Document:

Exhibit 10.31

 

EXECUTION VERSION

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), is entered into by Mirati Therapeutics, Inc. a Delaware corporation (the “Company”), and Dr. Rachel W. Humphrey, residing at                                                             (the “Employee”).  The Company and the Employee are hereinafter collectively referred to as the “Parties”, and individually referred to as a “Party”.

 

Upon its effectiveness, this Agreement shall replace and supersede in its entirety that certain Employment Agreement between the Employee and MethylGene US Inc., a company organized under the laws of Delaware (“MethylGene US”) entered into as of January 4, 2012 (the “Prior Agreement”).  This Agreement will become effective upon the effectiveness of the court-approved plan of arrangement under Section 192 of the Canada Business Corporations, between the Company and MethylGene Inc., a corporation incorporated under the Canada Business Corporations Act and the parent company of MethylGene US, pursuant to which MethylGene Canada will become the wholly-owned subsidiary of the Company (the “Plan of Arrangement”).  If the Plan of Arrangement does not become effective, the terms and conditions of this Agreement shall become null and void and of no effect, even if Employee has accepted it.

 

The Company desires to employ the Employee, and the Employee desires to be employed by the Company, on and subject to the terms and conditions hereafter set forth.  In consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Parties hereto, the Parties agree as follows:

 

1.                                      Term — The term of this Agreement shall begin on the effective date of the Plan of Arrangement  and shall continue until it is terminated pursuant to Section 4 herein.

 

2.                                      Employment

 

2.1                               Position — The Employee shall serve as Executive Vice President and Chief Medical Officer of the Company and shall report to the President and Chief Executive Officer of the Company (the “CEO”) or such other person as the CEO may designate from time to time.

 

2.2                               Duties — The Employee shall, subject to the provisions of this section, devote her full business time, best efforts, business judgment, skill and knowledge to the advancement of the Company’s business and interests and to the discharge of the duties and responsibilities outlined in the attached Appendix “A”.  The foregoing shall not, however, be construed as preventing the Employee from investing in publicly traded corporations so long as such investment is and remains passive and does not exceed one (1) percent of the outstanding shares listed.  Further, the Employee may serve on a limited number of boards of directors of companies unrelated to the Company and invest in privately held corporations provided such opportunities: (i) are reviewed and approved by the CEO prior to acceptance/implementation; (ii) do not conflict with the Company’s interests; (iii) do not interfere with Employee’s discharge of her duties and responsibilities under this Agreement and (iv) as it relates to investments in privately held corporations, so long as such investment is and remains passive and does not exceed five (5) percent of the outstanding shares.

 

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2.3                               Conduct — The Employee agrees to abide by the Company’s Code of Ethics and other rules, regulations, instructions, personnel practices and policies of the Company and any changes thereto which may be adopted from time to time by the Company.  The Employee agrees to execute any necessary compliance documentation in this regard.  The Employee is also required to conduct her activities in accordance with the highest ethical standards and all applicable federal, provincial, state and local laws, rules and regulations.

 

3.                                      Compensation and Benefits

 

3.1                               Salary — The Company shall pay the Employee, in accordance with the Company’s normal payroll practices in effect from time to time, an annual base salary of US$350,000, less applicable payroll deductions and withholdings and payable in accordance with the Company’s regular payroll schedule.  Such annual base salary shall be reviewed by the CEO and/or the Board of Directors of the Company (the “Board”) on or about the first week of January of each year.

 

3.2                               Bonus — The Employee shall be eligible to participate in the Company’s incentive plan applicable to senior executives at a level such that he will have the potential to earn a cash bonus, at target, of forty percent (40%) of her annual base salary during such year.  The amount of such cash bonus shall be determined by the Board in its sole discretion, based upon the achievement of the Employee and/or the Company of management objectives to be reasonably established by the Board and the CEO in consultation with the Employee.  These management objectives shall consist of both financial and scientific goals and shall be specified in writing by the Board, and a copy shall be given to the Employee prior to the commencement of the applicable year.  The Employee acknowledges there is no assurance that the terms of the incentive plan will remain unchanged or will in any future year provide the same benefits as it has in past years (or any benefits or payments at all) and that the Company may, at its discretion, revise the terms of the incentive plan in advance for any upcoming fiscal year as it applies to the Employee, provided always that the Employee will be entitled to participate in any incentive plan made available to senior executives of the Company.  Employee generally must continue to be employed through the date the bonus is paid in order to earn a bonus for any particular year, unless the Board determines, in its sole discretion, that the Employee has earned a bonus prior to such time.  In such event, any bonus payment will be paid to the Employee no later than the later of:  (i) the fifteenth (15th) day of the third (3rd) month following the close of the Company’s fiscal year in which such bonus payment is earned or (ii) March 15 following the calendar year in which such bonus payment is earned; provided that in the event the Board, in its sole discretion, determines to make a bonus payment upon an event described in Section 5.2 or Section 5.3 below, such amount will be paid as soon as determinable and in no event later than March 15 of the year following the year in which the Employee’s “Separation from Service” (as defined under U.S. Treasury Regulation Section 1.409A-1(h), without regard to any alternative definition thereunder) occurs.

 

3.3                               Benefits — The Employee shall, in accordance with Company policy and the terms and conditions of the applicable Company benefit plan documents, be eligible to participate in the benefit and fringe benefit programs provided by the Company to its U.S. based executive officers and other employees from time to time (such as life insurance, health insurance, dental insurance, annual executive physical examinations, retirement plans and short-term and long-term disability insurance).  The Employee will be reimbursed for the cost of any business visitor visas necessary for the performance of her duties while employed by the Company.

 

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3.4                               Paid Time Off/Holidays — In accordance with Company policies, Employee shall be entitled to accrue up to four (4) weeks of paid time off during each calendar year (January 1- December 31), subject to applicable maximum accrual caps; and Employee shall also be entitled to certain paid holidays.

 

3.5                               Reimbursement of Expenses — The Company shall reimburse the Employee for all reasonable and necessary travel, entertainment and other expenses incurred or paid by the Employee in connection with, or related to, the performance of her duties and responsibilities under this Agreement, upon presentation by the Employee of documentation, expense statements, vouchers and/or such other supporting information as the Company may reasonably request; provided, however, that the amount payable for such travel, entertainment and other expenses shall be consistent with expense reimbursement policies adopted by the Company and in effect at the time of the incurrence of such expenses by the Employee or may be fixed in advance by the Board.

 

3.6                               Options — The Employee will be entitled to participate in the Company’s 2013 Equity Incentive Plan (the successor to the MethylGene Amended and Restated Stock Option Plan) or such other equity incentive plan adopted by the Company (the “SOP”) in accordance with the terms and conditions of the SOP.

 

3.7                               Method of Payment — All salary and bonus payments made to the Employee pursuant to this Section 3 shall be made in U.S. dollars and subject to all applicable payroll deductions and withholdings.

 

4.                                      Termination of Employment

 

4.1                               At-Will Employment — The Employee’s employment relationship with the Company is, and shall all times remain, at will.  That means that either Employee or the Company may terminate the employment relationship at any time, for any reason or no reason, with or without Cause (as defined below) or advance notice, including but not limited to, under the following conditions:

 

4.2                               By the Company for Cause — At the election of the Company, the Company may summarily terminate the employment of the Employee for Cause upon written notice by the Company to the Employee to this effect.  For purposes of this Section 4.2, “Cause” shall mean (i)  any material breach by the Employee of her obligations under this Agreement, the Company’s Proprietary Information and Inventions Assignment Agreement, or any code of ethics or business conduct policy adopted by the Company from time to time; (ii) the Employee’s neglect or failure to conscientiously and diligently carry out her functions and/or duties after the Employee has received a written demand of performance from the Company which specifically set forth the factual basis for the Company’s belief that the Employee has not substantially performed her functions and has failed to cure such non-performance to the Company’s satisfaction within ten (10) business days after receiving such notice; (iii) the Employee’s conviction for a criminal act or other indictable offense under the laws of the United States, the state of New Jersey or any other criminal or penal statute of any jurisdiction applicable to Employee, which would have a material adverse effect upon the reputation or goodwill of the Company; or (iv) theft, fraud, embezzlement from the Company or any other material act of dishonesty by the Employee.

 

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4.3                               For Disability or on Death — The employment of the Employee will terminate upon written notice by the Company to the Employee thirty (30) days after her Disability or automatically upon the death of the Employee.  As used in this Agreement, the term “Disability” shall mean the Employee shall have been unable to perform the essential functions of her position with or without reasonable accommodations for a period of ninety (90) consecutive days due to a physical or mental disability.  A determination of Disability shall be made by a physician satisfactory to both the Employee and the Company; provided that if the Employee and the Company do not agree on a physician, the Employee and the Company shall each select a physician and these two (2) together shall select a third (3rd) physician, whose determination as to Disability shall be binding on all parties.  The Company shall act upon this provision in compliance with the federal Family and Medical Leave Act (if applicable to the Company), the Americans with Disabilities Act (as amended), and applicable state and local laws.

 

4.4                               By the Company Without Cause — At the election of the Company, it may terminate the employment of the Employee without Cause, upon written notice to the Employee.

 

4.5                               Date of Termination — For purposes of this Agreement, the “date of termination” will be the date specified in the written notice provided pursuant to Section 4.2, 4.3, or 4.4 as the case may be.

 

5.                                      Effect of Termination

 

5.1                               Termination by the Company for Cause; Termination By Employee — In the event the Employee’s employment is terminated by the Company for Cause pursuant to Section 4.2, or by the Employee for any reason, the Company’s only obligation will be to pay to the Employee the compensation and benefits otherwise earned and payable to her under Section 3 or otherwise as required by law through the date of her termination by the Company (the “Accrued Amounts”).

 

5.2                               Termination for Death or Disability — If the Employee’s employment is terminated by death or because of Disability pursuant to Section 4.3, the Company will pay to the estate of the Employee or to the Employee, as the case may be, the Accrued Amounts.

 

5.3                               Termination by the Company Without Cause — In the event that the Employee’s employment is terminated by the Company without Cause pursuant to Section 4.4, the Company shall pay to the Employee the Accrued Amounts and in addition, the Employee will be entitled to the following benefits, subject to the Employee’s timely execution and non-revocation of a Release (as defined below) and Employee’s compliance with her continuing obligations to the Company under this Agreement and the Company’s Proprietary Information and Inventions Assignment Agreement, and further subject to any delay as may be required under Section 5.6:

 

(a)           Continued  base salary payments at the base salary rate in effect at the time of termination of employment under Section 3.1 for a twelve (12) month period following termination of employment (the “Severance Period”).  Such payments will be paid in equal installments on the Company’s regular payroll schedule, less applicable withholdings, provided however that no payments will be made prior to the Release Deadline (as defined below) and on the Release Deadline, the Company will pay Employee in a lump sum the continued salary payments that Employee would have received on or prior to such date under the original schedule, with the balance of the payments being made as originally scheduled.

 

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(b)           Provided that Employee is eligible for and timely elects continued group health plan coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) following the Employee’s termination date, the Company will pay the Employee’s COBRA group health insurance premiums for the Employee and her eligible dependents until the earliest of (A) the close of the Severance Period, (B) the expiration of Employee’s eligibility for the continuation coverage under COBRA, or (C) the date when Employee becomes eligible for substantially equivalent health insurance coverage in connection with new employment or self-employment.  For purposes of this Section, references to COBRA premiums shall not include any amounts payable by Employee under a Section 125 health care reimbursement plan under the U.S. Internal Revenue Code.  Notwithstanding the foregoing, if at any time the Company determines, in its sole discretion, that it cannot pay the COBRA premiums without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then regardless of whether Employee elects continued health coverage under COBRA, and in lieu of providing the COBRA premiums, the Company will instead pay Employee on the last day of each remaining month of the Severance Period, a fully taxable cash payment equal to the COBRA premiums for that month, subject to applicable tax withholdings (such amount, the “Special Severance Payment”), which payments shall continue until the earlier of expiration of the Severance Period or the date when Employee becomes eligible for substantially equivalent health insurance coverage in connection with new employment or self-employment.  On the Release Deadline, the Company will make the first payment under this clause (and, in the case of the Special Severance Payment, such payment will be to Employee, in a lump sum) equal to the aggregate amount of payments that the Company would have paid through such date had such payments commenced on the date of Employee’s termination through the Release Deadline, with the balance of the payments paid thereafter on the schedule described above.  If Employee becomes eligible for coverage under another employer’s group health plan, Employee must immediately notify the Company of such event, and all payments and obligations under this Subsection shall cease.

 

Notwithstanding the foregoing, in the event that the Employee’s employment is terminated by the Company (or  its successor) without Cause pursuant to Section 4.4, on or within twelve (12) months after a Change of Control (as defined below), the Severance Period described above for purposes of Section 5.3(a) and 5.3(b) shall be eighteen (18), rather than twelve (12), months following the Employee’s termination of employment.  “Change of Control” shall mean the consummation of any of the following, provided that the Parties expressly agree that the Plan of Arrangement and the transactions contemplated thereby shall not constitute a Change of Control for purposes of this Agreement or the Prior Agreement:  (a) the acquisition, directly or indirectly, by any person or persons acting in concert (including any then existing shareholders) of more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities, but excluding any acquisition effected exclusively for the purpose of changing the domicile of the Company; (b) the sale of all or substantially all of the assets of the Company (other than a sale to an entity in which more than fifty percent (50%) of the combined voting power of its then outstanding securities are owned by stockholders of the Company in substantially the same proportions as their ownership of the outstanding voting securities of the Company immediately prior to such sale); or (c) a merger, consolidation, arrangement or other reorganization (collectively, a “Reorganization”) of the Company or any of its affiliates which results in the stockholders of the Company or its affiliates immediately prior to such Reorganization owning less than fifty percent (50%) of the combined voting power of the outstanding securities of the resulting entity (or its parent company) immediately after the Reorganization.

 

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5.4                               Release — The Employee’s receipt of severance benefits described in this Section 5 will be subject to and conditioned upon in all cases Employee providing an executed waiver and release of claims in a form acceptable to the Company, which may be included by the Company in a separate separation agreement (the “Release”), within the applicable deadline set forth therein following Employee’s termination date, and permitting the Release to become effective in accordance with its terms, which date may not be later than sixty (60) days following the date of the Employee’s Separation from Service (such sixty (60) day deadline, the “Release Deadline”).

 

5.5                               Confidentiality of Settlement — The Employee agrees that any amounts paid pursuant to this Section shall remain confidential as between the Employee and the Company, and shall not be disclosed by the Employee or the Company, other than as required by law (including any stock exchange rules), to any person, persons, corporation, association or organization whatsoever with the exception of the Employee’s spouse or the Employee’s legal and financial advisors and those in the Company and its legal and financial advisors who need to know and in each such case only in strictest confidence.

 

5.6                               Section 409A — Notwithstanding anything to the contrary in this Agreement, any severance payments or benefits under this Agreement that would be considered deferred compensation (the “Deferred Payments”) under Section 409A of the U.S. Internal Revenue Code of 1986 (as it has been and may be amended from time to time) and any regulations and guidance that has been promulgated or may be promulgated from time to time thereunder and any state law of similar effect (collectively “Section 409A”) will not be paid until the Employee has experienced a “Separation from Service” within the meaning of Section 409A.  The severance benefits under this Agreement are intended to satisfy the exemptions from application of Section 409A provided under U.S. Treasury Regulations Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9), as applicable.  However, if such exemptions are not available and the Employee is a “specified employee” within the meaning of Section 409A at the time of the Employee’s Separation from Service, then, solely to the extent necessary to avoid adverse personal tax consequences under Section 409A, the Deferred Payments that would otherwise be due to the Employee under this Agreement will accrue and will be paid in a lump sum payment on the date that is the earlier of (i) six (6) moths and one (1) day following the date of the Employee’s Separation from Service or (ii) the Employee’s death (such rule, the “Six Month Delay Rule”).  All subsequent Deferred Payments following the application of the Six Month Delay Rule, if any, will be payable in accordance with the payment schedule applicable to each payment.

 

It is the intent for all payments and benefits under this Agreement to be exempt from Section 409A or, if not exempt, to comply with the requirements of Section 409A so that none of the payments and benefits will be subject to the additional tax imposed under Section 409A, and any ambiguities or ambiguous terms herein will be interpreted to so comply.  Each payment and benefit payable under this Agreement is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the U.S. Treasury Regulations.

 

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5.7                               Section 280G.  If any payment or benefit Employee will or may receive from the Company or otherwise (a “280G Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the U.S. Internal Revenue Code of 1986 (as it has been and may be amended from time to time) and any regulations and guidance that has been promulgated or may be promulgated from time to time thereunder and any state law of similar effect (the “Code”), and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then any such 280G Payment pursuant to this Agreement or otherwise (a “Payment”) shall be equal to the Reduced Amount.  The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment (after reduction) being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount (i.e., the amount determined by clause (x) or by clause (y)), after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in Employee’s receipt, on an after-tax basis, of the greater economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax.  If a reduction in a Payment is required pursuant to the preceding sentence and the Reduced Amount is determined pursuant to clause (x) of the preceding sentence, the reduction shall occur in the manner (the “Reduction Method”) that results in the greatest economic benefit for Employee.  If more than one method of reduction will result in the same economic benefit, the items so reduced will be reduced pro rata (the “Pro Rata Reduction Method”).

 

Notwithstanding the foregoing, if the Reduction Method or the Pro Rata Reduction Method would result in any portion of the Payment being subject to taxes pursuant to Section 409A that would not otherwise be subject to taxes pursuant to Section 409A, then the Reduction Method and/or the Pro Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes pursuant to Section 409A as follows:  (A) as a first priority, the modification shall preserve to the greatest extent possible, the greatest  economic benefit for Employee as determined on an after-tax basis; (B) as a second priority, Payments that are contingent on future events (e.g., being terminated without cause), shall be reduced (or eliminated) before Payments that are not contingent on future events; and (C) as a third priority, Payments that are “deferred compensation” within the meaning of Section 409A shall be reduced (or eliminated) before Payments that are not deferred compensation within the meaning of Section 409A.

 

Unless Employee and the Company agree on an alternative accounting firm, the accounting firm engaged by the Company for general tax compliance purposes as of the day prior to the effective date of the change of control transaction triggering the Payment shall perform the foregoing calculations.  If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the change of control transaction, the Company shall appoint a nationally recognized accounting firm to make the determinations required hereunder.  The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder.  The Company shall use commercially reasonable efforts to cause the accounting firm engaged to make the determinations hereunder to provide its calculations, together with detailed supporting documentation, to Employee and the Company within fifteen (15) calendar days after the date on which Employee’s right to a 280G Payment becomes reasonably likely to occur (if requested at that time by Employee or the Company) or such other time as requested by Employee or the Company.

 

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If Employee receives a Payment for which the Reduced Amount was determined pursuant to clause (x) of the first paragraph of this Section 5.7 and the Internal Revenue Service determines thereafter that some portion of the Payment is subject to the Excise Tax, Employee shall promptly return to the Company a sufficient amount of the Payment (after reduction pursuant to clause (x) of the first paragraph of this Section 5.7 so that no portion of the remaining Payment is subject to the Excise Tax.  For the avoidance of doubt, if the Reduced Amount was determined pursuant to clause (y) in the first paragraph of this Section 5.7, Employee shall have no obligation to return any portion of the Payment pursuant to the preceding sentence.

 

6.                                      Confidential and Proprietary Information Obligations

 

6.1                               Confidential Information Obligations — As a condition of employment or continuing employment, Employee agrees to execute and abide by the Company’s Proprietary Information and Invention Assignment Agreement attached as Appendix “B”.

 

6.2                               Third Party Agreements and Information — Employee hereby confirms that her employment by the Company does not and will not conflict with any prior employment or consulting agreement or other agreement with any third party, and that Employee will perform her duties to the Company without violating any such agreement.  By entering into this Agreement, Employee represents that he has previously disclosed to the Board any agreement that he has signed that may restrict her activities on behalf of the Company in any manner.  Employee represents and warrants that he does not possess confidential or proprietary information arising out of prior employment, consulting, or other third party relationships, which would be used in connection with Employee’s employment by the Company, except as expressly authorized by that third party.  During Employee employment by the Company, Employee will be expected not to make any unauthorized use or disclosure of any information or materials, including trade secrets, of any former employer or other third party.  Employee will use in the performance of her duties only that information generally known and used by persons with training and experience comparable to her own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company or by Employee on behalf of the Company.

 

7.                                      Employee Indemnification — Upon the execution and delivery of this Agreement, the Company and the Employee shall sign an indemnification agreement in the form attached hereto as Appendix “C” (the “Indemnification Agreement”).  In addition, the Employee will be covered by the Company’s policy of Directors and Officers insurance.

 

8.                                      Dispute Resolution — To ensure the rapid and economical resolution of disputes that may arise in connection with Employee’s employment with the Company, MethylGene Canada or MethylGene US Inc., Employee and the Company agree that any and all disputes, claims, or causes of action, in law or equity, including but not limited to statutory claims, arising from or relating to the enforcement, breach, performance, or interpretation of this Agreement, Employee’s employment with the Company or MethylGene Canada, or the termination of Employee’s employment from the Company or MethylGene Canada, shall be resolved, to the fullest extent permitted by law, by final, binding and confidential arbitration conducted before a single arbitrator by JAMS, Inc (“JAMS”) or its successor, under JAMS’ then applicable rules and procedures for employment disputes (which can be found at http://www.jamsadr.com/rules-clauses/, and which will be provided to Employee on request).  The arbitration shall take place in

 

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the county (or comparable governmental unit) in which Employee was last employed by the Company, as determined by the arbitrator; provided that if the arbitrator determines there will be an undue hardship to Employee to have the arbitration in such location, the arbitrator will choose an alternative appropriate location.  The Parties each acknowledge that by agreeing to this arbitration procedure, they waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding. Employee will have the right to be represented by legal counsel at any arbitration proceeding. The arbitrator shall: (a) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be available under applicable law in a court proceeding; and (b) issue a written statement signed by the arbitrator regarding the disposition of each claim and the relief, if any, awarded as to each claim, the reasons for the award, and the arbitrator’s essential findings and conclusions on which the award is based.  The arbitrator, and not a court, shall also be authorized to determine whether the provisions of this section apply to a dispute, controversy, or claim sought to be resolved in accordance with these arbitration procedures.  The Company shall pay all arbitration fees and costs in excess of the administrative fees that Employee would be required to incur if the dispute were filed or decided in a court of law. Nothing in this Agreement is intended to prevent either Employee or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration.

 

9.                                      Miscellaneous

 

9.1                               Notices — All notices required or permitted under this Agreement shall be in writing and shall be deemed effective upon personal delivery or email delivery or three (3) days after deposit in the mail, by registered or certified mail, postage prepaid, return receipt requested, addressed to the other party at the address shown above, or at such other address or addresses as either party shall designate to the other in accordance with this Section 9.1.

 

9.2                               Entire Agreement — This Agreement, including all Appendices, constitute the entire agreement between the Parties and supersede all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement, including but not limited to the Prior Agreement.  By entering into this Agreement, the Company and the Employee agree that the terms and conditions set forth in this Agreement and Employee’s employment with the Company will not be construed as constituting an event or circumstance that will trigger the Employee’s right to severance or change of control benefits under the Prior Agreement.  By entering into this Agreement and agreeing to the terms and conditions set forth herein, Employee hereby waives any and all rights (if any) Employee may have under the Prior Agreement (including for severance benefits, change of control benefits, or any other benefit or right) and acknowledges that this Agreement replaces and supersedes the Prior Agreement in its entirety.

 

9.3                               Amendments — This Agreement may be amended or modified only by a written instrument executed by both the Company and the Employee.

 

9.4                               Governing Law — This Agreement shall be construed, interpreted and enforced in accordance with the laws of New Jersey.

 

9.5                               Successors and Assigns — This Agreement shall be binding upon and inure to the benefit of both Parties and their respective successors and assigns, provided that this Agreement may not be assigned by either party without the written consent of the other party.

 

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9.6                               Waiver — No delay or omission by either party in exercising any right under this Agreement shall operate as a waiver of that or any other right.  A waiver or consent given by either party on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion.

 

9.7                               Captions — The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement.

 

9.8                               Severability — In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby.

 

9.9                               Counterparts — This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year set forth above.

 

	
 
    	
 
    	
MIRATI   THERAPEUTICS INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Jamie A. Donadio
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    	
Jamie   A. Donadio 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Title:
    	
Vice   President of Finance
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   Rachel W. Humphrey, M.D.
    
	
 
    	
 
    	
RACHEL   W. HUMPHREY, M.D.
    
						

 

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APPENDIX “A”

 

DUTIES AND RESPONSIBILITIES OF EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING OFFICER

 

Responsible for clinical research and development activities leading to product approval.  This includes, but not limited to, directing clinical development efforts, integrating medical, regulatory, and clinical affairs along with commercial assessment, providing coaching and development to team members and leading interactions with regulatory agencies and key opinion leaders.  In addition, Employee will contribute beyond Employee’s immediate area of responsibility to the overall leadership and strategic development of the Company, including maintaining strong relations with the investment community and the Board of Directors, and assisting in corporate transactions.

 

 

APPENDIX “B”

 

PROPRIETARY INFORMATION AND INVENTION ASSIGNMENT AGREEMENT

 

 

APPENDIX “C”

 

INDEMNIFICATION AGREEMENT

 

1exhibit101.htm

Exhibit 99.1

 

 

8 July 2013

The Shareholders and Advisors

WWS Associates, Inc.

Cincinnati, OH

USA

RE:  Letter of Intent for Acquisition

This letter outlines the basic terms of the proposed acquisition (the “Transaction”) by E-Waste Systems, Inc. (“EWSI”), or a subsidiary of EWSI, to purchase all of the business and assets and selected liabilities of WWS Associates Inc., which is trading as ‘2TRG’ (collectively the “Business”), from WWS Associates Inc., (the ‘Company’) and its shareholders (collectively, the “Sellers”).  This letter is intended to reflect our preliminary understandings only and, except as expressly provided otherwise herein, is not intended to be a binding agreement.

1. Form of Transaction.  The Transaction would be either a stock purchase or an asset purchase by EWSI of the Business, free and clear of any claims, liens or encumbrances except as it relates to certain debt of the Company.  The parties will explore and consider alternative tax-free reorganization structures.

2. Payment.  The purchase price (the “Purchase Price”) for the Business would be a.) the assumption of and/or retirement of certain debt (the ‘Debt’), not to exceed $1.5Million, and as estimated on Exhibit A to this letter, plus b.) an incentive payment to management, which shall be payable in newly issued restricted shares of EWSI’s common stock, as shown on Exhibit B.

3. Closing.  It is anticipated that the transaction will close (the “Closing”) on or before 30 days from completion of an Audit of the Company’s financial statements for the last two fiscal years by Sadler Gibb and Associates, audit firm.  The cost of the audit shall be an allowed cost to be assumed as an obligation to be retired after the transaction has been closed.  The actual date of the Closing is referred to herein as the “Closing Date.”

4. Due Diligence Investigation.  Upon the execution of this letter by Sellers, Sellers will provide, and will cause the Company to provide, to EWSI and its agents, accountants, attorneys and other advisors, full and complete access to all of the assets and liabilities of the Company and all books, records, financial statements, and other documents and materials of the Company relating to its financial condition, assets, liabilities and business, and EWSI shall deliver to Sellers its due diligence checklist with full insrructions.  EWSI shall be entitled, at its own expense, to conduct appraisals of all or any portion of the Company’s assets, and to conduct environmental and occupational safety inspections.  The execution of the definitive Purchase Agreement described below and the closing of the Transaction are subject to a complete legal and financial review of the assets, liabilities and business of the Company including a physical inventory conducted by the Company and reviewed by EWSI, which verifies the information supplied by Sellers and the Company to EWSI, including historical and projected financial information, and which, in EWSI’s judgment, confirms that there has not occurred, and there is no condition or fact which is likely to or may result in, any material adverse change in the financial condition, property, business, results of operations or prospects of the Company.  The preliminary due diligence checklist of required financial  information is attached to this letter of intent.

5. Definitive Agreement.  EWSI’s counsel will prepare a definitive purchase agreement (the “Purchase Agreement”) consistent with this letter and containing representations, warranties, agreements, conditions, indemnities, escrows, non-competes and guaranties normally associated with this kind of transaction; together with associated documents necessary to complete the transaction, including employment agreements for management and other key individuals to be identified by EWSI.

 

 

 

 

 

OTCQB:  EWSI <101 First St #493, Los Altos, CA  94022< www.ewastesystems.com < 145-157 St John St, London EC1V 4LB

 

 

 

  

- 1 -

  

6. Conditions.   Consummation of the Transaction will be subject to a number of conditions, including but not necessarily limited to the following:

(a) The Sellers obtaining and delivering written consent from the Debt holders to the proposed transaction;

 

(b) Preparation and execution of the definitive Purchase Agreement and related documents prepared by EWSI’s counsel, in form and substance satisfactory to EWSI;

 

(c) Satisfactory completion of EWSI’s due diligence investigation of the legal and financial aspects of the Company’s assets, liabilities and business, which the parties expect will be completed within 45 days of the date of this letter of intent;

 

(d) Delivery to EWSI of financial statements for the most recent two fiscal years audited by a PCAOB qualified audit firm, and the delivery of quarterly financials for the most recent periods prior to Closing;

 

(e) Absence of any pending or threatened litigation which, if adversely determined, would have a material adverse effect on the assets, business or prospects of the Company or the Transaction; and

 

(f) Absence of any material adverse change, or any condition or fact, which is likely to or may result in any material adverse change, in the assets, business or prospects of the Company

 

(g) Approval by the board of directors of EWSI.

 

7. Expenses.  Whether or not the Transaction is consummated, each party shall pay all fees and expenses incurred by it, including the fees of its respective brokers, attorneys, accountants, investment bankers and other experts incident to the negotiation and preparation of this letter and the consummation of the Transaction (“Expenses”).

8. Publicity.  The parties agree that they will hold negotiations on all matters in connection herewith in strict confidence.  However, the parties understand that EWSI is a publicly traded company and that the execution of this Letter of Intent may be considered a disclosable event by EWSI’s counsel, and that it may be necessary to release public statements accordingly. The parties agree therefore, that, except to the extent required by law, they will not disclose, and they will not permit any of their affiliates, directors, officers, employees, representatives or agents to disclose, whether to employees, customers, suppliers or otherwise, any information pertaining to the existence of this letter or the subject matter hereof, without first informing with the intent to secure the consent of the other parties hereto as to manner, form and content.

9. No Shop.  In consideration of the substantial expenditures of time, effort, and expense to be undertaken by EWSI in the preparation and negotiation of the Purchase Agreement and the various investigations referred to in Paragraph 4 above, Sellers agree that until the earlier to occur of the execution of the Purchase Agreement or 90 days from the date of execution of this letter of intent, Sellers and the Company: (a) shall not, and Sellers shall cause the Company to not, directly or indirectly, solicit, entertain or encourage inquiries or proposals or enter into any agreement or negotiate with any other person or entity with respect to the Shares or the Company’s business or assets; and (b) shall cause the Company to conduct its business in the ordinary course and keep intact its business organization and use commercially reasonable efforts, consistent with past practices of the Company, to maintain the goodwill of its customers, suppliers and others with whom it has business relations.  This provision shall be null and void if EWSI fails to deliver, and Sellers fail to consent to (upon reasonable review), an executable Term Sheet for the financing of this transaction within 10 business days of confirmed receipt of at least all the financial due diligence requested by EWSI.

 

 

 

 

OTCQB:  EWSI <101 First St #493, Los Altos, CA  94022< www.ewastesystems.com < 145-157 St John St, London EC1V 4LB

 

 

 

  

- 2 -

  

 

 

10. Letter of Intent.  This letter is intended to be, and shall be construed only as, a letter of intent and, except as provided in this Paragraph 10, is not and shall not be a binding agreement.  The respective rights and obligations of the parties remain to be defined in the definitive Purchase Agreement.  Notwithstanding the foregoing, however, the obligations of EWSI and Sellers under Paragraphs 4, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16 and 17 hereof will be binding upon EWSI and Sellers when this letter has been executed and delivered by Sellers to EWSI. Paragraphs 7 (with respect to audit costs), 11, 12, 13, 16 and 17 will survive the expiration or termination of this letter.

11. Non-Solicitation of Employees. EWSI agrees that during the period that EWSI and the Sellers are negotiating the Transaction and for a period of 12 months after the date that either EWSI or the Sellers gives the other notice it is ceasing negotiations, EWSI will not, directly or indirectly, (a) solicit, induce or initiate discussions regarding employment with an employee of the Company, or assist any third party in respect to any of the foregoing, or (b) engage in any practice the purpose of which is to evade the provisions of this Paragraph.

12. Non-Solicitation of Customers. EWSI agrees that during the period EWSI and the Sellers are negotiating the Transaction and for a period of 12 months after the date that either EWSI or the Sellers gives the other notice it is ceasing negotiations, EWSI will not, directly or indirectly, (a) solicit, contact, sell to or otherwise solicit business of the type done by the Company from any of the Company's active customers (i.e., any customers who are contracted for or received services from the Company within 12 months prior to the date of this letter, and who are not also customers of EWSI) or (b) engage in any practice, the purpose of which is to evade the provisions of this Paragraph.

13. Restrictions Reasonable; Equitable Relief. EWSI acknowledges and agrees that the duration, geographic scope and activity restrictions in Paragraphs 11 and 12 are reasonable and necessary to protect the legitimate business interests of the Company and the Sellers. EWSI agrees that each of the covenants contained in Paragraphs 11 and 12 shall be construed as independent of any other covenant or agreement. EWSI agrees that in the event of any breach or threatened breach of Paragraphs 11 or 12, or any provision thereof, the Company and each Seller, in addition to any other remedies it or he may have at law or in equity, shall be entitled to equitable relief, including injunctive relief and specific performance.

14. Termination.  The proposal represented by this letter shall be null and void unless EWSI has received this letter, executed by each Seller, not later than 5:00 P.M., Pacific Time, seven days from today’s date.

15. Counterparts.  This letter may be executed in several counterparts, each of which shall be deemed an original, but such counterparts shall together constitute one letter.

16. Governing Law; Jurisdiction.  This letter will be governed by and construed in accordance with the laws of Ohio without regard to conflict of law principles.

17. Severability.  If any provision of this letter is deemed invalid or unenforceable, such provision will be deemed limited by construction in scope and effect to the minimum extent necessary to render it valid and enforceable and, in the event no such limiting construction is possible, the invalid or unenforceable provision will be deemed severed from this letter without affecting the validity of any other term or provision.

 

[SIGNATURE PAGE TO FOLLOW]

 

*  *  *  *  *

 

 

 

 

OTCQB:  EWSI <101 First St #493, Los Altos, CA  94022< www.ewastesystems.com < 145-157 St John St, London EC1V 4LB

 

 

 

  

- 3 -

  

If the foregoing correctly sets forth your intent, kindly signify by executing and returning the enclosed copy of this letter.  I look forward to your prompt response.

Sincerely,

E-Waste Systems, Inc.

By:  /s/  Martin Nielson                                                        

       Martin Nielson, Chief Executive Officer

 

 

The foregoing letter correctly sets forth our intent.

Dated:                                                                           

	
THE SHAREHOLDERS

	  	  
	  	  	  
	
By:                   _________________________________

	  	
By:                 _________________________________

	
Print Name:     _________________________________

Title:                _________________________________

	  	
Print Name:  _________________________________

Title:              _________________________________

Attachments:

Exhibit A:                      Preliminary List of Assets and Liabilities

Exhibit B:                      Purchase Price Bonus

Exhibit B:                      Last 2 years Financial Statements

Exhibit C:                      Forecast 12 Months Financial Statements

Exhibit D:                      Preliminary Financial Due Diligence Checklist

 

 

 

 

OTCQB:  EWSI <101 First St #493, Los Altos, CA  94022< www.ewastesystems.com < 145-157 St John St, London EC1V 4LB

 

 

 

  

- 4 -

  

 

Exhibit A

Schedule of Acquired Assets and Liabilities

[To Be Completed with Sellers]

Assets

The assets of the Business to be acquired are generally as follows and will be detailed further in the definitive agreement between the Parties

	
1.  

	
Trading Names:  All trading names, website addresses, and abbreviations

	
2.  

	
Credentials:  All certifications under ISO, R2/RIOS, eStewards, etc.

	
3.  

	
Capital Equipment:  All equipment used to operate the business

	
4.  

	
[list to be completed]

	
5.  

	 

Debt

The amount of Debt on the Closing Balance Sheet used as the basis of the Purchase Price (defined as any long-term debt (including the current portion, if any, shall be substantially in keeping with the following, which was provided by Sellers)):

	  	 	 	 	 	 	 	 	
Cash

	 	 	
Assumed

	 	  
	
Creditor

	 	
Amount Due

	 	 	
Discount

	 	 	
Closing

	 	 	
by Buyer

	 	
Comments

	  	 	 	 	 	 	 	 	 	 	 	 	 	  
	
5/3 Bank -- Revolver

	 	 	385,000	 	 	 	(19,250	)	 	 	365,750	 	 	 	 	
 5% discount

	
5/3 Bank

	 	 	138,733	 	 	 	 	 	 	 	138,733	 	 	 	 	
 5% discount

	
5/3 Bank

	 	 	226,002	 	 	 	 	 	 	 	226,002	 	 	 	 	
 5% discount

	
Daimler Chrysler Fin. Svc.

	 	 	30,559	 	 	 	 	 	 	 	 	 	 	 	30,559	 	  
	
City of Geneva, NY

	 	 	98,311	 	 	 	 	 	 	 	 	 	 	 	98,311	 	
 Includes balance in A/P

	
TVF

	 	 	19,058	 	 	 	 	 	 	 	 	 	 	 	19,058	 	
 Includes balance in A/P

	
Wells Fargo

	 	 	76,478	 	 	 	 	 	 	 	 	 	 	 	76,478	 	  
	
5/3 Business Quicklease

	 	 	124,596	 	 	 	 	 	 	 	124,596	 	 	 	 	 	
 5% discount

	
Overdue Rent

	 	 	148,629	 	 	 	(73,629	)	 	 	-	 	 	 	75,000	 	
 estimate; no discussions w/ landlord yet  25K 

 in landlord deposits not included

	
Critical Payables

	 	 	213,711	 	 	 	-	 	 	 	126,415	 	 	 	87,296	 	
 some A/P's could be paid over time

	
Silverstone

	 	 	50,000	 	 	 	-	 	 	 	50,000	 	 	 	 	 	  
	
TOTAL

	 	 	1,511,077	 	 	 	(92,879	)	 	 	1,031,496	 	 	 	386,702	 	  
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  
	
Total Cash at Closing

	 	 	1,031,496	 	 	 	 	 	 	 	 	 	 	 	 	 	  
	
Debt Assumed

	 	 	386,702	 	 	 	 	 	 	 	 	 	 	 	 	 	  
	
Total Purchase Price

	 	 	1,418,198	 	 	 	 	 	 	 	 	 	 	 	 	 	  

 

 

OTCQB:  EWSI <101 First St #493, Los Altos, CA  94022< www.ewastesystems.com < 145-157 St John St, London EC1V 4LB

 

  

A - 1

  

Exhibit B

Purchase Price Bonus

The Purchase Price shall increase if the auditor prepared EBITDA for the twelve months following Closing is at least 10% higher than for the twelve months prior to Closing.  Payment will be made within 30 days after final determination of EBITDA for such period.  The payment will be one point five times (1.5x) the increase in EBITDA.  EBITDA will be determined consistent with past practices of the Company and any transaction expenses and other expenses not normally incurred by the Company as a stand-alone, privately held company will be added back when determining EBITDA for the period, so long as they are in accordance with US GAAP and determined by the PCAOB auditors.  This bonus shall not exceed 50% of original Purchase Price.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTCQB:  EWSI <101 First St #493, Los Altos, CA  94022< www.ewastesystems.com < 145-157 St John St, London EC1V 4LB

 

  

B - 1

  

 

 

Exhibit B:

Last 2 years Financial Statements

[To be supplied by Sellers]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTCQB:  EWSI <101 First St #493, Los Altos, CA  94022< www.ewastesystems.com < 145-157 St John St, London EC1V 4LB

 

 

 

B - 2

  

 

 

 

 

Exhibit C:

Forecast 12 Months Financial Statements

[To be supplied by Sellers]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTCQB:  EWSI <101 First St #493, Los Altos, CA  94022< www.ewastesystems.com < 145-157 St John St, London EC1V 4LB

 

 

  

C - 1

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