RXi Pharmaceuticals Corp 10-Q 2011
Documents found in this filing:
The Employment Agreement (the Agreement) is made and entered into as of April 13, 2011 (the Effective Date) by and between RXi Pharmaceuticals Corporation, a Delaware corporation (the Company, or Employer), and Robert E. Kennedy, an individual and resident of the State of Arizona (Employee).
WHEREAS, Employer and Employee desire to enter into an employment agreement under which Employee shall serve on a full-time basis as the Companys Vice President and Chief Financial Officer on the terms set forth in the Agreement, with the term of the Agreement to commence on the Effective Date.
NOW, THEREFORE, upon the above premises, and in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows.
1. Engagement. Effective as of the Effective Date, Employer shall employ Employee, and Employee shall serve, as the Companys Vice President and Chief Financial Officer. Employee understands that his duties as Vice President and Chief Financial Officer may change from time to time during the Term (as herewith defined) in the discretion of Employers Board of Directors (hereinafter the Board), but such duties shall in all events be at least consistent with the duties customarily assigned to the Vice President and Chief Financial Officer of a company substantially comparable as of the Effective Date to Employer. As a condition to the Employees employment by the Employer, Employee and Employer shall execute the Employee Confidentiality, Non-Competition, and Proprietary Information Agreement, attached hereto as Exhibit 1 (the Confidentiality Agreement).
2. Duties. Employee shall perform all duties assigned to him in accordance with the terms of this Agreement by the Board faithfully, diligently and to the best of his ability. Such duties include, without limitation, the overseeing and implementation of the business plan adopted by the Board (as may be revised from time to time by the Board). Employee shall perform the services contemplated under this Agreement in accordance with the policies established by and under the direction of the Board. Employee shall have such corporate power and authority as shall reasonably be required to enable him to discharge his duties under this Agreement. Employees services hereunder shall be rendered in or around the vicinity of the Employees residence, at Employers offices in Worcester, MA, or such other location as the parties may agree, except for travel when and as required in the performance of Employees duties hereunder.
3. Time and Efforts. Employee shall devote all of his business time, efforts, attention and energies to Employers business and the discharge of his duties hereunder. Notwithstanding the foregoing, except as otherwise agreed to in writing, Employee shall have the right to perform such incidental services as are necessary in connection with (a) his private passive investments, (b) his charitable or community activities, (c) his participation in trade or professional organizations and (d) his service on the board of directors (or comparable body) of one third-party corporate entity that does not compete with the Company Business (as defined in the Confidentiality Agreement).
4. Term. Employees employment shall commence on the Effective Date and shall terminate on April 13, 2012 (the Term), unless sooner terminated in accordance with Section 6. Neither Employer nor Employee shall have any obligation to extend or renew this Agreement or Employees employment. Unless the parties otherwise agree in writing, Employees employment by Employer shall terminate upon any termination or expiration of this Agreement. Employer agrees to apply its best efforts to negotiate in good faith a replacement employment agreement with the Executive on or before September 30, 2011. In the event the parties have not entered into a new employment agreement by October 1, 2011 then, immediately upon the Employees written request, Employer shall terminate Employee without cause and all of the provisions of Section 6.2 shall apply.
5. Compensation. As the total consideration for Employees services rendered under the Agreement, Employer shall pay or provide Employee the following compensation and benefits:
5.1. Salary. Employee shall initially be entitled to receive an annual base salary during the Term of One Hundred Seventy Five Thousand Dollars ($175,000) (hereinafter the Base Salary) payable in accordance with the usual payroll period of Employer, as established from time to time. If and when during the Term the Company completes one or more financing transactions in which it sells shares of its capital stock (or securities convertible into or exercisable or exchangeable for its capital stock) (each, a Financing, and collectively, the Financings) resulting in aggregate gross cash proceeds of at least $5.0 million, then the Base Salary shall be increased to Two Hundred Thousand Dollars ($200,000) per annum. Further, if and when during the Term the Company completes one or more Financings resulting in aggregate gross cash proceeds of at least $7.5 million, then the Base Salary shall be increased to Two Hundred Twenty Five Thousand Dollars ($225,000) per annum. For purposes of this Agreement, a Financing shall not include any proceeds to the Company resulting from the sale of Company capital stock pursuant to the exercise of stock options or other issuances made primarily for compensatory purposes, or pursuant to the exercise of warrants or other rights to purchase capital stock of the Company outstanding as of the Effective Date.
5.2 Stock Option. On the Effective Date, the Company shall grant Employee a stock option (Option) under the Companys Amended and Restated 2007 Incentive Plan (the Plan) to purchase Thirty Thousand (30,000) shares of the Companys common stock. Except as provided in Section 6.2 of this Agreement, the Option shall vest in equal quarterly installments over 3 years beginning on the first quarterly anniversary of the Effective Date, provided, in each case, that Employee remains in the continuous employ of Employer through such quarterly anniversary date. The Option shall (a) be exercisable at an exercise price per share equal to the closing market price of the Companys common stock on the date of the grant, (b) have a term of ten years, and (c) be on such other terms as shall be determined by the Board (or the Compensation Committee of the Board) and set forth in a customary form of stock option agreement under the Plan evidencing the Option.
5.3. Expense Reimbursement. Employer shall reimburse Employee for reasonable business expenses incurred by Employee in connection with the performance of Employees duties in accordance with Employers usual practices and policies in effect from
time to time. Any reimbursements hereunder shall be paid to Employee promptly in a lump sum in accordance with such expense reimbursement policies and procedures then in effect.
5.4. Vacation. Employee will be entitled to four weeks of paid time off (vacation days plus sick time/personal time) for each full calendar year in accordance with the Companys policies from time to time in effect, in addition to holidays observed by the Company (for partial calendar years, the Employees paid time off will be pro-rated). Paid time off may be taken at such times and intervals as the Employee shall determine, subject to the business needs of the Company, and otherwise shall be subject to the policies of the Company, as in effect from time to time. The number of paid time off days will accrue per pay period and will stop accruing once 20 days have been reached.
5.5. Employee Benefits. The Company shall provide Employee and his dependents with coverage under all medical, dental and/or vision plans and other benefit programs available to the Companys executives and their dependents, to the extent Employee and his dependents satisfy the applicable eligibility requirements, and the Company shall pay, directly or indirectly, the monthly and annual premiums associated with any such medical plans to the same extent the Company pays such premiums for other executives of the Company. Employee shall be eligible to participate in any medical insurance and other employee benefits made available by Employer to all senior executives and/or all of employees of Employer under Employers plans and employment policies in effect during the Term. Employee acknowledges and agrees that, any such plans or policies now or hereafter in effect may be modified or terminated by Employer at any time in its discretion.
5.6. Payroll Taxes. Employer shall have the right to deduct from the compensation and benefits due to Employee hereunder any and all sums required for social security and withholding taxes and for any other federal, state, or local tax or charge which may be in effect or hereafter enacted or required as a charge on the compensation or benefits of Employee.
6. Termination. The Agreement and Employees employment may be terminated as set forth in this Section 6.
6.1. Termination by Employer for Cause; Termination by Employee. Employer may terminate Employees employment hereunder for Cause upon notice to Employee, and Employee may terminate his employment hereunder, for any reason or no reason, upon notice to Employer. Cause for the purpose of this Agreement shall mean any of the following:
(a) Employees breach of any material term of this Agreement including its Exhibits; provided that the first occasion of any particular breach shall not constitute Cause unless Employee shall have previously received written notice from Employer stating the nature of such breach and affording Employee at least ten (10) days to correct such breach;
(b) Employees conviction of, or plea of guilty or nolo contendere to, any felony or other crime of moral turpitude;
(c) Employees act of fraud or dishonesty injurious to Employer or its reputation;
(d) Employees continual failure or refusal to perform his material duties as required under the Agreement after written notice from Employer stating the nature of such failure or refusal and affording Employee at least ten days to correct the same;
(e) Employees act or omission that, in the reasonable determination of Employers Board (or a Committee of the Board), indicates alcohol or drug abuse by Employee; or
(f) Employees act or personal conduct that, in the judgment of the Board (or a Committee of the Board), gives rise to a material risk of liability of Employee or Employer under federal or applicable state law for discrimination, or sexual or other forms of harassment, or other similar liabilities to subordinate employees.
Upon termination of Employees employment by Employer for Cause or by Employee for any reason, all compensation and benefits to Employee hereunder shall cease except that Employee shall be entitled to payment, not later than three days after the date of termination, of (i) any accrued but unpaid salary and unused vacation time (only as accrued during the then-current year of employment), and (ii) reimbursement of business expenses accrued but unpaid as of the date of termination. In addition, Employers indemnification obligations shall remain in effect in accordance with the terms thereof.
6.2. Termination by Employer without Cause. Employer may also terminate Employees employment without Cause during the Term; provided, however, that (i) Employer shall remain obligated to continue paying Employees Base Salary at the time of termination for the remainder of the Term, and (ii) Employees Option shall continue to vest for the remainder of the Term. Upon any termination pursuant to this paragraph, Employee shall, not later than three days after the date of termination, be entitled to payment of any unused vacation time (only as accrued as of the date of such termination and in accordance with applicable law) and reimbursement of business expenses accrued but unpaid as of the date of termination.
7. Equitable Remedies; Injunctive Relief. Employee hereby acknowledges and agrees that monetary damages are inadequate to fully compensate Employer for the damages that would result from a breach or threatened breach of the Confidentiality Agreement and, accordingly, that Employer shall be entitled to equitable remedies, including, without limitation, specific performance, temporary restraining orders, and preliminary injunctions and permanent injunctions, to enforce such Section without the necessity of proving actual damages in connection therewith. The provision shall not, however, diminish Employers right to claim and recover damages or enforce any other of its legal or equitable rights or defenses.
8. Indemnification. Employer and Employee acknowledge that, as the Vice President and Chief Financial Officer of Employer, Employee shall be a corporate officer of Employer and, as such, Employee shall be entitled to indemnification to the full extent mandated
by Employer to its officers, directors and agents under the Employers Certificate of Incorporation and Bylaws as in effect as of the date of this Agreement.
9. Severable Provisions. The provisions of this Agreement are severable and if any one or more provisions is determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions, and any partially unenforceable provisions to the extent enforceable, shall nevertheless be binding and enforceable.
10. Successors and Assigns. This Agreement shall inure to the benefit of and shall be binding upon and enforceable by Employer, its successors and assigns and Employee and his heirs and representatives; provided, however, that neither party may assign the Agreement without the prior written consent of the other party. Employer will cause any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Employer to assume expressly and agree to perform this Agreement in the same manner and to the same extent that Employer would have been required to perform it.
11. Entire Agreement. This Agreement, including the Confidentiality Agreement, contains the entire agreement of the parties relating to the subject matter hereof, and the parties hereto have made no agreements, representations or warranties relating to the subject matter of the Agreement that are not set forth otherwise therein or herein. Except as expressly provided herein, this Agreement (including the Confidentiality Agreement) supersedes any and all prior or contemporaneous agreements, written or oral, between Employee and Employer relating to the subject matter hereof. Any such prior or contemporaneous agreements, as well as that certain Employment Agreement between Employee and Apthera, Inc. (Apthera) dated April 1, 2010, as amended on July 1, 2010 (the Prior Agreement), are hereby terminated and of no further effect, and Employee, by the execution hereof, agrees that any compensation provided for under any such agreements is specifically superseded and replaced by the provisions of this Agreement (including the Confidentiality Agreement). Employee acknowledges that all compensation and other obligations owed to Employee by Apthera pursuant to the Prior Agreement have been fully and finally paid and satisfied as of the Effective Date.
12. Amendment. No modification of this Agreement shall be valid unless made in writing, approved by the Employers Board (or a committee of the Board) and signed by the parties hereto and unless such writing is made by an executive officer of Employer (other than Employee). The parties hereto agree that in no event shall an oral modification of this Agreement be enforceable or valid.
13. Governing Law; Arbitration. This Agreement is and shall be governed and construed in accordance with the laws of the State of Delaware without giving effect to the choice-of-law rules of Delaware. Except to the extent a remedy is sought as described in Section 7, above, any dispute arising out of, or relating to, this Agreement or the breach thereof, or regarding the interpretation thereof, shall be exclusively decided by binding arbitration conducted in Los Angeles, California in accordance with the rules of the American Arbitration Association (the AAA) then in effect before a single arbitrator appointed in accordance with such rules. Judgment upon any award rendered therein may be entered and enforcement
obtained thereon in any court having jurisdiction. Each of the parties agrees that service of process in such arbitration proceedings shall be satisfactorily made upon it if sent by registered mail addressed to it at the address referred to in Section 14 below. The costs of such arbitration shall be borne proportionate to the finding of fault as determined by the arbitrator. Judgment on the arbitration award may be entered by any court of competent jurisdiction.
14. Notice. All notices and other communications under this Agreement shall be in writing and mailed, electronically mailed, telecopied (in case of notice to Employer only) or delivered by hand or by a nationally recognized courier service guaranteeing overnight delivery to a party at the following address (or to such other address as such party may have specified by notice given to the other party pursuant to the provision):
If to Employer:
RXi Pharmaceuticals Corporation
60 Prescott St.
Worcester, MA 01605
Attention: Chief Executive Officer
Fax: (508) 767-3862
If to Employee:
Through company e-mail or company regular mail box if employed by Company or if not employed:
Robert E. Kennedy
9450 E. Larkspur Drive
Scottsdale, AZ 85260
15. Survival. Sections 7 through 16 shall survive the expiration or termination of the Agreement.
16. Counterparts. The Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement.
17. Joint Participation. Employer and Employee agree and acknowledge that they have jointly participated in the negotiation and drafting of this Agreement and that this Agreement has been fully reviewed and negotiated by both Employer and Employee and their respective Counsel. In the event of an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by both Employer and Employee and no presumptions or burdens of proof shall arise favoring either Employer or Employee by virtue of the authorship of any of the provisions of this Agreement.
18. Attorneys Fees. In any action or proceeding to construe or enforce any provision of the Agreement the prevailing party shall be entitled to recover its or his reasonable attorneys fees and other costs of suit in addition to any other recoveries.
IN WITNESS WHEREOF, the Agreement is executed as of the day and year first above written.
RXi Pharmaceuticals Corporation
EMPLOYEE CONFIDENTIALITY, NON-COMPETITION, AND
PROPRIETARY INFORMATION AGREEMENT
AGREEMENT, effective as of April 13, 2011, between RXi Pharmaceuticals Corporation, a Delaware corporation (the Company), and Robert E. Kennedy (the Employee).
1. Employee will make full and prompt disclosure to the Company of all inventions, improvements, modifications, discoveries, methods, technologies, biological materials, and developments, and all other materials, items, techniques, and ideas related directly or indirectly to the business of the Company, whether patentable or not, made or conceived by Employee or under Employees direction during Employees employment with the Company, whether or not made or conceived during normal working hours, or on the premises of the Company (all of which are collectively termed Intellectual Property hereinafter).
2. Employee agrees that all Intellectual Property, as defined above, shall be the sole property of the Company and its assigns, and the Company and its assigns shall be the sole owner of all patents and other rights in connection therewith. Employee hereby assigns to the Company any rights Employee may have or acquire in all Intellectual Property and all related patents, copyrights, trademarks, trade names, and other industrial and intellectual property rights and applications therefore, in the United States and elsewhere. Employee further agrees that with regard to all future developments of Intellectual Property, Employee will assist the Company in every way that may be reasonably required by the Company (and at the Companys expense) to obtain and, from time to time, enforce patents on Intellectual Property in any and all countries that the Company may require, and to that end, Employee will execute all documents reasonably necessary for use in applying for and obtaining such patents thereon and enforcing the same, as the Company may desire, together with any assignment thereof to the Company or persons designated by the Company, and Employee hereby appoints the Company as Employees attorney to execute and deliver any such documents or assignments requested by the Company (but only for the purpose of executing and filing any such document). Employees obligation to assist the Company in obtaining and enforcing patents for Intellectual Property in any and all countries shall continue beyond the termination of Employees employment with the Company, but the Company shall compensate Employee at a reasonable, standard hourly rate following such termination for time directly spent by Employee at the Companys request for such assistance.
3. Employee hereby represents that Employee has no continuing obligation to assign to any former employer or any other person, corporation, institution, or firm any Intellectual Property as described above. Employee represents that Employees performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement to keep in confidence proprietary information acquired by Employee, in confidence or in trust, prior to Employees employment by the Company. Employee has not entered into, and Employee agrees not to enter into, any agreement (either written or oral), which would put Employee in conflict with this Agreement.
4. Employee agrees to assign to the Company any and all copyrights and reproduction rights to any material prepared by Employee in connection with this Agreement and/or developed by Employee during Employees employment with the Company that are related directly or indirectly to the business of the Company.
5. Employee understands and agrees that a condition of Employees employment and continued employment with the Company is that Employee has not brought and will not bring to the Company or use in the performance of Employees duties at the Company any materials or documents rightfully belonging to a former employer which are not generally available to the public.
6. Employee recognizes that the services to be performed by Employee hereunder are special, unique, and extraordinary and that, by reason of Employees employment with the Company, Employee may acquire Confidential Information (as hereinafter defined) concerning the operation of the Company, the use or disclosure of which would cause the Company substantial loss and damage which could not be readily calculated and for which no remedy at law would be adequate. Accordingly, Employee agrees that Employee will not (directly or indirectly) at any time, whether during or for a period of seven (7) years after Employees employment with the Company:
(i) knowingly use for personal benefit or for any other reason not authorized by the Company any Confidential Information that Employee may acquire or has acquired by reason of Employees employment with the Company, or;
(ii) disclose any such Confidential Information to any person or entity except (A) in the performance of Employee obligations to the Company hereunder, (B) as required by a court of competent jurisdiction, (C) in connection with the enforcement of Employee rights under this Agreement, or (D) with the prior consent of the Board of Directors of the Company.
As used herein, Confidential Information includes proprietary and confidential information with respect to the facilities and methods of the Company, reagents, chemical compounds, cell lines or subcellular constituents, organisms, or other biological materials, trade secrets, and other Intellectual Property, systems, patent applications, procedures, manuals, confidential reports, financial information, business plans, prospects, or opportunities, personnel information, or lists of customers and suppliers which are generally known only to the Company provided, however, that Confidential Information shall not include any information that is known or becomes generally known or available publicly other than as a result of disclosure by Employee which is not permitted as described in clause (ii) above, or the Company discloses same to others without obtaining an agreement of confidentiality.
Employee confirms that all Confidential Information is the exclusive property of the Company. All business records, papers, documents and electronic materials kept or made by Employee relating to the business of the Company which comprise Confidential Information shall be and remain the property of the Company during the Employees employment and at all times thereafter. Upon the termination, for any reason, of Employees employment with the Company, or upon the request of the Company at any time, Employee shall deliver to the
Company, and shall retain no copies of any written or electronic materials, records and documents made by Employee or coming into Employees possession concerning the business or affairs of the Company and which comprise Confidential Information.
7. During the term of Employees employment with the Company and for one (1) year thereafter (the Restricted Period), the Employee shall not directly or indirectly, for Employees own account or for the account of others, as an officer, director, stockholder (other than as the holder of less than 1% of the outstanding stock of any publicly traded company), owner, partner, employee, promoter, consultant, manager or otherwise participate in the promotion, financing, ownership, operation, or management of, or assist in or carry on through proprietorship, a corporation, partnership, or other form of business entity which is in competition with the Company in the field of the development of pharmaceutical products or product candidates for the treatment of HER2-positive cancer (the Company Business) within the United States or any other country in which the Company is conducting or is actively seeking or planning to conduct the Company Business as of the date of such termination. Notwithstanding the foregoing, except as otherwise agreed to in writing, Employee shall have the right to perform such incidental services as are necessary in connection with (a) his private passive investments, (b) his charitable or community activities,(c) his participation in trade or professional organizations, and (d) his service on the board of directors (or comparable body) of one third-party corporate entity that does not compete with the Company Business.
During the Restricted Period, the Employee shall not, whether for Employees own account or for the account of any other person (excluding the Company):
Nothing herein shall prohibit or preclude the Employee from performing any other types of services that are not precluded by this Section 7 for any other person.
Employee has carefully read and considered the provisions of this Section 7 (including the Restricted Period, scope of activity to be restrained, and the restrictions geographical scope) and concluded them to be fair, appropriate and reasonably required for the protection of the legitimate business interests of the Company, its officers, directors, employees, creditors, and shareholders. Employee understands that the restrictions contained in this Section may limit Employees ability to engage in a business competitive to the Companys business, but acknowledges that Employee will receive adequate remuneration and other benefits from the Company hereunder to justify such restrictions.
The Employee shall give prompt notice to the Company of the Employees acceptance of employment or other fees for services relationship during the Restricted Period, which notice
shall include the name of, the business of, and the position that Employee shall hold with such other entity.
8. In the event that Employees employment is transferred by the Company to a subsidiary, affiliated company, or acquiring company (as the case may be), Employees employment by such company will, for the purpose of this Confidentiality, Non-Competition, and Proprietary Information Agreement, be considered as continued employment with the Company, unless Employee executes an agreement, substantially similar in substance to this Agreement, and until the effective date of said agreement in any such company for which Employee becomes employed. It is further agreed that changes in Employees position or title unless expressly agreed to in writing will operate to terminate this Confidentiality, Non-Competition, and Proprietary Information Agreement without Cause.
9. Upon termination of Employees employment for any reason, unless such employment is transferred to a subsidiary, affiliated or acquiring company of the Company, Employee agrees to leave with, or return to, the Company all records, drawings, notebooks, and other documents pertaining to the Companys Confidential Information, whether prepared by Employee or others, as well as any equipment, tools or other devices owned by the Company, that are then in Employees possession, however such items were obtained, and Employee agrees not to reproduce or otherwise retain any document or data relating thereto.
10. Employee obligations under this Agreement shall survive the termination of Employees employment with the Company for the respective periods specifically set forth herein regardless of the manner of, and reason for, such termination, and shall be binding upon Employees heirs, executors, and administrators.
11. Employee understands and agrees that no license to any of the Companys trademarks, patents, copyrights or other proprietary rights is either granted or implied by Employees access to and utilization of the Confidential Information or Intellectual Property.
12. No delay or omission by the Company in exercising any right under this Agreement will operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion is effective only in that instance and will not be construed as a bar to or waiver of any right on any other occasion.
13. Employee agrees that in addition to any other rights and remedies available to the Company for any breach or threatened breach by Employee of Employees obligations hereunder, the Company shall be entitled to enforcement of Employees obligations hereunder by whatever means are at the Companys disposal, including court injunction.
14. The Company may assign this Agreement to any other corporation or entity which acquires (whether by purchase, merger, consolidation or otherwise) all or substantially all of the business and/or assets of the Company. Employee shall have no rights of assignment.
15. If any provision of this Agreement shall be declared invalid, illegal, or unenforceable, then such provision shall be enforceable to the extent that a court deems it reasonable to enforce such provision. If such provision shall be unreasonable to enforce to any
extent, such provision shall be severed and all remaining provisions shall continue in full force and effect.
16. This Agreement shall be effective as of the date first written above.
17. This Agreement shall be governed in all respects by the laws of the State of Delaware, without regard to principles of conflicts of law.
[Signature Page Follows]
IN WITNESS WHEREOF, Employee has executed this Agreement as of the date set forth above: