Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of the
10th day of August, 2015 (the “Effective Date”), by and between BIOPHARMX
CORPORATION, a Delaware corporation (the “Company”), and Greg Kitchener (the
“Executive”), (collectively the “Parties”).

 

WITNESSETH:

 

WHEREAS, Executive has represented that he has the experience, background and
expertise necessary to enable him to be the Company’s Executive Vice President
and Chief Financial Officer; and

 

WHEREAS, based on such representation, and the Company’s reasonable due
diligence, the Company wishes to employ Executive as its Executive Vice
President and Chief Financial Officer and Executive wishes to be so employed, in
each case, upon the terms hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements herein contained, and other good and valuable
consideration, the Parties agree as follows:

 

1.              DEFINITIONS.  As used herein, the following terms shall have the
following meanings:

 

1.1                   “Board” means the Board of Directors of the Company.

 

1.2                                                       “Cause” means (i) a
determination by the Board made in good faith that Executive’s performance is
unsatisfactory after there has been delivered to Executive a written demand for
performance which describes the deficiencies in Executive’s performance and the
manner in which Executive’s performance must be improved, and which provides
thirty (30) business days from the date of notice to remedy such performance
deficiencies; (ii) Executive’s conviction of or plea of nolo contendere to a
felony or a crime involving moral turpitude, (iii) Executive engaging in an act
of negligence or willful misconduct in the performance of his employment
obligations and duties, (iv) Executive’s commission of an act of fraud or
dishonesty against, material misconduct or misappropriation of property
belonging to the Company; (v) Executive engaging in any other misconduct that
has had or may reasonably be expected to have an adverse effect on the
reputation or business of the Company or any of its subsidiaries; or
(vi) Executive’s breach of the Company’s Invention Assignment and
Confidentiality Agreement or any other provision of this Agreement or other
misuse of the Company’s trade secrets or proprietary information.

 

1.3                         “Change in Control” means (i) a sale, conveyance,
exchange or transfer (excluding any venture-backed or similar investments in the
Company) in which any person or entity, other than persons or entities who as of
immediately prior to such sale, conveyance, exchange or transfer own securities
in the Company, either directly or indirectly, becomes the beneficial owner,
directly or indirectly, of securities of the Company representing more than
fifty

 

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(50%) percent of the total voting power of all its then outstanding voting
securities; (ii) a merger or consolidation of the Company in which its voting
securities immediately prior to the merger or consolidation do not represent, or
are not converted into securities that represent, a majority of the voting power
of all voting securities of the surviving entity immediately after the merger or
consolidation; or (iii) a sale of substantially all of the assets of the Company
or a liquidation or dissolution of the Company, provided that, with respect to
any of the foregoing subsections (i), (ii), or (iii), a transaction that does
not constitute a “change in control event” under Sections 1.409A-3(i)(5)(v) or
1.409A-3(i)(5)(vii) of the Treasury Regulations under Section 409A of Code will
not constitute a Change in Control for purposes of this Agreement.

 

1.4                   “Code” means the Internal Revenue Code of 1986, as
amended.

 

1.5                   “Common Stock” means the Company’s common stock, par value
$.001 per share.

 

1.6                                                       “Good Reason” means a
material decrease in Executive’s then current annual Base Salary (which for
purposes of this Agreement, material means a reduction by more than 10%, as
compared to immediately prior to such decrease and other than in connection with
a general decrease in the salary of all employees with a title of vice president
or above), provided that such decrease was taken without the Executive’s written
consent and, provided further, that (a) the Company receives, within thirty (30)
days following such decrease, written notice from the Executive specifying the
specific basis for Executive’s belief that Executive is entitled to terminate
employment for Good Reason, (b) the Company fails to cure the event constituting
Good Reason within thirty (30) days after receipt of such written notice
thereof, and (c) the Executive terminates employment within ten days (10) days
following the earlier of expiration of such cure period or receipt from the
Company that such deficiencies will not be cured.

 

1.7                   “Separation from Service” means a termination of
employment with the Company as defined under Section 409A of the Code and as
determined by the Company in its sole discretion.

 

2.              EMPLOYMENT.

 

2.1       Agreement to Employ. Effective as of the Effective Date, the Company
hereby agrees to employ Executive, and Executive hereby agrees to serve, subject
to the provisions of this Agreement, as an officer and executive of the Company.

 

2.2       Duties and Schedule. Executive shall serve as the Company’s Executive
Vice President and Chief Financial Officer and shall have such responsibilities
as designated by the Chief Executive Officer of the Company that are not
inconsistent with applicable laws, regulations and rules.  Executive shall
report directly to the Chief Executive Officer of the Company.

 

2.3       At-Will Employment.  Executive and the Company understand and
acknowledge that Executive’s employment with the Company constitutes “at-will”
employment, and the employment relationship may be terminated at any time, with
or without cause and with or without notice.

 

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3.              INVENTIONS AND PROPRIETARY INFORMATION.   Executive hereby
agrees to execute the Company’s Employee Invention Assignment and
Confidentiality Agreement (the “Invention Assignment and Confidentiality
Agreement”) attached hereto as Exhibit A.

 

4.              COMPENSATION.

 

4.1                                                       Salary and Bonus. 
While employed by the Company pursuant to this Agreement, Executive’s annual
base salary shall be Two Hundred Twenty-Five Thousand United States Dollars (US
$225,000) (the “Base Salary”), payable in accordance with the Company’s normal
payroll practices.  At such time as the Company adopts an employee bonus plan,
as determined in its sole discretion and subject to Board approval, Executive
will be eligible to receive an annual bonus in such amount and upon such terms
as shall be determined by the Board.  The Company shall periodically review (at
least annually) Executive’s compensation and benefits, provided that any changes
thereto shall be determined by the Company in its sole and absolute discretion.

 

4.2                                                       Employee Benefits. 
Executive shall be eligible to participate in all employee benefit plans and
arrangements as are made available by the Company to its other senior
executives, subject to the terms and conditions thereof.

 

4.3                                                       Vacation. Executive
will be entitled to paid vacation and holidays pursuant to the terms of the
Company’s vacation policy as may exist from time to time and in accordance with
applicable U.S. law.

 

4.4                                                       Business Expenses.
Executive shall be reimbursed by the Company for all ordinary and necessary
expenses incurred by Executive in the performance of his duties hereunder on
behalf of the Company subject to the approval by the Board and pursuant to
Company policy as may be in effect from time to time.

 

5.              STOCK OPTIONS.  On or following commencement of Executive’s
employment and subject to approval of the Board, the Company will grant
Executive an option under the Company’s 2014 Equity Incentive Plan (the “Plan”)
to purchase Two Hundred Thirty-Five Thousand (235,000) shares of the Company’s
Common Stock (the “Option”). The Option will have an exercise price that is no
less than the fair market value of the Company’s Common Stock on the date of
grant and will vest over Four (4) years, with 25% of the total number of shares
subject to the Option vesting on the One (1) year anniversary of the date of
grant and, the remainder vesting in equal installments on the last day of each
of the Thirty-Six (36) full calendar months thereafter (the “Vesting
Schedule”).  Vesting will depend on Executive’s Continued Service as an Employee
(as such terms are defined in the Plan) with the Company and will be subject to
the terms and conditions of the Plan and the written Stock Option Agreement
governing the Option.  Shares subject to the Option shall not vest during any
period in which Executive is taking a leave of absence from the Company, except
as may be required by applicable law.  At such time as Executive returns to
regular and continuous service with the Company following the leave of absence,
the Vesting Schedule applicable to the share subject to the Option shall
recommence, with the total Four (4) year period of the Vesting Schedule, and One
(1) year cliff (if applicable), extended by a number of days equal to the total
number of days of Executive’s leave of absence. Similarly, if Executive’s
schedule reduces to a less than full-

 

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time service arrangement, the shares subject to the Option may, as determined by
the Board, vest on a proportionately and commensurately slower schedule, but no
later than the expiration of the Option.  No fractional shares may be issued. 
Notwithstanding the foregoing, in the event of certain Separations from Service
from the Company, the vesting of the Option will be accelerated as set forth
herein.

 

6.              TERMINATION OF EMPLOYMENT.

 

6.1                                                       Termination Other Than
Separation from Service without Cause or by Executive for Good Reason, in each
case within Twelve (12) months following a Change in Control.  In the event of
any termination of Executive’s employment by the Company other than a Separation
from Service without Cause or by Executive for Good Reason, in each case within
Twelve (12) months following a Change in Control as set forth in Section 6.2
below, the Executive will be paid only (i) any earned but unpaid Base Salary,
and (ii) other unpaid vested amounts or benefits under the compensation,
incentive and benefit plans of the Company in which Executive participates, and
(iii) reimbursement for all reasonable and necessary expenses incurred by
Executive in connection with his performance of services on behalf of the
Company in accordance with applicable Company policies and guidelines, in each
case as of the effective date of such termination ((i), (ii) and
(iii) collectively, the “Accrued Compensation”).  Executive will be allowed to
exercise his vested stock options to purchase Company common stock, if any,
during the time period set forth in, and in accordance with, the Plan and
governing stock option agreement(s).

 

6.2                                                       Separation from
Service Following Change in Control. In the event of the Executive’s Separation
from Service without Cause or by Executive for Good Reason, in each case within
Twelve (12) months following a Change in Control, and provided that Executive
delivers to the Company a signed settlement agreement and general release of
claims in favor of the Company in the form attached hereto as Exhibit B (the
“Release”), and satisfies all conditions to make the Release effective, within
sixty (60) days following Executive’s Separation from Service, then, in addition
to the Accrued Compensation, Executive shall be entitled to the benefits as set
forth below, which shall be paid on or commencing no later than the first
business day following the 60th day following Separation from Service and in
compliance with the timeframe required under Section 409A as set forth in
Section 7 of this Agreement:

 

6.2.1         Lump sum payment equal to the sum of (a) Twelve (12) months of
Executive’s then current Base Salary.

 

6.2.2         Provided Executive timely elects to continue health coverage under
COBRA, reimbursement for any monthly COBRA premium payments made by Executive in
the Eighteen (18) months following Executive’s Separation from Service, provided
that, if the Company determines that it cannot provide reimbursement for such
continued health coverage without potentially violating applicable law
(including, without limitation, Section 2716 of the Public Health Service Act)
or incurring additional administrative expenses due to application of applicable
law, the Company shall in lieu thereof provide to Executive a taxable payment in
an amount equal to Eighteen (18) months of such continued health benefits, which
continued payment shall be made following such determination and regardless of
whether Executive elects COBRA continuation coverage.

 

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6.2.3         Acceleration as to One Hundred Percent (100%) of the unvested
shares subject to the Option and all other Company equity awards then held by
the Executive, provided, however, that in no event shall the vesting of
restricted stock units, performance-based restricted stock units or long-term
incentives be so accelerated if such acceleration would, as determined by the
Company in good faith, cause adverse tax consequences under Section 409A of the
Code.

 

6.2.4         No Other Obligations.  Notwithstanding anything in this Agreement
to the contrary, and except with respect to payment of the Accrued Compensation,
the Company shall have no obligation to make any payment or offer any benefits
to Executive under this Section 6.2 in the event of a termination (a) for any
reason occurring prior to a Change in Control, (b) for Cause, death, disability,
retirement or voluntary resignation other than for Good Reason occurring within
Twelve (12) months after a Change in Control or (c) for any reason occurring
after Twelve (12) months following a Change in Control.

 

6.3                               Return of Company Property.  Upon any
termination of Executive’s employment with the Company, Executive will return to
the Company all documents, customer lists, customer information, product
samples, presentation materials, drawing specifications, equipment and other
materials relating to the business of any of the Companies, which Executive
hereby acknowledges are the sole and exclusive property of the Companies or any
one of them.  Nothing in this Agreement shall prohibit Executive from retaining,
at all times any document relating to his personal entitlements and obligations,
his Rolodex, his personal correspondence files; and any additional personal
property.

 

6.4                               Parachute Payments.  In the event that the
severance and other benefits provided for in this Agreement or otherwise payable
to the Executive (i) constitute “parachute payments” within the meaning of
Section 280G of the Code and (ii) but for this Section, would be subject to the
excise tax imposed by Section 4999 of the Code, then, Executive’s severance and
other benefits under this Agreement shall be payable either (i) in full, or
(ii) as to such lesser amount which would result in no portion of such severance
and other benefits being subject to the excise tax under Section 4999 of the
Code, whichever of the foregoing amounts, taking into account the applicable
federal, state and local income taxes and the excise tax imposed by Section 4999
(as applicable), results in the receipt by Executive on an after-tax basis, of
the greatest amount of severance benefits under this Agreement.

 

Any reduction shall be made in the following manner:  first a prorata reduction
of (i) any cash payments subject to Section 409A of the Code as deferred
compensation and (ii) any cash payments not subject to Section 409A of the Code,
and second a prorata cancellation of (i) any equity-based compensation subject
to Section 409A of the Code as deferred compensation and (ii) any equity-based
compensation not subject to Section 409A of the Code.  Reduction in either cash
payments or equity compensation benefits shall be made prorata between and among
benefits which are subject to Section 409A of the Code and benefits which are
exempt from Section 409A of the Code in each case beginning with the benefits
that would othewise be made last in time.

 

Unless the Company and Executive otherwise agree in writing, any determination
required under this Section shall be made in writing by the Company’s
independent public accountants (the

 

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“Accountants”), whose determination shall be conclusive and binding upon
Executive and the Company for all purposes.  For purposes of making the
calculations required by this Section 6.4, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code.  The Company and Executive shall furnish to the
Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section.  The Company shall
bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section.

 

7.              MISCELLANEOUS.

 

7.1                               Section 409A.  To the extent (i) any payments
to which Executive becomes entitled under this Agreement, or any agreement or
plan referenced herein, in connection with Executive’s termination of employment
with the Company constitute deferred compensation subject to Section 409A of the
Code and (ii) Executive is deemed at the time of such termination of employment
to be a “specified” employee under Section 409A of the Code, then such payment
or payment shall not be made or commence until the earlier of (i) the expiration
of the six (6)-month period measured from the date of Executive’s “separation
from service” (as such term is at the time defined in regulations under
Section 409A of the Code) with the Company; or (ii) the date of Executive’s
death following such separation from service; provided, however, that such
deferral shall only be effected to the extent required to avoid adverse tax
treatment to Executive, including (without limitation) the additional twenty
percent (20%) tax for which Executive would otherwise be liable under
Section 409A(a)(1)(B) of the Code in the absence of such deferral. The first
payment thereof will include a catch-up payment covering the amount that would
have otherwise been paid during the period between Executive’s termination of
employment and the first payment date but for the application of this provision,
and the balance of the installments (if any) will be payable in accordance with
their original schedule.

 

For purposes of this Agreement or any agreement or plan referenced herein, and
notwithstanding any other provision herein, with respect to any payment that is
subject to (and not exempt from) Section 409A of the Code, no payment shall be
made upon disability or terminal illness unless and until such condition
qualifies as a “Disability” within the meaning of Section 409A of the Code and
Section 1.409A-3(i)(4) of the regulations thereunder.

 

Except as otherwise expressly provided herein, to the extent any expense
reimbursement or the provision of any in-kind benefit under this Agreement (or
otherwise referenced herein) is determined to be subject to (and not exempt
from) Section 409A of the Code, the amount of any such expenses eligible for
reimbursement, or the provision of any in-kind benefit, in one calendar year
shall not affect the expenses eligible for reimbursement or in kind benefits to
be provided in any other calendar year, in no event shall any expenses be
reimbursed after the last day of the calendar year following the calendar year
in which Executive incurred such expenses, and in no event shall any right to
reimbursement or the provision of any in-kind benefit be subject to liquidation
or exchange for another benefit.

 

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To the extent that any provision of this Agreement is ambiguous as to its
exemption or compliance with Section 409A, the provision will be read in such a
manner so that all payments hereunder are exempt from Section 409A to the
maximum permissible extent, and for any payments where such construction is not
tenable, that those payments comply with Section 409A to the maximum permissible
extent. To the extent any payment under this Agreement may be classified as a
“short-term deferral” within the meaning of Section 409A, such payment shall be
deemed a short-term deferral, even if it may also qualify for an exemption from
Section 409A under another provision of Section 409A.

 

Payments pursuant to this Agreement (or referenced in this Agreement) are
intended to constitute separate payments for purposes of
Section 1.409A-2(b)(2) of the regulations under Section 409A.

 

7.2                                                       Arbitration. 
Executive and the Company agree to submit to mandatory binding arbitration, in
San Mateo County, California, any and all claims arising out of or related to
this agreement and Executive’s employment with the Company and the termination
thereof, except that each party may, at its or his option, seek injunctive
relief in court related to the improper use, disclosure or misappropriation of a
party’s proprietary, confidential or trade secret information.  EXECUTIVE AND
THE COMPANY HEREBY WAIVE ANY RIGHTS TO TRIAL BY JURY IN REGARD TO SUCH CLAIMS. 
This agreement to arbitrate does not restrict Executive’s right to file
administrative claims Executive may bring before any government agency where, as
a matter of law, the parties may not restrict the Executive’s ability to file
such claims (including, but not limited to, the National Labor Relations Board,
the Equal Employment Opportunity Commission and the Department of Labor). 
However, Executive and the Company agree that, to the fullest extent permitted
by law, arbitration shall be the exclusive remedy for the subject matter of such
administrative claims.  The arbitration shall be conducted through JAMS before a
single neutral arbitrator, in accordance with the JAMS employment arbitration
rules then in effect.

 

7.3                                                       Executive’s
Representation.  Executive hereby represents and warrants to the Company that
(i) the execution, delivery and performance of this Agreement by Executive do
not and shall not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which Executive is
a party or by which he is bound, and (ii) upon the execution and delivery of
this Agreement by the Company, this Agreement (and the exhibit(s) hereto) shall
be the valid and binding obligation of Executive, enforceable in accordance with
its terms.  Executive hereby acknowledges and represents that he has consulted
with independent legal counsel regarding his rights and obligations under this
Agreement and that he fully understands the terms and conditions contained
herein.

 

7.4       Indemnification.     The Company shall indemnify Executive with
respect to activities in connection with his employment hereunder to the fullest
extent provided in the Company’s bylaws.

 

7.5                   Applicable Law.          Except as may be otherwise
provided herein, this Agreement shall be governed by and construed in accordance
with the laws of the State of California, applied without reference to
principles of conflict of laws.

 

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7.6                   Amendments.           This Agreement may not be amended or
modified otherwise than by a written agreement executed by and between Executive
and the Chairman of the Board.

 

7.7                   Notices.  All notices and other communications hereunder
shall be in writing and shall be given by hand-delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

 

If to the Executive:

 

Greg Kitchener

 

If to the Company:

 

BioPharmX Corporation
1098 Hamilton Court

Menlo Park, California 94025

Fax: (650) 900-4130

 

With a copy to (which shall not constitute notice):

 

Fenwick & West LLP
801 California Street
Mountain View, CA  94041
Attn: Robert Freedman
Fax: (208) 331-7723

 

Or to such other address as either party shall have furnished to the other in
writing in accordance herewith.  Notices and communications shall be effective
when actually received by the addressee.

 

7.8                   Withholding. The Company may withhold from any amounts
payable under the Agreement, such federal, state and local income, unemployment,
social security and similar employment related taxes and similar employment
related withholdings as shall be required to be withheld pursuant to any
applicable law or regulation.

 

7.9                   Successors.

 

7.9.1                     Executive. This Agreement is personal to Executive
and, without the prior express written consent of the Company, shall not be
assignable by Executive, except that Executive’s rights to receive any
compensation or benefits under this Agreement may be transferred or disposed of
pursuant to testamentary disposition, intestate succession or a qualified
domestic relations order or in connection with a disability.  This Agreement
shall inure to the benefit of and be enforceable by Executive’s estate, heirs,
beneficiaries, and/or legal representatives.

 

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7.9.2                     The Company. This Agreement shall inure to the benefit
of and be binding upon the Company and its successors and assigns.

 

7.10            Inventions and Patents. The Company shall be entitled to the
sole benefit and exclusive ownership of any inventions or improvements in
products, processes, or other things that may be made or discovered by Executive
within the technological fields of interests while he is in the service of the
Company, and all patents for the same. During the Term, Executive shall do all
acts necessary or required by the Company to give effect to this section and,
following the Term, Executive shall do all acts reasonably necessary or required
by the Company to give effect to this section.  In all cases, the Company shall
pay all costs and fees associated with such acts by Executive.

 

7.11            Severability.                 The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, and any such provision
which is not valid or enforceable in whole shall be enforced to the maximum
extent permitted by law.

 

7.12            Captions.                                The captions of this
Agreement are not part of the provisions and shall have no force or effect.

 

7.13            Entire Agreement.                 This Agreement (and the
exhibit(s) hereto) contains the entire agreement among the parties concerning
the subject matter hereof and supersedes all prior agreements, understandings,
discussions, negotiations and undertakings, whether written or oral, between the
parties with respect thereto.

 

7.14            Survivorship.                                           The
respective rights and obligations of the parties hereunder shall survive any
termination of this Agreement or the Executive’s employment hereunder to the
extent necessary to the intended preservation of such rights and obligations.

 

7.15            Waiver. Either Party’s failure to enforce any provision or
provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions, or prevent that party thereafter from
enforcing each and every other provision of this Agreement.

 

7.16            Joint Efforts/Counterparts.    Preparation of this Agreement
shall be deemed to be the joint effort of the parties hereto and shall not be
construed more severely against any party.  This Agreement may be signed in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

 

7.17            Representation by Counsel.    Each Party hereby represents that
it has had the opportunity to be represented by legal counsel of its choice in
connection with the negotiation and execution of this Agreement.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

 

EXECUTIVE:

 

BIOPHARMX CORPORATION

 

 

a Delaware corporation

 

 

 

 

 

 

 

/s/ Greg Kitchener

 

By:

/s/ Jim Pekarsky

 

 

 

 

Greg Kitchener

 

Name: Jim Pekarsky

 

 

Title: CEO

 

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