Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is entered into as of March 26, 2019
by and between Phio Pharmaceuticals Corp. (the “Company”), a Delaware
corporation, and John Barrett, Ph.D., (the “Executive”), an individual and
resident of the State of Massachusetts.

 

1.       Employment. Subject to the terms and conditions set forth in this
Agreement, the Company hereby offers, and the Executive hereby accepts,
employment as the Company’s Chief Development Officer.

 

2.       Term. The Executive’s employment shall commence on April 22, 2019, the
Effective Date (the “Effective Date”), and shall continue until terminated
pursuant to Section 5 hereof (the “Term”).

 

3.       Capacity and Performance.

 

(a)       During the Term, the Executive shall be employed by the Company on a
full-time basis and shall perform the duties and responsibilities of his
position and such other duties and responsibilities on behalf of the Company and
its Affiliates as may be reasonably designated from time to time by the Board of
Directors of the Company (the “Board”) or by its chairman or other designee. The
Executive’s office shall be located at the Company’s principal place of
business.

 

(b)       During the Term, the Executive shall devote his full business time and
his best efforts, business judgment, skill and knowledge exclusively to the
advancement of the business and interests of the Company and its Affiliates and
to the discharge of his duties and responsibilities hereunder. The Executive
shall not engage in any other business activity or serve in any industry, trade,
professional, governmental or academic position during the Term, except as may
be expressly approved in advance by the Board in writing. Notwithstanding the
foregoing, the Executive may serve on the boards of directors of other companies
that are not Competitive (the “Other Boards”); provided that: (i) commencing
three months after the Effective Date, the Executive may serve on no more than
three Other Boards; and (ii) commencing six months after the Effective Date, the
Executive may serve on no more than two Other Boards.

 

4.       Compensation and Benefits. As compensation for all services performed
by the Executive during the Term and subject to the Executive’s performance of
his duties and obligations to the Company and its Affiliates, pursuant to this
Agreement or otherwise, the Company shall provide the Executive with the
following compensation and benefits:

 

(a)       Base Salary and Bonus.

 

(i)       During the Term, the Company shall pay the Executive a base salary at
the rate of $315,000 per annum, payable in accordance with the payroll practices
of the Company for its executives and subject to adjustment from time to time by
the Board, in its sole discretion, subject to the Executive’s rights under
Section 5(e)(ii) (such base salary, as from time to time adjusted, the “Base
Salary”).

 

(ii)       The Executive shall be eligible to receive an annual performance
bonus, to be awarded at the discretion of the Compensation Committee of the
Board (the “Compensation Committee”), for the achievement of certain Company and
Executive performance goals, which goals will be established annually by the
Compensation Committee. The target bonus for achieving these goals shall be
equal to thirty (30%) percent of the Base Salary.

 

(b)       Stock Awards.

 

Initial Inducement Restricted Stock Unit Award. On the Effective Date the
Company shall grant to the Executive a Restricted Stock Unit award as an
inducement material to Executive’s entry into employment with the Company in
accordance with Nasdaq Listing Rule 5635(c)(4). The Restricted Stock Unit Award
shall give the Executive the conditional right to receive 222,991 shares of
common stock of the Company (the “Initial Award”), without payment. The Initial
Award shall become vested in equal annual installments over four (4) years
beginning on the first anniversary of the Effective Date of the Agreement;
provided, in each case, that the Executive remains in the employ of the Company
through each such annual vesting date. The Initial Award shall be subject to
such additional terms and conditions as shall be set forth in an award
agreement.

 

 

 

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(ii)       Discretionary Grants. In addition to the Initial Award contemplated
under Section 4 (b)(i), at the sole discretion of the Compensation Committee,
Executive shall be eligible for additional grants of other equity awards.

 

(c)       Paid Time Off. During the Term, the Executive shall be entitled to
earn paid time off at the rate of 20 days per year. Paid time off, which may be
taken for any reason including vacation, sick leave and personal leave, may be
taken at such times and intervals as shall be determined by the Executive,
subject to the reasonable business needs of the Company. Paid time off shall
otherwise be governed by the policies of the Company, as in effect from time to
time. The number of paid “time off” days will accrue per pay period and will
stop accruing once 20 days have been accrued (with such accrual to recommence
once the number of paid “time off” days accrued by the Executive drops below 20
days). The Executive may take paid time off even if his number of accrued paid
time off days is insufficient to cover such days, so long as the Executive’s
negative paid time off balance does not exceed a balance of 7 days.
Notwithstanding the foregoing, in the event that the Executive’s employment is
terminated while the Executive has a negative time off balance, the Executive
shall be liable to the Company for the value of such negative balance, which may
be deducted from his Final Compensation.

 

(d)       Other Benefits. During the term hereof, the Executive shall be
entitled to participate in any and all employee benefit plans from time to time
in effect for employees of the Company generally, except to the extent any such
employee benefit plan is in a category of benefit otherwise provided to the
Executive (e.g., a severance pay plan). Such participation shall be subject to
the terms of the applicable plan documents and generally applicable Company
policies. The Company may alter, modify, add to or delete its employee benefit
plans at any time as it, in its sole judgment, determines to be appropriate,
without recourse by the Executive.

 

(e)       Business Expenses. The Company shall pay or reimburse the Executive
for all reasonable and necessary business expenses incurred or paid by the
Executive in the performance of his duties and responsibilities hereunder,
subject to any maximum annual limit and other restrictions on such expenses set
by the Board and to such reasonable substantiation and documentation as may be
specified by the Company from time to time.

 

(f)       Retirement Benefits. Executive will be entitled to participate in the
401(k) plan and any other qualified or nonqualified deferred compensation plans
in which other executives of the Company generally are eligible to participate,
in each case as in effect from time to time and subject to the terms and
conditions thereof.

 

5.       Termination of Employment and Severance Benefits. The Executive’s
employment hereunder shall terminate under the following circumstances:

 

(a)       Death. In the event of the Executive’s death during the Term, the
Executive’s employment shall immediately and automatically terminate. In such
event, the Company shall pay any Final Compensation to the Executive’s
designated beneficiary or, if no beneficiary has been designated by the
Executive in writing, to his estate.

 

(b)       Disability.

 

(i)       The Company may terminate the Executive’s employment hereunder, upon
notice to the Executive, in the event that the Executive becomes disabled
through any illness, injury, accident or condition of either a physical or
psychological nature and, as a result, is unable to perform substantially all of
his duties and responsibilities hereunder, notwithstanding the provision of any
reasonable accommodation, for a total of ninety (90) days, whether or not
consecutive, during any period of three hundred and sixty-five (365) consecutive
calendar days. In the event of such termination, the Company shall have no
further obligation to the Executive, other than for payment of Final
Compensation.

 

(ii)       The Board may designate another employee to act in the Executive’s
place during any period of the Executive’s disability. Notwithstanding any such
designation, the Executive shall continue to receive the Base Salary in
accordance with Section 4(a) and benefits in accordance with Section 4(d), to
the extent permitted by the then-current terms of the applicable benefit plans,
until the Executive becomes eligible for disability income benefits under the
Company’s disability income plan or until the termination of his employment,
whichever shall first occur.

 

 

 

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(iii)       While receiving disability income payments under the Company’s
disability income plan, the Executive shall not be entitled to receive any Base
Salary under Section 4(a) hereof, but shall continue to participate in Company
benefit plans in accordance with Section 4(d) and the terms of such plans, until
the termination of his employment.

 

(iv)       If any question shall arise as to whether during any period the
Executive is disabled through any illness, injury, accident or condition of
either a physical or psychological nature so as to be unable to perform
substantially all of his duties and responsibilities hereunder, the Executive
may, and at the request of the Company shall, submit to a medical examination by
a physician selected by the Company to whom the Executive or his duly appointed
guardian, if any, has no reasonable objection to determine whether the Executive
is so disabled and such determination shall for the purposes of this Agreement
be conclusive of the issue. If such question shall arise and the Executive shall
fail to submit to such medical examination, the Company’s determination of the
issue shall be binding on the Executive.

 

(c)       By the Company for Cause. The Company may terminate the Executive’s
employment hereunder for Cause at any time upon written notice to the Executive
setting forth in reasonable detail the nature of such Cause. The following, as
determined by the Board in its reasonable judgment, shall constitute “Cause” for
termination:

 

(i)       The Executive’s repeated failure or repeated refusal to perform (other
than by reason of disability), or gross negligence in the performance of, his
material duties and responsibilities to the Company or any of its Affiliates;

 

(ii)       Material breach by the Executive of any provision of this Agreement
or any other agreement with the Company or any of its Affiliates or any material
policy of the Company or any of its Affiliates applicable to the Executive;
provided that the first occurrence of any particular breach shall not constitute
Cause unless the Executive has failed to cure such breach within ten days after
receiving written notice from the Board stating the nature of such breach;

 

(iii)       The Executive’s conviction of, or plea of guilty or nolo contendere
to, any felony;

 

(iv)       The Executive’s act of fraud;

 

(v)       The Executive’s act or omission that, in the reasonable determination
of the Company, indicates alcohol or drug abuse by the Executive; or

 

(vi)       The Executive’s act or personal conduct that, in the judgment of the
Board (or a committee of the Board), gives rise to a material risk of liability
of the Executive or the Company under federal or applicable state law for
discrimination, or sexual or other forms of harassment, or other similar
liabilities to subordinate employees.

 

Upon the giving of notice of termination of the Executive’s employment hereunder
for Cause, the Company shall have no further obligation to the Executive, other
than for Final Compensation.

(d)       By the Company Other Than for Cause. The Company may terminate the
Executive’s employment hereunder other than for Cause at any time upon written
notice to the Executive.

 

(i)       In the event of such termination without Cause, in addition to Final
Compensation, subject to Section 5(d)(iii) and provided that no benefits are
payable to the Executive under a separate severance agreement as a result of
such termination, then during the period of six months following the date of
termination, the Company shall continue to pay the Executive the Base Salary at
the rate in effect on the date of termination and, subject to any employee
contribution applicable to the Executive on the date of termination, shall
continue to contribute (on a taxable basis) to the premium cost of the
Executive’s participation in the Company’s group medical and dental plans
(unless prohibited by law), provided that the Executive is entitled to continue
such participation under applicable law and plan terms.

 

 

 

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(ii)       Notwithstanding and in lieu of the compensation set forth in Section
5(d)(i), in the event of a termination without Cause within 12 months following
a Change of Control, in addition to Final Compensation, subject to Section
5(d)(iii) and provided that no benefits are payable to the Executive under a
separate severance agreement as a result of such termination, then: (A) during
the period of 12 months following the date of termination, the Company shall
continue to pay the Executive the Base Salary at the rate in effect on the date
of termination; (B) the vesting of a portion of the Executive’s outstanding
equity awards granted by the Company shall accelerate, with such acceleration to
be equal to the greater of 50% of the unvested portion of all such outstanding
awards or the portion that would have vested over the twenty four (24) months
from the termination date; and (C) subject to any employee contribution
applicable to the Executive on the date of termination, shall continue to
contribute (on a taxable basis) to the premium cost of the Executive’s
participation in the Company’s group medical and dental plans (unless prohibited
by law), provided that the Executive is entitled to continue such participation
under applicable law and plan terms. For purposes of this Agreement, "Change in
Control" shall mean: (x) an acquisition of any securities of the Company (the
"Securities") by any "person" (as the term "person" is used for purposes of
Section 13(d) or Section 14(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), immediately after which such person has "beneficial
ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act)
("Beneficial Ownership") of 50% or more of the shares of the Company’s common
stock (as determined on a fully-diluted, as-converted basis) without the
approval of the Board; (y) a merger or consolidation in which holders of the
Capital Stock immediately prior to such transaction hold or are entitled to
acquire, immediately after the consummation of the merger or consolidation, less
than 50% of the surviving entity’s common stock (as determined on a
fully-diluted, as-converted basis); or (z) the sale of all or substantially all
of the Company’s assets. For purposes of this Section 5(d)(ii), “Capital Stock”
shall mean the Company’s common stock and any other Company securities that are
convertible into or exercisable for the Company’s common stock.

 

(iii)       Any obligation of the Company to the Executive hereunder, other than
for Final Compensation, is conditioned on the Executive signing a timely and
effective release of claims in the form provided by the Company (the “Employee
Release”) and delivering it to the Company by the deadline specified therein,
and the Employee Release taking effect by its terms, within 60 calendar days
following the date his employment terminates. Any severance payments to which
the Executive is entitled hereunder shall be payable in accordance with the
normal payroll practices of the Company, with the first payment, which shall be
retroactive to the day immediately following the date the Executive’s employment
is terminated, being due and payable on the Company’s next regular payday for
executives that follows the expiration of 60 calendar days from the date the
Executive’s employment terminates. The release of claims required for separation
benefits in accordance with this Section 5(d)(iii) creates legally binding
obligations on the part of the Executive and the Company and its Affiliates
therefore advise the Executive to seek the advice of an attorney before signing
it.

 

(e)       By the Executive for Good Reason. The Executive may terminate his
employment hereunder for Good Reason by: (A) providing notice to the Company
specifying in reasonable detail the condition giving rise to the Good Reason no
later than 30 days following the occurrence of that condition; (B) providing the
Company a period of 60 days to remedy the condition and so specifying in the
notice; and (C) terminating his employment for Good Reason within 30 days
following the expiration of the period to remedy if the Company fails to remedy
the condition. The following, occurring without the Executive’s consent, shall
constitute “Good Reason” for termination by the Executive:

 

(i)       a material reduction of the Executive’s regular responsibilities from
those typically assigned to a Chief Development Officer of a similarly situated
biotechnology company;

 

(ii)       a reduction in the Base Salary set forth in Section 4 hereof by more
than 10% in any calendar year, unless such reduction is in proportion with any
Company-wide reductions in base salary for all executive officers of the
Company;

 

(iii)       the Company’s material breach of any material term of the Agreement;
provided that the first occasion of any particular breach shall not constitute
such Good Reason unless the Company has failed to cure such breach within 60
days after receiving written notice from the Executive stating the nature of
such breach; or

 

(iv)       Relocation of the Company’s principal executive offices of a distance
in excess of 50 miles from its location at the Effective Date.

 

In the event of a termination of employment in accordance with this Section
5(e), the Executive will be entitled to receive the same pay and benefits he
would have been entitled to receive had he been terminated by the Company other
than for Cause in accordance with Section 5(d) above; provided that the
Executive satisfies all conditions to such entitlement, including without
limitation the signing of the Employee Release as set forth in Section 5(d).

 

 

 

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(f)       Timing of Payments and Section 409A.

 

(i)       Notwithstanding anything to the contrary in this Agreement, if at the
time of the Executive’s termination of employment, the Executive is a “specified
employee,” as defined below, any and all amounts payable under this Section 5 on
account of such separation from service that would (but for this provision) be
payable within six months following the date of termination, shall instead be
paid on the next business day following the expiration of such six (6) month
period or, if earlier, upon the Executive’s death; except (A) to the extent of
amounts that do not constitute a deferral of compensation within the meaning of
Treasury regulation Section 1.409A-1(b) (including without limitation by reason
of the safe harbor set forth in Section 1.409A-1(b)(9)(iii), as determined by
the Company in its reasonable good faith discretion); (B) benefits which qualify
as excepted welfare benefits pursuant to Treasury regulation Section
1.409A-1(a)(5); or (C) other amounts or benefits that are not subject to the
requirements of Section 409A of the Internal Revenue Code (“Section 409A”).

 

(ii)       For purposes of this Agreement, all references to “termination of
employment” and correlative phrases shall be construed to require a “separation
from service” (as defined in Section 1.409A-1(h) of the Treasury regulations
after giving effect to the presumptions contained therein), and the term
“specified employee” means an individual determined by the Company to be a
specified employee under Treasury regulation Section 1.409A-1(i).

 

(iii)       Each payment made under this Agreement shall be treated as a
separate payment and the right to a series of installment payments under this
Agreement is to be treated as a right to a series of separate payments.

 

(iv)       The Executive’s right to reimbursement for business expenses
hereunder shall be subject to the following additional rules: (i) the amount of
expenses eligible for reimbursement during any calendar year shall not affect
the expenses eligible for reimbursement in any other taxable year; (ii)
reimbursement shall be made not later than December 31 of the calendar year
following the calendar year in which the expense was incurred; and (iii) the
right to reimbursement is not subject to liquidation or exchange for any other
benefit.

 

(v) In no event shall the Company have any liability relating to any payment or
benefit under this Agreement failing to comply with, or be exempt from, the
requirements of Section 409A.

 

6.       Effect of Termination. The provisions of this Section 6 shall apply to
any termination of the Executive’s employment hereunder:

 

(a)        The Company shall pay to the Executive: (i) any Base Salary earned
but not paid during the final payroll period of the Executive’s employment
through the date of termination; (ii) pay for any paid time off earned but not
used through the date of termination; (iii) any bonus compensation awarded for
the year preceding that in which termination occurs, but unpaid on the date of
termination; and (iv) any business expenses incurred by the Executive but
un-reimbursed on the date of termination, provided that such expenses and
required substantiation and documentation are submitted within 60 days of
termination and that such expenses are reimbursable under Company policy (all of
the foregoing, “Final Compensation”). The Company shall have no further
obligation to the Executive hereunder except as set forth in Section 5(d) or
Section 5(e). Any Base Salary or pay for earned but unused paid time off shall
be payable at the time provided by applicable law. Any bonus due for the
preceding year shall be payable at the time provided for at the time such bonus
is awarded. Any business expenses shall be payable not later than 90 days
following the date of termination.

 

(b)       Payment by the Company of Final Compensation and any Base Salary and
contributions to the cost of the Executive’s continued participation in the
Company’s group health and dental plans that may be due the Executive in each
case under the applicable termination provision of Section 5 shall constitute
the entire obligation of the Company to the Executive hereunder. The Executive
shall promptly give the Company notice of all facts necessary for the Company to
determine the amount and duration of its obligations in connection with any
termination pursuant to Section 5(d) or Section 5(e) hereof.

 

(c)       Except for any right of the Executive to continue medical and dental
plan participation in accordance with applicable law, benefits shall terminate
pursuant to the terms of the applicable benefit plans based on the date of
termination of the Executive’s employment without regard to any continuation of
Base Salary or other payment to the Executive following such date of
termination.

 

 

 

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(d)       Provisions of this Agreement shall survive any termination if so
provided herein or if necessary or desirable to accomplish the purposes of other
surviving provisions, including without limitation the obligations of the
Executive under Sections 7, 8 and 9 hereof. The obligation of the Company to
make payments to or on behalf of the Executive under Section 5(d) or Section
5(e) hereof is expressly conditioned upon the Executive’s continued full
performance of obligations under Sections 7, 8 and 9 hereof. The Executive
recognizes that, except as expressly provided in Section 5(d) or Section 5(e),
no compensation is earned after termination of employment.

 

7.       Confidential Information.

 

(a)       The Executive acknowledges that the Company and its Affiliates
continually develop Confidential Information, that the Executive may develop
Confidential Information for the Company or its Affiliates and that the
Executive may learn of Confidential Information during the course of employment.
The Executive will comply with the policies and procedures of the Company and
its Affiliates for protecting Confidential Information and shall not disclose to
any Person or use, other than as required by applicable law or for the proper
performance of his duties and responsibilities to the Company and its
Affiliates, any Confidential Information obtained by the Executive incident to
his employment or other association with the Company or any of its Affiliates.
The Executive understands that this restriction shall continue to apply after
his employment terminates, regardless of the reason for such termination. The
confidentiality obligation under this Section 7 shall not apply to information
which is generally known or readily available to the public at the time of
disclosure or becomes generally known through no wrongful act on the part of the
Executive or any other person having an obligation of confidentiality to the
Company or any of its Affiliates. Notwithstanding the foregoing, if Executive
makes a confidential disclosure of a trade secret or other Confidential
Information to a government official or an attorney for the sole purpose of
reporting a suspected violation of law, or in a court filing under seal,
Executive shall not be held liable under this Agreement or under any federal or
state trade secret law for such a disclosure.

 

(b)       All documents, records, tapes and other media of every kind and
description relating to the business, present or otherwise, of the Company or
its Affiliates and any copies, in whole or in part, thereof (the “Documents”),
whether or not prepared by the Executive, shall be the sole and exclusive
property of the Company and its Affiliates. The Executive shall safeguard all
Documents and shall surrender to the Company at the time his employment
terminates, or at such earlier time or times as the Board or its designee may
specify, all Documents then in the Executive’s possession or control.

 

8.       Assignment of Rights to Intellectual Property. The Executive shall
promptly and fully disclose all Intellectual Property to the Company. The
Executive hereby assigns and agrees to assign to the Company (or as otherwise
directed by the Company) the Executive’s full right, title and interest in and
to all Intellectual Property. The Executive agrees to execute any and all
applications for domestic and foreign patents, copyrights or other proprietary
rights and to do such other acts (including without limitation the execution and
delivery of instruments of further assurance or confirmation) requested by the
Company to assign the Intellectual Property to the Company and to permit the
Company to enforce any patents, copyrights or other proprietary rights to the
Intellectual Property. The Executive will not charge the Company for time spent
in complying with these obligations. All copyrightable works that the Executive
creates shall be considered “work made for hire” and shall, upon creation, be
owned exclusively by the Company. The Executive’s obligation to assist the
Company in obtaining and enforcing patents for Intellectual Property in any and
all countries shall continue beyond the termination of the Executive’s
employment with the Company, but the Company shall compensate the Executive at a
reasonable, standard hourly rate following such termination for time directly
spent by Executive at the Company’s request for such assistance.

 

9.       Restricted Activities. The Executive agrees that the following
restrictions on his activities during and after his employment are necessary to
protect the good will, Confidential Information, trade secrets and other
legitimate interests of the Company and its Affiliates:

 

(a)       During the Term, the Executive will not undertake any outside
activity, whether or not Competitive with the business of the Company or its
Affiliates that could reasonably give rise to a conflict of interest or
otherwise interfere with his duties and obligations to the Company or any of its
Affiliates.

 

 

 

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(b)       During the Term and for the Restricted Period, the Executive shall
not, directly or indirectly, whether as owner, partner, investor, consultant,
agent, employee, co-venturer or otherwise: (i) engage in any Competitive
activity within the United States or any other country in which the Company has
conducted discovery, development or commercialization activities for any Product
or has sought patent protection for any Product, in either case as of the date
of such termination; or (ii) undertake any planning for any Competitive
business. Specifically, but without limiting the foregoing, the Executive agrees
not to engage in any manner in any activity that is directly or indirectly
Competitive or potentially Competitive and further agrees not to work or provide
services, in any capacity, whether as an employee, independent contractor or
otherwise, whether with or without compensation, to any Person who is engaged in
any business that is Competitive. The foregoing, however, shall not prevent the
Executive’s passive ownership of one percent (1%) or less of the equity
securities of any publicly traded company. For purposes of this Agreement: (A)
the “Restricted Period” shall be the six months following the date of
termination; and (B) the term “Competitive” shall mean either (i) the discovery,
development or commercialization of any therapeutics or diagnostics utilizing
any technology relating to the interference of RNA or otherwise relating to the
expression, or non-expression, of targeted genes or genetic pathways; or (ii)
the discovery, development or commercialization of any therapeutics or
diagnostics for the same or related biological target for the treatment of the
same diseases, disorders or conditions using technology relating to the
interference of RNA or otherwise relating to the expression, or non-expression,
of targeted genes or genetic pathways. During the Restricted Period, the
Executive will not directly or indirectly (a) solicit or encourage any customer
of the Company or any of its Affiliates to terminate or diminish its
relationship with them; or (b) seek to persuade any such customer or prospective
customer of the Company or any of its Affiliates to conduct with anyone else any
business or activity which such customer or prospective customer conducts or
could conduct with the Company or any of its Affiliates; provided that these
restrictions shall apply (y) only with respect to those Persons who are or have
been a customer of the Company or any of its Affiliates at any time within the
immediately preceding two-year period or whose business has been solicited on
behalf of the Company or any of the Affiliates by any of their officers,
employees or agents within said two year period, other than by form letter,
blanket mailing or published advertisement; and (z) only if the Executive has
performed work with such Person during his employment with the Company or one of
its Affiliates or been introduced to, or otherwise had contact with, such Person
as a result of his employment or other associations with the Company or one of
its Affiliates or has had access to Confidential Information which would assist
in the Executive’s solicitation of such Person.

 

(c)       During the Restricted Period, the Executive will not, and will not
assist any other Person to (a) hire or solicit for hiring any employee of the
Company or any of its Affiliates or seek to persuade any employee of the Company
or any of its Affiliates to discontinue employment; or (b) solicit or encourage
any independent contractor providing services to the Company or any of its
Affiliates to terminate or diminish its relationship with them. For the purposes
of this Agreement, an “employee” of the Company or any of its Affiliates is any
person who was such at any time within the preceding two years.

 

10.       Notification Requirement. Until 45 days after the conclusion of the
Restricted Period, the Executive shall give notice to the Company of each new
business activity he undertakes, at least ten days prior to beginning any such
activity. Such notice shall state the name and address of the Person for whom
such activity is undertaken and the nature of the Executive’s business
relationship(s) and position(s) with such Person. The Executive shall provide
the Company with such other pertinent information concerning such business
activity as the Company may reasonably request in order to determine the
Executive’s continued compliance with his obligations under Sections 7, 8 and 9
hereof.

 

11.       Enforcement of Covenants. The Executive acknowledges that he has
carefully read and considered all the terms and conditions of this Agreement,
including the restraints imposed upon him pursuant to Sections 7, 8 and 9
hereof. The Executive agrees without reservation that each of the restraints
contained herein is necessary for the reasonable and proper protection of the
good will, Confidential Information, trade secrets and other legitimate
interests of the Company and its Affiliates; that each and every one of those
restraints is reasonable in respect to subject matter, length of time and
geographic area; and that these restraints, individually or in the aggregate,
will not prevent him from obtaining other suitable employment during the period
in which the Executive is bound by these restraints. The Executive further
agrees that he will never assert, or permit to be asserted on his behalf, in any
forum, any position contrary to the foregoing. The Executive further
acknowledges that, were he to breach any of the covenants contained in Sections
7, 8 or 9 hereof, the damage to the Company would be irreparable. The Executive
therefore agrees that the Company, in addition to any other remedies available
to it, shall be entitled to preliminary and permanent injunctive relief against
any breach or threatened breach by the Executive of any of said covenants,
without having to post bond and to recover its reasonable attorneys’ fees and
costs incurred in securing such relief. The Executive agrees that the Restricted
Period shall be tolled, and shall not run, during any period of time in which he
is in violation of the terms thereof, in order that the Company and its
Affiliates shall have all of the agreed-upon temporal protection recited herein.
The parties further agree that, in the event that any provision of Section 7, 8
or 9 hereof shall be determined by any court of competent jurisdiction to be
unenforceable by reason of its being extended over too great a time, too large a
geographic area or too great a range of activities, such provision shall be
deemed to be modified to permit its enforcement to the maximum extent permitted
by law.

 

 

 

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12.       Conflicting Agreements. The Executive hereby represents and warrants
that the execution of this Agreement and the performance of his obligations
hereunder will not breach or be in conflict with any other agreement to which
the Executive is a party or is bound and that the Executive is not now subject
to any covenants against competition or similar covenants or any court order or
other legal obligation that would affect the performance of his obligations
hereunder. The Executive will not disclose to or use on behalf of the Company
any proprietary information of a third party without such party’s consent.

 

13.       Definitions. Words or phrases which are initially capitalized or are
within quotation marks shall have the meanings provided in this Section and as
provided elsewhere herein. For purposes of this Agreement, the following
definitions apply:

 

(a)       “Affiliates” means all persons and entities directly or indirectly
controlling, controlled by or under common control with the Company, where
control may be by management authority, contract or equity interest.

 

(b)       “Confidential Information” means any and all information of the
Company and its Affiliates that is not generally known by those with whom the
Company or any of its Affiliates competes or does business, or with whom the
Company or any of its Affiliates plans to compete or do business and any and all
information, publicly known in whole or in part or not, which, if disclosed by
the Company or any of its Affiliates would assist in competition against them.
Confidential Information includes without limitation such information relating
to (i) the development, research, testing, manufacturing, marketing and
financial activities of the Company and its Affiliates; (ii) the Products; (iii)
the costs, sources of supply, financial performance and strategic plans of the
Company and its Affiliates; (iv) the identity and special needs of the customers
of the Company and its Affiliates; and (v) the people and organizations with
whom the Company and its Affiliates have business relationships and the nature
and substance of those relationships. Confidential Information also includes any
information that the Company or any of its Affiliates has received, or may
receive hereafter, belonging to customers or others with any understanding,
express or implied, that the information would not be disclosed.

 

(c)       “Intellectual Property” means inventions, discoveries, developments,
methods, processes, compositions, works, concepts and ideas (whether or not
patentable or copyrightable or constituting trade secrets) conceived, made,
created, developed or reduced to practice by the Executive (whether alone or
with others, whether or not during normal business hours or on or off Company
premises) during the Executive’s employment and during the period of six months
immediately following termination of his employment that relate to either the
Products or any prospective activity of the Company or any of its Affiliates or
that make use of Confidential Information or any of the equipment or facilities
of the Company or any of its Affiliates.

 

(d)       “Person” means an individual, a corporation, a limited liability
company, an association, a partnership, an estate, a trust and any other entity
or organization, other than the Company or any of its Affiliates.

 

(e)       “Products” mean all products and product candidates planned,
researched, developed, tested, manufactured, sold, licensed, leased or otherwise
distributed or put into use by the Company or any of its Affiliates, together
with all related services provided or planned by the Company or any of its
Affiliates, during the Executive’s employment with the Company or any of its
Affiliates.

 

14.       Withholding. All payments made by the Company under this Agreement
shall be reduced by any tax or other amounts required to be withheld by the
Company under applicable law.

 

15.       Assignment. Neither the Company nor the Executive may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other; provided, however,
that the Company may assign its rights and obligations under this Agreement
without the consent of the Executive in the event that the Executive is
transferred to a position with any of the Affiliates or in the event that the
Company shall hereafter effect a reorganization, consolidate with, or merge
into, any Person or transfer all or substantially all of its properties or
assets to any Person. This Agreement shall inure to the benefit of and be
binding upon the Company and the Executive, their respective successors,
executors, administrators, heirs and permitted assigns.

 

 

 

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16.       Severability. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.

 

17.       Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of either party to
require the performance of any term or obligation of this Agreement, or the
waiver by either party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.

 

18.       Notices. Any and all notices, requests, demands and other
communications provided for by this Agreement shall be in writing and shall be
effective when delivered in person, consigned to a reputable national courier
service or deposited in the United States mail, postage prepaid, registered or
certified, and addressed to the Executive at his last known address on the books
of the Company or, in the case of the Company, at its principal place of
business, attention of the Chairman of the Board, or to such other address as
either party may specify by notice to the other actually received.

 

19.       Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all prior communications, agreements and
understandings, written or oral, with respect to the terms and conditions of the
Executive’s employment with the Company, other than any obligations owed to the
Company or its predecessor with respect to confidentiality, non-competition,
intellectual property, and proprietary information, all of which shall continue
in force.

 

20.       Amendment. This Agreement may be amended or modified only by a written
instrument signed by the Executive and by an expressly authorized representative
of the Company.

 

21.       Headings. The headings and captions in this Agreement are for
convenience only and in no way define or describe the scope or content of any
provision of this Agreement.

 

22.       Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument.

 

23.       Governing Law. This is a Massachusetts contract and shall be construed
and enforced under and be governed in all respects by the laws of the
Commonwealth of Massachusetts, without regard to the conflict of laws principles
thereof.

 

 

 

[Signature page follows immediately.]

 

 

 

 9 

 

 

IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by
the Company, by its duly authorized representative, and by the Executive, as of
the date first above written.

 

 

THE EXECUTIVE: PHIO PHARMACEUTICALS CORP.             By: /s/ John Barrett
By:  /s/ Gerrit Dispersyn       Name: John Barrett, Ph.D.         Name: Gerrit
Dispersyn, Dr. Med. Sc.                       Title: President & CEO

 

 

 

 

 

 

 

 

 

 

[Signature Page to John Barrett Employment Agreement]

 

 

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