Document:

Exhibit 10.16

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Employment Agreement”), effective as of, and contingent upon, the effectiveness of the registration statement for Employer’s initial public offering (“Agreement Effective Date”), is made by and between Aclaris Therapeutics, Inc., a corporation organized under the laws of the State of Delaware (“Employer”) and                                          (“Executive”).

 

WHEREAS, Executive desires to continue to provide services to Employer and Employer desires to continue to retain the services of Executive;

 

WHEREAS, in consideration of Executive’s employment by Employer for more than three (3) years prior to the Agreement Effective Date, Employer and Executive desire to enter this Employment Agreement and formalize the terms and conditions of Executive’s employment with Employer; and

 

WHEREAS, this Agreement has been duly approved and its execution has been duly authorized by the Compensation Committee of Employer’s Board of Directors.

 

NOW, THEREFORE, Employer and Executive hereby agree as follows:

 

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  EMPLOYMENT

 

1.1                               General. Employer hereby agrees to continue to employ Executive in the capacity of [TITLE]. Executive hereby accepts such continued employment upon the terms and subject to the conditions herein contained.

 

1.2                               Authority and Duties. Executive shall have full responsibility as the [TITLE] of Employer and all authority normally accorded to such position. Executive agrees to perform such duties and responsibilities commensurate with the position of [TITLE] as may reasonably be determined by the Board of Directors of Employer (the “Board”).

 

1.2.1                     Reporting. During Executive’s employment with Employer, Executive will report directly to, and take direction from, the Chief Executive Officer (the “CEO”).

 

1.2.2                     Time to Be Devoted to Employment. During Executive’s Employment with Employer, Executive shall diligently devote his efforts, business time, attention and energies to the business of Employer will not, while employed by Employer, undertake or engage in any other employment, occupation or business enterprise that would interfere with Executive’s responsibilities and the performance of Executive’s duties hereunder except for (i) reasonable time devoted to volunteer services for or on behalf of such religious, educational, non-profit and/or other charitable organization as Executive may wish to serve, (ii) reasonable time devoted to activities in the non-profit and business communities consistent with Executive’s duties; and (iii) such other activities as may be specifically approved by the Board.  This restriction shall not, however, preclude Executive (x) from owning less than one percent (1%) of the total outstanding shares of a publicly traded company, or (y) from employment or service in

 

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any capacity with Affiliates of Employer.  As used in this Agreement, “Affiliates” means an entity under common management or control with Employer.

 

1.3                               Other Responsibilities. Notwithstanding Section 1.2.2 above, the Board expressly grants Executive the right to (i) provide services as a member (or such other such role as he may later serve) of NeXeption, Inc. and its affiliated entities; (ii) provide services to Alexar Therapeutics, Inc.; and (iii) perform services, if necessary, for companies other than Employer, in connection with his ownership interests in such companies; provided that the provision of such services does not adversely affect his performance of services hereunder and does not otherwise result in a material breach hereunder.

 

1.4                               Location of Employment. Executive’s principal place of employment during his employment with Employer shall be in Malvern, Pennsylvania or such other location as Employer and Executive shall agree.

 

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 COMPENSATION AND BENEFITS

 

2.1                               Salary. Employer will pay to Executive an annual base salary of                Dollars and         Cents ($         ), payable subject to standard federal and state payroll withholding requirements in accordance with the regular payroll practices of Employer (“Base Salary”). The annual Base Salary may be increased (but not decreased) during the term of this Employment Agreement by the Board in its sole discretion.

 

2.2                               Additional Compensation. In addition to the salary set forth in Section 2.1, Executive shall be entitled to receive a cash bonus in accordance with the terms of this Section 2.2. For each fiscal year of Employer, beginning January 1, during the Employment Term (as defined in Section 2.4 hereof), Executive shall be eligible to receive a cash bonus based on (i) the “Annual Bonus Expectancy Amount,” which shall be an amount equal to thirty percent (30%) of Executive’s Base Salary for the applicable fiscal year, and (ii) Executive’s attainment of performance targets and other reasonable criteria established by the Board, to the extent possible, by the end of the first month of such fiscal year. Depending on the targets and criteria which are achieved or met, the amount of the cash bonus actually payable to Executive for each fiscal year will be an amount from zero to and including the Annual Bonus Expectancy Amount. Any cash bonus amount payable pursuant to this Section 2.2 shall be paid to Executive as soon as practicable, but in no event later than two and one-half (2 1/2) months, following the end of the fiscal year to which it relates. It is explicitly agreed and understood that cash bonuses under this Section 2.2 are to be payable only if, and to the extent, that the Board in its judgment determines Employer has adequate cash flow and is adequately capitalized to support such payment.

 

2.3                               Executive Benefits. In addition to the salary and additional compensation set forth in Sections 2.1 and 2.2, Executive shall also be entitled to the following benefits during Executive’s employment hereunder:

 

2.3.1                     Expenses. Employer will promptly reimburse Executive for expenses he reasonably incurs in connection with the performance of his duties (including business travel and entertainment expenses), in accordance with Employer’s standard expense reimbursement

 

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policy, as the same may be modified by Employer from time to time; provided, however, that Executive has provided Employer with documentation of such expenses in accordance with the Employer’s expense reimbursement policies and applicable tax requirements.  For the avoidance of doubt, to the extent that any reimbursements payable to Executive are subject to the provisions of Section 409A of the Code:  (a) any such reimbursements will be paid no later than December 31 of the year following the year in which the expense was incurred, (b) the amount of expenses reimbursed in one year will not affect the amount eligible for reimbursement in any subsequent year, and (c) the right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.

 

2.3.2                     Employer Plans. Executive will be eligible to participate on the same basis as similarly situated employees in Employer’s employee benefit plans and programs, as they may be interpreted, adopted, revised or deleted from time to time in Employer’s sole discretion, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and programs. All matters of eligibility for coverage or benefits under any benefit plan shall be determined in accordance with the provisions of such plan.  Employer retains the unilateral right to amend, modify or terminate any of its employee benefit plans and programs at any time.

 

2.3.3                     Vacation. Executive shall be eligible for paid vacation leave (not including regular holidays) consistent with the needs of the business. Vacation must be scheduled at those times convenient to Employer’s business as reasonably determined by the CEO.

 

2.3.4                     Coverage. Nothing in this Employment Agreement shall prevent Executive from participating in any other compensation plan or benefit plan made available to him by Employer.

 

2.3.5                     Withholding. All compensation shall be subject to withholding of taxes and deductions of other amounts as may be required by law.

 

2.4                               Employment Term. Unless earlier terminated pursuant to Section 3.1, Executive’s employment by Employer pursuant to this Employment Agreement shall continue until the second anniversary of the Agreement Effective Date (the “Initial Term”). Thereafter, this Employment Agreement shall be automatically renewed for successive one (1) year periods (the Initial Term, together with any subsequent employment period being referred to herein as the “Employment Term”); provided, however, that either party may elect to not renew this Employment Agreement by written notice to such effect delivered to the other party at least ninety (90) days prior to expiration of the Initial Term or the Employment Term.

 

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  TERMINATION OF EMPLOYMENT

 

3.1                               Events of Termination. Executive’s employment with Employer will terminate upon the occurrence of any one or more of the following events:

 

3.1.1                     Death. In the event of Executive’s death, Executive’s employment will terminate on the date of death.

 

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3.1.2                     Disability. In the event of Executive’s Disability (as hereinafter defined), Employer will have the option to terminate Executive’s employment by giving a notice of termination to Executive. The notice of termination shall specify the date of termination, which date shall not be earlier than thirty (30) calendar days after the notice of termination is given. For purposes of this Employment Agreement, “Disability” means the failure or inability of Executive to substantially perform, with or without reasonable accommodation, his duties hereunder for an aggregate of ninety (90) calendar days during any consecutive three hundred sixty-five (365) day period as a result of a physical or mental illness or injury, as determined in good faith by the Board upon the advice of an independent physician experienced in treating the condition(s) allegedly giving rise to the disability.  This definition shall be interpreted and applied consistent with the Americans with Disabilities Act, the Family and Medical Leave Act, and other applicable law.

 

3.1.3                     Termination by Employer for Cause. Employer may, at its option, terminate Executive’s employment for Cause by unilateral action of the Board of Directors upon giving a notice of termination to Executive. “Cause” shall mean (i) Executive’s conviction of, or guilty plea to, a crime of moral turpitude (whether or not a felony) or a felony (other than traffic violations); (ii) any act(s) or omission(s) by Executive which constitutes gross negligence or a material breach of Executive’s duty of loyalty; (iii) any material breach by Executive of Employer’s personnel policies, including those prohibiting acts of discrimination, harassment or retaliation; (iv) any act constituting dishonesty, fraud, immoral or disreputable conduct; (v) refusal to follow or implement a clear and reasonable directive of Employer; (vi) breach of fiduciary duty; or (vii) a material violation or breach by Executive of this Employment Agreement (other than an event described in the foregoing clauses (i) through (vi)) or any other agreement between the parties.

 

3.1.4                     Without Cause By Employer. Employer may, at its option, terminate Executive’s employment for any reason whatsoever (other than for the other reasons set forth above in this Section 3.1 that would constitute “Cause” to terminate) by giving a notice of termination to Executive, and Executive’s employment shall terminate on the later of the date the notice of termination is given or the date set forth in such notice of termination.

 

3.1.5                     By Executive. Executive may, at any time, terminate Executive’s employment for any reason whatsoever by giving a notice of termination to Employer. Executive’s employment shall terminate on the earlier of (i) the date, following the date of the notice of termination, upon which a suitable replacement for Executive is found by the Employer or upon which Employer makes a determination, in its sole discretion, that Executive’s duties shall be undertaken by other employees of Employer, (ii) thirty (30) calendar days after the date of receipt by Employer of the notice of termination, or (iii) such earlier date as the Employer and Executive shall agree.

 

3.1.6                     Termination Upon Non-Renewal. Either party may terminate this Employment Agreement and Executive’s employment hereunder by providing the other party notice in accordance with Section 2.4 above, in which case this Employment Agreement and Executive’s employment hereunder shall terminate on the last date of the Initial Term or the Employment Term, as the case may be. For the avoidance of doubt, Executive shall continue to be employed by Employer, on the same terms and conditions as set forth in this Employment

 

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Agreement during the ninety (90)-day notice period provided by either party to the other party in accordance with Section 2.4 above, unless, Employer, in its sole discretion determines that it does not want Executive to continue to work for Employer, in any capacity, during such notice period. In such event, Employer shall pay Executive all compensation in accordance with Section 3.2.3.

 

3.1.7                     For Good Reason by Executive. Executive may, at his option, terminate Executive’s employment for “Good Reason” by giving a notice of termination to Employer in the event that, in the absence of events that would support a termination of Executive for Cause:

 

(i)                                    there is a material failure of Employer (or successor employer) to pay Executive’s salary or additional compensation or benefits hereunder in accordance with this Employment Agreement;

 

(ii)                                Executive’s annual Base Salary is materially decreased without his prior written consent;

 

(iii)                            Executive is assigned duties substantially inconsistent with his title and the responsibilities set forth in Executive’s job description, without Executive’s prior written consent;

 

(iv)                             Executive’s place of employment is changed to a location that is greater than fifty (50) miles from Executive’s current place of employment which is contemplated to be 101 Lindenwood Drive, Suite 400, Malvern, Pennsylvania 19355; or

 

(v)                                 any other material violation or breach by Employer of this Employment Agreement.

 

Notwithstanding the foregoing, none of the events described in clauses (i) through (v) above shall constitute Good Reason unless Executive shall have notified Employer in writing describing the event which constitute Good Reason within thirty (30) days after Executive first becomes aware of such event and then only if Employer and/or its subsidiaries shall have failed to reasonably cure such events, if curable, within thirty (30) days after Employer’s receipt of such written notice and Executive elects to terminate his employment as a result within thirty (30) days following the end of such thirty (30) day period (assuming, for the avoidance of doubt, that Employer does not elect to cure).

 

3.2                               Certain Obligations of Employer Following Termination of Executive’s Employment. Following the termination of Executive’s employment under the circumstances described below, Employer will pay to Executive, subject to standard federal and state payroll withholding requirements and in accordance with its regular payroll practices, the following compensation and provide the following benefits (provided that the continuing payments of Executive’s then-current salary, as described below, shall occur no less frequently than monthly):

 

3.2.1                     Death; Disability; Termination by Employer Without Cause or by Executive for Good Reason. In the event that Executive’s employment is terminated by Employer pursuant to Section 3.1.1 (“Death”), Section 3.1.2 (“Disability”), Section 3.1.4 (“Without Cause by Employer”) or by Executive pursuant to Section 3.1.7 (“Termination by

 

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Executive for Good Reason”) hereof, and Executive, or his estate, as the case may be, executes and does not revoke a separation agreement containing a release upon such termination, in a form provided by the Employer, of any and all claims against Employer and all related parties with respect to all matters arising out of Executive’s employment by Employer, or the termination thereof (the “Release”) in accordance with Section 3.7, Executive, or his estate, as the case may be, shall be entitled to the following payments and benefits, which payments and benefits shall be paid in accordance with this Section 3.2.1 and Section 3.7:

 

(i)                                    Continuing payments of Executive’s then-current salary for the Severance Period, as defined in Section 3.5 herein, payable subject to standard federal and state payroll withholding requirements in accordance with Employer’s regular payroll practices on Employer’s normal payroll schedule over the Severance Period, subject to Section 3.7;

 

(ii)                                Employer shall pay to Executive a lump sum payment equal to the gross sum of any bonuses or portion thereof for any preceding year or for the year of termination which have been approved by Employer, but has not been received by Executive prior to the effective date of termination, less applicable deductions and withholdings paid in accordance with Section 2.2 but in no event later than two and one-half (2 1/2) months following the end of the fiscal year to which it relates. For the avoidance of doubt, (x) Executive does not have to be employed by Employer on the date such bonuses are approved by Employer to receive such bonuses; and (y) this provision shall not be construed as guaranteeing the payment of a bonus for such year(s);

 

(iii)                            So long as Executive is eligible, and so long as Executive remains eligible, for and upon his timely election of coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, or, if applicable, state or local insurance laws (“COBRA”), Employer will continue to pay, directly to the healthcare provider when due, 100% of the medical, vision and dental coverage premiums (including employee contributions, if any) until the earlier of (i) the end of the Severance Period; or (ii) the date when Executive becomes eligible for substantially equivalent health insurance coverage in connection with new employment (the “COBRA Payment Period”); provided that Executive must immediately notify Employer in the event Executive becomes eligible for coverage under another employer’s group health plan during the COBRA Payment Period; and provided further that, if at any time Employer determines, in its sole discretion, that the payment of the COBRA premiums would result in a violation of the nondiscrimination rules of Section 105(h)(2) of the Code or any statute or regulation of similar effect (including but not limited to the 2010 Patient Protection and Affordable Care Act, as amended by the 2010 Health Care and Education Reconciliation Act), then in lieu of providing the COBRA premiums for the remainder of the COBRA Payment Period, Employer will instead pay Executive on the first day of each month of the remainder of the COBRA Payment Period, a fully taxable cash payment equal to the COBRA premiums for that month, subject to applicable tax withholdings, for the remainder of the COBRA Payment Period; and

 

(iv)                             In the event such termination of employment occurs on or within three (3) months prior to or within twelve (12) months following the effective date of a Change of Control (as defined herein), Executive shall be entitled to the additional following payments and benefits:

 

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(1)                                 Continuing payments of Executive’s then-current salary for an additional six (6) months following the end of the Severance Period, payable subject to standard federal and state payroll withholding requirements in accordance with Employer’s regular payroll practices on Employer’s normal payroll schedule over the six (6) month period immediately following the end of the Severance Period, subject to Section 3.7;

 

(2)                                 Continued payment of Executive’s COBRA premiums directly to the healthcare provider for an additional six (6) months following the end of the Severance Period, or if earlier, until the date when Executive becomes eligible for substantially equivalent health insurance coverage in connection with new employment, subject to the terms, conditions and payment provisions set forth in Section 3.2.1(iii); and

 

(3)                                 In the event such termination of employment occurs (A) on or within three (3) months prior to the effective date of a Change of Control (as defined herein), all unvested stock options and other equity awards held by Executive and outstanding on the effective date of termination shall become fully vested on the effective date of the Change of Control, or (B) within twelve (12) months following the effective date of a Change of Control, provided that any surviving corporation or acquiring corporation assumes Executive’s stock options and/or other equity awards, as applicable, or substitutes similar stock options or equity awards for Executive’s stock options and/or equity awards, as applicable, in accordance with the terms of Employer’s applicable equity incentive plans, all such unvested stock options and other equity awards held by Executive and outstanding on the effective date of termination shall become fully vested on the date of such termination.

 

For purposes of this Agreement, “Change of Control” means, in each case as approved by the Board and the requisite stockholders of Employer, (i) any consolidation or merger of Employer with or into any other corporation or other entity or person, or any other corporate reorganization, in which the stockholders of Employer immediately prior to such consolidation, merger or reorganization, own, in the aggregate, less than 50% of the surviving entity’s voting power and/or outstanding capital stock immediately after such consolidation, merger or reorganization, or any transaction or series of related transactions (including any transaction which results from an option agreement or binding letter of intent with a third party) to which Employer or any of its stockholders is a party in which in excess of 50% of Employer’s voting power and/or outstanding capital stock is transferred, or pursuant to which any person or group of affiliated persons obtains in excess of 50% of Employer’s voting power and/or outstanding capital stock, excluding any consolidation or merger effected exclusively to change the domicile of Employer; or (ii) any sale, lease or other disposition (including through a Board and stockholder approved division or spin-off transaction) of all or substantially all of the assets of Employer and/or any of its subsidiaries or any sale, lease, exclusive license (or substantially exclusive license or agreement) or other disposition of all or substantially all of Employer’s intellectual property, as reasonably determined based upon the potential earning power of the assets or intellectual property; provided, however that none of the following shall constitute a Change of Control: (A) transfers of capital stock by an existing stockholder as a result of death or otherwise for estate planning purposes or to such stockholder’s affiliates or to any of Employer’s other existing stockholders, and (B) issuances of equity securities of Employer in connection with financings for working capital and other general corporate purposes.

 

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3.2.2                     Termination by Executive Other than For Good Reason: Termination Upon Non-Renewal by Executive; Termination by Employer for Cause. In the event Executive’s employment is terminated by Executive other than for Good Reason pursuant to Section 3.1.5 hereof (“By Executive”) or by Executive pursuant to Section 3.1.6 hereof (“Termination Upon Non-Renewal”) or by Employer pursuant to Section 3.1.3 hereof (“Termination by Employer for Cause”), Executive shall be entitled to no further compensation or other benefits under this Employment Agreement except as to that portion of any unpaid salary and other benefits accrued and earned by him hereunder up to and including the effective date of such termination and to offer COBRA coverage at Executive’s cost pursuant to applicable law.

 

3.2.3                     Termination Upon Non Renewal by Employer. In the event Executive’s employment is terminated by Employer pursuant to Section 3.1.6 hereof, then during the ninety (90)-day notice period of Section 2.4, Employer shall continue to pay to Executive his then-current annual Base Salary and benefits subject to standard federal and state payroll withholding requirements and in accordance with Employer’s regular payroll practices and no later than the effective date of termination of employment, Employer shall pay to Executive any unpaid salary accrued and earned by him up to and including the effective date of termination.  In addition, in the event Executive’s employment is terminated by Employer pursuant to Section 3.1.6 hereof, then provided Executive executes and does not revoke a Release in accordance with Section 3.7, Executive shall be entitled to the following, which payments and benefits shall be paid in accordance with this Section 3.2.3 and Section 3.7:

 

(i)                                    continuing payments of Executive’s then-current salary for the Severance Period payable subject to standard federal and state payroll withholding requirements in accordance with Employer’s regular payroll practices on Employer’s normal payroll schedule over the Severance Period, subject to Section 3.7;

 

(ii)                                Employer shall pay to Executive a lump sum payment equal to the gross sum of any bonuses or portion thereof for any preceding year or for the year of termination which bonus has been approved by Employer, but has not been received by Executive prior to the effective date of termination, less applicable deductions and withholdings paid in accordance with Section 2.2 but in no event later than two and one-half (2 1/2) months following the end of the fiscal year to which it relates. For the avoidance of doubt, (x) Executive does not have to be employed by Employer on the date such bonuses are approved by the Employer to receive such bonuses; and (y) this provision shall not be construed as guaranteeing the payment of a bonus for such year(s); and

 

(iii)                            So long as Executive is eligible, and so long as Executive remains eligible, for and upon his timely election of COBRA coverage, Employer will continue to pay, directly to the healthcare provider when due, 100% of the medical, vision and dental coverage premiums (including employee contributions, if any) until the earlier of (i) the end of the five (5) month period following the effective date of termination; or (ii) the date when Executive becomes eligible for substantially equivalent health insurance coverage in connection with new employment (the “Nonrenewal COBRA Payment Period”); provided that Executive must immediately notify Employer in the event Executive becomes eligible for coverage under another employer’s group health plan during the Nonrenewal COBRA Payment Period; and

 

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provided further that, if at any time Employer determines, in its sole discretion, that the payment of the COBRA premiums would result in a violation of the nondiscrimination rules of Section 105(h)(2) of the Code or any statute or regulation of similar effect (including but not limited to the 2010 Patient Protection and Affordable Care Act, as amended by the 2010 Health Care and Education Reconciliation Act), then in lieu of providing the COBRA premiums for the remainder of the Nonrenewal COBRA Payment Period, Employer will instead pay Executive on the first day of each month of the remainder of the Nonrenewal COBRA Payment Period, a fully taxable cash payment equal to the COBRA premiums for that month, subject to applicable tax withholdings, for the remainder of the Nonrenewal COBRA Payment Period.

 

3.3          Nature of Payments. All amounts to be paid by Employer to Executive pursuant to Sections 3.2.1(i) — (iv) and 3.2.3(i) — (iii) are considered by the parties to be severance payments and are in lieu of, and not in addition to, any benefits to which Executive may otherwise be entitled under any Employer severance plan, policy or program.

 

3.4          Duties Upon Termination. During the Severance Period, if there is a Severance Period applicable to Executive’s termination of employment from Employer, Executive shall fully cooperate with Employer in all matters relating to the winding up of Executive’s pending work including, but not limited to, any litigation in which Employer is involved, and the orderly transfer of any such pending work to such other employees as may be designated by Employer.  Notwithstanding the foregoing, such cooperation requirement shall not unreasonably interfere with his then current employment or business activities.  With Employer’s prior approval, Executive shall be reimbursed for all expenses reasonably incurred in connection with such cooperation.  Following the end of the Severance Period, Executive will be released from any duties and obligations hereunder (except those duties and obligations set forth in Article 4 hereof).  In the event of termination of Executive’s employment pursuant to Sections 3.1.1 through 3.1.7 hereof, the obligations of Employer to Executive will be as set forth in Section 3.2 hereof.

 

3.5          Severance Period. “Severance Period” shall mean a period of nine (9) months beginning on and immediately following the effective date of Executive’s termination of employment with Employer.

 

3.6          Release. Notwithstanding any provision of this Employment Agreement to the contrary, in no event shall the timing of Executive’s execution of the Release, directly or indirectly, result in Executive designating the calendar year of payment, and if a payment that is subject to the requirements of Section 409A of the Code and is subject to execution of the Release could be made in more than one taxable year based on when the Release is executed or becomes effective, payment shall be made in the later year.

 

3.7          Commencement of Severance Payments. The severance payments and benefits  set forth in Sections 3.2.1(i) — (iv) (Termination by Employer for Death, Disability, Without Cause, by Executive for Good Reason) and Sections 3.2.3(i) — (iii) (Termination Upon Non-Renewal by Employer) above will not be paid or provided unless Executive executes and does not revoke the Release and the Release is enforceable and effective as provided in the Release on or before the date that is the sixtieth (60th) day following the effective date of termination (such 60th day, the “Severance Pay Commencement Date”).  No cash severance payments will be paid

 

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pursuant to Sections 3.2.1 or 3.2.3 prior to the Severance Pay Commencement Date.  On the Severance Pay Commencement Date Employer will pay in a lump sum the aggregate amount of the cash severance payments that Employer would have paid Executive through such date had the payments commenced on the effective date of termination through the Severance Pay Commencement Date, with the balance paid thereafter on the applicable schedules described above. Notwithstanding any other provision of this Agreement to the contrary, it is intended that the payment of severance upon termination for Good Reason by Executive in accordance with Section 3.1.7 satisfy the safe harbor set forth in Treasury Regulation Section 1.409A-1(n)(2)(ii)), and any severance payment made pursuant to this Agreement shall satisfy the exemptions from the application of Section 409A of the Code provided under Treasury Regulation Sections 1.409A-1(b)(4), and 1.409A-1(b)(9).

 

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  CONFIDENTIALITY; NON-COMPETITION AND NON-SOLICITATION;

 

4.1          Confidentiality and Invention Rights. The parties hereto have entered into a Confidentiality and Invention Rights, Non-Competition and Non-Solicitation Agreement, which may be amended by the parties from time to time without regard to this Agreement.  The Confidentiality and Invention Rights, Non-Competition and Non-Solicitation Agreement contains provisions that are intended by the parties to survive and do survive termination of this Agreement.

 

4.2          Remedies. Executive acknowledges and agrees that (a) Employer will be irreparably injured in the event of a breach by Executive of any of his obligations under this Article 4; (b) monetary damages will not be an adequate remedy for any such breach; and (c) in the event of any such breach, the Employer will be entitled to injunctive relief, in addition to any other remedy which it may have, and Executive shall not oppose such injunctive relief based upon the extent of the harm or the adequacy of monetary damages.

 

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  MISCELLANEOUS PROVISIONS

 

5.1          Severability. If in any jurisdiction any term or provision hereof is determined to be invalid or unenforceable, (a) the remaining terms and provisions hereof shall be unimpaired, (b) any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction, and (c) the invalid or unenforceable term or provision shall, for purposes of such jurisdiction, be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision.

 

5.2          Execution in Counterparts. This Employment Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement (and all signatures need not appear on any one counterpart), and this Employment Agreement shall become effective when one or more counterparts has been signed by each of the parties hereto and delivered to each of the other parties hereto.

 

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5.3          Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed duly given when delivered by hand, or when delivered if mailed by registered or certified mail, postage prepaid, return receipt requested, or private courier service or via facsimile (with written confirmation of receipt) or email (with written confirmation of receipt) as follows:

 

If to Employer, to:

 

Aclaris Therapeutics, Inc.

101 Lindenwood Drive, Suite 400

Malvern, Pennsylvania 19355

Attention: Kamil Ali-Jackson, Esq.

Email: kalijackson@aclaristx.com

Telephone: 484-324-7933

 

If to Executive, to:

 

[NAME]

[ADDRESS]

 

or to such other address(es) as a party hereto shall have designated by like notice to the other parties hereto.

 

5.4          Amendment. No provision of this Employment Agreement may be modified, amended, waived or discharged in any manner except by a written instrument executed by Employer and Executive.

 

5.5          Entire Agreement. This Employment Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings of the parties hereto, oral or written, with respect to the subject matter hereof, including but not limited any prior offer letter or written embodiment of the employment relationship between Executive and Employer and the letter from Employer to Executive entitled “Change of Control Bonus” dated August 30, 2012. No representation, promise or inducement has been made by either party that is not embodied in this Employment Agreement, and neither party shall be bound by or liable for any alleged representation, promise or inducement not so set forth.

 

5.6          Applicable Law. This Employment Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania applicable to contracts made and to be wholly performed therein without regard to its conflicts or choice of law provisions.

 

5.7          Headings. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Employment Agreement.

 

5.8          Binding Effect; Successors and Assigns. Executive may not delegate his duties or assign his rights hereunder. This Employment Agreement will inure to the benefit of, and be

 

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binding upon, the parties hereto and their respective heirs, legal representatives, and successors. Employer may assign this Employment Agreement to any entity purchasing all or substantially all of the assets of Employer.

 

5.9          Waiver, etc. The failure of either of the parties hereto to at any time enforce any of the provisions of this Employment Agreement shall not be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Employment Agreement or any provision hereof or the right of either of the parties hereto to thereafter enforce each and every provision of this Employment Agreement. No waiver of any breach of any of the provisions of this Employment Agreement shall be effective unless set forth in a written instrument executed by the party against whom or which enforcement of such waiver is sought, and no waiver of any such breach shall be construed or deemed to be a waiver of any other or subsequent breach.

 

5.10        Continuing Effect. Provisions of this Agreement which by their terms must survive the termination of this Agreement in order to effectuate the intent of the parties will survive any such termination, whether by expiration of the term, termination of Executive’s employment, or otherwise, for such period as may be appropriate under the circumstances.

 

5.11        Representations and Warranties of Executive. Executive hereby represents and warrants to Employer that to the knowledge of Executive, Executive is not bound by any non-competition or other agreement which would prevent his performance hereunder.

 

5.12        Section 409A of the Code. This Employment Agreement is intended to comply with Section 409A of the Code and its corresponding regulations, or an exemption, and payments may only be made under this Employment Agreement upon an event and in a manner permitted by Section 409A of the Code, to the extent applicable. Payment under this Employment Agreement is intended to be exempt from Code Section 409A under the “short-teen deferral” exception set forth in Treasury Regulation Section 1.409A-1(b)(4), to the maximum extent applicable, and then under the “separation pay” exception set forth in Treasury Regulation Section 1.409A-1(b)(9), to the maximum extent applicable. All payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h) (or any successor provision) (a “Separation from Service”). For purposes of Code Section 409A, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments. In no event may the Executive, directly or indirectly, designate the calendar year of a payment. If the termination of employment giving rise to the payments described in Section 3.2.1 is not a Separation from Service, then the amounts otherwise payable pursuant to Section 3.2.1 will instead be deferred without interest and paid when Executive experiences a Separation from Service. Notwithstanding anything in this Employment Agreement to the contrary or otherwise, with respect to any expense, reimbursement or in-kind benefit provided pursuant to this Employment Agreement that constitutes a “deferral of compensation” within the meaning of Section 409A of the Code and its implementing regulations and guidance, (a) the expenses eligible for reimbursement or in-kind benefits provided to Executive must be incurred during the Employment Term (or applicable survival period), (b) the amount of expenses eligible for reimbursement or in-kind benefits provided to Executive during any calendar year will not affect the amount of expenses eligible for reimbursement or in-kind benefits provided to

 

12

 

Executive in any other calendar year, (c) the reimbursements for expenses for which Executive is entitled to be reimbursed shall be made on or before the last day of the calendar year following the calendar year in which the applicable expense is incurred and (d) the right to payment or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit.  Notwithstanding any provision to the contrary in this Agreement, if Executive is deemed by Employer at the time of his Separation from Service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, and if any of the payments due upon Separation From Service set forth herein and/or under any other agreement with Employer are deemed to be “deferred compensation,” then to the extent delayed commencement of any portion of such payments is required to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code and the related adverse taxation under Section 409A of the Code, such payments will not be provided to Executive prior to the earliest of (i) the expiration of the six (6)-month period measured from the date of Executive’s Separation From Service with Employer, (ii) the date of Executive’s death or (iii) such earlier date as permitted under Section 409A of the Code without the imposition of adverse taxation.  Upon the first business day following the expiration of such applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this paragraph will be paid in a lump sum to Executive, and any remaining payments due will be paid as otherwise provided in this Agreement or in the applicable agreement.  No interest will be due on any amounts so deferred.

 

5.13        Dispute Resolution.  The parties recognize that litigation in federal or state courts or before federal or state administrative agencies of disputes arising out of the Executive’s employment with the Employer or out of this Agreement, or the Executive’s termination of employment or termination of this Agreement, may not be in the best interests of either the Executive or Employer, and may result in unnecessary costs, delays, complexities, and uncertainty.  The parties agree that any dispute between the parties arising out of or relating to the negotiation, execution, performance or termination of this Agreement or the Executive’s  employment, including, but not limited to, any claim arising out of this Agreement, claims under Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, Section 1981 of the Civil Rights Act of 1966, as amended, the Family Medical Leave Act, the Executive Retirement Income Security Act, and any similar federal, state or local law, statute, regulation, or any common law doctrine, whether that dispute arises during or after employment, shall be settled by binding arbitration in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association; provided however, that this dispute resolution provision shall not apply to any separate agreements between the parties that do not themselves specify arbitration as an exclusive remedy. The location for the arbitration shall be the Philadelphia, Pennsylvania metropolitan area.  Any award made by such panel shall be final, binding and conclusive on the parties for all purposes, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The arbitrators’ fees and expenses and all administrative fees and expenses associated with the filing of the arbitration shall be borne by Employer. The parties acknowledge and agree that their obligations to arbitrate under this Section survive the termination of this Agreement and continue after the termination of the employment relationship between Executive and Employer. The parties each further agree that the arbitration provisions of this Agreement shall provide each party with its exclusive remedy, and each party expressly waives any right it might have to seek redress in any other forum, except as otherwise expressly provided in this Agreement.  By

 

13

 

election arbitration as the means for final settlement of all claims, the parties hereby waive their respective rights to, and agree not to, sue each other in any action in a Federal, State or local court with respect to such claims, but may seek to enforce in court an arbitration award rendered pursuant to this Agreement.  The parties specifically agree to waive their respective rights to a trial by jury, and further agree that no demand, request or motion will be made for trial by jury

 

[signature page follows]

 

14

 

IN WITNESS WHEREOF, this Employment Agreement has been executed and delivered by the parties hereto as of the Effective Date.

 

	
ACLARIS   THERAPEUTICS, INC.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
Date
    
	
Title:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
[NAME]
    	
 
    	
Date
    

 

15Exhibit

    
INFOBLOX INC.
2012 EQUITY INCENTIVE PLAN
Notice of Grant of Award of Market Stock Units

GRANT NUMBER:___________
Unless otherwise defined herein, the terms defined in the Infoblox Inc. (the “Company”) 2012 Equity Incentive Plan (the “Plan”) shall have the same meanings in this Notice of Market Stock Unit Award (the “Grant Notice”) and the attached Award Agreement, including any appendices thereto (the “Award Agreement”). 
	
		
	Participant:
	 

	Address:
	 

The Company hereby grants to the holder listed above (“you” or the “Participant”), an award (the “Award”) of Market Stock Units (the “Units”), each of which is a right to receive the value of one (1) Share of Common Stock, on the terms and conditions set forth herein and in the Award Agreement and the Plan, which are incorporated herein by reference.  Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Award Agreement.
	
		
	Grant Date:
	 

	Target Number of Units:
	_______, subject to adjustment as provided by the Award Agreement.

	Maximum Number of Units:
	_______, which is 175% of the Target Number of Units, subject to adjustment as provided by the Award Agreement.

	Performance Periods:
	Subject to Section 9.1 of the Award Agreement:

	1-Year Performance Period
	The single fiscal year beginning August 1, 2015 and ending July 31, 2016.

	2-Year Performance Period
	The two fiscal years beginning August 1, 2015 and ending July 31, 2017.

	3-Year Performance Period
	The three fiscal years beginning August 1, 2015 and ending July 31, 2018.

	Benchmark Index:
	The Russell 2000 (^RUT) 

	Performance Differential:
	The positive difference (“Positive Performance Differential”) or negative difference (“Negative Performance Differential”), measured in percentage points (rounded to the nearest 1/10th of 1%) for the applicable Performance Period, between the Company Total Stockholder Return and the Benchmark Index Total Return, both determined in accordance with Section 2 of the Award Agreement.

	Performance Multiplier:
	 

	For Positive Performance Differential
	A percentage (rounded to the nearest 1/10th of 1% and not greater than 175%) equal to the sum of (a) 100% plus (b) the product of 2.0 and the Positive Performance Differential, as illustrated by Appendix A.

	For Negative Performance Differential
	A percentage (rounded to the nearest 1/10th of 1% and not less than 0%) equal to (a) 100% reduced by (b) the product of 3.0 and the Negative Performance Differential, as illustrated by Appendix A.

	Earned Units:
	 

	1-Year Performance Period Earned Units
	The number of 1-Year Performance Period Earned Units, if any (not to exceed one-third of the Target Number of Units), shall equal the product of (a) one-third of the Target Number of Units and (b) the Performance Multiplier determined for the 1-Year Performance Period, as illustrated by Appendix A.

	2-Year Performance Period Earned Units
	The number of 2-Year Performance Period Earned Units, if any (not to exceed one-third of the Target Number of Units), shall equal the product of (a) one-third of the Target Number of Units and (b) the Performance Multiplier determined for the 2-Year Performance Period.

1

	
		
	3-Year Performance Period Earned Units
	The number of 3-Year Performance Period Earned Units, if any (not to exceed the Maximum Number of Units when combined with the 1-Year Performance Period Earned Units and the 2-Year Performance Period Earned Units), shall equal the excess, if any, of (a) the product of (i) the Target Number of Units and (ii) the Performance Multiplier determined for the 3-Year Performance Period, over (b) the sum of the 1-Year Performance Period Earned Units and the 2-Year Performance Period Earned Units.

	Vesting Date:
	Except as otherwise provided by the Award Agreement, the Vesting Date for each Performance Period shall be the last day of such Performance Period.

	Vested Units:
	Except as otherwise provided by the Award Agreement, provided that the Participant’s Service has not terminated prior to the Vesting Date for the applicable Performance Period, the Earned Units for such Performance Period, if any, shall become Vested Units on the Vesting Date.

	Settlement Date:
	Except as otherwise provided by Section 9 of the Award Agreement, for each Vested Unit, settlement shall be made within 30 days following the Vesting Date, or the Certification Date, if later, but in any event no later than the 15th day of the third calendar month following the end of the calendar year in which the Vesting Date occurs. 

	Expiration Date:
	This Award expires on the later of the Settlement Date or the last day of final Performance Period, provided, however that it will expire earlier if your Service terminates earlier, as described in the Award Agreement. 

You understand that your employment or consulting relationship or Service with the Company or Subsidiary is for an unspecified duration, can be terminated at any time (i.e., is “at-will”), except where otherwise prohibited by applicable law, and that nothing in this Grant Notice, the Award Agreement or the Plan changes the at-will nature of that relationship. You acknowledge that the vesting of the Units pursuant to this Grant Notice is earned only by continuing Service as an Employee, Director or Consultant of the Company.  You agree and acknowledge that the Vesting Schedule may change prospectively in the event that your Service status changes between full and part time status, or in the event of certain leaves of absence, in accordance with Company policies relating to work schedules and vesting of awards.  By accepting this Award, you consent to electronic delivery as set forth in the Award Agreement. 

You have read both the Award Agreement and the Plan.  By accepting this Award Agreement, you and the Company agree that this Award is granted under and governed by the terms and conditions of the Plan, the Grant Notice, and the Award Agreement.  Without limiting the generality of the foregoing, by accepting this Award Agreement, you consent to the electronic delivery, if applicable, as set forth in the Award Agreement.

	
					
	INFOBLOX INC.
	 
	PARTICIPANT

	By:
	 
	 
	By:
	 

	Print Name:
	 
	 
	Print Name:
	 

	Title:
	 
	 
	 
	 

2

APPENDIX A 
ILLUSTRATION OF PERFORMANCE MULTIPLIER
AND RESULTING NUMBER OF EARNED UNITS

	
			
	Performance Differential (Percentage Point Difference of
Company Total Stockholder Return Over/Under
Benchmark Index Total Return)
	Performance Multiplier*
	Earned Units
(Per 1,000 Target Units)

	45.0
	175.0%
	1,750

	40.0
	175.0%
	1,750

	35.0
	170.0%
	1,700

	30.0
	160.0%
	1,600

	25.0
	150.0%
	1,500

	20.0
	140.0%
	1,400

	15.0
	130.0%
	1,300

	10.0
	120.0%
	1,200

	5.0
	110.0%
	1,100

	4.0
	108.0%
	1,080

	3.0
	106.0%
	1,060

	2.0
	104.0%
	1,040

	1.0
	102.0%
	1,020

	0.5
	101.0%
	1,010

	0.1
	100.2%
	1,002

	0
	100.0%
	1,000

	-0.1
	99.7%
	997

	-0.5
	98.5%
	985

	-1.0
	97.0%
	970

	-2.0
	94.0%
	940

	-3.0
	91.0%
	910

	-4.0
	88.0%
	880

	-5.0
	85.0%
	850

	-10.0
	70.0%
	700

	-15.0
	55.0%
	550

	-20.0
	40.0%
	400

	-25.0
	25.0%
	250

	-30.0
	10.0%
	100

	-35.0
	0.0%
	0

	-40.0
	0.0%
	0

*Notwithstanding the applicable performance multiplier as set forth above, for purposes of the calculation of Earned Units for each of the Year 1 Performance Period and the Year 2 Performance Period, the maximum number of Earned Units a Participant shall receive for each such Year 1 and Year 2 Performance Periods shall not exceed one-third of the Target Number of Units as set forth in the Grant Notice.  
    

3

APPENDIX A CONTINUED
ILLUSTRATIONS OF CALCULATION OF EARNED UNITS
PER 1,000 TARGET UNITS

Company Total Stockholder Return Exceeds Benchmark Index Total Return

	
			
	Assumptions:
	 
	 

	 
	 
	 

	Infoblox Inc.:
	 
	 

	Average Per Share Closing Price (beginning)
	 
	$20.00

	Average Per Share Closing Price (ending)
	 
	$25.00

	 
	 
	 

	Russell 2000 Index:
	 
	 

	Average Closing Index Value (beginning)
	 
	1,200.00

	Average Closing Index Value (ending)
	 
	1,320.00

	 
	 
	 

	Computations:
	 
	 

	 
	 
	 

	Company Total Stockholder Return
	((25.00 / 20.00) - 1) x 100
	25.0%

	 
	 
	 

	Benchmark Index Total Return
	((1320 / 1200) - 1) x 100
	10.0%

	 
	 
	 

	Performance Multiplier
	100 + (2 x (25.0 - 10.0))
	130.0%

	 
	 
	 

	Earned Units
	1,000 x 130.0%
	1,300

	 
	 
	 

Company Total Stockholder Return Is Less Than Benchmark Index Total Return

	
			
	Assumptions:
	 
	 

	 
	 
	 

	Infoblox Inc.:
	 
	 

	Average Per Share Closing Price (beginning)
	 
	$20.00

	Average Per Share Closing Price (ending)
	 
	$20.00

	 
	 
	 

	Russell 2000 Index:
	 
	 

	Average Closing Index Value (beginning)
	 
	1,200.00

	Average Closing Index Value (ending)
	 
	1,320.00

	 
	 
	 

	Computations:
	 
	 

	 
	 
	 

	Company Total Stockholder Return
	((20.00 / 20.00) - 1) x 100
	0.0%

	 
	 
	 

	Benchmark Index Total Return
	((1320 / 1200) - 1) x 100
	10.0%

	 
	 
	 

	Performance Multiplier
	100 + (3 x (0.0 - 10.0)
	70.0%

	 
	 
	 

	Earned Units
	1,000 x 70.0%
	700

	 
	 
	 

4

INFOBLOX INC.
MARKET STOCK UNITS AWARD AGREEMENT
(U.S. PARTICIPANTS)

Infoblox Inc. (the “Company”) has granted to the Participant named in the Market Stock Units Grant Notice (the “Grant Notice”) to which this Market Stock Units Award Agreement (this “Award Agreement”) is attached an Award consisting of Market Stock Units (each a “Unit”) subject to the terms and conditions set forth in the Grant Notice and this Award Agreement.  The Award has been granted pursuant to and shall in all respects be subject to the terms and conditions of the Infoblox Inc. 2012 Equity Incentive Plan (the “Plan”), as amended to the Grant Date, the provisions of which are incorporated herein by reference.  By signing the Grant Notice, the Participant: (a) acknowledges receipt of and represents that the Participant has read and is familiar with the Grant Notice, this Award Agreement, the Plan and a prospectus for the Plan prepared in connection with the registration with the Securities and Exchange Commission of the shares issuable pursuant to the Award (the “Plan Prospectus”), (b) accepts the Award subject to all of the terms and conditions of the Grant Notice, this Award Agreement and the Plan and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Grant Notice, this Award Agreement or the Plan.
Unless otherwise defined herein or in the Grant Notice, capitalized terms shall have the meanings assigned by the Plan.
		
	1.
	The Award.

The Company hereby grants to the Participant the Award set forth in the Grant Notice, which, depending on the extent to which a performance goal is attained during the Performance Periods, may result in the Participant earning as little as zero (0) Units or as many as the Maximum Number of Units.  Subject to the terms of this Award Agreement and the Plan, each Unit, to the extent it is earned and becomes a Vested Unit, represents a right to receive on the applicable Settlement Date one (1) Share of Common Stock.  Unless and until a Unit has been determined to be an Earned Unit and has vested and become a Vested Unit as set forth in the Grant Notice and this Award Agreement, the Participant will have no right to settlement of such Unit.  Prior to settlement of any earned and vested Units, such Units will represent an unfunded and unsecured obligation of the Company.
		
	2.
	Measurement of Components of Performance Differential.

The components of the Performance Differential shall be determined for each of the Performance Periods in accordance with the following:
		
	2.1
	 “Company Total Stockholder Return” means the percentage point increase or decrease in (a) the Average Per Share Closing Price for the 30 market trading days ending on the last market trading day of the applicable Performance Period over (b) the Average Per Share Closing Price for the 30 market trading days ending on the last market trading day immediately preceding the first day of the applicable Performance Period.

		
	2.2
	“Average Per Share Closing Price” means the average of the daily closing prices per Share of Common Stock as reported on the securities exchange constituting the primary market for the Common Stock for all trading days falling within an applicable 30 market trading day period described in Section 2.1.

		
	2.3 
	“Benchmark Index Total Return” means the percentage point increase or decrease in (a) the Average Closing Index Value for the 30 market trading days ending on the last market trading day of the applicable Performance Period over (b) the Average Closing Index Value for the 30 market trading days ending on the last market trading day immediately preceding the first day of the applicable Performance Period.

		
	2.4
	 “Average Closing Index Value” means the average of the daily closing index values of the Benchmark Index for all trading days falling within an applicable 30 market trading day period described in Section 2.3.

5

		
	3.
	Committee Certification of Earned Units.

As soon as practicable following completion of each Performance Period, but no later than thirty (30) days following such completion except as provided in Section 9.1, the Committee shall determine and certify, in accordance with the requirements of Section 162(m) of the Code, in writing the Performance Differential attained for such Performance Period, the resulting Performance Multiplier and the number of Units which have become Earned Units for such Performance Period (the date of such certification being the “Certification Date”); provided, however, that the Committee shall retain discretion to reduce, but not increase the number of Units that would otherwise vest as a result of the Company’s performance for the Performance Period. 
		
	4.
	Vesting of Earned Units.

		
	4.1
	Normal Vesting.  Except as otherwise provided by this Award Agreement, Earned Units shall vest and become Vested Units as provided by the Grant Notice.

		
	4.2
	Forfeiture upon Termination of Employment.  If the Participant’s Service terminates for any reason, all Units subject to the Award which have not become Vested Units as of the time of such termination of Service (“Unvested Units”) shall be forfeited to the Company and all rights of Participant to such Unvested Units shall immediately terminate.  Notwithstanding the foregoing, if a Participant’s Change in Control Severance Agreement or other similar agreement or employment agreement with the Company provide for additional service credit in the event of a termination of Service, such Participant shall receive additional service credit, provided that it shall not affect the determination of whether Units have been earned pursuant to performance metrics in the Grant Notice. 

		
	4.3
	Vesting Upon a Corporate Transaction.  In the event of a Corporate Transaction, the vesting of Earned Units shall be determined in accordance with Section 9.1.

		
	5.
	Settlement. 

Except as otherwise provided by Section 9, for each Vested Unit, settlement shall be made within 30 days following the Vesting Date, or the Certification Date, if later, but in any event no later than the 15th day of the third calendar month following the end of the calendar year in which the Vesting Date occurs.
		
	6.
	No Stockholder Rights.

Unless and until such time as Shares are issued in settlement of Vested Units, Participant shall have no ownership of the Shares allocated to the Units and shall have no right to dividends or to vote such Shares.  

		
	7.
	Dividend Equivalents.

Dividends, if any (whether in cash or Shares), shall not be credited to Participant.  

		
	8.
	No Transfer.

Prior to the issuance of Shares of Common Stock on the applicable Settlement Date, neither this Award nor any Units subject to this Award nor any interest therein shall be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of.  

6

		
	9.
	Corporate Transaction.

In the event of a Corporate Transaction, this Section 9 shall determine the treatment of the Units which have not otherwise become Vested Units.
		
	9.1
	Effect of Corporate Transaction on Award.  In the event of a Corporate Transaction, (i) the number of Earned Units for each Performance Period that has ended prior to the closing of the Corporate Transaction (the “Closing Date”) in accordance with the schedule for such Performance Period set forth in the Grant Notice (a “Completed Performance Period”) shall, if not previously certified by the Committee in accordance with Section 3 and settled in accordance with Section 5, be determined and certified by the Committee in accordance with Section 3 and settled in accordance with Section 5 within 30 days following the Closing Date in accordance with Section 5, but in any event no later than the 15th day of the third calendar month following the end of the calendar year in which the Closing Date occurs (the “Completed Performance Period Units”); and (ii) the 1-Year Performance Period and the 2-Year Performance Period, to the extent not Completed Performance Periods and subject to Section 9.1(a), shall be disregarded and the remaining Earned Units (if any) and the vesting thereof shall be determined based on an adjusted performance period that ends on the day immediately preceding the Closing Date (the “Adjusted Performance Period”) as follows:

		
	(a)
	Earned Units.  The number of Earned Units for the Adjusted Performance Period shall be determined, taking into account the following:

		
	(i)
	The number of Adjusted Performance Period Earned Units, if any (not to exceed the Maximum Number of Units when combined with Completed Performance Period Earned Units), shall equal the excess, if any, of (a) the product of (i) the Target Number of Units and (ii) the Performance Multiplier determined for the Adjusted Performance Period, over (b) the Completed Performance Period Earned Units.

		
	(ii)
	The Company Total Stockholder Return shall be determined as provided by Section 2.1, except that the Average Per Share Closing Price for the 30 market trading days ending on the last market trading day of the Adjusted Performance Period shall be replaced with the price per Share of Common Stock to be paid to the holder thereof in accordance with the definitive agreement governing the transaction constituting the Corporate Transaction (or, in the absence of such agreement, the closing price per Share of Common Stock on the last trading day of the Adjusted Performance Period as reported on the securities exchange constituting the primary market for the Common Stock).

		
	(iii)
	The Benchmark Index Total Return shall be determined as provided by Section 2.3, except that for the purposes of clause (a) thereof, the Average Closing Index Value shall be determined for the 30 market trading days ending on the last market trading day of the Adjusted Performance Period.

Immediately following the determination pursuant to this Section 9.1(a), all Units subject to the Award which are not Earned Units (the “Unearned Units”) shall terminate and the Award, to the extent of the Unearned Units, shall cease to be outstanding.

		
	(b)
	Vested Units.  As of the last day of the Adjusted Performance Period and provided that the Participant’s Service has not terminated prior to such date, a portion of the Earned Units determined in accordance with Section 9.1(a) shall become Vested Units (the “Accelerated Units”), with such portion determined by multiplying the total number of Earned Units by a fraction, the numerator of which equals the number of days contained in the Adjusted Performance Period and the denominator of which equals the number of days contained in the corresponding original Performance Period determined without regard to this Section, less the number of Completed Performance Period Units.  The Accelerated Units shall be settled in accordance Section 5 within 30 days following the Closing Date but in any event no later than the 15th day of the third calendar month following the end of the calendar year in which the Closing Date occurs.

7

		
	(c)
	Unvested Units.  Except as otherwise provided by Section 9.1(b), that portion of the Earned Units determined in accordance with Section 9.1(a) in excess of the number of Accelerated Units (such excess portion, a “Time-Vesting Unit Award”) shall become Vested Units in equal installments on the remaining original Vesting Date(s), provided that the Participant’s Service has not terminated prior to the applicable Vesting Date.  The Units subject to the Time-Vesting Unit Award which become Vested Units shall be settled on the applicable Settlement Date in accordance with Section 5, provided that payment for each Vested Unit shall be made in the amount and in the form of the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a Share of Common Stock on the effective date of the Corporate Transaction was entitled (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares of Common Stock).  For the purposes of this Section 9.1(c), the Settlement Date shall occur upon or as soon as practicable following the applicable Vesting Date, but in any event no later than the 15th day of the third calendar month following the end of the calendar year in which the Vesting Date occurs.

		
	(d)
	Vested Units in Corporate Transaction in which Awards are not Assumed.  Notwithstanding anything to the contrary in Section 9.1(c) above or in the Plan, in the event of a Corporate Transaction in which the Units are not assumed or replaced by the successor entity, all of the Earned Units (as determined in accordance with Section 9.1(a) above) shall become Vested Units as of the last day of the Adjusted Performance Period and shall be settled in accordance Section 5 within 30 days following the Closing Date but in any event no later than the 15th day of the third calendar month following the end of the calendar year in which the Closing Date occurs.

		
	9.2
	Qualifying Termination in Connection with Corporate Transaction.  Notwithstanding anything to the contrary in Section 9.1, in the event of a Corporate Transaction, if a Participant’s Change in Control Severance Agreement or other similar agreement or employment agreement with the Company provide for additional service credit or accelerated vesting in the event of a qualifying termination of Service in connection with a Corporate Transaction, this Award Agreement shall be read in conjunction therewith, provided, however, that provisions of this Award Agreement shall govern except to the extent that such Participant would receive greater benefits under the Change in Control Severance Agreement or other similar agreement or employment agreement with the Company.

8

		
	10.
	Section 280G Provision. 

		
	10.1
	Best After-Tax Result.  In the event that any payment or benefit received or to be received by Participant pursuant to this Award Agreement or otherwise (“Payments”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code and (ii) but for this subsection (a), be subject to the excise tax imposed by Section 4999 of the Code, any successor provisions, or any comparable federal, state, local or foreign excise tax (“Excise Tax”), then, subject to the provisions of Section 10.1 hereof, such Payments shall be either (A) provided in full pursuant to the terms of this Award Agreement or any other applicable agreement, or (B) provided as to such lesser extent which would result in no portion of such Payments being subject to the Excise Tax (“Reduced Amount”), whichever of the foregoing amounts, taking into account the applicable federal, state, local and foreign income, employment and other taxes and the Excise Tax (including, without limitation, any interest or penalties on such taxes), results in the receipt by Participant, on an after-tax basis, of the greatest amount of payments and benefits provided for hereunder or otherwise, notwithstanding that all or some portion of such Payments may be subject to the Excise Tax. Unless the Company and Participant otherwise agree in writing, any determination required under this Section shall be made by independent tax counsel designated by the Company and reasonably acceptable to Participant (“Independent Tax Counsel”), whose determination shall be conclusive and binding upon Participant and the Company for all purposes. For purposes of making the calculations required under this Section, Independent Tax Counsel may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code; provided that Independent Tax Counsel shall assume that Participant pays all taxes at the highest marginal rate. The Company and Participant shall furnish to Independent Tax Counsel such information and documents as Independent Tax Counsel may reasonably request in order to make a determination under this Section. The Company shall bear all costs that Independent Tax Counsel may reasonably incur in connection with any calculations contemplated by this Section. In the event that Section 10.1(i) (B) above applies, then any reduction in payments and/or benefits required by this Section 6 shall occur in the following order: (1) reduction of cash payments; (2) reduction of acceleration of vesting of equity awards; and (3) reduction of other benefits paid to Participant. In the event that acceleration of vesting of equity awards is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant for Participant’s Equity Awards. If the Internal Revenue Service (the “IRS”) determines that any Payment is subject to the Excise Tax, then Section 10.2 hereof shall apply, and the enforcement of Section10.2 shall be the exclusive remedy to the Company.

		
	10.2
	Adjustments.  If, notwithstanding any reduction described in Section 10.1 hereof (or in the absence of any such reduction), the IRS determines that Participant is liable for the Excise Tax as a result of the receipt of one or more Payments, then Participant shall be obligated to surrender or pay back to the Company, within 120 days after a final IRS determination, an amount of such payments or benefits equal to the “Repayment Amount.” The Repayment Amount with respect to such Payments shall be the smallest such amount, if any, as shall be required to be surrendered or paid to the Company so that Participant’s net proceeds with respect to such Payments (after taking into account the payment of the Excise Tax imposed on such Payments) shall be maximized. Notwithstanding the foregoing, the Repayment Amount with respect to such Payments shall be zero if a Repayment Amount of more than zero would not eliminate the Excise Tax imposed on such Payments or if a Repayment Amount of more than zero would not maximize the net amount received by Participant from the Payments. If the Excise Tax is not eliminated pursuant to this Section 10.2, Participant shall pay the Excise Tax. 

		
	11.
	Compliance with Section 409A. 

Payments made pursuant to this Plan and Award are intended to qualify for the “short-term deferral” exemption from Section 409A of the Code.  The Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify the Plan and/or this Award agreement to ensure that all Awards are made in a manner that qualifies for exemption from or complies with Section 409A of the Code, provided however, that the Company makes no representations that the Award will be exempt from Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from applying to this Award.
		
	12.
	Tax Consequences

Participant acknowledges that there will be tax consequences upon settlement of the Units or disposition of the Shares, if any, received in connection therewith, and Participant should consult a tax adviser regarding Participant’s tax obligations prior to such settlement or disposition in the jurisdiction where he or she is subject to tax. 

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	13.
	Withholding Taxes and Stock Withholding. 

		
	13.1
	In General.  Regardless of any action the Company or Participant’s actual employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), Participant acknowledges that the ultimate liability for all Tax-Related Items legally due by Participant is and remains Participant’s responsibility and that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the award, including the settlement of the Units, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends; and (2) do not commit to structure the terms of the award or any aspect of the Units to reduce or eliminate Participant’s liability for Tax-Related Items.

		
	13.2
	Withholding.  Prior to the settlement of Participant’s Units, Participant shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all withholding and payment on account obligations of the Company and/or the Employer.  In this regard, Participant authorizes the Company and/or the Employer to withhold all applicable Tax-Related Items legally payable by Participant from Participant’s wages or other cash compensation paid to Participant by the Company and/or the Employer.  With the Committee’s consent, these arrangements may also include, if permissible under local law, (a) withholding Shares that otherwise would be issued to Participant when Participant’s Units are settled, provided that the Company only withholds the amount of Shares necessary to satisfy the minimum statutory withholding amount, (b) having the Company withhold taxes from the proceeds of the sale of the Shares, either through a voluntary sale or through a mandatory sale arranged by the Company (on Participant’s behalf pursuant to this authorization), or (c) any other arrangement approved by the Company.  The Fair Market Value of these Shares, determined as of the effective date when taxes otherwise would have been withheld in cash, will be applied as a credit against the withholding taxes. Finally, Participant shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of Participant’s participation in the Plan or Participant’s purchase of Shares that cannot be satisfied by the means previously described.  The Company may refuse to deliver the Shares if Participant fails to comply with Participant’s obligations in connection with the Tax-Related Items as described in this section.

		
	14.
	Miscellaneous Provisions.

		
	14.1
	Acknowledgement.  The Company and Participant agree that the Units are granted under and governed by the Grant Notice, this Award Agreement and the provisions of the Plan.  Participant: (i) acknowledges receipt of a copy of the Plan and the Plan Prospectus, (ii) represents that Participant has carefully read and is familiar with their provisions, and (iii) hereby accepts the Award subject to all of the terms and conditions set forth herein and those set forth in the Plan and the Grant Notice.  

		
	14.2
	Entire Agreement; Enforcement of Rights.  This Award Agreement, the Plan and the Grant Notice constitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments or negotiations concerning the purchase of the Shares hereunder are superseded. No modification of or amendment to this Award Agreement, nor any waiver of any rights under this Award Agreement, shall be effective unless in writing and signed by the parties to this Award Agreement.  The failure by either party to enforce any rights under this Award Agreement shall not be construed as a waiver of any rights of such party.

		
	14.3
	Compliance with Laws and Regulations.  The issuance of Shares will be subject to and conditioned upon compliance by the Company and Participant with all applicable state, federal and foreign laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance or transfer.

		
	14.4
	Governing Law; Severability.  If one or more provisions of this Award Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Award Agreement, (ii) the balance of this Award Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of this Award Agreement shall be enforceable in accordance with its terms.  This Award Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law. 

10

		
	14.5
	No Rights as Employee, Director or Consultant.  Nothing in this Award Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate Participant’s Service, for any reason, with or without cause. 

		
	14.6
	Consent to Electronic Delivery of All Plan Documents and Disclosures.  By acceptance of this Award, Participant consents to the electronic delivery of the Notice, this Award Agreement, the Plan, account statements, Plan Prospectuses required by the Securities and Exchange Commission, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements) or other communications or information related to the Award. Electronic delivery may include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at the Company’s discretion. Participant acknowledges that Participant may receive from the Company a paper copy of any documents delivered electronically at no cost if Participant contacts the Company by telephone, through a postal service or electronic mail at equity@infoblox.com.  Participant further acknowledges that Participant will be provided with a paper copy of any documents delivered electronically if electronic delivery fails; similarly, Participant understands that Participant must provide on request to the Company or any designated third party a paper copy of any documents delivered electronically if electronic delivery fails. Also, Participant understands that Participant’s consent may be revoked or changed, including any change in the electronic mail address to which documents are delivered (if Participant has provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal service or electronic mail at equity@infoblox.com. Finally, Participant understands that Participant is not required to consent to electronic delivery.

		
	14.7
	Award Subject to Company Clawback or Recoupment.  The Units shall be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or required by law during the term of Participant’s employment or other Service that is applicable to executive officers, Employees, Directors or other service providers of the Company, and in addition to any other remedies available under such policy and applicable law may require the cancellation of Participant’s Units (whether vested or unvested) and the recoupment of any gains realized with respect to Participant’s Units.

BY ACCEPTING THIS AWARD, PARTICIPANT AGREES TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE, IN THE GRANT NOTICE AND IN THE PLAN.

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