Exhibit 10.6
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is
entered into as of March 31, 2009 (the “Effective Date”) between REGENERX
BIOPHARMACEUTICALS, INC., a Delaware corporation (the “Company”), and C. NEIL
LYONS (the “Executive”).
Recitals
Whereas, the parties previously entered into an Employment Agreement, dated as
of April 12, 2007 (“Original Effective Date”), and subsequently amended the
original Employment Agreement effective as of December 31, 2008 based upon
Section 409A of the Internal Revenue Code of 1986, as amended (“Code”), and now
desire to amend and restate the Employment Agreement again in order to reflect
certain revisions to the terms and conditions of employment;
Whereas, Executive possesses substantial knowledge and experience with respect
to the Company’s business, in particular finance, accounting and administration;
and
Whereas, the Company desires to continue to employ Executive to have the
benefits of his expertise and knowledge and Executive, in turn, desires to
remain in employment with the Company;
NOW, THEREFORE, in consideration of the mutual covenants and representations
contained in this Agreement, the Company and Executive agree as follows:
Agreement
1. Employment of Executive: Position. The Company agrees to employ Executive and
Executive agrees to be employed by the Company as the Chief Financial Officer
subject to the terms and conditions of this Agreement. In connection therewith,
Executive shall devote his best efforts, experience and judgment and all of his
business time and attention (except for vacation periods as set forth herein and
reasonable periods of illness or other incapacities permitted by the Company’s
general employment policies) to the business of the Company.
2. Term of Employment and Renewal. The term of Executive’s employment under this
Agreement commenced on the Original Effective Date. Unless terminated earlier
subject to the provisions of Section 13 of this Agreement, the term of
Executive’s employment hereunder shall be for one (1) year from the Original
Effective Date and shall renew for a one-year period each year on the
anniversary of the Original Effective Date, unless either party provides written
notice at least thirty days before the anniversary of the Original Effective
Date (the “Term”) that it does not desire to renew. The last day of the Term is
the “Expiration Date.”
3. Duties. During the Term, Executive shall serve in an executive capacity and
shall perform such duties and responsibilities as are customarily associated
with his position and such other duties not inconsistent with his title and
position and as may be assigned to him by the Company. Executive shall act in
conformity with the written and oral policies of the Company and within the
limits, budgets, business plans and instructions as set by its Board of
Directors (the “Board”). Executive shall be subject to the authority of the
Board and the Company’s duly appointed officers, including the President and
Chief Executive Officer (“CEO”).

 

 

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4. Place of Employment. Executive acknowledges that the Company’s offices and
headquarters are currently located in the County of Montgomery, State of
Maryland and that shall be the initial site of Executive’s employment.
5. Other Employment Policies. The employment relationship between the parties
shall also be governed by the general employment policies and practices of the
Company, including those relating to protection of confidential information and
assignment of inventions, except that when the terms of this Agreement differ
from or are in conflict with the Company’s general employment policies or
practices, this Agreement shall control.
6. Compensation.
6.1 Base Salary. Executive shall receive an annual base salary of Two Hundred
and Two Thousand, Five Hundred and Thirty Seven U.S. Dollars (US $202,537) (the
“Base Salary”), subject to standard federal and state payroll withholding
requirements. The Base Salary shall be payable in equal periodic installments
which are not less than on a monthly basis. The Company will review and may
adjust the Base Salary from time to time, usually annually.
6.2 Bonus. Executive shall be eligible to receive an annual bonus in such amount
as shall be determined in the sole discretion of the Company’s Board and CEO.
6.3 Life Insurance. The Company will reimburse Executive for 2/3rds of his
annual term life insurance premium, which premium shall be: (i) for term life
insurance coverage not to exceed two times his annual Base Salary, and
(ii) reasonable and mutually agreeable.
7. Stock.
7.1 Stock Options. To date, Executive has been granted options (the “Options”)
to purchase 350,000 shares of the Company’s common stock pursuant to the
Company’s Amended and Restated 2000 Stock Option and Incentive Plan (“Plan”).
Additionally, and from time to time at the sole discretion of the Company’s
Board, the Company may make additional stock option awards to Executive (the
“Additional Options”). Subject to the provisions below regarding accelerated
vesting of option grants, the specific terms and conditions of the Option and
any Additional Options will be as set forth in the Plan, and any stock option
agreement between Executive and the Company.
7.2 Acceleration Clause for Stock Option Vesting.
(a) In the event of a Change of Control event as is set forth under Section 12.1
of this Agreement, Executive’s Options and any Additional Options shall be
immediately vested and become exercisable in full. Additionally, and without in
any way limiting the foregoing, Executive’s Options and any Additional Options
will also become immediately vested and become exercisable in full in the event
of a “Change of Control” (or any similar term provided for in the Applicable
Plan) as defined under the terms of the equity plan (the “Applicable Plan”)
pursuant to which such option was granted.

 

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(b) In the event Executive is terminated from employment with the Company
without Cause by the existing CEO, the Options and any Additional Options shall
vest only with respect to the portion of the Options and any Additional Options
that otherwise would have vested during the calendar year in which Executive’s
termination from employment occurs had Executive not been terminated.
(c) In the event that Executive is terminated without Cause from employment with
the Company by a new CEO, the Options and any Additional Options shall
immediately vest and become exercisable in full.
8. Benefits. Executive shall be entitled to (i) participate in and receive all
standard employee benefits under applicable Company welfare benefits plans and
programs (if and when such benefits are established by the Company) to the same
extent as other senior executives of the Company; (ii) participate in all
applicable incentive plans, including stock option, stock, bonus, savings and
retirement plans provided by the Company (if and when such plans are established
by the Company), which are offered to senior executive officers in the Company
(provided, however, that the Company is not obligated to award any particular
type or amount of equity to Executive); (iii) receive such perquisites as the
Company may establish from time to time which are commiserate with Executive’s
position and comparable to those received by other senior executives of the
Company; (iv) paid vacation of at least three (3) weeks per annum; and
(v) holidays, leaves of absence and leaves for illness and temporary disability
in accordance with the policies of the Company and federal, state and local law.
9. Outside Activities.
9.1 Other Employment/Enterprise. Except with the prior written consent of the
Company’s Board, Executive will not, while employed by the Company undertake or
engage in any other employment, occupation or business enterprise, other than
ones in which Executive is a passive investor. Executive may engage in civic and
not-for-profit activities or serve as a member of a not-for-profit or for-profit
board of directors so long as such activities do not materially interfere or
conflict with the performance of his duties hereunder.
9.2 Conflicting Interests. Except as permitted by Section 9.3, while employed by
the Company, Executive agrees not to acquire, assume or participate in, directly
or indirectly, any position, investment or interest known by him to be adverse
or antagonistic to the Company, its business or prospects, financial or
otherwise.
9.3 Competing Enterprises. While employed by the Company, except on behalf of
the Company, Executive will not directly or indirectly, whether as an officer,
director, stockholder, partner, proprietor, associate, representative,
consultant, or in any capacity whatsoever engage in, become financially
interested in, be employed by or have any business connection with any other
person, corporation, firm, partnership or other entity whatsoever which were
known by him to compete directly with the Company, throughout the world, in any
line of business engaged in (or planned to be engaged in) by the Company;
provided, however, that anything above to the contrary notwithstanding, he may
own, as a passive investor, securities of any public competitor corporation, so
long as his direct holdings in any one such corporation shall not in the
aggregate constitute more than 1% of the voting stock of such corporation.

 

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10. Proprietary Information, Nonsolicitation, Noncompetition and Inventions
Assignment obligations. As a condition of employment, Executive agrees to abide
by the Proprietary Information, Nonsolicitation, Noncompetition and Inventions
Assignment Agreement previously entered into on April 18, 2005.
11. Former Employment.
11.1 No Conflict With Existing Obligations. Executive represents that his
performance of all the terms of this Agreement and as an employee of the Company
does not and will not breach any agreement or obligation of any kind made prior
to his employment by the Company, including agreements or obligations he may
have with prior employers or entities for which he has provided services.
Executive has not entered into, and agrees he will not enter into, any agreement
or obligation either written or oral in conflict herewith.
11.2 No Disclosure of Confidential Information. If, in spite of the second
sentence of Section 11.1, Executive should find that confidential information
belonging to any former employer might be usable in connection with the
Company’s business, Executive will not intentionally disclose to the Company or
use on behalf of the Company any confidential information belonging to any of
Executive’s former employers (except in accordance with agreements between the
Company and any such former employer); but during Executive’s employment by the
Company he will use in the performance of his duties all information which is
generally known and used by persons with training and experience comparable to
his own and all information which is common knowledge in the industry or
otherwise legally in the public domain.
12. Change of Control.
12.1 Definition. “Change of Control” shall be deemed to occur upon any of the
following events:
(a) the dissolution or liquidation of the Company;
(b) the sale of all or substantially all of the assets of the Company to an
unrelated person or entity;
(c) a merger, reorganization or consolidation in which the holders of the
Company’s outstanding voting power immediately prior to such transaction do not
own a majority of the outstanding voting power of the surviving or resulting
entity, or its parent corporation, immediately upon completion of such
transaction;
(d) the sale of all of the capital stock of the Company to an unrelated person
or entity;

 

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(e) if any individual, firm, corporation, or other entity, or any group (as
defined in § 13(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)), other than (1) a trustee or other fiduciary holding securities
of the Company under an employee benefit plan of the Company or (2) Executive,
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 50% or
more of (A) the outstanding shares of common stock of the Company, or (B) the
combined voting power of the Company’s then-outstanding securities entitled to
vote generally in the election of directors; or
(f) any other transaction in which the owners of the Company’s outstanding
voting power prior to such transaction do not own at least a majority of the
outstanding voting power of the relevant entity after the transaction, in each
case, regardless of the form thereof.
12.2 Severance.
(a) In the event Executive voluntarily terminates his employment for any reason
within 12 months after a Change of Control event, as defined in Section 12.1,
then the Company shall provide Executive with the severance payments and
benefits described in Section 12.2(b) below, less any applicable federal and
state taxes and withholdings. To receive any severance pay and benefits
hereunder (other than Accrued Compensation, as defined below), Executive shall
first be required to execute and deliver to the Company a valid and fully
effective general waiver and release of any claims against the Company, its
affiliates, officers, directors, agents and employees in a form satisfactory to
the Company within the consideration period set forth in the waiver and release,
which period shall not exceed forty-five (45) days after the effective date of
his termination from employment (the “General Release”). The date upon which the
General Release is executed and delivered to the Company, and can no longer be
revoked, is referred to as a the “Release Effective Date.”
(b) Severance pay and benefits pursuant to 12.2(a) shall include and be
calculated as follows:
(i) The Company shall continue to pay Executive’s Base Salary in effect on the
date of his termination from employment for a period of twelve (12) calendar
months (“Severance Period”). These payments shall occur on the first day of each
calendar month, beginning with the first calendar month after the Release
Effective Date.
(ii) To the extent that Executive is eligible for and timely elects continuation
of health benefits for himself and/or his eligible dependents under the
Company’s group health plans pursuant to COBRA or any analogous state or local
law, the Company shall pay or reimburse Executive for the amount of any
insurance premiums for such continuation coverage during the Severance Period,
but these payments shall be limited to the amount of the premiums being paid by
the Company for Executive’s coverage immediately prior to the date of his
termination from employment.
(c) By no later than two weeks after the date of Executive’s termination from
employment under this Section (or earlier if required by applicable law or the
Company’s policies), the Company shall pay to Executive any Accrued
Compensation. “Accrued Compensation” shall mean any Base Salary owed to
Executive for services performed before the date of his termination from
employment, any bonuses earned, if any, for bonus periods that have concluded
prior to the date of his termination (and not including bonuses for the period
in which Executive’s termination occurs, unless otherwise provided by the
Company in its discretion), or any unused vacation or personal time in
accordance with the applicable policies of the Company.

 

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13. Termination. The parties acknowledge that Executive’s employment with the
Company is at-will. The provisions of Sections 13.1 through 13.6 govern the
amount of compensation, if any, and notice to be provided to Executive upon
termination of employment in circumstances other than those governed by
Section 12 above and do not alter this at-will status.
13.1 Termination by the Company Without Cause.
(a) The Company shall have the right to terminate Executive’s employment with
the Company at any time without Cause (as that term is defined in Section 13.2)
by giving notice as described in Section 13.6 of this Agreement. Termination on
account of Executive’s death or inability to perform his duties shall be
governed by Section 13.4 below.
(b) In the event Executive’s employment is terminated without Cause, he shall
receive any Accrued Compensation, and shall be entitled to receive severance pay
and benefits under the terms of Section 12.2 above, provided, however, that any
installments of severance pay that remain to be paid to Executive by March 15 of
the calendar year following the year in which Executive terminates employment
shall be accelerated and paid in full on such date.
13.2 Termination by Company for Cause.
(a) The Company, by action of its Board, may terminate Executive’s employment
under this Agreement for Cause at any time by giving notice as described in
Section 13.6 of this Agreement.
(b) “Cause” for termination means: (i) refusal, failure or neglect to perform
the material duties of his employment under this Agreement (other than by reason
of Executive’s physical or mental illness or impairment); (ii) willful
dishonesty, fraud, embezzlement or misconduct with respect to the business or
affairs of the Company; (iii) indictment or conviction of a felony or of any
crime involving dishonesty or moral turpitude; or (iv) Executive’s refusal to
abide by or comply with the directives of the Board or Chief Executive Officer,
so long as those directives are lawful and ethical.
(c) In the event Executive’s employment is terminated at any time with Cause, he
will not receive any severance pay or benefits under Section 12.2 or otherwise,
or any additional compensation other than his Accrued Compensation, if any.
13.3 Voluntary Termination By Executive.
(a) Executive may voluntarily terminate his employment with the Company at any
time by giving notice as described in Section 13.6.
(b) In the event Executive voluntarily terminates his employment (other than
after a Change of Control event), he will not receive any severance pay or
benefits under Section 12.2 or otherwise, or any additional compensation other
than his Accrued Compensation, if any.

 

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13.4 Termination for Inability to Regularly Perform Duties.
(a) This Agreement shall terminate automatically in the event of Executive’s
death. The Company may terminate Executive’s employment in the event of the his
illness, disability or other incapacity in such a manner that Executive is
rendered unable regularly to perform his duties hereunder for more than either
ninety (90) consecutive days or more than a total of one hundred twenty
(120) days in any consecutive twelve (12) month period, unless otherwise
prohibited by any applicable federal, state, or local law or ordinance.
(b) The determination regarding whether Executive is unable regularly to perform
his duties under (a) above shall be made by a doctor mutually acceptable to
Executive and the Company. Executive’s inability to be physically present on the
Company’s premises shall not constitute a presumption that Executive is unable
to perform such duties.
13.5 Non-renewal of the Agreement. Non-renewal of this Agreement initiated by
the Company in accordance with Section 2 above resulting in the termination of
Executive’s employment by the Company, or resulting in Executive’s demotion,
shall be deemed a termination of Executive’s employment without Cause and
Executive shall be entitled to receive severance pay and benefits under the
terms of Section 12.2, provided, however, that any installments of severance pay
that remain to be paid to Executive by March 15 of the calendar year following
the year in which Executive terminates employment shall be accelerated and paid
in full on such date. If Executive initiates a non-renewal of this Agreement in
accordance with Section 2 above, he shall not be entitled to any severance pay
or benefits from the Company.
13.6 Notice; Effective Date of Termination. Termination of Executive’s
employment pursuant to this Agreement shall be effective on the earliest of:
(a) thirty (30) days after Executive, for any reason, gives written notice to
the Company of his termination;
(b) thirty (30) days after the Company, without Cause, gives written notice to
Executive of his termination, including for his inability to perform services;
Executive will receive compensation through the 30-day notice period. However,
the Company reserves the right to require that Executive not perform any
services or report to work during the 30-day notice period;
(c) immediately upon the Company giving written notice to Executive of his
termination for Cause.
Any notices provided hereunder must be in writing and shall be deemed effective
upon the earlier of personal delivery (including personal delivery by hand,
telecopier, or telex) or the third day after mailing by first class mail, to the
Company at its primary office location and to Executive at his address as listed
on the Company payroll.

 

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14. Application of Section 409A. Notwithstanding anything to the contrary set
forth herein, any payments and benefits provided under this Agreement that
constitute “deferred compensation” within the meaning of Section 409A of the
Code, and the regulations and other guidance thereunder and any state law of
similar effect (collectively “Section 409A”) shall not commence in connection
with Executive’s termination of employment unless and until Executive has also
incurred a “separation from service” (as such term is defined in Treasury
Regulation Section 1.409A-1(h) (“Separation From Service”), unless the Company
reasonably determines that such amounts may be provided to Executive without
causing him to incur the additional 20% tax under Section 409A.
It is intended that each installment of severance pay provided for in this
Agreement is a separate “payment” for purposes of Treasury
Regulation Section 1.409A-2(b)(2)(i). For the avoidance of doubt, it is intended
that payments of severance set forth in this Agreement satisfy, to the greatest
extent possible, the exemptions from the application of Section 409A provided
under Treasury Regulation Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and
1.409A-1(b)(9). However, if the Company (or, if applicable, the successor entity
thereto) determines that any payments constitute “deferred compensation” under
Section 409A and Executive is, on the termination of service, a “specified
employee” of the Company or any successor entity thereto, as such term is
defined in Section 409A(a)(2)(B)(i) of the Code, then, solely to the extent
necessary to avoid the incurrence of the adverse personal tax consequences under
Section 409A, the timing of the severance payments shall be delayed until the
earlier to occur of: (i) the date that is six months and one day after
Executive’s Separation From Service, or (ii) the date of Executive’s death (such
applicable date, the “Specified Employee Initial Payment Date”). On the
Specified Employee Initial Payment Date, the Company (or the successor entity
thereto, as applicable) shall (A) pay to Executive a lump sum amount equal to
the sum of the severance payments that Executive would otherwise have received
through the Specified Employee Initial Payment Date if the commencement of the
severance payments had not been so delayed pursuant to this Section and
(B) commence paying the balance of the severance pay in accordance with the
applicable payment schedules set forth in this Agreement.
The Company’s obligations to make any reimbursements or provide in-kind benefits
to Executive shall be subject to the following restrictions: (a) Executive must
provide documentation of any reimbursable expenses in accordance with the
Company’s then existing policies and procedures, (b) the expenses paid or
reimbursed by the Company in one calendar year shall not affect the expenses
paid or reimbursed in another calendar year, and (c) the reimbursement for any
expenses shall be made within a reasonable period of time following the date on
which the Company receives written documentation of the expense, provided that
all expenses will be reimbursed on or before the last day of the calendar year
following the calendar year in which the expense was incurred.
15. Validity: Complete Agreement. This Agreement and its Exhibit constitute the
entire agreement between Executive and the Company. This Agreement is the
complete, final, and exclusive embodiment of their agreement with regard to this
subject matter and supercedes any prior oral discussions or written
communications and agreements. This Agreement is entered into without reliance
on any promise or representation other than those expressly contained herein,
and it cannot be modified or amended except in writing signed by the CEO.

 

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16. Waiver. Any waiver of any breach of this Agreement must be in writing. If
either party should waive any breach of any provisions of this Agreement, he or
it shall not thereby be deemed to have waived any preceding or succeeding breach
of the same or any other provision of this Agreement.
17. Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.
18. Amendment. This Agreement shall not be modified or amended except by written
agreement of the parties hereto. To the extent that any amendment itself would
result in the imposition of any taxes under Section 409A, such amendment shall
not be given effect.
19. Choice of Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the law of the State of Maryland regardless of the
choice of law provisions of the State of Maryland or any other jurisdiction. The
parties consent to the exclusive jurisdiction of the federal and state courts in
Maryland.
20. Arbitration of Disputes. Any controversy or claim arising out of this
Agreement or any aspect of Executive’s relationship with the Company including
the cessation thereof shall be resolved by arbitration in accordance with the
Company’s Dispute Resolution Policy, which is Attachment A to this Agreement and
incorporated herein by reference. This policy provides that any dispute between
Executive and the Company that is covered by the Dispute Resolution Policy and
cannot be resolved on a more informal basis shall be resolved exclusively
through final and binding arbitration, instead of litigation. The parties agree
that the award of the arbitrator shall be final and binding.
21. Indemnification. During the Term of this Agreement, Executive shall be
entitled to coverage under any liability insurance procured by Company to the
same extent as other senior executives at the Company.
22. Counterpart. This Agreement may be executed in any number of counterparts,
all of which shall be considered one and the same agreement.
23. Delay; Partial Exercise. No failure or delay by any party in exercising any
right, power or privilege under this Agreement shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
24. Successors and Assigns. This Agreement is intended to bind and inure to the
benefit of and be enforceable by Executive and the Company, and their respective
successors, assigns, heirs, executors and administrators, except that Executive
may not assign any of his duties hereunder and he may not assign any of his
rights hereunder without the written consent of the Company, which shall not be
withheld unreasonably.

 

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25. Mutual Acknowledgement. Executive and the Company hereby acknowledge that
both parties have read and fully understand the terms of the Agreement and are
entering into the Agreement knowingly and voluntarily.
26. Headings. The headings of the sections hereof are inserted for convenience
only and shall not be deemed to constitute a part hereof nor to affect the
meaning thereof.
27. Survival. Provisions of this Agreement which must survive the termination of
this Agreement in order to effectuate the intent of the parties, including, but
not limited to, Sections 10, 12.2 and 13, shall continue in effect after the
termination of the Agreement for a sufficient period of time under the
circumstances to effectuate the parties’ intent.
In Witness Whereof, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.

     
“EXECUTIVE”

   
C. Neil Lyons
   
 
   
/s/ C. Neil Lyons
   
 
By: C. Neil Lyons
   
 
   
“THE COMPANY”

   
RegeneRx Biopharmaceuticals, Inc.
   

          /s/ J.J. Finkelstein          
By:
  J.J. Finkelstein    
Title:
  President & CEO    

 

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Attachment A
DISPUTE RESOLUTION POLICY
Scope of Policy.
This Policy applies to any controversy, claim or dispute that could be brought
before a court or agency, whether based on contract or tort or any state,
federal or local law (collectively, a “Claim”), relating to or arising out of
your employment with or separation from RegeneRx Biopharmaceuticals, Inc.
(“RegeneRx”), or the termination thereof This Policy does not apply to claims
for unemployment or workers’ compensation, temporary injunctive relief necessary
to prevent irreparable harm or to enforce an arbitration decision issued in
accordance with this Policy.
Informal Resolution and Mediation.
You shall provide RegeneRx’s Principal with a written statement of the claim
(“Statement of Claim”). Similarly, if RegeneRx has a Claim against you, it shall
provide you with a Statement of Claim. The Statement of Claim will describe the
Claim to be resolved, identify any documents and witnesses (or other people who
have information) relating to the Claim, and request the relief sought. The
responding party shall have 15 working days in which to offer the relief
requested or proposed, or otherwise satisfy the demand of the aggrieved party.
If the Claim has not been resolved and the aggrieved party wants to pursue the
matter, then the aggrieved party shall request within 10 working days that the
Claim be submitted to non-binding mediation in Montgomery County, Maryland,
before a mediator to be jointly selected by the parties. RegeneRx will pay the
mediator’s fee. Such mediation must be held within 90 days of the request for
mediation.
Arbitration.
If mediation does not resolve the Claim and the aggrieved party wants to pursue
the matter, the Claim will be resolved by binding arbitration in Montgomery
County, Maryland, in accordance with applicable JAMS Employment Arbitration
Rules and Procedures (“Rules”) (for full text of the Rules, please see
www.jamsadr/arbitration_guide.asp). Except as otherwise specifically provided
herein, hearings under this Policy will be conducted in accordance with the
Rules. If there is a conflict between this Policy and the Rules, this Policy
will govern.
Time Limits.
The aggrieved party must request arbitration in accordance with the Rules within
the limitations period that would apply if the Claim had been filed in court or
with an administrative agency under statute or common law.
Failure to demand arbitration within this time period shall constitute a waiver
of all rights to bring such a Claim. Arbitration cannot be requested until the
party has submitted a Statement of Claim and exhausted the informal resolution
and mediation procedure described in this Policy.

 

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Terms of Arbitration.
Arbitrations under this Policy will be governed by the Federal Arbitration Act,
9 U.S.C. § 1, et seq. The parties shall attempt to agree upon an arbitrator who
shall hear and decide the dispute. If the parties are unable to agree upon a
mutually acceptable arbitrator, they shall select an arbitrator through the
procedures established by the Rules. Both parties will be entitled to discovery
and to be represented by counsel if they choose.
RegeneRx will pay the arbitrator’s costs and fees. RegeneRx and the employee or
former employee each is solely responsible for its own attorneys’ fees and costs
incurred (such as for production of documents, witness fees, transcripts,
depositions, etc.), unless the arbitrator shall order the award of attorney’s
fees and costs in accordance with the applicable law.
Arbitrator’s Authority.
The arbitrator shall have the authority to rule only on an issue that has been
submitted in a Statement of Claim in accordance with these procedures. Failure
to submit a Statement of Claim in accordance with these procedures will
constitute a waiver of the right to pursue any Claim under this Policy or in any
court or other forum. The arbitrator shall base the decision and award, if any,
on the facts presented in briefs and at the hearing in accordance with governing
prevailing law, including statutory and judicial authority. The arbitrator must
follow RegeneRx’s personnel policies as set forth in the Policy Manual in effect
at the time of the event resulting in the complaint. The arbitrator may not
ignore, modify or revoke any lawful provision of this Policy or any other
RegeneRx policy. The arbitrator’s authority shall be consistent with the Rules.
The Arbitrator’s Decision/Award.
The arbitrator’s decision will be final and binding on RegeneRx and the
employee/former employee and may be recorded as a judgment in a court of
competent jurisdiction.
Arbitration As Exclusive Means For Resolution.
In exchange for the parties’ mutual agreement to submit claims to the
arbitration process, and to preserve the expeditious and inexpensive nature of
arbitration, which is of value to the parties, the parties agree that
arbitration shall be the sole and exclusive means of resolution of all Claims.
Further, the parties expressly waive their right, if any, to have controversies
between them decided by a court or jury.
Nothing in the Policy shall limit the right of the parties to obtain from a
court of competent jurisdiction either (1) injunctive relief where necessary to
prevent irreparable harm or violation of any trade secret and confidentiality
agreement then in force, or (2) enforcement of an arbitration decision issued in
accordance with this Policy.
Miscellaneous.
RegeneRx may modify the Dispute Resolution Policy in writing, by providing
employees with 30 days notice of the modification. No other form of modification
shall be valid. Any Claim arising prior to the effective date of the
modification would be handled pursuant to the procedures in existence prior to
the change, except by mutual agreement. If any of the provisions of this Policy
are determined to be invalid by a court or governing agency of competent
jurisdiction, it is agreed that such determination shall not affect the
enforceability of the other provisions of this Policy.

 

12

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AMENDMENTS TO SECOND AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
Pursuant to Section 18 of the Second Amended and Restated Employment Agreement
between RegeneRx Biopharmaceuticals, Inc. (“Company”) and C. Neil Lyons
(“Executive”), dated as of March 31, 2009 (“Agreement”), the following
amendments (“Amendments”) to the Agreement are hereby adopted as of the dates
set forth below:
1. Section 6.1 of the Agreement is amended, effective as of April 1, 2009
(contingent upon the award of a stock option to the Executive as provided in
Paragraph 2 below), to provide that the Executive’s annual Base Salary shall be
$131,649, and to delete the last sentence of Section 6.1 and replace it with the
following provisions: “The Base Salary shall not be adjusted downward without
the written consent of Executive, except in a circumstance which is part of a
general reduction or other concessionary arrangement affecting all employees or
affecting senior executive officers. Notwithstanding the reduction of Base
Salary effective as of April 1, 2009, any severance pay under the terms of the
Agreement shall be calculated based upon Executive’s Base Salary in effect as of
March 31, 2009, or, if higher, Executive’s Base Salary in effect at the time of
his termination from employment.” All other provisions of Section 6.1 shall be
unchanged.
2. Section 7.1 of the Agreement shall be revised to add the provisions set forth
below to the end of the Section:
“Subject to approval by the Board, the Company agrees to award to the Executive
an option to purchase 116,592 shares of the Company’s Common Stock, pursuant to
the terms of the Company’s Plan, at an exercise price that is equal to the fair
market value of such Common Stock on the date of grant of the option as
determined in accordance with the Plan (“New Option”). The New Option, which
shall be an incentive stock option for purposes of section 422 of the Code to
the maximum extent permitted, and otherwise shall be treated as a non-qualified
stock option, shall vest in three equal vesting installments, occurring on
June 30, 2009, September 30, 2009 and December 31, 2009, provided that the
Executive has not incurred a Termination of Service (as defined in the Plan)
before any applicable vesting date. Notwithstanding Section 7.2 below or any
provision of the Plan, if the Executive is terminated from employment with the
Company without Cause or if there is a Change in Control (either as defined
herein or in the Plan), the New Option shall not be subject to any accelerated
vesting, except as provided below. The New Option shall be forfeited in its
entirety (whether vested or unvested) if the Executive’s employment with the
Company is terminated for Cause at any time as set forth in Section 13.2. If the
Executive voluntarily terminates his employment with the Company (or if the
Executive’s employment terminates because of his death or disability), the New
Option shall be considered to be vested and exercisable only through the most
recently completed vesting installment. If the Executive’s employment is
terminated without Cause, then the New Option shall be considered to be vested
and exercisable through the most recently completed vesting installment, and
shall be credited with an additional amount of daily pro-rata vesting for the
period since the last installment date. If the Executive’s Base Salary is
increased to at least the amount in effect immediately prior to the reduction on
April 1, 2009, then no additional vesting shall occur with respect to the New
Option thereafter, provided that daily pro-rata vesting shall be credited for
the period since the date of the last vesting installment (and any unvested
portion of the New Option shall terminate at that time). The specific terms and
conditions of the New Option shall be as set forth in the Plan and the standard
form of stock option agreement, which the Executive hereby agrees to execute.”

 

 

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The Executive herby voluntarily consents and agrees to the foregoing Amendments
and acknowledges that such Amendments are hereby authorized.

         
 
  EXECUTIVE:    
 
       
 
  /s/ C. Neil Lyons
 
By: C. Neil Lyons    
 
       
 
  COMPANY:    
 
       
 
  RegeneRx Biopharmaceuticals, Inc.    

                  /s/ J.J. Finkelstein              
 
  By:   J.J. Finkelstein    
 
  Title:   President & CEO