Exhibit 10.5
AMENDED AND RESTATED
EXECUTIVE SEVERANCE AND CHANGE IN CONTROL PLAN
Effective Date: April 15, 2021
Amendment Effective Date: March 30, 2023
Talaris Therapeutics, Inc. (the “Company”) sets forth herein the terms of its Amended and Restated Executive Severance and Change in Control Plan (the “Plan”) as follows:
The purpose of this Plan is to establish the conditions under which Eligible Executives will receive severance pay and benefits if employment with the Company (or its successor, following a Change in Control) terminates under the circumstances specified herein.
(i) with respect to an Eligible Executive employed by the Company at the level of executive-level manager or higher (a “C-Level Eligible Executive”), the period of time commencing 3 months prior to the Announcement Date or approval by the Board of Directors of the Company of a complete liquidation or dissolution of the Company (but no earlier than April 1, 2023) and ending 12 months after the Announcement Date; and
(ii) with respect to any other Eligible Executive, (x) who has been employed by the Company for at least 12 months preceding the Announcement Date, the period of time commencing 3 months prior to the Announcement Date or approval by the Board of Directors of the Company of a complete liquidation or dissolution of the Company (but no earlier than April 1, 2023) and ending 12 months after the Announcement Date and (y) who has not been employed by the Company for at least 12 months preceding the Announcement Date (a “New Hire Eligible Executive”), the period of time commencing on the Change in Control and ending 12 months thereafter.
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provided, however, that any such event shall not constitute Good Reason unless and until the Eligible Executive has provided the Company with written notice thereof no later than 30 days following the initial occurrence of such event and the Company shall have failed to remedy such event (if capable of being remedied) within 30 days of receipt of such notice, and the Eligible Executive must terminate the Eligible Executive’s employment with the Company within 30 days after the expiration of such 30-day remedial period.
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The provisions of this Section 4 shall apply in lieu of, and expressly supersede, the provisions of Section 3 if (i) an Eligible Executive’s employment is terminated either (a) by the Company without Cause or (b) by the Eligible Executive for Good Reason, and (ii) the Date of Termination is within the Change in Control Period and a Change in Control is consummated. For the avoidance of doubt, the benefits in this Section 4 shall apply solely in the event a Change in Control is consummated within the Change in Control Period. These provisions shall terminate and be of no further force or effect after the Change in Control Period. In the event an Eligible Executive is entitled to the severance payments benefits under this Section 4 but has already begun receiving severance payments and benefits pursuant to the provisions of Section 3, then the Eligible Executive will receive the severance payments and benefits set forth in this Section 4 following the occurrence of a Change in Control; provided that the lump sum amount under this Section 4 to be paid to the Eligible Executive following the occurrence of a Change in Control will be decreased by any severance pay and benefits previously paid to the Eligible Executive pursuant to Section 3, and the Eligible Executive will receive no further severance pay and benefits pursuant to Section 3. In no event may there be duplication of severance pay and benefits under Section 3 and Section 4.
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An Eligible Executive’s eligibility to participate in this Plan and receive the severance benefits provided under Section 3 or Section 4 (as applicable) is in consideration of the Eligible Executive entering into and/or otherwise being party to a Restrictive Covenant Agreement in a form provided by the Company. All severance benefits provided under Section 3 or Section 4 (as applicable) are in consideration of the Eligible Executive’s timely execution of and compliance with the Separation Agreement and the Eligible Executive’s continued compliance with the Continuing Obligations. If the Eligible Executive fails to comply with (a) the terms of the Separation Agreement or (b) the terms of the Continuing Obligations, the Company reserves the right to withhold or terminate any unpaid severance payments or benefits (with the exception of legally-mandated benefits), including, without limitation, all severance payments and benefits provided under Section 3 or Section 4 (as applicable), and require the Eligible Executive to repay any amounts the Eligible Executive may have previously received under this Plan. Neither the Company’s termination of any such unpaid severance payments or benefits nor the Eligible Executive’s repayment of any such amounts the Eligible Executive may have previously received under this Plan shall affect the Eligible Executive’s continuing obligations under this Plan, the Separation Agreement or the Continuing Obligations.
Anything in this Plan to the contrary notwithstanding, in the event that the amount of any compensation, payment or distribution by the Company to or for the benefit of the Eligible Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Plan or otherwise, calculated in a manner consistent with Section 280G of the Code and the applicable regulations thereunder (the “Severance Payments”), would be subject to the excise tax imposed by Section 4999 of the Code, the following provisions shall apply:
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Notwithstanding anything in this Plan to the contrary, all payments required to be made by the Company hereunder to an Eligible Executive or an Eligible Executive’s estate or beneficiaries shall be subject to the withholding of such amounts relating to taxes as the Company reasonably may determine it should withhold pursuant to any applicable law or regulation. In lieu of withholding such amounts, in whole or in part, the Company may, in its sole discretion, accept other provisions for the payment of taxes and any withholdings as required by law, provided that the Company is satisfied that all requirements of law affecting its responsibilities to withhold compensation have been satisfied. Nothing in this Plan shall be construed to require the Company to make any payments to compensate the Eligible Executive for any adverse tax effect associated with any payments or benefits or for any deduction or withholding from any payment or benefit.
An Eligible Executive’s payments received hereunder shall be considered severance pay in consideration of past service and entitlement thereto shall not be governed by any duty to mitigate damages by seeking further employment. Notwithstanding anything to the contrary herein, all severance benefits provided to an Eligible Executive pursuant to Section 3 or Section 4 (as applicable) shall be reduced and/or offset by any amounts or benefits paid to an Eligible Executive to satisfy the federal Worker Adjustment and Retraining Notification (WARN) Act, 29 U.S.C. § 2101 et seq., as amended, and any applicable state plant or facility closing or mass layoff law (whether as damages, as payment of salary or other wages during an applicable notice period or otherwise).
This Plan may be amended, suspended or terminated at any time by the Board or the Administrator (as defined herein); provided, however, that no such amendment, suspension or termination shall adversely affect the rights of any Eligible Executive then subject to this Plan, including, without limitation, an Eligible Executive then
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receiving payments, benefits or equity-related rights under this Plan, without the Eligible Executive’s written consent.
This Plan shall be administered by either the Board or the Compensation Committee of the Board or such other committee or person(s) appointed by the Board from time to time to administer this Plan (in either case, the “Administrator”); provided, however, that this Plan shall not be interpreted in a way that is less favorable to an Eligible Executive than would be the case under the Eligible Executive’s Employment Agreement in effect as of the Effective Date of this Plan. The Administrator shall have the power and authority to interpret the terms and provisions of this Plan, to make all determinations it deems advisable for the administration of this Plan, to decide all disputes arising in connection with this Plan and to otherwise supervise the administration of this Plan. All decisions and interpretations of the Administrator shall be final, conclusive and binding on all persons.
This Plan shall be governed by the laws of the United States to the extent applicable and otherwise by the laws of the Delaware, excluding the choice of law rules thereof.
If any part of any provision of this Plan shall be invalid or unenforceable under applicable law, such part shall be ineffective to the extent of such invalidity or unenforceability only, without in any way affecting the remaining parts of such provision or the remaining provisions of this Plan.
The Company shall require any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets of the Company expressly to assume and agree to perform this Plan to the same extent that the Company would be required to perform it if no succession had taken place. Notwithstanding the foregoing, if an Eligible Executive remains employed or becomes employed by the Company, the purchaser or any of their affiliates in connection with any such transaction, then the Eligible Executive shall not be entitled to any payments, benefits or vesting pursuant to this Plan solely as a result of such transaction.
This Plan shall be unfunded and shall not create (or be construed to create) a trust or separate fund. Likewise, this Plan shall not establish any fiduciary relationship between the Company or any of its subsidiaries or affiliates and any Eligible Executive.
No provision in this Plan shall be construed to confer upon any individual the right to remain in the employ or service of the Company or any Subsidiary, or to interfere in any way with any contractual or other right or authority of the Company either to increase or decrease the compensation or other payments to any individual at any time, or to terminate any employment or other relationship between any individual and the Company. The obligation of the Company to pay any benefits pursuant to this Plan shall be interpreted as a contractual obligation to pay only those amounts described herein, in the manner and under the conditions prescribed herein. This Plan shall in no way be interpreted to require the Company to transfer any amounts to a third party trustee or otherwise hold any amounts in trust or escrow for payment to any participant or beneficiary under the terms of this Plan. Notwithstanding the foregoing, and for the avoidance of doubt, in the event of an Eligible Executive’s death after the Eligible Executive’s termination of employment but prior to the completion by the Company of all payments due to the Eligible Executive under this Plan, the Company shall continue such payments to the Eligible Executive’s
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beneficiary designated in writing to the Company prior to the Eligible Executive’s death (or to the Eligible Executive’s estate, if the Eligible Executive fails to make such designation).
If an Eligible Executive’s employment is terminated for Cause or due to death or Disability or the Eligible Executive voluntarily terminates employment with the Company (other than, with respect to any C-Level Eligible Executive, for Good Reason, or, with respect to any other Eligible Executive, for Good Reason during the Change in Control Period), the Eligible Executive shall be entitled to only the Accrued Obligations through the Date of Termination. The mere occurrence of a Change in Control shall not, by itself, be treated as a termination of an Eligible Executive’s employment under this Plan, nor shall the mere transfer of an Eligible Executive’s employment between the Company and/or any of its Subsidiaries, by itself, be treated as a termination of employment under this Plan. Further, Section 3 and Section 4 of this Plan are mutually exclusive and in no event shall an Eligible Executive be entitled to severance payments or benefits pursuant to both Section 3 and Section 4 of this Plan.
The use of captions in this Plan is for the convenience of reference only and shall not affect the meaning of any provision of this Plan.
With respect to words used in this Plan, the singular form shall include the plural form, the masculine gender shall include the feminine gender, etc., as the context requires.
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This Plan was duly authorized by the Board of Directors on the Effective Date.
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Company Secretary
Schedule A
Position | Salary Continuation Period | Benefit Continuation Period |
Chief Executive Officer | 15 months | 12 months |
Other C-Level Eligible Executives | 9 months | 12 months |
Other Eligible Executives | 6 months | 12 months |
Schedule B
Position | Multiplier | Benefit Continuation Period |
Chief Executive Officer | 1.5 | 18 months |
Other C-Level Eligible Executives | 1.0 | 12 months |
Other Eligible Executives | .75 | 12 months |
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