Exhibit 10.3
 
 
Execution Copy

NEUROLOGIX, INC.
 

 
December 16, 2011
 
Mr. Reginald Hardy
2600 Southwest Third Avenue, Suite 950
Miami, Florida  33129

Re:           Neurologix, Inc. - Prospective Employment and Related Investment
 
Dear Reg:
 
This letter agreement (“Agreement”) is made effective as of December 16, 2011
(“Effective Date”) by and between Neurologix, Inc., a Delaware corporation with
an office located at One Bridge Plaza, Fort Lee, New Jersey 07024
(“Corporation”) and Reginald Hardy, a Florida resident with a business address
located at 2600 Southwest Third Avenue, Suite 950, Miami, Florida 33129
(“Executive”).

Background.  Corporation and Executive have agreed in principle to terms and
conditions under which Corporation shall offer, and Executive shall accept, a
position of employment as Vice President of the Corporation, and this Agreement
reflects the definitive agreement of Corporation and Executive of such terms and
conditions.
 
This offer of employment is undertaken simultaneously with the closing of the
transactions contemplated by that certain Second Amendment to Note and Warrant
Purchase Agreement and Promissory Notes and First Amendment to Security
Agreement dated December 16, 2011 by and among Palisade Concentrated Equity
Partnership II, L.P. (“PCEPII”), General Electric Pension Trust (“GE”), and
Corriente Master Fund, L.P. (“Corriente”) (the “Bridge Loan”).  It is understood
that Executive will purchase a participation in the Bridge Loan on the date
hereof from one or more of PCEPII, GE or Corriente in the minimum amount of
$125,000.
 
Corporation and Executive hereby agree as follows:
 
1.           Employment.  Corporation hereby offers and Executive hereby accepts
the offer to serve as Vice President of Corporation on the terms and conditions
set forth herein.  The term of employment shall commence upon the Effective Date
and shall terminate: (i) upon the closing of a Liquidity Event or (ii) March 31,
2012, whichever is later in time, or (iii) sooner by the parties as further set
forth herein.  Executive will perform the following services in his capacity as
Vice President of Corporation (collectively, the “Services”):
 
 
(a)
Advise Corporation on strategy and tactics to be used to engage in discussions
with potential strategic parties in order to facilitate the consummation of a
Liquidity Event;

 
 
 

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(b)
Identify and introduce potential strategic parties to Corporation for purposes
of facilitating a Liquidity Event;

 
 
(c)
Provide advice and assistance in connection with a Liquidity Event, including
assisting Corporation in negotiating the Liquidity Event and, at Corporation’s
reasonable request, assist in presentations to and discussions with potential
strategic parties and Corporation’s Board of Directors; and

 
 
(d)
At Corporation’s request, meet and work with MTS Health Partners, L.P. (“MTS”)
to assist MTS in carrying out its services under the engagement letter entered
into between MTS and Corporation on February 1, 2010.

 
For purposes of this Agreement, the term “Liquidity Event” shall mean (i) any
merger, consolidation, reorganization or other business combination pursuant to
which the business of Corporation is combined with that of one or more
purchasers or sellers or one or more persons formed by or affiliated with a
purchaser or seller (but, specifically excluding joint venture, collaboration or
licensing arrangements not involving more than 50% of the capital stock or
assets of Corporation), (ii) the acquisition, directly or indirectly, by one or
more purchasers of more than 50% of the capital stock of Corporation, by way of
negotiated purchase or any other means (but specifically excluding any purchase
of capital stock from Corporation for the purposes of capital raising), (iii)
the acquisition, directly or indirectly, by one or more purchasers of all or
substantially all of the assets of Corporation, or (iv) any licensing,
collaboration, partnership, joint venture, strategic alliance or similar
transaction, business association or relationship with one or more strategic
parties with respect to the development, commercialization, marketing,
promotion, sale and/or distribution of Corporation’s gene therapy product for
the treatment of Parkinson’s disease.  Executive and Corporation acknowledge and
agree that a “Liquidity Event” shall not include any debt or equity offerings
that shall only result in the continued financing and operation of Corporation.
 
2.           Non-Competition/ Conflict of Interest.  Executive is presently
employed in the pharmaceutical industry by Brickell Biotech, Inc. (“BBI”) and is
subject to provisions of non-competition that prohibit an employment arrangement
between Executive and Corporation without the express approval of the Board of
Directors of BBI.  Executive has obtained the required consents from BBI to
enable Executive to serve as Vice President of Corporation on the terms set
forth herein.  Executive represents and covenants that his employment by
Corporation on the terms set forth herein and compliance with the terms and
conditions hereof will not conflict with or result in the breach by him of any
agreement to which he is a party or by which he may be bound and in connection
with his employment by Corporation and his provision of Services, he will not
engage in any unauthorized use of any confidential or proprietary information he
may have obtained in connection with his employment with any other employer or
his service on the Board of Directors or other similar governing body of any
other entity.
 
3.           Reserved.
 
4.           Consideration.  In consideration for Executive’s Services and
specifically conditioned upon the successful achievement of a Liquidity Event
with a pharmaceutical, biotechnology or medical device company, and, subject to
Section 8 hereof, specifically conditioned upon Executive’s continued employment
with Corporation, Executive shall receive (i) four percent (4%) of any up-front
payment received by Corporation in such Liquidity Event and (ii) four percent
(4%) of any future milestone payments received by Corporation in such Liquidity
Event.  In the event, there is only one payment in such Liquidity Event,
Executive shall receive four percent (4%) of such payment received by
Corporation. Each payment is due and payable to Executive, in whatever form,
within fifteen (15) days of receipt by Corporation (collectively, the
“Consideration”).  Executive acknowledges and agrees that he shall not be
entitled to any other compensation, perquisites or benefits in connection with,
or as a condition to, or as consideration for his employment by Corporation and
his provision of Services as described under this Agreement.
 
 
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5.           Investment.  Executive hereby agrees, either individually or
through an entity affiliated with Executive, to invest $125,000 in the aggregate
in the first $500,000 tranche of the Bridge Loan (if and when such first tranche
is purchased by the Bridge Loan investors and issued by Corporation), and to
invest $125,000 in the aggregate in the second $500,000 tranche of the Bridge
Loan (if and when such second tranche is purchased by the Bridge Loan investors
and issued by Corporation), with such investments being made upon the same terms
and conditions as PCEPII, GE, Corriente and any other Bridge Loan
investor.  Executive shall possess all of the rights and obligations equivalent
to each investor in the Bridge Loan.  The parties hereto acknowledge and agree
that Executive’s investments described above will be made by purchasing a
participation or participations in the Bridge Loan from one or more of PCEPII,
GE or Corriente, and that the effectiveness of this Agreement, the employment of
Executive as Vice President on the date hereof, and his continued employment,
are expressly conditioned upon Executive purchasing the participations as
described above.
 
6.           Nondisclosure.  Executive has previously executed a non-disclosure
agreement dated as of February 18, 2010 for the benefit of Corporation (the
“Non-Disclosure Agreement”) that shall govern the terms of this Agreement and
shall survive the termination of this Agreement and Executive’s employment with
Corporation.
 
7.           Reimbursement of Expenses.  Upon the submission of proper
substantiation by Executive, and subject to such rules and guidelines as
Corporation may from time to time adopt, Corporation shall reimburse Executive
for all reasonable expenses actually paid or incurred by Executive during the
term of employment in the course of and pursuant to his rendering Services to
Corporation.  Executive shall account to Corporation in writing for all expenses
for which reimbursement is sought and shall supply to Corporation copies of all
relevant invoices, receipts or other evidence reasonably requested by
Corporation.
 
8.           Termination.   Executive shall at all times have the right to
terminate his employment upon fifteen (15) days’ prior written notice to
Corporation and, in the event such notice of termination is given prior to any
Liquidity Event, Executive shall not be entitled to the Consideration provided
for in Section 4.  Corporation may terminate the term of Executive’s employment
at any time for any reason; provided, however, in the event that Corporation
shall enter into a Liquidity Event within six (6) months of Corporation’s
termination of Executive’s employment (other than a lawful termination by
Corporation as a result of Executive’s material breach of this Agreement, which
shall include Executive’s failure to invest in the first or second tranches of
the Bridge Loan, as described in Section 5 above) with a pharmaceutical,
biotechnology or medical device company, Executive shall be entitled to the full
Consideration provided for in Section 4.
 
 
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9.           Mediation.  In the event a dispute arises out of or relates to this
Agreement, or the breach thereof, and if the dispute cannot be settled through
negotiation, the parties hereby agree first to attempt in good faith to settle
the dispute by mediation administered by the American Arbitration Association
under its Employment Mediation Rules before resorting to litigation or some
other dispute resolution procedure.
 
10.           Arbitration.  Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Broward County, Florida (if Executive defends) or in Bergen County, New Jersey
(if Corporation defends) in accordance with the Rules of the American
Arbitration Association then in effect (except to the extent that the procedures
outlined below differ from such rules or the parties agree otherwise).  Within
thirty (30) days after written notice by either party has been given that a
dispute exists and that arbitration is required, each party must select an
arbitrator and those two arbitrators shall promptly, but in no event later than
thirty (30) days after their selection, select a third arbitrator.  The parties
agree to act as expeditiously as possible to select arbitrators and con­clude
the dispute.  The selected arbitrators must render their decision in
writing.  The cost and expenses of the arbitration shall be borne equally by
both parties.  If advances are required, each party will advance one-half of the
estimated fees and expenses of the arbitrators.  Judgment may be entered on the
arbitrators' award in any court having jurisdiction.  Although arbitration is
contemplated to resolve disputes hereunder, either party may proceed to court to
obtain an injunction to protect its rights hereunder, the parties agreeing that
either could suffer irreparable harm by reason of any breach of this
Agreement.  Pursuit of an injunction shall not impair arbitration on all
remaining issues.
 
11.           Governing Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to conflicts
of law issues.
 
12.           Entire Agreement; Modifications; Counterparts; Facsimile or .PDF
Delivery.  This Agreement and the Non-Disclosure Agreement constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and, upon the Effective Date, shall supersede all prior agreements,
understandings and arrangements, both oral and written, between Executive and
Corporation (or any of its affiliates) with respect to such subject
matter.  This Agreement may not be modified in any way unless by a written
instrument signed by both Corporation and Executive.  This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all such counterparts shall together constitute one and the same
instrument.  Signatures delivered by facsimile or PDF shall be effective for all
purposes.
 
13.           Notices.  All notices required or permitted to be given hereunder
shall be in writing and shall be personally delivered by courier, sent by
registered or certified mail, return receipt requested or sent by confirmed
e-mail or facsimile transmission addressed as set forth herein or to such other
address as either party hereto may from time to time give notice of to the
other.
 
14.           Benefits; Binding Effect; Assignment.  This Agreement shall be for
the benefit of and binding upon the parties hereto and their respective heirs,
personal representatives, legal representa­tives, successors and, where
applicable, assigns, including, without limitation, any successor to
Corporation, whether by merger, consolidation, sale of stock, sale of assets or
otherwise.  Except as otherwise provided below, Executive shall not assign or
transfer this Agreement nor any rights hereunder without the consent of
Corporation, and any attempted or purported assignment without such consent
shall be void; provided, that, Executive shall be entitled, to the extent
permitted under applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or other benefit hereunder following
Executive’s death by giving written notice thereof.  In the event of Executive’s
death or a judicial determination of his incompetence, references in this
Agreement to Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative.
 
 
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15.           Severability.  The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remain­ing portions of this Agreement or any
part thereof, all of which are inserted conditionally on their being valid in
law, and, in the event that any one or more of the words, phrases, sentences,
clauses or sections contained in this Agreement shall be declared invalid, this
Agreement shall be construed as if such invalid word or words, phrase or
phrases, sentence or sentences, clause or clauses, or section or sections had
not been inserted.
 
16.           Waivers.  The waiver by either party hereto of a breach or
violation of any term or provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or violation.
 
17.           Damages.  Subject to Section 10 of this Agreement, nothing
contained herein shall be construed to prevent Corporation or Executive from
seeking and recovering from the other damages sustained by either or both of
them as a result of its or his breach of any term or provision of this
Agreement.  In the event that either party hereto brings suit for the collection
of any damages resulting from, or the injunction of any action constituting, a
breach of any of the terms or provisions of this Agreement, or for the
enforcement of any arbitration award under Section 10 of this Agreement, then
the party found to be at fault and the non-enforcing party of an arbitration
award shall pay all reasonable court costs and attorneys' fees of the other.
 
18.           No Third Party Beneficiary.  Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than Corporation, the parties hereto and their respective heirs, personal
representatives, legal represen­tatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement.
 
19.           Indemnification.  Executive shall be entitled to indemnification
in his capacity as an officer of Corporation in accordance with the terms of
Corporation’s Amended and Restated By-Laws, as in effect on the date hereof and
as they may be amended, modified or restated in the future.  Corporation
represents the existence of a director’s and officer’s insurance policy in full
force and effect as of the date of this Agreement, and agrees that such policy
shall be maintained with respect to Executive for as long as such policy is
maintained with respect to all of Corporation’s other directors and officers.  
 

 

 
Signature page follows
 
 
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Should this Agreement satisfactorily represent our business agreement, please
sign and execute two copies of this letter, keeping one copy for your records
and returning the other to us.
 
Sincerely,
 
NEUROLOGIX, INC.
 
By:
/s/ Clark A. Johnson
 

Name:  Clark A. Johnson
Title: Chief Executive Officer

By:
/s/ Marc L. Panoff
 

Name:  Marc L. Panoff
Title: Chief Financial Officer

 
ACKNOWLEDGED AND AGREED:
 
By:
/s/ Reginald Hardy
   
Reginald Hardy, Individually
 

 

 

 

 

 
 
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