Inhibitor Therapeutics, Inc 8-K, filed Dec 19, 2022
Inhibitor Therapeutics, Inc. (INTI)
About this 8-K
Inhibitor Therapeutics, Inc filed this 8-K on December 19, 2022, reporting on events of December 13, 2022.
Items reported
- Item 1.01: Entered into a material agreement
- Item 1.02: Ended a material agreement
- Item 5.01: Change in control
- Item 5.02: Director or officer change, or executive pay
- Item 9.01: Financial statements and exhibits
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
| None | N/A | N/A |
Item 1.01 |
Entry into Material Definitive Agreement. |
Item 1.02. |
Termination of a Material Definitive Agreement. |
Item 5.01 |
Changes in Control |
Item 5.02. |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Item 9.01. |
Financial Statements and Exhibits. |
Exhibit No. |
Description | |
| 10.1 | Stipulation and Agreement of Compromise, Settlement, and Release, dated September 9, 2022 | |
| 10.2 | License Agreement by and between the Company and Mayne, dated December 13, 2022 | |
| 10.3 | Employment Agreement by and between the Company and Francis E. O’Donnell, dated December 13, 2022 | |
| 10.4 | Employment Agreement by and between the Company and James A. McNulty, dated December 13, 2022 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
| Dated: December 19, 2022 | INHIBITOR THERAPEUTICS, INC. | |||||
| By: | /s/ Francis E. O’Donnell | |||||
| Name: | Francis E. O’Donnell, Jr. | |||||
| Title: | Executive Chairman and Chief Executive Officer | |||||
Exhibit 10.1
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
| HEDGEPATH, LLC,
Plaintiff,
v. |
C.A. No. 2019-0529-JTL | |
| BRENDAN MAGRAB, STEFAN J. CROSS, DR. R. DANA ONO, ROBERT D. MARTIN, W. MARK WATSON, NICHOLAS J. VIRCA and MAYNE PHARMA VENTURES PTY LTD.,
Defendants,
and |
||
| HEDGEPATH PHARMACEUTICALS, INC., a Delaware corporation,
Nominal Defendant. |
||
| SAMUEL SEARS, Individually And On Behalf of All Others Similarly Situated, Plaintiff,
v.
BRENDAN MAGRAB, STEFAN J. CROSS, DR. R. DANA ONO, ROBERT D. MARTIN, W. MARK WATSON, NICHOLAS J. VIRCA, and MAYNE PHARMA VENTURES PTY LTD.,
Defendants. |
C.A. No. 2020-0215-JTL | |
STIPULATION AND AGREEMENT OF
COMPROMISE, SETTLEMENT, AND RELEASE
This Stipulation and Agreement of Compromise, Settlement, and Release (the “Stipulation,” the terms of which are the “Settlement”), dated as of September 9, 2022, is entered into between (i) Plaintiffs Hedgepath, LLC and Samuel Sears (“Plaintiffs”); (ii) defendants Brendan Magrab, Stefan J. Cross, R. Dana Ono, Robert D. Martin, W. Mark Watson, Nicholas J. Virca (“Individual Defendants”), and Mayne Pharma Ventures Pty Ltd. (“Mayne”); and (iii) Inhibitor Therapeutics, Inc., f/k/a Hedgepath Pharmaceuticals, Inc. (“Nominal Defendant” or the “Company”) (collectively with the Individual Defendants and Mayne, “Defendants”). Each Plaintiff and Defendant is referred to individually as a “Party,” and they are referred to collectively as the “Parties.” The Parties intend for this Stipulation to fully, finally, and forever resolve, discharge, and settle the above-captioned actions (together, the “Actions”) and the Released Claims (as defined below), subject to the approval of the terms and conditions of the Stipulation by the Court of Chancery of the State of Delaware (the “Court”);
PROCEDURAL BACKGROUND
WHEREAS:
A. The Company is a pharmaceutical development company that is focused on developing and ultimately commercializing innovative therapeutics for patients with certain cancers and certain non-cancerous proliferation disorders. On August 20, 2019, the Company changed its name from HedgePath Pharmaceuticals (OTCQG:HPPI) to Inhibitor Therapeutics, Inc. (OTCQB:INTI). As of the date of this Stipulation, the Company has approximately 376,858,323 shares of Company common stock issued and outstanding.
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B. The Company’s majority stockholder, Mayne, is an Australian specialty pharmaceutical company that develops and manufactures branded and generic products, which it distributes directly or through distribution partners and provides contract development and manufacturing services. Mayne licensed to and supplied the Company with SUBA-Itraconazole, Mayne Pharma’s patented formulation of itraconazole. Until December 17, 2018, the Company had sought FDA approval to use SUBA-Itraconazole as a treatment for basal cell carcinoma in patients with Basal Cell Carcinoma Nevus Syndrome (“BCCNS”) within the United States.
C. On July 9, 2019, Plaintiff Hedgepath, LLC filed a complaint (the “Initial Hedgepath Complaint”; Transaction ID 63524207) initiating the litigation styled Hedgepath, LLC v. Magrab et al., C.A. No. 2019-0529-JTL (the “Hedgepath Action”). Hedgepath, LLC is the Company’s second largest stockholder (after Mayne) and, as of the date of this Stipulation, owns 79,627,069 shares of Company common stock.
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D. The Initial Hedgepath Complaint alleged direct and derivative claims for breach of fiduciary duty, waste, declaratory judgment, statutory violations under 8 Del C. § 271, and dilution of stockholder equity, against the Individual Defendants and Mayne relating to, inter alia, (i) the issuance of certain of the Company’s equity securities to Mayne on or about January 8, 2018 (the “January 2018 Transactions”), and (ii) the Third Amended and Restated Supply and License Agreement between the Company and Mayne (“Third Amended SLA”) and certain transactions contemplated thereby (the “December 2018 Transactions,” and together with the January 2018 Transactions, the “Challenged Transactions”)). The Initial Hedgepath Complaint also alleged claims for breach of fiduciary duty and fraudulent misrepresentation in connection with allegedly false and misleading statements included in the Company’s press releases and filings with the SEC. The Initial Hedgepath Complaint sought damages from Defendants, as well as equitable and other relief.
E. Before filing the Initial Hedgepath Complaint, Hedgepath, LLC served the Company with a corporate books and records demand pursuant to 8 Del. C. § 220 (“Section 220”) to investigate, among other things, alleged breaches of fiduciary duty in connection with, inter alia, the Challenged Transactions (the “HPLLC 220 Demand”). The Company produced to Hedgepath, LLC more than 13,000 pages of nonpublic Board-level, and senior officer-level corporate books and records regarding the Challenged Transactions (“Section 220 Documents”).
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F. On September 27, 2019, Defendants moved to dismiss the Initial Hedgepath Complaint (Transaction ID 64604558). Among other things, the motions argued that the Initial Hedgepath Complaint failed to state a claim under Court of Chancery Rules 9(b) and 12(b)(6) and, with respect to the derivative claims, failed to adequately plead demand futility under Rule 23.1.
G. On October 17, 2019, Plaintiff Samuel Sears (“Plaintiff Sears”) served the Company with a Section 220 demand to investigate, among other things, alleged breaches of fiduciary duty in connection with, inter alia, the Challenged Transactions (“Sears 220 Demand” and with the HPLLC 220 Demand, the “Section 220 Demands”). The Company produced to Plaintiff Sears the same Section 220 Documents the Company produced to Plaintiff Hedgepath, LLC.
H. On December 3, 2019, Plaintiff Hedgepath, LLC filed an amended complaint (the “Amended Hedgepath Complaint”; Transaction ID 64481043).
I. On January 10, 2020, Defendants moved to dismiss the Amended Hedgepath Complaint for the same reasons set forth in their original motions to dismiss.
J. On March 23, 2020, Plaintiff Samuel Sears filed a class action complaint (the “Sears Complaint”; Transaction ID 65532758) initiating the litigation styled Samuel Sears v. Magrab et al., C.A. No. 2020-0215-JTL (the “Sears Action”). The Sears Complaint asserted breach of fiduciary duty claims similar to those asserted in the Hedgepath Action. While the Amended Hedgepath Complaint
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asserted its breach of fiduciary duty claims derivatively, the Sears Complaint purported to assert all of its claims on behalf a “Class” defined to include “all other holders of the Company’s common stock (except Defendants herein and any persons, firm, trust, corporation, or other entity related to or affiliated with them and their successors-in-interest) who are or will be threatened with injury arising from Defendants’ wrongful action.”
K. On April 23, 2020, Defendants moved to dismiss the Sears Complaint.
L. On May 18, 2020, Plaintiff Sears filed his amended complaint (the “Amended Sears Complaint”; Transaction ID 65532758).
M. On June 4, 2020, following briefing and oral argument, the Court denied Defendants’ motions to dismiss the Amended Hedgepath Complaint.
N. On June 17, 2020, in light of the Court’s ruling in the Hedgepath Action, Defendants withdrew their motions to dismiss the Sears Complaint (Transaction ID 65705316).
O. On June 17, 2020, HedgePath, LLC served its First Set of Requests for Production of Documents Directed to all Defendants and its First Set of Interrogatories Directed to all Defendants.
P. Between August and September 2020, Defendants served Responses and Objections to Hedgepath, LLC’s discovery requests.
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Q. Between August and October 2020, Hedgepath, LLC served subpoenas on third parties The Weinberg Group, LLC, SciQuus, Inc., Ellenoff Grossman & Schole LLP, and Mentara, Inc.
R. On September 2, 2020, Plaintiff Sears served his First Request for Production of Documents Directed to All Defendants.
S. On September 17, 2020, the Individual Defendants served their First Set of Interrogatories Directed to Plaintiffs and their First Set of Requests for the Production of Documents Directed to Plaintiffs.
T. On September 17, 2020, Mayne served its First Set of Interrogatories Directed to Plaintiffs Hedgepath, LLC and Samuel Sears and their First Set of Requests for Production of Documents from Plaintiffs Hedgepath, LLC and Samuel Sears.
U. On November 2, 2020, Plaintiff Sears served his responses to the Individual Defendants’ First Set of Interrogatories Directed to Plaintiffs, the Individual Defendants’ First Set of Requests for the Production of Documents Directed to Plaintiffs, Mayne’s First Set of Interrogatories Directed to Plaintiffs Hedgepath, LLC and Samuel Sears, and Mayne’s First Set of Requests for Production of Documents from Plaintiffs Hedgepath, LLC and Samuel Sears.
V. On December 9, 2020, the Parties to the Hedgepath Action and the Sears Action filed a Stipulation and Proposed Order Regarding Coordination of Related Actions (Transaction ID 66172844), which required the parties to the
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Actions to coordinate in good faith on all matters where it is practicable to do so, conduct the litigation in a manner designed to avoid duplication, and promote the efficient and speedy resolution of the Actions. On December 10, 2020, the Court granted the Stipulation and Order Regarding Coordination of Related Actions (Transaction ID 66176455).
W. In January 2021, the Parties agreed to discuss a potential resolution of the Actions. Between December 2020 and October 2021, at the request of Plaintiffs and to allow Plaintiffs to evaluate a potential settlement, Defendants produced more than 44,000 pages of documents to Plaintiffs.
X. On November 4, 2021, the Parties participated in a confidential mediation before the Honorable Stephen P. Lamb. Following the mediation, the Parties continued to engage in arm’s-length negotiations, including the exchange of numerous offers and counteroffers.
Y. On June 20, 2022, the Parties reached an agreement-in-principle to settle the claims asserted in the Actions for the Settlement Consideration reflected in Paragraphs 2–13 below, subject to the execution of the Stipulation and related papers and Court approval.
Z. On June 27, 2022, via a joint status letter, the Parties informed the Court that the Parties had reached an agreement-in-principle to fully resolve the Actions (Transaction ID 67765786).
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AA. Following an analysis of the strengths and weaknesses of the claims asserted in the Actions, including review and analysis of the documents Plaintiffs received, Plaintiffs believe that the Settlement Consideration described in Paragraphs 2–13 below provides the Company and the Class with substantial benefits.
BB. Although Plaintiffs believe that the Actions assert strong claims, they are agreeing to settle the Actions to eliminate the uncertainties inherent in further litigation and in recognition of the benefits this Settlement will afford the Company and the Class.
CC. Plaintiffs have determined that the terms of the Settlement are fair, reasonable, adequate, and in the best interests of the Company and the Class, and that it is reasonable to pursue a settlement of the Actions based upon those terms and the procedures outlined herein.
DD. At all times, Defendants have denied, and continue to deny, all allegations of wrongdoing in the Complaints, including without limitation that they have committed any breach of fiduciary duty, that they have violated Delaware law, that they have made any misrepresentations, or that Plaintiffs have suffered damages.
EE. Defendants expressly maintain that they have at all times complied with their fiduciary and other legal duties.
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FF. Although Defendants believe that they have strong defenses to the claims asserted in the Actions, Defendants are entering into this Stipulation because the Settlement will eliminate the burden, expense, distraction, and uncertainties inherent in further litigation.
GG. This Stipulation (together with the Exhibits hereto), which has been duly executed by the undersigned signatories on behalf of their respective clients, reflects the final and binding agreement among the Parties concerning the Settlement, subject to Court approval.
NOW, THEREFORE, IT IS STIPULATED AND AGREED, in consideration of the benefits set forth below, and subject to the approval of the Court pursuant to Court of Chancery Rules 23 and 23.1, that the Actions and the Released Claims (as defined below) shall be compromised, settled, released, and dismissed with prejudice on the merits and without costs (except as provided below), subject to the following terms and conditions:
DEFINITIONS
1. The following terms shall have the meanings assigned to them herein:
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(a) “Class” shall mean the class of all record holders and beneficial owners of Company common stock who held such stock at any time during the period between and including January 8, 2018 and December 17, 2018 (except as limited by the following sentence), and their heirs, assigns, transferees, and successors-in-interest, in each case solely in their capacity as holders or owners of Company common stock. Excluded from the Class are (i) the Individual Defendants and Mayne (collectively, the “Excluded Parties” and each an “Excluded Party”); (ii) any Individual Defendant’s Immediate Family Members (as defined below); (iii) any persons, firm, trust, corporation, or other entity affiliated with an Excluded Party and their successors-in-interest; and (iv) any entity in which any Excluded Party has or had a direct or indirect controlling interest.
(b) “Class Member” shall mean a member of the Class.
(c) “Immediate Family Member” means any children, stepchildren, parents, stepparents, spouses and siblings. As used in this Paragraph, “spouse” shall mean a husband, a wife, or a partner in a state-recognized domestic relationship or civil union.
(d) “Complaints” shall mean the Amended Hedgepath Complaint and the Amended Sears Complaint.
(e) “Plaintiffs’ Releasees” shall mean each of the Company, Plaintiffs, and each Class Member, and each of their respective parents, subsidiaries, affiliates, and controlling persons, and any current or former officer, director, member or manager of any of the foregoing, and each of their respective heirs, trusts, trustees, executors, estates, administrators, beneficiaries, distributees, foundations,
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agents, employees, fiduciaries, partners, partnerships, general or limited partners or partnerships, joint ventures, member firms, limited liability companies, corporations, divisions, parents, subsidiaries, affiliates, associated entities, stockholders, principals, officers, directors, managing directors, members, managers, managing members, managing agents, predecessors, predecessors-in-interest, successors, successors-in-interest, assigns financial or investment advisors, attorneys (including all Plaintiffs’ counsel in these Actions), personal or legal representatives, accountants, insurers, co-insurers, reinsurers, and associates.
(f) “Defendants’ Releasees” shall mean each of Brendan Magrab, Stefan J. Cross, R. Dana Ono, Robert D. Martin, W. Mark Watson, Nicholas J. Virca, and Mayne, and each of their respective parents, subsidiaries, affiliates, and controlling persons, and any current or former officer, director, member or manager of any of the foregoing, and each of their respective heirs, trusts, trustees, executors, estates, administrators, beneficiaries, distributees, foundations, agents, employees, fiduciaries, partners, partnerships, general or limited partners or partnerships, joint ventures, member firms, limited liability companies, corporations, divisions, parents, subsidiaries, affiliates, associated entities, stockholders, principals, officers, directors, managing directors, members, managers, managing members, managing agents, predecessors, predecessors-in-interest, successors, successors-in-interest, assigns, financial or investment advisors, attorneys (including all Defendants’ counsel in these Actions), personal or legal representatives, accountants, insurers, co-insurers, reinsurers, and associates.
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(g) “Plaintiffs’ Releasors” shall mean each of the Company, the Plaintiffs, the Class, each Class Member and each of their respective parents, subsidiaries, affiliates and controlling persons, successors-in-interest, and assigns.
(h) “Defendants’ Releasors” shall mean each of Brendan Magrab, Stefan J. Cross, R. Dana Ono, Robert D. Martin, W. Mark Watson, Nicholas J. Virca, and Mayne, and each of their respective parents, subsidiaries, affiliates and controlling persons, successors-in-interest, and assigns.
(i) “Releasing Parties” shall mean Plaintiffs’ Releasors and Defendants’ Releasors, collectively.
(j) “Plaintiffs’ Released Claims” shall mean any and all manner of claims, demands, rights, liabilities, losses, obligations, duties, damages, costs, debts, expenses, interest, penalties, sanctions, fees, attorneys’ fees, actions, potential actions, causes of action, suits, agreements, judgments, decrees, matters, issues, and controversies of any kind, nature, or description whatsoever, whether known or unknown, disclosed or undisclosed, accrued or unaccrued, apparent or not apparent, foreseen or unforeseen, matured or not matured, suspected or unsuspected, liquidated or not liquidated, fixed or contingent, including, without limitation, Unknown Claims (as defined herein), whether based on state, local, foreign, federal,
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statutory, regulatory, common or other law or rule, that are, have been, could have been, or could now be asserted in the Actions or in any other court, tribunal, forum, suit, action or proceeding, by any of the Plaintiffs’ Releasors or any member of the Class, derivatively on behalf of the Company, or individually or as a member of the Class directly (in their capacities as current or former Company stockholders), or by the Company directly against any of the Defendants’ Releasees that are based upon, relate in any way to, arise out of or involve, directly or indirectly, in whole or in part, the actual, alleged, or attempted actions, inactions, transactions, claims, facts, events, conduct, occurrences, practices, statements, representations, misrepresentations, omissions, allegations, votes, contracts, decisions, or any other matters, things, or causes whatsoever, or any series thereof, in connection with the Actions or the subject matter of the Actions or alleged, asserted, set forth, claimed, or referred to in the Complaints or any former complaints in the Actions, including, without limitation (i) the Challenged Transactions, (ii) any and all agreements between Mayne or its affiliates on the one hand, and the Company or Hedgepath LLC or its principals on the other hand, (iii) any statements by the Company or Defendants related to or in connection with the Challenged Transactions, or the agreements referenced in part (ii) of this sentence, or alleged in the Complaints; provided, however, that Plaintiffs’ Released Claims shall not include claims relating to the enforcement of the Settlement (including any agreements or provisions of agreements identified in this Stipulation as surviving the Settlement).
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(k) “Defendants’ Released Claims” shall mean any and all manner of claims, demands, rights, liabilities, losses, obligations, duties, damages, costs, debts, expenses, interest, penalties, sanctions, fees, attorneys’ fees, actions, potential actions, causes of action, suits, agreements, judgments, decrees, matters, issues, and controversies of any kind, nature, or description whatsoever, whether known or unknown, disclosed or undisclosed, accrued or unaccrued, apparent or not apparent, foreseen or unforeseen, matured or not matured, suspected or unsuspected, liquidated or not liquidated, fixed or contingent, including, without limitation, Unknown Claims (as defined herein), whether based on state, local, foreign, federal, statutory, regulatory, common, or other law or rule, that are, have been, could have been, or could now be asserted in the Actions or in any other court, tribunal, forum, suit, action or proceeding by any of the Defendants’ Releasors against any of the Plaintiffs’ Releasees that are based upon, relate in any way to, arise out of or involve, directly or indirectly, in whole or in part, the Section 220 Demands, the prosecution of the Actions or the subject matter thereof, including, without limitation, any and all agreements between Mayne or its affiliates on the one hand, and the Company or Hedgepath LLC or its principals on the other hand; provided, however, that Defendants’ Released Claims shall not include claims relating to the enforcement of the Settlement (including any agreements or provisions of agreements identified in this Stipulation as surviving the Settlement).
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(l) The “Released Claims” shall mean Plaintiffs’ Released Claims and Defendants’ Released Claims, collectively. For avoidance of doubt, the Released Claims do not include any rights or claims that the Company and Defendants may have against their insurers.
(m) “Effective Date” shall have the meaning provided in Paragraph 36 below.
(n) “Mayne Debt” shall mean the $3,000,000 (United States Dollars) advance made by Mayne to the Company pursuant to the Third Amended SLA.
(o) “Mayne Equity Holdings” shall mean all equity securities in the Company, including Company common stock, Company preferred stock, warrants to purchase Company stock, and options to purchase Company stock, that is held or owned, beneficially or of record, by Mayne (or any parent or subsidiary thereof), consisting of 205,065,189 shares of Company common stock, 17,391,306 shares of Company common stock upon conversion of Series B Preferred Stock, and warrants to purchase 4,347,827 shares of Company common stock as of the date of this Stipulation.
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(p) “Mayne Short-Term Financing” shall mean (i) the $371,000 (United States Dollars) currently owed by the Company to Mayne in connection with a term debt facility memorialized in letter agreements dated December 12, 2020, January 13, 2022, and March 9, 2022 (Exhibits 10.11, 10.12, and 10.13, respectively, to the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 30, 2022), and a letter agreement dated July 1, 2022, and (ii) any interim financing, in an amount not to exceed $86,000 (United States Dollars), that Mayne may provide to the Company between the date of the Stipulation and the Effective Date to fund the Company’s operating expenses (subject to Paragraphs 20 and 22 below) and expenses relating to Notice (as defined below). For the avoidance of doubt, under no circumstances shall the Mayne Short-Term Financing exceed $457,000 (United States Dollars) in the aggregate, and following the Effective Date, the Company shall have no obligation to pay or repay any amounts to Mayne other than the Mayne Short-Term Financing.
(q) “SUBA-Itraconazole BCCNS” shall mean the use of SUBA-Itraconazole targeting basal cell carcinoma in patients with Basal Cell Carcinoma Nevus Syndrome.
(r) “Non-SUBA Formulations of Itraconazole” shall mean any formulations of Itraconazole that do not infringe on the claims of the itraconazole formulation described in U.S. Patent 8,771,739 “Pharmaceutical Compositions for Poorly Soluble Drugs.”
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(s) “Company Stockholders” shall refer to each and every person who is a record holder or beneficial owner of Company common stock as of the date that the Stipulation is filed with the Court.
(t) “Unknown Claims” are claims that the Releasing Parties did not know or suspect to exist at the time of the release.
SETTLEMENT CONSIDERATION
2. Within five (5) business days of the Effective Date, the Individual Defendants and Mayne shall pay or cause to be paid to the Company a total of $14,250,000 (United States Dollars) in cash paid via wire transfer or check (the “Cash Consideration”).
3. The Mayne Equity Holdings shall be surrendered to the Company and canceled. Such surrender and cancellation will occur upon the Effective Date. The Individual Defendants shall retain any Company common stock that they own as of the Effective Date, but any options, warrants, or other rights to purchase Company shares that they possess shall be cancelled.
4. The Mayne Debt shall be canceled. Such cancellation will occur upon the Effective Date. Within ten (10) business days of receiving the Cash Consideration, the Company shall repay to Mayne the Mayne Short-Term Financing.
5. After the Effective Date, except as expressly provided herein, the Company shall have no further obligations to (and shall owe no amounts to) Mayne or the Individual Defendants except with respect to Company common stock held by the Individual Defendants.
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6. Upon the Effective Date, the Company shall convert the license, from the Company to Mayne, for the following intellectual property owned by the Company from exclusive to non-exclusive, without restriction as to field:
| a. | U.S. Patent 9,129,609 |
Treatment and Prognostic Monitoring of Proliferation
Disorders Using Hedgehog Pathway Inhibitors
Issued: 11-24-2015; Expires: 02-05-2034
| b. | U.S. Patent 9,962,381 |
Treatment and Prognostic Monitoring of Cancerous Proliferation
Disorders Using Hedgehog Pathway Inhibitors
Issued: 05-08-2018; Expires: 02-05-2034
| c. | U.S. Patent 9,968,600 |
Treatment and Prognostic Monitoring of Non-Cancerous Proliferation
Disorders Using Hedgehog Pathway Inhibitors
Issued: 05-05-2018; Expires: 02-05-2034
| d. | U.S. Patent 10,328,072 |
Treatment of Lung Cancer Using Hedgehog Pathway Inhibitors
Issued: 6-25-2019; Expires: 02-05-2034
| e. | U.S. Patent 10,363,252 |
Treatment of Prostate Cancer Using Hedgehog Pathway Inhibitors
Issued: 07-30-2019; Expires: 02-05-2034
The non-exclusive license of the aforementioned patents to Mayne under this Paragraph 6 shall be memorialized in a separate license agreement, entered into between INTI and Mayne, which shall survive this Stipulation.
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7. Upon the Effective Date, Mayne will terminate the following licenses, from Mayne to the Company, for the following intellectual property owned or licensed by Mayne:
| a. | The sublicense agreement, dated August 27, 2019, from Mayne Pharma International Pty Ltd, an affiliate of Mayne, for the exclusive U.S. patent rights to U.S. patent No 8,653,083 entitled “Hedgehog Pathway Antagonists to Treat Disease”, issued on February 28, 2014 and U.S. patent No 8,980.930 entitled “Angiogenesis Inhibitors”, issued March 17, 2015 (the “JHU Patents”) |
| b. | U.S. Patent 8,771,739 |
Pharmaceutical Compositions for Poorly Soluble Drugs
Issued: 07-08-2014; Expires: 12-16-2022
| c. | U.S. Patent 8,921,374 |
Itraconazole Compositions and Dosage Forms and Methods Using Same
Issued: 12-30-2014; Expires: 06-21-2033
| d. | U.S. Patent 9,272,046 |
Itraconazole Compositions and Dosage Forms and Methods Using Same
Issued: 03-01-2016; Expires: 06-21-2033
| e. | U.S. Patent 9,713,642 |
Itraconazole Compositions and Dosage Forms and Methods Using Same
Issued: 07-25-2017; Expires: 06-21-2033
| f. | U.S. Patent 10,473,740 |
Itraconazole Compositions and Dosage Forms and Methods Using Same
Issued: 11-05-2019; Expires: 06-21-2033
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| g. | U.S. Patent 10,806,792 |
Itraconazole Compositions and Dosage Forms and Methods Using Same
Issued: 10-20-2019; Expires: 06-21-2033
Mayne further agrees that the Company will not owe or be required to pay any amounts that may be due under the licenses referenced in this Paragraph 7.
8. After the Effective Date, Mayne will remain amenable to discussing with the Company, in good faith, the potential licensing and/or sub-licensing of the JHU Patents, for a commercially reasonable licensing fee, to the extent the Company seeks to engage in such discussions.
9. Mayne will not take the position that the Company or persons affiliated with the Company, including Dr. Francis E. O’Donnell, Jr., are prohibited from developing or commercializing Non-SUBA Formulations of Itraconazole for any cancer or non-cancer indications. Nor shall Mayne take any action intended to restrict or limit the Company’s ability or efforts to develop or commercialize Non-SUBA Formulations of Itraconazole for any cancer or non-cancer indications.
10. Upon the Effective Date, the Third Amended SLA shall be deemed void and each party shall be released from its rights and obligations thereunder; provided, however, that the Company will retain the right to a 9% cash royalty on future net sales, if any, of SUBA-Itraconazole BCCNS in the United States, on the same terms set forth in the Third Amended SLA (the “Royalty”). For the avoidance of doubt, although the Mayne Debt shall in other respects be canceled under Paragraph 4 of this Stipulation, any Royalty will first be applied to pay down the $3,000,000 (United States Dollars) advanced by Mayne to the Company under the Third Amended SLA, after which any further Royalties will be paid to the Company.
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11. Mayne, in its sole and exclusive discretion, shall determine whether to develop SUBA-Itraconazole BCCNS.
12. Upon the Effective Date, the Equity Holders Agreement by and between the Company, Mayne, Hedgepath, LLC, Dr. Francis O’Donnell, and Nicholas Virca, dated as of June 24, 2014, as amended May 15, 2015 (the “EHA”), shall be deemed terminated pursuant to Section 8.1(b) of the EHA.
13. Any of the Individual Defendants who holds a position with the Company shall retire from each such position effective upon the Effective Date. At least five days before the Settlement Hearing, the Company’s board shall execute a unanimous written consent appointing Dr. Francis E. O’Donnell, Jr. as a director of the Company effective upon the Effective Date.
PARTY REPRESENTATIONS
14. The Parties agree that the representations and warranties set forth herein are a material part of the Settlement and they are relying on the representations and warranties in connection with agreeing to the Settlement.
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15. Each of the Plaintiffs represents and warrants that he or it has been a stockholder of the Company since prior to January 1, 2018, continually to the present, that as of the date hereof he or it continues to hold stock in the Company, and that he or it shall continue to hold such stock in the Company through the Effective Date. Each Plaintiff further represents that he or it has not sold, traded, collateralized, divested, alienated, assigned, or otherwise transferred the claims asserted in the Actions, or any of the Plaintiffs’ Released Claims, to any person.
16. Mayne represents and warrants that it currently owns or has the rights to 205,065,189 shares of Company common stock, 17,391,306 shares of Company common stock upon conversion of Series B Preferred Stock, and warrants to purchase 4,347,827 shares of Company common stock, and that it has not exercised, sold, traded, canceled, collateralized, divested, alienated, assigned, or otherwise impaired its rights to any of the Mayne Equity Holdings subject to surrender and cancellation under Paragraph 3 of this Stipulation, and that it shall not exercise, sell, trade, cancel, collateralize, divest, alienate, assign, or otherwise impair its rights to any of the Mayne Equity Holdings subject to surrender and cancellation under Paragraph 3 of this Stipulation.
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17. Each of the Individual Defendants represents and warrants that he currently owns the amount of Company equity securities (or options or rights to acquire Company equity securities) set forth next to his name: Brendan Magrab (65,000 shares of common stock; no vested stock options); Stefan J. Cross (no equity securities); R. Dana Ono (453,000 shares of common stock; 3,080,734 vested stock options); Robert D. Martin (60,000 shares of common stock; 2,930,734 vested stock options); W. Mark Watson (1,054,100 shares of common stock; 4,227,347 vested stock options); Nicholas J. Virca (8,727,519 shares of common stock; 535,000 vested stock options).
18. The Individual Defendants further represent and warrant that they shall not exercise, sell, trade, cancel, collateralize, divest, alienate, assign, or otherwise impair any options or other rights to acquire Company stock subject to surrender and cancellation under Paragraph 3 of this Stipulation.
19. Mayne represents and warrants that apart from the surrender and cancellation under Paragraph 4 of this Stipulation, it has not exercised, sold, traded, canceled, collateralized, divested, alienated, assigned, or otherwise impaired its rights to any of the Mayne Debt, and that it shall not exercise, sell, trade, cancel, collateralize, divest, alienate, assign, or otherwise impair its rights to any of the Mayne Debt.
20. The Company represents and warrants that, prior to the Effective Date, the Company shall not: (i) issue any additional Company equity securities (or options or rights to acquire Company equity securities); (ii) incur or assume any additional debt on behalf of the Company that is not paid prior to the Effective Date
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(except in the ordinary course of the Company’s business, or as is reasonably necessary in connection with the Company’s obligations and contemplated actions set forth in this Stipulation); or (iii) repay any of the Mayne Debt. Mayne represents and warrants that, prior to the Effective Date, it shall not take any actions to cause the Company to: (i) issue any additional Company equity securities (or options or rights to acquire Company equity securities); (ii) incur or assume any additional debt on behalf of the Company that is not paid prior to the Effective Date (except in the ordinary course of the Company’s business, or as is reasonably necessary in connection with the Company’s obligations and contemplated actions set forth in this Stipulation); or (iii) repay any of the Mayne Debt.
21. The Company represents and warrants that the Company has not sold, canceled, divested, alienated, assigned, or otherwise impaired its rights to the intellectual property described above in Paragraph 6. Mayne represents and warrants that it will not take any actions to cause the Company to sell, cancel, divest, alienate, assign, or otherwise impair the Company’s rights to the intellectual property described above in Paragraph 6.
22. The Company represents and warrants that the Company will operate in the ordinary course until the Effective Date, and that the Company shall not dispose of or impair any of its material assets or incur any additional debt or obligations other than as provided in Paragraph 20. Mayne represents and warrants that it will not take any actions to cause the Company (i) not to operate in the ordinary course until the Effective Date or (ii) to dispose of or impair any of the Company’s material assets or incur any additional debt or obligations other than as provided in Paragraph 20.
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23. The Company represents and warrants that the Certificate of Incorporation, amended as of August 14, 2019, and the Second Amended and Restated Bylaws of the Company, attached as exhibits to the Company’s Annual Report on Form 10-K filed on March 26, 2021, are the Company’s operative certification of incorporation and bylaws as of the date of this Stipulation. Defendants agree that neither Mayne nor the Individual Defendants shall take any action to further amend the certification of incorporation or bylaws after the date of this Stipulation.
24. Mayne represents and warrants that, except as expressly provided in Paragraph 10 herein and apart from the Mayne Debt and Mayne Short-Term Financing, it is not aware of, and will not seek to enforce payment of, any amounts or obligations owed by the Company to Mayne or its affiliates incurred prior to the Effective Date, including, but not limited to, any cash received for royalties in advance of being earned, dividends payable, notes payable, interest payable, loans, or debt financing.
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RELEASE OF CLAIMS
25. Effective upon the Effective Date:
(a) The Plaintiffs’ Releasors shall fully, finally, and forever release and discharge each and all of the Defendants’ Releasees from any and all of Plaintiffs’ Released Claims.
(b) The Defendants’ Releasors shall fully, finally, and forever release and discharge each and all of the Plaintiffs’ Releasees from any and all of Defendants’ Released Claims.
26. The contemplated releases given by the Releasing Parties extend to Unknown Claims. The Releasing Parties shall be deemed to have waived any and all provisions, rights, and benefits conferred by any law of the United States, any law of any state, or principle of common law that governs or limits a person’s release of unknown claims to the fullest extent permitted by law. The Releasing Parties shall be deemed to relinquish, to the full extent permitted by law, the provisions, rights, and benefits of Section 1542 of the California Civil Code, which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.
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27. The Releasing Parties shall also be deemed to have waived any and all provisions, rights, and benefits conferred by any law of any state of the United States or principle of common law that is similar, comparable, or equivalent to California Civil Code Section 1542. The Releasing Parties acknowledge that they may discover facts in addition to or different from those that they now know or believe to be true with respect to the subject matter of the contemplated releases, but that it is their intention to fully, finally, and forever settle and release any and all claims released hereby, known or unknown, suspected or unsuspected, which now exist or heretofore existed, from the beginning of time to the Effective Date, without regard to the subsequent discovery or existence of such additional or different facts, to the fullest extent permitted by law.
28. The contemplated releases are not intended to release and shall not be deemed to release any rights or obligations of the Parties created by this Stipulation.
DUE DILIGENCE; CONDITIONS OF THE SETTLEMENT
29. The Settlement was preceded by production to Plaintiffs and their counsel of books and records pursuant to the Section 220 Demands; the review of documents produced in discovery; the analysis by Plaintiffs of public filings by the Company with the U.S. Securities and Exchange Commission; the review by Plaintiffs of press releases issued by the Company and other public statements about
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the Company; and the mediation submissions prepared by the Parties. Accordingly, in determining to enter into this Settlement, Plaintiffs believe that they were sufficiently informed of the circumstances and terms of the Challenged Transactions and Defendants’ actions to determine whether the Settlement was in the best interests of the Company, the Class, and the Company Stockholders (other than Mayne and the Individual Defendants).
30. This Stipulation shall be terminated, and shall be void and of no force and effect, unless otherwise agreed to by the Parties hereto pursuant to the terms hereof, if (i) any Party exercises a right to terminate the Settlement pursuant to the terms of this Stipulation; or (ii) the Settlement does not obtain Final Court Approval (as defined below). If this Stipulation is terminated, this Stipulation and the Settlement shall be void and of no effect, and this Stipulation shall not be deemed to prejudice in any way the positions in the Actions of any Party. In such event, and consistent with the applicable evidentiary rules, neither this Stipulation nor any of its contents, nor the existence of this Stipulation, shall be admissible in evidence or shall be referred to for any purpose in the Actions or in any other proceeding, except in connection with any claim for breach of this Stipulation or as otherwise specifically provided herein.
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31. The Settlement shall be void and of no force and effect if the terms of the Settlement, except for the Fee and Expense Applications (as defined below), do not receive Final Court Approval (as defined below), in which case the Parties shall revert to their litigation positions prior to entering into this Stipulation. For the avoidance of doubt, the Parties agree that court approval of the Fee and Expense Applications (as defined below) is not a condition precedent to the Settlement or Final Court Approval thereof.
32. In the event that any final injunction, decision, order, judgment, determination, or decree is entered or issued by any court or governmental entity prior to Final Court Approval (as defined below) of this Stipulation and the Settlement embodied herein that would make consummation of the Settlement in accordance with the terms of this Stipulation unlawful or that would restrain, prevent, enjoin, or otherwise prohibit consummation of the Settlement, the Parties each reserve the right to withdraw from and to terminate the Settlement. In addition, in the event that any preliminary or temporary injunction, decision, order, determination, or decree (an “Interim Order”) is entered or issued by any court or governmental entity prior to Final Court Approval (as defined below) of this Stipulation and the Settlement that would restrain, prevent, enjoin, or otherwise prohibit consummation of the Settlement, then, notwithstanding anything herein to the contrary, the Parties shall have no obligation to consummate the Settlement unless and until such Interim Order expires or is terminated or modified in a manner such that consummation of the Settlement in accordance with the terms of this Stipulation would no longer be restrained, prevented, enjoined, or otherwise prohibited.
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33. The Settlement shall be conditioned upon (i) entry of a Final Order and Judgment (the “Judgment”) in the form attached as Exhibit B, which shall release any and all claims described in Paragraphs 25-28 hereof (the “Settled Claims”); and (ii) the Judgment becoming Final (as defined below) (“Final Court Approval”).
SUBMISSION AND APPLICATION TO THE COURT
34. Within two (2) days of the execution of this Stipulation on behalf of all Parties, Plaintiffs’ counsel shall submit this Stipulation together with its Exhibits to the Court, and the Parties shall apply jointly for entry of an order (the “Scheduling Order”), substantially in the form attached hereto as Exhibit A, providing for, among other things: (i) approval of the form and content of the proposed Notice of the Settlement; and (ii) a date for the final settlement hearing (the “Settlement Hearing”). At the Settlement Hearing, the Parties shall jointly request that the Judgment be entered substantially in the form attached as Exhibit B.
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NOTICE
35. The Company shall be responsible for providing Notice of the Settlement to Company Stockholders and all members of the Class in the form and manner directed by the Court (when approved by the Court, the “Notice”), substantially in the form attached hereto as Exhibit C. The Company shall cause to be paid all costs and expenses incurred in providing the Notice, including any costs and expenses associated with any additional copies of the Notice requested by record holders of the Company’s common stock (whether for purpose of providing the Notice to beneficial owners or otherwise).
EFFECTIVE DATE/FINAL COURT APPROVAL
36. The “Effective Date” of the Settlement shall be the first date by which the Court has entered the Judgment and such Judgment has received Final Court Approval. “Final Court Approval” of any Court Order shall mean (i) if no appeal is filed, the expiration date of the time for filing or noticing of any appeal of the Judgment; or (ii) if there is an appeal from the Judgment, the date of (a) final dismissal of all such appeals, or the final dismissal of any proceeding on certiorari or otherwise to review the Judgment, or (b) the date the Judgment is finally affirmed on appeal, the expiration of the time to file a petition for a writ of certiorari or other form of review, or the denial of a writ of certiorari or other form of review of the Judgment, and, if certiorari or other form of review is granted, the date of final affirmance of the Judgment after such review. Notwithstanding anything to the contrary herein, any appeal or proceeding seeking subsequent judicial review pertaining solely to an order issued with respect to attorneys’ fees or expenses and/or an incentive award payable to Plaintiffs shall not in any way delay the Effective Date of the Settlement.
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INTERIM INJUNCTION
37. Subject to an order of the Court, pending final determination of whether the Settlement should be approved, the Parties shall be barred and enjoined, to the maximum extent permitted under law, from commencing, prosecuting, instigating, or in any way participating in the commencement or prosecution of any action asserting any of the Released Claims as defined herein, either directly, representatively, derivatively, or in any other capacity, and all pending deadlines in any and all such actions shall be suspended.
ATTORNEYS’ FEES AND EXPENSES
38. Hedgepath, LLC intends to petition the Court for an award of attorneys’ fees and expenses actually incurred by it in connection with investigating and pursuing the claims asserted in the Actions (and to reimburse Hedgepath, LLC for the attorneys’ fees and expenses already paid to its counsel), and Sears also intends to petition the Court for an award of attorneys’ fees and expenses. Any attorneys’ fees and expenses awarded by the Court shall be paid solely from the Cash Consideration, and from no other source, in an aggregate amount not to exceed $2,000,000 (United States Dollars) (the “Fee and Expense Applications”).
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39. Plaintiffs’ Counsel’s Fee and Expense Applications are not the subject of any agreement among Plaintiffs and Defendants other than what is set forth in this Stipulation. Defendants agree that they will not object to or otherwise take any position on the Fee and Expense Applications so long as the Fee and Expense Applications seek an award or reimbursement in an amount no greater than $2,000,000 (United States Dollars).
40. Plaintiffs’ Counsel’s attorneys’ fees and expenses that are awarded by the Court (the “Fee and Expense Reimbursement”) will be paid to Plaintiffs’ Counsel and Plaintiffs (to the extent they have already paid such fees to their counsel) from the Cash Consideration.
41. An award of attorneys’ fees or expenses to Plaintiffs or Plaintiffs’ counsel is not a necessary term of the Settlement and shall not be a condition of the Settlement. Neither Plaintiffs nor Plaintiffs’ counsel may cancel or terminate the Settlement based on the Court’s or any appellate court’s ruling on attorneys’ fees or expenses or incentive awards to Plaintiffs.
42. Except as provided in this Stipulation, the Defendants’ Releasees and the Company shall bear no other expenses, costs, damages, or fees alleged or incurred by any of Plaintiffs’ counsel, or by any attorneys, experts, advisors, agents, or representatives of any Plaintiff or Class Member in connection with the Actions, the Settled Claims, or the Settlement. The Plaintiffs’ Releasees shall bear no expenses, costs, damages, or fees alleged or incurred by any Defendant, or by any of any Defendants’ attorneys, experts, advisors, agents or representatives in connection with the Actions, the Settled Claims, or the Settlement.
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TERMINATION
43. Prior to the Effective Date, each Party shall have the right to terminate the Settlement and this Stipulation by providing written notice of their election to do so, through counsel, to all other Parties hereto within thirty (30) calendar days of: (a) the Court’s final refusal to enter the Scheduling Order in any material respect; (b) the Court’s refusal to approve (including at the Settlement Hearing) the Settlement or any material part thereof; (c) the Court’s refusal to enter the Judgment in any material respect or to dismiss the Actions with prejudice; (d) the date upon which an order vacating, modifying, revising or reversing the Judgment becomes Final; or (e) the date upon which Plaintiffs become aware that any of the representations and warranties provided in Paragraphs 16–24 are not true and correct as of the date of this Stipulation.
44. In the event that the Settlement is terminated pursuant to the terms of this Stipulation or the Effective Date of the Settlement otherwise fails to occur, then: (i) this Stipulation, and the Settlement, including without limitation the releases under Paragraphs 25–28 above, shall be void; (ii) the fact of the Settlement shall not be admissible in any trial of the Action; (iii) the Parties shall be deemed to have returned to their respective litigation positions in the Actions immediately prior to the date of execution of the Stipulation; and (iv) the Parties shall proceed in all respects as if this Stipulation and any related orders had not been entered.
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ENTIRE AGREEMENT
45. This Stipulation and its Exhibits constitute the entire agreement among the Parties with respect to the subject matter hereof and supersede all written or oral communications, agreements, or understandings that may have existed prior to the execution of this Stipulation. No representations, warranties, or statements of any nature whatsoever, whether written or oral, have been made to or relied upon by any Party concerning this Stipulation or its Exhibits, other than the representations, warranties, and covenants expressly set forth in such documents.
CONSTRUCTION
46. This Stipulation shall be construed in all respects as jointly drafted and shall not be construed, in any way, against any Party on the ground that the Party or its counsel drafted this Stipulation.
47. Headings have been inserted for convenience only and will not be used in determining the terms of this Stipulation.
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GOVERNING LAW; CONTINUING JURISDICTION
48. This Stipulation and the Settlement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to Delaware’s principles governing choice of law. The Parties irrevocably and unconditionally (i) consent to submit to the sole and exclusive jurisdiction of the Court of Chancery of the State of Delaware for any litigation arising out of or relating in any way to this Stipulation or the Settlement (or if subject-matter jurisdiction is lacking, to the Superior Court of the State of Delaware); (ii) agree that any dispute arising out of or relating in any way to this Stipulation or the Settlement shall not be litigated or otherwise pursued in any forum or venue other than any such court; (iii) waive any objection to the laying of venue of any such litigation in any such court; (iv) agree not to plead or claim in any such court that such litigation brought therein has been brought in any inconvenient forum; and (v) expressly waive any right to demand a jury trial as to any such dispute.
AMENDMENTS
49. This Stipulation may be modified or amended only by a writing, signed by each of the Parties (or their duly authorized counsel), that refers specifically to this Stipulation.
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SETTLEMENT NOT AN ADMISSION
50. The provisions contained in the Settlement and this Stipulation shall not be deemed a presumption, concession, or admission by any Party to this Stipulation of any fault, liability, or wrongdoing, or any infirmity or weakness of any claim or defense, as to any facts or claims (including the Settled Claims) that have been or might be alleged or asserted in the Actions, or any other action or proceeding that has been, will be, or could be brought, and shall not be interpreted, construed, deemed, invoked, offered, or received in evidence or otherwise used by any person in the Actions, or in any other action or proceeding, whether civil, criminal, or administrative, for any purpose other than as permitted by applicable court rules and rules of evidence.
MISCELLANEOUS PROVISIONS
51. All the exhibits attached hereto are incorporated by reference as though fully set forth herein. Notwithstanding the foregoing, if there exists a conflict or inconsistency between the terms of this Stipulation and the terms of any exhibit attached hereto, the terms of the Stipulation shall prevail.
52. Each of the Defendants warrants that, as to the payments made or to be made on behalf of them, at the time of entering into this Stipulation and at the time of such payment they, or to the best of their knowledge any Persons contributing to the payment of the Cash Consideration, were not insolvent, nor will the payment required to be made by or on behalf of them render them insolvent, within the meaning of and/or for the purposes of the United States Bankruptcy Code, including §§ 101 and 547 thereof. This representation is made by each of Defendants and not by their counsel.
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53. In the event of the entry of a final order of a court of competent jurisdiction determining that the transfer of the Cash Consideration or any portion thereof by or on behalf of Defendants was a preference, voidable transfer, fraudulent transfer, or similar transaction and any portion thereof is required to be returned, and such amount is not promptly transferred to the Company by others, then, at the election of Plaintiffs, Plaintiffs and Defendants shall jointly move the Court to vacate and set aside the Released Claims given and the Judgment entered pursuant to this Stipulation, in which event the Released Claims and Judgment shall be null and void, and Plaintiffs and Defendants shall be restored to their respective positions in the litigation as provided in Paragraph 44 above.
54. If any Party is required to give notice to another Party under this Stipulation, such notice shall be in writing and shall be deemed to have been duly given upon receipt of FedEx or email transmission, with confirmation of receipt. Notice shall be provided as follows:
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| If to Plaintiffs or Plaintiffs’ Counsel: | Potter Anderson & Corroon LLP Attn: Kevin R. Shannon Attn: Tyler J. Leavengood 1313 North Market Street – 6th Floor Wilmington, DE 19801 (302) 984-6000 kshannon@potteranderson.com tleavengood@potteranderson.com Andrews & Springer LLC
Attn: Peter B. Andrews 4001 Kennett Pike, Suite 250 Wilmington, Delaware 19807 (302) 504-4957 pandrews@andrewsspringer.com | |
| If to Defendants: | ||
| Mayne: |
Mayne Pharma Ventures Pty Ltd. Attn: Laura Loftus Level 1, 99 King Street Melbourne VIC 3000 Australia Laura.Loftus@maynepharma.com
Abrams & Bayliss LLP Attn: A. Thompson Bayliss 20 Montchanin Road, Suite 200 Wilmington, DE 19807 Bayliss@AbramsBayliss.com
Curtis, Mallet-Prevost, Colt & Mosle LLP Attn: Jacques Semmelman 101 Park Avenue New York, NY 10178 jsemmelman@curtis.com | |
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| Brendan Magrab, Stefan J. Cross, Dr. R. Dana Ono, Robert D. Martin, W. Mark Watson, and Nicholas J. Virca: | Wilson Sonsini Goodrich & Rosati Attn: Andrew D. Cordo 222 Delaware Avenue, 8th Floor Wilmington, DE 19801 (302) 304-7600 acordo@wsgr.com | |
| Nominal Defendant: | Inhibitor Therapeutics, Inc. Attn: Garrison Hasara 449 South 12th Street Unit 1705 Tampa, Florida 33602 (888) 841-6811 ghasara@inhibitortx.com
Ashby & Geddes, PA Attn: Troupe Mickler 500 Delaware Avenue P.O. Box 1150 Wilmington, DE 19899 (302) 654-1888 tmickler@ashbygeddes.com | |
BINDING EFFECT
55. This Stipulation shall be binding upon and inure to the benefit of the Parties hereto and their respective agents, executors, heirs, successors, and assigns.
COUNTERPARTS
56. This Stipulation may be executed in one or more counterparts, each of which when so executed and delivered shall be deemed to be an original but all of which together shall constitute one and the same instrument.
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AUTHORITY
57. This Stipulation will be executed by counsel for each of the Parties, each of whom represents and warrants that they have the authority from their client(s) to enter into this Stipulation and bind their clients hereto.
NO WAIVER
58. Any failure by any Party to insist upon the strict performance by any other Party of any of the provisions of this Stipulation shall not be deemed a waiver of any of the provisions hereof, and such Party, notwithstanding such failure, shall have the right thereafter to insist on the strict performance of any and all of the provisions of this Stipulation to be performed by such other Party. No waiver, express or implied, by any Party of any breach or default in the performance by the other Party of its obligations under this Stipulation shall be deemed or construed to be a waiver of any other breach, whether prior, subsequent, or contemporaneous, under this Stipulation.
CONFIDENTIALITY
59. Plaintiffs, Defendants, and their counsel agree, to the extent permitted by law, that all agreements relating to the confidentiality of information made before and during the course of the Actions shall survive this Stipulation. The parties agree that all non-public information relating to the use of SUBA-Itraconazole to treat oncology shall be deemed the confidential information of Mayne and shall be kept confidential pursuant to the terms of the Third Amended SLA.
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60. IN WITNESS WHEREOF, the Parties have caused this Stipulation to be executed, by their duly authorized attorneys, as of September 9, 2022.
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| POTTER ANDERSON & CORROON LLP
/s/ Kevin R. Shannon Kevin R. Shannon (#3137) Tyler J. Leavengood (#5506) Hercules Plaza, 6th Floor 1313 North Market Street Wilmington, DE 19899 (302) 984-6000
Attorneys for Plaintiff Hedgepath, LLC |
ANDREWS & SPRINGER LLC
/s/ Peter B. Andrews Peter B. Andrews (#4623) Craig J. Springer (#5529) David Sborz (#6203) 4001 Kennett Pike, Suite 250 Wilmington, Delaware 19807 (302) 504-4957
Attorneys for Plaintiff Samuel Sears | |||
| Of Counsel:
Jacques Semmelman Grace E. Condro CURTIS, MALLET-PREVOST, COLT & MOSLE LLP 101 Park Avenue New York, NY 10178 (212) 696-6000 |
ABRAMS & BAYLISS LLP
/s/ A. Thompson Bayliss A. Thompson Bayliss (#4379) 20 Montchanin Road, Suite 200 Wilmington, DE 19807 (302) 778-1000
Attorneys for Defendant Mayne Pharma Ventures Pty Ltd. | |||
| WILSON SONSINI GOODRICH & ROSATI, P.C.
/s/ Andrew D. Cordo Andrew D. Cordo (#4534) Daniyal M. Iqbal (#6167) Leah E. León (#6536) 222 Delaware Avenue, Suite 800 Wilmington, Delaware 19801 (302) 304-7600
Attorneys for Defendants Brendan Magrab, Stefan J. Cross, Dr. R. Dana Ono, Robert D. Martin, W. Mark Watson, and Nicholas J. Virca | ||||
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| ASHBY & GEDDES, P.A.
/s/ F. Troupe Mickler IV F. Troupe Mickler IV (#5361) Marie M. Degnan (#5602) 500 Delaware Avenue, 8th Floor P.O. Box 1150 Wilmington, Delaware 19801 (302) 654-1888
Attorneys for Nominal Defendant Hedgepath Pharmaceuticals, Inc. | ||||
| Dated: September 9, 2022 |
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Exhibit 10.2
Licence Agreement
Date
Parties
| Name | Mayne Pharma Ventures Pty Ltd, an Australian company ACN 168 896 357 | |
| Short form name | Mayne Pharma | |
| Notice details | 1538 Main North Road, Salisbury South, SA 5106 Australia Facsimile: +61 3 9614 7022 Attention: General Counsel | |
| Name | Inhibitor Therapeutics, Inc., formerly known as Hedgepath Pharmaceuticals, Inc., a company incorporated in Delaware, successor in interest by merger to Commonwealth Biotechnologies, Inc, a Virginia corporation | |
| Short form name | INTI | |
| Notice details | 900 W. Platt St. #200, Tampa, FL 33606, United States Facsimile: +1 813-527-0500 Attention: CEO | |
Background
| A | Mayne Pharma and INTI are parties to the Third Amended and Restated Supply and License Agreement dated 17 December 2018 (the 2018 Agreement). |
| B | Mayne Pharma and INTI are parties to a certain Stipulation and Agreement of Compromise, Settlement and Release dated as of September 9, 2022 pending approval by the Court of Chancery of the State of Delaware (the Stipulation), pursuant to which the 2018 Agreement is to be voided as of the Effective Date (defined) except as provided in the Stipulation, including with respect to the licence to Mayne Pharma of rights arising under certain INTI Patents (defined) and INTI’s right to a 9% cash royalty on future net sales, if any, of the Product (defined) in the United States and Mayne Pharma’s right to set off any royalties due to INTI on future net sales of the Product against USD 3,000,000.00 advance paid to INTI under the 2018 Agreement. |
| C | In accordance with the Stipulation, Mayne Pharma and INTI have mutually agreed to the following terms and conditions to provide and govern the licence to Mayne Pharma of rights under of the INTI Patents upon the final approval of the Stipulation and effective as of the Effective Date. If the Stipulation is not approved by December 31, 2022, this Licence Agreement shall not become effective and the 2018 Agreement shall not be voided. |
Agreed terms
| 1. | Defined terms |
In this Licence Agreement:
2018 Agreement has the meaning given to it in paragraph A of the background section of this Licence Agreement.
Actual Launch Date means the date of the first commercial sale of a BCCNS Product in the Territory.
Affiliate means, with respect to a party, any person or entity which directly or indirectly, is controlled by, controls, or is under common control with that party.
BCCNS means Basal Cell Carcinoma Nevus (Gorlin) Syndrome.
BCCNS Field means the treatment of human patients with BCCNS.
BCCNS Product means a Product manufactured or sold by Mayne Pharma in the BCCNS Field.
Effective Date has the meaning given to it in the Stipulation.
INTI Patents means the patents listed on Schedule 1.
Licence Agreement means this license agreement.
Product means SUBA-Itraconazole as described in Schedule 2 or another SUBA- Itraconazole product.
Quarter means a 3-month period starting 1 January, 1 April, 1 July or 1 October.
Relevant Regulatory Authority means, in relation to a country or region, any governmental authority (whether federal, state or local) regulating the manufacture, importation, storage, promotion, sale, distribution or use of therapeutic substances, and in the case of Australia and the USA incudes the Therapeutic Goods Administration (TGA) and the Food and Drug Administration (FDA), respectively, or any successor body.
Royalty Term means a period beginning on the Actual Launch Date and continuing until the lapse or expiration of all of the INTI Patents.
Territory means the United States of America, including all of its territories and possessions.
Stipulation has the meaning given to it in paragraph B of the background section of this Licence Agreement.
| 2. | Termination of 2018 Agreement |
| 2.1 | Acknowledgment. |
The parties acknowledge the termination of the 2018 Agreement and all of their rights and obligations thereunder as of the Effective Date except as expressly preserved herein.
| 3. | Licence |
| 3.1 | Grant of licence to INTI Patents |
From the Effective Date, INTI grants to Mayne Pharma a worldwide, royalty-free (subject to clause 6.1), nonexclusive, perpetual, irrevocable licence to exploit the INTI Patents to the extent they relate to, or have potential application in connection with, the Product.
| 3.2 | Covenant not to sue |
The parties covenant as follows:
| (a) | INTI covenants that it will not sue Mayne Pharma for Mayne Pharma’s use of any information that Mayne Pharma obtained from INTI in the course of negotiation or performance of the 2018 Agreement or its predecessor agreements, provided the use of such information is not in violation of this Agreement. |
| (b) | Mayne Pharma covenants that it will not sue INTI for INTI’s use of any information that INTI obtained from Mayne Pharma in the course of negotiation or performance of the 2018 Agreement or its predecessor agreements, provided the use of such information is not in violation of this Agreement. |
| 3.3 | Warranty |
INTI warrants that it is free to grant the licence under clause 3.1 and that, to INTI’s knowledge, there are no claims that the manufacture, sale or use of any Product constitutes an infringement of the intellectual property rights of any other party. Promptly on becoming aware of any restriction on such right to grant such licence, INTI shall notify Mayne Pharma.
| 3.4 | Sub-licensing |
Mayne Pharma may not grant a sublicence of the INTI Patents to a third party without the prior written consent of INTI, which consent shall not be unreasonably withheld or delayed. Without limiting the foregoing, Mayne Pharma agrees that it would not be unreasonable for INTI to withhold consent if, in the business judgment of the Board of Directors of INTI, Mayne Pharma’s grant of a sublicence to a third party may cause economic damage to INTI. In no event shall any sublicense alter, impair, avoid, or reduce any obligation owed by Mayne Pharma, including with respect to the payment of any Royalty pursuant to Section 6.
| 3.5 | Assignment |
Mayne Pharma may assign any of its rights or obligations under this Licence Agreement without the prior written consent of INTI.
| 4. | Termination |
| 4.1 | Termination for breach by a party |
A party may terminate the surviving obligations set out in this Licence Agreement with immediate effect by notice in the manner set forth below to the other party if:
| (a) | that other party breaches any material provision of this Licence Agreement and fails to remedy the breach within 30 days after receiving notice requiring it to do so; or |
| (b) | that other party breaches a material provision of this Licence Agreement where that breach is not capable of remedy. |
| 4.2 | Accrued rights and remedies |
The termination or expiry of the 2018 Agreement or this Licence Agreement does not affect any accrued rights or remedies of either party.
| 4.3 | Survival |
Sections 3.2, 4, 5, 7 and 8 hereof shall survive any termination of this Licence Agreement.
Section 3.1 hereof shall survive termination of this Licence Agreement unless it is terminated by INTI for Mayne Pharma’s breach of Sections 3.2(b) or 3.4.
Section 6 hereof shall survive until all royalty payments due from Mayne Pharma to INTI have been paid in full unless this Licence Agreement is terminated by Mayne Pharma for INTI’s breach of Section 3.2(a).
| 5. | Dispute resolution |
In the event of any action, question or disagreement arising from or relating to the ongoing obligations of the 2018 Agreement or this Licence Agreement, the parties hereto agree to settle such action, question or disagreement by arbitration before three arbitrators in Wilmington, Delaware, selected by, and such arbitration to be administered by, the American Arbitration Association (“AAA”) in accordance with its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Each of the parties hereto agrees and acknowledges that all actions, questions or disagreements between or among them arising from or relating to this Agreement are subject to the alternative dispute resolution procedures of this clause 5. Each of the parties hereto agrees that any aspect of alternative dispute resolution not specifically covered in this Agreement shall be covered, without limitation, by the applicable AAA rules and procedures. Each of the parties hereto further agrees that any determination by the arbitrator regarding any action, question or disagreement arising from or relating to this Agreement shall be final and binding upon the parties hereto and shall not be subject to further appeal.
| 6. | Royalty |
| 6.1 | Payment each Quarter |
Subject to clauses 6.2 and 6.3, within 60 days of the end of each Quarter of the Royalty Term, Mayne Pharma must pay to INTI a cash royalty of 9% on the aggregate of the actual gross invoice price for the BCCNS Product sold by Mayne Pharma, its Affiliates or any sublicensee to third parties in the Territory, less the following deductions (whether or not separately stated on invoices) to the extent reasonable and customary in the market for the Product or any product similar to or substitutable for the Product:
| (a) | Third party trade, case and quantity discounts, bonuses, commission and rebates actually and normally allowed; |
| (b) | Sales, value added or excise taxes on the sale of such Product; and |
| (c) | Amounts repaid or credited to the purchaser by reason of rejections or returns of such Product. |
INTI acknowledges that the royalty payable under this clause reflects the royalty obligation stated in Paragraph 10 of the Stipulation and is the only royalty obligation from Mayne Pharma to INTI.
| 6.2 | Calculation of the royalty |
In respect of the amounts payable under clause 6.1:
| (a) | if such amount is negative in any Quarter, then no royalty is payable for that Quarter and that amount will be carried forward and included as a deduction from the aggregate of the gross invoice price in any subsequent Quarter (as applicable); |
| (b) | Mayne Pharma must submit to INTI a report setting out, in reasonable detail, the calculation of the royalty amount (including the aggregate actual gross invoice price for the Product sold by Mayne Pharma, its Affiliates or any sublicensee during the applicable Quarter) at the same time as it makes payment; and |
| (c) | Mayne Pharma must, and must ensure that its Affiliates and any sublicensee will, promptly process any deduction and in any event, process such deductions no later than one Quarter after they are allowed (in the case of discounts, bonuses, commissions and rebates) applied or the Products sold by Mayne Pharma, its Affiliates or any sublicensee are rejected or returned. |
| 6.3 | Credit for payment of the Advance |
The parties acknowledge that, as at the date of this Licence Agreement, Mayne Pharma has paid advances totalling USD 3,000,000.00 to INTI. Royalty payments totalling up to USD 3,000,000.00 that are due by Mayne Pharma to INTI under clause 6.1 will be credited and set off against the advances totalling USD 3,000,000.00, after which any further royalty payments that are due by Mayne Pharma to INTI under clause 6.1 will be paid in full to INTI.
| 6.4 | Books of account |
| (a) | Mayne Pharma will maintain books of account and records with respect to sales and stocks of a BCCNS Product in the Territory by Mayne Pharma, its Affiliates and any sublicensee (including stock records) (Mayne Pharma Books of Account). |
| (b) | INTI will have the right to appoint, on reasonable notice, an Accountant to inspect and examine the Mayne Pharma Books of Account. |
| (c) | INTI will bear the fees of such Accountant unless an error equivalent to 5% or more (in favour of INTI) of the amounts payable under clause 6.1 in any calendar year is discovered, in which case the fees will be borne by Mayne Pharma. |
| (d) | Mayne Pharma will maintain the Mayne Pharma Books of Account in accordance with business accounting standards in the Territory. |
| 7. | Payments |
| 7.1 | Payment terms |
Mayne Pharma must make payments due under this Licence Agreement:
| (a) | in US dollars; and |
| (b) | to the bank account of INTI listed on the relevant invoice, with Mayne Pharma to bear the costs of any such remittance. |
| 7.2 | Reimbursement |
Where a party agrees to reimburse to the other party any costs or expenses, then it will reimburse these amounts within 30 days from receipt of the other party’s invoice for, and reasonable evidence of, such costs or expenses.
| 8. | Miscellaneous |
| 8.1 | Governing law |
This Licence Agreement is governed by the laws of Delaware, USA, without regard to the conflicts of laws principles thereof.
| 8.2 | Entire agreement |
This Licence Agreement and the Stipulation constitute the entire agreement between the parties as to its subject matter and supersedes any prior representations and agreements in connection with that subject matter. In the event of a conflict between the terms of this Licence Agreement and the Stipulation, the terms of this Licence Agreement shall prevail.
| 8.3 | Costs |
Each party must bear its own costs of preparing and executing this Licence Agreement.
| 8.4 | Counterparts |
This Licence Agreement may be executed in counterparts, including facsimile counterpart. All executed counterparts constitute one document.
Signing page
EXECUTED as an agreement.
| Signed for Mayne Pharma Ventures Pty Ltd by an authorised officer in the presence of | /s/ shawn Patrick O’Brien |
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| Signature of officer | ||||||
| /s/ Laura Loftus |
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| Signature of witness
Laura Loftus |
Name of officer (print)
CEO & MANAGING DIRECTOR |
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| Name of witness (print) | Office held | |||||
| Signed for Inhibitor Therapeutics, Inc. by an authorised officer in the presence of |
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| Signature of officer | ||||||
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| Signature of witness | Name of officer (print) | |||||
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| Name of witness (print) | Office held | |||||
-7-
Schedule 1
INTI Patents
| a. | U.S. Patent 9,192,609 |
Treatment and Prognostic Monitoring of Proliferation Disorders Using Hedgehog Pathway Inhibitors
Issued: 11-24-2015; Expires: 02-05-2034
| b. | U.S. Patent 9,962,381 |
Treatment and Prognostic Monitoring of Cancerous Proliferation Disorders Using Hedgehog Pathway Inhibitors
Issued: 05-08-2018; Expires: 02-05-2034
| c. | U.S. Patent 9,968,600 |
Treatment and Prognostic Monitoring of Non-Cancerous Proliferation Disorders Using Hedgehog Pathway Inhibitors
Issued: 05-05-2018; Expires: 02-05-2034
| d. | U.S. Patent 10,328,072 |
Treatment of Lung Cancer Using Hedgehog Pathway Inhibitors
Issued: 6-25-2019; Expires: 02-05-2034
| e. | U.S. Patent 10,363,252 |
Treatment of Prostate Cancer Using Hedgehog Pathway Inhibitors
Issued: 07-30-2019; Expires: 02-05-2034
Schedule 2
Product and Product Specification
Product: SUBA-Itraconazole 50mg hard capsules
1. Description of the dosage form
Hard gelatin capsules. size 1, light blue/light blue body and cap printed “i-50” in black on the cap. Capsules contain white to off-white powder. The outside of the capsule must be free from powder and the two capsule halves must lock firmly together.
2. Composition
The qualitative composition for SUBA-Itraconazole Capsules is presented in Table 1 below.
Table 1:Qualitative and Quantitative Composition
| Component |
Grade | |
| Itraconazole | USP/Ph.Eur. | |
| Hypromellose Phthalate (HP-50) | NF/Ph.Eur. | |
| Sodium Starch Glycolate Type A | NF/Ph.Eur. | |
| Silicon Dioxide Colloidal (Aerosil 200P) | NF/Ph.Eur. | |
| Magnesium Stearate (1726) | NF/Ph.Eur. | |
| Methylene Chloride | NF/Ph.Eur. | |
| Nitrogen | NF | |
| Capsule size No 1 P
Light Blue/Light Blue |
In-house | |
| FD&C Blue No. 1 (Cl 42090) | 21 CFR | |
| Titanium Dioxide (CI 77891) | 21 CFR | |
| Gelatin | USP/Ph.Eur. | |
| TekPrint SW-9008 | Proprietary | |
| Shellac | NF | |
| Dehydrated Alcohol | USP | |
| Isopropyl Alcohol | USP | |
| Butyl Alcohol | NF | |
| Propylene Glycol | USP | |
| Strong Ammonia Solution | NF | |
| Potassium Hydroxide | NF | |
| Black Iron Oxide | NF | |
| Purified Water | USP | |
3. Container Closure System
SUBA-Itraconazole Capsules 50 mg will be packaged into white, round HDPE bottles with CRC/induction foil seal cap containing 30 capsules or 90 capsules (trade pack).
SUBA-Itraconazole Capsules 50 mg may be packaged into double LDPE bag lined cardboard cartons with one desiccant sachet between the inner and outer bags and each bag sealed with a cable tie.
- 10 -
Exhibit 10.3
INHIBITOR THERAPEUTICS, INC.
EMPLOYMENT AGREEMENT
This Employment Agreement (the “Agreement”), entered into as of December 13, 2022 (the “Effective Date”), is made by and between Inhibitor Therapeutics, Inc., a Delaware corporation (the “Company”) and Francis E. O’Donnell (“Executive” and, together with the Company, the “Parties”).
WHEREAS, the Company desires to assure itself of the services of Executive by engaging Executive to perform services as an employee of the Company under the terms hereof;
WHEREAS, Executive desires to provide services to the Company on the terms herein provided; and
WHEREAS, the Parties desire to execute this Agreement to reflect details of Executive’s employment with the Company effective as of the Effective Date.
NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, including the respective covenants and agreements set forth below, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
1. Employment.
(a) General. The Company shall employ Executive upon the terms and conditions provided herein effective as of the Effective Date. In addition, the Company acknowledges that the Executive is the founder of the Company formerly known as HedgePath Pharmaceuticals, Inc (the prior name of Inhibitor Therapeutic, Inc)
(b) Position and Duties. Effective on the Effective Date, Executive: (i) shall serve as the Company’s Executive Chairman and Chief Executive Officer (CEO), with responsibilities, duties, and authority usual and customary for such positions, subject to direction by the Board of Directors of the Company (the “BOD”); and as needed, interim director of clinical development, business development, intellectual property and licensing (ii) shall report directly to the BOD; and (iii) agrees promptly and faithfully to comply with all present and future policies, requirements, rules and regulations, and reasonable directions and requests, of the Company in connection with the Company’s business. At the Company’s request, Executive shall serve the Company and/or its subsidiaries and affiliates in such other capacities in addition to the foregoing as the Company shall designate, provided that such additional capacities are consistent with Executive’s position as the Company’s Executive Chairman. In the event that Executive serves in any one or more of such additional capacities, Executive’s compensation shall not automatically be increased on account of such additional service.
(c) Performance of Executive’s Duties. During Executive’s employment with the Company, and except for periods of illness, vacation, disability, or reasonable leaves of absence or as discussed in Section 1(e) below, Executive shall devote Executive’s full time and attention to the business and affairs of the Company pursuant to the general direction of the BOD. The rights of Executive under this Agreement shall not be affected by any change in the title, duties, or capacity of Executive during Executive’s employment with the Company. Notwithstanding the foregoing, the Company acknowledges that Executive is also the founder and currently serves as Executive Chairman of the Board of Repurposed Therapeutics, Inc (dba Defender Pharma).
(d) Principal Office. Executive will work principally from Executive’s home office in Sarasota Florida, but may upon request of the BOD work for short periods of time from the Company’s headquarters located at 900 W. Platt St., Suite 200, Tampa FL 33606.
(e) Exclusivity. Except as disclosed in 1(c) and, in other situations, with the prior written approval of the BOD (which the BOD may grant or withhold in its sole and absolute discretion), Executive shall devote substantially all of Executive’s working time, attention, and energies to the business of the Company, except during any paid vacation or other excused absence periods. Nothing in this section prevents Executive from engaging in additional activities in connection with personal investments and community affairs. Executive may also serve as a member of the board of directors or board of advisors of another organization provided (i) such organization is not a competitor of the Company; (ii) Executive receives prior written approval from the Company’s BOD; and (iii) such activities do not individually or in the aggregate interfere with the performance of Executive’s duties under this Agreement, violate the Company’s standards of conduct then in effect, or raise a conflict under the Company’s conflict of interest policies.
2. Term. The period of Executive’s employment under this Agreement shall commence on the Effective Date and shall continue until Executive’s employment with the Company is terminated pursuant to Section 5 below. The phrase “Term of Employment” as used in this Agreement shall refer to the entire period of employment of Executive by the Company. The Effective Date of this employment contract is that day which corresponds to the effective date of the settlement pending in the Court of Chancery in the State of Delaware regarding litigation involving the certain prior officers and directors of the Company and Mayne Pharma (C.A. No. 2019-0529-JTL and C.A. No. 2020-0215-JTL).
3. Compensation and Related Matters.
(a) Annual Base Salary. During the Term of Employment, Executive shall receive a base salary at the rate of $ 23,000 biweekly (as may be increased from time to time, the “Annual Base Salary”), subject to withholdings and deductions, which shall be paid to Executive in accordance with the customary payroll practices and procedures of the Company. Such Base Salary shall be reviewed by the BOD, and, as applicable, the Compensation Committee of the BOD, not less than annually.
Executive’s compensation shall be accrued until such time as the pending litigation settlement is filed and approved by the Delaware Chancery Court (the “Cash Payment Trigger”) on or after the Effective Date of this Agreement. Executive and Company hereby agree that Executive’s services to the Company to prepare for the change of control at INTI entitle Executive to a sign-on bonus compensation from the filing of the joint settlement agreement to the effective date, which will be paid upon achievement of the Cash Payment Trigger. Thereafter Executive’s Base Salary shall be paid as described in section 3(a) above.
(b) Annual Bonus. Executive shall be eligible to receive a discretionary annual bonus based on Executive’s achievement of performance objectives as mutually agreed between Executive and the BOD, such bonus to be targeted at fifty percent (50%) of Executive’s Annual Base Salary (the “Annual Bonus”). Any Annual Bonus approved by the BOD and/or the Compensation Committee of the BOD shall be paid at the same time annual bonuses are paid to other executives of the Company generally, subject to Executive’s continuous employment through the date of approval.
(c) Benefits. Executive shall be entitled to participate in such employee and executive benefit plans and programs as the Company may from time to time offer to provide to its executives, subject to the terms and conditions of such plans. Notwithstanding the foregoing, nothing herein is intended, or shall be construed, to require the Company to institute or continue any, or any particular, plan or benefit.
(d) Business Expenses. The Company shall reimburse Executive for all reasonable, documented, out-of-pocket travel and other business expenses incurred by Executive in the performance of Executive’s duties to the Company in accordance with the Company’s applicable expense reimbursement policies and procedures as are in effect from time to time.
(e) Vacation. Executive will be entitled to paid vacation in accordance with the Company’s vacation policy.
4. Equity Awards.
(a) Equity Awards. Executive shall be eligible for such stock options and equity awards as may be determined by the Company, in its sole discretion.
(b) Acceleration Upon a Change in Control. Notwithstanding anything herein to the contrary, in the event of a Change in Control (as defined below), the vesting of Executive’s then outstanding unvested equity awards, including any stock options, restricted stock awards and any such awards subject to performance-based vesting (after giving effect to any vesting in connection with the Change in Control) (the “Outstanding Awards”), shall accelerate as of immediately prior to such a Change in Control (and, if applicable, all restrictions and rights of repurchase on such awards shall lapse) in respect of 50% of the then-unvested shares of Company common stock subject thereto (such unvested portion, the “Unvested Portion”). The Unvested Portion of any Outstanding Award subject to performance-based vesting shall convert into a time-based equity award, and the Unvested Portion of each Outstanding Award shall vest in substantially equal installments on each of the first twelve monthly anniversaries of the closing date of the Change in Control. Notwithstanding the foregoing and for the avoidance of doubt, the Unvested Portion of each Outstanding Award shall be subject to accelerated vesting in accordance with Section 6(b)(iii) below.
5. Termination.
(a) At-Will Employment. The Company and Executive acknowledge that Executive’s employment is and shall continue to be at-will, as defined under applicable law. This means that it is not for any specified period of time and can be terminated by Executive or by the Company at any time, with or without advance notice, and for any or no particular reason or cause. It also means that Executive’s job duties, title, and responsibility and reporting level, work schedule, compensation, and benefits, as well as the Company’s personnel policies and procedures, may be changed with prospective effect, with or without notice, at any time in the sole discretion of the Company (subject to any ramification such changes may have under Section 6 of this Agreement). This “at-will” nature of Executive’s employment shall remain unchanged during Executive’s tenure as an employee and may not be changed, except in an express writing signed by Executive and a duly-authorized officer of the Company. If Executive’s employment terminates for any lawful reason, Executive shall not be entitled to any payments, benefits, damages, award, or compensation other than as provided in this Agreement.
(b) Notice of Termination. During the Term of Employment, any termination of Executive’s employment by the Company or by Executive (other than by reason of death) shall be communicated by written notice (a “Notice of Termination”) from one Party hereto to the other Party hereto (i) indicating the specific termination provision in this Agreement relied upon, if any, (ii) setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (iii) specifying the Date of Termination (as defined below). The failure by the Company to set forth in the Notice of Termination all of the facts and circumstances which contribute to a showing of Cause (as defined below) shall not waive any right of the Company hereunder or preclude the Company from asserting such fact or circumstance in enforcing their rights hereunder.
(c) Termination Date. For purposes of this Agreement, “Date of Termination” shall mean the date of the termination of Executive’s employment with the Company specified in a Notice of Termination.
(d) Deemed Resignation. Upon termination of Executive’s employment for any reason, Executive shall be deemed to have resigned from all offices and board memberships, if any, then held with the Company or any of its affiliates, and, at the Company’s request, Executive shall execute such documents as are necessary or desirable to effectuate such resignations.
6. Consequences of Termination.
(a) Payments of Accrued Obligations upon all Terminations of Employment. Upon a termination of Executive’s employment for any reason, Executive (or Executive’s estate or legal representative, as applicable) shall be entitled to receive, within thirty (30) days after Executive’s Date of Termination (or such earlier date as may be required by applicable law): (i) any portion of Executive’s Annual Base Salary earned through Executive’s Date of Termination not theretofore paid, (ii) any expenses owed to Executive under Section 3(d) above, (iii) any accrued but unused paid time-off owed to Executive, (iv) any Annual Bonus approved by the Board, Compensation Committee of the Board and/or the CEO on or prior to the Date of Termination but unpaid as of the Date of Termination, and (v) any amount arising from Executive’s participation in, or benefits under, any employee benefit plans, programs, or arrangements under Section 3(c) above, which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans, programs, or arrangements. Except as otherwise set forth in Section 6(b) or 6(c) below, the payments and benefits described in this Section 6(a) shall be the only payments and benefits payable in the event of Executive’s termination of employment for any reason.
(b) Severance Payments upon Termination Without Cause or For Good Reason. If, during the Term of Employment Executive’s employment is terminated by the Company without Cause or Executive resigns for Good Reason, in addition to the payments and benefits described in Section 6(a) above, the Company shall, subject to Executive’s delivery to the Company of a waiver and release of claims agreement in a form approved by the Company that becomes effective and irrevocable in accordance with Section 11(d) hereof (a “Release”):
(1) The Company shall pay to Executive an amount equal two times the sum of (i) Executive’s Annual Base Salary and Executive’s target Annual Bonus. Such amount will be subject to applicable withholdings and payable in twenty-four equal cash payments on the first regular payroll date in twenty-four consecutive calendar months commencing on the first such regular payroll date occurring at least 45 days following the date the Release becomes effective and irrevocable or as otherwise provided in Section 11(d) hereof.
(2) During the period commencing on the Date of Termination and ending on the twelve month anniversary thereof or, if earlier, the date on which Executive becomes eligible for comparable replacement coverage under a subsequent employer’s group health plan (in any case, the “COBRA Period”), subject to Executive’s valid election to continue healthcare coverage under Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations thereunder, the Company shall, in its sole discretion, either (A) continue to provide to Executive and Executive’s dependents, at the Company’s sole expense, or (B) reimburse Executive and Executive’s dependents for coverage under its group health plan (if any) at the same levels in effect on the Date of Termination; provided, however, that if (1) any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the continuation coverage period to be, exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), (2) the Company is otherwise unable to continue to cover Executive or Executive’s dependents under its group health plans, or (3) the Company cannot provide the benefit without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then, in any such case, an amount equal to each remaining Company subsidy shall thereafter be paid to Executive in substantially equal monthly installments over the COBRA Period (or remaining portion thereof).
(3) Cause any unvested equity awards, including any stock options, restricted stock awards and any such awards subject to performance-based vesting, held by Executive as of the Date of Termination, to become fully vested and, if applicable, exercisable, and cause all restrictions and rights of repurchase on such awards to lapse with respect to all of the shares of the Company’s Common Stock subject thereto.
(c) No Other Severance. The provisions of this Section 6 shall supersede in their entirety any severance payment provisions in any severance plan, policy, program, or other arrangement maintained by the Company except as otherwise approved by the Board.
(d) No Requirement to Mitigate; Survival. Executive shall not be required to mitigate the amount of any payment provided for under this Agreement by seeking other employment or in any other manner. Notwithstanding anything to the contrary in this Agreement, the termination of Executive’s employment shall not impair the rights or obligations of any Party.
(e) Definition of Cause. For purposes hereof, “Cause” shall mean any one of the following: (i) Executive’s material violation of any applicable material law or regulation respecting the business of the Company; (ii) Executive’s conviction of, or plea of nolo contendere to, a felony or other crime involving moral turpitude; (iii) any act of dishonesty, fraud, or misrepresentation in relation to Executive’s duties to the Company which act is materially and demonstrably injurious to the Company; (iv) Executive’s willful and repeated failure to perform in any material respect Executive’s duties hereunder after fifteen (15) days’ notice and an opportunity to cure such failure and a reasonable opportunity to present to the Board Executive’s position regarding any dispute relating to the existence of such failure (other than on account of disability); or (vi) any act of gross misconduct which is materially and demonstrably injurious to the Company.
(f) Definition of Change in Control. For purposes of this Agreement, “Change in Control” shall mean (i) the acquisition by any person or group of affiliated or associated persons of more than fifty percent (50%) of the outstanding capital stock of the Company or voting securities representing more than fifty percent (50%) of the total voting power of outstanding securities of the Company; (ii) the consummation of a sale of all or substantially all of the assets of the Company to a third party; (iii) the consummation of any merger involving the Company in which, immediately after giving effect to such merger, less than a majority of the total voting power of outstanding stock of the surviving or resulting entity is then “beneficially owned” (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) in the aggregate by the stockholders of the Company, as applicable, immediately prior to such merger. For the avoidance of doubt and notwithstanding anything herein to the contrary,
in no event shall a transaction constitute a “Change in Control” if: (w) its sole purpose is to change the state of the Company’s incorporation; (x) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction; (y) it constitutes, or includes sales of shares in connection with, the initial public offering of the Company’s capital stock. Notwithstanding the foregoing, a “Change in Control” must also constitute a “change in control event,” as defined in Treasury Regulation §1.409A-3(i)(5).
(g) Definition of Good Reason. For purposes hereof, “Good Reason” shall mean any one of the following: (i) the material reduction of Executive’s base salary or target annual performance bonus, or any action to negatively alter the vesting terms or negatively altering the payment schedule of any of Executive’s issued/outstanding equity compensation awards; (ii) the assignment to Executive of any duties materially and negatively inconsistent in any respect of Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities (including without limitation a requirement to report to any person or entity other than the BOD or CEO); or (iii) the Company’s material breach of this Agreement, provided, that, in each case, Executive will not be deemed to have Good Reason unless (1) Executive first provides the Company with written notice of the condition giving rise to Good Reason within thirty (30) days of its initial occurrence, (2) the Company or the successor company fails to cure such condition within thirty (30) days after receiving such written notice (the “Cure Period”), and (3) Executive’s resignation based on such Good Reason is effective within thirty (30) days after the expiration of the Cure Period.
7. Assignment and Successors. The Company shall assign its rights and obligations under this Agreement to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise). This Agreement shall be binding upon and inure to the benefit of the Company, Executive, and their respective successors, assigns, personnel, and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable. None of Executive’s rights or obligations may be assigned or transferred by Executive, other than Executive’s rights to payments hereunder, which may be transferred only by will, operation of law, or as otherwise provided herein.
8. Miscellaneous Provisions.
(a) Confidentiality Agreement. Executive hereby agrees to execute contemporaneously with entry into this Agreement the form of At-Will Employment, Confidential Information, Invention and Assignment, and Arbitration Agreement by and between Executive and the Company (the “Confidentiality Agreement”) attached hereto as Exhibit A. The Confidentiality Agreement shall survive the termination of this Agreement and Executive’s employment with the Company for the applicable period(s) set forth therein. Notwithstanding the foregoing, in the event of any conflict between the terms of the Confidentiality Agreement and the terms of this Agreement, the terms of this Agreement shall prevail.
(b) Non-Solicitation of Employees. For a period of one (1)-year following Executive’s Date of Termination, Executive shall not, either directly or indirectly (i) solicit for employment by any individual, corporation, firm, or other business, any employees, consultants, independent contractors, or other service providers of the Company or any of its affiliates, or (ii) solicit any employee or consultant of the Company or any of its affiliates to leave the employment or consulting of or cease providing services to the Company or any of its affiliates; provided, however, that the foregoing clauses (i) and (ii) shall not apply to a general advertisement or solicitation (or any hiring pursuant to such advertisement or solicitation) that is not specifically targeted to such employees or consultants.
(c) Governing Law. This Agreement shall be governed, construed, interpreted, and enforced in accordance with its express terms, and otherwise in accordance with the substantive laws of the State of Delaware, without giving effect to any principles of conflicts of law, whether of any other State or any other jurisdiction, and where applicable, the laws of the United States, that would result in the application of the laws of any other jurisdiction.
(d) Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
(e) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement. Signatures delivered by facsimile shall be deemed effective for all purposes.
(f) Entire Agreement. The terms of this Agreement, together with the Confidentiality Agreement, are intended by the Parties to be the final expression of their agreement with respect to the employment of Executive by the Company and supersede all prior understandings and agreements, whether written or oral, regarding Executive’s service to the Company, including without limitation, the Offer Letter. The Parties further intend that this Agreement, together with the Confidentiality Agreement, shall constitute the complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement or the Confidentiality Agreement. Notwithstanding the foregoing, in the event of any conflict between the terms of the Confidentiality Agreement and the terms of this Agreement, the terms of this Agreement shall prevail.
(g) Amendments; Waivers. This Agreement may not be modified, amended, or terminated except by an instrument in writing signed by Executive and a duly authorized representative of the Company. By an instrument in writing similarly executed, Executive or a duly authorized officer of the Company, as applicable, may waive compliance by the other Party with any specifically identified provision of this Agreement that such other Party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure. No failure to exercise and no delay in exercising any right, remedy, or power hereunder shall preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.
(h) Dispute Resolution. Executive and the Company hereby agree that any dispute, claim or controversy arising under this Agreement or arising from, relating to or resulting from Executive’s employment shall be subject to Section 13.1 of the Confidentiality Agreement.
(i) Enforcement. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid, or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and be legal, valid, and enforceable.
(j) Withholding. The Company shall be entitled to withhold from any amounts payable under this Agreement any federal, state, local, or foreign withholding or other taxes or charges which the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.
(k) Whistleblower Protections and Trade Secrets. Notwithstanding anything to the contrary contained herein, nothing in this Agreement prohibits Executive from reporting possible violations of federal law or regulation to any United States governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or any other whistleblower protection provisions of state or federal law or regulation (including the right to receive an award for information provided to any such government agencies). Furthermore, in accordance with 18 U.S.C. § 1833, notwithstanding anything to the contrary in this Agreement: (i) Executive shall not be in breach of this Agreement, and shall not be held criminally or civilly liable under any federal or state trade secret law (x) for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (y) for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (ii) if Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Executive may disclose the trade secret to Executive’s attorney, and may use the trade secret information in the court proceeding, if Executive files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order.
9. Prior Employment. Executive represents and warrants that Executive’s acceptance of employment with the Company has not breached, and the performance of Executive’s duties hereunder will not breach, any duty owed by Executive to any prior employer or other person. Executive further represents and warrants to the Company that (a) the performance of Executive’s obligations hereunder will not violate any agreement between Executive and any other person, firm, organization, or other entity; (b) Executive is not bound by the terms of any agreement with any previous employer or other party to refrain from competing, directly or indirectly, with the business of such previous employer or other party that would be violated by Executive entering into this Agreement and/or providing services to the Company pursuant to the terms of this Agreement; and (c) Executive’s performance of Executive’s duties under this Agreement will not require Executive to, and Executive shall not, rely on in the performance of Executive’s duties or disclose to the Company or any other person or entity or induce the Company in any way to use or rely on any trade secret or other confidential or proprietary information or material belonging to any previous employer of Executive.
10. Golden Parachute Excise Tax.
(a) Best Pay. Any provision of this Agreement to the contrary notwithstanding, if any payment or benefit Executive would receive from the Company pursuant to this Agreement or otherwise (“Payment”) would (i) constitute a “parachute payment” within the 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 such Payment will be equal to the Reduced Amount (as defined below). The “Reduced Amount” will be either (A) the largest portion of the Payment that would result in no portion of the Payment (after reduction) being subject to the Excise Tax or (B) the entire Payment, whichever amount after taking into account all applicable federal, state, and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction of such state and local taxes), results in Executive’ s receipt, on an after-tax basis, of the greater 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 (A) of the preceding sentence, the reduction shall occur in the manner (the “Reduction Method”) that results in the greatest economic benefit for Executive. If more than one method of reduction will result in the same economic benefit, the items so reduced will be reduced pro rata (the “Pro Rata Reduction Method”). Notwithstanding the foregoing, if the Reduction Method or the Pro Rata Reduction Method would result in any portion of the Payment being subject to taxes pursuant to Section 409A (as defined below) that would not otherwise be subject to taxes pursuant to Section 409A, then the Reduction Method and/or the Pro Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes pursuant to Section 409A as follows: (1) 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; (2) as a second priority, Payments that are contingent on future events (e.g., being terminated without cause), shall be reduced (or eliminated) before Payments that are not contingent on future events; and (3) as a third priority, Payments that are “deferred compensation” within the meaning of Section 409A shall be reduced (or eliminated) before Payments that are not deferred compensation within the meaning of Section 409A.
(b) Accounting Firm. The accounting firm engaged by the Company for general tax purposes as of the day prior to the Change in Control will perform the calculations set forth in Section 10(a) above. If the firm so engaged by the Company is serving as the accountant or auditor for the acquiring company, the Company will appoint a nationally recognized accounting firm to make the determinations required hereunder. The Company will bear all expenses with respect to the determinations by such firm required to be made hereunder. The accounting firm engaged to make the determinations hereunder will provide its calculations, together with detailed supporting documentation, to the Company within thirty (30) days before the consummation of a Change in Control (if requested at that time by the Company) or such other time as requested by the Company. If the accounting firm determines that no Excise Tax is payable with respect to a Payment, either before or after the application of the Reduced Amount, it will furnish the Company with documentation reasonably acceptable to the Company that no Excise Tax will be imposed with respect to such Payment. Any good faith determinations of the accounting firm made hereunder will be final, binding and conclusive upon the Company and Executive.
11. Section 409A.
(a) General. The intent of the Parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date, (“Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. If Executive notifies the Company that Executive has received advice of tax counsel of a national reputation with expertise in Section 409A that any provision of this Agreement would cause Executive to incur any additional tax or interest under Section 409A (with specificity as to the reason therefor) or the Company independently makes such determination, the Company and Executive shall take commercially reasonable efforts to reform such provision to try to comply with or be exempt from Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Section 409A, provided that any such modifications shall not increase the cost or liability to the Company. To the extent that any provision hereof is modified in order to comply with or be exempt from Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to Executive and the Company of the applicable provision without violating the provisions of Section 409A.
(b) Separation from Service. Notwithstanding any provision to the contrary in this Agreement: (i) no amount that constitutes “deferred compensation” under Section 409A shall be payable pursuant to Section 6(b) above unless the termination of Executive’s employment constitutes a “separation from service” within the meaning of Section 1.409A-1(h) of the Department of Treasury Regulations (“Separation from Service”); (ii) for purposes of Section 409A, Executive’s right to receive installment payments shall be treated as a right to receive a series of separate and distinct payments; and (iii) to the extent that any reimbursement of expenses or in-kind benefits constitutes “deferred compensation” under Section 409A, such reimbursement or benefit shall be provided no later than December 31st of the year following the year in which the expense was incurred. The amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year. The amount of any in-kind benefits provided in one year shall not affect the amount of in-kind benefits provided in any other year.
(c) Specified Employee. Notwithstanding anything in this Agreement to the contrary, if Executive is deemed by the Company at the time of Executive’s Separation from Service to be a “specified employee” for purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A, such portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of Executive’s Separation from Service with the Company or (ii) the date of Executive’s death. Upon the first business day following the expiration of the applicable Section 409A period, all payments deferred pursuant to the preceding sentence shall be paid in a lump sum to Executive (or Executive’s estate or beneficiaries), and any remaining payments due to Executive under this Agreement shall be paid as otherwise provided herein.
(d) Release. Notwithstanding anything to the contrary in this Agreement, to the extent that any payments due under this Agreement as a result of Executive’s termination of employment are subject to Executive’s execution and delivery of a Release, (i) the Company shall deliver the Release to Executive within ten (10) business days following Executive’s Date of Termination, and the Company’s failure to deliver a Release prior to the expiration of such ten (10) business day period shall constitute a waiver of any requirement to execute a Release, (ii) if Executive fails to execute the Release on or prior to the Release Expiration Date (as defined below) or timely revokes Executive’s acceptance of the Release thereafter, Executive shall not be entitled to any payments or benefits otherwise conditioned on the Release, and (iii) in any case where Executive’s Date of Termination and the Release Expiration Date fall in two separate taxable years, any payments required to be made to Executive that are conditioned on the Release and are treated as nonqualified deferred compensation for purposes of Section 409A shall be made in the later taxable year. For purposes of this Section 11(d), “Release Expiration Date” shall mean the date that is twenty-one (21) days following the date upon which the Company timely delivers the Release to Executive, or, in the event that Executive’s termination of employment is “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967), the date that is forty-five (45) days following such delivery date. To the extent that any payments of nonqualified deferred compensation (within the meaning of Section 409A) due under this Agreement as a result of Executive’s termination of employment are delayed pursuant to this Section 11(d), such amounts shall be paid in a lump sum on the first payroll date following the date that Executive executes and does not revoke the Release (and the applicable revocation period has expired) or, in the case of any payments subject to Section 11(d)(iii), on the first payroll period to occur in the subsequent taxable year, if later.
12. Employee Acknowledgement. Executive acknowledges that Executive has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on Executive’s own judgment.
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date and year first above written.
| INHIBITOR THERAPEUTICS, INC. | ||
| By: |
| |
| Name: | ||
| Title: | ||
| EXECUTIVE | ||
| By: |
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| Name: Francis E. O’Donnell Title: Executive Chairman & CEO | ||
Exhibit 10.4
INHIBITOR THERAPEUTICS, INC.
EMPLOYMENT AGREEMENT
This Employment Agreement (the “Agreement”), entered into as of December 13, 2022 (the “Effective Date”), is made by and between Inhibitor Therapeutics, Inc., a Delaware corporation (the “Company”) and James A. McNulty (“Executive” and, together with the Company, the “Parties”).
WHEREAS, the Company desires to assure itself of the services of Executive by engaging Executive to perform services as an employee of the Company under the terms hereof; and
WHEREAS, Executive desires to provide services to the Company on the terms herein provided; and
WHEREAS, the Parties desire to execute this Agreement to reflect details of Executive’s employment with the Company effective as of the Effective Date.
NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, including the respective covenants and agreements set forth below, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
1. Employment.
(a) General. The Company shall employ Executive upon the terms and conditions provided herein effective as of the Effective Date.
(b) Position and Duties. Effective on the Effective Date, Executive: (i) shall serve as the Company’s Chief Financial Officer and Treasurer (CFO), with responsibilities, duties, and authority usual and customary for such position, subject to direction by the Chief Executive Officer (CEO) of the Company or the Board of Directors of the Company (the “BOD”); (ii) shall report directly to the CEO; and (iii) agrees promptly and faithfully to comply with all present and future policies, requirements, rules and regulations, and reasonable directions and requests, of the Company in connection with the Company’s business. At the Company’s request, Executive shall serve the Company and/or its subsidiaries and affiliates in such other capacities in addition to the foregoing as the Company shall designate, provided that such additional capacities are consistent with Executive’s position as the Company’s CFO. In the event that Executive serves in any one or more of such additional capacities, Executive’s compensation shall not automatically be increased on account of such additional service.
(c) Performance of Executive’s Duties. During Executive’s employment with the Company, and except for periods of illness, vacation, disability, or reasonable leaves of absence or as discussed in Section 1(e) below, Executive shall devote Executive’s attention to the business and affairs of the Company on a part-time basis pursuant to the general direction of the CEO. The rights of Executive under this Agreement shall not be affected by any change in the title, duties, or capacity of Executive during Executive’s employment with the Company.
(d) Principal Office. Executive will work principally from Executive’s home office in Tampa Florida, but may upon request of the CEO work for short periods of time from the Company’s headquarters located at 900 W. Platt St., Tampa FL 33606.
(e) Exclusivity. Except with the prior written approval of the CEO (which the CEO may grant or withhold in its sole and absolute discretion), Executive shall devote approximately fifty percent (50%) of Executive’s working time, attention, and energies to the business of the Company, except during any paid vacation or other excused absence periods. Nothing in this section prevents Executive from engaging in additional engagements or activities, including without limitation in connection with personal investments and community affairs. Executive may also serve as a member of the board of directors or board of advisors of another organization provided (i) such organization is not a competitor of the Company; (ii) Executive receives prior written approval from the Company’s CEO; and (iii) such activities do not individually or in the aggregate interfere with the performance of Executive’s duties under this Agreement, violate the Company’s standards of conduct then in effect, or raise a conflict under the Company’s conflict of interest policies.
2. Term. The period of Executive’s employment under this Agreement shall commence on the Effective Date and shall continue until Executive’s employment with the Company is terminated pursuant to Section 5 below. The phrase “Term of Employment” as used in this Agreement shall refer to the entire period of employment of Executive by the Company.
3. Compensation and Related Matters.
(a) Annual Base Salary. During the Term of Employment, Executive shall receive a base salary at the rate of $7,692.00 bi-weekly (as may be increased from time to time, the “Annual Base Salary”), subject to withholdings and deductions, which shall be paid to Executive in accordance with the customary payroll practices and procedures of the Company. Such Annual Base Salary shall be reviewed by the BOD, and, as applicable, the Compensation Committee of the BOD, not less than annually.
Executive and Company hereby agree that Executive’s services to the Company to prepare for the change of control at INTI entitle Executive to a sign-on bonus compensation from the filing of the joint settlement agreement to the effective date, which will be paid within ten (10) days of the Effective Date. Thereafter Executive’s Base Salary shall be paid as described in section 3(a) above.
(b) Annual Bonus. Executive shall be eligible to receive a discretionary annual bonus based on Executive’s achievement of performance objectives as mutually agreed between Executive and the BOD, such bonus to be targeted at forty percent (40%) of Executive’s Annual Base Salary (the “Annual Bonus”). Any Annual Bonus approved by the BOD and/or the Compensation Committee of the BOD shall be paid at the same time annual bonuses are paid to other executives of the Company generally, subject to Executive’s continuous employment through the date of approval.
(c) LTI Bonus. Executive shall receive a long-term incentive bonus in a form to be determined by agreement between Executive and the BOD (“LTI Bonus”). Such LTI Bonus shall be reviewed by the BOD, and/or the Compensation Committee of the BOD, not less than annually.
(d) Benefits. Executive shall be entitled to participate in such employee and executive benefit plans and programs as the Company may from time to time offer to provide to its executives, subject to the terms and conditions of such plans. Notwithstanding the foregoing, nothing herein is intended, or shall be construed, to require the Company to institute or continue any, or any particular, plan or benefit.
(e) Business Expenses. The Company shall reimburse Executive for all reasonable, documented, out-of-pocket travel and other business expenses incurred by Executive in the performance of Executive’s duties to the Company in accordance with the Company’s applicable expense reimbursement policies and procedures as are in effect from time to time.
(f) Vacation. Executive will be entitled to paid vacation in accordance with the Company’s vacation policy.
4. Equity Awards.
(a) Equity Awards. Executive shall be eligible for such stock options and equity awards as may be determined by the Company, in its sole discretion.
(b) Acceleration Upon a Change in Control. Notwithstanding anything herein to the contrary, in the event of a Change in Control (as defined below), the vesting of Executive’s then outstanding unvested equity awards, including any stock options, restricted stock awards and any such awards subject to performance-based vesting (after giving effect to any vesting in connection with the Change in Control) (the “Outstanding Awards”), shall accelerate as of immediately prior to such a Change in Control (and, if applicable, all restrictions and rights of repurchase on such awards shall lapse) in respect of 50% of the then-unvested shares of Company common stock subject thereto (such unvested portion, the “Unvested Portion”). The Unvested Portion of any Outstanding Award subject to performance-based vesting shall convert into a time-based equity award, and the Unvested Portion of each Outstanding Award shall vest in substantially equal installments on each of the first twelve monthly anniversaries of the closing date of the Change in Control. Notwithstanding the foregoing and for the avoidance of doubt, the Unvested Portion of each Outstanding Award shall be subject to accelerated vesting in accordance with Section 6(b)(iii) below.
5. Termination.
(a) At-Will Employment. The Company and Executive acknowledge that Executive’s employment is and shall continue to be at-will, as defined under applicable law. This means that it is not for any specified period of time and can be terminated by Executive or by the Company at any time, with or without advance notice, and for any or no particular reason or cause. It also means that Executive’s job duties, title, and responsibility and reporting level, work schedule, compensation, and benefits, as well as the Company’s personnel policies and procedures, may be changed with prospective effect, with or without notice, at any time in the sole discretion of the Company (subject to any ramification such changes may have under Section 6 of this Agreement). This “at-will” nature of Executive’s employment shall remain unchanged during Executive’s tenure as an employee and may not be changed, except in an express writing signed by Executive and a duly-authorized officer of the Company. If Executive’s employment terminates for any lawful reason, Executive shall not be entitled to any payments, benefits, damages, award, or compensation other than as provided in this Agreement.
(b) Notice of Termination. During the Term of Employment, any termination of Executive’s employment by the Company or by Executive (other than by reason of death) shall be communicated by written notice (a “Notice of Termination”) from one Party hereto to the other Party hereto (i) indicating the specific termination provision in this Agreement relied upon, if any, (ii) setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (iii) specifying the Date of Termination (as defined below). The failure by the Company to set forth in the Notice of Termination all of the facts and circumstances which contribute to a showing of Cause (as defined below) shall not waive any right of the Company hereunder or preclude the Company from asserting such fact or circumstance in enforcing their rights hereunder.
(c) Termination Date. For purposes of this Agreement, “Date of Termination” shall mean the date of the termination of Executive’s employment with the Company specified in a Notice of Termination.
(d) Deemed Resignation. Upon termination of Executive’s employment for any reason, Executive shall be deemed to have resigned from all offices and board memberships, if any, then held with the Company or any of its affiliates, and, at the Company’s request, Executive shall execute such documents as are necessary or desirable to effectuate such resignations.
6. Consequences of Termination.
(a) Payments of Accrued Obligations upon all Terminations of Employment. Upon a termination of Executive’s employment for any reason, Executive (or Executive’s estate or legal representative, as applicable) shall be entitled to receive, within thirty (30) days after Executive’s Date of Termination (or such earlier date as may be required by applicable law): (i) any portion of Executive’s Annual Base Salary earned through Executive’s Date of Termination not theretofore paid, (ii) any expenses owed to Executive under Section 3(d) above, (iii) any accrued but unused paid time-off owed to Executive, (iv) any Annual Bonus approved by the Board, Compensation Committee of the Board and/or the CEO on or prior to the Date of Termination but unpaid as of the Date of Termination, and (v) any amount arising from Executive’s participation in, or benefits under, any employee benefit plans, programs, or arrangements under Section 3(c) above, which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans, programs, or arrangements. The payments and benefits described in this Section 6(a) shall be the only payments and benefits payable in the event of Executive’s termination of employment for any reason.
(b Definition of Change in Control. For purposes of this Agreement, “Change in Control” shall mean (i) the acquisition by any person or group of affiliated or associated persons of more than fifty percent (50%) of the outstanding capital stock of the Company or voting securities representing more than fifty percent (50%) of the total voting power of outstanding securities of the Company; (ii) the consummation of a sale of all or substantially all of the assets of the Company to a third party; (iii) the consummation of any merger involving the Company in which, immediately after giving effect to such merger, less than a majority of the total voting power of outstanding stock of the surviving or resulting entity is then “beneficially owned” (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) in the aggregate by the stockholders of the Company, as applicable, immediately prior to such merger. For the avoidance of doubt and notwithstanding anything herein to the contrary, in no event shall a transaction constitute a “Change in Control” if: (w) its sole purpose is to change the state of the Company’s incorporation; (x) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction; (y) it constitutes, or includes sales of shares in connection with, the initial public offering of the Company’s capital stock. Notwithstanding the foregoing, a “Change in Control” must also constitute a “change in control event,” as defined in Treasury Regulation §1.409A-3(i)(5).
7. Assignment and Successors. The Company shall assign its rights and obligations under this Agreement to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise). This Agreement shall be binding upon and inure to the benefit of the Company, Executive, and their respective successors, assigns, personnel, and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable. None of Executive’s rights or obligations may be assigned or transferred by Executive, other than Executive’s rights to payments hereunder, which may be transferred only by will, operation of law, or as otherwise provided herein.
8. Miscellaneous Provisions.
(a) Confidentiality Agreement. Executive hereby agrees to execute contemporaneously with entry into this Agreement the form of At-Will Employment, Confidential Information, Invention and Assignment, and Arbitration Agreement by and between Executive and the Company (the “Confidentiality Agreement”) attached hereto as Exhibit A. The Confidentiality Agreement shall survive the termination of this Agreement and Executive’s employment with the Company for the applicable period(s) set forth therein. Notwithstanding the foregoing, in the event of any conflict between the terms of the Confidentiality Agreement and the terms of this Agreement, the terms of this Agreement shall prevail.
(b) Non-Solicitation of Employees. For a period of one (1)-year following Executive’s Date of Termination, Executive shall not, either directly or indirectly (i) solicit for employment by any individual, corporation, firm, or other business, any employees, consultants, independent contractors, or other service providers of the Company or any of its affiliates, or (ii) solicit any employee or consultant of the Company or any of its affiliates to leave the employment or consulting of or cease providing services to the Company or any of its affiliates; provided, however, that the foregoing clauses (i) and (ii) shall not apply to a general advertisement or solicitation (or any hiring pursuant to such advertisement or solicitation) that is not specifically targeted to such employees or consultants.
(c) Governing Law. This Agreement shall be governed, construed, interpreted, and enforced in accordance with its express terms, and otherwise in accordance with the substantive laws of the State of Delaware, without giving effect to any principles of conflicts of law, whether of any other State or any other jurisdiction, and where applicable, the laws of the United States, that would result in the application of the laws of any other jurisdiction.
(d) Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
(e) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement. Signatures delivered by facsimile shall be deemed effective for all purposes.
(f) Entire Agreement. The terms of this Agreement, together with the Confidentiality Agreement, are intended by the Parties to be the final expression of their agreement with respect to the employment of Executive by the Company and supersede all prior understandings and agreements, whether written or oral, regarding Executive’s service to the Company, including without limitation, the Offer Letter. The Parties further intend that this Agreement, together with the Confidentiality Agreement, shall constitute the complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement or the Confidentiality Agreement. Notwithstanding the foregoing, in the event of any conflict between the terms of the Confidentiality Agreement and the terms of this Agreement, the terms of this Agreement shall prevail.
(g) Amendments; Waivers. This Agreement may not be modified, amended, or terminated except by an instrument in writing signed by Executive and a duly authorized representative of the Company. By an instrument in writing similarly executed, Executive or a duly authorized officer of the Company, as applicable, may waive compliance by the other Party with any specifically identified provision of this Agreement that such other Party was
or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure. No failure to exercise and no delay in exercising any right, remedy, or power hereunder shall preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.
(h) Dispute Resolution. Executive and the Company hereby agree that any dispute, claim or controversy arising under this Agreement or arising from, relating to or resulting from Executive’s employment shall be subject to Section 13.1 of the Confidentiality Agreement.
(i) Enforcement. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid, or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and be legal, valid, and enforceable.
(j) Withholding. The Company shall be entitled to withhold from any amounts payable under this Agreement any federal, state, local, or foreign withholding or other taxes or charges which the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.
(k) Whistleblower Protections and Trade Secrets. Notwithstanding anything to the contrary contained herein, nothing in this Agreement prohibits Executive from reporting possible violations of federal law or regulation to any United States governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or any other whistleblower protection provisions of state or federal law or regulation (including the right to receive an award for information provided to any such government agencies). Furthermore, in accordance with 18 U.S.C. § 1833, notwithstanding anything to the contrary in this Agreement: (i) Executive shall not be in breach of this Agreement, and shall not be held criminally or civilly liable under any federal or state trade secret law (x) for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (y) for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (ii) if Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Executive may disclose the trade secret to Executive’s attorney, and may use the trade secret information in the court proceeding, if Executive files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order.
9. Prior Employment. Executive represents and warrants that Executive’s acceptance of employment with the Company has not breached, and the performance of Executive’s duties hereunder will not breach, any duty owed by Executive to any prior employer or other person. Executive further represents and warrants to the Company that (a) the performance of Executive’s obligations hereunder will not violate any agreement between Executive and any other person, firm, organization, or other entity; (b) Executive is not bound by the terms of any agreement with any previous employer or other party to refrain from competing, directly or indirectly, with the business of such previous employer or other party that would be violated by Executive entering into this Agreement and/or providing services to the Company pursuant to the terms of this Agreement; and (c) Executive’s performance of Executive’s duties under this Agreement will not require Executive to, and Executive shall not, rely on in the performance of Executive’s duties or disclose to the Company or any other person or entity or induce the Company in any way to use or rely on any trade secret or other confidential or proprietary information or material belonging to any previous employer of Executive.
10. Golden Parachute Excise Tax.
(a) Best Pay. Any provision of this Agreement to the contrary notwithstanding, if any payment or benefit Executive would receive from the Company pursuant to this Agreement or otherwise (“Payment”) would (i) constitute a “parachute payment” within the 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 such Payment will be equal to the Reduced Amount (as defined below). The “Reduced Amount” will be either (A) the largest portion of
the Payment that would result in no portion of the Payment (after reduction) being subject to the Excise Tax or (B) the entire Payment, whichever amount after taking into account all applicable federal, state, and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction of such state and local taxes), results in Executive’ s receipt, on an after-tax basis, of the greater 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 (A) of the preceding sentence, the reduction shall occur in the manner (the “Reduction Method”) that results in the greatest economic benefit for Executive. If more than one method of reduction will result in the same economic benefit, the items so reduced will be reduced pro rata (the “Pro Rata Reduction Method”). Notwithstanding the foregoing, if the Reduction Method or the Pro Rata Reduction Method would result in any portion of the Payment being subject to taxes pursuant to Section 409A (as defined below) that would not otherwise be subject to taxes pursuant to Section 409A, then the Reduction Method and/or the Pro Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes pursuant to Section 409A as follows: (1) 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; (2) as a second priority, Payments that are contingent on future events (e.g., being terminated without cause), shall be reduced (or eliminated) before Payments that are not contingent on future events; and (3) as a third priority, Payments that are “deferred compensation” within the meaning of Section 409A shall be reduced (or eliminated) before Payments that are not deferred compensation within the meaning of Section 409A.
(b) Accounting Firm. The accounting firm engaged by the Company for general tax purposes as of the day prior to the Change in Control will perform the calculations set forth in Section 10(a) above. If the firm so engaged by the Company is serving as the accountant or auditor for the acquiring company, the Company will appoint a nationally recognized accounting firm to make the determinations required hereunder. The Company will bear all expenses with respect to the determinations by such firm required to be made hereunder. The accounting firm engaged to make the determinations hereunder will provide its calculations, together with detailed supporting documentation, to the Company within thirty (30) days before the consummation of a Change in Control (if requested at that time by the Company) or such other time as requested by the Company. If the accounting firm determines that no Excise Tax is payable with respect to a Payment, either before or after the application of the Reduced Amount, it will furnish the Company with documentation reasonably acceptable to the Company that no Excise Tax will be imposed with respect to such Payment. Any good faith determinations of the accounting firm made hereunder will be final, binding and conclusive upon the Company and Executive.
11. Section 409A.
(a) General. The intent of the Parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date, (“Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. If Executive notifies the Company that Executive has received advice of tax counsel of a national reputation with expertise in Section 409A that any provision of this Agreement would cause Executive to incur any additional tax or interest under Section 409A (with specificity as to the reason therefor) or the Company independently makes such determination, the Company and Executive shall take commercially reasonable efforts to reform such provision to try to comply with or be exempt from Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Section 409A, provided that any such modifications shall not increase the cost or liability to the Company. To the extent that any provision hereof is modified in order to comply with or be exempt from Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to Executive and the Company of the applicable provision without violating the provisions of Section 409A.
(b) Separation from Service. Notwithstanding any provision to the contrary in this Agreement: (i) no amount that constitutes “deferred compensation” under Section 409A shall be payable pursuant to Section 6(b) above unless the termination of Executive’s employment constitutes a “separation from service” within the meaning of Section 1.409A-1(h) of the Department of Treasury Regulations (“Separation from Service”); (ii) for purposes of Section 409A, Executive’s right to receive installment payments shall be treated as a right to receive a series of separate and distinct payments; and (iii) to the extent that any reimbursement of expenses or in-kind benefits constitutes “deferred compensation” under Section 409A, such reimbursement or benefit shall be provided no later than December 31st of the year following the year in which the expense was incurred. The amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year. The amount of any in-kind benefits provided in one year shall not affect the amount of in-kind benefits provided in any other year.
(c) Specified Employee. Notwithstanding anything in this Agreement to the contrary, if Executive is deemed by the Company at the time of Executive’s Separation from Service to be a “specified employee” for purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A, such portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of Executive’s Separation from Service with the Company or (ii) the date of Executive’s death. Upon the first business day following the expiration of the applicable Section 409A period, all payments deferred pursuant to the preceding sentence shall be paid in a lump sum to Executive (or Executive’s estate or beneficiaries), and any remaining payments due to Executive under this Agreement shall be paid as otherwise provided herein.
(d) Release. Notwithstanding anything to the contrary in this Agreement, to the extent that any payments due under this Agreement as a result of Executive’s termination of employment are subject to Executive’s execution and delivery of a Release, (i) the Company shall deliver the Release to Executive within ten (10) business days following Executive’s Date of Termination, and the Company’s failure to deliver a Release prior to the expiration of such ten (10) business day period shall constitute a waiver of any requirement to execute a Release, (ii) if Executive fails to execute the Release on or prior to the Release Expiration Date (as defined below) or timely revokes Executive’s acceptance of the Release thereafter, Executive shall not be entitled to any payments or benefits otherwise conditioned on the Release, and (iii) in any case where Executive’s Date of Termination and the Release Expiration Date fall in two separate taxable years, any payments required to be made to Executive that are conditioned on the Release and are treated as nonqualified deferred compensation for purposes of Section 409A shall be made in the later taxable year. For purposes of this Section 11(d), “Release Expiration Date” shall mean the date that is twenty-one (21) days following the date upon which the Company timely delivers the Release to Executive, or, in the event that Executive’s termination of employment is “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967), the date that is forty-five (45) days following such delivery date. To the extent that any payments of nonqualified deferred compensation (within the meaning of Section 409A) due under this Agreement as a result of Executive’s termination of employment are delayed pursuant to this Section 11(d), such amounts shall be paid in a lump sum on the first payroll date following the date that Executive executes and does not revoke the Release (and the applicable revocation period has expired) or, in the case of any payments subject to Section 11(d)(iii), on the first payroll period to occur in the subsequent taxable year, if later.
12. Employee Acknowledgement. Executive acknowledges that Executive has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on Executive’s own judgment.
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date and year first above written.
| INHIBITOR THERAPEUTICS, INC. | ||
| By: |
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| Name: | ||
| Title: | ||
| EXECUTIVE | ||
| By: |
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| Name: James A. McNulty Title: CFO & Treasurer | ||