Document:

tlry-ex101_15.htm

Exhibit 10.1

 

EXECUTION COPY

EMPLOYMENT AGREEMENT

Employment Agreement is effective July 27, 2021 (the “Effective Date”) between Tilray, Inc. (the “Company”) and Irwin D. Simon (the “Executive”).

RECITALS:

WHEREAS, the Executive desires to continue his employment with the Company in accordance with the terms and conditions contained in this Employment Agreement (the “Agreement”);

WHEREAS, the Company is only willing to enter into this Agreement on the basis that the Executive observe the restrictive covenants set out herein, which have been negotiated in good faith and which the Executive acknowledges as being reasonable given the nature of his position pursuant to this Agreement; and

WHEREAS the Agreement supersedes all prior agreements between the parties or any affiliates hereto;

NOW THEREFORE in consideration of the foregoing and the mutual covenants and agreements contained herein, and other good and valuable consideration (the receipt, sufficiency and adequacy of which are each hereby acknowledged), the parties agree as follows:

ARTICLE 1
INTERPRETATION

Section 1.1Definitions.

In this Agreement, unless otherwise defined herein, capitalized terms have the meaning set out in Schedule A annexed to this Agreement.

Section 1.2Currency.

All dollar amounts referred to in this Agreement are in US currency, unless otherwise stated.

ARTICLE 2
EMPLOYMENT

Section 2.1Employment.

The Executive shall continue to serve as the full-time Chief Executive Officer and Chairman of the Company’s Board of Directors (the “Board”) and shall perform all duties and accept all responsibilities incident to such position as may be reasonably assigned to Executive by the Company’s Board based on the terms and conditions contained herein as of and with effect from the Effective Date.

 

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Section 2.2Employment Term.

The Agreement will be effective from the Effective Date and will continue in effect until it is terminated in accordance with Article 3 (the “Employment Term”).

Section 2.3Duties.

	
(1)
	
During the Employment Term, the Executive shall:

(a)serve the Company as provided herein and carry out those responsibilities as are necessary to perform the functions associated with the positions of Chief Executive Officer and Chairman of the Board; and

(b)devote the required skill, experience, time and attention necessary to carry out the responsibilities consistent with the Executive’s positions. 

	
(2)
	
The Executive further acknowledges that he must generally comply with (i) the lawful policies and procedures established by the Company from time to time, including any code of ethics or business conduct adopted by the Company (including any future revisions of such policies, procedures or other codes of business conduct), and (ii) all applicable laws, rules and regulations, and all requirements of all applicable regulatory, self-regulatory and administrative bodies. 

	
(3)
	
The Executive will not engage in any other for-profit business, profession or occupation, including as a member of a board of directors of any third party, for compensation which would materially conflict or materially interfere with the rendition of services hereunder, without the prior written consent of the Board, which shall not be unreasonably withheld. Any uncertainty as to whether such a conflict exists will be raised by the Executive for determination by the Board, acting reasonably. The Board acknowledges that the Executive has ongoing participation in other private and public businesses that have been disclosed by the Executive and are listed on Exhibit A and that such participation does not, in any way, conflict with his role at the Company.  Except for the businesses listed on Exhibit A, which have already been approved, the Executive agrees to disclose to the Board and receive prior written consent from the Board to participate as a director, employee or consultant with (i) any other public company or (ii) with any competing company whether it is a private or public company. The Executive further agrees to disclose any other director, employment or consultant positions with any other company that may materially affect his ability to perform his duties and responsibilities under this Agreement.  Notwithstanding the above, nothing herein shall limit or preclude Executive from engaging and/or participating in charitable and/or community affairs or from managing any passive investments made by Executive.

Section 2.4Base Salary.

Effective May 1, 2021, the Company shall pay to the Executive a salary equating to $1,700,000 on an annualized basis, payable bi-weekly (the “Base Salary”), less all deductions and withholdings required by law.  The Company’s Compensation Committee shall review the Base Salary on an annual basis at the end of each fiscal year and may increase but not decrease 

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the Base Salary.  Any such increases will be effective as of June 1 of each year and, as so increased, shall constitute the “Base Salary” hereunder.

Section 2.5Bonus.

	
(1)
	
Annual Performance Bonus. The Executive shall be eligible to earn an annual performance- based cash bonus (the “Bonus”) based on performance metrics established in accordance with this Section 2.5 (the “Bonus Metrics”), subject to the Executive’s continuous employment with the Company on the date any such Bonus is paid.  The Executive’s target amount of such Bonus shall be equal to 200% of his Base Salary (the “Target Bonus”) and the maximum amount of such bonus shall be equal to 350% of his Base Salary, provided that the actual amount of any such Bonus shall be determined based on the achievement of applicable Bonus Metrics and any other individual performance metrics as determined in the discretion of the Compensation Committee.  All Bonus payments will be less all deductions and withholdings required by law and paid within seventy-five (75) days of the Company’s fiscal year end.

	
(2)
	
Goal Setting.  No later than July 15th of each fiscal year, the Executive shall provide the Compensation Committee of the Board with a list of operational and strategic goals for the fiscal year.  The Compensation Committee of the Board will determine with the Executive’s input the Bonus Metrics for the fiscal year. For fiscal year 2021, the Compensation Committee has determined that the Bonus shall not be less than one million five hundred sixty thousand dollars ($1,560,000), which bonus shall be paid no later than August 15, 2021.

	
(3)
	
Annual Performance Bonus.  The Bonus will be determined based on the following:

	
 
	
•
	
Bonus amounts are to be based on the same corporate scorecard that is used for other executives, which is to be formally approved in writing by the Board before the end of the first quarter of each year.

	
 
	
•
	
At the beginning of each fiscal year, the Compensation Committee shall review and approve the Bonus metrics and the target, threshold, and maximum achievement levels for each metric.

	
 
	
•
	
At the end of each fiscal year, the Compensation Committee shall review the Company’s performance relative to targets and approve corporate score payout percentages (%).  The Compensation Committee retains the right to exercise discretion with respect to the achievement of metrics included on the corporate scorecard at year-end.

 

Section 2.6Equity Incentives.

	
(1)
	
The Company has established the Tilray, Inc. Amended and Restated 2018 Equity Incentive Plan (“EIP”). During the Employment Term, pursuant to the terms and conditions of the Company’s EIP or any successor equity compensation plan as may be in 

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place from time to time, the Executive shall be eligible to receive, from time to time, awards in amounts, and subject to such terms, conditions and restrictions, as determined by the Compensation Committee in its sole discretion.  Except as otherwise provide in this Agreement, awards granted to the Executive, if any, shall be subject to the terms and conditions established within the EIP (as amended from time to time) or any successor equity compensation plan as may be in place from time to time, as applicable, and the separate option agreement, restricted stock purchase agreement or stock award agreement between the Company and the Executive that sets forth the terms and conditions of the award (e.g., exercise price, expiration date and vesting schedule of stock options; and the restricted period and/or other restrictions such as performance objectives relating to stock awards); provided, however, that any such awards shall not require Executive to be bound by any restrictive covenants (or forfeiture provision tied to breaching restrictive covenants or similar provisions) beyond those in Articles 4-7 hereof.  The Executive will be eligible to receive a target annual grant under the EIP of 250% of the Executive’s Base Salary.  The actual amount of any annual equity grant shall be based on performance metrics determined by the Board, in its sole discretion; provided, however that the 2021 EIP grant shall be not less than two million six hundred thousand dollars ($2,600,000), which shall be granted by August 15, 2021. 

 

	
(2)
	
The Company shall grant the Executive the following awards under the EIP subject to the terms of the applicable form of award agreement previously approved by the Compensation Committee:

 

(a)Performance-Based Grant.  The Company shall, no later than August 15, 2021, grant to Executive a number of performance-based restricted stock units (“PSUs”), valued based on the closing price of the Company’s Shares on the grant date valued at five million dollars ($5,000,000) which grant shall be subject to the performance conditions and vesting schedule set forth in Schedule B and applicable form of award agreement.

 

(b)Time-Based Grant.  The Company shall, no later than August 15, 2021, grant to executive time-based restricted stock units (“RSUs”), valued based on the closing price of the Company’s Shares on the grant date equal to five million dollars ($5,000,000) which grant shall be subject to time-based vesting of 1/3 on June 1, 2022 (the “Initial Vesting Date”) and 1/3 on each of the first (1st) anniversary and the second (2nd) anniversary of the Initial Vesting Date, subject to Executive’s continued employment through such vesting dates (except as otherwise set forth in this Agreement), and the applicable form of award agreement.

 

(c)Synergy Equity Grant.  The Executive shall be awarded, no later than August 15, 2021, a number of restricted stock units valued based on closing price of the Company’s Shares on the grant date equal to five million dollars ($5,000,000) (the “Synergy Equity Grant”), which grant shall be subject to the applicable form of award agreement and the satisfaction of the time and performance-based vesting conditions below to be achieved no later than the third (3rd) anniversary of the Effective Date as follows: 

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•
	
Time-Based Vesting Condition:  Subject to the satisfaction of the performance-based vesting conditions on or prior to each applicable vesting date and in no event after the final Vesting Date, 50% of the Synergy Equity Grant shall vest on the first anniversary of the Effective Date (the “Initial Vesting Date”), and an additional 25% shall vest on each of the first (1st) and second (2nd) anniversaries of the Initial Vesting Date (each a “Time-Based Vesting Date” or a “Vesting Date”); provided, however, that in the event that a performance-based vesting condition has not been satisfied on an earlier Vesting Date, but is satisfied on a later Vesting Date, then the portion of the award that did not vest on the earlier Vesting Date shall become vested on the later Vesting Date.

	
 
	
•
	
Performance-Based Vesting Condition: Achievement of the following cost savings from synergies achieved in connection with the Aphria/Tilray transaction in accordance with the Synergy Plan presented to and approved by the Compensation Committee on July 26, 2021 prior to or on the applicable Time-Based Vesting Date: 50% satisfied when $50,000,000 in cost savings are achieved, and 100% satisfied when $80,000,000 of cumulative cost savings are achieved in accordance with the Synergy Plan submitted to the Board, in each case, as determined by the Company's Compensation Committee.

The Synergy Equity Grant shall be settled within 30 days of the date each Time-Based Vesting Condition provided the Performance-Based Vesting Condition has been satisfied (e.g., if the grant date is July 1, 2021, and the 50% target is hit on May 1, 2022, then 25% of the  award shall vest on July 1, 2022; then, if the 100% target is hit on September 1, 2022, an additional 50% shall vest on July 1, 2023, and the final 25% shall vest on July 1, 2024).  Except as otherwise provided, herein, in the event that neither Performance-Based Vesting Condition is satisfied by the third (3rd) anniversary of the Effective Date, then the Synergy Equity Grant shall be forfeited.

(d)Full Vesting of Outstanding Awards.  The Company shall no later than August 15, 2021 cause all outstanding Aphria equity awards held by Executive to become fully vested and paid out in accordance with their terms.

(e)This Agreement Controls.  In the event of any conflict between the terms of any of the award agreements granted pursuant to this Section 2.6 and this Agreement, then the terms of this Agreement shall control, even if the award agreements were granted and executed after the date hereof.

 

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Section 2.7Benefit Plans.

Executive shall participate in, and the Company shall pay the entire cost for his and his dependents participation in, all employee retirement and welfare benefit plans made available to the Company’s senior level executives as a group or to its employees generally, as such retirement and welfare plans may be in effect from time to time and subject to the eligibility requirements of the plans.  Nothing in this Agreement shall prevent the Company from amending or terminating any retirement, welfare or other employee benefit plans or programs from time to time as the Company deems appropriate.  In the event that paying for the entire cost of Executive’s and his dependents participation in, all employee retirement and welfare benefits plans would cause the Company to have a discrimination issue with respect to such plans, then the Company shall increase Base Salary by the portion of the cost of such plans that Executive must pay for the applicable coverage, with any portion that cannot be paid with pre-tax money to be gross-up for all applicable taxes.

Section 2.8Vacation and Personal Days.

During each calendar year, the Executive will be entitled to accrue up to five (5) weeks of vacation to be taken at such time or times as may be mutually agreed upon by the parties hereto. Accrued but unused vacation may not be carried forward to a subsequent year, except as required by applicable law or Company policy.  In addition, the Executive will be entitled to up to six (6) personal days each calendar year. The personal days cannot be carried forward and do not have any cash value. Accrued but unused vacation and personal days shall not be cashed out upon termination of employment or at any time during employment, except as required by applicable law or Company policy.

Section 2.9Expenses.

Consistent with the reimbursement of expenses incurred by the Executive prior to the commencement of this Agreement the Company shall reimburse the Executive for all out-of-pocket expenses reasonably and properly incurred by the Executive in connection with his duties hereunder, including travel and entertainment expenses. Without limiting the generality of the foregoing and notwithstanding the provisions of Section 2.3(2) of this Agreement, the Company acknowledges and agrees that the Executive shall be entitled to incur and be reimbursed for expenses greater than, or not contemplated in the policies of the Company in effect from time to time.

Section 2.10Car Allowance.

The Company shall pay to the Executive a car allowance of $1,200 per month (the “Allowance”) on an after-tax basis.

Section 2.11Corporate Phone Plan.

The Executive shall be eligible to participate in a corporate phone plan, subsidized entirely by the Company. The phone plan will cover the costs of an iPhone (or similar Smartphone device) for the Executive’s sole use and business needs.

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Section 2.12Transformation Bonus.

The Executive shall be entitled to a one-time bonus equal to ten million dollars ($10,000,000) (the “Transformation Bonus”), less all deductions and withholdings as required by law in consideration for the Executive agreeing to remain in his role of Chief Executive Officer or otherwise providing continued services through mutual agreement with the Company until December 31, 2022.  Such bonus amount shall be paid within five (5) days of the Effective Date.  If the Executive voluntarily resigns without Good Reason (other than as a result of Executive’s death or Disability) prior to December 31, 2022, then Executive shall repay to the Company the prorated after-tax portion of the Transformation Bonus within ninety (90) days of his resignation without Good Reason, calculated by multiplying the after-tax portion of the award by a fraction, the numerator of which is the number of days from the resignation date through December 31, 2022 and the denominator of which is the number of days from the Effective Date through December 31, 2022.  For clarity, this obligation of the Executive does not commit the Company to continue the employment of the Executive for any term or period and his employment can be terminated at any time in accordance with the terms of this Agreement.

Section 2.13Life Insurance.

As long as the Executive remains employed with the Company, and subject to applicable underwriting, the Company will obtain and pay the premiums for life insurance payable to the estate of the Executive (or his designated beneficiary) in the aggregate amount of $6.0 million dollars provided such annual premiums do not exceed $150,000 per annum which may be secured through a group and/or individual polic(ies).  The Executive shall not be entitled to the continued payment of premiums for such life insurance policy after the date of termination of the Executive’s employment.  Following any termination of employment, the Company shall promptly assign such policy to Executive (or his designee), if he requests the assignation of such policy.

ARTICLE 3
TERMINATION

Section 3.1Termination by the Company.

This Agreement and the employment of the Executive may be terminated by the Company, at any time, for the following reasons:

(a)for Cause following the satisfaction of the notice and other provisions applicable to a Cause termination;

(b)automatically upon the death of the Executive;

(c)in the event of a Disability of the Executive; or

(d)without Cause upon written notice of termination.

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Section 3.2Termination by Executive.

This Agreement and the employment of the Executive may be terminated by the Executive for the following reasons:

(a)with Good Reason; or

(b)without Good Reason.  

In the event that Executive terminates his employment without Good Reason, then he agrees that he shall provide not less than four (4) weeks’ prior written notice of resignation to the Company (the “Notice of Resignation Period”). The Company may waive the Notice of Resignation Period in whole or in part at any time by providing payment of regular Base Salary and any other payments required by applicable employment law for the period so waived.

Section 3.3Payment Upon Termination

	
 
	
(1)
	
Should this Agreement be terminated pursuant to Section 3.1(a), Section 3.1(b), Section 3.1(c), or should the Executive resign without Good Reason pursuant to Section 3.2(b), then Executive will only be entitled to: (i) accrued but unpaid Base Salary for services rendered to the date of termination; (ii) reimbursement for the business expenses incurred by the Executive up to the date of termination; (iii) amounts which Executive has earned and are owed to him pursuant to any written agreements, compensation and/or equity plans or programs of the Company or any of its affiliates, including, but not limited to any awards granted pursuant to any such plans or programs; (iv) amounts to which is entitled pursuant to any employee benefit plans of the Company or any of its affiliates (including, but not limited to, life insurance proceeds upon death and/or disability insurance proceeds upon disability); and (v) any indemnification rights Executive has in connection with his service as an officer and/or director of the Company and/or its affiliates, whether pursuant to the Company’s governing documents or otherwise (collectively, the “Accrued Benefits”). Notwithstanding the foregoing:

(a)Upon Executive’s termination of employment pursuant to Section 3.1(b) or (c) or Section 3.2(a), Executive shall be entitled to any Bonus, the performance conditions of which have been met in respect of a prior year, which has not yet been paid as of the date of termination.

(b)Upon a termination of employment as a result of Executive’s death pursuant to Section 3.1(b), on the sixtieth (60th) day following the date of termination, all of Executive’s unvested equity awards, including but not limited to all equity awards granted pursuant to Section 2.6 shall immediately vest and settle (as applicable) in full (to the extent then outstanding, unvested, and unsettled).

(c)Upon a termination of employment as a result of Executive’s Disability pursuant to Section 3.1(c), then subject to Section 3.6, the Executive shall also be entitled to: 

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(i)
	
a lump-sum payment equal to the sum of (a) the annual Base Salary and (b) the Target Bonus, to be paid 60 days following the date of termination;

	
 
	
(ii)
	
continued provision of the benefits described in Section 2.7, at entirely the Company’s cost, for twelve (12) months following the month in which Executive’s employment terminated; provided, however, if the Company determines that providing the continued health insurance under this benefit shall cause the plan to violate nondiscrimination regulations, then the Company shall pay to Executive for 12 months following the termination of his employment, in lieu of the Company provided continued health insurance, the monthly COBRA premium for Executive and his dependents, and in such case, the Company shall pay to the executive, on an after-tax basis, a bonus equal to the grossed-up amount of all taxes applicable to the payments in lieu of continued health insurance benefits; and 

	
 
	
(iii)
	
full vesting and settlement (as applicable), on the sixtieth (60th) day following the termination date, of all of Executive’s outstanding, unvested, and unsettled (as applicable) equity awards that: (A) would vest solely subject to Executive’s continuous service with the Company over time in the future, including, but not limited to, awards granted pursuant to Section 2.6(2)(b) and any performance-vesting awards that would have otherwise vested by the third (3rd) anniversary of the Effective Date (to the extent that such performance-criteria have already been satisfied as of the date of termination), such as those equity awards granted pursuant to Section 2.6(2)(a) (to the extent then outstanding, unvested, and unsettled); and (B) were issued pursuant to Section 2.6(2)(c).

	
(2)
	
Should this Agreement be terminated pursuant to Section 3.1(d) or Section 3.2(a), then subject to Section 3.6, the Executive shall be entitled to:

(a)an amount equal to 1.5 times (1.5x) the sum of (i) Executive’s Base Salary plus (ii) the Target Bonus, which amount shall be paid in installments over the Company’s normal payroll cycles;

(b)continued provision of the benefits described in Section 2.7, at entirely the Company’s cost, for eighteen (18) months following the month in which Executive’s employment terminated; provided, however, if the Company determines that providing the continued health insurance under this benefit shall cause the plan to violate nondiscrimination regulations, then the Company shall pay to Executive for 18 months following the termination of his employment, in lieu of the Company provided continued health insurance, the monthly COBRA premium for Executive and his dependents, and in such case, the Company shall pay to the Executive, on an after-tax basis, a bonus equal to the grossed-up 

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amount of all taxes applicable to the payments in lieu of continued health insurance benefits;

(c)full vesting and payment, on the sixtieth (60th) day following termination of employment, of all unvested equity that would vest upon the passage of time in the future, including, but not limited to, awards granted pursuant to Section 2.6(2)(b) and any performance-based awards that would be vested by the third (3rd) anniversary of the Effective Date based upon satisfaction of performance-criteria that have already been satisfied at time of termination, such as those in Section 2.6(2)(a) and (c);

(d)any Bonus, the performance conditions of which have been met in respect of a prior year, which has not yet been paid at time of termination; and

(e)the Accrued Benefits.

	
(3)
	
Notwithstanding Section 3.1(d), in the event this Agreement or Executive’s employment is terminated without Cause or Executive resigns with Good Reason within two (2) years following a Change of Control, in lieu of the amounts stipulated in Section 3.3(3) (and less any payments the Executive received upon his termination), the Executive shall be entitled to the following, subject to Section 3.6:

(a)2.5 times (2.5x) the Base Salary, paid in a lump sum on the sixtieth (60th) day following termination of employment;

(b)2.5 times (2.5x) the amount of the highest paid Bonus (which for the avoidance of doubt shall not include the Transformation Bonus) prior to the effective date of the Change of Control, paid in a lump sum on the sixtieth (60th) day following termination of employment;

(c)the Accrued Benefits;

(d)continued provision of the benefits described in Section 2.7, at entirely the Company’s cost, for thirty (30) months following the month in which Executive’s employment terminated; provided, however, if the Company determines that providing the continued health insurance under this benefit shall cause the plan to violate nondiscrimination requirements under applicable law or such benefits cannot be provided under the terms of the plan, then the Company shall pay to Executive for 30 months (or such lesser period if benefits can be provided under the Company’s plan) following the termination of his employment, the monthly COBRA premium for Executive and his dependents, and in such case, the Company shall pay to the executive, on an after-tax basis, a bonus equal to the grossed-up for amount of all taxes applicable to the payments in lieu of continued health insurance benefits.

(e)full vesting and payment, on the sixtieth (60th) day following termination of employment, of (i) all unvested equity that would vest solely upon the passage of time in the future, including, but not limited to, awards granted 

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pursuant to Section 2.6(2)(b) and granted pursuant to Section 2.6(2)(c), (ii) all unvested equity granted pursuant to Section 2.6(2)(a) that would vest by the (3rd) anniversary of the Effective Date upon achieving the greater of the highest 30 day average share price prior to the Change of Control or the share price in the Change of Control; and (iii) all unvested equity granted pursuant to Section 2.6(2)(c) ; and

(f)for a period of 2.5 years from the date of termination following a Change of Control, the Executive shall also continue to receive the benefits under Section 2.10 (Car Allowance) and the continued payment by the Company of the lease for the Executive’s office and executive assistant located in New York City.

	
(4)
	
Except as provided for herein, any of the Executive’s entitlements upon termination of employment under the LTIP will be governed by the terms of the applicable LTIP documents.

	
(5)
	
Except as provided for herein, the Executive’s entitlements under Section 2.10 to Section 2.11 will cease on the date of termination of the Executive’s employment for any reason. 

Section 3.4Effect of Termination.

The Executive agrees that, upon termination of his employment for any reason whatsoever, the Executive shall thereupon be deemed to have immediately resigned any other position the Executive may have as an officer, director or employee of the Company together with any other office, position or directorship which the Executive may hold with any of the Company’s affiliates or related entities. In such event, the Executive shall, at the request of the Company, forthwith execute any and all documents appropriate to evidence such resignations. The Executive will not be entitled to any additional payments in respect of such resignation.

Section 3.5Date of Termination.

For the purposes of this Agreement the “date of termination” will be the date specified in the written notice of termination provided pursuant to Section 3.1(a), Section 3.1(d), Section 3.2(b) as the case may be, or, in the case of death or Disability or resignation for Good Reason, the date of Executive’s death or Disability or resignation for Good Reason. 

Section 3.6Release.

The Executive agrees that he shall not receive the payments and benefits set forth in Section 3.3(1)(c), Section 3.3(2)(a)-(c) or in Section 3.3(3)(a), (b) and (d)-(f) unless (i) by the 60th day following the date of termination, the Executive has signed and delivered to the Company an effective general release of claims in favor of the Company and its affiliates and representatives, in a form acceptable to the Company substantially consistent with the form attached to this Agreement as Exhibit B, including any changes that are necessitated by law or mutually agreed upon by the parties (the “Release”); (ii) the Executive has not materially breached the Release, which Release cannot be revoked in whole or part by such date; and (iii) the Executive has not materially breached his post-termination obligations under this Agreement; 

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provided, however, that in the event that the Company alleges a material breach under (ii) or (iii) above, the Company shall provide written notice to Executive specifying the event(s) alleged to materially breach the Release or any such agreement and the Executive has failed to cure such event(s) within thirty (30) days of his receipt of such written notice.

 

Each of the Company and the Executive confirm that the provisions of Section 3.3 are reasonable and that any payments made are inclusive of any termination and/or severance payments that may be required under applicable law and have been agreed upon with reference to the Executive’s length of service with the Company.

 

ARTICLE 4
EXECUTIVE’S COVENANTS

Section 4.1Company Property.

The Executive acknowledges that all materials of the Company relating to the business and affairs of the Company, including, without limitation, all Developments, manuals, documents, reports, equipment, working materials and lists of customers or suppliers prepared by the Company or by the Executive in the course of the Executive’s employment are for the benefit of the Company and are and will remain the property of the Company.

Section 4.2Confidentiality, Intellectual Property and Cooperation.

(a)Confidentiality. The Executive shall not disclose to any Person, nor use for his own or another Person’s benefit, either during or after his employment, any Confidential Information, except as otherwise specifically authorized in writing by the Company or as reasonably required for the Executive to carry out his duties during employment with the Company.  The foregoing shall not preclude the Executive from reporting possible violations of federal securities laws to the appropriate government enforcing agency, making such other disclosures that are expressly protected under such laws, or responding to inquiries from, or otherwise cooperate with, any governmental or regulatory investigation (such the activities are, collectively, referred to as the “Protected Activities”).

(b)Ownership of Intellectual Property. The Executive acknowledges and agrees that the Company is the owner of all Developments. Any and all Developments shall be and remain the exclusive property of the Company and the Executive shall have no right, title or interest therein, and hereby waives his/her moral rights in favor of the Company and its successors and permitted assigns, and the Company shall have the sole and exclusive right, title and interest in and to the Developments, which right shall continue notwithstanding the termination of the Executive’s employment.

(c)Assignment of Rights. The Executive hereby irrevocably assigns and waives, and shall irrevocably assign and waive (which assignment operations automatically upon the making or developing of the Developments), to or on behalf of the Company and its successors, assigns or other legal representatives, any and all right, title and interest, including any moral rights, that the Executive may have in and to the Developments.

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(d)Intellectual Property Protection. The Company shall have the sole and exclusive right to apply for, prosecute, obtain and maintain any patents, design patents, copyrights, industrial designs, domain name registrations, or trademark registrations, in any and all countries throughout the world in respect of any Developments and the Executive shall, whether during or after employment, assist the Company, at its expense, with recording or securing the Company’s right, title and interest in and to the Developments, including agreeing to execute any applications, transfers, assignments, waivers, or other documents as the Company may consider necessary or desirable, for prosecuting, issuing, enforcing, obtaining, maintaining or vesting in or assigning any of the foregoing with or to the Company in any and all countries of the world; provided, however, that in the event that the Company requests that the Executive execute applications, transfers, assignments, waivers or other documents, then the Executive may retain attorneys, at the Company’s sole cost and expense, to review any such applications, transfers assignments, waivers or other documents and Executive shall only be required to execute such documents if his attorneys determine his execution of such documents to be reasonable and appropriate.

(e)Cooperation. From and after any termination, for any reason, the Executive shall provide Executive’s reasonable cooperation in connection with any legal action or proceeding (or any appeal from any action or proceeding) which relates to events occurring during Executive’s Employment Term, provided, that (i) the Company shall pay Executive for his time at a mutually agreed upon hourly rate, (ii) the Company shall reimburse Executive for Executive’s reasonable costs and expenses incurred in connection therewith, and (iii) such cooperation shall not unreasonably burden Executive or materially interfere with any subsequent employment that Executive may undertake or with any other duties Executive may have.

Section 4.3Third-Party Obligations.

The Executive hereby represents that, except for agreements the Company is aware of, he is not a party to, or bound by the terms of, any agreement with any previous employer or other party to refrain from using or disclosing any trade secret or confidential or proprietary information in the course of his employment with the Company which would prevent him from performing his duties and responsibilities at the Company or to refrain from competing, directly or indirectly, with the business of such previous employer or any other party. The Executive further represents that his performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement (written or oral) with any third party, including without limitation any agreement to keep in confidence proprietary information, knowledge or data acquired by the Executive in confidence or in trust prior to his employment with the Company, and the Executive will not disclose to the Company or induce the Company to use any confidential or proprietary information or material belonging to any previous employer or others.  Similarly, the Company shall not request or require Executive to breach any obligations Executive has to any former employer.

Section 4.4Defend Trade Secrets Act Notice.

Pursuant to the Federal Defend Trade Secrets Act of 2016 (“DTSA”), an individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made in confidence to a Federal, State, or local 

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government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law.  An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.  An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order.

 

ARTICLE 5
NON-COMPETITION AND NON-SOLICITATION

Section 5.1Non-Competition.

The Executive shall not, during the Employment Term and for a period of twelve (12) months immediately following the termination of his employment, for any reason, whether voluntary or involuntary, on his own behalf or on behalf of any Person, without the prior written consent of the Company, directly or indirectly, have an ownership interest in or engage in (as owner, sole proprietor, stockholder, partner, lender, director, officer, manager, employee, consultant, agent or otherwise) any business in all or part of the Territory which is competitive with the Business.

Section 5.2Exception.

The Executive will, however, not be in default under Section 5.1 by virtue of the Executive holding, strictly for portfolio purposes and as a passive investor, no more than five percent (5%) of the issued and outstanding shares of or any other interest in, any body corporate which is listed on any recognized stock exchange, the business of which body corporate is in competition, in whole or in part, with the Business.

Section 5.3Non-Solicitation of Customers and Suppliers.

The Executive shall not, during the Employment Term and, for a period of twelve (12) months immediately following the termination of his employment, for any reason, on his own behalf or on behalf of or in connection with any other Person, without the prior written consent of Company, whether directly or indirectly, alone through or in connection with any Person:

(a)canvass or solicit the business of (or procure or assist the canvassing or soliciting of the business of) any Customer, Prospective Customer or Supplier for any purpose which is competitive with the Business; or

(b)procure or assist in the procurement of, any business which is competitive with the Business from any Customer, Prospective Customer or Supplier.

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Section 5.4Non-Solicitation of Employees.

The Executive shall not, during the Employment Term and, for a period of twelve (12) months, immediately following the termination of his employment, for any reason, on his own behalf or on behalf of or in connection with any other Person, without the prior written consent of Company, whether directly or indirectly, alone through or in connection with any Person:

(a)offer employment or engagement to or solicit the employment or engagement of or otherwise entice away from the employment or engagement of the Company or any of its affiliates, any individual who is, to the Executive’s knowledge, employed or engaged by the Company or any of its affiliates; or

(b)procure or assist any Person to offer employment or engagement or solicit the employment or engagement of any individual who is, to the Executive’s knowledge, employed or engaged by the Company or any of its affiliates or otherwise entice away from the employment or engagement of the Company or any of its affiliates any such individual.

ARTICLE 6
RECOGNITION

Section 6.1Recognition.

	
 
	
(1)
	
The Executive expressly recognizes that Article 4 and Article 5 of this Agreement are of the essence of this Agreement, and that the Company would not have entered into this Agreement without the inclusion of those Articles.

	
 
	
(2)
	
The Executive further recognizes and expressly acknowledges that the application of Article 4 and Article 5 of this Agreement will not have the effect of prohibiting him from earning a living in a satisfactory manner in the event of the termination of his employment and of this Agreement.

	
 
	
(3)
	
The Executive further recognizes and expressly acknowledges that Article 4 and Article 5 of this Agreement grant to the Company only such reasonable protection as is necessary to preserve the legitimate interests of the Company and the Executive equally recognizes, in this respect, that the description of the Business and the Territory are reasonable.

Section 6.2Remedies.

The Executive hereby recognizes and expressly acknowledges that the Company would be subject to irreparable harm should any of the provisions of Article 4, Article 5 or Article 6 be infringed, or should any of the Executive’s obligations hereunder be breached by the Executive, and that damages alone will be an inadequate remedy for any breach or violation thereof and that provided the Company has performed all of its obligations under the Agreement, the Company, in addition to all other remedies, will be entitled as a matter of right to equitable relief, including temporary or permanent injunction to restrain such breach.

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ARTICLE 7
NON-DISPARAGEMENT

Section 7.1Non-Disparagement

	
(1)
	
The Executive covenants and agrees that he shall not at any time engage in any pattern of conduct that involves the making or publishing of written or oral statements or remarks (including, without limitation, the repetition or distribution of derogatory rumors, allegations, negative reports or comments) which are disparaging, deleterious or damaging to the integrity, reputation or goodwill of the Business or the Company, its affiliates or their management, except that the Executive may provide truthful information while engaging in the Protected Activities.

	
(2)
	
The Company covenants and agrees that it shall not (and shall cause its officers and directors not to) engage in any pattern of conduct that involves the making or publishing of written or oral statements or remarks (including, without limitation, the repetition or distribution of derogatory rumors, allegations, negative reports or comments) which are disparaging, deleterious or damaging to the integrity, reputation or goodwill of the Executive, except that the Company may provide truthful information while engaging in the Protected Activities.

ARTICLE 8
GENERAL

Section 8.1Section 409A.

	
(1)
	
Notwithstanding anything to the contrary in this Agreement, no severance pay or benefits to be paid or provided to Executive, if any, pursuant to this Agreement that, when considered together with any other severance payments or separation benefits, are considered deferred compensation under Section 409A of the Code, and the final regulations and any guidance promulgated thereunder (“Section 409A”) (together, the “Deferred Payments”) will be paid or otherwise provided until Executive has a “separation from service” within the meaning of Section 409A. Similarly, no severance payable to Executive, if any, pursuant to this Agreement that otherwise would be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9) will be payable until Executive has a “separation from service” within the meaning of Section 409A.

	
(2)
	
Notwithstanding anything to the contrary in this Agreement, if Executive is a “specified employee” within the meaning of Section 409A at the time of Executive’s termination (other than due to death), then the Deferred Payments, if any, that are payable within the first six (6) months following Executive’s separation from service, will become payable on the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of Executive’s separation from service. All subsequent Deferred Payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if Executive dies following Executive’s separation from service, but before the six (6) month anniversary of the separation from service, then any payments delayed in accordance 

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with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of Executive’s death and all other Deferred Payments will be payable in accordance with the payment schedule applicable to each payment or benefit. Each payment and benefit payable under this Agreement is intended to constitute a separate payment under Section 1.409A-2(b)(2) of the Treasury Regulations.

	
(3)
	
It is intended that any amount paid under this Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-l (b)(4) of the Treasury Regulations will not constitute Deferred Payments for purposes of clause (b) above.

	
(4)
	
It is intended that any amount paid under this Agreement that qualifies as a payment made as a result of an involuntary separation from service pursuant to Section 1.409A-l (b)(9)(iii) of the Treasury Regulations that does not exceed the Section 409A Limit (as defined below) will not constitute Deferred Payments for purposes of clause (i) above. “Section 409A Limit” will mean two (2) times the lesser of: (i) Executive’s annualized compensation based upon the annual rate of pay paid to Executive during the Executive’s taxable year preceding the Executive’s taxable year of Executive’s termination of employment as determined under, and with such adjustments as are set forth in, Treasury Regulation 1.409A- l(b)(9)(iii)(A)( l) and any Internal Revenue Service guidance issued with respect thereto; or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(l7) of the Code for the year in which Executive’s employment is terminated.

To the extent any reimbursements or in-kind benefits provided under this Agreement constitute nonqualified deferred compensation subject to Code Section 409A, all such reimbursements and in-kind benefits shall be made or provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (1) any reimbursement is for expenses incurred during the Executive’s lifetime (or during a shorter period of time specified in this Agreement); (2) the amount of expenses eligible for reimbursement, or in kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in kind benefits to be provided, in any other calendar year; (3) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the year in which the expense is incurred; and (4) the right to reimbursement or in kind benefits is not subject to liquidation or exchange for another benefit.

	
(5)
	
The foregoing provisions are intended to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. The Company and Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition before actual payment to Executive under Section 409A. Executive agrees and acknowledges that the Company makes no representations or warranties with respect to the application of Section 409A and other tax consequences to any payments hereunder and, by the acceptance of any such payments, Executive agrees to accept the 

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potential application of Section 409A and the other tax consequences of any payments made hereunder.

Section 8.2Section 280G of the Code. 

	
(1)
	
Notwithstanding any other provision of this Agreement or any other plan, arrangement or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Company or its affiliates to Executive or for Executive’s benefit pursuant to the terms of this Agreement or otherwise (the “Covered Payments”) constitute parachute payments (the “Parachute Payments”) within the meaning of Section 280G of the Code and, but for this Section 8.2, would be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the “Excise Tax”), then prior to making the Covered Payments, a calculation shall be made comparing (i) the Net Benefit (as defined below) to Executive of the Covered Payments after payment of the Excise Tax to (ii) the Net Benefit to Executive if the Covered Payments are limited to the extent necessary to avoid being subject to the Excise Tax. Only if the amount calculated under (i) above is less than the amount under (ii) above will the Covered Payments be reduced to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax (that amount, the “Reduced Amount”). “Net Benefit” shall mean the present value of the Covered Payments net of all federal, state, local, foreign income, employment and excise taxes. 

(a)Any such reduction shall be made in accordance with Section 409A and the following:

	
 
	
(i)
	
the Covered Payments consisting of cash severance benefits that do not constitute nonqualified deferred compensation subject to Section 409A shall be reduced first, in reverse chronological order; and

	
 
	
(ii)
	
all other Covered Payments consisting of cash payments, and Covered Payments consisting of accelerated vesting of equity based awards to which Treas. Reg. §1.280G-1 Q/A-24(c) does not apply, and that in either case do not constitute nonqualified deferred compensation subject to Section 409A, shall be reduced second, in reverse chronological order; and

	
 
	
(iii)
	
all Covered Payments consisting of cash payments that constitute nonqualified deferred compensation subject to Section 409A shall be reduced third, in reverse chronological order; and

	
 
	
(iv)
	
all Covered Payments consisting of accelerated vesting of equity-based awards to which Treas. Reg. § 1.280G-1 Q/A-24(c) applies shall be the last Covered Payments to be reduced.

(b)Any determination required under this Section 8.2 shall be made in writing in good faith by an independent accounting firm selected by the Company and reasonably acceptable to the Executive (the “Accountants”). The Company and Executive shall provide the Accountants with such information and documents as the Accountants may reasonably request in 

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order to make a determination under this Section 8.2. For purposes of making the calculations and determinations required by this Section 8.2, the Accountants may rely on reasonable, good-faith assumptions and approximations concerning the application of Section 280G and Section 4999 of the Code. The Accountants’ determinations shall be final and binding on the Company and Executive. The Company shall be responsible for all fees and expenses incurred by the Accountants in connection with the calculations required by this Section 8.2.

(c)It is possible that after the determinations and selections made pursuant to this Section 8.2 Executive will receive Covered Payments that are in the aggregate more than the amount intended or required to be provided after application of this Section 8.2 (“Overpayment”) or less than the amount intended or required to be provided after application of this Section 8.2 (“Underpayment”). 

	
 
	
(i)
	
In the event that: (A) the Accountants determine, based upon the assertion of a deficiency by the Internal Revenue Service against either the Company or Executive that the Accountants believe has a high probability of success, that an Overpayment has been made or (B) it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding that has been finally and conclusively resolved that an Overpayment has been made, then Executive shall pay any such Overpayment to the Company together with interest at the applicable federal rate (as defined in Section 7872(f)(2)(A) of the Code) from the date of Executive’s receipt of the Overpayment until the date of repayment.

	
 
	
(ii)
	
In the event that: (A) the Accountants, based upon controlling precedent or substantial authority, determine that an Underpayment has occurred or (B) a court of competent jurisdiction determines that an Underpayment has occurred, any such Underpayment will be paid promptly by the Company to or for the benefit of Executive together with interest at the applicable federal rate (as defined in Section 7872(f)(2)(A) of the Code) from the date the amount should have otherwise been paid to Executive until the payment date. 

Section 8.3Notices.

Any notice, demand or other communication which is required or permitted by this Agreement to be given or made by a party hereto must be in writing and be sufficiently given if delivered personally or sent by pre-paid registered mail at the following addresses:

(a)to the Company at:

 

Tilray, Inc.

Attention: General Counsel

655 Madison Avenue

19th Floor

New York, New York 10065

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(b)to the Executive at:

the address of the Executive's principal residence most recently on file with the Company,

or at such other address as any party may from time to time advise the other party by notice in writing. Every notice or other communication will be deemed to have been received, (i) on the date of receipt, if given by personal delivery, and (ii) the fifth Business Day after which it is mailed, if sent by registered mail. Notwithstanding the foregoing, if a strike or lockout of postal executives is in effect, or generally known to be impending, notice must be effected by personal delivery.

Section 8.4Survival.

Notwithstanding the termination of this Agreement each party shall remain bound by the provisions of this Agreement which by their terms impose obligations upon that party that extend beyond the termination of this Agreement.

Section 8.5Further Assurances.

The parties shall, with reasonable diligence, do all things and provide all reasonable assurances as may be required to complete the transactions contemplated by this Agreement, and each party shall provide such further documents or instruments required by any other party as may be reasonably necessary or desirable to give effect to this Agreement and carry out its provisions.

Section 8.6Assignment.

Except as otherwise expressly provided herein, neither this Agreement nor any rights or obligations are assignable by Executive. The Company may only assign this Agreement to a successor to all or substantially all of its assets.

Section 8.7Entire Agreement

This Agreement, including the referenced Schedule(s), constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements, including but not limited to understandings, negotiations and discussions, whether oral or written, of the parties hereto and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth herein.

Section 8.8Amendment and Waiver.

No supplement, modification, amendment or waiver of this Agreement will be binding unless executed in writing by both parties. No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision (whether or not similar) nor will such waiver constitute a continuing waiver unless otherwise expressly provided.

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Section 8.9Successors and Assigns.

This Agreement will inure to the benefit of and be binding upon the parties and their respective heirs, executors and administrators or successors and permitted assigns, as the case may be.

Section 8.10Effective Date.

Notwithstanding the date that the Parties hereto may execute this Agreement on the date first written above, this Agreement shall be deemed to take effect as of the Effective Date.

Section 8.11Severability.

If any provision in this Agreement is determined to be invalid, void or unenforceable by the decision of any court of competent jurisdiction, which determination is not appealed or appealable for any reason whatsoever, the provision in question will not be deemed to affect or impair the validity or enforceability of any other provision of this Agreement and such invalid or unenforceable provision or portion thereof will be severed from the remainder of this Agreement.

Section 8.12Independent Legal Advice.

The Executive acknowledges that he has been advised to obtain, and that he has obtained independent legal advice with respect to this Agreement and that he understands the nature and consequences of this Agreement.

Section 8.13Governing Law.

This Agreement will be governed by and construed in accordance with the laws of the State of New York, without reference to rules relating to conflicts of laws.

Section 8.14Counterparts.

This Agreement may be executed by the parties in one or more counterparts, each of which when so executed and delivered will be deemed to be an original and such counterparts will together constitute one and the same instrument.

Section 8.15Indemnification.

  During the Employment Term and thereafter, the Company shall also provide Executive with coverage under its current directors’ and officers’ liability policy to the same extent as its other senior executives and/or directors.

Section 8.16Legal Fees.

The Company shall promptly pay or reimburse Executive for all reasonable legal fees and expenses he incurred up to $40,000, subject to Executive submitting documentation, in 

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connection with the negotiation, review, and preparation of this Agreement and any related agreements, including, but not limited to, those in the Exhibits to this Agreement.

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

	
TILRAY, INC.

	
 

	
Name:
	
 

	
Title
	
 

	
 
	
 

	
 
	
 

	
 
	
 

	
 
	
 

Agreed to and Accepted this                 day of                   ,             .

 

	
WITNESS
	
 
	
EXECUTIVE

	
 
	
 
	
 

	
Name:
	
 
	
 
	
 
	
Irwin D. Simon

 

 

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SCHEDULE A 
DEFINITIONS

“Board” means the Board of Directors of the Company.

“Business” means the business carried on by the Company and its direct and indirect subsidiaries at any time during Executive’s employment, which includes (but is not limited to) the cultivation, production, distribution and sale of medical and recreational cannabis, or the use of cannabis or hemp in any product or service, to the extent that Executive worked with, or obtained Confidential Information  about, such business.

“Business Day” means any day of the year which the NASDAQ is open for business.

“Cause” means (a) Executive’s conviction of or entry of a plea of guilty or nolo contendere to, any felony (other than relating to cannabis); (b) Executive’s refusal to perform his reasonably assigned duties for the Company (other than as a result of Executive’s incapacity due to physical or mental illness); (c) Executive engaging in any act of material dishonesty or fraud; (d) Executive engaging in willful misconduct or gross negligence in the performance of his duties; (e) Executive materially breaches this Agreement (other than violations of policies); or (f) Executive willfully and materially violating material written policy applicable to Executive and the Company incurring material liability directly as a result of such willful and material violation; provided, however, that (i) Cause shall not exist under (b), (e) or (f) above unless the Company has delivered written notice to Executive, signed by a duly authorized officer of the Company, specifying the event(s) above providing Cause and the Executive has failed to reasonably cure such event(s) within thirty (30) days of receiving such written notice.

“Change of Control” shall be deemed to have occurred upon:

(a)A merger, consolidation, reorganization, or similar form of corporate transaction approved by the Company’s stockholders, unless securities representing more than fifty percent (50%) of the total and combined voting power of the outstanding voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly, by the persons who beneficially owned the Company’s outstanding voting securities immediately prior to such transaction; or 

(b)The sale, transfer or other disposition of Company assets (including by way of merger or spin-off of any subsidiary or subsidiaries of the Company) occurring within a twelve (12) month period and representing, at a minimum, not less than forty percent (40%) of the total gross fair market value of all assets of the Company, to any person, entity, or group of persons acting in consort, other than a sale, transfer or disposition to: (A) a stockholder of the Company in exchange for or with respect to its stock; (B) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company; (C) a person, or more than one person acting as a group, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of the outstanding stock of the Company; or (D) an entity, at least fifty percent (50%) of the total value or voting power of which is owned by a person described in (C); or 

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(c)Any transaction or series of related transactions pursuant to which any person or any group of persons comprising a “group” within the meaning of Rule 13d-5(b)(l) under the Securities Exchange Act of 1934, as amended (other than the Company or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlled by or is under common control with the Company) becomes directly or indirectly the beneficial owner (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of securities possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Company’s securities outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction involves a direct issuance from the Company or the acquisition of outstanding securities held by one or more of the Company’s stockholders; or

(d)during any period of two consecutive years, individuals who at the beginning of such period constitute the Board cease for any reason to constitute at least a majority thereof; provided, however, that any individual whose election or nomination for election as a member of the Board was approved by a vote of at least two-thirds of the directors then in office shall be considered to have continued to be a member of the Board;

Notwithstanding the foregoing, a transaction shall not constitute a Change of Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in the same proportions by the persons who held the Company’s securities immediately before such transaction 

“Code” means the U.S. Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereto.

“Confidential Information” means information, whether or not originated by the Executive, that relates to the business or affairs of the Company or its affiliates, their clients or suppliers and is confidential or proprietary to the Company, its affiliates or their clients or suppliers.

	
(a)
	
Confidential Information includes, but is not limited to, the following types of information and other information of a similar nature (whether or not reduced to writing or designated or marked as confidential and whether or not stored on a Company device or personal device):

	
 
	
(i)
	
work product resulting from or related to work or projects performed or to be performed by the Company, including but not limited to, the interim and final lines of inquiry, hypotheses, research and conclusions related thereto and the methods, processes, procedures, analysis, techniques and audits used in connection therewith;

	
 
	
(ii)
	
internal Company personnel and financial information, vendor names and other vendor information, purchasing and internal cost information, internal services and operational manuals;

	
 
	
(iii)
	
marketing and development plans, price and cost data, price and fee amounts, pricing and billing policies, quoting procedures, marketing techniques and methods of obtaining business, forecasts and forecast assumptions and volumes, 

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and future plans and potential strategies of the Company which have been or are being discussed, customer names and customer information;

	
 
	
(iv)
	
contracts and their contents, client services, data provided by clients and the type, quantity and specifications of products and services purchased, leased, licensed or received by clients of the Company; and,

	
 
	
(v)
	
all confidential information of the Company which becomes known to the Executive as a result of employment with the Company, which the Executive acting reasonably, believes is confidential information of the Company or which, the Company takes measures to protect, provided that the Executive is aware or ought to be aware of such measures.

	
(b)
	
Confidential Information does not include:

	
 
	
(i)
	
the general skills, general knowledge and experience gained during the Executive’s employment;

	
 
	
(ii)
	
information publicly known without breach of this Agreement; or,

	
 
	
(iii)
	
information, the public disclosure of which is required to be made by any law, regulation, governmental authority or court (to the extent of the requirement), provided that before disclosure is made, notice of the requirement is provided to the Company where it is within the Executive’s control to provide such notice, and to the extent possible in the circumstances, the Company is afforded an opportunity to dispute the requirement.

“Customer” means any Person who, in the twelve (12) months preceding the date of the termination of the Executive’s employment hereunder for any reason, has purchased from the Company or its affiliates, with the Executive’s assistance, any material amount of product or services produced, sold, licensed, or distributed by the Company in respect of the Business.

“Developments” means all discoveries, know how, inventions, designs, works of authorship, ideas, intellectual property, information, data, contributions, developments, processes, compositions, techniques or any derivations or improvements thereof (whether or not patentable or copyrightable) and legally recognized proprietary rights (including, but not limited to, patents, copyrights, trademarks, topographies, know-how and trade secrets), and all records and copies of records relating to the foregoing, that:

	
(a)
	
relate to the Business;

	
(b)
	
result or derive from the Executive’s employment with the Company or from the Executive’s knowledge or use of Confidential Information;

	
(c)
	
are made by the Executive (individually or in collaboration with others) in the discharge of his duties hereunder;

	
(d)
	
result from or derive from the use or application of the resources of the Company; or

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(de)
	
result or derive from the use of any open source software in connection with the Business or otherwise on behalf of the Company.

“Disability” means the Executive has been determined to be “permanently disabled” or “totally disabled” (or any other similar applicable term) under the Company’s Long Term Disability Plan and the Executive has commenced receiving disability benefits pursuant to such plan.

“Good Reason” means any of the following without Executive’s prior written consent:

	
 
	
(a)
	
any reduction in Executive’s Base Salary or any failure to pay Executive any amounts which he is due;

	
 
	
(b)
	
any material diminution in Executive’s titles, duties, authorities or reporting relationships;

	
 
	
(c)
	
the assignment to Executive of any duties materially inconsistent with his position as CEO and Chairman of the Board;

	
 
	
(d)
	
any removal of Executive from the positions of CEO or Chairman of the Board;

	
 
	
(e)
	
any requirement Executive’s principal place of employment be outside New York County, New York; or

	
 
	
(f)
	
any material breach by the Company or any of its affiliates of this Agreement or any other agreement to which Executive is a party;

provided, however, that Good Reason shall not exist hereunder unless Executive has provided written notice to the Company identifying the event(s) alleged to constitute Good Reason and the Company has failed to reasonably cure such event(s) within thirty (30) days of its receipt of such notice.

“Effective Date” means July 27, 2021.

“Person” means a natural person, partnership, limited liability partnership, company, joint stock company, trust, unincorporated association, joint venture or other entity or governmental entity, and pronouns have a similarly extended meaning.

“Prospective Customer” means (i) any Person solicited by the Executive on behalf of the Company or its affiliates for any purpose relating to the Business at any time during the twelve (12) month period immediately preceding the date of the termination of the Executive’s employment hereunder, for any reason; and (ii) any Person solicited by the Company with the Executive’s knowledge for any purpose relating to the Business at any time during the twelve (12) month period immediately preceding the date of the termination of the Executive’s employment hereunder.

“Shares” means the Common Stock of the Company.

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“Supplier” means any Person who, in the twelve (12) months’ preceding the date of the termination of the Executive’s employment hereunder for any reason, has supplied to the Company or its affiliates, with the Executive’s assistance, any material amount of product or services produced, sold, licensed, or distributed by the Company in respect of the Business.

“Territory” means North America and any other country within which the Company conducts the Business in the twelve (12) months’ preceding the date of the termination of the Executive’s employment               hereunder                for                  any                   reason.

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SCHEDULE B

PSUs

 

 

	
Share Price*
	
% of Units vested with interpolation between percentages**

	
0% to less than 25% share price appreciation (threshold)
	
0%

	
25% share price appreciation
	
25%

	
50% share price appreciation
	
50%

	
75% share price appreciation
	
100%

	
100% share price appreciation
	
150%

	
125% share price appreciation or greater
	
250%

 

 

*Highest 30-day Volume Weighted Average Price (VWAP) achieved anytime during the 3-year performance period (or such shorter period upon death, Disability, termination without Cause by the Company, Executive’s termination for Good Reason or Change of Control (an “Intervening Event”); provided, however, that in the event of a Change of Control, the Share Price used above shall be the greater of (x) the highest 30-day VWAP prior to the Change of Control or (y) the share price in the Change of Control.  The initial share price for purposes of this grant shall be $15.80, which is equal to the VWAP from May 1 to May 30, 2021.

 

**Final vested percentage will be determined based on the earlier of (1) an Intervening Event or (2) the third anniversary of grant date (the “Vesting Date”).

Except as otherwise provided herein or in the Employment Agreement, for the avoidance of doubt, the Executive must remain in continuous employment from the grant date to the Vesting Date in order for the Units (or any portion thereof) to be vested.  Vested Units will be settled within 30 days of the Vesting Date.  Further, any price appreciation occurring after the third (3rd) anniversary of the Effective Date shall result in no further vesting and any unvested portion of the Units at that time shall be forfeited. 

 

 

 

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Exhibit A

Ongoing Business Participation

 

	
 
	
1.)
	
Whole Earth Brands: Board Member, Executive Chairman

	
 
	
2.)
	
Stagwell Group: Lead Director

	
 
	
3.)
	
GP Act III Spac: Co-Chairman

	
 
	
4.)
	
Tulane University: Board of Directors

	
 
	
5.)
	
Brooklyn Poly Prep Country Day School: Board of Directors

	
 
	
6.)
	
Cape Breton Eagles (Canadian) Hockey Team QMJHL: Chairman of the Board/Majority Owner

 

	
 
	
7.)
	
St. John’s Edge (Canadian) Basketball Team: Co-Owner

	
 
	
8.)
	
Lobster Roll Restaurant: Co-Owner

	
 
	
9.)
	
Cambridge Suites Hotel (Sydney, NS): Owner

	
 
	
10.)
	
 Stew Leonard Grocery Store: Advisory Board

 

 

 

 

EAST\181875955.14

 

 

Exhibit B

Release

 

 

 

 

EAST\181875955.14tlry-ex102_16.htm

 

Exhibit 10.2

 

Execution Copy

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement') is effective as of the 26th day of July, 2021 (the “Effective Date”) by and between Tilray, Inc., a Delaware corporation (the "Company") and Denise Faltischek (the "Executive").

 

WHEREAS, the Company desires to employ Executive as its Chief Strategy Officer and Head of International, and Executive desires to serve in such capacity on behalf of the Company, upon the terms and conditions hereinafter set forth; and

 

WHEREAS, Executive acknowledges that she has had an opportunity to consider this Agreement and to consult with an independent advisor of her choosing with regard to the terms of this Agreement, and enters into this Agreement voluntarily and with a full understanding of its terms.

 

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

 

1. Employment.

 

1.1 Employment Period. Subject to the provisions for earlier termination provided herein, the Company shall continue to employ the Executive as of the Effective Date.  The Agreement will be effective from the Effective Date and will continue at-will until it is terminated in accordance with the provisions provided in Section 3 of this Agreement (the “Employment Period”). For the avoidance of doubt, the parties acknowledge and agree that Executive was employed in good standing by the Company prior to the Effective Date of this Agreement, and any subsequent calculation done under this Agreement shall give effect to such prior employment effective as of May 1, 2021, including without limitation the calculation of Executive’s severance (if any), Performance Bonus and LTIP award in respect of the fiscal year-ending May 31, 2022.

 

1.2 Position. Commencing on the Effective Date, Executive shall serve as the Chief Strategy Officer and Head of International of the Company, reporting to the Chief Executive Officer of the Company, and shall perform all duties and accept all responsibilities incident to such position and such other duties as may be reasonably assigned to Executive by the Chief Executive Officer of the Company consistent with such position, as set forth below.  

 

1.3 Extent of Services. Executive shall use her best efforts to carry out Executive's duties and responsibilities consistent with this Agreement and shall devote substantially all of Executive's business time, attention and energy thereto. In the performance of her duties, Executive shall observe and adhere to all applicable Company policies and procedures as may be interpreted, adopted, revised or deleted from time to time in the Company's sole discretion. During the Employment Period, Executive may engage in (a) volunteer services for or on behalf of such religious, educational, non-profit and/or other charitable organization as Executive may wish to serve and (b) with the consent of the Board of Directors of Company (“Board”) (which consent shall not be unreasonably withheld), serve on one (1) for-profit board of directors, in all such cases not interfering with Executive's responsibilities and performance of Executive's duties hereunder. The foregoing shall not be construed as preventing Executive from owning less than two percent (2%) of the total outstanding shares of a publicly traded company.  For purposes of this Section 1.3, it is hereby acknowledged and agreed that, as of the Effective Date, the Executive is 

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already a director on a for-profit board of directors and that the Board is deemed to have consented to such directorship.    

 

1.4 No Fixed Location of Services. The Executive shall not be required to perform any of the duties set out herein from any specific location or premises but is permitted to work from the Company’s New York, New York office, provided that at all times such duties are exercised faithfully and diligently. The Executive shall undertake such travel within or outside of the United States and Canada as is necessary or advisable for the efficient operations of the Company and the performance of Executive's duties hereunder.

 

2. Compensation and Benefits.

 

2.1 Base Salary. For all the services rendered by Executive hereunder, effective as May 1, 2021, the Company shall pay Executive a base salary ("Base Salary") at the annual rate of five hundred thousand U.S. Dollars ($500,000) subject to all required withholdings and authorized deductions and payable bi-weekly in installments at such times as the Company customarily pays its other senior level executives. Executive's Base Salary is subject to annual review by the Compensation Committee of the Board (the "Compensation Committee") consistent with other members of the Company's executive team. 

 

2.2 Annual Performance Cash Bonus. For each fiscal year during the Employment Period, Executive shall be eligible to participate in the Annual Performance Cash Bonus Plan (the “Annual Performance Plan”), as it may be amended from time to time.  Pursuant to the Annual Performance Plan, Executive shall be entitled to receive annual performance cash bonuses in an amount up to one hundred percent (100%) of her Base Salary (the "Performance Bonus") based upon the achievement of such performance metrics (the “Bonus Metrics”) established by the Compensation Committee.  Any Performance Bonuses payable pursuant to the Annual Performance Plan shall be paid as soon as reasonably practicable after the end of each fiscal year to which the Performance Bonus relates, but in no event later than two and one-half (2 1⁄2) months after the end of such fiscal year.  Subject to the Compensation Committee's discretion, and Section 3 of this Agreement, in no event shall Executive be eligible to receive a Performance Bonus, or any portion thereof, unless Executive is employed in good standing by the Company both at the time the amount of the Performance Bonus, if any, is determined by the Compensation Committee, and at the time such Performance Bonus, as so determined, is paid.  

 

2.3 Initial Equity Compensation.  The Company shall grant Executive two million U.S. Dollars ($2,000,000) of Restricted Stock Units (the “Tilray RSUs”).  The number of Tilray RSUs issued to Executive shall be determined by dividing two million U.S. Dollars ($2,000,000) by the closing price of the Company’s common stock on NASDAQ on the date the Compensation Committee approves the grant (the “Initial Equity Grant”).   The Initial Equity Grant will vest as follows:

 

(a)Performance-Based Grant.  The Company shall grant to Executive a number of performance-based restricted stock units (“PSUs”), valued based on the closing price of the Company’s Shares on the grant date valued at $666,666 which grant shall be subject to the performance conditions and vesting schedule set forth in Schedule A and the applicable form of award agreement.

 

(b)Time-Based Grant.  The Company shall grant to Executive time-based restricted stock units (“RSUs”), valued based on the closing price of the Company’s Shares on the grant date equal to $666,666 which grant shall be subject to time-based vesting of 1/3 on June 1, 2022 (the “Initial Vesting Date”) and 1/3 on each of the first (1st) anniversary and the second (2nd) anniversary of the Initial Vesting 

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Date, subject to Executive’s continued employment through such vesting dates (except as otherwise set forth in this Agreement), and the applicable form of award agreement.

 

(c)Synergy Equity Grant.  The Executive shall be awarded, no later than August 31, 2021, a number of restricted stock units valued based on closing price of the Company’s Shares on the grant date equal to $666,6667 (the “Synergy Equity Grant”), which grant shall be subject to the applicable form of award agreement and the satisfaction of the time and performance-based vesting conditions below to be achieved no later than the third (3rd) anniversary of the Effective Date as follows: 

 

•Time-Based Vesting Condition:  Subject to the satisfaction of the performance-based vesting conditions on or prior to each applicable vesting date and in no event after the final Vesting Date, 50% of the Synergy Equity Grant shall vest on the first anniversary of the Effective Date (the “Initial Vesting Date”), and an additional 25% shall vest on each of the first (1st) and second (2nd) anniversaries of the Initial Vesting Date (each a “Time-Based Vesting Date” or a “Vesting Date”); provided, however, that in the event that a performance-based vesting condition has not been satisfied on an earlier Vesting Date, but is satisfied on a later Vesting Date, then the portion of the award that did not vest on the earlier Vesting Date shall become vested on the later Vesting Date.

 

•Performance-Based Vesting Condition: Achievement of the following cost savings from synergies achieved in connection with the Aphria/Tilray transaction in accordance with the Synergy Plan presented to and approved by the Compensation Committee on July 26, 2021, prior to or on the applicable Time-Based Vesting Date: 50% satisfied when $50,000,000 in cost savings are achieved, and 100% satisfied when $80,000,000 of cumulative cost savings are achieved in accordance with the Synergy Plan submitted to the Board, in each case, as determined by the Company's Compensation Committee.

 

The Synergy Equity Grant shall be settled within 30 days of the date each Time-Based Vesting Condition provided the Performance-Based Vesting Condition has been satisfied (e.g., if the grant date is July 1, 2021, and the 50% target is hit on May 1, 2022, then 25% of the award shall vest on July 1, 2022; then, if the 100% target is hit on September 1, 2022, an additional 50% shall vest on July 1, 2023, and the final 25% shall vest on July 1, 2024).  Except as otherwise provided, herein, in the event that neither Performance-Based Vesting Condition is satisfied by the third (3rd) anniversary of the Effective Date, then the Synergy Equity Grant shall be forfeited.

 

The Initial Equity Grant will be subject to such terms and conditions as set forth in the applicable equity award agreement. 

 

2.4 Long Term Incentive Plan.  For each fiscal year during the Employment Period, Executive shall be eligible to participate in the Company’s Long Term Incentive Plan, as it may be amended from time to time.  Pursuant to the Long Term Incentive Plan (the “LTIP”), Executive shall be entitled to receive annual equity grants, at such time as annual equity grants are made to other executives, in such amounts, types and terms as determined in the sole discretion of the Board based on Executive's individual performance and the performance of the Company; provided, however, that the Executive’s annual target shall be in an amount equal to one hundred and seventy-five percent (175%) of her Base Salary based upon the achievement of certain performance metrics. The terms and conditions of the annual equity grant will be established by the Board at the time of the grant and will be subject to the terms of the Company's applicable equity plan and form of equity award agreement.  Annual equity grants shall 

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be subject to reevaluation each performance period based on peer market data and shall be subject to the sole discretion of the Board.

 

2.5 Retirement and Welfare Plans. Executive shall be eligible to participate in employee retirement and welfare benefit plans made available to the Company's senior level executives as a group or to its employees generally, as such retirement and welfare plans may be in effect from time to time and subject to the eligibility requirements of the plans. Nothing in this Agreement shall prevent the Company from adopting, amending or terminating any retirement, welfare or other employee benefit plans or programs from time to time as the Company deems appropriate.

 

2.6 Reimbursement of Expenses. Executive shall be eligible to be reimbursed for all customary and appropriate business-related expenses actually incurred by Executive and documented in accordance with the Company's policies applicable to senior level executives and as may be in effect from time to time.

 

2.7 Vacation. Executive shall be entitled to 5 weeks of annual paid vacation, which shall be subject in all respects to the terms and conditions of the Company's vacation and paid time off policies, as may be in effect from time to time.  

 

2.8 Corporate Phone Plan. The Executive shall be eligible to participate in a corporate phone plan, subsidized entirely by the Company.  The phone plan will cover the costs of an iPhone (or similar Smartphone device) for the Executive’s sole use and business needs.

 

3. Termination. 

 

Notwithstanding Section 1, Executive's employment shall terminate, and the Employment Period shall terminate concurrently therewith, upon the occurrence of any of the following events:

 

3.1 Termination Without Cause or Resignation for Good Reason.

 

(a) The Company may terminate Executive's employment at any time without Cause (as defined in Section 3.8) from the position in which Executive is employed hereunder upon not less than thirty (30) days’ prior written notice to Executive. The Company shall have the discretion to terminate Executive's employment during the notice period and pay continued Base Salary in lieu of notice. In addition, Executive may initiate a termination of employment under this Section 3.1 by resigning for Good Reason (in accordance with the notice provision set forth in Section 3.6). 

 

(b) Upon termination under this Section 3.1, Executive shall receive

 

(i) Executive's accrued but unpaid Base Salary through the date of termination (payable on the Company's first payroll date after Executive's date of termination or earlier if required by applicable law), (ii) any unreimbursed business expenses incurred by Executive and payable in accordance Sections 2.6 and 20 of this Agreement, and (iii) benefits earned, accrued and due under any qualified retirement plan or health and welfare benefit plan in which Executive was a participant in accordance with applicable law and the provisions of such plan (collectively, the amounts in this Section 3.1(b) are "Guaranteed Payments").

 

(c) If Executive's employment terminates as described in Section 3.1(a) above and if, upon such termination, Executive (i) executes within twenty-one (21) days (or forty-five (45) days to the extent required by 

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applicable law) after presentation to the Executive of, that she does not revoke, a written general release in a form provided by the Company releasing the Company from any and all claims (including with respect to all matters arising out of or related to Executive's employment by the Company or the termination thereof) (the "Release”), and (ii) complies with the terms and conditions of the Release, including, without limitation, the terms and conditions of Sections 5, 6, 7, 8, and 9 (which shall be incorporated in the Release by reference) below, Executive will be entitled to receive the benefits described below as follows (collectively, the "Severance"):

 

(i) Executive shall receive cash severance in an amount equal to (A) twelve (12) months of Executive's then-current Base Salary (the "Base Salary Severance") plus (B) Executive's Performance Bonus at Target for the fiscal year in which Executive's employment is terminated prorated based on the number of days Executive is employed during such fiscal year (the “Bonus Severance”). The Base Salary Severance amount, less all required withholdings and authorized deductions, shall be paid in substantially equal installments consistent with the Company's regularly scheduled payroll until the Base Salary Severance has been paid in full, subject to Section 3.1(d) below. The Bonus Severance amount, less all required withholdings and authorized deductions, shall be paid in a lump sum, subject to Section 3.1(d) below. 

 

(ii) Provided that Executive timely and properly elects continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), the Company shall, for a period of twelve (12) months following Executive's termination date determination (the "COBRA Period"), pay the premiums for COBRA healthcare continuation coverage for Executive, and, where applicable, her spouse and eligible dependents, less an amount equal to the required monthly employee payment for such coverage calculated as if Executive had continued to be an employee of the Company throughout such period (the "COBRA Payment"). Notwithstanding the foregoing, payments specified under this Section 3.1(c)(ii) shall cease if the Company's statutory obligation to provide such COBRA healthcare continuation coverage terminates for any reason before the expiration of the COBRA Period, including but not limited to Executive's failure to timely elect continuation coverage under COBRA.

 

(iii) Acceleration of all vesting of any of Executive’s time-based only equity awards that remain unvested as of the termination date and, solely with respect to acceleration of vesting of any performance-based equity award, as determined in the discretion of the Compensation Committee.

 

(d) The benefits described in subsections (i) and (ii) above (except with respect to the Bonus Severance) shall begin within thirty (30) days after expiration of the revocation period of the Release, provided Executive has timely executed and not revoked the Release; and provided that notwithstanding any provision of this Agreement to the contrary, in no event shall the timing of Executive's execution of the Release, directly or indirectly, result in Executive's designating the calendar year of payment, and if a payment that is "nonqualified deferred compensation" as defined under Section 409A of the Code ("Section 409A") is subject to execution of the Release could be made in more than one taxable year of Executive, payment shall be made on the earliest date permitted under the terms of the Release in the later such taxable year.

 

(e) Executive agrees and acknowledges that the Severance provided to Executive pursuant to Section 3.l(c) is in lieu of, and is not in addition to, any benefits to which Executive may otherwise be entitled under any Company severance plan, policy, or program, other than the Guaranteed Payments.

 

(f) Executive agrees and acknowledges that if Executive fails to comply with Section 5, 6, 7, or 8 below, all payments under Section 3.l(c) shall immediately cease and Executive shall be required to repay immediately any cash Severance previously paid by the Company thereunder.

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3.2 Termination Without Cause or Resignation for Good Reason Upon or After a Change of Control.

 

(a) If a Change of Control occurs and, during the 12-month period commencing on the date of the Change of Control, the Company terminates Executive's employment without Cause or Executive initiates a termination of employment by resigning for Good Reason, this Section 3.2 shall apply in lieu of Section 3.1.

 

(b) Upon termination under this Section 3.2, Executive shall receive the Guaranteed Payments. With the exception of unreimbursed business expenses, which shall be paid in accordance with Sections 2.6 and 20 of this Agreement, or as otherwise provided in the applicable benefit plan, Executive will be paid the Guaranteed Payments on the Company's first payroll date after Executive's date of termination, or earlier if required by applicable law.

 

(c) If Executive's employment terminates as described in Section 3.2(a) and if, upon such termination, Executive (i) executes within twenty-one (21) days (or forty-five (45) days to the extent required by applicable law) after presentation to the Executive of, that she does not revoke, a Release, and (ii) complies with the terms and conditions of the Release, including without limitation, Sections 5, 6, 7, 8, and 9 (which shall be incorporated into the Release by reference) below, Executive shall be entitled to receive the following (collectively, the "Change of Control Severance"):

 

(i) Executive shall receive cash severance in an amount equal to the sum of (A) twenty-four (24) months of Executive's then-current Base Salary, plus (B) two times (2x) the Executive's Performance Bonus at target, plus (C) a pro rata bonus equal to Executive’s Performance Bonus at target for the year of termination of employment based on the number of days Executive was employed during the fiscal year in which the termination occurs. The Change of Control Severance amount shall be paid in a single lump-sum payment, less all required withholdings and deductions, subject to Section 3.2(d) below.

 

(ii) Provided that Executive timely and properly elects continuation coverage under COBRA, the Company shall, for a period of twelve (12) months following Executive's termination date determination, pay the COBRA Payment (as defined in Section 3.1(c)(ii) above). Notwithstanding the foregoing, payments specified under this Section 3.2(c)(ii) shall cease if the Company's statutory obligation to provide such COBRA healthcare continuation coverage terminates for any reason before the expiration of the COBRA Period, including but not limited to Executive's failure to timely elect continuation coverage under COBRA.

 

(iii) Acceleration of vesting of any of Executive’s time and/or performance-based equity awards that remain outstanding as of Executive’s termination date except with respect to the PSUs (as set forth in Section 2.3) which shall be subject to the terms and conditions in the applicable award agreement.

 

(d) The payments described in subsections (i) and (ii) above shall be paid or begin, as the case may be, within thirty (30) days after expiration of the revocation period of the Release, provided Executive has timely executed and not revoked the Release; and provided that notwithstanding any provision of this Agreement to the contrary, in no event shall the timing of Executive's execution of the Release, directly or indirectly, result in Executive's designating the calendar year of payment, and if a payment that is "nonqualified deferred compensation" as defined under Section 409A is subject to execution of the Release could be made in more than one taxable year of Executive, payment shall be made on the earliest date permitted under the Release in the later such taxable year.

 

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(e) Executive agrees and acknowledges that the Change of Control Severance provided to Executive pursuant to Section 3.2(c) is in lieu of, and not in addition to, any benefits to which Executive may otherwise be entitled under any Company severance plan, policy, or program, other than the Guaranteed Payments.

 

(f) Executive agrees and acknowledges that if Executive fails to comply with Section 5, 6, 7 or 8 below, all payments under Section 3.2(c) shall immediately cease and Executive shall be required to repay immediately any Change of Control Severance previously paid by the Company thereunder.

 

3.3 Termination by Reason of Disability. Subject to applicable state and federal law, the Company may terminate Executive's employment if Executive has been unable to perform the duties of Executive's position for a continuous period of one hundred eighty (180) days or nine (9) months in the aggregate during any twelve (12) month period because of physical or mental injury or illness ("Disability"). Executive agrees, in the event of a dispute under this Section 3.3 relating to Executive's Disability, to submit to a physical examination by a licensed physician jointly selected by the Board and Executive. If the Company terminates Executive's employment for Disability, Executive will not receive the Severance, the Change of Control Severance or any other severance compensation or benefits, except that the Company shall pay to Executive the Guaranteed Payments and accelerated of vesting of any of Executive’s equity awards that remain outstanding with respect to the time-based vesting elements only of such awards as of Executive’s termination date.

 

3.4 Termination by Reason of Death. If Executive dies while employed by the Company, all obligations of the parties hereunder shall terminate immediately. Executive will not receive the Severance, the Change of Control Severance or any other severance compensation or benefits, except that the Company shall pay to Executive's executor, legal representative, administrator or designated beneficiary, as applicable, the Guaranteed Payments and the vesting of any of Executive’s time and/or performance-based equity awards that remain outstanding as of Executive’s death shall accelerate.

 

3.5 Termination for Cause or Resignation without Good Reason. The Company may terminate Executive's employment at any time for Cause upon written notice to Executive (and subject to any applicable cure periods set forth in Section 3.8(a)) and Executive may initiate a termination of employment by resigning without Good Reason upon not less than four (4) weeks’ prior written notice to the Company, and in any such event all payments under this Agreement shall cease except that the Company shall pay to Executive the Guaranteed Payments. In such event, Executive will not receive the Severance, the Change of Control Severance, or any other severance compensation or benefits.

 

3.6 Notice of Termination. Any termination of Executive's employment by either party shall be communicated by a written notice of termination to the other party hereto given in accordance with Section 13. The notice of termination shall (a) indicate the specific termination provision in this Agreement relied upon; (b) briefly summarize the facts and circumstances deemed to provide a basis for a termination of employment and the applicable provision hereof, provided, that no basis need be provided by the Company in connection with a termination without Cause by the Company or a termination without Good Reason by Executive; and (c) specify the termination date in accordance with the requirements of this Agreement.

 

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3.7 Cooperation with the Company After Termination. During any notice period preceding termination of Executive's employment for any reason, Executive agrees to cooperate with the Company in all matters relating to the winding up of Executive's pending work and the orderly transfer and transition of any such pending work to such other employees as may be designated by the Company. Following termination of employment, Executive agrees to cooperate with the Company, at reasonable times and locales and upon reasonable prior notice, in (a) responding to requests by the Company for information concerning work performed by Executive during the period of Executive's employment with the Company and with regard to any matters that relate to or arise out of the business of the Company during the period of employment and about which Executive may have knowledge; and (b) any investigation or review that may be performed by the Company or any government authority or in connection with any litigation or proceeding in which the Company may become involved. Executive's obligations under this Section 3.7 include (without limitation) (i) making herself available to testify on behalf of the Company or any of its affiliates in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative; (ii) assisting the Company or any of its affiliates in any such action, suit, or proceeding, by providing truthful and accurate information; (iii) and meeting and consulting with the Board or its representatives or counsel, or representatives or counsel to any of the Company's affiliates as may be reasonably requested and after taking into account the Executive's post-termination responsibilities and obligations. The Company will reimburse Executive for any reasonable travel and out of pocket expenses incurred by Executive in providing such cooperation.

 

3.8 Definitions.

 

(a) "Cause" shall mean any of the following grounds for termination of Executive's employment:

 

(i) Executive has been convicted of or enters a plea of guilty or nolo contendere to, any felony or any crime involving moral turpitude;

 

(ii) Executive fails to perform Executive's reasonably assigned duties for the Company (other than a failure resulting from Executive's incapacity due to physical or mental illness), which failure has continued for a period of at least thirty (30) days after a written notice of demand for substantial performance, signed by a duly authorized officer of the Company, has been delivered to Executive specifying the manner in which Executive has failed substantially to perform;

 

(iii) Executive directly or indirectly causes material damage to any tangible or intangible property of or belonging to the Company;

 

(iv) Executive engages in conduct that is harmful to the public reputation of the Company

 

(v) Executive engages in any act of dishonesty, fraud, or immoral or disreputable conduct;

 

(vi) Executive engages in willful misconduct or gross negligence in the performance of Executive's duties;

 

(vii) Executive materially breaches any material covenant or condition of this Agreement (including Sections 5, 6, 7, 8 or 9 below) or any other written agreement between the parties, or breaches Executive's fiduciary duty to the Company; or

 

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(viii) Executive materially violates or breaches the Company's Code of Conduct or other material written policy applicable to Executive.

 

(b) "Change of Control" means the first of the following to occur: (i) a Change in Ownership of the Company, (ii) a Change in Effective Control of the Company, or (iii) a Change in the Ownership of Assets of the Company, as described herein and construed in accordance with Code section 409A.

 

(i)            A “Change in Ownership of the Company” shall occur on the date that (A) any one Person acquires, or Persons Acting as a Group acquire, ownership of the capital stock of the Company that, together with the stock held by such Person or Group, constitutes more than 50% of the total fair market value or total voting power of the capital stock of the Company. However, if any one Person is, or Persons Acting as a Group are, considered to own more than 50%, on a fully diluted basis, of the total fair market value or total voting power of the capital stock of Company, the acquisition of additional stock by the same Person or Persons Acting as a Group is not considered to cause a Change in Ownership of the Company or to cause a Change in Effective Control of the Company (as described below). An increase in the percentage of capital stock owned by any one Person, or Persons Acting as a Group, as a result of a transaction in which the Company acquires its stock in exchange for property will be treated as an acquisition of stock or (B) a merger, consolidation, plan of arrangement or reorganization of the Company that results in the beneficial, direct or indirect transfer of more than 50% of the total voting power of the resulting entity’s outstanding securities to a person, or group of persons acting jointly and in concert, who are different from the person(s) that have, beneficially, directly or indirectly, more than 50% of the total voting power prior to such transaction.

 

(ii)           A “Change in Effective Control of the Company” shall occur on the date either (A) a majority of members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election, or (B) any one Person, or Persons Acting as a Group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons) ownership of stock of the Company possessing 50% or more of the total voting power of the stock of the Company.

 

(iii)          A “Change in the Ownership of Assets of the Company” shall occur on the date that any one Person acquires, or Persons Acting as a Group acquire (or has or have acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons), assets from Company that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all of the assets of  the Company immediately before such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. 

 

Notwithstanding the foregoing, a transaction shall not constitute a Change of Control if its sole purpose is to change the state of the Company's incorporation or to create a holding company that will be owned in the same proportions by the persons who held the Company's securities immediately before such transaction.

 

The following rules of construction apply in interpreting the definition of Change in Control:

 

(A)          A “Person” means any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended, other than employee benefit plans sponsored or maintained by the Company and by entities controlled by the 

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Company or an underwriter, initial purchaser or placement agent temporarily holding the capital stock of Company pursuant to a registered public offering.

 

(B)           Persons will be considered to be Persons Acting as a Group (or Group) if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the corporation. If a Person owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a Group with other shareholders only with respect to the ownership in that corporation before the transaction giving rise to the change and not with respect to the ownership interest in the other corporation. Persons will not be considered to be acting as a Group solely because they purchase assets of the same corporation at the same time or purchase or own stock of the same corporation at the same time, or as a result of the same public offering.

 

(C)          A Change in Control shall not include a transfer to a related person as described in Code section 409A or a public offering of capital stock of the Company.

 

(D)          For purposes of the definition of Change in Control, Section 318(a) of the Code applies to determine stock ownership. Stock underlying a vested option is considered owned by the individual who holds the vested option (and the stock underlying an unvested option is not considered owned by the individual who holds the unvested option). For purposes of the preceding sentence, however, if a vested option is exercisable for stock that is not substantially vested (as defined by Treasury Regulation §1.83-3(b) and (j)), the stock underlying the option is not treated as owned by the individual who holds the option.

 

(c) “Confidential Information” means information, whether or not originated by the Executive, that relates to the business or affairs of the Company or its affiliates, their clients or Suppliers and is confidential or proprietary to the Company, its affiliates or their clients or Suppliers.  

 

(i)Confidential Information includes, but is not limited to, the following types of information and other information of a similar nature (whether or not reduced to writing or designated or marked as confidential and whether or not stored on a Company device or personal device):

(A)work product resulting from or related to work or projects performed or to be performed by the Company, including but not limited to, the interim and final lines of inquiry, hypotheses, research and conclusions related thereto and the methods, processes, procedures, analysis, techniques and audits used in connection therewith;

(B)internal Company personnel and financial information, vendor names and other vendor information, purchasing and internal cost information, internal services and operational manuals;

(C)marketing and development plans, price and cost data, price and fee amounts, pricing and billing policies, quoting procedures, marketing techniques and methods of obtaining business, forecasts and forecast assumptions and volumes, and future plans and potential strategies of the Company which have been or are being discussed, Customer names and Customer information;

(D)contracts and their contents, client services, data provided by clients and the type, quantity and specifications of products and services purchased, leased, licensed or received by clients of the Company; and,

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(E)all confidential information of the Company which becomes known to the Executive as a result of employment with the Company, which the Executive acting reasonably, believes is confidential information of the Company or which, the Company takes measures to protect, provided that the Executive is aware or ought to be aware of such measures.

(ii)Confidential Information does not include:

(A)the general skills, general knowledge and experience gained during the Executive’s employment;

(B)information publicly known without breach of this Agreement; or,

(C)information, the public disclosure of which is required to be made by any law, regulation, governmental authority or court (to the extent of the requirement), provided that before disclosure is made, notice of the requirement is provided to the Company where it is within the Executive’s control to provide such notice, and to the extent possible in the circumstances, the Company is afforded an opportunity to dispute the requirement.

 

(d) "Customer" means any Person who, in the twelve (12) months preceding the date of the termination of the Executive’s employment hereunder for any reason, has purchased from the Company or its affiliates, with the Executive’s assistance, any material amount of product or services produced, sold, licensed, or distributed by the Company in respect of the Business.

 

(e) "Good Reason" shall mean the occurrence of any of the following events or conditions, unless Executive has expressly consented in writing thereto:

 

(i) Any reduction in Executive’s Base Salary or any failure to pay Executive any material amounts which she is due or eligibility to participate in the Performance Bonus plan or LTIP program in an applicable year;

 

(ii) The material diminution of Executive's duties, responsibilities, powers or authorities, including the assignment of any duties and responsibilities materially inconsistent with her position as Chief Strategy Officer and Head of International, provided that Good Reason shall not exist under this clause (ii) if such diminution of authority, duties and responsibilities is a result of the hiring of additional subordinates to assume some of Executive's duties and responsibilities which are in fact, in the aggregate from time to time, not a material diminution of such authority, duties and responsibilities as Chief Strategy Officer and Head of International. The sale or disposition of any subsidiary or business of the Company to the extent such event does not rise to the level of a sale of all or substantially all of the Company's assets shall not in and of itself be deemed to be a material diminution of duties;

 

(iii) A material adverse change in Executive's reporting responsibilities so that she no longer reports to the Chief Executive Officer of the Company;

 

(iv) The Company requires that Executive's principal office location be moved to a location more than fifty (50) miles from Executive's principal office location immediately before the change without Executive's prior consent; and

 

(v) A material breach by the Company of this Agreement or any other written agreement between the parties.

 

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For purposes of this Agreement, Executive shall not have Good Reason for termination unless (i) Executive reasonably determines in good faith that a "Good Reason" condition has occurred; (ii) Executive notifies the Company in writing of the occurrence of the Good Reason condition within thirty (30) days of such occurrence; (iii) the Company shall have a period of not less than thirty (30) days following such notice (the "Cure Period'') to cure the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist following expiration of the Cure Period as reasonably determined by the Company in good faith; and (v) Executive terminates her employment within thirty (30) days after the end of the Cure Period. If the Company cures the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred.

 

(f) "Supplier" means any Person who, in the twelve (12) months’ preceding the date of the termination of the Executive’s employment hereunder for any reason, has supplied to the Company or its affiliates, with the Executive’s assistance, any material amount of product or services produced, sold, licensed, or distributed by the Company in respect of the Business.

 

3.9 Required Postponement for Specified Executives. If Executive is considered a "specified employee" (as defined under Section 409A) and payment of any amounts under this Agreement is required to be delayed for a period of six (6) months after separation from service pursuant to Section 409A, payment of such amounts shall be delayed as required by Section 409A, and the accumulated postponed amounts shall be paid in a lump-sum payment within five (5) days after the end of the six (6) month period. If Executive dies during the postponement period prior to the payment of benefits, the amounts postponed on account of Section 409A shall be paid to the personal representative of Executive's estate within thirty (30) days after the date of Executive's death.

 

4. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit Executive's continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by the Company and for which Executive may qualify; provided, however, that if Executive becomes entitled to and receives the Severance or Change of Control Severance provided for in Section 3 of this Agreement, Executive hereby waives Executive's right to receive payments under any severance plan or similar program that would otherwise apply to Executive. In the event of any inconsistency between this Agreement and any other plan, program or agreement in which Executive is a participant or a party, this Agreement shall control unless such other plan, program or agreement specifically refers to this Agreement as not so controlling.

 

5. Confidentiality. Executive agrees that Executive's services to the Company are of a special, unique and extraordinary character, and that Executive's position places Executive in a position of confidence and trust with the Company's Customers, clients, vendors, Suppliers, contractors, business partners and employees. Executive also recognizes that Executive's position with the Company will give Executive substantial access to Confidential Information, the unauthorized use or disclosure of which to competitors of the Company would cause the Company to suffer substantial and irreparable damage. Executive recognizes and agrees, therefore, that it is in the Company's legitimate business interest to restrict Executive's use of Confidential Information for any purposes other than the proper discharge of Executive's employment duties at the Company, and to limit any potential appropriation of Confidential Information by Executive for the benefit of the Company's competitors and/or to the detriment of the Company. Accordingly, Executive agrees as follows:

 

(a) Executive shall not at any time, whether during or after the termination of Executive's employment with the Company or any Company subsidiary or affiliate for any reason, reveal or disclose to any person or entity any of the trade secrets or Confidential Information of the Company, or the trade secrets or Confidential Information of any third party which the Company is under an obligation to keep confidential.   Executive shall keep secret all Confidential Information entrusted to Executive and shall not use or attempt to use 

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any such Confidential Information for personal gain or in any manner that may injure or cause loss, or could reasonably be expected to injure or cause loss, whether directly or indirectly, to the Company.  

 

(b) The above restrictions shall not apply to: (i) information that at the time of disclosure is in the public domain through no fault of Executive; (ii) information received from a third party outside of the Company that was disclosed without a breach of any confidentiality obligation on the part of such third party; (iii) information approved for release by written authorization of the Company; or (iv) information that may be required by law or an order of any court, agency or proceeding to be disclosed; provided that Executive shall provide the Company prior written notice of any such required disclosure once Executive has knowledge of it and will help the Company to the extent reasonable to obtain an appropriate protective order. Moreover, the foregoing shall not limit Executive's ability to (A) to discuss the terms of Executive's employment, wages and working conditions to the extent expressly protected by applicable law, (B) to report possible violations of federal securities laws to the appropriate government enforcing agency and make such other disclosures that are expressly protected under federal or state "whistleblower" laws, or (C) to respond to inquiries from, or otherwise cooperate with, any governmental or regulatory investigation or proceeding.

 

(c) Executive agrees that during Executive's employment with the Company or any Company subsidiary or affiliate Executive shall not take, use or permit to be used any notes, memoranda, reports, lists, records, drawings, sketches, specifications, software programs, data, documentation or other materials of any nature constituting Confidential Information or Developments (as defined below) otherwise than for the benefit of the Company. Executive further agrees that Executive shall not, after the termination of Executive's employment for any reason, use or permit to be used any such notes, memoranda, reports, lists, records, drawings, sketches, specifications, software programs, data, documentation or other materials, it being agreed that all of the foregoing shall be and remain the sole and exclusive property of the Company and that, immediately upon the termination of Executive's employment for any reason, Executive shall deliver all of the foregoing, and all copies thereof, to the Company, at its main office.

 

(d) Executive agrees that upon the termination of Executive's employment with the Company or any Company subsidiary or affiliate for any reason, Executive shall not take or retain without written authorization any documents, files or other property of the Company, and Executive will return promptly to the Company any such documents, files or property in Executive's possession or custody, including any copies thereof maintained in any medium or format. Executive recognizes that all documents, files and property that Executive has received and will receive from the Company, including but not limited to scientific research, Customer lists, handbooks, memoranda, product specifications, and other materials (with the exception of documents relating to benefits to which Executive might be entitled following the termination of Executive's employment with the Company), are for the exclusive use of the Company and employees who are discharging their responsibilities on behalf of the Company, and that Executive has no claim or right to the continued use, possession or custody of such documents, files or property following the termination of Executive's employment with the Company for any reason.

 

(e) Pursuant to the Defend Trade Secrets Act of 2016, Executive acknowledges that Executive will not have criminal or civil liability under any federal or state trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

 

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6. Intellectual Property.

 

(a) If at any time or times during Executive's employment with the Company or any Company subsidiary or affiliate Executive shall (either alone or with others) make, conceive, discover or reduce to practice any invention, modification, discovery, design, development, improvement, process, software program, work of authorship, documentation, formula, data, technique, know-how, secret or intellectual property right whatsoever or any interest therein (whether or not patentable or registrable under copyright or similar statutes or subject to analogous protection) (herein called "Developments") that (i) relates to the Business (as defined below) of the Company or any of the products or services being developed, manufactured or sold by the Company or which may be used in relation therewith, (ii) results from tasks assigned to Executive by the Company or (iii) results from the use of premises or personal property (whether tangible or intangible) owned, leased or contracted for by the Company, such Developments and the benefits thereof shall immediately become the sole and absolute property of the Company and its assigns, and Executive shall promptly disclose to the Company (or any persons designated by it) each such Development, and Executive hereby assigns any rights Executive may have or acquire in the Developments and benefits and/or rights resulting therefrom to the Company and its assigns without further compensation and shall communicate, without cost or delay, and without publishing the same, all available information relating thereto (with all necessary plans and models) to the Company.

 

(b) Upon disclosure of each Development to the Company, Executive will, during Executive's employment and at any time thereafter, at the request and cost of the Company, sign, execute, make and do all such deeds, documents, acts and things as the Company and its duly authorized agents may reasonably require:

 

(i) to apply for, obtain and vest in the name of the Company alone (unless the Company otherwise directs) letters patent, copyrights or other analogous protection in any country throughout the world and when so obtained or vested to renew and restore the same; and

 

(ii) to defend any opposition proceedings in respect of such applications and any opposition proceedings or petitions or applications for revocation of such letters patent, copyright or other analogous protection.

 

(c) In the event the Company is unable, after reasonable effort, to secure Executive's signature on any letters patent, copyright or other analogous protection relating to a Development, whether because of Executive's physical or mental incapacity or for any other reason whatsoever, Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive's agent and attorney-in-fact for the sole purpose of acting for and on Executive's behalf and in her stead to execute and file any such application or applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent, copyright and other analogous protection thereon with the same legal force and effect as if executed by Executive.

 

7. Non-Competition. During Executive's employment with the Company or any Company subsidiary or affiliate and for a period of twelve (12) months after termination of Executive's employment (for any reason whatsoever, whether voluntary or involuntary) (the "Non-Competition Period''), Executive shall not, without the prior written approval of the Board, whether alone or as a partner, officer, director, consultant, agent, employee, representative or stockholder of any company, entity, or other commercial enterprise, or in any other capacity, directly or indirectly engage in any research, development, testing, manufacture, sale, marketing, or licensing related to any products or services developed or provided by the Company in the United States and Canada (the "Business''). The foregoing prohibition shall not prevent Executive's employment or engagement after termination of Executive's employment by any company or business organization, as long as the activities of any such 

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employment or engagement, in any capacity, do not involve work on matters related to the Business of the Company during Executive's employment with the Company. Executive shall be permitted to own securities of a public company not in excess of two percent (2%) of any class of such securities and to own stock, partnership interests or other securities of any entity not in excess of two percent (2%) of any class of such securities and such ownership shall not be considered to be in competition with the Company.

 

8. Non-Solicitation. During Executive's employment with the Company or any Company subsidiary or affiliate and for a period of twelve (12) months after termination of such employment (for any reason, whether voluntary or involuntary), Executive agrees that Executive will not:

 

(a) directly or indirectly (i) solicit, entice or induce, or attempt to solicit, entice or induce, any Customer, Supplier or client to become a Customer, Supplier or client of any other person, firm or corporation with respect to any products or services then sold, offered, or under development by the Company or any of its subsidiaries or affiliates, or (ii) solicit, entice or induce, or attempt to solicit, entice or induce any Customer, client vendor, Supplier, contractor, or business development partner to cease doing business with or any in way reduce or impair its business relationship with the Company, and Executive shall not approach or contact any such person, firm or corporation for such purpose or authorize or knowingly approve the taking of such actions by any other person; or

 

(b) directly or indirectly (i) solicit or recruit, or attempt to solicit or recruit, any employee, consultant or contractor of the Company to terminate employment or otherwise cease providing services to the Company or (ii) solicit or recruit, or attempt to solicit or recruit, any employee to work for or provide services to a third party other than the Company; and Executive shall not approach any such person for such purpose or authorize or knowingly approve the taking of such actions by any other person.

 

9. Non-Disparagement. During Executive's employment and at all times following Executive's termination of employment for any reason, Executive agrees not to make, or knowingly cause to be made, any disparaging statement or communication, written or oral, concerning the Company, or otherwise impugn the business or management of, damage the reputation of, or interfere with the normal operations of the Company, its subsidiaries and/or affiliates, or any of their respective past or present employees, executives, officers, directors, shareholders, members, managers, principals, or representatives. During Executive's employment and at all times following Executive's termination of employment for any reason, the Company agrees that none of the Company (via any authorized public statement), its officers or members of the Board shall make, or knowingly cause to be made, any disparaging statement or communication, written or oral, concerning Executive, or otherwise impugn the business of Executive, damage the reputation of Executive, or interfere with Executive's pursuit of other business endeavors or employment. The foregoing prohibitions include, without limitation:

 

(i) non-verbal comments or statements made on the Internet, including without limitation, on blogs, forums, social media platforms, review or rating sites, or any Internet site or online message board (including but not limited to Linkedin or GlassDoor); and (ii) comments or statements to any person or entity, including without limitation, to the press or media, the Company, or any entity, Customer, client, vendor, Supplier, consultant or contractor with whom the Company or its subsidiaries or affiliates has, has had or may in the future have a business relationship, that would in any way adversely affect Executive's reputation or her business or employment activities or adversely affect the conduct of the business of the Company or its subsidiaries or affiliates (including but not limited to any business plans or prospects) or the reputation of the Company, its subsidiaries or affiliates, or the aforementioned persons (including without limitation former and present employees of the Company and/or its subsidiaries or affiliates). Nothing in this provision or elsewhere in this Agreement shall (a) affect the parties' right to provide truthful information as may be required by law, rule, regulation or legal process, or 

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as requested by any legal or regulatory authority, (b) unlawfully impair or interfere with Executive's rights under Section 7 of the National Labor Relations Act, or (c) impair or in any way interfere with the Company's ability to engage in intra-Company communications between or among officers, members of the Board, and/or their advisors related to Executive's compensation, retention, and/or job performance.

 

10. General Provisions.

 

(a) Executive acknowledges and agrees that, for purposes of Sections 5, 6, 7, 8, and 9 of this Agreement, the term "Company" shall include the Company's direct and indirect controlled subsidiaries and affiliates. Executive acknowledges and agrees that the type and periods of restrictions imposed in Sections 5, 6, 7, 8, and 9 of this Agreement are fair, reasonable and no greater than necessary to protect the Company's legitimate business interests, and that such restrictions are intended solely to protect the legitimate interests of the Company, including its Confidential Information, goodwill (client, Customer, employee, and otherwise), and business interests, and shall not in any way prevent Executive from earning a livelihood or impose upon Executive undue hardship. Executive recognizes and agrees that the Company competes and provides its products and services worldwide, and that Executive's access to Confidential Information makes it both reasonable and necessary for the Company to restrict Executive's post-employment activities worldwide in any market in which the Company competes, and in which Executive's access to Confidential Information and other proprietary information could be used to the detriment of the Company and for which the Company would have no adequate remedy at law. In the event that any restriction set forth in this Agreement is determined by a court of competent jurisdiction to be overly broad or unenforceable with respect to scope, time (duration), or geographical coverage, Executive agrees that such restriction or restrictions shall be modified and narrowed, either by such court of competent jurisdiction, or by the Company, to the least extent possible under applicable law for such restriction or restrictions to be enforceable so as to preserve and protect the legitimate interests of the Company as described in this Agreement, and without negating or impairing any other restrictions or agreements set forth herein.

 

(b) Executive acknowledges and agrees that should Executive breach any of the covenants, restrictions and agreements contained herein, irreparable loss and injury would result to the Company, monetary relief would not compensate for such breach, and damages arising out of such a breach would be difficult to fully ascertain. Executive therefore agrees that, in addition to any and all other remedies available at law or at equity, the Company shall be entitled to have the covenants, restrictions and agreements contained in Sections 5, 6, 7, 8, and 9 specifically enforced (including, without limitation, by temporary, preliminary, and permanent injunctions and restraining orders), without the need to post any bond or security, by any state or federal court in the State of Delaware having equity jurisdiction, and Executive agrees to be subject to the jurisdiction of such court and hereby waives any objection to the jurisdiction or venue thereof.

 

(c) Executive agrees that if the Company fails to take action to remedy any breach by Executive of this Agreement or any portion of the Agreement, such inaction by the Company shall not operate or be construed as a waiver of such breach or of any subsequent or other breach by Executive of the same or any other provision, agreement or covenant.

 

(d) Executive acknowledges and agrees that the payments and benefits to be provided to Executive under this Agreement are provided as, and constitute sufficient and adequate, consideration for the covenants in Sections 5, 6, 7, 8, and 9 hereof.

 

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11. Representations and Warranties. Executive represents and warrants the following to the Company, each of which Executive acknowledges is a material inducement to the Company's willingness to enter into this Agreement and a material provision of this Agreement:

 

(a) Other than as previously disclosed in writing or provided to the Company, Executive is not a party to or bound by any employment agreements, restrictive covenants, non compete restrictions, non-solicitation restrictions, and/or confidentiality or non-disclosure agreements with any other person, business or entity, or any agreement or contract requiring Executive to assign inventions to another party (each, a "Restrictive Agreement"), and Executive has conducted a thorough review of any and all agreements she may have entered into with any current or former employer or any other relevant party to ensure that this representation and warranty is correct.

 

(b) No Restrictive Agreement prohibits, restricts, limits or otherwise affects Executive's employment with the Company as an executive or ability to perform any of Executive's duties or responsibilities for the Company as contemplated herein.

 

(c) Executive has not made any material misrepresentation or omission in the course of her communications with the Company regarding the Restrictive Agreements or other obligations to any current or former employer or other third party.

 

(d) Executive has not, directly or indirectly, removed, downloaded, or copied any confidential or proprietary information or records of any current or former employer (or their subsidiaries and/or corporate affiliates) without the express written consent of an authorized representative of such entity, and shall not use or possess, as of the date Executive begins employment and at all times during her employment with the Company, any confidential or proprietary information or records of any current or former employer (or their subsidiaries and/or corporate affiliates), whether in hard copy or electronic form, including, but not limited to, documents, files, disks, or other materials, all of which Executive is prohibited from using in connection with her employment with the Company.

 

12. Survivorship. The respective rights and obligations of the parties under this Agreement, including but not limited to those rights and obligations set forth in Sections 5, 6, 7, 8, and 9, shall survive termination of Executive's employment and any termination of this Agreement for any reason to the extent necessary to the intended preservation of such rights and obligations. 

 

13. Notices. All notices and other communications required or permitted under this Agreement or necessary or convenient in connection herewith shall be in writing and shall be deemed to have been given when hand-delivered or mailed by registered or certified mail, as follows (provided that notice of change of address shall be deemed given only when received):

 

If to the Company, to:

 

Tilray, Inc.

655 Madison Avenue, 19th Floor 

New York, New York 10054

Attn: Rita Seguin, Chief Human Resources Officer

 

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If to Executive, to:

The address of her principal residence most recently on file with the Company.

 

or to such other names or addresses as the Company or Executive, as the case may be, shall designate by notice to each other person entitled to receive notices in the manner specified in this Section.

 

14. Contents of Agreement, Amendment, Interpretation and Assignment.

(a) This Agreement, including the Exhibits attached hereto, sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes any and all prior agreements and understandings concerning Executive's employment by the Company and cannot be changed or modified except upon written amendment approved by the Board and executed on its behalf by a duly authorized officer and by Executive.

(b) The headings in this Agreement are for convenience only, and both parties agree that they shall not be construed or interpreted to modify or affect the construction or interpretation of any provision of this Agreement.

(c) All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, executors, administrators, legal representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of Executive under this Agreement are of a personal nature and shall not be assignable or delegable in whole or in part by Executive. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business or assets of the Company, within fifteen (15) days of such succession, expressly to assume and agree to perform this Agreement in the same manner as, and to the same extent that, the Company would be required to perform if no such succession had taken place.

 

15. Severability. If any provision of this Agreement or application thereof to anyone or under any circumstances is adjudicated by a court of competent jurisdiction to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect any other provision or application of this Agreement that can be given effect without the invalid or unenforceable provision or application and shall not invalidate or render unenforceable such provision or application in any other jurisdiction. If any provision is held void, invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances.

 

16. Remedies Cumulative; No Waiver. No remedy conferred upon a party by this Agreement is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to any other remedy given under this Agreement or now or hereafter existing at law or in equity. No delay or omission by a party in exercising any right, remedy or power under this Agreement or existing at law or in equity shall operate or be construed as a waiver thereof, and any such right, remedy or power may be exercised by such party from time to time and as often as may be deemed expedient or necessary by such party in its sole discretion.

 

17. Withholding. All payments under this Agreement shall be made subject to applicable tax withholding, and the Company shall withhold from any payments under this Agreement all federal, state and local taxes as the Company is required to withhold pursuant to any law or governmental rule or regulation. Executive shall bear all expense of, and be solely responsible for, all federal, state and local taxes due with respect to any payment received under this Agreement other than such taxes that are, by their nature, obligations of the Company (for example, and without limitation, the employer portion of the Federal Insurance Contributions Act (FICA) taxes).

 

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18. Counterparts. This Agreement may be executed in counterparts, each of which is an original. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. Facsimile signatures and signatures transmitted by PDF shall be equivalent to original signatures.

 

19. Governing Law. This Agreement shall be governed by and interpreted under the laws of the State of Delaware without giving effect to (i) any conflicts-of-law provisions or choice of law provisions of the State of Delaware or of any other jurisdiction which provisions (if applied) would result in the application of the laws of any other jurisdiction other than of the State of Delaware, or (ii) canons of construction or principles of law that construe agreements against the draftsperson.

 

20. Section 409A. This Agreement is intended to comply with or otherwise be exempt from Section 409A and its corresponding regulations, to the extent applicable, and shall be so construed. Notwithstanding anything in this Agreement to the contrary, payments of "nonqualified deferred compensation" subject to Section 409A may only be made under this Agreement upon an event and in a manner permitted by Section 409A, to the extent applicable. For purposes of Section 409A, all payments of "nonqualified deferred compensation" subject to Section 409A to be made upon the termination of Executive's employment under this Agreement may only be made upon a "separation from service" under Section 409A. Each payment made under this Agreement shall be treated as a separate payment and the right to a series of installment payments under this Agreement is to be treated as a right to a series of separate payments. In no event shall Executive, directly or indirectly, designate the calendar year of payment with respect to any amount that is "nonqualified deferred compensation" subject to Section 409A. All reimbursements provided under this Agreement that are "nonqualified deferred compensation" that is subject to Section 409A shall be made or provided in accordance with Section 409A, including, where applicable, the requirements that (a) any reimbursement is for expenses incurred during the Employment Period (or during such other time period specified in this Agreement), (b) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (c) the reimbursement of an eligible expense will be made on or before the last day of the taxable year following the year in which the expense is incurred, and (d) the right to reimbursement is not subject to liquidation or exchange for another benefit. Nothing herein shall be construed as having modified the time and form of payment of any amounts or payments of "nonqualified deferred compensation" within the meaning Section 409A that were otherwise payable pursuant to the terms of any agreement between Company and Executive in effect prior to the date of this Agreement.

 

21. Section 280G of the Code. Notwithstanding any other provision of this Agreement or any other plan, arrangement or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Company or its affiliates to Executive or for Executive's benefit pursuant to the terms of this Agreement or otherwise (the "Covered Payments") constitute parachute payments (the "Parachute Payments") within the meaning of Section 280G of the Code and, but for this Section 21, would be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the "Excise Tax"), then prior to making the Covered Payments, a calculation shall be made comparing (i) the Net Benefit (as defined below) to Executive of the Covered Payments after payment of the Excise Tax to (ii) the Net Benefit to Executive if the Covered Payments are limited to the extent necessary to avoid being subject to the Excise Tax. Only if the amount calculated under (i) above is less than the amount under (ii) above will the Covered Payments be reduced to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax (that amount, the "Reduced Amount"). "Net Benefit" shall mean the present value of the Covered Payments net of all federal, state, local, foreign income, employment and excise taxes.

 

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(a) Any such reduction shall be made in accordance with Section 409A and the following:

 

(i) the Covered Payments consisting of cash severance benefits that do not constitute nonqualified deferred compensation subject to Section 409A shall be reduced first, in reverse chronological order; and

 

(ii) all other Covered Payments consisting of cash payments, and Covered Payments consisting of accelerated vesting of equity based awards to which Treas. Reg. §1.280G-1 Q/A-24(c) does not apply, and that in either case do not constitute nonqualified deferred compensation subject to Section 409A, shall be reduced second, in reverse chronological order;

 

(iii) all Covered Payments consisting of cash payments that constitute nonqualified deferred compensation subject to Section 409A shall be reduced third, in reverse chronological order; and

 

(iv) all Covered Payments consisting of accelerated vesting of equity-based awards to which Treas. Reg. § 1.280G-1 Q/A-24(c) applies shall be the last Covered Payments to be reduced.

 

(b) Any determination required under this Section 21 shall be made in writing in good faith by an independent accounting firm selected by the Company and reasonably acceptable to the Executive (the "Accountants"). The Company and Executive shall provide the Accountants with such information and documents as the Accountants may reasonably request in order to make a determination under this Section 21. For purposes of making the calculations and determinations required by this Section 21, the Accountants may rely on reasonable, good-faith assumptions and approximations concerning the application of Section 280G and Section 4999 of the Code. The Accountants' determinations shall be final and binding on the Company and Executive. The Company shall be responsible for all fees and expenses incurred by the Accountants in connection with the calculations required by this Section 21 .

 

(c) It is possible that after the determinations and selections made pursuant to this Section 21 Executive will receive Covered Payments that are in the aggregate more than the amount intended or required to be provided after application of this Section 21 ("Overpayment') or less than the amount intended or required to be provided after application of this Section 21 ("Underpayment').

 

(i) In the event that: (A) the Accountants determine, based upon the assertion of a deficiency by the Internal Revenue Service against either the Company or Executive that the Accountants believe has a high probability of success, that an Overpayment has been made or (B) it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding that has been finally and conclusively resolved that an Overpayment has been made, then Executive shall pay any such Overpayment to the Company together with interest at the applicable federal rate (as defined in Section 7872(f)(2)(A) of the Code) from the date of Executive's receipt of the Overpayment until the date of repayment.

 

(ii) In the event that: (A) the Accountants, based upon controlling precedent or substantial authority, determine that an Underpayment has occurred or (B) a court of competent jurisdiction determines that an Underpayment has occurred, any such Underpayment will be paid promptly by the Company to or for the benefit of Executive together with interest at the applicable federal rate (as defined in Section 7872(f)(2)(A) of the Code) from the date the amount should have otherwise been paid to Executive until the payment date.

 

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22. Taxes.  Any taxes applicable to your employment compensation with the Company will be deducted and remitted to the appropriate authorities in accordance with the Company’s stated policies and applicable law.  In the event the Executive works in a second tax jurisdiction at the Company’s request, the Company will cover the reasonable costs for you to use the services of the Company’s tax adviser or another adviser mutually agreed upon by the Parties to prepare you home and host country tax returns for any year during which you are required to file tax returns in more than one country as a result of your employment with the Company.  Any amounts paid to you to cover this cost will be subject to applicable tax and employment withholdings.

 

23. Independent Legal Advice.  The Executive acknowledges that she has been advised to obtain, and that she has obtained independent legal advice with respect to this Agreement and that she understands the nature and consequences of this Agreement.

 

24. Dispute Resolution.  The parties agree to the following dispute resolution provision in order to minimize the costs of any disputes and to expedite their determination.  The parties agree that any controversy, dispute, or claim between the parties arising out of or relating to the negotiation, execution, performance or termination of this Agreement, Executive’s employment with the Company or the termination of such employment, including (but not limited to) any claim arising out of this Agreement, claims under Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, Section 1981 of the Civil Rights Act of 1966, as amended, the Family Medical Leave Act, and any similar federal, state or local law, statute, regulation, or any common law doctrine, whether that dispute arises during or after employment, shall be resolved through final and binding arbitration with a single arbitrator from the Judicial Arbitration & Mediation Services, Inc. (“JAMS”), pursuant to its Employment Arbitration Rules & Procedures (the “Rules”), which rules are incorporated by reference and may be accessed directly through JAMS or its website; provided, however, that the Rules shall not contradict or otherwise alter the terms of this Agreement, including, but not limited to, the below cost sharing provision.  To the extent that the JAMS rules conflict with the substantive law of Delaware, Delaware law shall take precedence.  

 

(a)This Agreement to arbitrate is governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq. (“FAA”).  Such arbitration shall take place in New York, New York and be conducted in accordance with the Rules to the extent not inconsistent with any provision of this Agreement.  The demand for arbitration must be in writing and must be made by the aggrieved party within the statute of limitations period provided under applicable Delaware or federal law for the particular claim.  Failure to make a written demand within the applicable statutory period constitutes a waiver to raise that claim in any forum.  Notwithstanding the foregoing, without waiving the right to arbitration, either party may seek provisional relief (including without limitation a temporary restraining order or a preliminary injunction) from a court of competent jurisdiction (including without limitation to enforce the Restrictive Covenants), to the extent provided by applicable federal or Delaware law, upon the ground that the award to which the party may be entitled may be rendered ineffectual without provisional relief.  Judgment on the award rendered may be entered in any court of competent jurisdiction, and no party shall be entitled to exemplary damages. The Company and the Executive shall split the arbitrator’s fees and expenses and the administrative fees and expenses associated with the arbitration.  Each party shall bear her or its own attorneys’ fees and costs incurred in pursuing or defending such arbitration.  As a material part of this agreement to arbitrate claims, both the Executive and the Company expressly waive all rights to a jury trial in court on all statutory or other claims. The Executive and the Company agree that any award of the arbitrator shall be final, conclusive and binding and that neither party will contest any action by the other party in accordance with the award of the arbitrator.

 

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(b)This Agreement does not prohibit the filing of a complaint with an administrative agency, such as the Equal Employment Opportunity Commission, the National Labor Relations Board, the Department of Labor or other agency if applicable law permits access to such agency notwithstanding an agreement to arbitrate.  Nothing in this Agreement shall be read as excusing a party from exhausting administrative remedies that are a prerequisite to bringing a claim.  All claims or disputes subject to arbitration, other than claims seeking to enforce rights under Section 7 of the National Labor Relations Act, must be brought in the party’s individual capacity, and not as a plaintiff or class member in any class, collective, or representative action.  Any disputes concerning the validity of this multi-plaintiff, class, collective and representative action waiver will be decided by a court of competent jurisdiction, not by the arbitrator.  In the event a court determines this waiver is unenforceable with respect to any claim, then this waiver shall not apply to that claim.

 

[SIGNATURE PAGE FOLLOWS]

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

	
 
	
 
	
 
	
 
	
TILRAY, INC.

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
Name:
	
 
	
 

	
 
	
 
	
 
	
 
	
Title:
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
WITNESS
	
 
	
EXECUTIVE

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Name:
	
 
	
 
	
 
	
Denise Faltischek

	
 
	
 
	
 
	
 
	
 
	
 
	
 

 

23

 

 

 

SCHEDULE A

 

PSUs

 

 

		
	
Share Price*
	
% of Units vested with interpolation between percentages**

	
0% to less than 25% share price appreciation (threshold)
	
0%

	
25% share price appreciation
	
25%

	
50% share price appreciation
	
50%

	
75% share price appreciation
	
100%

	
100% share price appreciation
	
150%

	
125% share price appreciation or greater
	
250%

 

 

*Highest 30-day Volume Weighted Average Price (VWAP) achieved anytime during the 3-year performance period (or such shorter period upon death, Disability, termination without Cause by the Company, Executive’s termination for Good Reason or Change of Control (an “Intervening Event”); provided, however, that in the event of a Change of Control, the Share Price used above shall be the greater of (x) the highest 30-day VWAP prior to the Change of Control or (y) the share price in the Change of Control.  The initial share price for purposes of this grant shall be $15.80, which is equal to the VWAP from May 1 to May 30, 2021.

 

**Final vested percentage will be determined based on the earlier of (1) an Intervening Event or (2) the third anniversary of grant date (the “Vesting Date”).

Except as otherwise provided herein or in the Employment Agreement, for the avoidance of doubt, the Executive must remain in continuous employment from the grant date to the Vesting Date in order for the Units (or any portion thereof) to be vested.  Vested Units will be settled within 30 days of the Vesting Date.  Further, any price appreciation occurring after the third (3rd) anniversary of the Effective Date shall result in no further vesting and any unvested portion of the Units at that time shall be forfeited. 

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