination of that employment; claims or demands related to
salary, bonuses, commissions, stock, stock options, or any other ownership
interests in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of compensation; claims pursuant to any
federal, state or local law, statute, or cause of action; tort law; or contract
law (individually a “Claim” and collectively “Claims”). The Claims you are
releasing and waiving in this Release include, but are not limited to, any and
all Claims that any of the Company Parties:

 

·has violated its personnel policies, handbooks, contracts of employment, or
covenants of good faith and fair dealing;

 

·has discriminated against you on the basis of age, race, color, sex (including
sexual harassment), national origin, ancestry, disability, religion, sexual
orientation, marital status, parental status, source of income, entitlement to
benefits, any union activities or other protected category in violation of any
local, state or federal law, constitution, ordinance, or regulation, including
but not limited to: the Age Discrimination in Employment Act, as amended
(“ADEA”); Title VII of the Civil Rights Act of 1964, as amended; the Civil
Rights Act of 1991; 42 U.S.C. § 1981, as amended; the Equal Pay Act; the
Americans With Disabilities Act; the Genetic Information Nondiscrimination Act;
the Family and Medical Leave Act; the Connecticut Fair Employment Practices Act;
the New Jersey Law Against Discrimination; the New Jersey Equal Pay Act; the New
Jersey Conscientious Employee Protection Act; the New Jersey Civil Rights Act;
the New Jersey Family Leave Act; the New Jersey State Wage and Hour Law; the New
Jersey Wage Withholding Protection Law; the Employee Retirement Income Security
Act; the Employee Polygraph Protection Act; the Worker Adjustment and Retraining
Notification Act; the Older Workers Benefit Protection Act; the anti-retaliation
provisions of the Sarbanes-Oxley Act, or any other federal or state law
regarding whistleblower retaliation; the Lilly Ledbetter Fair Pay Act; the
Uniformed Services Employment and Reemployment Rights Act; the Fair Credit
Reporting Act; and the National Labor Relations Act; or

 

   

 

 

·has violated any statute, public policy or common law (including but not
limited to Claims for retaliatory discharge; negligent hiring, retention or
supervision; defamation; intentional or negligent infliction of emotional
distress and/or mental anguish; intentional interference with contract;
negligence; detrimental reliance; loss of consortium to you or any member of
your family and/or promissory estoppel).

 

Notwithstanding the foregoing, other than events expressly contemplated by this
Release you do not waive or release rights or Claims that may arise from events
that occur after the date this waiver is executed. Also excluded from this
Release are any Claims which cannot be waived by law, including, without
limitation, any rights you may have under applicable workers’ compensation or
unemployment laws and your right, if applicable, to file or participate in an
investigative proceeding of any federal, state or local governmental agency.
Nothing in this Release shall prevent you from filing, cooperating with, or
participating in any proceeding or investigation before the Equal Employment
Opportunity Commission, United States Department of Labor, the National Labor
Relations Board, the Occupational Safety and Health Administration, the
Securities and Exchange Commission or any other federal government agency, or
similar state or local agency (“Government Agencies”), or exercising any rights
pursuant to Section 7 of the National Labor Relations Act. You further
understand this Release does not limit your ability to voluntarily communicate
with any Government Agencies or otherwise participate in any investigation or
proceeding that may be conducted by any Government Agency, including providing
documents or other information, without notice to the Company. While this
Release does not limit your right to receive an award for information provided
to the Securities and Exchange Commission, you understand and agree that, you
are otherwise waiving, to the fullest extent permitted by law, any and all
rights you may have to individual relief based on any Claims that you have
released and any rights you have waived by signing this Release. If any Claim is
not subject to release, to the extent permitted by law, you waive any right or
ability to be a class or collective action representative or to otherwise
participate in any putative or certified class, collective or multi-party action
or proceeding based on such a Claim in which any of the Company Parties is a
party. This Release does not abrogate your existing rights under any Company
benefit plan or any plan or agreement related to equity ownership in the
Company; however, it does waive, release and forever discharge Claims existing
as of the date you execute this Release pursuant to any such plan or agreement.

 

4.            Your Acknowledgments and Affirmations / Effective Date of Release.
You acknowledge that you are knowingly and voluntarily waiving and releasing any
and all rights you may have under the ADEA, as amended. You also acknowledge and
agree that (i) the consideration given to you in exchange for the waiver and
release in this Release is in addition to anything of value to which you were
already entitled, and (ii) that you have been paid for all time worked, have
received all the leave, leaves of absence and leave benefits and protections for
which you are eligible, and have not suffered any on-the-job injury for which
you have not already filed a Claim. You affirm that all of the decisions of the
Company Parties regarding your pay and benefits through the date of your
execution of this Release were not discriminatory based on age, disability,
race, color, sex, religion, national origin or any other classification
protected by law. You affirm that you have not filed or caused to be filed, and
are not presently a party to, a Claim against any of the Company Parties. You
further affirm that you have no known workplace injuries or occupational
diseases. You acknowledge and affirm that you have not been retaliated against
for reporting any allegation of corporate fraud or other wrongdoing by any of
the Company Parties, or for exercising any rights protected by law, including
any rights protected by the Fair Labor Standards Act, the Family Medical Leave
Act or any related statute or local leave or disability accommodation laws, or
any applicable state workers’ compensation law. You further acknowledge and
affirm that you have been advised by this writing that: (a) your waiver and
release do not apply to any rights or Claims that may arise after the execution
date of this Release; (b) you have been advised hereby that you have the right
to consult with an attorney prior to executing this Release; (c) you have been
given [twenty-one (21)/ forty-five (45)] days to consider this Release (although
you may choose to voluntarily execute this Release earlier and if you do you
will sign the Consideration Period waiver below); (d) you have seven (7) days
following your execution of this Release to revoke this Release; and (e) this
Release shall not be effective until the date upon which the revocation period
has expired unexercised (the “Release Date”), which shall be the eighth day
after this Release is executed by you.

 

   

 

 

5.            Return of Company Property. Within ten (10) days of the effective
date of the termination of employment, you agree to return to the Company all
Company documents (and all copies thereof) and other Company property then in
existence that you have had in your possession at any time, including, but not
limited to, Company files, notes, drawings, records, business plans and
forecasts, financial information, specifications, computer-recorded information,
tangible property (including, but not limited to, computers), credit cards,
entry cards, identification badges and keys; and, any materials of any kind that
contain or embody any proprietary or confidential information of the Company
(and all reproductions thereof). Receipt of the Severance Benefits described in
paragraph 2 of this Release expressly conditioned upon return of all such
Company Property.

 

6.            Confidentiality. The provisions of this Release will be held in
strictest confidence by you and will not be publicized or disclosed in any
manner whatsoever; provided, however, that: (a) you may disclose this Release in
confidence to your immediate family; (b) you may disclose this Release in
confidence to your attorney, accountant, auditor, tax preparer, and financial
advisor; and (c) you may disclose this Release insofar as such disclosure may be
required by law. Notwithstanding the foregoing, nothing in this Release shall
limit your right to voluntarily communicate with the Equal Employment
Opportunity Commission, United States Department of Labor, the National Labor
Relations Board, the Securities and Exchange Commission, other federal
government agency or similar state or local agency or to discuss the terms and
conditions of your employment with others to the extent expressly permitted by
Section 7 of the National Labor Relations Act.

 

7.            Proprietary Information and Post-Termination Obligations. You
acknowledge your continuing obligations to the Company under the Cara
Therapeutics, Inc., At Will Employment, Confidential Information, Invention
Assignment, And Arbitration Agreement. Proprietary and/or confidential
information that is also a “trade secret,” as defined by law, may be disclosed
(A) if it 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. In addition, in the event that
you file a lawsuit for retaliation by the Company for reporting a suspected
violation of law, you may disclose the trade secret to your attorney and use the
trade secret information in the court proceeding, if you: (A) file any document
containing the trade secret under seal; and (B) do not disclose the trade
secret, except pursuant to court order.

 

   

 

 

8.            Non-Disparagement. You agree not to disparage the Company, and the
Company’s attorneys, directors, managers, partners, employees, agents and
affiliates, in any manner likely to be harmful to them or their business,
business reputation or personal reputation; provided that you may respond
accurately and fully to any question, inquiry or request for information when
required by legal process. Notwithstanding the foregoing, nothing in this
Release shall limit your right to voluntarily communicate with the Equal
Employment Opportunity Commission, United States Department of Labor, the
National Labor Relations Board, the Securities and Exchange Commission, other
federal government agency or similar state or local agency or to discuss the
terms and conditions of your employment with others to the extent expressly
permitted by Section 7 of the National Labor Relations Act.

 

9.            No Admission. This Release does not constitute an admission by the
Company of any wrongful action or violation of any federal, state, or local
statute, or common law rights, including those relating to the provisions of any
law or statute concerning employment actions, or of any other possible or
claimed violation of law or rights.

 

10.            Breach. You agree that upon any material breach of this Release
you will forfeit all amounts paid or owing to you under this Release. Further,
you acknowledge that it may be impossible to assess the damages caused by your
material violation of the terms of paragraphs 5, 6, 7 and 8 of this Release and
further agree that any threatened or actual material violation or breach of
those paragraphs of this Release will constitute immediate and irreparable
injury to the Company. You therefore agree that any such breach of this Release
is a material breach of this Release, and, in addition to any and all other
damages and remedies available to the Company upon your breach of this Release,
the Company shall be entitled to an injunction to prevent you from violating or
breaching this Release.

 

11.            Miscellaneous. This Release, together with your Cara
Therapeutics, Inc., At Will Employment, Confidential Information, Invention
Assignment, And Arbitration Agreement, constitute the complete, final and
exclusive embodiment of the entire agreement between you and the Company with
regard to this subject matter. It is entered into without reliance on any
promise or representation, written or oral, other than those expressly contained
herein, and it supersedes any other such promises, warranties or
representations. This Release may not be modified or amended except in a writing
signed by both you and a duly authorized officer of the Company. This Release
will bind the heirs, personal representatives, successors and assigns of both
you and the Company, and inure to the benefit of both you and the Company, their
heirs, successors and assigns. If any provision of this Release is determined to
be invalid or unenforceable, in whole or in part, this determination will not
affect any other provision of this Release and the provision in question will be
modified by the court so as to be rendered enforceable. This Release will be
deemed to have been entered into and will be construed and enforced in
accordance with the laws of the State of Connecticut as applied to contracts
made and performed entirely within the State of Connecticut.

 

 

   

 

 

 

CARA THERAPEUTICS, INC.               By:       Derek Chalmers, Ph.D., D.Sc.    
  President & CEO   Date

  

I UNDERSTAND THAT THIS RELEASE INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN
CLAIMS, EVEN THOSE UNKNOWN CLAIMS THAT IF KNOWN BY ME, WOULD AFFECT MY DECISION
TO ACCEPT THIS RELEASE.

 

EXECUTIVE                       Tom Reilly   Date

 

CONSIDERATION PERIOD

 

I, Tom Reilly, understand that I have the right to take at least [21/] [45] days
to consider whether to sign this Release, which I received on                  ,
20 . If I elect to sign this Release before [21/] [45] days have passed, I
understand I am to sign and date below this paragraph to confirm that I
knowingly and voluntarily agree to waive the [21/] [45]-day consideration
period.

 

 

AGREED:          

 

 

    Signature    

 

 

    Date