Separation Agreement and Release, dated June 13, 2019, by and between Arbutus Biopharma Corporation and Mark J. Murray

SEPARATION AGREEMENT AND RELEASE

This SEPARATION AGREEMENT AND RELEASE (the “Agreement”) is entered into by and between Arbutus Biopharma Corporation (the “Company”) and Mark J. Murray (“Executive”) (collectively, the “Parties”), and shall be effective as set forth in Section 6(a).

WHEREAS, Executive currently serves as the President and Chief Executive Officer of the Company;

WHEREAS, Executive and the Company have mutually agreed that Executive’s employment with the Company shall terminate at 11:59 p.m. Eastern Daylight Time on June 23, 2019 (the “Separation Date”);

WHEREAS, Executive and the Company have mutually agreed that Executive shall provide certain consulting services to Arbutus Biopharma, Inc., a subsidiary of the Company (“Arbutus”), following the Separation Date;

WHEREAS, Executive is a party to an Executive Employment Agreement with the Company, dated May 30, 2008 (the “Employment Agreement”); and

WHEREAS, the Company and Executive desire to enter into this Agreement to set out the terms and conditions of Executive’s termination of employment with the Company.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the Parties agree as follows:

1.       Termination of Employment: At 11:59 p.m. Eastern Daylight Time on the Separation Date, Executive’s employment with the Company shall (and does hereby) terminate, and Executive shall cease to hold any position as a director or an officer of the Company or any of its direct or indirect subsidiaries. Executive shall resign in writing from any positions held with a direct or indirect subsidiary of the Company as requested by the Company. For the avoidance of doubt, Executive’s “Last Day of Employment” (as defined in the Employment Agreement) shall be the Separation Date.

2.       Compensation Upon Termination: Pursuant to paragraph 13.7 of the Employment Agreement, Executive shall be entitled to receive the payments and benefits set forth in this Section 2.

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Notwithstanding anything to the contrary contained herein (and for the avoidance of doubt), the payments and benefits set forth in this Section 2 shall be in full satisfaction of any and all obligations of the Company under the Employment Agreement and the underlying plans to which such payments and benefits relate (and there shall be no duplication of payments or benefits in any manner). Executive shall forfeit all rights to the Severance Benefits unless Executive executes and timely re-executes this Agreement and delivers the Agreement to the Company, and the Agreement has become irrevocable by virtue of the expiration of the applicable Revocation Period without the Agreement having been revoked. The Company shall have no obligation to pay or provide the Severance Benefits prior to the end of the Revocation Period that begins following Executive’s re-execution of this Agreement on or following the Separation Date.

3.       No Duty to Mitigate: Executive shall not be required to seek other employment, or to otherwise mitigate any loss or damage, for Executive or Executive’s estate to be entitled to receive any payments payable under this Agreement after the Separation Date, and no amount shall be set off against any such payments on account of any remuneration or benefit that Executive may receive as a result of any other employment Executive may obtain, or for any other reason.

4.       Consulting Services: Executive agrees that Executive shall serve as a consultant to Arbutus following the Separation Date pursuant to the Consulting Agreement attached hereto as Exhibit A (the “Consulting Agreement”), subject to Executive’s execution of such agreement.

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5.       Section 409A:

a. The Company intends that the payments and benefits provided under this Agreement shall either be exempt from the application of, or comply with, the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and this Agreement shall be construed in a manner that effectuates this intent. Neither the Company nor its respective directors, officers, employees or advisers (other than Executive) shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Executive as a result of this Agreement. Notwithstanding anything in this Agreement to the contrary, the Company may amend this Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of remaining exempt from or complying with the requirements of Section 409A of the Code and the administrative regulations and rulings promulgated thereunder.

b. In the event that, notwithstanding the clear language of this Agreement and the intent of the Company, any amount or benefit under this Agreement constitutes non-exempt “deferred compensation” for purposes of Section 409A of the Code (“Non-Exempt Deferred Compensation”) and is payable or distributable by reason of Executive’s separation from service during a period in which Executive qualifies as a “specified employee” (as defined in Section 409A of the Code and the final regulations thereunder), then, subject to any permissible acceleration of payment under Section 409A of the Code: (i) the amount of such Non-Exempt Deferred Compensation that would otherwise be payable during the six-month period immediately following Executive’s separation from service under the terms of this Agreement shall be accumulated through and paid or provided on the first day of the seventh month following Executive’s separation from service (or, if Executive dies during such period, within thirty (30) days after Executive’s death) (in either case, the “Required Delay Period”); and (ii) the normal payment or distribution schedule for any remaining payments or distributions shall resume at the end of the Required Delay Period.

c. To the extent that any right to reimbursement of expenses or payment of any benefit in-kind under this Agreement constitutes Non-Exempt Deferred Compensation, (i) any such expense reimbursement shall be made by the Company no later than the last day of the taxable year following the taxable year in which such expense was incurred by Executive, (ii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) the amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year.

6.       Release:

a. As consideration for Executive’s receipt of the Severance Benefits set forth in Section 2(b), Executive, for Executive and Executive’s attorneys, heirs, executors, administrators, successors and assigns, does hereby fully and forever release and discharge the Company and its past, current and future subsidiaries and affiliates, as well as each of their predecessors, successors and assigns, and each of their past, current and former directors, officers, partners, agents, employees, attorneys, shareholders and administrators (collectively, the “Released Parties”), from all suits, causes of action, and/or claims, demands or entitlements of any nature whatsoever, whether known, unknown, or unforeseen, which Executive has or may have against any of them arising out of or in connection with Executive’s employment with the Company, the termination of Executive’s employment with the Company, or any event, transaction, or matter occurring or existing on or before the date of Executive’s signing of this Agreement. Executive agrees not to file or otherwise institute any claim, demand or lawsuit seeking damages or other relief and not to otherwise assert any claims, demands or entitlements that are released herein. Executive further hereby irrevocably and unconditionally waives any and all rights to recover any relief or damages concerning the claims, demands or entitlements that are released herein. Executive represents and warrants that Executive has not previously filed or joined in any such claims, demands or entitlements against the Company or the other persons or entities released herein and that Executive shall indemnify and hold them harmless from all liabilities, claims, demands, costs, expenses and/or attorney’s fees incurred as a result of any such claims, demands or lawsuits. This Agreement shall become effective when signed by Executive and the Revocation Period that begins following Executive’s initial execution of this Agreement expires without revocation by Executive.

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b. Section 6(a) of this Agreement specifically includes, but is not limited to, all claims of breach of contract (including all claims for breach of the Employment Agreement), employment discrimination (including but not limited to any claims coming within the scope of Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Equal Pay Act, the Americans with Disabilities Act, and the Family and Medical Leave Act, all as amended, or any other applicable federal, state or local law), claims under the Worker Adjustment and Retraining Notification Act, claims under the Sarbanes-Oxley Act of 2002, including the Corporate and Criminal Fraud Accountability Act, claims under the Employee Retirement Income Security Act of 1974, as amended, claims for wrongful discharge in violation of public policy, claims under the Pennsylvania Human Relations Act, the Pennsylvania Whistleblower Law, the Washington Industrial Welfare Act, the Washington Minimum Wage Act, the Washington Wage Payment Act, the Washington Wage Rebate Act, the Washington Law Against Discrimination and the Washington Leave Law, all as amended, claims for breach of express or implied contract, claims concerning recruitment, hiring, termination, salary rate, severance pay, wages or benefits due, share options, bonuses, incentive compensation, equity-based incentives, perquisites, sick leave, holiday pay, vacation pay, life insurance, disability benefits, group medical insurance, any other fringe benefits, termination, employment status, libel, slander, defamation, intentional or negligent misrepresentation and/or infliction of emotional distress, together with any and all tort, contract, or other claims which might have been asserted by Executive or on Executive’s behalf in any suit, charge of discrimination, or claim against the Company or the persons or entities released herein, including any claims, charges or complaints arising under or pursuant to the British Columbia Employment Standards Act, the Human Rights Code, the Workers Compensation Act or any other applicable provincial or federal statute or law.

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c. Executive acknowledges that different or additional facts may be discovered in addition to what Executive now knows or believes to be true with respect to the matters released in this Section 6, and this Section 6 shall be and remain in effect in all respects as a complete and final release of the matters released, notwithstanding any different or additional facts.

d. However, notwithstanding the foregoing, nothing in this Section 6 shall be construed to waive any right that is not subject to waiver by private agreement, including, without limitation, any claims arising under state unemployment insurance or workers compensation laws.  Executive understands that rights or claims under the Age Discrimination in Employment Act that may arise after Executive executes this Agreement are not waived. Likewise, nothing in this Section 6 shall be construed to prohibit Executive from filing a charge with or participating in any investigation or proceeding conducted by the EEOC, NLRB, or any comparable state or local agency, or from reporting a possible violation of law to a government entity or law enforcement, including making a disclosure that is protected under the whistle blower protections of applicable law.  Notwithstanding the foregoing, Executive agrees to waive Executive’s right to recover against the Released Parties individual relief in any charge, complaint, or lawsuit filed by Executive or anyone on Executive’s behalf.

e. Notwithstanding anything to the contrary contained herein, nothing in this Agreement shall affect or diminish: (i) any of Executive’s rights under the March 28, 2008 Share Purchase Agreement, the May 2, 2008 Notice and Agreement with respect to Protiva Options, or the May 23, 2008 Secured Promissory Note issued to Executive by Protiva Biotherapeutics Inc.; (ii) any of Executive’s rights under any indemnity agreement between Executive and the Company or any of its affiliates or subsidiaries, including Protiva Biotherapeutics Inc.; (iii) any other right to contribution or indemnity that Executive may otherwise have under law; or (iv) any rights under this Agreement.

f. Executive acknowledges that Executive has been given an opportunity of twenty-one (21) days to consider whether to sign this Agreement and that Executive has been advised by the Company to discuss fully the terms of this Agreement with legal counsel of Executive’s own choosing. Moreover, for a period of seven (7) days following Executive’s execution and re-execution of this Agreement (each such period, as applicable, the “Revocation Period”), Executive shall have the right to revoke the waiver of claims arising under the Age Discrimination in Employment Act, a federal statute that prohibits employers from discriminating against employees who are age 40 or over. If Executive elects to revoke this Agreement in whole or in part within the Revocation Period, Executive must inform the Company by delivering a written notice of revocation to the Company’s Chairman of the Board, c/o Arbutus Biopharma Corporation, 701 Veterans Circle, Warminster, PA 18974, no later than 11:59 p.m. on the seventh calendar day after Executive signs this Agreement. Executive understands that, if Executive elects to exercise this revocation right, this Agreement shall be voided in its entirety at the election of the Company and the Company shall be relieved of all obligations to pay or provide the Severance Benefits described in Section 2(b) hereof. Executive may, if Executive wishes, elect to sign this Agreement prior to the expiration of the 21-day consideration period, and Executive agrees that if Executive elects to do so, Executive’s election is made freely and voluntarily and after having an opportunity to consult counsel.

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7.       Confidentiality; Work Product; and Restrictions on Solicitation and Competition: Executive hereby acknowledges and agrees that Executive shall continue to be subject to the restrictive covenants and obligations set forth in paragraphs 10, 11, 12 and 14 of the Employment Agreement, which shall survive termination of the Employment Agreement. The Parties acknowledge that pursuant to 18 U.S.C. § 1833(b), an individual may not be held liable under any criminal or civil federal or state trade secret law for disclosure of a trade secret: (i) made in confidence to a government official, either directly or indirectly, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Additionally, an individual suing an employer for retaliation based on the reporting of a suspected violation of law may disclose a trade secret to his or her attorney and use the trade secret information in the court proceeding, so long as any document containing the trade secret is filed under seal and the individual does not disclose the trade secret except pursuant to court order. The Parties acknowledge that nothing in this Agreement or the Employment Agreement prohibits Executive from reporting possible violations of United States federal law or regulation to any United States governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of United States federal law or regulation without prior authorization from or any notice to the Company.

8.       Cooperation. Following the Separation Date, Executive shall reasonably cooperate with the Company in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company which relate to events or occurrences that took place while Executive was employed by the Company. Executive’s reasonable cooperation in connection with such claims or actions includes, but is not limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Company at mutually convenient times. Following the Separation Date, Executive also shall reasonably cooperate with the Company in connection with any investigation or review of any federal, state, provincial, or local regulatory authority as any such investigation or review relates to events or occurrences that took place while Executive was employed by the Company. The Company shall reasonably compensate Executive for Executive’s time spent, and reimburse Executive for any reasonable out-of-pocket expenses incurred, in connection with Executive’s performance of obligations pursuant to this Section 8.

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9.       Return of Property. Promptly after the Separation Date, Executive shall return to the Company the original and all copies of Company property, including but not limited to any and all Confidential Information (as defined in paragraph 10 of the Employment Agreement) and all documents, files, manuals, forms, records, contact information or lists, financial information, drawings, plans, hardware, software, access codes, keys, credit cards, and any and all other physical, intellectual, or personal property of the Company or its subsidiaries or affiliates.

10.       Non-admission of Liability or Wrongdoing: The Parties understand and agree that the execution of this Agreement does not constitute an admission by any Party of any liability or wrongdoing on the part of that Party.

11. Mediation of Disputes: Before initiating any legal proceedings, the Parties shall attempt to resolve all disputes concerning the interpretation, application, or enforcement of any term of this Agreement, any alleged breach of or non-compliance with this Agreement, or otherwise arising out of or in connection with this Agreement or any aspect of Executive’s employment or relationship with the Company or the termination of that employment or relationship, by mediated negotiation, and shall use their best efforts to agree on a mediator and to resolve any disputes by mediation.

12.       Acknowledgements by Executive: In signing this Agreement, Executive acknowledges:

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13.       Knowing and Voluntary Execution: Executive states and represents that Executive has carefully read this Agreement and knows and understands the contents thereof, and that Executive has executed the same as Executive’s own free act and deed. Executive also acknowledges that Executive has had the opportunity to ask questions about each and every provision of this Agreement and that Executive fully understands the effect of the provisions contained herein upon Executive’s legal rights.

14.       Executed Counterparts: This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.

15.        Headings: Section and subsection headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof.

16.       Amendment; Waiver: This Agreement shall not be amended, altered or modified except by an instrument in writing duly executed by the Party against whom enforcement is sought. Neither the waiver by either of the Parties hereto of a breach of or a default under any of the provisions of this Agreement, nor the failure of either of the Parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature, or as a waiver of any such provisions, rights or privileges hereunder.

17.       Effect of Void Provision: If a Party successfully asserts that any provision in this Agreement is void or invalid, the rest of the Agreement shall remain valid and enforceable unless the other Party elects to cancel it. If this Agreement is cancelled pursuant to the preceding sentence, then Executive shall forfeit and/or repay any additional amounts which Executive received in exchange for signing it.

18.       Assignability: Executive’s obligations and agreements under this Agreement shall be binding on Executive’s heirs, executors, legal representatives and assigns and shall inure to the benefit of any successors and assigns of the Company. The Company may, at any time, assign this Agreement or any of its rights or obligations arising hereunder to any party. The Company’s obligations and agreements under this Agreement shall be binding on its successors and assigns and shall inure to the benefit of Executive’s heirs, successors and assigns.

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19.       Entire Agreement: This Agreement, the Consulting Agreement and the provisions of the Employment Agreement referenced in Section 7 above set forth the entire agreement between the Parties hereto and supersede and replace any and all prior or contemporaneous representations or agreements, whether oral or written, relating to the subject matter herein. Executive acknowledges that when Executive decided to sign this Agreement, Executive was not relying on any representations that are not expressly contained in this Agreement.

20.       Withholding: The Company shall have the authority and right to withhold an amount sufficient to satisfy federal, state, local and foreign taxes required by law to be withheld with respect to any payments or benefits under this Agreement. Such withholding shall be consistent with Executive’s elections in his IRS Form W-4 currently on file with the Company.

21.       Governing Law: This Agreement shall be governed by the laws of the Commonwealth of Pennsylvania, without regard to its conflicts of law provisions, except where federal law applies.

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