Document:

Exhibit 10.20

 

STOCK RESTRICTION AGREEMENT

 

This STOCK RESTRICTION AGREEMENT (this “Agreement”) is dated as of the 5th day of February, 2016 (the “Effective Date”), between Sigilon, Inc., a Delaware corporation (the “Company”), and Robert S. Langer (the “Founder”) relating to shares of the Company’s common stock, par value $0.001 per share (“Common Stock”).  The Company and the Founder are each referred to individually as a “Party” and together as the “Parties.”

 

WHEREAS, the Founder is being issued, on the Effective Date, five million (5,000,000) shares of Common Stock (the “Founder Shares”); and

 

WHEREAS, the Company and the Founder desire to enter into this Agreement pursuant to which the Founder Shares shall become subject to certain terms and conditions, as more fully described herein.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Founder hereby agree as follows:

 

ARTICLE I
  RESTRICTED SHARES

 

Upon execution of this Agreement, the Company and the Founder agree that the Founder Shares shall initially be deemed “Restricted Shares” and shall initially be subject to all of the restrictions set forth herein.

 

ARTICLE II
  DEFINITIONS; INTERPRETATION

 

Section 2.1.                                 Definitions.  For purposes of this Agreement, the following terms are defined as set forth below:

 

(a)                                 “Agreement” has the meaning set forth in the preamble.

 

(b)                                 “Board” means the Company’s board of directors.

 

(c)                                  “Common Stock” has the meaning set forth in the preamble.

 

(d)                                 “Company Person” means an employee of the Company, a director of the Company, a member of the Scientific Advisory Board of the Company or a consultant to the Company.

 

(e)                                  “Effective Date” has the meaning set forth in the preamble.

 

(f)                                   “Escrow Agent” has the meaning set forth in Section 5.6.

 

(g)                                  “Party” has the meaning set forth in the preamble.

 

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(h)                                 “Repurchase Price” means $0.001 per share.

 

(i)                                     “Repurchase Event” has the meaning set forth in Section 5.2.

 

(j)                                    “Repurchase Period” has the meaning set forth in Section 5.2.

 

(k)                                 “Repurchase Right” has the meaning set forth in Section 5.1.

 

(l)                                     “Restricted Shares” means Founder Shares that are not vested and are subject to the Repurchase Right (as defined in Section 5.1).

 

(m)                             “Scientific Advisory Board” means the scientific advisory board of the Company.

 

(n)                                 “Unrestricted Shares” means Founder Shares that are vested and are not subject to the Repurchase Right.

 

Section 2.2.                                 Interpretation.  Except where the context expressly requires otherwise:

 

(a)                                 the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation;” and

 

(b)                                 the words “herein” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof.

 

ARTICLE III
  LAPSE OF RESTRICTIONS

 

Section 3.1.                                 Vesting Schedule.  25% of the Restricted Shares will vest and become “Unrestricted Shares” on the first anniversary of the first closing of a preferred stock financing of the Company and the remaining Restricted Shares will vest and become “Unrestricted Shares” as to six and one quarter percent (6.25%) of the total initial number of Restricted Shares on the first day of each calendar quarter following such first anniversary for the subsequent 12 calendar quarters, as long as the Founder is a Company Person on each such vesting date.  The Company will confirm in writing the date of such first closing upon the Founder’s written request.  No further action on behalf of the Company or the Founder or any other person or entity shall be required for Restricted Shares to become Unrestricted Shares under this Section 3.1 or the following Section 3.2.

 

Section 3.2.                                 Deemed Liquidation Event.  Notwithstanding anything contained herein to the contrary, in the event of a Deemed Liquidation Event (as such term may be defined in the Certificate of Incorporation of the Company, as such may be amended), or in the event of any “Sale Event”, “Change in Control” or other like definition contained in the Company’s then current stock option plan (i.e., the option plan from which the Company is then granting options or other equity awards) if such Certificate of Incorporation does not contain the defined term “Deemed Liquidation Event”), any and all Restricted Shares will automatically vest and become “Unrestricted Shares” immediately prior to such Deemed Liquidation Event (or Sale Event,

 

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Change in Control, etc.), if the Founder is a Company Person immediately prior to such Deemed Liquidation Event (or Sale Event, Change in Control, etc.).

 

ARTICLE IV
  RESTRICTION ON TRANSFER

 

Section 4.1.                                 Restricted Shares.  The Founder may not directly or indirectly transfer, sell, assign, pledge, hypothecate or otherwise dispose of any of the Restricted Shares, nor any interest therein, without the prior written consent of the Board or as otherwise provided in this Agreement.  The Company shall not be required to (a) transfer any Restricted Shares on its books that shall have been sold, assigned or otherwise transferred in violation of this Section 4.1 or (b) treat as the owner of such Restricted Shares, or accord the right to vote as such owner or to pay dividends to, any person or entity to which any such Restricted Shares shall have been so sold, assigned or otherwise transferred, in violation of this Section 4.1.

 

Section 4.2.                                 Transferees.  Notwithstanding anything contained in Section 4.1 to the contrary, the Founder may transfer (i) any or all of her Restricted Shares to her spouse, parents, siblings, or children or grandchildren, or to a trust established for the benefit of her spouse, parents, siblings, children or grandchildren, or the Founder, or to the other Founder of the Company (or a trust established for the benefit of the other Founder) or (ii) any or all of the Restricted Shares under her will or by the laws of intestacy, in each case of clauses (i) and (ii), provided that, such Restricted Shares shall remain subject to this Agreement and such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Agreement.  Notwithstanding the foregoing, the Restricted Shares shall continue to be the Restricted Shares in the hands of any holder other than Founder, and except as otherwise expressly provided herein, each such other holder of Restricted Shares will succeed to all rights and obligations attributable to Founder as a holder of Restricted Shares hereunder.

 

ARTICLE V
  REPURCHASE RIGHT

 

Section 5.1.                                 Scope of Repurchase Right.  In the event that the Founder ceases to be a Company Person, the Restricted Shares shall be subject to a right (but not an obligation) of repurchase by the Company, at a price and on the other terms and conditions set forth below (the “Repurchase Right”).  Exercise by the Company of the Repurchase Right shall require approval by a majority of the Board.

 

Section 5.2.                                 Condition Precedent to Exercise.  The Repurchase Right shall be exercisable by the Company with respect to the Restricted Shares during the ninety (90)-day period (the “Repurchase Period”) immediately following the date that the Founder ceases to be a Company Person (the “Repurchase Event”).

 

Section 5.3.                                 Repurchase Cost.  The purchase price for the Restricted Shares to be paid by the Company pursuant to the Repurchase Right shall be an amount equal to the Repurchase Price.

 

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Section 5.4.                                 Exercise of Repurchase Right.  The Repurchase Right shall be exercisable by the Company only by written notice delivered to the Founder prior to the expiration of the Repurchase Period.  Each such notice shall set forth the date, time and place for the repurchase of the Restricted Shares, the number of Restricted Shares to be repurchased and the purchase price therefor.  Such date shall not be more than thirty (30) days after the date of the notice.  Prior to the close of business on such date, the Founder shall deliver to the Company certificate(s) representing the Restricted Shares to be repurchased and properly endorsed for transfer to the Company.  The Company shall promptly, but in no event later than the next business day, following the receipt of such certificate(s), pay to the Founder the purchase price determined according to Section 5.3.  Such payment shall be made in one installment in immediately available funds.  The right of repurchase shall terminate with respect to any Restricted Shares for which it has not been timely exercised pursuant to this Section 5.4.

 

Section 5.5.                                 Substituted Securities.  In the event of a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any substituted securities which are by reason of such transaction distributed with respect to any Restricted Shares, or into which such Restricted Shares thereby become convertible, shall immediately be subject to Repurchase Right  Appropriate adjustments to reflect the distribution of such securities or property shall be made to the number and/or class of the Restricted Shares.  After each such transaction, appropriate adjustments shall also be made to the price per share to be paid upon the exercise of Repurchase Right in order to reflect any change in the Company’s outstanding securities effected without receipt of consideration therefor; provided, however, that the aggregate purchase price payable for the Restricted Shares shall remain the same.

 

Section 5.6.                                 Escrow.  Upon the issuance of the certificates for Restricted Shares, such certificates shall be held in escrow by the Company as the escrow agent (the “Escrow Agent”) until the Repurchase Period expires or the Restricted Shares are repurchased by the Company, in each case in accordance with this ARTICLE V.  Upon the issuance of the certificates for any substituted securities described in Section 5.5, the Founder shall immediately deliver such certificates to the Company to be held in escrow.  All regular cash dividends on the Founder Shares shall be paid directly to the Founder and shall not be held in escrow.  Promptly following receipt by the Escrow Agent of a written request from the Founder, the Company shall release from escrow and deliver to the Founder a certificate for the whole number of Unrestricted Shares, if any.  In the event of a repurchase by the Company of Restricted Shares subject to the Repurchase Right, the Escrow Agent shall release from escrow and cancel a certificate for the number of Restricted Shares so repurchased.

 

Section 5.7.                                 Termination of Rights as Stockholder.  Notwithstanding anything to the contrary herein, the Parties agree that, if the Company makes available, at the time and place and in the amount and form described in Section 5.4, the consideration for the Restricted Shares to be repurchased in accordance with such notice and in compliance with this Agreement, then, immediately after such time, the Founder shall no longer have any rights as a holder of such Restricted Shares (other than the right to receive payment of such consideration in accordance with such notice).  Such Restricted Shares shall be deemed to have been repurchased in accordance with the applicable provisions hereof, whether or not the certificate(s) therefor have been delivered as required by such notice.

 

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Section 5.8.                                 Legend.  All certificates representing the Restricted Shares shall have endorsed thereon a legend substantially as follows:

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS SET FORTH IN A STOCK RESTRICTION AGREEMENT DATED AS OF FEBRUARY    , 2016 WITH THE COMPANY, A COPY OF WHICH AGREEMENT IS AVAILABLE FOR INSPECTION AT THE OFFICES OF THE COMPANY OR WILL BE MADE AVAILABLE UPON REQUEST.”

 

ARTICLE VI
  SECTION 83(B) ELECTION

 

The Founder understands that Section 83 of the Internal Revenue Code of 1986, as amended, may tax as compensation income the difference between the amount paid for the Founder Shares and the fair market value of the Founder Shares as of the date any restrictions on the Founder Shares lapse in the absence of an 83(b) election.  A form of 83(b) election is attached as Exhibit A.

 

ARTICLE VII
  MISCELLANEOUS

 

Section 7.1.                                 Notices.  Any notices, consents, or other communication required to be sent or given hereunder by any of the Parties shall in every case be in writing and shall be deemed properly served if (a) delivered in hand personally, (b) sent by registered or certified mail, in all such cases with first class postage prepaid and return receipt requested, (c) delivered by a recognized overnight courier service, freight prepaid or (d) sent by facsimile transmission, transmission confirmed (along with a copy sent by first-class mail), to the Parties at the addresses as set forth below or at such other addresses or to the attention of such other person as may be furnished by prior written notice of the receiving Party to the sending Party:

 

	
if to the Company:
    	
Sigilon, Inc.
    
	
 
    	
c/o Flagship Ventures
    
	
 
    	
1 Memorial Drive, #7
    
	
 
    	
Cambridge, MA 02142
    
	
 
    	
Attention: President
    
	
 
    	
 
    
	
with a copy to:
    	
Ropes & Gray LLP
    
	
 
    	
Prudential Tower
    
	
 
    	
800 Boylston Street
    
	
 
    	
Boston, MA 02199
    
	
 
    	
Fax: [***]
    
	
 
    	
Attention: Marc A. Rubenstein, Esq.
    
	
 
    	
 
    
	
if to the Founder:
    	
Robert S. Langer
    

 

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Date of service of such notice shall be (i) the date such notice is personally delivered by hand, (ii) five (5) days after the date of mailing if sent by certified or registered mail, (iii) one (1) day after date of delivery to the overnight courier if sent by overnight courier or (iv) the next succeeding business day after transmission by facsimile, transmission confirmed.

 

Section 7.2.                                 Third-Party Beneficiaries.  Nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person or entity, other than the Parties and their respective permitted successors and assigns, any rights or remedies under or by reason of this Agreement.

 

Section 7.3.                                 Consent of Spouse.  If the Founder is married as of the Effective Date, the Founder’s spouse shall execute a Consent of Spouse in the form of Exhibit B hereto, effective as of the Effective Date.  Such consent shall not be deemed to confer or convey to the spouse any rights in the Restricted Shares that do not otherwise exist by operation of law or the express written agreement of the Parties.  If the Founder marries or remarries subsequent to the Effective Date, the Founder shall, not later than sixty (60) days thereafter, obtain her new spouse’s acknowledgment of and consent to the existence and binding effect of all restrictions contained in this Agreement by such spouse’s executing and delivering a Consent of Spouse in the form of Exhibit B.

 

Section 7.4.                                 Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality, or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed, and enforced in such jurisdiction as if such invalid, illegal, or unenforceable provision had never been contained herein.

 

Section 7.5.                                 Complete Agreement.  This Agreement embodies the complete agreement and understanding between the Parties and supersedes and preempts any prior understandings, agreements, or representations by or between the Parties, written or oral, which may have related to the subject matter hereof in any way.

 

Section 7.6.                                 Counterparts.  This Agreement may be executed on separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

 

Section 7.7.                                 Successors and Assigns.  This Agreement may not be assigned by either Party without the prior written consent of the other Party.  This Agreement is intended to bind and inure to the benefit of and be enforceable by the Founder and the Company and their respective successors and assigns (including subsequent holders of Common Stock).

 

Section 7.8.                                 No Strict Construction.  The language used in this Agreement will be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction will be applied against any Party.

 

Section 7.9.                                 Remedies.  Each of the Parties will be entitled to enforce its rights under this Agreement specifically, to recover damages by reason of any breach of any provision of this

 

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Agreement and to exercise all other rights existing in its favor.  The Founder and the Company agree and acknowledge that money damages will not be an adequate remedy for any breach by the Founder of the provisions of this Agreement and that the Company shall be entitled to specific performance and injunctive relief in order to enforce or prevent any violation of any provision of this Agreement in any court of competent jurisdiction.

 

Section 7.10.                          Amendments and Waivers.  Any provision of this Agreement may be amended or waived only with the prior written consent of the Company and the Founder.

 

Section 7.11.                          Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts applicable to contracts made and to be performed wholly therein. Subject to Section 7.9, the Parties agree that jurisdiction and venue in any action brought by any Party pursuant to this Agreement shall properly lie in any federal or state court located in the Commonwealth of Massachusetts and the Parties expressly submit to such jurisdiction.

 

Section 7.12.                          Headings.  The captions set forth in this Agreement are for convenience only and shall not be considered as part of this Agreement or as in any way limiting the terms and provisions hereof.

 

(Signature page follows.)

 

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

 

	
 
    	
SIGILON, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Douglas Cole
    
	
 
    	
 
    	
Name:
    	
Douglas Cole
    
	
 
    	
 
    	
Title:
    	
President
    
	
 
    	
 
    
	
 
    	
ROBERT   S. LANGER
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert S. Langer
    

 

(Signature Page to Stock Restriction Agreement)

 

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EXHIBIT A

 

Election to Include Gross Income in Year

of Transfer Pursuant to Section 83(b)

of the Internal Revenue Code of 1986, as amended

 

In accordance with Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”), the undersigned (the “Taxpayer”) hereby elects to include in her gross income as compensation for services the excess, if any, of the fair market value of the property (described below) at the time of transfer over the amount paid for such property.

 

The following sets for the information required in accordance with the Code and the regulations promulgated hereunder:

 

1.                                      The name, address and social security number of the undersigned are:

 

Name:                                                                                                           Robert S. Langer             

 

Address:                                                                                                 [***]                                  

 

[***]                                  

 

Social Security No.:                                      [***]                                  

 

2.                                      The description of the property with respect to which the election is being made is as follows:

 

Five million (5,000,000) shares (the “Shares”) of Common Stock, $0.001 par value per share, of Sigilon, Inc., a Delaware corporation (the “Company”).

 

3.                                      This election is made for the calendar year 2016, with respect to the transfer of the property to the Taxpayer on                  , 2016.

 

4.                                      Description of restrictions:  The property is subject to the following restrictions:

 

In the event taxpayer’s employment with the Company or an affiliate of the Company is terminated, the Company may repurchase all or any portion of the Shares at the acquisition price paid by the Taxpayer.

 

5.                                      The fair market value at time of transfer (determined without regard to any restrictions other than restrictions which by their terms will never lapse) of the property with respect to which this election is being made was not more than $0.001 per Share.

 

6.                                      The amount paid by the Taxpayer for said property was $0.001 per Share.

 

7.                                      A copy of this statement has been furnished to the Company.

 

Signed this      day of              , 2016.

 

	
 
    	
By:
    	
/s/ Robert S. Langer
    
	
 
    	
 
    	
Name:
    	
Robert S. Langer
    

 

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EXHIBIT B

 

CONSENT OF SPOUSE

 

I,   Laura Langer                  , spouse of Robert S. Langer, acknowledge that I have read the Stock Restriction Agreement dated as of the February   , 2016 (the “Agreement”) to which this Consent is attached as Exhibit B and that I know its contents.  Capitalized terms used and not defined herein shall have the meanings assigned to such terms in the Agreement.  I am aware that by its provisions the Founder Shares granted to my spouse are subject to a Repurchase Right in favor of Sigilon, Inc. (the “Company”) and that, accordingly, the Company has the right to repurchase up to all of the Restricted Shares of which I may become possessed as a result of a gift from my spouse or a court decree and/or any property settlement in any domestic litigation.

 

I hereby agree that my interest, if any, in the Restricted Shares subject to the Agreement shall be irrevocably bound by the Agreement and further understand and agree that any community property interest I may have in the Restricted Shares shall be similarly bound by the Agreement.

 

I agree to the Repurchase Right described in the Agreement and I hereby consent to the repurchase of the Restricted Shares by the Company and the sale of the Restricted Shares by my spouse or my spouse’s legal representative in accordance with the provisions of the Agreement.  Further, as part of the consideration for the Agreement, I agree that, at my death, if I have not disposed of any interest of mine in the Restricted Shares by an outright bequest of the Restricted Shares to my spouse, then the Company shall have the same rights against my legal representative to exercise the Repurchase Right with respect to any interest of mine in the Restricted Shares as the Company would have had pursuant to the Agreement if I had acquired the Restricted Shares pursuant to a court decree in domestic litigation.

 

I AM AWARE THAT THE LEGAL, FINANCIAL AND RELATED MATTERS CONTAINED IN THE AGREEMENT ARE COMPLEX AND THAT I AM FREE TO SEEK INDEPENDENT PROFESSIONAL GUIDANCE OR COUNSEL WITH RESPECT TO THIS CONSENT.  I HAVE EITHER SOUGHT SUCH GUIDANCE OR COUNSEL OR DETERMINED AFTER REVIEWING THE AGREEMENT CAREFULLY THAT I WILL WAIVE SUCH RIGHT.

 

Dated as of the         day of               , 2016.

 

	
 
    	
/s/ Laura Langer
    
	
 
    	
 
    	
 
    
	
 
    	
Print name:
    	
Laura Langer
    

 

10Exhibit 10.21

 

SIGILON THERAPEUTICS INC.

 

AMENDED AND RESTATED SEVERANCE AND CHANGE IN CONTROL POLICY

 

This Amended and Restated Severance and Change in Control Policy (the “Policy”) of Sigilon Therapeutics Inc. (the “Company”), effective as of April 17, 2020 and amended and restated as of October 7, 2020, sets forth the payments and benefits the Company intends to provide to certain employees of the Company and its subsidiaries at the level of Vice President and higher (the “Executives”) who have a Qualifying Termination (the “Eligible Executives”), subject to the terms and conditions of this Policy. The severance benefits payable under this Policy as herein amended and restated shall apply to Qualifying Terminations on and after the Amendment Date. This Policy does not alter the “at will” nature of an Executive’s employment.  Capitalized terms that are not defined within this Policy have the meaning ascribed to it in Appendix A.

 

QUALIFYING TERMINATION OUTSIDE OF THE CHANGE IN CONTROL PERIOD.

 

In the event an Executive’s Qualifying Termination does not occur within the Change in Control Period, the Eligible Executive will be eligible to receive, depending upon his or her title as set forth in the table below, (i) a payment equal to the number of months set forth below (the “Severance Period”) of the Eligible Executive’s then-current annual base salary, paid in cash as payroll continuation payments payable beginning on the first payroll date following the Release Effective Date (as defined below) through the Severance Period; and (ii) if the Eligible Executive timely elects COBRA continuation coverage, reimbursement for his or her COBRA premium payments until the earlier of (x) the last day of the Severance Period, (y) the date upon which COBRA coverage otherwise terminates (including, without limitation, when the Eligible Executive becomes eligible to participate in any other employers’ group health plan), or (z) the date on which the Eligible Executive ceases to be eligible for COBRA continuation coverage for any reason.

 

	
Title
    	
 
    	
Severance Period (in months)
    	
 
    
	
Chief Executive   Officer (CEO)
    	
 
    	
12
    	
 
    
	
C-Level Officer   or Senior Vice President (SVP)
    	
 
    	
9
    	
 
    
	
Vice President
    	
 
    	
6
    	
 
    

 

Any severance benefits payable under this Policy are subject to the Eligible Executive executing and not revoking the Release and ongoing compliance with any Restrictive Covenants (as defined below), as further described below.

 

QUALIFYING TERMINATION WITHIN THE CHANGE IN CONTROL PERIOD.

 

In the event an Executive’s Qualifying Termination occurs during the Change in Control Period, the Eligible Executive will be eligible to receive, depending upon his or her title as set forth in the table below, (i) a payment equal to the number of months set forth below (the “CIC Severance Period”) of the Eligible Executive’s then-current annual base salary, paid in cash as payroll continuation payments payable beginning on the first payroll date following the Release Effective Date (as defined below) through the CIC Severance Period; (ii) a percentage of his or her target annual performance bonus (set forth below) for the year in which his or her termination

 

 

of employment occurs, paid ratably each payroll period beginning on the first payroll date following the Release Effective Date (as defined below) and ending on the last day of the CIC Severance Period; (iii) if the Eligible Executive timely elects COBRA continuation coverage, reimbursement for his or her COBRA premium payments until the earlier of (x) the last day of the CIC Severance Period, (y) the date upon which COBRA coverage otherwise terminates (including, without limitation, when the Eligible Executive becomes eligible to participate in any other group health plan), or (z) the date on which the Eligible Executive ceases to be eligible for COBRA continuation coverage for any reason; and (iv) notwithstanding the terms of the Company’s equity incentive plan under which the Eligible Executive’s equity awards were granted or any applicable award agreements, full acceleration of all of the Eligible Executive’s unvested and outstanding equity awards and, in the case of stock options, such stock options will remain outstanding and exercisable for the remainder of its full term.

 

	
Title
    	
 
    	
CIC Severance Period
   (in months)
    	
 
    	
Percentage of Annual
   Performance Bonus
    	
 
    
	
CEO
    	
 
    	
18
    	
 
    	
150
    	
%
    
	
Chief Operating   Officer (COO)
    	
 
    	
12
    	
 
    	
100
    	
%
    
	
C-Level Officer   or SVP
    	
 
    	
9
    	
 
    	
75
    	
%
    
	
Vice President
    	
 
    	
6
    	
 
    	
50
    	
%
    

 

Any severance benefits payable under this Policy are subject to the Eligible Executive executing and not revoking the Release and ongoing compliance with any Restrictive Covenants (as defined below), as further described below.

 

RELEASE OF CLAIMS.

 

Payment of the severance benefits described above will be subject to the Eligible Executive executing a Release, which becomes irrevocable at the time specified in the Release (the “Release Effective Date”), but in no event later than sixty (60) days following the date of the Eligible Executive’s termination.  Any severance benefits described in this Policy that would otherwise be payable prior to the Release Effective Date will be paid in arrears on the first regularly scheduled payroll date of the Company that follows such Release Effective Date by at least five (5) business days.

 

COMPLIANCE WITH RESTRICTIVE COVENANTS.

 

The Eligible Executive’s right to receive and retain the severance benefits provided for in this Policy is conditioned on his or her compliance with any agreement between the Eligible Executive and the Company or any of its affiliates that includes non-competition, non-solicitation and/or confidentiality restrictions (the “Restrictive Covenants”).  The severance benefits payable under this Policy shall be subject to forfeiture, clawback and/or recoupment by the Company automatically upon the Eligible Executive’s breach of any Restrictive Covenants.

 

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TIMING OF PAYMENTS AND SECTION 409A; WITHHOLDING.

 

The Company will have the right to withhold from any amount payable hereunder any federal, state and local taxes in order for the Company to satisfy any withholding tax obligation it may have under any applicable law or regulation.

 

This Policy is intended to comply with Section 409A of the Code (“Section 409A”) or an exemption thereunder and shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Policy, payments provided under this Policy may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Policy that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, references to termination of employment will be interpreted consistent with the definition of “separation from service” in Section 409A, and each installment in a series of payments will be treated as a separate “payment.”

 

Notwithstanding any other provision of this Policy, if any payment or benefit is conditioned on the Eligible Executive’s execution of a Release, the first payment shall include all amounts that would otherwise have been paid to the Eligible Executive during the period beginning on the date of the Qualifying Termination and ending on the payment date if no delay had been imposed. If the period within which the Eligible Executive must execute a Release would begin in one calendar year and expire in the following calendar year, then any payments contingent upon the execution of a Release shall be made in such following calendar year (regardless of the year of execution of the Release) if the payment in such following calendar year is required to avoid penalty under Section 409A.

 

Notwithstanding anything to the contrary in the Policy, if at the time of an Eligible Executive’s termination of employment, the Eligible Executive is a “specified employee,” as defined below, any and all amounts payable under the Policy on account of such separation from service that are covered in (i) below would (but for this provision) be payable within six (6) months following the date of termination, will instead be paid on the next business day following the expiration of such six (6) month period or, if earlier, upon the Eligible Executive’s death; except (i) to the extent of amounts that do not constitute a deferral of compensation within the meaning of Treasury Regulation Section 1.409A-1(b) (including without limitation by reason of the safe harbor set forth in Section 1.409A-1(b)(9)(iii), as determined by the Company in its reasonable good faith discretion); (ii) benefits that qualify as excepted welfare benefits pursuant to Treasury Regulation Section 1.409A-1(a)(5); or (iii) other amounts or benefits that are not subject to the requirements of Section 409A.

 

Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Policy comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by an Eligible Executive on account of non-compliance with Section 409A.

 

SECTION 280G OF THE CODE.

 

Notwithstanding anything in this Policy to the contrary, if at any time it is determined that payment of the severance benefits described herein, together with any other payments and benefits

 

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payable to an Eligible Executive (the “280G Payments”) would constitute “parachute payments” within the meaning of Section 280G of the Code and would, but for this paragraph, be subject to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), then such 280G Payments will be reduced by the Company by first reducing or eliminating payments that are payable in cash and then by reducing or eliminating payments, rights, and benefits that are not payable in cash, in each case, in reverse order beginning with payments, rights, or benefits that are to be paid farthest in time from the Change in Control so that the Eligible Executive will not be subject to the Excise Tax; provided that such reduction or elimination will not apply if the Eligible Executive would receive a greater after-tax amount by receiving all such 280G Payments without reduction or elimination pursuant to the foregoing provisions of this sentence.  In the event that an Eligible Executive receives payments or benefits that should not have been paid under this paragraph, the Eligible Executive must repay or reimburse the Company promptly upon receiving notice that an overpayment has been made.  Nothing in this paragraph will cause the Company to be responsible for, or to have any liability or obligation with respect to, the Excise Tax, including, but not limited to a tax gross-up.

 

DISCRETION TO INTERPRET THE POLICY.

 

As noted above, the Company has the sole discretion to make determinations as to (i) an Executive’s eligibility to participate in this Policy, (ii) the circumstances under which the severance benefits may be paid, (iii) the amount of severance benefits that may be paid, and (iv) whether any payments or benefits are 280G Payments. All determinations by the Company concerning the terms and provisions of this Policy and its administration will be final and binding.

 

NO DUPLICATION OF BENEFITS.

 

This Policy governs severance payable to any Eligible Executive; provided, however, if an Eligible Executive has an agreement with the Company or any of its affiliates, such as an offer letter or employment agreement, that provides for severance, then such agreement will govern the severance payments payable to such Eligible Executive, unless he or she consents in writing to waive the severance payments in such agreement and to be subject to this Policy. In no event will an Eligible Executive be entitled to a duplication of amounts or benefits under this Policy and under (i) any general severance policy or severance plan that the Company or any of its affiliates maintain or (ii) any agreement or arrangement between the Eligible Executive and the Company that provides for severance benefits (collectively under (i) and (ii), the “Company Plans”).  Any severance benefits payable to an Eligible Executive under this Policy, as amended and restated, will be in lieu of and not in addition to any benefits that the Company may provide under any other Company Plans to which the Eligible Executive would otherwise be entitled, including this Policy as in effect prior to October 7, 2020 (unless the Company Plan expressly provides for severance benefits to be in addition to those provided under this Policy).  The Company will reduce any severance benefits payable to an Eligible Executive under this Policy by any severance benefits to which the Eligible Executive is entitled by operation of a law or government regulations.

 

ACKNOWLEDGEMENTS.

 

The benefits provided under this Policy are entirely discretionary to the Company and the Company reserves the right in its sole and absolute discretion to amend or modify, in any respect

 

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whatsoever, or to suspend or terminate this Policy at any time and from time to time without notice, including the right to terminate, cancel or rescind any severance benefits that would otherwise be payable to any Eligible Executive (even a terminated Eligible Executive) after any change to this Policy to the maximum extent permitted by law.  This Policy does not represent a commitment by the Company to provide severance benefits at any point in the future.

 

This Policy is unfunded, and payments and benefits hereunder are payable from the general assets of the Company.

 

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APPENDIX A

 

For purposes of this Policy, the following terms will have the following meanings:

 

“Amendment Date” means October 7, 2020, the date on which the amended and restated Policy was approved by the Compensation Committee.

 

“Board” means the board of directors of the Company.

 

“Cause” means, as reasonably determined by the Board or the Compensation Committee, any one or more of the following actions: (i) the Executive’s material breach of the terms and conditions of any of the Restrictive Covenants, (ii) the Executive’s willful, malfeasant, dishonest or reckless conduct, in each case that relates to the Company and causes or could reasonably be expected to cause the Company material harm or damage, (iii) the Executive’s commission of an act of fraud, theft, misappropriation or embezzlement, or conviction, indictment for or pleading guilty or nolo contendere to a felony or any other crime involving moral turpitude, or (iv) the Executive’s failure to comply with a lawful directive of the Board or the person to whom the Executive reports, as applicable, or gross negligence in the performance of his or her duties and responsibilities to the Company.

 

“Change in Control” means (i) a merger or consolidation of the Company with or into any other corporation or other entity or person, (ii) a sale, lease, exchange or other transfer in one transaction or a series of related transactions of all or substantially all of the Company’s assets, or (iii) any other transaction, including without limitation, the sale by the Company of new shares of its capital stock or a transfer of existing shares of capital stock of the Company, the result of which is that a third party that is not an affiliate of the Company or its stockholders (or a group of third parties not affiliated with the Company or its stockholders) immediately prior to such transaction acquires or holds capital stock of the Company representing a majority of the Company’s outstanding voting power immediately following such transaction; provided that the following events will not constitute a “Change in Control”: (A) a transaction (other than a sale of all or substantially all of the Company’s assets) in which the holders of the voting securities of the Company immediately prior to the merger or consolidation hold, directly or indirectly, a majority of the voting securities in the successor corporation or its parent immediately after the merger or consolidation; (B) a sale, lease, exchange or other disposition in one transaction or a series of related transactions of all or substantially all of the Company’s assets to an affiliate of the Company; (C) an initial public offering of, or other financing involving, any of the Company’s securities; (D) a reincorporation of the Company solely to change its jurisdiction; or (E) a transaction undertaken for the primary purpose of creating a holding company that will be owned in substantially the same proportion by the persons who held the Company’s securities immediately before such transaction.

 

“Change in Control Period” means the period beginning upon the consummation of a Change in Control and ending twelve (12) months thereafter.

 

“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

 

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

 

“Compensation Committee” means the Compensation Committee of the Board.

 

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“Good Reason” means that one or more of the following events occur without the Executive’s consent: (i) the material diminution in the Executive’s responsibilities, authority and function; or (ii) a reduction in the Executive’s base salary or annual bonus opportunity, other than an across-the-board reduction that affects other similarly situated Executives of the Company on a proportionate basis (which such reduction will be disregarded when determining the amount of payments due following a termination of employment for Good Reason); or (iii) a requirement by the Company that the Executive relocate his or her principal location of employment to a location that is more than fifty (50) miles from his or her principal work location at the time of the consummation of the applicable Change in Control; provided, however, that, (a) an event will not give rise to a termination for Good Reason, unless the Executive has notified the Company in writing within sixty (60) days of the initial occurrence of such event, the Company has failed to correct the event within a period of not less than thirty (30) days after the Company’s receipt of such written notice (the “Cure Period”), and the Executive actually terminates employment with the Company within thirty (30) days of the Cure Period, and (b) the suspension of an Executive’s title and authority while on administrative leave due to the administrator’s reasonable, good faith belief that the Executive has engaged in misconduct, whether or not the suspected misconduct constitutes Cause, will not be considered Good Reason.

 

“Qualifying Termination” means an involuntarily termination without Cause (which, for the avoidance of doubt, will not include a termination due to an Executive’s disability or death) or a voluntarily termination for Good Reason during the Change in Control Period, provided that a termination of the employment of an Executive in connection with a sale of all or substantially all of the Company’s assets will not be considered a Qualifying Termination if the Executive is offered comparable employment by the Company or its successors, defined as a position having a comparable role in the purchaser of such assets (or any of its affiliates) with similar or greater span of responsibility and with comparable compensation and benefits opportunities, regardless of whether the Executive accepts such offer of employment.

 

“Release” means a general release in favor of the Company, its affiliates and their respective officers in a form that the Company provides to the Eligible Executive around the time of the Qualifying Termination.

 

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