Employment Agreement between the Registrant and Kleem Chaudhary, dated October 14, 2019, as amended on August 2, 2020, with such amendment taking effect upon the completion of this offering
Exhibit 10.15
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement (the Agreement), made and entered into this 14th day of October 2019 (the Effective Date), by and between Checkmate Pharmaceuticals, Inc., a Delaware corporation (Company), and Kleem Chaudhary, Ph.D. (Executive).
WHEREAS, Company wishes to employ Executive as its Chief Business Officer.
WHEREAS, Executive represents that Executive possesses the necessary skills to perform the duties of this position and that Executive has no obligation to any other person or entity which would prevent, limit or interfere with Executives ability to do so; and
WHEREAS, Executive and Company desire to enter into a formal Employment Agreement to assure the harmonious performance of the affairs of Company.
NOW, THEREFORE, in consideration of the mutual promises, terms, provisions, and conditions contained herein, the parties agree as follows:
1. Roles and Duties. Subject to the terms and conditions of this Agreement, Company shall employ Executive as its Chief Business Officer reporting to the CEO. Executives duties will include responsibility for the Companys Business Development, Corporate Strategy and Planning, Investor Relations and Corporate Communications functions; and other duties as assigned by the CEO. Executive accepts such employment upon the terms and conditions set forth herein and agrees to perform to the best of Executives ability the duties normally associated with such position and as determined by Company in its sole discretion. During Executives employment. Executive shall devote all of Executives business time and energies to the business and affairs of Company, provided that nothing contained in this Section 1 shall prevent or limit Executives right to manage Executives personal investments on Executives own personal time, including the right to make passive investments in the securities of: (a) any entity which Executive does not control, directly or indirectly, and which does not compete with Company, or (b) any publicly held entity so long as Executives aggregate direct and indirect interest does not exceed two percent (2%) of the issued and outstanding securities of any class of securities of such publicly held entity.
2. Term of Employment.
(a) Term. Subject to the terms hereof, Executives employment hereunder shall commence on November 1, 2019 (the Commencement Date) and shall continue until terminated hereunder by either party (such term of employment referred to herein as the Term).
(b) Termination. Notwithstanding anything else contained in this Agreement, Executives employment hereunder shall terminate upon the earliest to occur of the following:
(i) Death. Immediately upon Executives death:
(ii) Termination by Company.
(A) If because of Executives Disability (as defined in Section 2(c)). upon written notice by Company to Executive that Executives employment is being terminated as a result of Executives Disability, which termination shall be effective on the date of such notice or such later date as specified in writing by Company;
(B) If for Cause (as defined in Section 2(d)), upon written notice by Company to Executive that Executives employment is being terminated for Cause, which termination shall be effective on the date of such notice or such later date as specified in writing by Company; or
(C) If by Company for reasons other than Disability or Cause, upon written notice by Company to Executive that Executives employment is being terminated, which termination shall be effective immediately after the date of such notice or such later date as specified in writing by Company.
(iii) Termination by Executive.
(A) If for Good Reason (as defined in Section 2(e)), upon written notice by Executive to Company that Executive is terminating Executives employment for Good Reason and that sets forth the factual basis supporting the alleged Good Reason, which termination shall be effective thirty (30) days after the date of such notice; provided that if Company has cured the circumstances giving rise to the Good Reason, then such termination shall not be effective; see Section 4 for Severance Payment provisions or
(B) If without Good Reason, written notice by Executive to Company that Executive is terminating Executives employment, which termination shall be effective at least thirty (30) days after the date of such notice.
Notwithstanding anything in this Section 2(b), Company may at any point terminate Executives employment for Cause prior to the effective date of any other termination contemplated hereunder.
(c) Definition of Disability. For purposes of this Agreement, Disability shall mean Executives incapacity or inability to perform Executives duties and responsibilities as contemplated herein for one hundred twenty (120) days or more within any one (1) year period (cumulative or consecutive), because Executives physical or mental health has become so impaired as to make it impossible or impractical for Executive to perform the duties and responsibilities contemplated hereunder. Determination of Executives physical or mental health shall be determined by Company after consultation with a medical expert appointed by mutual agreement between Company and Executive who has examined Executive. Executive hereby consents to such examination and consultation regarding Executives health and ability to perform as aforesaid.
(d) Definition of Cause. As used herein, Cause shall include: (i) Executives willful engagement in illegal conduct or gross misconduct, which, in each case, is materially injurious to Company; (ii) Executives insubordination or substantial malfeasance or nonfeasance of duty, which, in each case, is materially injurious to Company; (iii) Executives embezzlement, misappropriation or fraud; (iv) Executives unauthorized disclosure of confidential
information; or (v) Executives breach of a material provision of any employment, non-disclosure, invention assignment, non-competition, or similar agreement between Executive and Company; provided that (A) Company provides Executive with written notice that Company intends to terminate Executives employment hereunder for one of the circumstances set forth in this Section 2(d) within thirty (30) days of such circumstance occurring, (B) if such circumstance is capable of being cured, Executive has failed to cure such circumstance within a period of thirty (30) days from the date of such written notice, and (C) Company terminates Executives employment within sixty five (65) days from the date that Cause first occurs. For purposes of clarification, the above-listed conditions shall apply separately to each occurrence of Cause, and failure to adhere to such conditions in the event of Cause shall not disqualify Company from asserting Cause for any subsequent occurrence of Cause.
(e) Definition of Good Reason. As used herein, Good Reason shall mean: (i) relocation of Executives principal business location to a location more than fifty (50) miles from Executives then-current business location; (ii) a material diminution in Executives duties, authority or responsibilities; or (iii) a material reduction in Executives Base Salary; provided that (A) Executive provides Company with written notice that Executive intends to terminate Executives employment hereunder for one of the circumstances set forth in this Section 2(e) within thirty (30) days of such circumstance occurring, (B) if such circumstance is capable of being cured, Company has failed to cure such circumstance within a period of thirty (30) days from the date of such written notice, and (C) Executive terminates Executives employment within sixty five (65) days from the date that Good Reason first occurs. For purposes of clarification, the above-listed conditions shall apply separately to each occurrence of Good Reason and failure to adhere to such conditions in the event of Good Reason shall not disqualify Executive from asserting Good Reason for any subsequent occurrence of Good Reason. For purposes of this Agreement, Good Reason shall be interpreted in a manner, and limited to the extent necessary, so that it shall not cause adverse tax consequences for either party with respect to Section 409A (Section 409A) of the Internal Revenue Code of 1986, as amended (the Code), and any successor statute, regulation and guidance thereto.
3. Compensation.
(a) Base Salary. Company shall pay Executive a base salary (the Base Salary) at the annual rate of three hundred and fifty thousand dollars ($350,000), as of the Commencement Date. The Base Salary shall be payable in substantially equal periodic installments in accordance with Companys payroll practices as in effect from time to time. Company shall deduct from each such installment all amounts required to be deducted or withheld under applicable law or under any employee benefit plan in which Executive participates. The Company shall review the Base Salary on an annual basis and may increase, but not decrease, the Base Salary.
(b) Annual Performance Bonus. Executive shall be eligible to receive an annual cash bonus (the Annual Performance Bonus), with the target amount of such Annual Performance Bonus equal to Thirty Percent (30%) of Executives Base Salary in the year to which the Annual Performance Bonus relates; provided that the actual amount of the Annual Performance Bonus may be greater or less than such target amount. The amount of the Annual Performance Bonus shall be determined by the Board or an appropriate committee thereof in its sole discretion,
and shall be paid to Executive no later than March 15th of the calendar year immediately following the calendar year in which it was earned. Executive must be employed by Company on the last day of the fiscal year on which the Annual Performance Bonus is based in order to be eligible for such Annual Performance Bonus. Company shall deduct from the Annual Performance Bonus all amounts required to be deducted or withheld under applicable law or under any employee benefit plan in which Executive participates. For the current calendar year, Executive shall be eligible for a prorated Annual Performance Bonus subject to the terms and conditions described above.
(c) Paid Time Off. Executive may take up to twenty (20) days of paid time off (PTO) per year, to be scheduled to minimize disruption to Companys operations, pursuant to the terms and conditions of Company policy and practices as applied to Company senior executives.
(d) Fringe Benefits. Executive shall be entitled to participate in all benefit/welfare plans and fringe benefits provided to Company senior executives. Executive understands that, except when prohibited by applicable law, Companys benefit plans and fringe benefits may be amended by Company from time to time in its sole discretion.
(e) Equity Incentive Awards. Executive will eligible to participate in the Companys equity incentive program and, subject to approval by the Companys Board of Directors, to be obtained no later than the Commencement Date, receive a stock option grant equal to 1.1% of the Companys fully diluted stock vesting over four years, with the first twenty-five percent (25%) vesting on the twelve (12) month anniversary of your Commencement Date, and the remaining vesting in equal monthly installments over the following thirty-six (36) months. In the case of a Sale Event, as defined in the Companys 2015 Stock Option and Grant Plan (the Plan), this option shall be treated as provided in Section 3(c) of the Plan and all of the shares shall vest immediately upon the Completion of a Sale Event (as defined in the Plan).
(f) Sign-On Bonus. Company shall pay Executive a sign-on bonus payment of one hundred thousand dollars ($100,000) within one month after the Commencement Date and an additional payment of sixty-five thousand dollars ($65,000) within one month after either (i) the twelve (12) month anniversary of the Commencement Date provided that Executive is employed by the Company on the twelve (12) month anniversary of the Commencement Date or (ii) a change of control of the Company provided that Executive is employed by the Company on the date of the change of control of the Company.
(g) Reimbursement of Expenses. Company shall reimburse Executive for all ordinary and reasonable out-of-pocket business expenses incurred by Executive in furtherance of Companys business in accordance with Companys policies with respect thereto as in effect from time to time. Executive must submit any request for reimbursement no later than ninety (90) days following the date that such business expense is incurred. All reimbursements provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during Executives lifetime (or during a shorter period of time specified in this Agreement); (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year; (iii) the reimbursement of an eligible expense shall be made no later than the last day of the calendar year following the year in which the expense is incurred; and (iv) the right to reimbursement or in kind benefits is not subject to liquidation or exchange for another benefit.
(h) Indemnification. Executive shall be entitled to indemnification with respect to Executives sendees provided hereunder pursuant to Delaware law, the terms and conditions of Companys certificate of incorporation and/or by-laws, Companys directors and officers (D&O) liability insurance policy, and Companys standard indemnification agreement for directors and officers as executed by Company and Executive.
(i) Initial Public Offering. If the Company completes an initial public offering, Executives cash compensation (base salary plus target bonus) shall be set at least the median for the Chief Business Officer at comparable public companies as determined by the Companys Board of Directors.
4. Payments Upon Termination.
(a) Definition of Accrued Obligations. For purposes of this Agreement, Accrued Obligations means the portion of Executives Base Salary that has accrued prior to any termination of Executives employment with Company and has not yet been paid, and the amount of any expenses properly incurred by Executive on behalf of Company prior to any such termination and not yet reimbursed. Executives entitlement to any other compensation or benefit under any plan of Company shall be governed by and determined in accordance with the terms of such plans, except as otherwise specified in this Agreement.
(b) Termination by Company for Cause, by Executive Without Good Reason, or as a Result of Executives Disability or Death. If Executives employment hereunder is terminated by Company for Cause, by Executive without Good Reason, or as a result of Executives Disability or death, then Company shall pay the Accrued Obligations to Executive promptly following the effective date of such termination.
(c) Termination by Company Without Cause or by Executive For Good Reason. In the event that Executives employment is terminated by action of Company other than for Cause, or Executive terminates Executives employment for Good Reason, then, in addition to the Accrued Obligations, Executive shall receive the following, subject to the terms and conditions of Section 4(d):
(i) Severance Payments. Payment in an amount equal to Executives then-current Base Salary for a nine (9) month period plus any Annual Performance Bonus accrued prior to any termination of Executives employment with Company and has not yet been paid (prorated based on the date of termination) less customary and required taxes and employment-related deductions, paid in one lump sum amount on the first payroll date following the date on which the separation agreement under Section 4(d) becomes effective and non-revocable; provided that such payment shall be made within seventy (70) days following the effective date of termination from employment, and further provided that if the 70th day falls in the calendar year following the year during which the termination or separation from service occurred, then the payments will commence in such subsequent calendar year, and further provided that if such payments commence in such subsequent year, the first such payment shall be a lump sum in an
amount equal to the payments that would have come due since Employees separation from service. For the avoidance of doubt, the severance payments in this Section 4(c)(i) apply in the event of a change of control of the Company.
(ii) Benefits Payments. Upon completion of appropriate forms and subject to applicable terms and conditions under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA), Company shall continue to provide Executive medical insurance coverage at no cost to Executive to the same extent that such insurance continues to be provided to similarly situated executives at the time of Executives termination, until the earlier to occur of twelve (12) months following Executives termination date or the date Executive begins employment with another employer. Executive shall bear responsibility for applying for COBRA continuation coverage.
(d) Execution of Separation Agreement. Company shall not be obligated to pay Executive severance payments or benefits described in this Section 4 unless Executive has executed (without revocation) a timely separation agreement in a form acceptable to Company, which shall include a release of claims and standard terms regarding non-disparagement, confidentiality, cooperation and the like, which shall be provided to Executive within ten (10) days following separation from service, and signed by Executive and returned to Company no later than sixty (60) days following Executives separation from service (the Review Period).
(e) COBRA. If the payment of any COBRA or health insurance premiums by Company on behalf of Executive as described herein would otherwise violate any applicable nondiscrimination rules or cause the reimbursement of claims to be taxable under the Patient Protection and Affordable Care Act of 2010, together with the Health Care and Education Reconciliation Act of 2010 (collectively, the Act) or Section 105(h) of the Code, the COBRA premiums paid by Company shall be treated as taxable payments (subject to customary and required taxes and employment-related deductions) and be subject to imputed income tax treatment to the extent necessary to eliminate any discriminatory treatment or taxation under the Act or Section 105(h) of the Code. If Company determines in its sole discretion that it cannot provide the COBRA benefits described herein under Companys health insurance plan without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), Company shall in lieu thereof provide to Executive a taxable lump-sum payment in an amount equal to the sum of the monthly (or then remaining) COBRA premiums that Executive would be required to pay to maintain Executives group health insurance coverage in effect on the separation date for the remaining portion of the period for which Executive shall receive the payments described in Sections 4(b) or 4(c) above.
5. Prohibited Competition And Solicitation. In light of the competitive and proprietary aspects of the business of Company, and as a condition of employment hereunder, Executive agrees to execute and abide by Companys Confidentiality, Assignment of Inventions and Non-Competition Agreement.
6. Property and Records. Upon the termination of Executives employment hereunder, or if Company otherwise requests, Executive shall: (a) return to Company all tangible business information and copies thereof (regardless how such Confidential Information or copies are maintained), and (b) deliver to Company any property of Company which may be in Executives possession, including, but not limited to, cell phones, smart phones, laptops, products, materials, memoranda, notes, records, reports or other documents or photocopies of the same.
7. Code Sections 409A and 280G.
(a) In the event that the payments or benefits set forth in Section 4 of this Agreement constitute non-qualified deferred compensation subject to Section 409A, then the following conditions apply to such payments or benefits:
(i) Any termination of Executives employment triggering payment of benefits under Section 4 must constitute a separation from service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-l(h) before distribution of such benefits can commence. To the extent that the termination of Executives employment does not constitute a separation of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. § 1.409A-1 (h) (as the result of further services that are reasonably anticipated to be provided by Executive to Company at the time Executives employment terminates), any such payments under Section 4 that constitute deferred compensation under Section 409A shall be delayed until after the date of a subsequent event constituting a separation of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-l(h). For purposes of clarification, this Section 7(a) shall not cause any forfeiture of benefits on Executives part, but shall only act as a delay until such time as a separation from service occurs.
(ii) Notwithstanding any other provision with respect to the timing of payments under Section 4 if, at the time of Executives termination, Executive is deemed to be a specified employee of Company (within the meaning of Section 409A(a)(2)(B)(i) of the Code), then limited only to the extent necessary to comply with the requirements of Section 409A, any payments to which Executive may become entitled under Section 4 which are subject to Section 409A (and not otherwise exempt from its application) shall be withheld until the first (1st) business day of the seventh (7th) month following the termination of Executives employment, at which time Executive shall be paid an aggregate amount equal to the accumulated, but unpaid, payments otherwise due to Executive under the terms of Section 4.
(b) It is intended that each installment of the payments and benefits provided under Section 4 of this Agreement shall be treated as a separate payment for purposes of Section 409A. Neither Company nor Executive shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A.
(c) Notwithstanding any other provision of this Agreement to the contrary, this Agreement shall be interpreted and at all times administered in a manner that avoids the inclusion of compensation in income under Section 409A, or the payment of increased taxes, excise taxes or other penalties under Section 409A. The parties intend this Agreement to be in compliance with Section 409A. Executive acknowledges and agrees that Company does not guarantee the tax treatment or tax consequences associated with any payment or benefit arising under this Agreement, including but not limited to consequences related to Section 409A.
(d) If any payment or benefit Executive would receive under this Agreement, when combined with any other payment or benefit Executive receives pursuant to a change of control (for purposes of this section, a Payment) would: (i) constitute a parachute payment within the meaning of Section 280G the Code; and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the Excise Tax), then such Payment shall be either: (A) the full amount of such Payment; or (B) such lesser amount as would result in no portion of the Payment being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local employments taxes, income taxes and the Excise Tax, results in Executives receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. With respect to subsection (B), if there is more than one method of reducing the payment as would result in no portion of the Payment being subject to the Excise Tax, then Executive shall determine which method shall be followed, provided that if Executive fails to make such determination within thirty (30) days after Company has sent Executive written notice of the need for such reduction, Company may determine the amount of such reduction in its sole discretion.
8. General.
(a) Notices. Except as otherwise specifically provided herein, any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated: (i) by personal delivery when delivered personally; (ii) by overnight courier upon written verification of receipt; (iii) by telecopy or facsimile transmission upon acknowledgment of receipt of electronic transmission; or (iv) by certified or registered mail, return receipt requested, upon verification of receipt.
| Notices to Executive shall be sent to: |
The last known address in Companys records or such other address as Executive may specify in writing.
| Notices to Company shall be sent to: |
Checkmate Pharmaceuticals, Inc.
245 Main St., 4th Floor
Cambridge, MA 02142
Attn: President and CEO
or to such other Company representative as Company may specify in writing, with a copy to:
Goodwin Procter LLP
100 Northern Avenue
Boston, MA 02210
(b) Modifications: Amendments: Waivers: Consents. The terms of this Agreement may be modified or amended only by written agreement executed by the parties hereto. The terms of this Agreement may be waived, or consent for the departure therefrom granted, only
by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.
(c) Assignment. Company may assign its rights and obligations hereunder to any person or entity that succeeds to all or substantially all of Companys business or that aspect of Companys business in which Executive is principally involved. Executive may not assign Executives rights and obligations under this Agreement without the prior written consent of Company.
(d) Governing Law; Jurisdiction: Venue. This Agreement shall be governed by and construed in accordance with the substantive laws of the Commonwealth of Massachusetts, without giving effect to any choice or conflict of law provision or rule. Any legal action permitted by this Agreement to enforce an award or for a claimed breach shall be governed by the laws of the Commonwealth of Massachusetts and shall be commenced and maintained solely in any state or federal court located in the Commonwealth of Massachusetts, and both parties hereby submit to the jurisdiction and venue of any such court.
(e) Headings and Captions. The headings and captions of the various subdivisions of this Agreement are for convenience of reference only and shall in no way modify or affect the meaning or construction of any of the terms or provisions hereof.
(f) Entire Agreement. This Agreement, together with the other agreements specifically referenced herein, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement of any kind not expressly set forth in this Agreement shall affect, or be used to interpret, change or restrict, the express terms and provisions of this Agreement.
This Agreement may be executed in two or more counterparts, and by different parties hereto on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. For all purposes a signature by fax shall be treated as an original.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
KLEEM CHAUDHARY | CHECKMATE PHARMACEUTICALS, INC. | |||||
/s/ Kleem Chaudhary | By: | /s/ Barry Labinger | ||||
Signature | Name: Barry Labinger Title: President and CEO |
AMENDMENT NO. 1
TO
EMPLOYMENT AGREEMENT
THIS AMENDMENT NO. 1 (this Amendment) to that certain Executive Employment Agreement, dated as of October 14, 2019 (the Employment Agreement), by and between Checkmate Pharmaceuticals, Inc., a corporation, and Kleem Chaudhary (the Executive) is made and entered into by and between the Executive and the Company, effective upon the completion of the Companys initial public offering (the Effective Date). Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Employment Agreement.
WHEREAS, the Executive and the Company are party to the Employment Agreement;
WHEREAS, the Company desires to continue to employ the Executive and the Executive desires to continue to be employed by the Company; and
WHEREAS, the Executive and the Company desire to amend the Employment Agreement effective as of the Effective Date as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Executive and the Company hereby agree to amend the Employment Agreement effective as of the Effective Date as follows:
1. The following shall be inserted as a new Section 2(f):
(f) Definition of Change in Control. For purposes of this Agreement, Change in Control shall mean Sale Event as such term is defined in the Checkmate Pharmaceuticals, Inc. 2020 Stock Option and Incentive Plan, as the same may be amended from time to time.
2. The following shall be inserted as a new Section 2(g):
(g) Definition of Change in Control Period. For purposes of this Agreement, Change in Control Period means the twelve (12) month period beginning on the date the Change in Control occurs.
3. The following shall be inserted as a new Section 2(h):
(h) Definition of IPO. For purposes of this Agreement, IPO means the first offering by the Company of its equity securities to the public pursuant to an effective registration statement filed under the Securities Act of 1933, as amended, or under any similar law then in effect.
4. Section 2(e) of the Employment Agreement is deleted and replaced with the following:
Definition of Good Reason. As used herein, Good Reason shall mean the following actions by Company, in each case without Executives consent: (i) relocation of Executives principal business location to a location more than fifty (50) miles from Executives then-current business location; (ii) a material diminution in Executives duties, authority or responsibilities; or (iii) a material reduction in Executives Base Salary unrelated to a Company-wide reduction in officer compensation; provided that (A) Executive provides Company with written notice that Executive intends to terminate Executives employment hereunder for one of the circumstances set forth in this Section 2(e) within thirty (30) days of such circumstance occurring, (B) if such circumstance is capable of being cured, Company has failed to cure such circumstance within a period of thirty (30) days from the date of such written notice, and (C) Executive terminates Executives employment within sixty five (65) days from the date that Good Reason first occurs. For purposes of clarification, the above-listed conditions shall apply separately to each occurrence of Good Reason and failure to adhere to such conditions in the event of Good Reason shall not disqualify Executive from asserting Good Reason for any subsequent occurrence of Good Reason. For purposes of this Agreement, Good Reason shall be interpreted in a manner, and limited to the extent necessary, so that it shall not cause adverse tax consequences for either party with respect to Section 409A (Section 409A) of the Internal Revenue Code of 1986, as amended (the Code), and any successor statute, regulation and guidance thereto. Notwithstanding the foregoing, any of the actions described in subclause (ii) herein that are taken in connection with a transaction in which the owners of the Companys outstanding voting power immediately prior to such transaction do not own at least a majority of the outstanding voting power of the Company or any successor entity immediately upon completion of the transaction other than as a result of the acquisition of securities directly from the Company shall not be deemed to constitute an occurrence of Good Reason.
5. The first sentence of Section 3(a) of the Employment Agreement is deleted and replaced with the following:
Company shall pay Executive a base salary (the Base Salary) at the annual rate of three hundred seventy thousand dollars ($370,000).
6. The first sentence of Section 3(b) of the Employment Agreement is deleted and replaced with the following:
Executive shall be eligible to receive an annual cash bonus (the Annual Performance Bonus), with the target amount of such Annual Performance Bonus equal to Forty Percent (40%) of Executives Base Salary in the year to which the Annual Performance Bonus relates (the Target Bonus Amount), provided that the actual amount of the Annual Performance Bonus may be greater or less than such Target Bonus Amount.
7. Section 4(c) of the Employment Agreement is deleted in its entirety and replaced with the following:
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(c) Severance Pay and Benefits Upon Termination by the Company without Cause or by the Executive for Good Reason Outside the Change in Control Period. If the Executives employment is terminated by the Company without Cause or the Executive terminates employment for Good Reason, each outside of the Change in Control Period, then, in addition to the Accrued Obligations, and subject to (i) the Executive signing a separation agreement and release in a form and manner satisfactory to the Company, which shall include, without limitation, a general release of claims against the Company and all related persons and entities, a reaffirmation of all of the Executives obligations under the Companys Confidentiality, Assignment of Inventions and Non-Competition Agreement of the Agreement, and any other provisions of this Agreement intended to survive its termination (Continuing Obligations), and shall provide that if the Executive breaches any of the Continuing Obligations, all payments or provisions of the Severance Pay and Benefits shall immediately cease (and may be subject to recoupment) without affecting the other provisions thereof (the Separation Agreement and Release), and (ii) the Separation Agreement and Release becoming effective irrevocable, all within 60 days after the date of termination (or such shorter period as set forth in the Separation Agreement and Release), the Company will pay or provide (as applicable) the following (collectively, the Severance Pay and Benefits):
(i) an amount equal to 9 months of the Executives Base Salary (the Severance Amount); and
(ii) if the Executive was participating in the Companys group health, dental and/or vision plans immediately prior to the date of termination and properly elects to continue health coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA), then, subject to the Executives copayment of the premium amounts at the applicable active employees rate, the Company shall pay to the group health plan provider, the COBRA provider or the Executive a monthly payment equal to the monthly employer contribution that the Company would have made to provide health insurance to the Executive if the Executive had remained employed by the Company until the earliest of the following: (i) the last day of the nine-month period following the date of termination; (ii) the Executives eligibility for group medical plan benefits under any other employers group medical plan or otherwise through other employment; or (iii) the cessation of the Executives continuation coverage rights under COBRA. Notwithstanding the foregoing, if the Company determines at any time that its payments pursuant to this paragraph may be taxable income to the Executive or that it cannot pay such amounts to the group health plan provider or the COBRA provider (if applicable) without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then the Company may convert such payments to payroll payments directly to the Executive for the time period specified above; and such payments shall be subject to tax-related deductions and withholdings and shall be paid on the Companys regular payroll dates. Any other premiums or costs of COBRA continuation coverage not provided above (including, without limitation, for any COBRA coverage after the time period set forth above) shall be at the sole expense of the Executive.
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The amounts payable under this Section 4(c), to the extent taxable, shall be paid out in substantially equal installments in accordance with the Companys payroll practice over 9 months commencing within 60 days after the date of termination; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, the Severance Amount, to the extent it qualifies as non-qualified deferred compensation within the meaning of Section 409A of the Code, shall begin to be paid in the second calendar year by the last day of such 60-day period; provided, further, that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the date of termination. Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2).
8. The following shall be inserted as a new Section 4(d):
(d) Severance Pay and Benefits Upon Termination by the Company without Cause or by the Executive for Good Reason within the Change in Control Period. The provisions of this Section 4(d) shall apply in lieu of, and expressly supersede, the provisions of Section 4(c) if the date of termination occurs during the Change in Control Period. These provisions shall terminate and be of no further force or effect after a Change in Control Period. If the Executives employment is terminated by the Company without Cause or the Executive terminates employment for Good Reason and, in each case, the date of termination occurs during the Change in Control Period, then, in addition to the Accrued Obligations, and subject to (i) the Executive signing a Separation Agreement and Release meeting all of the requirements specified in Section 4(c) of this Agreement, including a reaffirmation that if the Executive breaches any of the Continuing Obligations, all payments or provisions of the Change in Control Pay and Benefits shall immediately cease and may be subject to recoupment, and (ii) the Separation Agreement and Release becoming effective irrevocable, all within 60 days after the date of termination (or such shorter period as set forth in the Separation Agreement and Release), the Company will pay or provide (as applicable) the following (collectively, the Change in Control Pay and Benefits):
(i) the Company shall pay the Executive a lump sum in cash in an amount equal to the (A) Executives then current Base Salary, plus (B) the Target Bonus Amount;
(ii) notwithstanding anything to the contrary in any applicable option agreement or other stock-based award agreement, all time-based stock options and other stock-based awards subject to time-based vesting held by the Executive (the Time-Based Equity Awards) and granted after the Companys IPO shall immediately accelerate and become fully exercisable or nonforfeitable as of the later of (A) the date of termination or (B) the effective date of the Separation Agreement and Release (the Accelerated Vesting Date); provided that any
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termination or forfeiture of the unvested portion of such Time-Based Equity Awards that would otherwise occur on the date of termination in the absence of this Agreement will be delayed until the effective date of the Separation Agreement and Release and will only occur if the vesting pursuant to this subsection does not occur due to the absence of the Separation Agreement and Release becoming fully effective within the time period set forth therein. Notwithstanding the foregoing, no additional vesting of the Time-Based Equity Awards shall occur during the period between the Executives date of termination and the Accelerated Vesting Date; and
(iii) if the Executive was participating in the Companys group health, dental and/or vision plans immediately prior to the date of termination and properly elects to continue health coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA), then, the Company shall continue to provide Executive medical insurance coverage at no cost to Executive to the same extent that such insurance continues to be provided to similarly situated executives at the time of Executives termination until the earliest of the following: (i) the first anniversary of the date of termination; (ii) the Executives eligibility for group medical plan benefits under any other employers group medical plan or otherwise through other employment; or (iii) the cessation of the Executives continuation coverage rights under COBRA. Notwithstanding the foregoing, if the Company determines at any time that its payments pursuant to this paragraph may be taxable income to the Executive or that it cannot pay such amounts to the group health plan provider or the COBRA provider (if applicable) without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then the Company may convert such payments to payroll payments directly to the Executive for the time period specified above; and such payments shall be subject to tax-related deductions and withholdings and shall be paid on the Companys regular payroll dates.
The amounts payable under this Section 4(d), to the extent taxable, shall be paid or commence to be paid within 60 days after the date of termination.
9. All Agreement references to section numbers and defined terms are amended to reflect the above modifications.
10. Except to the extent expressly modified or amended by this Amendment, all terms and provisions of the Employment Agreement shall continue in full force and effect and shall remain enforceable and binding in accordance with their respective terms.
11. Any required notices, meetings or consents that are necessary to make an amendment to the Employment Agreement are hereby waived or satisfied.
12. This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Amendment delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Amendment.
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IN WITNESS WHEREOF, the undersigned have executed this Amendment effective as of the date first set forth above.
COMPANY: | ||
CHECKMATE PHARMACEUTICALS, INC., a Delaware Corporation | ||
By: | /s/ Barry Labinger | |
Name: | Barry Labinger | |
Title: | President and Chief Executive Officer | |
EXECUTIVE: | ||
By: | /s/ Kleem Chaudhary | |
Name: | Kleem Chaudhary |
Signature Page to Amendment No. 1 to Chaudhary Executive Employment Agreement