Document:

arlz_Ex10_1

		
			Exhibit 10.1
		

		
			EXECUTIVE EMPLOYMENT AGREEMENT
		

		
			This EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made as of March 13, 2018, by and between Aralez Pharmaceuticals Inc. (together with its successors and assigns, “Aralez” or the “Company”), and Michael Kaseta (“Executive”).
		

		
			R E C I T A L S
		

		
			WHEREAS, the Company desires to promote Executive to Chief Financial Officer and Executive desires to be employed by the Company as the Chief Financial Officer of the Company.
		

		
			NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and conditions herein, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereby agree as follows:
		

		
			A G R E E M E N T
		

		
			1.          Employment and Term.  The Company hereby agrees to employ Executive and Executive hereby accepts employment by the Company on the terms and conditions hereinafter set forth.  Executive’s term of employment by the Company under this Agreement (the “Term”) shall commence on March 13, 2018 (the “Effective Date”) and continue through the three-year anniversary of the Effective Date; provided,  however, that the Term shall thereafter be automatically extended for unlimited additional one-year periods unless, at least ninety (90) days prior to the then-scheduled date of expiration of the Term, either (x) the Company gives notice to Executive that it is electing not to so extend the Term; or (y) Executive gives notice to the Company that he is electing not to so extend the Term.  Notwithstanding the foregoing, the Term may be earlier terminated in strict accordance with the provisions of Section 5 below, in which event Executive’s employment with the Company shall expire in accordance therewith.
		

		
			2.          Position, Duties and Responsibilities; Location.
		

		
			2.1        Position and Duties.  Executive shall be employed as the Chief Financial Officer of Aralez Pharmaceuticals Inc.  Executive shall have the duties, powers and authority as are commensurate with his position, including such other duties and responsibilities as are reasonably delegated to him from time to time by the Chief Executive Officer of the Company (the “CEO”).  Executive shall report to the CEO.
		

		
			2.2        Exclusive Services and Efforts.  Executive agrees to devote his efforts, energies, and skill to the discharge of the duties and responsibilities attributable to his position and, except as set forth herein, agrees to devote substantially all of his professional time and attention exclusively to the business and affairs of the Company.
		

		
			3.          Compensation.
		

		
			3.1        Base Salary.  During the Term, the Company hereby agrees to pay to Executive an annualized base salary of Three Hundred and Seventy-Five Thousand Dollars ($375,000) (the “Salary”), subject to all applicable Federal, state and local income and employment taxes and other required or elected withholdings and deductions, payable in equal installments on the Company’s regularly-scheduled paydays as it is earned.  Executive’s Salary will be reviewed at least annually by the Compensation Committee (the “Compensation Committee”) of the Board of Directors of the Company (the “Board”) and may be adjusted upward (in which case such increased amount shall be the “Salary” hereunder) or remain the same (but in no event shall the Salary be reduced).
		

		
			
		

		
			

		 

		

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			3.2        Annual Cash Bonus.  For each calendar year that ends during the Term, Executive shall be entitled to receive an annual cash incentive award (the “Annual Cash Bonus”).  Executive’s target Annual Cash Bonus shall be forty-five percent (45%) of Executive’s Salary.  For each such year, the Compensation Committee shall award the Annual Cash Bonus based on an evaluation of performance and peer company compensation practices, taking into account Company and individual performance objectives.  The Compensation Committee may award an Annual Cash Bonus in excess of the target amount, and may grant a special bonus at any time.  The Annual Cash Bonus shall be paid in the calendar year following the year in which the services were performed, as soon as reasonably practicable following the Board’s approval thereof.
		

		
			3.3        Annual Equity Award.  Executive will be eligible for annual grants of long-term incentive and equity compensation awards at the Company’s good faith discretion, based upon the Compensation Committee’s evaluation of his performance and peer company compensation practices (the “Annual Equity Grant”).  Executive’s target Annual Equity Grant shall be consistent with his position at the Company’s peer companies; provided,  however, that the target Annual Equity Grant shall not be less than one hundred fifty percent (150%) of Executive’s Salary, with vesting terms consistent with that of other executives.
		

		
			3.4       Promotion Equity Award.  The Company shall grant to Executive an equity award valued at $281,000 (the “Promotion Award”) in the form of 50% Performance Share Units, 30% Restricted Stock Until and 20% Stock Options.  The Promotion Award shall be granted as soon as practicable following the Effective Date, but in the case of Restricted Stock Units and Stock Options shall be subject to the Company’s shareholders approving an increase in the number of shares available under the Company’s 2016 Long Term Incentive Plan at the Company’s 2018 annual meeting of shareholders.  Subject to the terms of this Agreement and the award agreement(s) into which Executive and the Company shall enter evidencing the grant of the Promotion Award.
		

		
			3.5        Registration of Common Stock.  In the event that the shares of Company Common Stock issuable upon vesting of the restricted stock units granted under the Sign-On Award are not otherwise covered by an effective Registration Statement on Form S-8, the Company shall use commercially reasonable efforts to register a sufficient number of shares of Common Stock on a Form S-8 to satisfy its obligations under this Agreement as soon as practicable following the execution of this Agreement.  The Company shall also accompany the Form S-8s with reoffer prospectuses and shall use reasonable best efforts to maintain the effectiveness of the Form S-8s and reoffer prospectuses.
		

		
			4.          Employee Benefits.
		

		
			4.1        Participation in Benefit Plans.  During the Term, Executive shall be entitled to participate in such health, group insurance, welfare, pension, and other employee benefit plans, programs and arrangements as are made generally available from time to time to executives of the Company (which shall include customary health, life insurance and disability plans), such participation in each case to be on terms and conditions no less favorable to Executive than to other executives of the Company generally.
		

		
			4.2        Fringe Benefits, Perquisites and Vacations.  During his employment by the Company, Executive shall be entitled to participate in all fringe benefits and perquisites made available to other executives of the Company, such participation to be at levels, and on terms and conditions, that are commensurate with his position and responsibilities at the Company and that are no less favorable than those applying to other executives of the Company.
		

		
			
		

		
			

		 

		

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			4.3        Reimbursement of Expenses.  The Company shall reimburse Executive for all reasonable business and travel expenses incurred in the performance of his job duties and the promotion of the Company’s business, promptly upon presentation of appropriate supporting documentation and otherwise in accordance with the expense reimbursement policy of the Company.
		

		
			5.          Termination.
		

		
			5.1        General.  The Company may terminate Executive’s employment for any reason or no reason, and Executive may terminate his employment for any reason or no reason, in either case subject only to the terms of this Agreement.  In the event of the termination of Executive’s employment hereunder for any reason, he shall promptly resign from any position he then holds that is affiliated with the Company or that he was holding at the Company’s request.  For purposes of this Agreement, the following terms have the following meanings:
		

		
			(a)         “Accrued Obligations” shall mean: (i) Executive’s earned but unpaid Salary through the Termination Date; (ii) a lump-sum payment in respect of accrued but unused vacation days at Executive’s per-business-day Salary rate in effect as of the Termination Date; and (iii) any unpaid expense or other reimbursements due pursuant to Section 4.3 hereof or otherwise.
		

		
			(b)         “Cause” shall mean (i) Executive is convicted of, or pleads guilty or nolo contendere to, a felony or a crime involving moral turpitude; (ii) in carrying out his duties hereunder, Executive engages in conduct that constitutes willful gross misconduct, or willful gross neglect and that, in either case, results in material economic or reputational harm to the Company, which misconduct Executive fails to cure within thirty (30) days following Executive’s receipt of written notice from the Board of such misconduct; or (iii) Executive refuses to perform, or repeatedly fails to undertake good faith efforts to perform, the duties or responsibilities reasonably assigned to him (consistent with Section 2) by the CEO, which non-performance has continued for thirty (30) days following Executive’s receipt of written notice from the Board of such non-performance.
		

		
			(c)         “Change in Control” shall mean the first to occur of any of the following, provided that for any distribution that is subject to Section 409A (as defined in Section 9.2), a Change in Control under this Agreement shall be deemed to occur only if such event also satisfies the requirements under Treas. Regs. Section 1.409A-(i)(5):
		

		
			(i)          any Person or group of Persons becomes the beneficial owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities (a “Majority of the Securities”);
		

		
			(ii)         (A) the stockholders of the Company approve a plan of complete liquidation of the Company; (B) the sale or disposition of all or substantially all of the Company’s assets; or (C) a merger, consolidation or reorganization of the Company with or involving any other entity, other than a merger, consolidation or reorganization that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least a Majority of the Securities of the Company (or such surviving entity) outstanding immediately after such merger, consolidation or reorganization owned in approximately the same proportion of such ownership by each of the prior shareholders as prior to the transaction; or
		

		
			(iii)       the date a majority of the members of the Board are replaced during any twelve (12)-month period by directors whose appointment or election are not endorsed by a majority of the members of the Board before the date of the appointment or election.
		

		
			
		

		
			

		 

		

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			Notwithstanding the foregoing, the Company’s contemplated merger transaction with Tribute Pharmaceuticals Canada Inc. shall not constitute a Change in Control.
		

		
			(d)         “Disability” shall mean that Executive has been unable, with or without reasonable accommodation and due to physical or mental incapacity, to substantially perform his duties and responsibilities hereunder for one hundred eighty (180) consecutive days.
		

		
			(e)         “Good Reason” shall mean the occurrence of any of the following events without Executive’s express prior written consent:  (i) a change in Executive’s authority, title, duties, responsibilities or reporting lines (other than any changes that may be specifically contemplated by the Company at the time of the execution of this agreement); (ii) a reduction in Executive’s base salary; (iii) relocation of Executive’s principal office, or principal place of employment, to a location that is more than fifty (50) miles from Philadelphia, Pennsylvania or such other corporate headquarters as is approved by the CEO; (iv) any other action or inaction that constitutes a material breach of this Agreement by the Company; or (v) the Company fails to extend the Term of this Agreement in accordance with Section 1.
		

		
			A termination of employment by Executive for Good Reason shall be effectuated by giving the Company written notice (“Notice of Termination for Good Reason”), not later than thirty (30) days following the occurrence of the circumstance that constitutes Good Reason, setting forth in reasonable detail the specific conduct of the Company that constitutes Good Reason.  The Company shall be entitled, during the ten (10) day period following receipt of a Notice of Termination for Good Reason, to cure the circumstances that gave rise to Good Reason, provided that the Company shall be entitled to waive its right to cure or reduce the cure period by delivery of written notice to that effect to Executive (such ten (10) day or shorter period, the “Cure Period”).  If, during the Cure Period, such circumstance is remedied, Executive will not be permitted to terminate employment for Good Reason as a result of such circumstance.  If, at the end of the Cure Period, the circumstance that constitutes Good Reason has not been remedied, Executive will be entitled to terminate employment for Good Reason during the ten (10) day period that follows the end of the Cure Period.  If Executive does not terminate employment during such ten (10) day period, Executive will not be permitted to terminate employment for Good Reason as a result of such event.
		

		
			(f)         “Termination Date” shall mean the date on which Executive’s employment hereunder terminates in accordance with this Agreement (which, in the case of a notice of non-renewal of the Term in accordance with Section 1 hereof, shall mean the date on which the Term expires).
		

		
			5.2        Termination by the Company Without Cause or by Executive With Good Reason.  In the event that Executive’s employment is terminated by the Company without Cause or by Executive for Good Reason, the Term shall expire on the Termination Date and Executive shall be entitled to:
		

		
			(a)         Payment of an amount equal to the sum of (x) one (1) times Executive’s Salary as in effect immediately prior to the Termination Date and (y) one times the average Annual Cash Bonus paid over the previous two (2) years; provided,  however, that if Executive is not employed for a sufficient time to have received an Annual Cash Bonus, such calculation will assume that a target Annual Cash Bonus was paid, payable in twelve (12) substantially equal monthly installments commencing with the first regular payroll period following the expiration of any applicable revocation period with respect to the Release, but in any event, if at all, within ninety (90) days after the Termination Date;
		

		
			(b)         reimbursement for monthly COBRA costs of continued coverage for a period of twelve (12) months following the Termination Date under the Company’s welfare plans (including health, dental, prescription drug and vision), for Executive and, as applicable, his spouse and
		

		
			
		

		
			

		 

		

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			eligible dependents, less the amount Executive would be required to contribute for such coverage if Executive had remained an active employee during such twelve (12) month period;
		

		
			(c)         acceleration of the vesting of all equity and equity-based awards that would otherwise vest during the twelve (12) month period following the Termination Date; and
		

		
			(d)         the Accrued Obligations.
		

		
			5.3        Death and Disability.  Executive’s employment shall terminate in the event of his death, and either Executive or the Company may terminate Executive’s employment in the event of his Disability (provided that no termination of Executive’s employment hereunder for Disability shall be effective unless the party terminating Executive’s employment first gives at least fifteen (15) days’ written notice of such termination to the other party).  In the event that Executive’s employment hereunder is terminated due to his death or Disability, the Term shall expire on the Termination Date and he and/or his estate or beneficiaries (as the case may be) shall be entitled to the Accrued Obligations.
		

		
			5.4        Termination by the Company For Cause or by Executive Without Good Reason.  In the event that Executive’s employment hereunder is terminated by Executive without Good Reason or by the Company for Cause, the Term shall expire as of the Termination Date and Executive shall be entitled to the Accrued Obligations.
		

		
			5.5        Due to Change in Control.  In the event that within twelve (12) months following a Change in Control Executive terminates his employment hereunder with Good Reason or the Company terminates Executive’s employment hereunder without Cause, then, in lieu of the payments otherwise due to Executive under Section 5.2 above, the Term shall expire on the Termination Date and Executive shall be entitled to (subject to the last paragraph of this Section 5.5):
		

		
			(a)         a single sum cash amount, payable on the sixtieth (60th) day following his Termination Date, in an amount equal to two (2) times Executive’s Salary as in effect immediately prior to the Termination Date;
		

		
			(b)         a single sum cash amount, payable on the sixtieth (60th) day following his Termination Date, in an amount equal to two (2) times the greater of (i) the average Annual Cash Bonus that Executive received for each of the two (2) preceding calendar years; and (ii) the Annual Cash Bonus that Executive received during the preceding calendar year provided,  however, that if Executive is not employed for a sufficient time to have received an Annual Cash Bonus, such calculation will assume that a target Annual Cash Bonus was paid;
		

		
			(c)         continued medical (health, dental, prescription drug and vision) benefits to the same extent in which Executive participated prior to the Termination Date (with Executive required to pay the amount Executive would have been required to pay for such coverage had Executive remained an active employee at such time) for a period twenty-four (24) months following the Termination Date; provided,  however, if the Company cannot provide, for any reason, Executive or his dependents with the opportunity to participate in the benefits to be provided pursuant to this paragraph, the Company shall pay to Executive a single sum cash payment, payable within sixty (60) days following the date the Company cannot provide such benefits, in an amount equal to the fair market value of the benefits to be provided pursuant to this paragraph;
		

		
			(d)         full vesting, exercisability and non-forfeitability, as applicable, as of the Termination Date, of any outstanding equity or equity-based awards; and
		

		
			
		

		
			

		 

		

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			(e)         the Accrued Obligations.
		

		
			5.6        Release.  Executive’s entitlement to the payments described in this Section 5 is expressly contingent upon Executive first providing the Company with a signed mutual release in substantially the form attached hereto as Exhibit A (the “Release”).  In order to be effective, such Release must be (a) delivered by Executive to the Company no later than forty-five (45) days following the Termination Date; and (b) counter-signed and returned by the Company to Executive within ten (10) days following the Company’s receipt thereof; provided,  however, that if Executive delivers the Release to the Company on a timely bases and the Company does not return a counter-signed Release during the applicable time period allowed, such Release of Executive shall be null and void and the payments hereunder shall cease to be contingent on the Release and this Section 5.6.
		

		
			6.          Section 280G.
		

		
			6.1        If any payment or benefit (including payments and benefits pursuant to this Agreement) that Executive would receive in connection with a Change in Control from the Company or otherwise (“Transaction Payment”) would (a) constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986 (the “Code”); and (b) the net after-tax benefit that Executive would receive by reducing the Transaction Payments to three times the “base amount,” as defined in Section 280G(b)(3) of the Code, (the “Parachute Threshold”) is greater than the net after-tax benefit Executive would receive if the full amount of the Transaction Payments were paid to Executive, then the Transaction Payments payable to Executive shall be reduced (but not below zero) so that the Transaction Payments due to Executive do not exceed the amount of the Parachute Threshold, reducing first any Transaction Payments under Sections 5.5(a) and (b) hereof.
		

		
			6.2        Unless Executive and the Company otherwise agree in writing, any determination required under this section shall be made in writing by the Company’s independent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon Executive and the Company for all purposes.  Subject to Section 8.4, for purposes of making the calculations required by this section, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code.  The Accountants shall provide detailed supporting calculations to the Company and Executive as requested by the Company or Executive at least thirty (30) days prior to the date the excise tax imposed by Section 4999 of the Code (including any interest, penalties or additions to tax relating thereto) is required to be paid by Executive or withheld by the Company.  Executive and the Company shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this section.  The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this section as well as any costs incurred by Executive with the Accountants for tax planning under Sections 280G and 4999 of the Code.
		

		
			7.          Section 4985.
		

		
			7.1        If any “specified stock compensation” (within the meaning of Section 4985(e) of the Code) payable or paid by the Company (or any member of its “expanded affiliated group” as defined in Section 4985(e)(4) of the Code) in connection with the Sign-On Award pursuant to this Agreement or otherwise to or for the benefit of Executive or a member of such individual’s family (within the meaning of Section 4985(a) of the Code) becomes subject to the excise tax imposed by Section 4985 of the Code (including any interest, penalties or additions to tax relating thereto) (the “4985 Excise Tax”), then the Company shall pay to Executive, no later than ten (10) days prior to the date the 4985 Excise Tax is required to be paid by Executive or withheld by the Company, an additional amount (the “4985 Gross-up Payment”) equal to the sum of (a) the 4985 Excise Tax payable by Executive; plus (b) the amount necessary to put
		

		
			
		

		
			

		 

		

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			Executive in the same net after-tax position (taking into account any and all applicable Federal, state, local and foreign income, employment, excise and other taxes (including the 4985 Excise Tax and any income and employment taxes imposed on the 4985 Gross-up Payment pursuant to Section 4985(f)(2) or any other provision of the law)) that Executive would have been in if Executive had not incurred any liability for taxes under Section 4985 of the Code.
		

		
			7.2        Unless Executive and the Company otherwise agree in writing, any determination required under this section shall be made in writing by the Accountants, whose determination shall be conclusive and binding upon Executive and the Company for all purposes.  For purposes of making the calculations required by this section, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 4985 of the Code.  The Accountants shall provide detailed supporting calculations to the Company and Executive as requested by the Company or Executive at least thirty (30) days prior to the date the 4985 Excise Tax is required to by paid by Executive or withheld by the Company.  Executive and the Company shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this section.  The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this section as well as any costs incurred by Executive with the Accountants for tax planning under Section 4985 of the Code.
		

		
			7.3        In the event that it is subsequently claimed by the Internal Revenue Service or other agency that the 4985 Excise Tax required to be paid by Executive is greater than the amount previously determined by the Accountants hereunder, the Company shall promptly pay to Executive such additional 4985 Gross-up Payment relating to such increased 4985 Excise Tax (including, for the avoidance, of doubt, any additional interest, penalties or additions thereto).
		

		
			8.          Indemnification.
		

		
			8.1        If Executive is made a party, is threatened to be made a party, or reasonably anticipates being made a party, to any Proceeding by reason of the fact that Executive is or was a director, officer, shareholder, employee, agent, trustee, consultant or representative of the Company or any of its Affiliates or is or was serving at the request of the Company or any of its Affiliates, or in connection with his service hereunder as a director, officer, shareholder, employee, agent, trustee, consultant or representative of another Person, or if any Claim is made, is threatened to be made, or is reasonably anticipated to be made, that arises out of or relates to Executive’s service in any of the foregoing capacities, then Executive shall promptly be indemnified and held harmless to the fullest extent permitted or authorized by any plan, program, agreement, corporate governance document or arrangement of the Company or any of its Affiliates, or if greater, by applicable law, against any and all costs, expenses, liabilities and losses (including, without limitation, advancement and payment of attorneys’ and other professional fees and charges, judgments, interest, expenses of investigation, penalties, fines, Employee Retirement Income Security Act of 1974, as amended, excise taxes or penalties and amounts paid or to be paid in settlement, with such legal fees advanced to the maximum extent permitted by law) incurred or suffered by him in connection therewith or in connection with seeking to enforce his rights under this Section 8.1, and such indemnification shall continue even if Executive has ceased to be a director, officer, shareholder, employee, agent, trustee, consultant or representative of the Company or other Person and shall inure to the benefit of his heirs, executors and administrators.
		

		
			8.2        A directors’ and officers’ liability insurance policy (or policies) shall be kept in place, during the Term and thereafter until the sixth (6th) anniversary of the Termination Date, providing coverage to Executive that is no less favorable to him in any respect than the coverage then being provided to any other current or former director or officer of the Company.
		

		
			
		

		
			

		 

		

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			8.3        For purposes of this Agreement, the following terms shall have the following meanings:  “Affiliate” of a Person shall mean any Person that directly or indirectly controls, is controlled by, or is under common control with, such Person; “Claim” shall mean any claim, demand, request, investigation, dispute, controversy, threat, discovery request, or request for testimony or information; “Person” shall mean any individual, corporation, partnership, limited liability company, joint venture, trust, estate, board, committee, agency, body, employee benefit plan, or other person or entity; and “Proceeding” shall mean any threatened or actual action, suit or proceeding, whether civil, criminal, administrative, investigative, appellate, formal, informal or other.
		

		
			8.4       The Company hereby agrees that, for purposes of determining whether any Transaction Payment would be subject to the excise tax under Section 4999 of the Code, the non-compete obligations (the “Non-Compete Obligations”) set forth in that certain Employee Confidentiality, Invention Assignment and Non-Compete Agreement signed by Executive on September 22, 2016 (the “Non-Compete Agreement”) shall be treated as an agreement for the performance of personal services.  The Company hereby agrees to indemnify, defend, and hold harmless Executive from and against any adverse impact, tax, penalty, or excise tax resulting from the Company or Accountant’s attribution of a value to the Non-Compete Obligations that is less than the total compensation amount disclosed under Item 402(c) of Securities and Exchange Commission Regulation S-K for 2015 (as reported in the 2016 annual report or proxy statement), to the extent the use of such lesser amount results in a larger excise tax under Section 4999 of the Code than Executive would have been subject to had the Company or Accountant attributed a value to the Non-Compete Obligations that is at least equal to the total compensation amount disclosed under Item 402(c) of Securities and Exchange Commission Regulation S-K for 2015.
		

		
			9.          Other Tax Matters.
		

		
			9.1        The Company shall withhold all applicable federal, state and local taxes, social security and workers’ compensation contributions and other amounts as may be required by law with respect to compensation payable to Executive pursuant to this Agreement.
		

		
			9.2        Notwithstanding anything herein to the contrary, this Agreement is intended to be interpreted and applied so that the payment of the benefits set forth herein either shall either be exempt from the requirements of Section 409A of the Code (“Section 409A”) or shall comply with the requirements of such provision.  Notwithstanding any provision of this Agreement to the contrary, (a) to the extent any payments are treated as nonqualified deferred compensation subject to Section 409A, then if the ninety (90) day period set forth under Section 5.2(a) commences in one taxable year and ends in another, then no payments will be made until the second taxable year; and (b) if Executive is a “specified employee” within the meaning of Section 409A, any payments or arrangements due upon a termination of Executive’s employment under any arrangement that constitutes a “nonqualified deferral of compensation” within the meaning of Section 409A and which do not otherwise qualify under the exemptions under Treas. Regs. Section 1.409A-1 (including without limitation, the short-term deferral exemption or the permitted payments under Treas. Regs. Section 1.409A-1(b)(9)(iii)(A)), shall be delayed and paid or provided on the earlier of (i) the date which is six (6) months after Executive’s “separation from service” (as such term is defined in Section 409A and the regulations and other published guidance thereunder) for any reason other than death; and (ii) the date of Executive’s death.
		

		
			9.3        After any Termination Date, Executive shall have no duties or responsibilities that are inconsistent with having a “separation from service” within the meaning of Section 409A as of the Termination Date and, notwithstanding anything in the Agreement to the contrary, distributions upon termination of employment of nonqualified deferred compensation may only be made upon a “separation
		

		
			
		

		
			

		 

		

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			from service” as determined under Section 409A and such date shall be the Termination Date for purposes of this Agreement.  Each payment under this Agreement or otherwise shall be treated as a separate payment for purposes of Section 409A.  In no event may Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement which constitutes a “nonqualified deferral of compensation” within the meaning of Section 409A and to the extent an amount is payable within a time period, the time during which such amount is paid shall be in the discretion of the Company.
		

		
			9.4        Any amounts otherwise payable to Executive following a termination of employment that are not so paid by reason of this Section 9 shall be paid as soon as practicable following, and in any event within thirty (30) days following, the date that is six (6) months after Executive’s separation from service (or, if earlier, the date of Executive’s death) together with interest on the delayed payment at the Company’s cost of borrowing.  All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A.
		

		
			9.5        To the extent that any reimbursements pursuant to Section 4 or otherwise are taxable to Executive, any reimbursement payment due to Executive pursuant to such Section shall be paid to Executive on or before the last day of Executive’s taxable year following the taxable year in which the related expense was incurred.  The reimbursements pursuant to Section 4 or otherwise are not subject to liquidation or exchange for another benefit and the amount of such reimbursements that Executive receives in one taxable year shall not affect the amount of such reimbursements that Executive receives in any other taxable year.  Any tax gross-up shall be made no later than the end of the calendar year next following the calendar year in which Executive remits the related tax.
		

		
			10.        Confidentiality, Invention Assignment and Non-Competition Agreement.  Executive reaffirms the terms of the Non-Compete Agreement, which is incorporated herein by reference.  Except as expressly set forth in this Agreement and the Non-Compete Agreement, Executive shall be subject to no contractual or similar restrictions on his right to terminate his employment hereunder or on his activities after the Termination Date.
		

		
			11.        Non-Disparagement.  During and after the Term, Executive and the Company agree not to make any statement that criticizes, ridicules, disparages, or is otherwise derogatory of the other; provided,  however, that nothing in this Agreement shall restrict either party from making truthful statements (a) when required by law, subpoena, court order or the like; (b) when requested by a governmental, regulatory, or similar body or entity; (c) in confidence to a professional advisor for the purpose of securing professional advice; (d) in the course of performing his duties during the Term; (e) from rebutting any statement made or written about them; or (f) from making normal competitive statements about the Company’s business or products.
		

		
			12.        Notices.  Except as otherwise specifically provided herein, any notice, consent, demand or other communication to be given under or in connection with this Agreement shall be in writing and shall be deemed duly given when delivered personally, when transmitted by facsimile transmission, one (1) day after being deposited with Federal Express or other nationally recognized overnight delivery service or three (3) days after being mailed by first class mail, charges or postage prepaid, properly addressed, if to the Company, at its principal office, and, if to Executive, at his address set forth following his signature below.  Either party may change such address from time to time by notice to the other.
		

		
			13.        Governing Law.  This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of North Carolina, exclusive of any choice of law rules.
		

		
			
		

		
			

		 

		

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			14.        Arbitration; Legal Fees.
		

		
			14.1      Any dispute or controversy arising under or in connection with this Agreement (except with respect to injunctive relief under Section 10) shall be settled exclusively by arbitration in North Carolina, in accordance with the rules of the American Arbitration Association for employment disputes as then in effect.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction.
		

		
			14.2      In the event of any material contest or dispute relating to this Agreement or the termination of Executive’s employment hereunder, each of the parties shall bear its own costs and expenses, except that the Company agrees to promptly reimburse Executive for his costs and expenses (including reasonable attorneys’ fees and expenses) incurred by Executive in connection with such contest or dispute in the event Executive prevails, as determined by the arbitrator if in arbitration, by the court, or as a separate arbitration if otherwise.  The amount shall be paid within thirty (30) days of the award of the arbitration or court, which shall also specify the amount due.
		

		
			15.        Amendments; Waivers.  This Agreement may not be modified or amended or terminated except by an instrument in writing, signed by Executive and a duly-authorized officer of the Company (other than Executive).  By an instrument in writing similarly executed, either party may waive compliance by the other party with any provision of this Agreement that such other party was or is obligated to comply with or perform; provided,  however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure.  No failure to exercise and no delay in exercising any right, remedy, or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, or power hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, or power provided herein or by law or in equity.  To be effective, any written waiver must specifically refer to the condition(s) or provision(s) of this Agreement being waived.
		

		
			16.        Inconsistencies.  In the event of any inconsistency between any provision of this Agreement and any provision of any Company arrangement, the provisions of this Agreement shall control, unless Executive and the Company otherwise agree in a writing that expressly refers to the provision of this Agreement that is being waived.
		

		
			17.        Assignment.  Except as otherwise specifically provided herein, neither party shall assign or transfer this Agreement nor any rights hereunder without the consent of the other party, and any attempted or purported assignment without such consent shall be void; provided,  however, that any assignment or transfer pursuant to a merger or consolidation, or the sale or liquidation of all or substantially all of the business and assets of the Company shall be valid, so long as the assignee or transferee (a) is the successor to all or substantially all of the business and assets of the Company; and (b) assumes the liabilities, obligations and duties of the Company, as contained in this Agreement, either contractually or as a matter of law.  Executive’s consent shall not be required for any such transaction.  This Agreement shall otherwise bind and inure to the benefit of the parties hereto and their respective successors, assigns, heirs, legatees, devisees, executors, administrators and legal representatives.
		

		
			18.        Voluntary Execution; Representations.  Executive acknowledges that (a) he has consulted with or has had the opportunity to consult with independent counsel of his own choosing concerning this Agreement and has been advised to do so by the Company; and (b) he has read and understands this Agreement, is competent and of sound mind to execute this Agreement, is fully aware of the legal effect of this Agreement, and has entered into it freely based on his own judgment and without duress.  Executive represents and covenants that his employment hereunder and compliance with the terms and conditions hereof will not conflict with or result in the breach by him of any agreement to which he is a party or by which he may be bound and in connection with his employment with the Company he will not engage in any unauthorized use of any confidential or proprietary information he may have obtained in connection
		

		
			
		

		
			

		 

		

			-  10  -

		

 

		

		
			with his employment with any other employer.  The Company represents and warrants that it is fully authorized, by any person or body whose authorization is required, to enter into this Agreement and to perform its obligations under it.
		

		
			19.        Headings.  The headings of the Sections and sub-sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.
		

		
			20.        Beneficiaries/References.  Executive shall be entitled, to the extent permitted under applicable law, to select and change a beneficiary or beneficiaries to receive any compensation or benefit hereunder following Executive’s death by giving written notice thereof.  In the event of Executive’s death or a judicial determination of his incompetence, references in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative.
		

		
			21.        Survivorship.  Except as otherwise set forth in this Agreement, the respective rights and obligations of the parties shall survive any termination of Executive’s employment.
		

		
			22.        Severability.  Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but the invalidity or unenforceability of any provision or portion of any provision of this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of this Agreement, including that provision or portion of any provision, in any other jurisdiction.
		

		
			23.        No Mitigation/No Offset.  Executive shall be under no obligation to seek other employment or to otherwise mitigate the obligations of the Company under this Agreement, and there shall be no offset against amounts or benefits due to Executive under this Agreement or otherwise on account of any claim (other than any preexisting debts then due in accordance with their terms) the Company may have against him or any remuneration or other benefit earned or received by Executive after such termination.
		

		
			24.        Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts shall together constitute one and the same instrument.  Signatures delivered by facsimile or PDF shall be effective for all purposes.
		

		
			25.        Entire Agreement.  This Agreement and the agreements described in the attached Exhibits contain the entire agreement of the parties and supersedes all prior or contemporaneous negotiations, correspondence, understandings and agreements between the parties, regarding the subject matter of this Agreement.
		

		
			[Signature Page to Follow]
		

		
			 
		

		
			 
		

		
			 
		

		
			

		 

		

			-  11  -

		

 

		

		
			IN WITNESS WHEREOF, this Agreement has been duly executed by or on behalf of the parties hereto as of the date first above written.
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						Aralez Pharmaceuticals Inc.:

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						   /s/ Adrian Adams

				
	
					
						 

					
					
						Name: Adrian Adams

				
	
					
						 

					
					
						Title:  CEO

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						EXECUTIVE:

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						   /s/ Michael Kaseta

				
	
					
						 

					
					
						Name:  Michael Kaseta

				
	
					
						 

					
					
						Address:

				

		
			 
		

		
			 
		

		
			

		 

		

			 

		

 

		

		
			Exhibit A
		

		
			FORM OF GENERAL RELEASE OF ALL CLAIMS
		

		
			THIS GENERAL RELEASE OF ALL CLAIMS (this “General Release”), dated as of [_______], is made by and between Michael Kaseta (the “Executive”) and Aralez Pharmaceuticals plc (together with its successors and assigns, the “Company”).
		

		
			WHEREAS, the Company and Executive are parties to that certain Employment Agreement, dated as of ______, 2018 (the “Employment Agreement”);
		

		
			WHEREAS, Executive’s employment with the Company has been terminated and Executive is entitled to receive severance and other benefits, as set forth in Section 5 of the Employment Agreement subject to the execution of this General Release;
		

		
			WHEREAS, in consideration for Executive’s signing of this General Release, the Company will provide Executive with such severance and benefits pursuant to the Employment Agreement; and
		

		
			WHEREAS, except as otherwise expressly set forth herein, the parties hereto intend that this General Release shall effect a full satisfaction and release of the obligations described herein owed to Executive by the Company and to the Company by Executive.
		

		
			NOW, THEREFORE, in consideration of the premises, the mutual covenants of the parties hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby covenant and agree as follows:
		

		
			1.          Executive, for himself, Executive’s spouse, heirs, administrators, children, representatives, executors, successors, assigns, and all other individuals and entities claiming through Executive, if any (collectively, the “Executive Releasers”), does hereby release, waive, and forever discharge the Company and each of its respective agents, subsidiaries, parents, affiliates, related organizations, employees, officers, directors, attorneys, successors, and assigns in their capacities as such (collectively, the “Employer Releasees”) from, and does fully waive any obligations of Employer Releasees to Executive Releasers for, any and all liability, actions, charges, causes of action, demands, damages, or claims for relief, remuneration, sums of money, accounts or expenses (including attorneys’ fees and costs) of any kind whatsoever, whether known or unknown or contingent or absolute, which heretofore has been or which hereafter may be suffered or sustained, directly or indirectly, by Executive Releasers in consequence of, arising out of, or in any way relating to:  (a) Executive’s employment with the Company; (b) the termination of Executive’s employment with the Company; (c) the Employment Agreement; or (d) any events occurring on or prior to the date of this General Release.  The foregoing release and discharge, waiver and covenant not to sue includes, but is not limited to, all waivable claims and any obligations or causes of action arising from such claims, under common law including wrongful or retaliatory discharge, breach of contract (including but not limited to any claims under the Employment Agreement other than claims for unpaid severance benefits, bonus or Salary earned thereunder) and any action arising in tort including libel, slander, defamation or intentional infliction of emotional distress, and claims under any federal, state or local statute including the Age Discrimination in Employment Act (“ADEA”), Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866 and 1871 (42 U.S.C. § 1981), the National Labor Relations Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, the Americans with Disabilities Act of 1990, the Rehabilitation Act of 1973, or the discrimination or employment laws of any state or municipality, and/or any claims under any express or implied contract which Executive Releasers may claim existed with Employer Releasees.  This also includes a release of any claims for wrongful discharge and all claims for alleged physical or personal injury, emotional distress relating to or arising out of Executive’s employment
		

		
			 
		

		
			 
		

		
			

		 

		

			 

		

 

		

		
			with the Company or any of its subsidiaries or affiliates or the termination of that employment; and any claims under the WARN Act or any similar law, which requires, among other things, that advance notice be given of certain work force reductions.  Notwithstanding anything contained in this Section 1 above to the contrary, nothing contained in herein shall constitute a release by any Executive Releaser of any of his, her or its rights or remedies available to him, her or it, at law or in equity, related to, on account of, in connection with or in any way pertaining to the enforcement of:  (i) any right to indemnification, advancement of legal fees or directors and officers liability insurance coverage existing under the constituent documents of the Company or applicable state corporate, limited liability company and partnership statutes or pursuant to any agreement, plan or arrangement; (ii) any rights to the receipt of employee benefits which vested on or prior to the date of this General Release; (iii) the right to receive severance and other benefits under the Employment Agreement; (iv) the right to continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act; (v) any rights of Executive under the Employment Agreement with respect to the gross-up protections set forth in Section 7 of the Employment Agreement; (vi) any equity rights; or (vii) this General Release or any of its terms or conditions.
		

		
			2.          Excluded from this General Release and waiver are any claims which cannot be waived by applicable law, including but not limited to the right to participate in an investigation conducted by certain government agencies.  Executive does, however, waive Executive’s right to any monetary recovery should any government agency (such as the Equal Employment Opportunity Commission) pursue any claims on Executive’s behalf.  Executive represents and warrants that Executive has not filed any complaint, charge, or lawsuit against the Employer Releasees with any government agency or any court.
		

		
			3.          Executive agrees never to seek personal recovery from any Employer Releasee in any forum for any claim covered by the above waiver and release language, except that Executive may bring a claim under the ADEA to challenge this General Release.  If Executive violates this General Release by suing an Employer Releasee (excluding any claim by Executive under the ADEA or as otherwise set forth in Section 1 hereof), then Executive shall be liable to the Employer Releasee so sued for such Employer Releasee’s reasonable attorneys’ fees and other litigation costs incurred in defending against such a suit.  Nothing in this General Release is intended to reflect any party’s belief that Executive’s waiver of claims under ADEA is invalid or unenforceable, it being the intent of the parties that such claims are waived.
		

		
			4.          The Employer Releasees do hereby release, waive, and forever discharge Executive, Executive’s heirs, personal representatives and assigns, and any and all other persons or entities that are now or may become liable to any Employer Releasee due to Executive’s act or omission (all of whom are collectively referred to as “Executive Releasees”), from, and do fully waive any obligations of Executive Releasees to Employer Releasees for, any and all liability, actions, charges, causes of action, demands, damages, or claims for relief, remuneration, sums of money, accounts or expenses (including attorneys’ fees and costs) of any kind whatsoever, whether known or unknown or contingent or absolute, that the Employer Releasees, or any person acting under any of them, may now have, or claim at any future time to have, based in whole or in part upon any act or omission occurring from the beginning of time through the date of execution of this General Release.
		

		
			5.          Each party agrees that neither this General Release, nor the furnishing of the consideration for this General Release, shall be deemed or construed at any time to be an admission by any party of any improper or unlawful conduct.
		

		
			6.          Each party acknowledges and recites that he or it has:
		

		
			(a)         executed this General Release knowingly and voluntarily;
		

		
			(b)         had a reasonable opportunity to consider this General Release;
		

		
			
		

		
			

		 

		

			-  14  -

		

 

		

		
			(c)         read and understands this General Release in its entirety;
		

		
			(d)         been advised and directed orally and in writing (and this subparagraph (d) constitutes such written direction) to seek legal counsel and any other advice such party wishes with respect to the terms of this General Release before executing it; and
		

		
			(e)         relied solely on such party’s own judgment, belief and knowledge, and such advice as such party may have received from such party’s legal counsel.
		

		
			7.          Section 14 of the Employment Agreement, which shall survive the expiration of the Employment Agreement for this purpose, shall apply to any dispute with regard to this release.
		

		
			8.          Executive acknowledges and agrees that (a) his execution of this General Release has not been forced by any employee or agent of the Company, and Executive has had an opportunity to negotiate the terms of this General Release; and (b) he has been offered twenty-one (21) calendar days after receipt of this General Release to consider its terms before executing it.  Executive shall have seven (7) calendar days from the date he executes this General Release to revoke his or her waiver of any ADEA claims by providing written notice of the revocation to the Company, as provided in Section 12 of the Employment Agreement.
		

		
			9.          Capitalized terms used but not defined in this General Release have the meanings ascribed to such terms in the Employment Agreement.
		

		
			10.        This General Release may be executed by the parties in one or more counterparts, each of which shall be an original and all of which shall together constitute one and the same instrument.  Each counterpart may be delivered by facsimile transmission or e-mail (as a .pdf, .tif or similar un-editable attachment), which transmission shall be deemed delivery of an originally executed counterpart hereof.
		

		
			IN WITNESS WHEREOF, the parties hereto have executed this General Release as of the day and year first above written.
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						Aralez Pharmaceuticals Inc.:

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						 

				
	
					
						 

					
					
						Name:

				
	
					
						 

					
					
						Title:

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						EXECUTIVE:

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						Name:  Michael Kaseta

				
	
					
						 

					
					
						Address:

				

		
			 
		

		 

		

			-  15  -Exhibit 10.1

 

AMENDED AND RESTATED CHANGE IN CONTROL AND SEVERANCE AGREEMENT

 

This Amended and Restated Change in Control and Severance Agreement (this “Agreement”) is entered into by and between                         (the “Executive”) and Loxo Oncology, Inc., a Delaware corporation (the “Company”), on May    , 2018 (the “Effective Date”).

 

1.                                      Term of Agreement.

 

Except to the extent renewed as set forth in this Section 1, this Agreement shall terminate the earlier of March 6, 2020 (the “Expiration Date”) or the date the Executive’s employment with the Company terminates for a reason other than a Qualifying Termination or CIC Qualifying Termination; provided however, if a definitive agreement relating to a Change in Control has been signed by the Company on or before the Expiration Date, then this Agreement shall remain in effect through the earlier of:

 

(a)                                 The date the Executive’s employment with the Company terminates for a reason other than a Qualifying Termination or CIC Qualifying Termination, or

 

(b)                                 The date the Company has met all of its obligations under this Agreement following a termination of the Executive’s employment with the Company due to a Qualifying Termination or CIC Qualifying Termination.

 

This Agreement shall renew automatically and continue in effect for three (3) year periods measured from the initial Expiration Date and each subsequent Expiration Date, unless the Company provides Executive notice of non-renewal at least three (3) months prior to the date on which this Agreement would otherwise renew. For the avoidance of doubt, and notwithstanding anything to the contrary in Sections 2 or 3 below, the Company’s non-renewal of this Agreement shall not constitute a Qualifying Termination or CIC Qualifying Termination, as applicable.

 

2.                                      Qualifying Termination.  If the Executive is subject to a Qualifying Termination, then, subject to Sections 4, 9, and 10 below, Executive will be entitled to the following benefits:

 

(a)                                 Severance Benefits.  The Company shall pay the Executive 12 months of [his/her] monthly base salary (at the rate in effect immediately prior to the actions that resulted in the Qualifying Termination).  The Executive will receive [his/her] severance payment in a cash lump-sum in accordance with the Company’s standard payroll procedures which will be made on the next regular payroll date occurring after the Release Conditions have been satisfied, provided that if the sixty (60) day period following the Separation spans two calendar years, then the severance payment will be paid on the first payroll date occurring in the second calendar year after the Release Conditions have been satisfied.

 

(b)                                 Continued Employee Benefits.  If Executive timely elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), the Company shall pay the full amount of Executive’s COBRA premiums on behalf of the Executive for the Executive’s continued coverage under the Company’s health, dental and vision plans, including coverage for the Executive’s eligible dependents, for the same period that Executive is paid severance benefits pursuant to Section 2(a) following the Executive’s Separation or, if earlier, until Executive is eligible to be covered under another substantially equivalent medical insurance plan by a subsequent employer.

 

(c)                                  [Equity.  Any outstanding Equity Awards (as defined below), including awards that would otherwise vest only upon satisfaction of performance criteria, shall accelerate and become vested and exercisable as if an additional six (6) months of vesting had occurred at target to the then unvested shares subject to the Equity Awards.  Subject to Section 4, the accelerated vesting described above shall be effective as of the Separation.]

 

 

3.                                      CIC Qualifying Termination.  If the Executive is subject to a CIC Qualifying Termination, then, subject to Sections 4, 9, and 10 below, Executive will be entitled to the following benefits:

 

(a)                                 Severance Payments.  The Company or its successor shall pay the Executive 12 months of [his/her] monthly base salary (at the rate in effect immediately prior to the actions that resulted in the Separation) [plus one hundred percent of Executive’s target annual bonus for the year in which the Separation occurs].  Such payment shall be paid in a cash lump sum payment in accordance with the Company’s standard payroll procedures, which payment will be made on the next regular payroll date occurring after the Release Conditions have been satisfied, provided that if the sixty (60) day period following the Separation spans two calendar years, then the severance payment will be paid on the first payroll date occurring in the second calendar year after the Release Conditions have been satisfied.

 

(b)                                 Equity.  Each of Executive’s then outstanding awards of stock options, restricted stock awards, restricted stock units or other stock based awards, including but not limited to stock bonus awards, restricted stock, restricted stock units or stock appreciation rights (“Equity Awards”), including awards that would otherwise vest only upon satisfaction of performance criteria, shall accelerate and become vested and exercisable as to 100% of the then unvested shares at target subject to the Equity Award. Subject to Section 4, the accelerated vesting described above shall be effective as of the Separation.

 

(c)                                  Pay in Lieu of Continued Employee Benefits.  Continuation of COBRA or a cash benefit, in both cases on the same terms as set forth in Section 2(b) above, for the same period that the Executive is paid severance benefits pursuant to Section 3(a) following the Executive’s Separation or, if earlier, until Executive is eligible to be covered under another substantially equivalent medical insurance plan by a subsequent employer.

 

(d)                                 [Termination for Death or Disability.  If the Executive is subject to a termination of his employment as a result of his death or Disability on or within 12 months following the consummation of a Change in Control, then, subject to Sections 4, 9, and 10 below, each of Executive’s then outstanding Equity Awards, including awards that would otherwise vest only upon satisfaction of performance criteria, shall accelerate and become vested and exercisable as to 100% of the then unvested shares subject to the Equity Award. Subject to Section 4, the accelerated vesting described above shall be effective as of the date of his death or the Separation (as applicable).]

 

4.                                      General Release.  Any other provision of this Agreement notwithstanding, the benefits under Sections 2 and 3 shall not apply unless the Executive [or in the event of his death, the Executive’s estate] (a) has executed a general release substantially in the form attached hereto as Exhibit A of all known and unknown claims that he or she may then have against the Company or persons affiliated with the Company and such release has become effective and (b) has agreed not to prosecute any legal action or other proceeding based upon any of such claims.  The release must be in the form prescribed by the Company, without alterations (this document effecting the foregoing, the “Release”).  The Company will deliver the form of Release to the Executive within ten (10) days after the Executive’s Separation.  The Executive must execute and return the Release within the time period specified in the form.

 

5.                                      Accrued Compensation and Benefits.  Notwithstanding anything to the contrary in Sections 2, 3 and 4 above, in connection with any termination of employment (whether or not a Qualifying Termination or CIC Qualifying Termination), the Company shall pay Executive’s earned but unpaid base salary and other vested but unpaid cash entitlements for the period through and including the termination of employment, including unused earned vacation pay and unreimbursed documented business expenses incurred by Executive through and including the date of termination (collectively “Accrued Compensation and Expenses”), as required by law and the applicable Company plan or policy.  In addition, Executive shall be entitled to any other vested benefits earned by Executive for the period through and including the termination date of Executive’s employment under any other employee benefit plans and arrangements maintained by the Company, in accordance with the terms of such plans and arrangements, except as modified herein (collectively “Accrued Benefits”).  Any Accrued Compensation and Expenses to which the Executive is entitled shall be paid to the Executive in cash as soon as

 

 

administratively practicable after the termination and, in any event, no later than two and one-half (2-1/2) months after the end of the taxable year of the Executive in which the termination occurs or at such earlier time as may be required by Section 10 below or to such lesser extent as may be mandated by Section 9 below.  Any Accrued Benefits to which the Executive is entitled shall be paid to the Executive as provided in the relevant plans and arrangements.

 

6.                                      Covenants.

 

(a)                                 Non-Competition.  The Executive agrees that, during his or her employment with the Company, he or she shall not engage in any other employment, consulting or other business activity (whether full-time or part-time) that would create a conflict of interest with the Company.

 

(b)                                 Cooperation.  The Executive agrees that, during the six (6) month period following his or her cessation of employment, he or she shall cooperate with the Company in every reasonable respect and shall use his or her best efforts to assist the Company with the transition of Executive’s duties to his or her successor.  The Company’s request for cooperation will take into consideration Executive’s personal and business commitments.  The Company will reimburse Executive for his or her reasonable out-of-pocket expenses incurred in connection with Executive’s compliance with this Section.

 

(c)                                  Non-Disparagement.  The Executive further agrees that, during the six (6) month period following his or her cessation of employment, he or she shall not in any way or by any means disparage the Company, the members of the Company’s Board of Directors or the Company’s officers and employees.  Notwithstanding the foregoing, the Executive is not prohibited from cooperating with a government agency or testifying truthfully in any government inquiry or other proceeding or in which Executive is required to testify pursuant to subpoena or other valid legal process.

 

7.                                      Definitions.

 

(a)                                 “Cause” shall have the same meaning as the definition of “Cause” as set forth in the Plan.

 

(b)                                 “Code” means the Internal Revenue Code of 1986, as amended.

 

(c)                                  “Change in Control.”  For all purposes under this Agreement, a Change in Control shall mean a “Corporate Transaction,” as such term is defined in the Plan, provided that the transaction (including any series of transactions) also qualifies as a change in control event under U.S. Treasury Regulation 1.409A-3(i)(5).

 

(d)                                 “CIC Qualifying Termination” means a Separation within twelve (12) months following a Change in Control or within three (3) months preceding a Change in Control (if after a Potential Change in Control) resulting from (A) the Company or its successor terminating the Executive’s employment for any reason other than Cause or (B) the Executive voluntarily resigning his or her employment for Good Reason. A termination or resignation due to the Executive’s death or Disability shall not constitute a CIC Qualifying Termination. A “Potential Change in Control” means the date of execution of a definitive agreement whereby the Company will consummate a Change in Control if such transaction is consummated.  In the case of a termination following a Potential Change in Control and before a Change in Control, solely for purposes of benefits under this Agreement, the date of Separation will be deemed to be the date the Change in Control is consummated.

 

(e)                                  “Disability” shall have that meaning set forth in Section 22(e)(3) of the Code.

 

(f)                                   “Good Reason” means, without the Executive’s consent, (i) a material reduction or adverse change in the Executive’s level of responsibility and/or scope of authority, (ii) a reduction by more than 10% in Executive’s base salary or annual bonus opportunity or aggregate benefits, (iii) relocation of the Executive’s principal workplace by more than thirty-five (35) miles from Executive’s then current place

 

 

of employment, (iv) Executive does not report to the Chief Executive Officer of the parent company following any Change in Control, or (v) a material breach of this Agreement, including without limitation Section 8(a), or any other written agreement between the Executive and the Company in connection with an Equity Award.  For the Executive to receive the benefits under this Agreement as a result of a voluntary resignation under this subsection (f), all of the following requirements must be satisfied: (1) the Executive must provide notice to the Company of his or her intent to assert Good Reason within sixty (60) days of the initial existence of one or more of the conditions set forth in subclauses (i) through (iii); (2) the Company will have thirty (30) days (the “Company Cure Period”) from the date of such notice to remedy the condition and, if it does so, the Executive may withdraw his or her resignation or may resign with no benefits; and (3) any termination of employment under this provision must occur within ten (10) days of the earlier of expiration of the Company Cure Period or written notice from the Company that it will not undertake to cure the condition set forth in subclauses (i) through (iii).  Should the Company remedy the condition as set forth above and then one or more of the conditions arises again within twelve months following the occurrence of a Change in Control, the Executive may assert Good Reason again subject to all of the conditions set forth herein.

 

(g)                                  “Plan” means the Company’s 2014 Equity Incentive Plan, as may be amended from time to time.

 

(h)                                 “Release Conditions” mean the following conditions occurring within sixty (60) days following the Separation:  (i) Company has received the Executive’s executed Release; and (ii) any rescission period applicable to the Executive’s executed Release has expired.

 

(i)                                     “Qualifying Termination” means a Separation that is not a CIC Qualifying Termination, but which results from (i) the Company terminating the Executive’s employment for any reason other than Cause or (ii) the Executive voluntarily resigning his or her employment for Good Reason. A termination or resignation due to the Executive’s death or Disability shall not constitute a Qualifying Termination.

 

(j)                                    “Separation” means a “separation from service,” as defined in the regulations under Section 409A of the Code.

 

8.                                      Successors.

 

(a)                                 Company’s Successors.  The Company shall require any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets, by an agreement in substance and form satisfactory to the Executive, to assume this Agreement and to agree expressly to perform this Agreement in the same manner and to the same extent as the Company would be required to perform it in the absence of a succession.  For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets or which becomes bound by this Agreement by operation of law.

 

(b)                                 Executive’s Successors.  This Agreement and all rights of the Executive hereunder shall inure to the benefit of, and be enforceable by, the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

 

9.                                      Golden Parachute Taxes.

 

(a)                                 Best After-Tax Result.  In the event that any payment or benefit received or to be received by Executive pursuant to this Agreement or otherwise (“Payments”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code and (ii) but for this subsection (a), be subject to the excise tax imposed by Section 4999 of the Code, any successor provisions, or any comparable federal, state, local or foreign excise tax (“Excise Tax”), then, subject to the provisions of Section 10, such Payments shall be either (A) provided in full pursuant to the terms of this Agreement or any other applicable agreement, or (B) provided as to such lesser extent which would result in the

 

 

Payments being $1.00 less than the amount at which any portion of the Payments would be subject to the Excise Tax (“Reduced Amount”), whichever of the foregoing amounts, taking into account the applicable federal, state, local and foreign income, employment and other taxes and the Excise Tax (including, without limitation, any interest or penalties on such taxes), results in the receipt by Executive, on an after-tax basis, of the greatest amount of payments and benefits provided for hereunder or otherwise, notwithstanding that all or some portion of such Payments may be subject to the Excise Tax.  Unless the Company and Executive otherwise agree in writing, any determination required under this Section shall be made by independent tax counsel designated by the Company and reasonably acceptable to Executive (“Independent Tax Counsel”), whose determination shall be conclusive and binding upon Executive and the Company for all purposes.  For purposes of making the calculations required under this Section, Independent Tax Counsel may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code; provided that Independent Tax Counsel shall assume that Executive pays all taxes at the highest marginal rate.  The Company and Executive shall furnish to Independent Tax Counsel such information and documents as Independent Tax Counsel may reasonably request in order to make a determination under this Section.  The Company shall bear all costs that Independent Tax Counsel may reasonably incur in connection with any calculations contemplated by this Section.  In the event that Section 9(a)(ii)(B) above applies, then based on the information provided to Executive and the Company by Independent Tax Counsel, Executive may, in Executive’s sole discretion and within thirty (30) days of the date on which Executive is provided with the information prepared by Independent Tax Counsel, determine which and how much of the Payments (including the accelerated vesting of equity compensation awards) to be otherwise received by Executive shall be eliminated or reduced (as long as after such determination the value (as calculated by Independent Tax Counsel in accordance with the provisions of Sections 280G and 4999 of the Code) of the amounts payable or distributable to Executive equals the Reduced Amount).  If the Internal Revenue Service (the “IRS”) determines that any Payment is subject to the Excise Tax, then Section 9(b) hereof shall apply, and the enforcement of Section 9(b) shall be the exclusive remedy to the Company.

 

(b)                                 Adjustments.  If, notwithstanding any reduction described in Section 9(a) hereof (or in the absence of any such reduction), the IRS determines that Executive is liable for the Excise Tax as a result of the receipt of one or more Payments, then Executive shall be obligated to surrender or pay back to the Company, within one-hundred twenty (120) days after a final IRS determination, an amount of such payments or benefits equal to the “Repayment Amount.”  The Repayment Amount with respect to such Payments shall be the smallest such amount, if any, as shall be required to be surrendered or paid to the Company so that Executive’s net proceeds with respect to such Payments (after taking into account the payment of the Excise Tax imposed on such Payments) shall be maximized.  Notwithstanding the foregoing, the Repayment Amount with respect to such Payments shall be zero (0) if a Repayment Amount of more than zero (0) would not eliminate the Excise Tax imposed on such Payments or if a Repayment Amount of more than zero would not maximize the net amount received by Executive from the Payments.  If the Excise Tax is not eliminated pursuant to this Section 9(b), Executive shall pay the Excise Tax.

 

10.                               Miscellaneous Provisions.

 

(a)                                 Section 409A.  To the extent (i) any payments to which Executive becomes entitled under this Agreement, or any agreement or plan referenced herein, in connection with Executive’s termination of employment with the Company constitute deferred compensation subject to Section 409A of the Code and (ii) Executive is deemed at the time of such termination of employment to be a “specified” employee under Section 409A of the Code, then such payment or payments shall not be made or commence until the earlier of (i) the expiration of the six (6)-month period measured from the Executive’s Separation; or (ii) the date of Executive’s death following such Separation; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to Executive, including (without limitation) the additional twenty percent (20%) tax for which Executive would otherwise be liable under Section 409A(a)(1)(B) of the Code in the absence of such deferral.  Upon the expiration of the applicable deferral period, any payments which would have otherwise been made during that period (whether in a single sum or in installments) in the absence of this paragraph shall be paid to Executive or

 

 

Executive’s beneficiary in one lump sum (without interest).  Except as otherwise expressly provided herein, to the extent any expense reimbursement or the provision of any in-kind benefit under this Agreement (or otherwise referenced herein) is determined to be subject to (and not exempt from) Section 409A of the Code, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the expenses eligible for reimbursement or in kind benefits to be provided in any other calendar year, in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which Executive incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.  To the extent that any provision of this Agreement is ambiguous as to its exemption or compliance with Section 409A, the provision will be read in such a manner so that all payments hereunder are exempt from Section 409A to the maximum permissible extent, and for any payments where such construction is not tenable, that those payments comply with Section 409A to the maximum permissible extent.  To the extent any payment under this Agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A.  Payments pursuant to this Agreement (or referenced in this Agreement) are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the regulations under Section 409A.

 

(b)                                 Other Arrangements.  This Agreement supersedes any and all cash severance arrangements, severance and salary continuation arrangements, programs and plans which were previously offered, or may be offered on the Effective Date or thereafter, by the Company to the Executive, including change in control severance arrangements, employment agreement or offer letter, and Executive hereby waives Executive’s rights to such other benefits.  In no event shall any individual receive cash severance benefits under both this Agreement and any other severance pay or salary continuation program, plan or other arrangement with the Company.  For the avoidance of doubt, in no event shall Executive receive payment under both Section 2 and Section 3 with respect to Executive’s Separation.  This Section will not supersede the Company’s obligation to accelerate outstanding Equity Awards under Section 21.1 of the Plan in connection with a Corporate Transaction (as that term is defined in the Plan).

 

(c)                                  Dispute Resolution.  To ensure rapid and economical resolution of any and all disputes that might arise in connection with this Agreement, Executive and the Company agree that any and all disputes, claims, and causes of action, in law or equity, arising from or relating to this Agreement or its enforcement, performance, breach, or interpretation, will be resolved solely and exclusively by final, binding, and confidential arbitration, by a single arbitrator, in Fairfield County, and conducted by Judicial Arbitration & Mediation Services, Inc. (“JAMS”) under its then-existing employment rules and procedures.  Nothing in this Section, however, is intended to prevent either party from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration.  Each party to an arbitration or litigation hereunder shall be responsible for the payment of its own attorneys’ fees.

 

(d)                                 Notice.  Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid or deposited with Federal Express Corporation, with shipping charges prepaid.  In the case of the Executive, mailed notices shall be addressed to him or her at the home address which he or she most recently communicated to the Company in writing.  In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.

 

(e)                                  Waiver.  No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Executive and by an authorized officer of the Company (other than the Executive).  No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

 

 

(f)                                   Withholding Taxes.  All payments made under this Agreement shall be subject to reduction to reflect taxes or other charges required to be withheld by law.

 

(g)                                  Severability.  The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

 

(h)                                 No Retention Rights.  Nothing in this Agreement shall confer upon the Executive any right to continue in service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company or any subsidiary of the Company or of the Executive, which rights are hereby expressly reserved by each, to terminate his or her service at any time and for any reason, with or without Cause.

 

(i)                                     Choice of Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Connecticut (other than its choice-of-law provisions).

 

 

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

 

 

	
EXECUTIVE
    	
 
    	
LOXO   ONCOLOGY, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Title:
    

 

 

Exhibit A
 Form of General Release

 

I,                    , hereby acknowledge that my employment with or any of its affiliates Loxo Oncology, Inc., a Delaware corporation, (the “Company”) terminated as of                (the “Termination Date”) and, in connection with such termination of employment, the Company has agreed to provide me with certain benefits in consideration of my execution and performance of this General Release Agreement (the “Release Agreement”) pursuant to the terms of that certain Amended and Restated Change in Control and Severance Agreement entered into between me and the Company dated as of May    , 2018 (the “Severance Agreement”).

 

1.                                      In consideration of and in exchange for the payments and benefits set forth in the Severance Agreement, for myself, my heirs, administrators, executors and assigns, knowingly and voluntarily agree to release and forever discharge the Company, its parents, subsidiaries, affiliated companies, successors and assigns, each of their current and former employees, owners, officers, directors, shareholders, members, agents and attorneys, in their personal and official capacities (collectively referred to as “Releasees”), from any and all claims against Releasees that I may have as a result of any injuries, losses, damages or any other costs whatsoever, whether known or unknown, that I now have or claim to have or which I heretofore had from the beginning of time to the date of the execution of this Release Agreement (the “Execution Date”).  This general release of claims includes, without limitation, claims arising out of or in any way connected with or relating to my employment with the Company or its termination, including but not limited to, any known or unknown claims arising under federal, state, local or municipal laws, including, but not limited to, claims for breach of contract, breach of the implied covenant of good faith and fair dealing, privacy violations, defamation, fraud, hostile work environment, impairment of economic opportunity, intentional infliction of emotional harm or other tort, or claims arising under Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; Sections 1981 through 1988 of Title 42 of the United States Code, as amended; the Fair Labor Standards Act; the Employee Retirement Income Security Act of 1974; the Family and Medical Leave Act; the Americans with Disabilities Act of 1990; the Age Discrimination in Employment Act, 29 U.S.C. Sec. 626 et seq. including the Older Workers’ Benefit Protection Act, 29 U.S.C. Sec. 626(f)(1); the Civil Rights Act of 1991; the New York Labor Law; the New York Human Rights Law; the New York City Human Rights Law, and any other similar federal, state or local civil rights, disability, discrimination, retaliation or labor law, or any theory of contract, or any other federal, state or municipal statute, ordinance or the common law, including those relating to employment or employment discrimination, including claims for age, sex, gender, race, religion, national origin, marital status, sexual orientation, ancestry, veteran status or disability discrimination, or claims growing out of any legal restrictions on the rights of the Company to discharge its employees or the obligations of the Company to pay any sums or provide any benefits upon termination, that I now have or claim to have, or which I heretofore had based on acts or omissions occurring through the date I sign this Release Agreement, and I expressly waive any and all remedies that may be available thereunder, including without limitation attorney’s fees and costs.

 

2.                                      The Company and I do not intend to release claims that I may not release as a matter of law, including but not limited to claims for indemnity, or any claims for enforcement of this Release Agreement.  This general release of claims also excludes any claims made under state workers’ compensation or unemployment laws, and/or any claims which cannot be waived by law.  For the avoidance of doubt, I preserve any claims resulting from (i) payments and benefits due under the Severance Agreement; (ii) continued ownership of any securities issued to me by the Company or any of its affiliates, and (iii) indemnification pursuant to Company’s articles, bylaws or other governing documents, directors’ and officers’ liability and errors and omissions liability insurance secured by the Company, or as otherwise permitted or required by applicable law.

 

3.                                      I understand that nothing in Sections 1 and 2 (general release and waiver of claims) of this Release Agreement, or otherwise in this Release Agreement or the Severance Agreement, limits my ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local government agency or commission (“Government

 

 

Agencies”).  I further understand that this Release Agreement does not limit my ability to 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.  This Release Agreement does not limit my right to receive an award for information provided to any Government Agencies.

 

4.                                      I agree and acknowledge that, other than the payments and benefits set forth in the Severance Agreement, no additional monies, benefits or payments, including without limitation, severance or separation pay, salary continuation, benefits, health insurance coverage (except as provided for under COBRA and/or in the Severance Agreement) or other fringe benefits, commissions, bonuses, fees, incentive compensation, vacation pay, notice pay, or equity interest in the Company, are due to me by the Company or shall be paid or provided to me by the Company.

 

5.                                      I acknowledge that I have certain obligations under the Severance Agreement and agree that I will continue to be bound by those terms of the Severance Agreement (including Sections 6, 9 and 10 thereof).

 

6.                                      The Company and I each agree not to publish, publicize or otherwise make known to any person the existence of or the terms and conditions of this Release Agreement, except as provided by law, administrative regulation, court order, subpoena, or the purpose of enforcing this Release Agreement.  This provision does not prohibit or restrict the Company or me from disclosing the terms of this Release Agreement to immediate family, legal counsel or tax accountants solely for the purpose of obtaining professional advice relating thereto.

 

7.                                      This Release Agreement shall be construed under Delaware law, without reference to any state’s conflict of laws rules.

 

8.                                      It is understood and agreed that this Release Agreement is not to be construed as an admission of liability or wrongdoing by the Company or by me.

 

9.                                      I have had an opportunity to consult with an attorney prior to executing this Release Agreement.

 

10.                               I acknowledge that I have been given a period of 21 days within which to consider this Release Agreement and to the extent I execute this Release Agreement before the expiration of the 21-day period, I do so knowingly and voluntarily and only after consulting an attorney.  I understand that I have the right to cancel and revoke this Release Agreement during a period of seven (7) days following the Execution Date, and this Release Agreement shall not become effective, and no payments or benefits shall be made or provided pursuant to the Severance Agreement until the day after the expiration of such seven (7)-day period. The seven (7)-day period of revocation shall commence upon my execution of this Release Agreement. In order to revoke this Release Agreement, I understand that I must deliver to the Company, prior to the expiration of such seven (7)-day period, a written notice of revocation. Upon such revocation, this Release Agreement shall be null and void and of no further force or effect.

 

11.                               A facsimile or photocopy copy of this Release Agreement that has been signed by me shall have the same force and effect as a signed original of the Release Agreement.

 

12.                               My signature below indicates that I have had a reasonable period of time within which to consider this Release Agreement, that I have carefully read and reviewed this Release Agreement, and I fully understand all of its terms and conditions.  The release and waiver of claims set forth in this Release Agreement is an essential and material part of the Release Agreement.  My release and waiver of rights and claims is voluntary and knowing, without duress or coercion.

 

13.                               The terms of this Release Agreement cannot be changed or modified in any respect except in writing signed by me and a duly authorized representative of the Company.

 

 

14.                               I agree that this Release Agreement and the documents referenced herein constitute the entire understanding between myself and the Company relating to the subject matter hereof and that no one at the Company or anyone acting on its behalf has made any oral or written promises to me that are not fully and accurately set forth in this Agreement.

 

 

IN WITNESS WHEREOF, I have executed this General Release Agreement as of the date first above written.

 

 

	
 
    	
 
    
	
 
    	
[Executive Name]

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