Document:

Exhibit 10.4

 

AXOVANT SCIENCES LTD.

 

INDEMNIFICATION AGREEMENT

 

This INDEMNIFICATION AGREEMENT, dated and effective as of                              (this “Agreement”), is by and between AXOVANT SCIENCES LTD., an exempted limited company incorporated under the laws of Bermuda (the “Company” (as such definition is further expanded below))                                    , and, if such individual is a Director serving the Company as a representative of an entity,                                        (each an “Indemnitee” and collectively, the “Indemnitees”).

 

RECITALS:

 

A.                                    The Company desires to attract and retain the services of highly qualified individuals, such as the Indemnitee, to serve the Company and its related entities.

 

B.                                    In order to induce Indemnitee to provide services to the Company, the Company wishes to provide for the indemnification of, and the advancement of expenses to, the Indemnitees to the maximum extent permitted by law.

 

C.                                    The Company and Indemnitees recognize the continued difficulty in obtaining and maintaining adequate liability insurance for persons serving as directors, officers, employees, agents or fiduciaries of private and public companies, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance.

 

D.                                    The Company and Indemnitees further recognize the substantial increase in corporate litigation in general, subjecting directors, officers, employees, agents and fiduciaries to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited.

 

E.                                    In view of the considerations set forth above, the Company desires that Indemnitees shall be indemnified and advanced expenses by the Company as set forth herein.

 

AGREEMENT:

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration had and received, the Company and the Indemnitees hereby agree as follows:

 

1.                                      Certain Definitions.

 

(a)                                 “Bermuda Companies Act” shall mean the Companies Act 1981 of Bermuda, as amended.

 

(b)                                 “Change in Control” shall mean, and shall be deemed to have occurred if, on or after the date of this Agreement, (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) (the “Exchange Act”, other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company acting in such capacity or a corporation owned directly or indirectly by the shareholders of the

 

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Company in substantially the same proportions as their ownership of shares of the Company, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the total voting power represented by the Company’s then outstanding Voting Securities (as defined below), (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company (the “Board”) and any new director whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 75% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of (in one transaction or a series of related transactions) all or substantially all of the Company’s assets.

 

(c)                                  “Claim” shall mean with respect to a Covered Event (as defined below): any threatened, pending or completed action, suit, proceeding or alternative dispute resolution mechanism, or any hearing, inquiry or investigation that an Indemnitee in good faith believes might lead to the institution of any such action, suit, proceeding or alternative dispute resolution mechanism, whether civil, criminal, administrative, investigative or other.

 

(d)                                 “Covered Event” shall mean any event or occurrence related in any way to the fact that Indemnitee is or was a director, officer, employee, agent, or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, company, joint venture, employee benefit plan, trust or other enterprise, or by reason of any action or inaction on the part of Indemnitee while serving in any such capacity.

 

(e)                                  “Expenses” shall mean any and all expenses (including attorneys’ fees and all other costs, expenses and obligations incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, to be a witness in or to participate in, any action, suit, proceeding, alternative dispute resolution mechanism, hearing, inquiry or investigation), judgments, fines, penalties and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld), actually and reasonably incurred, of any Claim and any federal, state, local or foreign taxes imposed on any Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement.

 

(f)                                   “Expense Advance” shall mean a payment to any Indemnitee pursuant to Section 3 of Expenses in advance of the settlement of or final judgment in any action, suit, proceeding or alternative dispute resolution mechanism, hearing, inquiry or investigation which constitutes a Claim.

 

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(g)                                 “Independent Legal Counsel” shall mean an attorney or firm of attorneys, selected in accordance with the provisions of Section 2(d) hereof, who shall not have otherwise performed services for the Company or the applicable Indemnitee within the last three years (other than with respect to matters concerning the rights of the Indemnitees under this Agreement, or of other indemnitees under similar indemnity agreements).

 

(h)                                 References to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on an Indemnitee with respect to an employee benefit plan; and references to “serving at the request of the Company” shall include any service as a director, officer, employee, agent or fiduciary of the Company which imposes duties on, or involves services by, such director, officer, employee, agent or fiduciary with respect to an employee benefit plan, its participants or its beneficiaries; and if such Indemnitee acted in good faith and in a manner such Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

 

(i)                                    “Reviewing Party” shall mean, subject to the provisions of Section 2(d), any person or body appointed by the Board in accordance with applicable law to review the Company’s obligations hereunder and under applicable law, which may include a member or members of the Board, Independent Legal Counsel or any other person or body not a party to the particular Claim for which an Indemnitee is seeking indemnification.

 

(j)                                    “Section” refers to a section of this Agreement unless otherwise indicated.

 

(k)                                 “Voting Securities” shall mean any securities of the Company that vote generally in the election of directors.

 

2.                                      Indemnification.

 

(a)                                 Indemnification of Expenses.  Subject to the provisions of Section 2(b) below, the Company shall indemnify each Indemnitee for Expenses to the fullest extent permitted by law if such indemnitee was or is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, any Claim (whether by reason of or arising in part out of a Covered Event), including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, provided that the indemnity shall not extend to any matter in respect of any fraud or dishonesty to the extent prohibited by the Bermuda Companies Act in relation to the Company that may attach to any Indemnitee.

 

(b)                                 Review of Indemnification Obligations.  Notwithstanding the foregoing, in the event any Reviewing Party shall have determined in good faith (as detailed in written opinion of counsel, in any case in which Independent Legal Counsel is the Reviewing Party), that an Indemnitee is not entitled to be indemnified hereunder under applicable law, (i) the Company shall have no further obligation under Section 2(a) to make any payments to such Indemnitee not made prior to such determination by such Reviewing Party, and (ii) the Company shall be entitled to be reimbursed by such Indemnitee (who hereby agrees to reimburse the Company) for all Expenses theretofore paid in indemnifying such Indemnitee; provided, however, that if such Indemnitee has commenced or thereafter commences legal proceedings in a

 

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court of competent jurisdiction to secure a determination that such Indemnitee is entitled to be indemnified hereunder under applicable law, any determination made by any Reviewing Party that such Indemnitee is not entitled to be indemnified hereunder under applicable law shall not be binding and such Indemnitee shall not be required to reimburse the Company for any Expenses theretofore paid in indemnifying such Indemnitee until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed).  An Indemnitee’s obligation to reimburse the Company for any Expenses shall be unsecured and no interest shall be charged thereon.

 

(c)                                  Indemnitee Rights on Unfavorable Determination; Binding Effect.  If any Reviewing Party determines that an Indemnitee substantively is not entitled to be indemnified hereunder in whole or in part under applicable law, such Indemnitee shall have the right to commence litigation seeking an initial determination by the court or challenging any such determination by such Reviewing Party or any aspect thereof, including the legal or factual bases therefor, and, subject to the provisions of Section 15 the Company hereby consents to service of process and to appear in any such proceeding.  Absent such litigation, any determination by any Reviewing Party shall be conclusive and binding on the Company and Indemnitee.

 

(d)                                 Selection of Reviewing Party; Change in Control.  If there has not been a Change in Control, any Reviewing Party shall be selected by the Board, and if there has been such a Change in Control, any Reviewing Party with respect to all matters thereafter arising concerning the rights of an Indemnitee to indemnification of Expenses under this Agreement or any other agreement or under the Company’s Memorandum of Association or Bye-laws as now or hereafter in effect, or under any other applicable law, if desired by such Indemnitee, shall be Independent Legal Counsel selected by such Indemnitee and approved by the Company (which approval shall not be unreasonably withheld).  Such counsel, among other things, shall render its written advice to the Company and such Indemnitee as to whether and to what extent such Indemnitee would be entitled to be indemnified hereunder under applicable law and the Company agrees to abide by such advice.  The Company agrees to pay the reasonable fees and expenses of the Independent Legal Counsel referred to above and to indemnify fully such counsel against any and all expenses (including attorneys’ fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.  Notwithstanding any other provision of this Agreement, the Company shall not be required to pay Expenses of more than one Independent Legal Counsel in connection with all matters concerning a single Indemnitee, and such Independent Legal Counsel shall be the Independent Legal Counsel for any or all other Indemnitees unless (i) the employment of separate counsel by one or more Indemnitees has been previously authorized by the Company in ·writing, or (ii) an Indemnitee shall have provided to the Company a written statement that such Indemnitee has reasonably concluded that there may be a conflict of interest between such Indemnitee and the other Indemnitees with respect to the matters arising under this Agreement.

 

(e)                                  Mandatory Payment of Expenses.  Notwithstanding any other provision of this Agreement other than Section 10 hereof, to the extent that an Indemnitee has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any Claim, such Indemnitee shall be indemnified against all Expenses incurred by such Indemnitee in connection therewith.

 

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3.                                      Expense Advances.

 

(a)                                 The Company shall make Expense Advances to an Indemnitee upon receipt of a written undertaking by or on behalf of the Indemnitee to repay such amounts if it shall ultimately be determined (as set forth herein) that the Indemnitee is not entitled to be indemnified therefor by the Company.

 

(b)                                 Form of Undertaking.  Any obligation to repay any Expense Advances hereunder pursuant to a written undertaking by the Indemnitee shall be unsecured and no interest shall be charged thereon.

 

(c)                                  Determination of Reasonable Expense Advances.  The parties agree that for the purposes of any Expense Advance for which an Indemnitee has made written demand to the Company in accordance with this Agreement, all Expenses included in such Expense Advance that are certified in good faith by affidavit of such Indemnitee as being reasonable shall be presumed conclusively to be reasonable.

 

4.                                      Procedures for Indemnification and Expense Advances.

 

(a)                                 Timing of Payments.  All payments of Expenses (including without limitation Expense Advances) by the Company to an Indemnitee pursuant to this Agreement shall be made to the fullest extent permitted by law as soon as practicable after written demand by such Indemnitee therefor is presented to the Company, but in no event later than forty-five (45) business days after such written demand by such Indemnitee is presented to the Company, except in the case of Expense Advances, which shall be made no later than thirty (30) business days after such written demand by such Indemnitee is presented to the Company.

 

(b)                                 Notice/Cooperation by Indemnitee.  Each Indemnitee shall, as a condition precedent to such Indemnitee’s right to be indemnified or Indemnitee’s right to receive Expense Advances under this Agreement, give the Company notice in writing as soon as practicable of any Claim made against such Indemnitee for which indemnification will or could be sought under this Agreement.  Notice to the Company shall be directed to the Principal Executive Officer of the Company at the address shown on the signature page of this Agreement (or such other address as the Company shall designate in writing to Indemnitee).  In addition, such Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee’s power.

 

(c)                                  No Presumptions; Burden of Proof.  For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by this Agreement or applicable law.  In addition, neither the failure of any Reviewing Party to have made a determination as to whether an Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual determination by any Reviewing Party that an Indemnitee has not met such standard of conduct or did not have such belief, prior to the commencement of legal proceedings by such Indemnitee to secure a judicial determination that such Indemnitee should be indemnified under this Agreement or applicable law, shall be a defense to such Indemnitee’s claim or create a presumption that such Indemnitee has not met any particular

 

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standard of conduct or did not have any particular belief.  In connection with any determination by any Reviewing Party or otherwise as to whether the Indemnitee is entitled to be indemnified hereunder the burden of proof shall be on the Company to establish that such Indemnitee is not so entitled.

 

(d)                                 Notice to Insurers.  If, at the time of the receipt by the Company of a notice of a Claim pursuant to Section 4(b) hereof, the Company has liability insurance in effect which may cover such Claim, the Company shall give prompt notice of the commencement of such Claim to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of such Indemnitee, all amounts payable as a result of such Claim in accordance with the terms of such policies, subject to any other claims which may be paid pursuant to such policies.

 

(e)                                  Selection of Counsel.  In the event the Company shall be obligated hereunder to provide indemnification for or make any Expense Advances with respect to the Expenses of any Claim, the Company, if appropriate, shall be entitled to assume the defense of such Claim with counsel approved by Indemnitee (which approval shall not be unreasonably withheld) upon the delivery to such Indemnitee of written notice of the Company’s election to do so.  After delivery of such notice, approval of such counsel by such Indemnitee and the retention of such counsel by the Company, the Company will not be liable to such Indemnitee under this Agreement for any fees or expenses of separate counsel subsequently retained by or on behalf of such Indemnitee with respect to the same Claim; provided, however, that, (i) such Indemnitee shall have the right to employ such Indemnitee’s separate counsel in any such Claim at such Indemnitee’s expense, and (ii) if (A) the employment of separate counsel by such Indemnitee has been previously authorized by the Company, (B) such Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and such Indemnitee in the conduct of any such defense and such Indemnitee has received written advice of counsel to such effect, or (C) the Company shall not continue to retain such counsel to defend such Claim, then the fees and expenses of Indemnitee’s separate counsel shall be Expenses for which Indemnitee may receive indemnification or Expense Advances hereunder.

 

5.                                      Additional Indemnification Rights; Non-Exclusivity.

 

(a)                                 Scope.  The Company hereby agrees to indemnify each Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company’s Memorandum of Association, its Bye-laws or by statute.  In the event of any change after the date of this Agreement in any applicable law, statute or rule which expands the right of a Bermuda exempted limited company to indemnify a member of its board of directors or an officer, employee, agent or fiduciary, it is the intent of the parties hereto that each Indemnitee shall enjoy by this Agreement the greater benefits afforded by such change.  In the event of any change in any applicable law, statute or rule which narrows the right of a Bermuda exempted limited company to indemnify a member of its board of directors or an officer, employee, agent or fiduciary, such change, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties’ rights and obligations hereunder except as set forth in Section10(a) hereof.

 

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(b)                                 Non-Exclusivity.  The indemnification and the payment of Expense Advances provided by this Agreement shall be in addition to any rights to which each Indemnitee may be entitled under the Company’s Memorandum of Association, its Bye-laws, any other agreement, any vote of shareholders or disinterested directors, applicable Bermuda law, or otherwise.  The indemnification and the payment of Expense Advances provided under this Agreement shall continue as to each Indemnitee for any action taken or not taken while serving in an indemnified capacity even though subsequent thereto Indemnitee may have ceased to serve in such capacity.

 

(c)                                  [Primacy of Indemnification.  The Company hereby acknowledges that Indemnitee has certain rights to indemnification, advancement of expenses and/or insurance provided by [Name of Fund/Sponsor] and certain of [its][their] affiliates (collectively, the “Fund Indemnitors”).  The Company hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations to Indemnitee are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary), (ii) that it shall be required to advance the full amount of expenses incurred by Indemnitee and shall be liable for the full amount of all Expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by the terms of this Agreement and the Company’s Memorandum of Association or Bye-laws (or any other agreement between the Company and Indemnitee), without regard to any rights Indemnitee may have against the Fund Indemnitors, and (iii)  that it irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof.  The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company.  The Company and Indemnitee agree that the Fund Indemnitors are express third party beneficiaries of the terms of this Section 5(c).](1)

 

6.                                      No Duplication of Payments.  The Company shall not be liable under this Agreement to make any payment in connection with any Claim made against an Indemnitee to the extent such Indemnitee has otherwise actually received payment (under any insurance policy, provision of the Company’s Memorandum of Association, its Bye-laws or otherwise) of the amounts otherwise payable hereunder.

 

7.                                      Partial Indemnification.  If an Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses incurred connection with any Claim, but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify such Indemnitee for the portion of such Expenses to which such Indemnitee is entitled.

 

8.                                      Mutual Acknowledgment.  The Company and each Indemnitee acknowledge that in certain instances, federal law or applicable public policy may prohibit the Company from indemnifying its directors, officers, employees, agents or fiduciaries under this Agreement or otherwise.  Each Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the Securities and Exchange Commission to

 

(1)  To delete if not applicable.

 

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submit the question of indemnification to a court in certain circumstances for a determmat1on of the Company’s right under public policy to indemnify Indemnitee.

 

9.                                      Liability Insurance.  To the extent the Company maintains liability insurance applicable to directors, officers, employees, agents or fiduciaries, each Indemnitee shall be covered by such policies in such a manner as to provide such Indemnitee the same rights and benefits as are provided to the most favorably insured of the Company’s directors, if Indemnitee is a director; or of the Company’s officers, if Indemnitee is not a director of the Company but is an officer; or one of the Company’s key employees, agents or other fiduciaries, if Indemnitee is not an officer or director but is a key employee, agent or other fiduciary.

 

10.                               Exceptions.  Notwithstanding any other provision of this Agreement, the Company shall not be obligated pursuant to the terms of this Agreement:

 

(a)                                 Excluded Action or Omissions.  To indemnify an Indemnitee for Expenses resulting from acts, omissions or transactions for which such Indemnitee is prohibited from receiving indemnification under this Agreement or applicable law, provided, however, that notwithstanding any limitation set forth in this Section 10(a) regarding the Company’s obligation to provide indemnification, such Indemnitee shall be entitled under Section 3 to receive Expense Advances hereunder with respect to any such Claim unless and until a court having jurisdiction over the Claim shall have made a final judicial determination (as to which all rights of appeal therefrom have been exhausted or lapsed) that such Indemnitee has engaged in acts, omissions or transactions for which such Indemnitee is prohibited from receiving indemnification under this Agreement or applicable law (any such final determination, an “Adverse Final Determination”), and provided, further, that the Company shall have no obligation to provide any Expense Advances unless and until such Indemnitee has furnished the Company with an undertaking to repay Expense Advances in the event of an Adverse Final Determination.

 

(b)                                 Claims Initiated by Indemnitee.  To indemnify or make Expense Advances to the Indemnitee with respect to Claims initiated or brought voluntarily by an Indemnitee and not by way of defense, counterclaim or crossclaim, except: (i) with respect to actions or proceedings brought to establish or enforce a right to indemnification under this Agreement or any other agreement or insurance policy or under the Company’s Memorandum of Association or Bye-laws now or hereafter in effect relating to Claims for Covered Events, (ii) in specific cases if the Board has approved the initiation or bringing of such Claim, or (iii) as otherwise required under applicable Bermuda law, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, or insurance recovery, as the case may be.

 

(c)                                  Lack of Good Faith.  To indemnify an Indemnitee for any Expenses incurred by such Indemnitee with respect to any action instituted:  (i) by such Indemnitee to enforce or interpret this Agreement, if a court having jurisdiction over such action determines as provided in Section 13 that each of the material assertions made by such Indemnitee as a basis for such action was not made in good faith or was frivolous, or (ii) by or in the name of the Company to enforce or interpret this Agreement, if a court having jurisdiction over such action determines as provided in Section 13 that each of the material defenses asserted by such Indemnitee in such action was made in bad faith or was frivolous .

 

Furthermore, notwithstanding anything herein to the contrary, Indemnitee shall be entitled under Section 3 (to the maximum extent permitted by law) to receive Expense Advances

 

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hereunder with respect to any Claim arising from the purchase and sale of securities of the Company by the Indemnitee in violation of Section 16(b) of the Exchange Act unless and until a court having jurisdiction over the Claim shall have made a final judicial determination (as to which all rights of appeal therefrom have been exhausted or lapsed) that Indemnitee has violated said statute or the Claim is settled and in connection with such settlement Indemnitee admits a violation of said statute, in which event Indemnitee will be obligated to repay all Expense Advances to the Company pursuant to a payment plan or other payment arrangements mutually agreeable to the parties.

 

11.                               Counterparts.  This Agreement may be executed and delivered in multiple counterparts (including facsimile, PDF, or other electronic counterparts), each of which, when taken together, shall constitute one and the same instrument.

 

12.                               Binding Effect; Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), spouses, heirs and personal and legal representatives.  The Company shall require and cause any successor (whether direct or indirect, and whether by purchase, merger, consolidation or otherwise) to all, substantially all, or a substantial part, of the business or assets of the Company, by written agreement in form and substance satisfactory to the Indemnitees, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.  This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as a director, officer, employee, agent or fiduciary (as applicable) of the Company or of any other enterprise at the Company’s request.

 

13.                               Expenses Incurred in Action Relating to Enforcement or Interpretation.  In the event that any action is instituted by any Indemnitee under this Agreement or under any liability insurance policies maintained by the Company to enforce or interpret any of the terms hereof or thereof, such Indemnitee shall be entitled to be indemnified for all Expenses incurred by such Indemnitee with respect to such action (including without limitation attorneys’ fees), regardless of whether Indemnitee is ultimately successful in such action, unless as a part of such action a court having jurisdiction over such action makes a final judicial determination (as to which all rights of appeal therefrom have been exhausted or lapsed) that each of the material assertions made by such Indemnitee as a basis for such action was not made in good faith or was frivolous; provided, however, that until such final judicial determination is made, Indemnitee shall be entitled under Section 3 to receive payment of Expense Advances hereunder with respect to such action.  In the event of an action instituted by or in the name of the Company under this Agreement to enforce or interpret any of the terms of this Agreement, each Indemnitee shall be entitled to be indemnified for all Expenses incurred by such Indemnitee in defense of such action (including without limitation costs and expenses incurred with respect to such Indemnitee’s counterclaims and cross-claims made in such action), unless as a part of such action a court having jurisdiction over such action makes a final judicial determination (as to which all rights of appeal therefrom have been exhausted or lapsed) that each of the material defenses asserted by such Indemnitee in such action was made in bad faith or was frivolous; provided, however, that until such final judicial determination is made, such Indemnitee shall be entitled under Section 3 to receive payment of Expense Advances hereunder with respect to such action.

 

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14.                               Notice.  All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and signed for by the party addressed, on the date of such delivery, or (ii) if mailed by domestic certified or registered mail with postage prepaid, on the third business day after the date postmarked.  Addresses for notice to either party are as shown on the signature page of this Agreement, or as subsequently modified by written notice.

 

15.                               Consent to Jurisdiction.  The Company and each Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of Bermuda for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be commenced, prosecuted and continued only in Bermuda, which shall be the exclusive and only proper forum for adjudicating such a claim.

 

16.                               Severability.  The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law.  Furthermore, to the fullest extent possible, the provisions of this Agreement (including without limitation each portion of this Agreement containing any provision held to be invalid, void or otherwise unenforceable, that is not itself invalid, void or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

 

17.                               Choice of Law.  This Agreement, and all rights, remedies, liabilities, powers and duties of the parties to this Agreement, shall be governed by and construed in accordance with the laws of Bermuda without regard to its principles of conflicts of laws.

 

18.                               Subrogation.  In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of each Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights.

 

19.                               Amendment and Termination.  No amendment, modification, termination or cancellation of this Agreement shall be effective unless it is in writing signed by both the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed to be or shall constitute a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver.

 

20.                               Integration and Entire Agreement.  This Agreement sets forth the entire understanding between the parties hereto and supersedes and merges all previous written and oral negotiations, commitments, understandings and agreements relating to the subject matter hereof between the parties hereto.

 

21.                               No Construction as Employment Agreement.  Nothing contained in this Agreement shall be construed as giving Indemnitee any right to be retained in the employ of the Company or any of its subsidiaries or affiliated entities.

 

[Signature page follows.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this INDEMNIFICATION AGREEMENT as of the date first written above.

 

	
 
    	
AXOVANT   SCIENCES LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Vivek   Ramaswamy
    
	
 
    	
 
    	
Principal   Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
Clarendon   House
    
	
 
    	
2   Church Street
    
	
 
    	
Hamilton   HM 11, Bermuda
    
	
 
    	
 
    
	
 
    	
INDEMNITEE:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[NAME   OF FUND, IF APPLICABLE]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:Exhibit 10.7

 

AXOVANT SCIENCES, INC.

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is entered into as of [INSERT DATE], 2015, by and between [INSERT EXECUTIVE NAME] (the “Executive”) and Axovant Sciences, Inc. (the “Company”).

 

RECITALS

 

A.                                    The Company desires the association and services of Executive and [his/her] skills, abilities, background and knowledge, and is willing to engage Executive’s services on the terms and conditions set forth in this Agreement.

 

B.                                    Executive desires to be in the employ of the Company, and is willing to accept such employment on the terms and conditions set forth in this Agreement.

 

C.                                    This Agreement supersedes any and all prior and contemporaneous oral or written employment agreements or arrangements between Executive and the Company or any predecessor thereof.

 

AGREEMENT

 

In consideration of the foregoing, the parties agree as follows:

 

1.                                      EMPLOYMENT BY THE COMPANY.

 

1.1                               Position; Duties; Location.  Subject to the terms and conditions of this Agreement, Executive shall hold the position of [INSERT POSITION AND TITLE].  Executive’s activities and duties shall be as directed by the Company’s Chief Executive Officer.  It is understood and agreed that Executive’s duties may include providing services to or for the benefit of the Company’s affiliates, including, but not limited to, Axovant Sciences, Ltd. (the “Parent”), pursuant to that certain Services Agreement by and between Parent and the Company effective as of March 7, 2015 or otherwise, provided, that Executive agrees that [he/she] will not provide any services from within the United States for Parent or any affiliate of Parent that is organized in a jurisdiction outside the United States.  Executive shall devote Executive’s full business energies, interest, abilities and productive time to the proper and efficient performance of Executive’s duties under this Agreement; provided, however, that Executive may devote reasonable periods of time to (a) serving on the board of directors of other corporations subject to the prior approval of the CEO, and (b) engaging in charitable or community service activities, so long as none of the foregoing additional activities materially interfere with Employee’s duties under this Agreement. Executive shall report to the Company’s Chief Executive Officer and shall work generally from the Company’s offices in New York City, New York.  Executive may work from remote locations, provided it does not interfere with the successful performance of Executive’s duties.  Executive understands that [his/her] duties may require periodic business travel.

 

 

1.2                               Policies and Procedures.  The employment relationship between the parties shall be governed by this Agreement and by the policies and practices established by the Company and/or its Board of Directors (the “Board”).  In the event that the terms of this Agreement differ from or are in conflict with the Company’s policies or practices, this Agreement shall govern and control.

 

1.3                               Exclusive Employment; Agreement not to Participate in Company’s Competitors.  Subject to Section 1.1 above, except with the prior written consent of the Company’s Chief Executive Officer, Executive will not during employment with the Company undertake or engage in any other employment, occupation or business enterprise.  During Executive’s employment, Executive agrees not to acquire, assume or participate in, directly or indirectly, any position, investment or interest known by Executive to be adverse or antagonistic to the Company, its business, or prospects, financial or otherwise, or in any company, person, or entity that is, directly or indirectly, in competition with the business of the Company.  Ownership by Executive in professionally managed funds over which the Executive does not have control or discretion in investment decisions, or, an investment of less than two percent (2%) of the outstanding shares of capital stock of any corporation with one or more classes of its capital stock listed on a national securities exchange or publicly traded on a national securities exchange or in the over-the-counter market shall not constitute a breach of this Section.

 

1.4                               Start Date.  Executive’s employment with the Company [will commence/commenced] on [INSERT DATE] (the “Start Date”).

 

2.                                      AT-WILL EMPLOYMENT.

 

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

 

3.                                      COMPENSATION AND BENEFITS.

 

3.1                               Salary. The Company shall pay Executive a base salary at the annualized rate of $[INSERT ANNUAL BASE SALARY] (the “Base Salary”), less payroll deductions and all required withholdings, payable in regular periodic payments in accordance with the Company’s normal payroll practices.  The Base Salary shall be prorated for any partial year of employment on the basis of a 365-day year.  The Base Salary may be adjusted from time to time in the Company’s discretion.  Immediately prior to or following the consummation of an initial public offering, the Base Salary shall be adjusted upward as necessary to meet appropriate public market standards as determined by the Board or the Compensation Committee thereof.

 

3.2                               Performance Bonus.  Each fiscal year, Executive will be eligible to earn an additional cash bonus with a target of fifty percent (50%) of [his/her] Base Salary, based on the Board’s assessment of Executive’s individual performance and overall Company performance.  Following the consummation of an initial public offering, the percentage of Base Salary that Executive will be eligible to earn as a bonus shall be adjusted upward as necessary to meet appropriate public market standards as determined

 

 

by the Board or the Compensation Committee thereof.  In order to earn and receive the bonus, Executive must remain employed by the Company through and including the bonus payout date, which will be on or before April 30 of the year following the year for which it is paid.  The determination of whether Executive has earned a bonus and the amount thereof shall be determined by the Board (and/or a committee thereof) in its sole discretion.  The Company reserves the right to modify the bonus criteria from year to year.  Within 30 days following a Change in Control (as defined below), the Company shall pay to Executive a pro-rated bonus (based on the higher of target or actual achievement of pro-rata performance targets for the number of days that have elapsed in such calendar year as of the Change in Control) and with the bonus amounts to be the pro-rated portion of a full annual bonus based on the number of days that have elapsed in such calendar year as of the Change in Control.

 

3.3                               Equity.  Subject to the terms of Parent’s 2015 Equity Incentive Plan (the “Plan”), Executive [will be/has been] granted an option (the “Option”) to purchase a number of shares of Parent’s Common Stock equal to [INSERT NUMBER OF SHARES] (the “Option Shares”).  Twenty-five percent (25%) of the Option Shares will vest one year after the Start Date and the balance of the Option Shares will vest in a series of twelve (12) successive equal quarterly installments measured from the first anniversary of the Start Date. The exercise price of the Option will be equal to the fair market value of the Parent Common Stock on the date of grant of the Option, as determined by the Parent Board in its sole discretion.  The Option will be governed by the Plan and other documents issued in connection with the grant.  In addition, the Executive will be eligible for additional discretionary periodic or annual equity incentive grants based upon the Executive’s performance as well as business conditions at the Company (including possibly following the consummation of an initial public offering based on appropriate public market comparables for the Executive’s position) and in any event on a basis no less favorable than that provided to other senior Company executives from time to time.  Upon a Change in Control, any unvested portion of the Option and any other options or additional equity incentive grants that Executive may have received shall immediately vest in full, and the Company agrees to take all action required by the Board and/or the board of directors of Parent to accelerate the vesting of any such unvested options or equity incentive grants.

 

3.4                               Benefits and Insurance.  Executive shall, in accordance with Company policy and the terms of the applicable plan documents, be eligible to participate in benefits under any benefit plan or arrangement that may be in effect from time to time and made available to similarly situated Company employees (including but not limited to being named as an officer for purposes of the Company’s Directors & Officers Insurance).  The Company reserves the right to modify, add or eliminate benefits from time to time.  Executive shall accrue four (4) weeks of vacation per year subject to the Company’s policy regarding vacation.  Executive may carry over five (5) days of unused vacation to the next calendar year; any other portion of accrued but unused vacation shall not carry over to the next calendar year.

 

3.5                               Expense Reimbursements.  The Company will reimburse Executive for all reasonable business expenses Executive incurs in conducting [his/her] duties hereunder, pursuant to the Company’s usual expense reimbursement policies.  Reimbursement will be made as soon as practicable following receipt from Executive of reasonable documentation supporting said expenses.

 

 

4.                                      PROPRIETARY INFORMATION OBLIGATIONS.

 

As a condition of employment Executive agrees to execute and abide by the Company’s Employee Non-Disclosure And Inventions Assignment Agreement (“NDA”).

 

5.                                      TERMINATION OF EMPLOYMENT.

 

5.1                               Termination Without Cause Or Resignation For Good Reason.

 

(a)                                 If Executive’s employment with the Company is terminated without Cause or Executive resigns for Good Reason, in either case, prior to a Change in Control or more than twelve (12) months following a Change in Control, then the Company shall pay Executive any earned but unpaid Base Salary and unused vacation accrued through the date of termination, at the rates then in effect, less standard deductions and withholdings.  In addition, if Executive furnishes to the Company an executed waiver and release of claims in a form to be provided by the Company, which may include an obligation for Executive to provide reasonable transition assistance (the “Release”)  that is nonrevocable prior to the Release Date, and if Executive allows such Release to become effective in accordance with its terms, then the Executive shall receive the following benefits:

 

(i)  The Company shall pay Executive an amount equal to one (1) times the sum of the Executive’s then current Base Salary (without regard to any reduction in Base Salary that would otherwise constitute Good Reason), the full amount of Executive’s annual target bonus in respect of the calendar year in which the termination of employment occurs, and any unpaid annual bonus amount with respect to the calendar year ended prior to the termination of Executive’s employment.  Said amount shall be paid to Executive in a single lump sum within ten (10) days following the Release Date and will be subject to required withholding;

 

(ii)  If Executive is eligible for and timely elects COBRA continuation coverage, the Company will reimburse COBRA premiums for the first twelve (12) months of COBRA coverage; provided, however, that if Executive ceases to be eligible for COBRA or becomes eligible to enroll in the group health insurance plan of another employer, Executive will immediately notify the Company and the Company’s obligation to provide the COBRA premium benefits shall immediately cease.  Further, notwithstanding the foregoing, if at any time the Company determines, in its sole discretion, that it cannot provide the COBRA premium benefits without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then in lieu of paying COBRA premiums on Executive’s behalf, the Company will pay Executive on a monthly basis a fully taxable cash payment equal to the COBRA premium for that month, subject to applicable tax withholding.  This payment may be, but need not be, used by Executive to pay for COBRA premiums; and

 

[(iii)  In the event that Executive’s employment is terminated on account of Special Good Reason and Executive’s performance was determined to be “Very Good” or higher against agreed objectives during Executive’s performance review immediately prior to the termination, in addition to the payments and benefits

 

 

provided in Section 5.1(a)(i) and (ii), 50% of the then unvested portion of the Option, and any other options or additional equity grants that the Executive may have received, shall immediately become fully vested.] (1)

 

(b)                                 If Executive’s employment with the Company is terminated without Cause or Executive resigns for Good Reason, in either case, upon or on or before the twelve-month anniversary of a Change in Control (but not before a Change in Control), then the Company shall pay Executive any earned but unpaid Base Salary and unused vacation accrued through the date of termination, at the rates then in effect, less standard deductions and withholdings.  In addition, if Executive furnishes to the Company an executed Release that is nonrevocable prior to the Release Date, and if Executive allows such Release to become effective in accordance with its terms, then the Executive shall receive the following benefits:

 

(i)  The Company shall pay Executive an amount equal to one and a half (1.5) times the sum of the Executive’s then current Base Salary (without regard to any reduction in Base Salary that would otherwise constitute Good Reason), the full amount of Executive’s annual target bonus in respect of the calendar year in which the termination of employment occurs, and any unpaid annual bonus amount with respect to the calendar year ended prior to the termination of Executive’s employment.  Said amount shall be paid to Executive in a single lump sum within ten (10) days following the Release Date

 

(ii)  If Executive is eligible for and timely elects COBRA continuation coverage, the Company will reimburse COBRA premiums for the first eighteen (18) months of COBRA coverage; provided, however, that if Executive ceases to be eligible for COBRA or becomes eligible to enroll in the group health insurance plan of another employer, Executive will immediately notify the Company and the Company’s obligation to provide the COBRA premium benefits shall immediately cease.  Further, notwithstanding the foregoing, if at any time the Company determines, in its sole discretion, that it cannot provide the COBRA premium benefits without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then in lieu of paying COBRA premiums on Executive’s behalf, the Company will pay Executive on a monthly basis a fully taxable cash payment equal to the COBRA premium for that month, subject to applicable tax withholding.  This payment may be, but need not be, used by Executive to pay for COBRA premiums.

 

[(iii) In the event that Executive’s employment is terminated on account of Special Good Reason and Executive’s performance was determined to be “Very Good” or higher against agreed objectives during Executive’s performance review immediately prior to the termination, in addition to the payments and benefits provided in Section 5.1(b)(i) and (ii), 50% of the then unvested portion of any then outstanding options or other equity grants that the Executive may have received, which have not already accelerated pursuant to the last sentence of Section 3.3, shall immediately become fully vested.] (2)

 

(1)                                     To be inserted into the employment agreements of certain executive officers at the discretion of the Board.

 

(2)                                     To be inserted into the employment agreements of certain executive officers at the discretion of the Board. 

 

 

5.2                               Other Termination.  If Executive resigns [his/her] employment at any time without Good Reason or Executive’s employment is terminated by the Company at any time for Cause or due to death or Disability, the Company shall pay Executive (or her estate) any Base Salary and any unused vacation accrued through the date of such resignation or termination, at the rates then in effect, less standard deductions and withholdings.  In addition, in the event of a termination due to death or Disability, Executive (or [his/her] estate) will be paid an amount equal to Executive’s target bonus amount for the year in which such resignation or termination occurs pro-rated to the date of such resignation or termination. The Company shall thereafter have no further obligations to Executive, except as may otherwise be required by law.

 

5.3                               Definitions.  For purposes of this Agreement, the following terms shall have the following meanings:

 

(a)                                 “Cause” shall mean the occurrence of any of the following: (i) Executive’s willful failure to substantially perform [his/her] duties and responsibilities to the Company after written demand for performance from the Company which specifically sets forth the factual basis for the Company’s belief that the Executive has not substantially performed such duties and after she has been provided with a sixty (60) day cure period, or Executive’s deliberate violation of a Company policy; (ii) Executive’s commission of any act of fraud, embezzlement, dishonesty or any other willful misconduct that has caused or is reasonably expected to result in material injury to the Company; (iii) unauthorized use or disclosure by Executive of any proprietary information or trade secrets of the Company or any other party to whom Executive owes an obligation of nondisclosure as a result of [his/her] relationship with the Company; (iv) Executive’s willful breach of any of [his/her] obligations under any written agreement or covenant with the Company; or (v) Executive’s conviction of (x) any felony, or (y) any misdemeanor crime involving fraud or dishonesty.  For purposes of this Agreement, no act or failure to act, on the part of Executive, will be considered ‘‘willful” unless it is done, or omitted to be done, by Executive in bad faith or without reasonable belief that Executive’s action or omission was in the best interests of the Company.

 

(b)                                 “Disability” shall mean the Executive’s inability to perform [his/her] duties and responsibilities hereunder, with or without reasonable accommodation, due to any physical or mental illness or incapacity, which condition either (i) has continued for a period of 180 days (including weekends and holidays) in any consecutive 365-day period.

 

(c)                                  “Good Reason” for Executive to resign [his/her] employment hereunder shall mean the occurrence of any of the following events without Executive’s consent: (i) a material reduction by the Company of Executive’s Base Salary below that Base Salary as set as of the time of the reduction, provided, however, that if such reduction occurs in connection with a Company-wide decrease in executive team compensation, such reduction shall not constitute Good Reason provided that it is a reduction of a proportionally like amount or percentage affecting the entire executive team; (ii) a material breach of this Agreement by the Company; (iii) relocation of Executive’s primary work location to a location that increases Executive’s one-way commute by more than fifty (50) miles as compared to Executive’s then current primary work location immediately prior to such relocation; or (iv) an adverse change in Executive’s duties, authority, or

 

 

responsibilities relative to Executive’s duties, authority, or responsibilities in effect immediately prior to such reduction, without limiting the foregoing, including a change in the Executive’s reporting responsibilities so that she no longer reports directly to the CEO of the Company.  Provided, however, that, any such resignation by Executive shall only be deemed for Good Reason pursuant to this definition if: (1) Executive gives the Company written notice of intent to terminate for Good Reason within thirty (30) days following the first occurrence of the condition(s) that [he/she] believes constitute(s) Good Reason, which notice shall describe such condition(s); (2) the Company fails to remedy such condition(s) within thirty (30) days following receipt of the written notice (the “Cure Period”); and (3) Executive voluntarily terminates [his/her] employment within thirty (30) days following the end of the Cure Period.

 

(d)                                 [“Special Good Reason” for Executive to resign [his/her] employment hereunder shall mean if within twelve (12) months from the start date of another executive being hired by the Company, (i) the Executive terminates [his/her] employment due to an adverse change in Executive’s duties, authority, or responsibilities relative to Executive’s duties, authority, or responsibilities in effect immediately prior to such reduction, without limiting the foregoing, including a change in the Executive’s reporting responsibilities so that she no longer reports directly to the Chief Executive Officer of the Company or (ii) Executive is involuntarily terminated because the Company hires a third party who assumes Executive’s position or a portion of [his/her] position, provided, however, that, any termination by Executive shall only be deemed to constitute Special Good Reason pursuant to clause (i) of this definition if: (1) Executive gives the Company written notice of intent to terminate for Special Good Reason within thirty (30) days following the first occurrence of the condition(s) that Executive believes will give [his/her] the right to terminate for Special Good Reason, which notice shall describe such condition(s); (2) the Company fails to remedy such condition(s) within the Cure Period; and Executive voluntarily terminates [his/her] employment within thirty (30) days following the end of the Cure Period.] (3)

 

(e)                                  A “Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

(i)                                    any person or entity becomes the Owner, directly or indirectly, of securities of the Company or Parent representing more than fifty percent (50%) of the combined voting power of the Company’s or Parent’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction.  Notwithstanding the foregoing, a Change in Control will not be deemed to occur (A) on account of the acquisition of securities of the Company directly from the Company or the acquisition of securities of the Parent directly from Parent, (B) on account of the acquisition of securities of the Company or Parent by an investor, any affiliate thereof or any other person or entity that acquires the Company’s or Parent’s securities in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company or Parent through the issuance of equity securities; (C) on account of the acquisition of securities of the Company or Parent by any individual who is, on the IPO Date, either an executive officer or a Director (either, an “IPO Investor”) and/or any entity in which an IPO Investor has a direct or indirect interest (whether in the form of voting rights or participation in profits or capital contributions) of more than 50% (collectively, the “IPO Entities”) or on account of the IPO Entities continuing to hold shares that come to represent more than 50% of the combined voting power of the Company's or Parent's then outstanding securities as a result of the conversion of any class of the Company's or Parent's securities into another class of the Company's or Parent's securities having a different number of votes per share pursuant to the conversion provisions set forth in the Company's or Parent's Amended and Restated Certificate of Incorporation.  For these purposes, “IPO Date” means the date and time of execution of the underwriting agreement between the Company or Parent and the underwriter(s) managing the initial public offering of the Common Stock of the Company or Parent, pursuant to which the Common Stock is priced for the initial public offering; or (D) solely because the level of ownership held by any person or entity (the “Subject Person”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company or Parent reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this clause (D)) as a result of the acquisition of voting securities by the

 

(3)            To be inserted into the employment agreements of certain executive officers at the discretion of the Board.

 

 

Company or Parent, and after such share acquisition, the Subject Person becomes the owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities owned by the Subject Person over the designated percentage threshold, then a Change in Control will be deemed to occur;

 

(ii)                                there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company or Parent and, immediately after the consummation of such merger, consolidation or similar transaction, the shareholders of the Company or Parent, as the case may be, immediately prior thereto do not own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving entity in such merger, consolidation or similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their ownership of the outstanding voting securities of the Company or Parent, as the case may be, immediately prior to such transaction; provided, however, that a merger, consolidation or similar transaction will not constitute a Change in Control under this prong of the definition if the outstanding voting securities representing more than 50% of the combined voting power of the surviving Entity or its parent are owned by the IPO Entities; or

 

(iii)                            there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries or Parent and its subsidiaries, as the case may be, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries or Parent and its subsidiaries, as the case may be, to an entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are owned by shareholders of the Company or of Parent, as the case may be, in substantially the same proportions as their ownership of the outstanding voting securities of the Company or of Parent immediately prior to such sale, lease, license or other disposition; provided, however, that a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries will not constitute a Change in Control under this prong of the definition if the outstanding voting securities representing more than 50% of the combined voting power of the acquiring Entity or its parent are owned by the IPO Entities;

 

(iv)                             individuals who, on March 18, 2015, are members of the Board of Directors of the Company or Parent (the “Incumbent Board”) cease for any reason to constitute at least a majority of the members of the Board of Directors of the Company or Parent; provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member will be considered as a member of the Incumbent Board. Notwithstanding the foregoing definition, the term Change in Control will not include (x) a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company or Parent, or (y) a liquidation or dissolution ancillary to or in connection with an assignment for the benefit of creditors, a bankruptcy proceeding, appointment of receiver or similar proceeding or transaction.

 

5.4                               “Release Date” shall mean the date that is fifty-five (55) days following the date of Executive’s termination.

 

5.5                               Effect of Termination.  Executive agrees that should [his/her] employment be terminated for any reason, she shall be deemed to have resigned from any and all positions with the Company, including, but not limited, to a position on the Board.

 

5.6                               Section 409A Compliance.

 

(a) It is intended that any benefits under this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), provided under Treasury Regulations Sections 1.409A-1(b)(4), and 1.409A-1(b)(9), and this Agreement will be

 

 

construed to the greatest extent possible as consistent with those provisions, and to the extent not so exempt, this Agreement (and any definitions hereunder) will be construed in a manner that complies with Section 409A.  For purposes of Section 409A (including, without limitation, for purposes of Treasury Regulations Section 1.409A-2(b)(2)(iii)), Executive’s right to receive any installment payments under this Agreement (whether severance payments, if any, or otherwise) shall be treated as a right to receive a series of separate payments and, accordingly, each installment payment hereunder shall at all times be considered a separate and distinct payment. A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a “resignation,” “termination,” “termination of employment” or like terms shall mean separation from service.  Notwithstanding any provision to the contrary in this Agreement, if Executive is deemed by the Company at the time of a separation from service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i), and if any payments or benefits that the Executive becomes entitled to under this Agreement on account of such separation from service are deemed to be “deferred compensation,” then to the extent delayed commencement of any portion of such payments or benefits is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) and the related adverse taxation under Section 409A, such payments shall not be provided prior to the earliest of (i) the expiration of the six-month period measured from the date of separation from service, (ii) the date of Executive’s death or (iii) such earlier date as permitted under Section 409A without the imposition of adverse taxation.  Upon the first business day following the expiration of such period, all payments deferred pursuant to this paragraph shall be paid in a lump sum, and any remaining payments due shall be paid as otherwise provided herein.  No interest shall be due on any amounts so deferred.

 

(b)                                 With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, and (iii) such payments shall be made on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred. The Company makes no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Code Section 409A but do not satisfy an exemption from, or the conditions of, Code Section 409A.

 

5.7                               Section 280G.

 

(a)                                 If any payment or benefit (including payments and benefits pursuant to this Agreement) that Executive would receive in connection with a Change in Control or other transaction (the “Transaction”) from the Company or otherwise (“Transaction Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the

 

 

“Excise Tax”), then the Company shall cause to be determined, before any amounts of the Transaction Payment are paid to Executive, which of the following two alternative forms of payment would result in Executive’s receipt, on an after-tax basis, of the greater amount of the Transaction Payment notwithstanding that all or some portion of the Transaction Payment may be subject to the Excise Tax: (1) payment in full of the entire amount of the Transaction Payment (a “Full Payment”), or (2) payment of only a part of the Transaction Payment so that Executive receives the largest payment possible without the imposition of the Excise Tax (a “Reduced Payment”).  For purposes of determining whether to make a Full Payment or a Reduced Payment, the Company shall cause to be taken into account the value of the noncompetition provision set forth in the NDA, all applicable federal, state and local income and employment taxes and the Excise Tax (all computed at the highest applicable marginal rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction of such state and local taxes).  If a Reduced Payment is made, (x) Executive shall have no rights to any additional payments and/or benefits constituting the Transaction Payment, and (y) reduction in payments and/or benefits shall occur in the manner that results in the greatest economic benefit to Executive as determined in this paragraph.  If more than one method of reduction will result in the same economic benefit, the portions of the Transaction Payment shall be reduced pro rata.

 

(b)                                 Notwithstanding the foregoing, in the event that no stock of the Company is readily tradeable on an established securities market or otherwise (within the meaning of Section 280G of the Code) at the time of the Change in Control of the Company, the Company shall cause a vote of shareholders to be held to approve the portion of the Transaction Payments that exceeds three times Executive’s “base amount” (within the meaning of Section 280G of the Code) (the “Excess Parachute Payments”) in accordance with Treas. Reg. §1.280G-1, and Executive shall cooperate with such vote of shareholders, including the execution of any required documentation subjecting Executive’s entitlement to all Excess Parachute Payments to such shareholder vote. In the event that the Company does not cause a vote of shareholder to be held to approve all Excess Parachute Payments, the provisions set forth in Section 5.6(a) shall apply.

 

(c)                                  Unless Executive and the Company otherwise agree in writing, any determination required under this section shall be made in writing by the Company’s independent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon Executive and the Company for all purposes.  For purposes of making the calculations required by this section, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code.  The Accountants shall provide detailed supporting calculations to the Company and Executive as requested by the Company or Executive. Executive and the Company shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this section.  The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this section as well as any costs incurred by Executive with the Accountants for tax planning under Sections 280G and 4999 of the Code.

 

 

6.                                      ARBITRATION.

 

As a condition of employment Executive agrees to execute and abide by the Arbitration Agreement provided herewith.

 

7.                                      GENERAL PROVISIONS.

 

7.1                               Representations and Warranties.  Executive represents and warrants that Executive is not restricted or prohibited, contractually or otherwise, from entering into and performing each of the terms and covenants contained in this Agreement, and that Executive’s execution and performance of this Agreement will not violate or breach any other agreements between the Executive and any other person or entity.

 

7.2                               Advertising Waiver.  Executive agrees to permit the Company, and persons or other organizations authorized by the Company, to use, publish and distribute advertising or sales promotional literature concerning the products and/or services of the Company in which Executive’s name and/or pictures of Executive appear.  Executive hereby waives and releases any claim or right Executive may otherwise have arising out of such use, publication or distribution.

 

7.3                               Miscellaneous.  This Agreement, along with the NDA and Arbitration Agreement, constitutes the complete, final and exclusive embodiment of the entire agreement between Executive and the Company with regard to its subject matter.  It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or representations.  This Agreement may not be modified or amended except in a writing signed by both Executive and a duly authorized officer or member of the Board.  This Agreement will bind the heirs, personal representatives, successors and assigns of both Executive and the Company, and inure to the benefit of both Executive and the Company, and to [his/her] and its heirs, successors and assigns.  If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision of this Agreement and the provision in question will be modified so as to be rendered enforceable.  This Agreement will be deemed to have been entered into and will be construed and enforced in accordance with the laws of the State of New York as applied to contracts made and to be performed entirely within New York.  Any ambiguity in this Agreement shall not be construed against either party as the drafter.  Any waiver of a breach of this Agreement shall be in writing and shall not be deemed to be a waiver of any successive breach.  This Agreement may be executed in counterparts and facsimile signatures will suffice as original signatures.

 

 

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

 

	
 
    	
AXOVANT SCIENCES, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
Christine   Mikail
    
	
 
    	
 
    	
Title:
    	
Chief   Administrative Officer and General Counsel
    
	
 
    	
 
    
	
 
    	
 
    
	
ACCEPTED AND AGREED:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
[INSERT   NAME OF EXECUTIVE]

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