Exhibit 10.3
EXECUTIVEEMPLOYMENTAGREEMENT
THISEXECUTIVEEMPLOYMENTAGREEMENT(this“Agreement”),ismadeas of July 29, 2026, by and between LB Pharmaceuticals Inc, a Delaware Corporation, (the “Company”) and Susan G. Kozauer, an individual residing at *** (the “Executive”). Company and Executive are each a “Party,” and together, the “Parties.”
Recitals
WHEREAS,theCompanywishestoretaintheservicesoftheExecutivetoserveasChief Medical Officer of the Company and on the terms and conditions set forth herein; and
WHEREAS, the Executive desires to enter into employment with the Company on the terms and conditions set forth herein.
Agreement
NOW,THEREFORE,inconsiderationofthemutualcovenants,promises,andobligations contained herein, and for other good and valuable consideration, the receipt and sufficiency of whichareherebyacknowledged,thePartiesintendingtobelegallybound,acknowledgeandagree as follows:
1.
Position and Duties. Subject to the terms set forth herein, the Company agrees to employ the Executive as Chief Medical Officer, and the Executive hereby acceptssuchemployment,startingonSeptember 14, 2026(the“StartDate”).TheExecutiveshall reporttotheChiefExecutiveOfficeroftheCompany(the“CMO”).TheExecutiveshallhavesuch duties,authority,andresponsibilitiesasshallbeconsistentwiththedutiesnormallyperformedby apersonwiththeExecutive’spositionatcompaniesofsimilarsizeinthepharmaceuticalindustry in which the Company operates. The Executive will diligently and conscientiously perform Executive’s duties and will devote substantially all of the Executive’s business hours to such duties, and during such time will make the best use of the Executive’s energy, knowledge, and trainingtoadvancingtheCompany’sinterests.TheExecutivewillacceptnootheremploymentor contractingworkwhileemployedbytheCompany,orserveasamemberoftheboardofdirectors of any for-profit entity, or as a member of any advisory board, in each case, to the extent such activityconflictswiththeExecutive’semploymenthereunder,withouttheexpresswrittenconsent oftheCEO.UponterminationoftheExecutive’semploymentrelationshipwiththeCompanyfor any reason, the Executive shall resign and relinquish any position held as an officer of the Company.
2.
CompensationandBenefits.
(a)
Base Salary. Subject to the terms set forth herein, in consideration for all services rendered by the Executive to the Company, the Company shall pay the Executive an annualbasesalaryof$515,000.00(“AnnualBaseSalary”)inperiodicinstallmentsinaccordance withtheCompany’sregularpayrollpracticesineffectfromtimetotimeforexecutiveemployees,
but no less frequently than semi-monthly. The Executive shall be classified as exempt from overtime and the Executive understands and acknowledges that the Executive is not entitled to overtime compensation and that the Annual Base Salary is intended to compensate the Executive for all hours worked.
(b)
TargetBonus.
(i)
Beginningwithcalendaryear2026,theExecutivewillbeeligibleeach fiscal year in which the Executive is employed to earn a target bonus of up to 40% of Executive’s Annual Base Salary or a pro rata portion thereof for any partial fiscal year in which the Executive is employed by the Company, in all cases subject to the discretion of the Compensation Committee (the “Committee”) of the board of directors of the Company (the “Board”) determining that the applicable objectives have been achieved (the “Target Bonus”). Objectives will be determined annually by the Compensation Committee in consultationwiththeExecutiveandwillincludebothCompanyperformanceandtheExecutive’s personal performance.
(ii)
IftheExecutive’semploymentterminatesforanyreasonpriortothe payment date of any Target Bonus awarded, the Executive will not have earned, and will not be paid, the awarded Target Bonus (or any portion thereof), provided that if the Company awards a Target Bonus and thereafter terminates the Executive’s employment with the Company for a reason other than for Cause but before any such Target Bonus has been paid, the Executive will stillreceivetheExecutive’sTargetBonuspayment,eveniftheExecutiveisnolongerworkingat the Company at the time the Target Bonus is to be paid. Any Target Bonus awarded will be paid no later than forty-five (45) days after it has been awarded.
(c)
InitialOptionGrant.
(i)
Subject to Board or Committee approval and as a material inducement to the Executive commencing employment with the Company, following the Start Date, the Company will grant to the Executive an option to purchase 200,000 shares of common stockoftheCompany(“CommonStock”)(the“Option”)outside,butsubjecttotheterms,ofthe Company’s 2025 Equity Incentive Plan (the “Plan”), at an exercise price per share equal to the fair market value of a share of Common Stock as of the date of grant. The Option is intended to comply with the inducement award exception to stockholder approval provided under Nasdaq Listing Rule 5635(c)(4) and related guidance.
(ii)
TheOptionshallvestandbecomeexercisableonacumulativebasis withtwentyfivepercent(25%)tovestuponthefirstanniversaryoftheStartDateandinthirty-six
(36) substantially equal monthly installments over the thirty-six (36) month period beginning on the last day of the month following the first anniversary of the Start Date and the last day of each month thereafter; provided that the Executive remains in Continuous Service (as defined in the Plan) with the Company through each such date. The Option shall be subject to the terms and conditions set forth in the Plan and the applicable award agreement thereunder.
Employee Benefits. During Executive’s term of employment by the Company under this Agreement (the “Employment Period”), the Executive shall be entitled to participateinallemployeebenefitplans,practices,andprogramsmaintainedbytheCompany,as in effect from
time to time (collectively, the “Employee Benefit Plans”), on a basis which is no lessfavorablethanisprovidedtoothersimilarlysituatedseniorexecutivesoftheCompany,tothe extentconsistentwithapplicablelawandthetermsoftheapplicableEmployeeBenefitPlans.The CompanyreservestherighttoamendorcancelanyEmployeeBenefitPlansatanytimeinitssole discretion, subject to the terms of such Employee Benefit Plans and applicable law.
(d)
Paid Time Off. During the Employment Period, the Executive shall be entitled to twenty (20) days paid vacation per calendar year. This vacation is in addition to Company recognized holidays and paid sick time, if any, in accordance with the Company’s practicesandpoliciesasineffectfromtimetotime.TheCompanyreservestherighttoamendor cancel its practices and policies at any time in its sole discretion, in accordance with applicable law. If accrued vacation time is not used by the end of the benefit year, the Executive may carry overunusedtimetothenextbenefityear.However,theExecutivemayonlyaccruevacationupto a maximum of 1.5 times the annual accrual amount. Once the Executive reaches the maximum accrualamount,theExecutivewillnotaccrueanyadditionalvacationtimeuntiltheExecutiveuses some of the Executive’s accrued but unused vacation, and the accrued but unused vacation falls below the maximum accrual amount. The Company will pay the Executive for any accrued but unused vacation upon termination of the Executive’s employment.
(e)
Expense Reimbursement. The Company shall reimburse the Executive for allreasonabletravelandotherbusinessexpensesincurredbytheExecutiveintheperformanceof the Executive’s duties to the Company in accordance with the Company’s applicable expense reimbursement policies and procedures.
(f)
Sign-on Bonus. The Executive will also be eligible to receive a one-time cashbonusof$150,000.00,lessapplicablewithholdings(the“Sign-onBonus”).TheCompanywill advance the Sign-on Bonus, prior to it being earned, in a lump sum within thirty (30) days following the Start Date. The Executive will earn fifty percent (50%) of the Sign-on Bonus if the Executive remains continuously employed with the Company through the first anniversary of the Start Date; and the Executive will earn the remaining fifty percent (50%) of the Sign-on Bonus if theExecutiveremainscontinuouslyemployedwiththeCompanythroughthesecondanniversary oftheStartDate.IftheExecutive’semploymentwiththeCompanyterminatesforanyreasonprior to the first anniversary of the Start Date, the Executive agrees to repay, within thirty (30) days of theExecutive’slastdayofemploymentwiththeCompany,thegrossamountequaltoonehundred percent (100%) of the Sign-on Bonus paid to the Executive by the Company in advance of becomingearned;andiftheExecutive’semploymentwiththeCompanyterminatesforanyreason on or after the first anniversary of the Start Date, but prior to the second anniversary of the Start Date, then the Executive agrees to repay, within thirty (30) days of the Executive’s last day of employment with the Company, the gross amount equal to fifty percent (50%) of the Sign-on Bonus paid to the Executive by the Company in advance of becoming earned.
(g)
Withholdings.AllpaymentsmadesubjecttothisAgreementwillbesubject to payroll withholdings that the Company reasonably believes are required by law or elected or authorized by the Executive for state and federal income taxes, Social Security, Medicare, and other applicable payroll deductions, in accordance with the Company’s normal payroll practices.
3.
TerminationofEmployment.
(a)
At-Will Employment; Accrued Rights. The Parties acknowledge that Executive’s employment relationship with the Company shall be at-will. Either the Company or the Executive may terminate Executive’s employment with or without Cause or Good Reason or advancenotice.UponaterminationoftheExecutive’semploymentforanyreason,theExecutive (or the Executive’s estate) shall be entitled to receive (i) that portion of the Executive’s Annual Base Salary, then in effect, earned and unpaid as of the termination date; (ii) any expenses owed and properly reimbursable to the Executive pursuant to the Company’s expense reimbursement policies; (iii) conversion rights, if applicable, with respect to any life insurance or disability insurance policy provided to the Executive; and (iv) any vested amounts owed to the Executive under the Company’s employee benefit plans or programs and any vested options in accordance with the terms and conditions of such employee benefit plans or programs and the Plan (collectively, the “Accrued Rights”).
(b)
TerminationbytheCompanyforCauseorExecutive’sResignationWithoutGoodReason.UponterminationoftheExecutive’semploymentrelationshipbytheCompanyfor Cause, or by the Executive’s resignation without Good Reason, the Company shall, thereafter, have no obligation to the Executive for any unearned Annual Base Salary, Target Bonus, or any other form of compensation or benefit, except as otherwise required by law. Reimbursement of appropriately documented expenses incurred by the Executive before the termination of employment,totheextentthattheExecutivewouldhavebeenentitledtosuchreimbursementbut for the termination of employment, shall be paid by the Company to the Executive.
(c)
Termination by the Company Without Cause or Executive’s Resignationfor Good Reason Outside of Change in Control Period. In the event that the Company terminates the Executive’s employment without Cause or Executive resigns for Good Reason outside of the ChangeinControlPeriod(definedbelow),andprovidedthattheSeverancePreconditions(defined below)aremet,(A)theExecutiveshallreceivenine(9)months’severancepayattheExecutive’s Annual Base Salary then in effect, paid as salary continuation over the nine (9) month period immediately following the Executive’s employment termination date pursuant to the Company’s customarypayrollpractices,commencingonthefirstpayrolldatefollowingthedateonwhichthe Releasebecomeseffectiveandirrevocable,providedthatiftheReleaseExecutionPeriod(defined below) spans two calendar years, payments shall begin no earlier than the first payrolldate of the later calendar year, and provided further that, the first installment payment shall include all amountsattributabletotheperiodfromtheExecutive’semploymentterminationdatethroughthe first payment date; and (B) if the Executive is eligible for and timely and properly elects group healthplancontinuationcoverageundertheConsolidatedOmnibusBudgetReconciliationActof 1985 (“COBRA”), the Company shall reimburse the Executive for monthly COBRA premiums payable to continue coverage for the Executive and the Executive’s eligible dependents until the earliestof(x)nine(9)monthsfollowingtheterminationdate;(y)theexpirationoftheExecutive’s eligibility for the continuation coverage under COBRA; or (z) the date when the Executive becomes eligible for substantially equivalent health insurance coverage in connection with new employment.SuchreimbursementshallbepaidtotheExecutivenolaterthantheendofthemonth immediately following the month in which the Executive timely remits each COBRA premium payment.
(d)
Termination by the Company Without Cause or Executive’s Resignationfor Good Reason in Connection with Change in Control. If at any time during the time period of three (3) months prior to or twelve (12) months following a Change in Control (defined below) (the“ChangeinControlPeriod”),theCompanyterminatestheExecutive’semploymentwithout Cause or the Executive resigns for Good Reason, provided the Severance Preconditions are met, the Company will provide Executive with the following severance benefits (in lieu of, and not in addition to, the severance benefits provided in Section 311(i)):
(i)
alumpsumseverancepayment,payablewithinsixty(60)daysafter thelateroftheChangeinControlandExecutive’semploymentterminationdate(providedthatif theReleaseExecutionPeriodspanstwocalendaryears,paymentshallnotmadeuntilthebeginning of the later calendar year), in an amount equal to the sum of: (A) one (1) year of Executive’s AnnualBaseSalarythenineffect;and(B)1.5timestheTargetBonusopportunityfortheyearin which Executive’s employment termination date occurs;
(ii)
iftheExecutiveiseligibleforandtimelyandproperlyelectsgroup healthplancontinuationcoverageunderCOBRA,theCompanyshallreimbursetheExecutivefor monthly COBRA premiums payable to continue coverage for the Executive and the Executive’s eligibledependentsuntiltheearliestof(x)twelve(12)monthsfollowingtheterminationdate;(y) the expiration of the Executive’s eligibility for the continuation coverage under COBRA; or (z) the date when the Executive becomes eligible for substantially equivalent health insurance coverageinconnectionwithnewemployment.SuchreimbursementshallbepaidtotheExecutive nolaterthantheendofthemonthimmediatelyfollowingthemonthinwhichtheExecutivetimely remits each COBRA premium payment; and
(iii)
the vesting of any outstanding unvested equity that the Executive holds shall be accelerated in full as of the termination date.
(e)
Termination in the Event of Executive’s Disability or Death. The Executive’s employment hereunder (i) shall terminate automatically upon the Executive’s death and (ii) may be terminated by the Company for the Executive’s Disability. Upon termination of the Executive’s employment hereunder by reason of the Executive’s Disability or death, the Executive or the Executive’s estate (as the case may be) shall be entitled to receive:
(i)
theAccruedRights;and
(ii)
subject to the Executive’s or, in the event of the Executive’s death, therepresentativeoftheExecutive’sestate,executionandnon-revocationoftheReleaseandsuch Release becoming effective and irrevocable within the Release Execution Period:
(A)
a pro-rata portion (based on the number of full days the Executivewasemployedintheapplicablefiscalyear)oftheTargetBonus,ifany,Executivewould have earned for the fiscal year in which Executive’s employment termination date occurs, based onactualCompanyperformanceofthefullfiscalyearandpayableatthesametimeannualbonuses aregenerallypaidtoexecutivesforsuchfiscalyear(butinanyeventnolaterthanMarch15ofthe
calendar year that immediately follows the calendar year in which the Executive’s employment termination date occurs); and
(B)
if the Executive is (or in the event of the Executive’s death, theExecutive’ssurvivingspouseand/ordependentsare)eligibleforandtimelyandproperlyelects group health plan continuation coverage under COBRA, the Company shall reimburse the Executive (or in the event of the Executive’s death, the Executive’s surviving spouse and/or dependents) for the monthly COBRA premium paid by the Executive (or in the event of the Executive’sdeath,theExecutive’ssurvivingspouseand/ordependents)fortheExecutiveandthe Executive’sspouse/dependents.SuchreimbursementshallbepaidtotheExecutive(orintheevent of the Executive’s death, the Executive’s surviving spouse and/or dependents) no later than the end of the month immediately following the month in which the Executive (or in the event of the Executive’sdeath,theExecutive’ssurvivingspouseand/ordependents)timelyremitstheCOBRA premium payment. The Executive (or in the event of the Executive’s death, the Executive’s surviving spouse and/or dependents) shall be eligible to receive such reimbursement until the earliest of: (i) the last day of the month that is twenty-six (26) weeks after the termination of the Executive’s employment by reason of the Executive’s Disability or death; (ii) in the event of Executive’sDisability,thedateExecutivebecomeseligibletoreceivehealthcarecoveragefroma subsequent employer (and Executive agrees to promptly notify the Company of such eligibility) or(iii)thedatetheExecutiveis(orintheeventoftheExecutive’sdeath,theExecutive’ssurviving spouse and/or dependents are) no longer eligible to receive COBRA continuation coverage. Notwithstanding the foregoing, if the Company determines in its sole discretion that it cannot provide the foregoing benefit without potentially violating applicable law (including, without limitation,Section2716ofthePublicHealthServiceAct)orincurringanexcisetax,theCompany shallinlieuthereofprovidetoExecutive(orintheeventoftheExecutive’sdeath,theExecutive’s survivingspouseand/ordependents)ataxablemonthlypaymentinanamountequaltothemonthly COBRApremiumcontemplatedbythecontinuationbenefitsetforthinthisSectiononthelastday of each month remaining in the period that the Executive would have otherwise been eligible to receive the COBRA reimbursement benefit set forth in this Section.
(iii)
FollowingtheterminationoftheExecutive’semploymentbyreason of the Executive’s Disability or death, except as set forth in this Section 3, the Executive (or Executive’s estate) shall have no further rights to any compensation or any other benefits under this Agreement.
(f)
Effect of Termination on Post-Termination Obligations. Upon termination ofthisAgreementforanyreason,theExecutiveshallcontinuetobeboundbythepost-employment obligations and covenants set forth in this Agreement and the CIIAA following Executive’s termination.
(g)
No Mitigation. The Executive will not be required to mitigate any of the Company’s payment obligations set forth in this Section 3 by making any efforts to secure other employment, and Executive’s commencement of employment with another employer will not reducetheobligationsoftheCompanyunderthisSection3,unlessspecificallyprovidedforherein.
(h)
Resignation of Offices. Promptly following any termination of the Executive’semploymentwiththeCompanyforanyreason(otherthanbyreasonoftheExecutive’s
death),theExecutiveshalldelivertotheCompanyreasonablysatisfactorywrittenevidenceofthe Executive’s resignation from all positions that the Executive may then hold as an employee or officer of the Company or any subsidiary of the Company.
4.
Definitions.
(a)
Cause. For purposes of this Agreement the term “Cause” shall mean any one or more of the following:
i.
The Executive’s persistent unsatisfactory performance or material failure to perform the Executive’s duties or any lawful directive of the Board or CEO after being given written notice of such deficiencies in the Executive’s performance and failure to cure them within thirty (30) calendar days of such written notice;
ii.
The Executive’s indictment for, conviction of, plea of guilty to, or pleaofnolocontenderetoafelonyinvolvingthepropertyoroperationsoftheCompanyoracrime of moral turpitude;
iii.
The Executive’s indictment for, conviction of, plea of guilty to, or pleaofnolocontenderetoembezzlement,misappropriationorfraud,whetherornotrelatedtothe Executive’s employment with Company;
iv.
Theexistenceofanycourtorderorsettlementagreementprohibiting the Executive’s continued employment with the Company;
v.
The Executive’s material breach of any material obligation in this Agreement,oranyotherwrittenagreementbetweentheExecutiveandCompany,oranymaterial misconductbytheExecutivethatadverselyaffectsthebusinessoftheCompanyoritsreputation; or
vi.
The Executive’s material failure to comply with the Company’s reasonableandlawfulpoliciesorrulesofwhichtheExecutiveisgivenwrittennotice,astheymay beineffectfromtimetotimeduringtheExecutive’semployment,andfailuretocurethemwithin thirty (30) calendar days of such written notice.
(b)
ChangeinControl.ForpurposesofthisAgreement,“ChangeinControl” has the meaning ascribed to such term in the Plan. Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a “change in control event” within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(i).
(c)
Disability.ForthepurposesofthisAgreement,“Disability”shallmeanthat in the good faith judgment of the Board, despite reasonable accommodation, the Executive is unable due to a physical or mental incapacity to perform the essential functions of Executive’s most recent position for: (x) a period of one hundred eighty (180) consecutive days or (y) an aggregate of six (6) months in any twelve (12) consecutive month period.
(d)
Good Reason. For purposes of this Agreement, the term “Good Reason” shallmeananyoneormoreofthefollowing,ineachcaseduringtheEmploymentPeriodwithout the Executive’s written consent:
i.
a material reduction of the Executive’s position, authority or responsibilities, or the removal of the Executive from such position, authority or responsibilities, unless the Executive is provided with a new position of equal or greater organizational level, authority, responsibilities and compensation;
ii.
a material reduction in the Annual Base Salary other than a general reduction in Annual Base Salary that affects all similarly situated executives in substantially the same proportions;
iii.
amaterialbreachbytheCompanyofthisAgreement;or
iv.
amaterialchangeinthegeographiclocationatwhichtheExecutive is required to perform services for the Company (except for office relocations that would not increase the Executive’s one-way commute by more than twenty-five (25) miles).
provided, however, that Good Reason shall not exist unless: (x) the Executive has given the CompanywrittennoticeoftheconductoftheCompanythatisallegedtoconstituteGoodReason withinthirty(30)daysfollowingtheoccurrenceofsuchevent;(y)theExecutivehasprovidedthe Companyatleastthirty(30)daysfollowingthedateonwhichsuchnoticeisprovidedtocuresuch conduct and the Company has failed to do so; and (z) the Executive resigns and voluntarily terminates the Executive’s employment within thirty (30) days following the expiration of the Company’s opportunity to cure such conduct.
(e)
Severance Preconditions. For the purposes of this Agreement, the “SeverancePreconditions”shallmeanthat(i)theExecutivehasexecutedandnotrevokedwithin the applicable revocation period a separation agreement and general release in a form and substance reasonably satisfactory to the Company (the “Release”) and such Release becomes effectiveandirrevocablewithinsixty(60)daysfollowingtheExecutive’semploymenttermination date (such 60-day period, the “Release Execution Period”); (ii) the Executive remains in compliance with the CIIAA; and (iii) the Executive has provided to the Company the written resignations set forth in Section 33(h).
5.
Confidential Information and Intellectual Property Rights. As a condition of employment, the Executive agrees to execute and abide by the Confidentiality and Proprietary Rights Agreement attached as Exhibit A (“CIIAA”). The CIIAA contains provisions that are intendedbythePartiestosurviveanddosurviveanyterminationofthisAgreementandtheCIIAA.
6.
Non-Disparagement.TheExecutiveshallnot,duringorafteremployment,make, directly or indirectly, any public or private statements, gestures, signs, signals or other verbal or nonverbal communications that belittle, disparage or otherwise express disapproval of the Company or any of its affiliates or their respective businesses, or any of their past or present officers, directors, employees, advisors, agents, policies, procedures, practices, decision-making,
conduct, professionalism or compliance with standards, except as and to the extent required to comply with applicable federal or state law. This Agreement does not prohibit Executive from reporting possible legal violations to the government or from making other disclosures to the government that are protected under federal or state whistleblower provisions. This Agreement doesnotprohibitExecutivefrommakingtruthfulstatementsordisclosuresaboutallegedunlawful acts in the workplace, including sexual harassment.
7.
Section 409A. It is intended that any payment or benefit that is provided pursuant toorinconnectionwiththisAgreementthatisconsideredtobedeferredcompensationsubjectto Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) shall be paid and providedinamanner,andatsuchtimeandform,ascomplieswiththeapplicablerequirementsof Section 409A of the Code to avoid the unfavorable tax consequences provided therein for non-compliance. It is further intended that the payments hereunder shall, to the maximum extent permissible under Section 409A of the Code, be exempt from Section 409A of the Code under either (i) the exception for involuntary separation pay to the extent that all payments are payable within the limitations described in Treasury Regulation Section 1.409A-1(b)(9), or (ii) the short-termdeferralexceptiondescribedinTreasuryRegulationSection1.409A-1(b)(4)totheextentthat allpaymentsarepayablenolaterthantwoandahalfmonthsaftertheendofthefirsttaxableyear in which the right to the payment is no longer subject to a substantial risk of forfeiture.
(a)
If the Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i)oftheCodeatsuchtime,anypaymentstobemadeorbenefitstobedeliveredin connection with the Executive’s “separation from service” (as defined below) that constitute deferred compensation subject to Section 409A of the Code shall not be made until the earlier of
(i) the Executive’s death or (ii) six months plus one day after the Executive’s separation from service(“409ADeferralPeriod”)asrequiredbySection409AoftheCode.Paymentsofanysuch deferred compensation otherwise due to be made in installments or periodically during the 409A DeferralPeriodshallbeaccumulatedandpaidinalumpsumassoonasthe409ADeferralPeriod ends, and the balance of the payment shall be made as otherwise scheduled.
(b)
For purposes of this Agreement, all rights to payments and benefits hereunder shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code.
(c)
For purposes of this Agreement, with respect to the timing of any amounts that constitute deferred compensation subject to Section 409A of the Code that depends on termination of employment or separation from service, termination of employment or separation from service shall mean a “separation from service” within the meaning of Section 409A of the Codewhereitisreasonablyanticipatedthatnofurtherserviceswouldbeperformedaftersuchdate or that the level of bona fide services the Executive would perform after that date (whether as an employee or independent contractor) would permanently decrease to a level less than or equal to twentypercent(20%)oftheaveragelevelofbonafideservicestheExecutiveperformedoverthe immediately preceding thirty-six (36) month period.
8.
Section 280G. If any payment or benefit Executive will or may receive from the Companyorotherwise(a“Payment”)would(i)constitutea“parachutepayment”withinthe
meaning of Section 280G of 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 any such Payment shall be equal to the Reduced Amount. The “Reduced Amount” shall be either (x)the largest portion of the PaymentthatwouldresultinnoportionofthePayment(afterreduction)beingsubjecttotheExcise Tax or (y)the largest portion, up to and including the total, of the Payment, whichever amount (i.e.,theamountdeterminedbyclause(x)orbyclause(y)),aftertakingintoaccountallapplicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highestapplicablemarginalrate),resultsinExecutive’sreceipt,onanafter-taxbasis,ofthegreater economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in a Payment is required pursuant to the preceding sentence and the Reduced Amount is determined pursuant to clause (x) of the preceding sentence, the reduction shalloccurinthemanner(the“ReductionMethod”)thatresultsinthegreatesteconomicbenefit forExecutive.Ifmorethanonemethodofreductionwillresultinthesameeconomicbenefit,the items so reduced will be reduced pro rata (the “Pro Rata Reduction Method”).
Notwithstanding any provisions in this Section above to the contrary, if the Reduction Method or the Pro Rata Reduction Method would result in any portion of the Payment being subjecttotaxespursuanttoSection409Athatwouldnototherwisebesubjecttotaxespursuantto Section409A,thentheReductionMethodand/ortheProRataReductionMethod,asthecasemay be,shallbemodifiedsoastoavoidtheimpositionoftaxespursuanttoSection409Aasfollows:
(A)as a first priority, the modification shall preserve to the greatest extent possible, the greatest economic benefit for Executive as determined on an after-tax basis; (B)as a second priority, Payments that are contingent on future events (e.g., being terminated without Cause), shall be reduced(oreliminated)beforePaymentsthatarenotcontingentonfutureevents;and(C)asathird priority,Paymentsthatare“deferredcompensation”withinthemeaningofSection409Ashallbe reduced (or eliminated) before Payments that are not deferred compensation within the meaning of Section 409A.
The Company shall appoint a nationally recognized accounting or law firm to make the determinations required by this Section. The Company shall bear all expenses with respect to the determinations by such accounting or law firm required to be made hereunder. If Executive receives a Payment for which the Reduced Amount was determined pursuant to clause (x) above andtheInternalRevenueServicedeterminesthereafterthatsomeportionofthePaymentissubject totheExciseTax,ExecutiveagreestopromptlyreturntotheCompanyasufficientamountofthe Payment(afterreductionpursuanttoclause(x)above)sothatnoportionoftheremainingPayment is subject to the Excise Tax. For the avoidance of doubt, if the Reduced Amount was determined pursuant to clause (y) above, Executive shall have no obligation to return any portion of the Payment pursuant to the preceding sentence.
9.
Indemnification.TheCompanywillenterintoanindemnificationagreementwith Executive.AtalltimesduringtheExecutive’sserviceasanofficerand/ordirectorandforatleast sixyearsthereafter,theCompanyshallprovidethatExecutiveiscoveredbytheCompany’sD&O insurance on the same basis as other active officers and directors (without regard to whether the Executive’s service has previously terminated).
10.
RepresentationsoftheExecutive.TheExecutiverepresentsandwarrantsthat:
(i)theExecutivehasnolegalobligationstoanyotherpartythatwouldbebreachedbysigningthis Agreement or otherwise fulfilling Executive’s obligations hereunder, including but not limited to anynon-competition,non-solicitation,non-inducement,confidentiality,assignmentofinventions, or other similar agreement; (ii) the Executive has not disclosed any third party’s confidential or proprietaryinformationtotheCompanyoritsrepresentativesoragents;(iii)iftheExecutivelearns of any confidential or proprietary information that belongs to any third party, the Executive will not disclose such information to the Company or its representatives or agents, except as allowed by law or any agreement Executive has signed with such party; and (iv) the Executive is not in breach of any confidentiality or non-disclosure agreement that the Executive has signed.
11.
Miscellaneous.
(a)
Entire Agreement. This Agreement contains the entire agreement and understanding of the Executive and the Company concerning the subject matter hereof and supersedes and replaces all prior negotiations and proposed agreements, whether oral or written. The Executive acknowledges that, by signing this Agreement, the Executive has not relied upon any representations, promises or agreements made by the Company or its employees, officers, directors, or representatives (including any Company attorneys) that are not contained in this Agreement.ThisAgreementmaynotbemodifiedoramendedexceptbyaninstrumentinwriting signed by the Parties hereto.
(b)
Headings/Counterparts.Theheadingsoftheparagraphshereinareincluded for reference only and are not intended to affect the interpretation of the Agreement. This Agreement may be executed in any number of counterparts, each of which shall be deemed an originalbutallofwhichshallconstituteoneandthesameAgreement.EachPartyagreesthatfaxed or electronically transmitted copies of the signature pages of this Agreement and/or any of the other instruments, agreements and documents relating to any of the transactions contemplated hereby, whether sent to the other Party or to such other Party’s counsel, shall be deemed definitively executed and delivered, and with the same force and effect as if manually signed and delivered, for all purposes whatsoever. Neither Party hereto shall raise the use of DocuSign, electronic mail or a facsimile machine to deliver a signature or the fact that any signature was transmittedorcommunicatedthroughtheuseofelectronicmailorafacsimilemachineasadefense to the formation of a contract and each Party forever waives any such defense. All counterparts shall be construed together and shall constitute one instrument, and the signature page from any counterpart may be attached to another counterpart to form a complete copy of this Agreement.
(c)
Severability. If any provision of this Agreement or the application thereof isheldinvalid,suchinvalidationshallnotaffectotherprovisionsorapplicationsofthisAgreement and to this end the provisions of this Agreement are declared to be severable.
(d)
Construction/JointDrafting.Thedeterminationofthetermsandconditions ofthisAgreementhasbeenbymutualagreementoftheParties.Each Partyparticipatedjointlyin the drafting of this Agreement, and therefore the terms and conditions of this Agreement are not intended to be, and shall not be, construed against any Party by virtue of draftsmanship.
(e)
Non-Waiver.NeitherthefailurenoranydelayonthepartofeitherPartyto exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence.NowaiverofanyprovisionofthisAgreementwillbebindingunlessmadeinawriting signed by the Parties hereto.
(f)
Assignment.ThisAgreementshallbebindingupontheCompanyandshall inuretothebenefitoftheCompanyincludinganytransfereeofthebusinessoperation,asagoing concern, in which the Executive is employed and shall be binding upon the Executive and the Executive’s heirs and personal representatives. None of the rights or obligations of the Executive hereundermaybeassignedordelegated.TheCompanymayassignitsrightsandobligationsunder this Agreement in whole or in part to anyone.
(g)
Choice of Law. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the internal laws of the State of California.
(h)
Resolution of Disputes. To aid the rapid and economical resolution of disputesthatmayariseinconnectionwiththeExecutive’semploymentwiththeCompany,andin exchange for the mutual promises contained in this Agreement, the Executive and the Company agree that any and all disputes, claims, or causes of action, in law or equity, including but not limited to statutory claims, arising from or relating to the enforcement, breach, performance, or interpretation of this Agreement, the Executive’s employment with the Company, or the termination of the Executive’s employment, shall be resolved, to the fullest extent permitted by law, by final, binding and confidential arbitration conducted by JAMS, Inc. (“JAMS”) or its successor,underJAMS’thenapplicablerulesandproceduresappropriatetothereliefbeingsought (available upon request and also currently available at the following web address: (i) https://www.jamsadr.com/rules-employment-arbitration/and(ii)https://www.jamsadr.com/rules-comprehensive-arbitration/) at a location closest to where the Executive last worked for the Companyoranothermutuallyagreeablelocation.Anydemandforarbitrationmustbemadewithin the statute of limitations applicable to the claim asserted as if such claim were asserted in court. Failuretodemandarbitration(or,whereapplicable,fileacounterclaim,crossclaim,orthird-party claim) within such time limitation shall serve as a waiver and release with respect to all such claims.TheExecutiveacknowledgesthatbyagreeingtothisarbitrationprocedure,boththe Executive and the Company waive the right to resolve any such dispute through a trial by juryorjudge.TheFederalArbitrationAct,9U.S.C.§1etseq.,will,tothefullestextentpermitted bylaw,governtheinterpretationandenforcementofthisarbitrationagreementandanyarbitration proceedings. This provision shall not be mandatory for any claim or cause of action to the extent applicablelawprohibitssubjectingsuchclaimorcauseofactiontomandatoryarbitrationandsuch applicable law is not preempted by the Federal Arbitration Act or otherwise invalid (collectively, the “Excluded Claims”), such as non-individual claims that cannot be waived under applicable law,claimsorcausesofactionallegingsexualharassmentoranonconsensualsexualactorsexual contact, or unemployment or workers’ compensation claims brought before the applicable state governmentalagency.IntheeventtheExecutiveortheCompanyintendtobringmultipleclaims,
includingoneoftheExcludedClaimslistedabove,theExcludedClaimsmaybefiledwithacourt, whileanyotherclaimswillremainsubjecttomandatoryarbitration.TheExecutiveacknowledges andagreesthatproceedingsofanynon-individualclaim(s)undertheCaliforniaPrivateAttorneys GeneralAct(“PAGA”)thatmaybebroughtincourtshallbestayedforthedurationandpending a final resolution of the arbitration of any individual or individual PAGA claim. Nothing herein preventstheExecutivefromfilingandpursuingproceedingsbeforeafederalorstategovernmental agency, although if the Executive chooses to pursue a claim following the exhaustion of any applicableadministrativeremedies,thatclaimwouldbesubjecttothisprovision.Inaddition,with the exception of Excluded Claims arising out of 9 U.S.C. § 401 et seq., all claims, disputes, or causesofactionunderthissection,whetherbytheExecutiveortheCompany,mustbebroughtin anindividualcapacity,andshallnotbebroughtasaplaintiff(orclaimant)orclassmemberinany purportedclass,representative,orcollectiveproceeding,norjoinedorconsolidatedwiththeclaims ofanyotherpersonorentity.TheExecutiveacknowledgesthatbyagreeingtothisarbitration procedure, both the Executive and the Company waive all rights to have any dispute be brought,heard,administered,resolved,orarbitratedonaclass,representative,orcollective actionbasis.Thearbitratormaynotconsolidatetheclaimsofmorethanonepersonorentity, and may not preside over any form of representative or class proceeding. If a court finds, by meansofafinaldecision,notsubjecttoanyfurtherappealorrecourse,thattheprecedingsentences regarding class, representative, or collective claims or proceedings violate applicable law or are otherwise found unenforceable as to a particular claim or request for relief, the Parties agree that anysuchclaim(s)orrequest(s)forreliefbeseveredfromthearbitrationandmayproceedinacourt of law rather than by arbitration. All other claims or requests for relief shall be arbitrated. The Executive will have the right to be represented by legal counsel at any arbitration proceeding. Questionsofwhetheraclaimissubjecttoarbitrationandproceduralquestionswhichgrowoutof the dispute and bear on the final disposition are matters for the arbitrator to decide, provided however, that if required by applicable law, a court and not the arbitrator may determine the enforceabilityofthisparagraphwithrespecttoExcludedClaims.Thearbitratorshall:(i)havethe authority to compel adequate discovery for the resolution of the dispute and to award such relief aswouldotherwisebepermittedbylaw;and(ii)issueawrittenstatementsignedbythearbitrator regardingthedispositionofeachclaimandtherelief,ifany,awardedastoeachclaim,thereasons fortheaward,andthearbitrator’sessentialfindingsandconclusionsonwhichtheawardisbased. The arbitrator shall be authorized to award all relief that the Executive or the Company would be entitled to seek in a court of law. The Company shall pay all arbitration administrative fees in excess of the administrative fees that the Executive would be required to pay if the dispute were decided in a court of law. Each Party is responsible for its own attorneys’ fees, except as may be expressly set forth in the CIIAA or as otherwise provided under applicable law. Nothing in this Agreement is intended to prevent either the Executive or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration. Any awardsorordersinsucharbitrationsmaybeenteredandenforcedasjudgmentsinthefederaland state courts of any competent jurisdiction.
(i)
Notices.For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have beendulygiven(i)onthedateofdelivery,ifdeliveredbyhand,(ii)onthedateoftransmission,if deliveredbyelectronicmail,(iii)onthefirstbusinessdayfollowingthedateofdeposit,ifdelivered
by guaranteed overnight delivery service, or (iv) on the fourth business day following the date delivered or mailed by the U.S. Postal Service, addressed as follows:
If to theExecutive:
Attheaddressshowninthebooksandrecordsofthe Company, currently:
***
If to theCompany:
LB Pharmaceuticals Inc OnePennPlaza,Suite1025 New York, NY 10119
Attention:ChiefExecutiveOfficer Email: ***
withcopy,whichshallnotconstitutenotice, to:
DivakarGupta Cooley LLP
55HudsonYards
NewYork,NewYork 10001-2163
Noticesshallbedeemedtobeproperlyaddressed,totheCompanyortotheExecutive,ifaddressed tosuchpersonatsuchperson’saddressassetforthabove,ortosuchotheraddressoraddressesas the addressee previously may have specified by Notice given to the other parties in the manner contemplated by this Section 11(i).
(j)
Survival.UpontheterminationofthisAgreement,therespectiverightsand obligations of the Parties hereto shall survive such expiration or other termination to the extent necessary to carry out the intentions of the Parties under this Agreement.
12.
Acknowledgement of Full Understanding. THE EXECUTIVE ACKNOWL-EDGES AND AGREES THAT EXECUTIVE HAS FULLY READ, UNDERSTANDS AND VOLUNTARILY ENTERS INTO THIS AGREEMENT. THE EXECUTIVE ACKNOWL-EDGESANDAGREESTHATEXECUTIVEHASBEENREPRESENTEDBYEXECUTIVE’S OWN COUNSEL OR HAS HAD AN OPPORTUNITY TO BE REPRESENTED BY AN ATTORNEY OF EXECUTIVE’S CHOICE BEFORE SIGNING THIS AGREEMENT.
(Remainderofpageleft blankintentionally;Signatures onthefollowing page)
IN WITNESS WHEREOF, the Parties have duly executed and delivered this Agreement as of the date first above written.
EXECUTIVELBPHARMACEUTICALSINC
By:/s/ Susan G. Kozauer By:/s/ Heather Turner
Name: Susan G. Kozauer Name:HeatherTurner
Title:CEO
15
ExhibitA
CONFIDENTIALITYANDPROPRIETARYRIGHTSAGREEMENT
(Seeattached)