Exhibit 10.39

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”), dated as of December 10, 2009, is
made by and between Inovio Biomedical Corporation, a Delaware corporation (the
“Company”), and Dr. Mark Bagarazzi (“Executive”).

R E C I T A L S

WHEREAS, the Company desires to employ Executive and to have the benefit of his
skills and services, and Executive desires to accept employment with the
Company, on the terms and conditions set forth herein; and

WHEREAS, as a condition to his employment by the Company, Executive agrees to
execute and shall be bound by the terms and conditions of the Non-Disclosure,
Assignment of Inventions, Non-Solicitation and Non-Compete Agreement (the
“Non-Compete Agreement”) attached hereto as Exhibit A.

NOW, THEREFORE, in consideration of the mutual promises, terms, covenants and
conditions set forth herein and in the Non-Compete Agreement, and the
performance of each, the parties hereto, intending legally to be bound, hereby
agree as follows:

 

1. Employment; Term.

a. The Company hereby agrees to employ Executive as Chief Medical Officer and
Senior Vice President, and Executive hereby agrees to accept such employment
with the Company in accordance with the terms and conditions of this Agreement.

b. The “Term” of this Agreement shall commence on the date hereof (the
“Commencement Date”) and shall continue in effect until terminated as provided
in Section 7 below.

 

2. Position and Duties.

a. The Company agrees to employ Executive throughout the Term as Chief Medical
Officer and Senior Vice President of the Company with such responsibilities,
duties and authority as are assigned to him by the Chief Executive Officer of
the Company or his designee.

b. Executive shall faithfully devote his full business/working time, attention
and energy to the business and affairs of the Company and the performance of his
duties hereunder and to use reasonable efforts to perform such responsibilities
faithfully and efficiently.

c. Without limiting the generality of the foregoing paragraph, during the Term,
upon prior written consent of the Chief Executive Officer of the Company,
Executive shall be permitted to serve on other Boards of Directors, professional
associations and otherwise be involved with any family business or trust to the
extent that, in the reasonable judgment of the Chief Executive Officer, such
other business pursuits and activity do not materially (i) interfere with
Executive’s ability to discharge Executive’s duties and responsibilities to the
Company, whether or not such activity is pursued for gain, profit or other
pecuniary advantage, or (ii) violate the Conflicts provision of the Non-Compete
Agreement.

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3. Compensation.

a. Executive shall be entitled to receive as compensation for his employment a
base annual salary at a rate of $235,000 per annum (the “Base Salary”), which
shall be paid to Executive by the Company or any of its affiliates in accordance
with the Company’s standard payroll practices, as in effect from time to time.

b. Increases in the Base Salary shall be reviewed annually by the Company’s
Board of Directors (the “Board”) or its Compensation Committee during the Term,
and any such increases will be at the Board’s or Compensation Committee’s sole
discretion and will otherwise be consistent with the Company’s annual policies
and budget for payroll increases.

 

4. Bonus.

During the Term, Executive shall be eligible to receive an incentive cash bonus
up to the amount, based upon the criteria, and payable at such times, as may be
determined by the Board or its Compensation Committee and targeted at 20% or
more of the Base Salary. The amount shall be determined by the Board or
Compensation Committee, in its sole and absolute discretion, which shall be
binding and final, and shall be paid in a one-time lump sum payment (less
payroll taxes). To the extent that such cash bonus is to be determined in light
of financial performance during a specified fiscal period and the Agreement
commences on a date after the start of such fiscal period, any cash bonus
payable in respect of such fiscal period’s results may be prorated. In addition,
if the period of Executive’s employment hereunder expires before the end of a
fiscal period, and if Executive is eligible to receive a cash bonus at such time
(such eligibility being subject to the restrictions set forth in Section 7
below), any cash bonus payable in respect of such fiscal period’s results may be
prorated. Notwithstanding the foregoing, all annual bonuses shall be paid within
two and one-half months after the close of each year.

 

5. Benefits; Stock Options.

In addition to the salary and cash bonus referred to above, Executive shall be
entitled during the Term to participate in such employee benefits plans or
programs of the Company, and shall be entitled to such other fringe benefits, as
are from time to time adopted by the Board and made available by the Company
generally to employees of Executive’s position, tenure, salary, age, health and
other qualifications. Without limiting the generality of the foregoing,
Executive shall be eligible for such awards, if any, under the Company’s
employee benefits plans or programs as shall be granted to Executive in the sole
discretion of the Board or its Compensation Committee. Executive acknowledges
and agrees that the Company does not guarantee the adoption or continuance of
any particular employee benefits plan or program or other fringe benefits during
the Term, and participation by Executive in any such plan or program shall be
subject to the rules and regulations applicable thereto.

 

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6. Expenses.

The Company will reimburse Executive, in accordance with the practices in effect
from time to time for other officers or staff personnel of the Company, for all
reasonable and necessary business and traveling expenses and other disbursements
incurred by Executive for or on behalf of the Company in the performance of
Executive’s duties hereunder, upon presentation by Executive to the Company of
appropriate vouchers and supporting documentation.

 

7. Termination.

Executive’s employment by the Company pursuant hereto is subject to termination
as follows:

a. Death or Disability. Executive’s employment shall be deemed to terminate
automatically on the date of Executive’s death, and the Company may by written
notice to Executive terminate Executive’s employment on account of his Total
Disability effective as of the date of such notice. For purposes hereof,
Executive shall be deemed to experience a “Total Disability” if Executive is
considered totally disabled under any group disability plan maintained by the
Company and in effect at that time, or in the absence of any such plan,
Executive shall be deemed to experience a Total Disability if he shall have been
unable to perform his duties hereunder on a full-time basis for 90 consecutive
days or longer, or for shorter periods aggregating 120 days in any 360-day
period. In the event of any dispute under this Section 7(a), Executive shall
submit to a physical examination by a licensed physician mutually satisfactory
to the Company and Executive, the cost of such examination to be paid by the
Company, and the determination of such physician shall be determinative. In the
case of a Total Disability, until the Company shall have terminated Executive’s
employment hereunder in accordance with the foregoing, Executive shall be
entitled to receive compensation provided for herein notwithstanding any such
Total Disability. In the event of the termination of Executive’s employment on
account of his death or Total Disability, neither Executive nor his personal
representative will have any rights or claims against the Company under this
Agreement except as follows:

(i) Executive (or his estate or representative, as applicable) shall be paid
(A) any unpaid portion of his Base Salary computed on a pro rata basis through
the date of his termination and (B) any unreimbursed expenses;

(ii) All other of Executive’s accrued but unpaid rights shall be as determined
under any incentive compensation, stock option, retirement, employee welfare or
other employee benefits plan or program of the Company in which Executive is
then participating at the time of his termination; and

(iii) in the case of Executive’s Total Disability only, (A) the Company shall
continue Executive’s medical benefits coverage existing at the time of his
termination for as long as permissible under the Company’s health benefits
policies (not to exceed 60 days) and the Company further agrees to pay
Executive’s COBRA premiums for six months thereafter, with such premiums to
provide for coverage at the same level and subject to the same terms and
conditions (including, without limitation, any applicable co-pay obligations of
Executive, but excluding any applicable tax consequences for Executive) as in
effect for Executive at the time of termination, and (B) Executive shall further
receive a lump-sum payment, within 30 days after the effective date of
termination, equal to the aggregate amount of Executive’s Base Salary as in
effect immediately prior to such termination that would be payable over a period
of six months following the effective date of such termination.

 

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b. Involuntary Termination for Cause. In the event the Company terminates
Executive’s employment for Cause (as such term is defined below), such
termination shall be effective immediately upon notice thereof, in which case
Executive will have no rights or claims against the Company under this Agreement
except as follows:

(i) Executive shall be paid (A) any unpaid portion of his Base Salary computed
on a pro rata basis through the date of his termination and (B) any unreimbursed
expenses; and

(ii) All other of Executive’s accrued but unpaid rights shall be as determined
under any incentive compensation, stock option, retirement, employee welfare or
other employee benefits plan and program of the Company in which Executive is
then participating at the time of his termination.

“Cause” shall mean: (1) conviction of Executive of any felony; (2) participation
by Executive in any fraud or act of dishonesty against the Company; (3) material
violation by Executive of (i) any contract between the Company and Executive, or
(ii) any statutory duty of Executive to the Company; (4) conduct of Executive
that, based upon a good faith and reasonable factual investigation and
determination by the Board, demonstrates Executive’s gross unfitness to serve;
or (5) the continued, willful refusal or failure by Executive to perform any
material duties reasonably requested by the Board or the Chief Executive
Officer.

c. Involuntary Termination Without Cause. The Company may terminate Executive’s
employment, other than on account of death, Total Disability or for Cause, on 30
days’ prior written notice, in which case Executive will have no rights or
claims against the Company under this Agreement except as follows:

(i) Executive (or his estate or representative, as applicable) shall be paid
(A) any unpaid portion of his Base Salary computed on a pro rata basis through
the date of his termination, and (B) any unreimbursed expenses;

(ii) All other of Executive’s accrued but unpaid rights shall be as determined
under any incentive compensation, stock option, retirement, employee welfare or
other employee benefits plan and program of the Company in which Executive is
then participating at the time of his termination;

(iii) Executive shall receive severance payments in the form of monthly payments
of Executive’s Base Salary (as in effect immediately prior to such termination)
for a period of twelve months following the effective date of such termination;
and

 

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(iv) The Company shall pay Executive’s COBRA premiums for twelve months
thereafter, with such premiums to provide for coverage at substantially the same
level and subject to the same terms and conditions (including, without
limitation, any applicable co-pay obligations of Executive, but excluding any
applicable tax consequences for Executive) as in effect for Executive at the
time of termination.

d. Voluntary Termination For Good Reason. Executive may terminate his employment
for good reason (“Termination For Good Reason”) by providing 30 days’ prior
written notice to the Company of a breach constituting Good Reason, which notice
shall be provided within 45 days after the initial existence of the breach, and
further provided that such breach is not cured in all material respects to the
reasonable satisfaction of Executive within 30 days after such notice. In the
event of Termination for Good Reason, Executive shall be entitled to receive the
payments and other rights provided in Section 7(c) hereof. For purposes of this
Agreement, termination for “Good Reason” shall mean voluntary termination by
Executive of his employment with the Company based on one of the following
events:

(i) the material diminution in Executive’s position, title, responsibilities or
authority from those in effect at the Commencement Date; provided, however, that
a material diminution shall not be deemed to have occurred upon a change of
control of the Company solely by virtue of the Company’s having been acquired
and made part of a larger organization;

(ii) a relocation of Executive’s principal executive offices more than fifty
miles from its location at the Commencement Date; or

(iii) the breach by the Company of any of its material obligations under this
Agreement.

e. Other Voluntary Termination. Executive may otherwise terminate his employment
without Good Reason upon 30 days’ prior written notice to the Company, in which
case Executive (or his estate or representative, as applicable) shall be paid
(A) any unpaid portion of his Base Salary on a pro rata basis through the date
of the termination, and (B) any unreimbursed expenses.

f. Section 409A. The Base Salary continuation set forth in Sections 7 (a),
(c) and (d) hereof shall be intended to satisfy either (i) the safe harbor set
forth in the regulations issued under Section 409A (as defined below) of the
Internal Revenue Code of 1986, as amended (the “Code”) (Treas. Regs.
1.409A-1(n)(2)(ii)), or (ii) be treated as a Short-term Deferral as that term is
defined under Section 409A (Treas. Regs. 1.409A-1(b)(4)). To the extent that
such continuation payments exceed the applicable safe harbor amount or do not
constitute a Short-term Deferral, the excess amount shall be treated as deferred
compensation under Section 409A and as such shall be payable pursuant to the
following schedule: such excess amount shall be paid via standard payroll in
periodic installments in accordance with the Company’s usual practice for its
senior executives.

Notwithstanding any provision in this Agreement to the contrary, in the event
that Executive is a “specified employee” as defined in Section 409A, any
continuation payment, continuation benefits or other amounts payable under this
Agreement that would be subject to the special rule regarding payments to
“specified employees” under Section 409A(a)(2)(B) of the Code shall not be paid
before the expiration of a period of six months following the date of
Executive’s termination of employment or before the date of Executive’s death,
if earlier.

 

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g. Forfeiture of Rights. In the event that, subsequent to the termination of
Executive’s employment hereunder, Executive breaches any of the provisions of
the Non-Compete Agreement in any material respect, all payments and benefits to
which Executive may otherwise have been entitled to pursuant to this Section 7
hereof shall immediately terminate and be forfeited.

h. Release. Executive shall not be entitled to any compensation under this
Section 7 unless Executive executes and delivers to the Company a Separation of
Employment Agreement and General Release (the “Release”) in form and substance
satisfactory to the Company, by which Executive releases the Company from any
obligations and liabilities of any type whatsoever, except for the Company’s
obligation to provide the compensation and benefits specified in this Section 7.
The parties hereto acknowledge that the payments to be provided under this
Section 7 are to be provided in consideration for the Release.

 

8. Remedies.

In addition to other remedies provided by law or equity, upon a breach by
Executive of any of the covenants contained herein or in the Non-Compete
Agreement, the Company shall be entitled to have a court of competent
jurisdiction enter an injunction against Executive enjoining Executive and
prohibiting any further breach of the covenants contained herein. Executive
acknowledges that a breach or threatened breach by Executive of the provisions
of this Agreement will cause irreparable damage to the Company because
Executive’s services to be performed hereunder are of a unique, special and
extraordinary character. Thus, the Company shall be entitled to injunctive
relief without the necessity of proving actual damages and the Company shall not
be required to post a bond or other security in support of such injunctive
relief.

 

9. Arbitration.

Any claim, dispute or controversy arising out of or in connection with this
Agreement, or any breach thereof, shall be arbitrated by the parties before a
sole arbitrator (who shall have substantial experience in the pharmaceutical and
life sciences industry) conducted in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association then
in effect. The arbitrator shall have the authority to order discovery but shall
not have the authority to add to, detract from or modify any provision hereof
nor to award punitive damages to any injured party. A decision by the sole
arbitrator shall be final and binding. Judgment may be entered on the
arbitrator’s award in any court having jurisdiction. The direct expense of any
arbitration proceeding shall be borne by the Company. Each party shall bear its
own counsel fees. Such arbitration shall take place in Montgomery County,
Pennsylvania. The parties hereto consent to the jurisdiction of the state and
federal courts located in the Commonwealth of Pennsylvania with respect to any
action arising under this Agreement. Notwithstanding the foregoing, the Company
shall be entitled to seek injunctive or other equitable relief, as contemplated
by Section 8 hereof, from any court of competent jurisdiction, without the need
to resort to arbitration.

 

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10. Assignment; Binding Nature.

This Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors, heirs (in the case of Executive) and permitted
assigns. No rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company except that such rights or obligations
may be assigned or transferred to the successor of the Company or its business
if the assignee or transferee assumes all of the liabilities, obligations and
duties of the Company, as contained in this Agreement, either contractually or
as a matter of law. If any such successor of the Company or its business does
not agree to so assume such liabilities, obligations and duties, Executive may
immediately resign, which shall be deemed a Termination For Good Reason under
the provisions of this Agreement. No rights or obligations of Executive under
this Agreement may be assigned or transferred by Executive other than
Executive’s rights to compensation and benefits, which may be transferred only
by will or operation of law, except as otherwise specifically provided or
permitted hereunder.

 

11. Notice.

Any notice which a party is required or may desire to give pursuant to this
Agreement shall be given in writing by personal delivery, by facsimile
transmission, by registered or certified mail, return receipt requested, postage
prepaid, or by overnight courier, at the following addresses:

If to the Company:

Inovio Biomedical Corporation

450 Sentry Parkway

Blue Bell, PA 19422

Attention: Chief Executive Officer

If to Executive:

Dr. Mark Bagarazzi

280 Garrison Way

Conshohocken, PA 19428

Any notice personally delivered shall be deemed received when given, or if given
by facsimile or overnight courier shall be deemed received on the next business
day and any notice mailed shall be deemed received on the third business day
thereafter.

 

12. Entire Agreement.

This Agreement and the Non-Compete Agreement constitute the complete agreements
and understandings between the Company and Executive concerning Executive’s
employment by the Company, and supersede any and all previous agreements or
understandings concerning such employment, whether written or oral, between
Executive and the Company.

 

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13. Modification.

This Agreement may not be waived, amended or modified without the express
written consent of the party against whom enforcement of such Agreement is
sought.

 

14. Waiver.

Except as set forth herein, no delay or omission to exercise any right, power or
remedy accruing to any party shall impair any such right, power or remedy or
shall be construed to be a waiver of or an acquiescence to any breach hereof. No
waiver by either party of any breach by the other party of any condition or
provision contained in this Agreement to be performed by such other party shall
be deemed a waiver of a similar or dissimilar condition or provision at the same
or any prior or subsequent time. Any waiver must be in writing and signed by
Executive and the Chief Executive Officer or other duly authorized officer of
the Company.

 

17. Section 409A.

It is intended that this Agreement be drafted and administered in compliance
with section 409A of the Code, including, but not limited to, any future
amendments to Code section 409A, and any other Internal Revenue Service or other
governmental rulings or interpretations (collectively, “Section 409A”) issued
pursuant to Section 409A so as not to subject Executive to payment of interest
or any additional tax under Section 409A. The parties intend for any payments
under this Agreement to either satisfy the requirements of Section 409A or to be
exempt from the application of Section 409A, and this Agreement shall be
construed and interpreted accordingly. In furtherance thereof, if payment or
provision of any amount or benefit hereunder that is subject to Section 409A at
the time specified herein would subject such amount or benefit to any additional
tax under Section 409A, the payment or provision of such amount or benefit shall
be postponed to the earliest commencement date on which the payment or provision
of such amount or benefit could be made without incurring such additional tax.
In addition, to the extent that any Internal Revenue Service guidance issued
under Section 409A would result in Executive being subject to the payment of
interest or any additional tax under Section 409A, the parties agree, to the
extent reasonably possible, to amend this Agreement in order to avoid the
imposition of any such interest or additional tax under Section 409A, which
amendment shall have the minimum economic effect necessary to the Company and
Executive and be reasonably determined in good faith by the Company and
Executive.

 

18. Invalidity of Any Provision.

If any portion of this Agreement is held invalid or inoperative, the other
portions of this Agreement shall be deemed valid and operative and, so far as is
reasonable and permitted by the law, effect shall be given to the intent
manifested by the portion held invalid or inoperative.

 

19. Applicable Law.

This Agreement shall be governed by and construed in accordance with the laws of
the Commonwealth of Pennsylvania, without regard to the principles of conflict
of laws thereof.

 

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20. Counterparts.

This Agreement may be executed simultaneously in any number of counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same agreement.

 

21. Headings.

The Section headings contained in this Agreement are for reference purposes only
and will not affect in any way the meaning or interpretation of this Agreement.

 

22. Binding Effect.

The provisions of this Agreement will be binding upon, and will inure to the
benefit of, the respective heirs, legal representatives and successors of the
parties thereto.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as of the date first written above.

 

INOVIO BIOMEDICAL CORPORATION By:  

/s/ J. Joseph Kim

  Name: J. Joseph Kim, Ph.D.   Title: President and CEO Date:   12/10/09
EXECUTIVE

/s/ Mark Bagarazzi

Mark Bagarazzi, M.D.

Date:   12/10/09

 

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