Document:

EXHIBIT 10.15

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT effective as of March 11, 2015 between Marinus Pharmaceuticals, Inc. (the “Company”), a Delaware corporation, and Albena Patroneva (the “Employee”).

 

Recital:

 

The parties hereto desire to enter into this Agreement to provide for the employment of the Employee by the Company and for certain other matters in connection with such employment, all as set forth more fully in this Agreement.

 

NOW, THEREFORE, in consideration of the premises and covenants set forth herein, and intending to be legally bound hereby, the parties to this Agreement hereby agree as follows:

 

1.                                      Duties.  The Company agrees that the Employee shall be employed by the Company to serve as Vice President and Chief Medical Officer of the Company.  The Employee shall report to the Chief Executive Officer of the Company (the “CEO”).  The Employee agrees to be so employed by the Company and to devote her best efforts and substantially all of her business time to advance the interests of the Company and to perform the duties customarily incident to the position of Chief Medical Officer and such other duties assigned to the Employee by the CEO, provided such other duties are commensurate with the Employee’s employment level at the Company.

 

2.                                      Term.  The Employee’s employment under this Agreement shall continue in effect until terminated pursuant to Section 4 of this Agreement.

 

3.                                      Compensation.

 

(a)                                 Salary.  During the term of the Employee’s employment under this Agreement, the Employee shall be paid an annual salary at the rate of not less than $335,000 (the “Base Salary”).  The Base Salary may be increased from time to time by the Board of Directors or its compensation committee (the “Board”).  The Board shall review the Base Salary at least annually after the end of each fiscal year of the Company.  The Base Salary shall be paid in accordance with the Company’s regular payroll practices.

 

(b)                                 Annual Bonus.  At the end of each fiscal year of the Company that ends during the term of this Agreement, the Board shall consider the award of a performance bonus to the Employee for such fiscal year in an amount of up to 35% of the Employee’s Base Salary (the “Target Bonus”) based upon the achievement of performance objectives established annually by the Board.  Whether the performance objectives for any year have been achieved by the Employee shall be determined by the Board.  Notwithstanding the foregoing, all bonuses shall be paid within two and one-half months after the close of each year.

 

(c)                                  Relocation Expenses.  The Employer shall reimburse the Employee for the Employee’s reasonable and customary documented out-of-pocket expenses for relocating to

 

 

the Radnor, Pennsylvania area in an amount not to exceed $15,000 in total.  The Employee agrees to repay all such relocation expenses in full if she leaves the Company’s employ, for whatever reason, on or before January 12, 2016.

 

(d)                                 Equity Incentive Programs.  The Employee shall also be eligible to participate in other equity incentive programs established by the Company from time to time to provide stock options and other equity-based incentives to key employees of the Company in accordance with the terms of those programs.  All stock options and restricted stock awards granted to the Employee that vest over time shall, if the Employee’s employment is terminated by the Company without Cause in accordance with Section 4(d) or the Employee resigns from the Company’s employ for Good Reason in accordance with Section 4(e), in each case upon or during the twelve-month period that immediately follows a Change of Control (as defined in Section 4(h)), become fully vested upon the termination of the Employee’s employment to the extent permitted by the terms of the applicable plan and subject to the satisfaction by the Employee of the requirements of Section 4(g) of this Agreement.

 

(e)                                  Vacation and Fringe Benefits.  The Employee shall be entitled to 20 days’ paid vacation, plus an additional two floating holidays and two personal days, as per Company policy as in effect from time to time.  The Employee shall be entitled to participate in all insurance and other fringe benefit programs of the Company to the extent and on the same terms and conditions as are accorded to other officers and key employees of the Company.

 

(f)                                   Reimbursement of Expenses.  The Employee shall be reimbursed for all normal items of travel, entertainment and miscellaneous business expenses reasonably incurred by the Employee on behalf of the Company, provided that such expenses are documented and submitted in accordance with the reimbursement policies of the Company as in effect from time to time.

 

(g)                                 Entire Compensation.  The compensation provided for in this Agreement shall constitute full payment for the services to be rendered by the Employee to the Company hereunder.

 

4.                                      Termination.

 

(a)                                 Death.  This Agreement shall automatically terminate effective as of the date of the Employee’s death, in which event the Company shall not have any further obligation or liability under this Agreement except that the Company shall pay to the Employee’s estate:  (i) any portion of the Employee’s Base Salary for the period up to the Employee’s date of death that has been earned but remains unpaid; and (ii) any benefits that have accrued to the Employee under the terms of the employee benefit plans of the Company, which benefits shall be paid in accordance with the terms of those plans.

 

(b)                                 Total Disability.  The Company may terminate the employment of the Employee immediately upon written notice to the Employee in the event of the Disability (as that term is hereinafter defined) of the Employee, in which event, the Company shall not have any further obligation or liability under this Agreement except that the Company shall pay to the Employee:  (i) any portion of the Employee’s Base Salary for the period up to the date of

 

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termination that has been earned but remains unpaid; and (ii) any benefits that have accrued to the Employee under the terms of the employee benefit plans of the Company, which benefits shall be paid in accordance with the terms of those plans.  For purposes of this Agreement, the term “Disability” shall mean an illness, incapacity or a mental or physical condition that renders the Employee unable or incompetent to carry out the job responsibilities that the Employee held or the tasks that the Employee was assigned at the time the disability commenced, as determined by the Board and supported by the opinion of a physician.  The Employee shall fully cooperate with the physician retained to furnish such opinion, including submitting to such examinations and tests as may be requested by the physician.

 

(c)                                  Termination by the Company for Cause.  The Company may terminate the Employee’s employment hereunder upon written notice to the Employee for any of the following reasons:  (i) the Employee’s misuse of alcoholic beverages, controlled substances or other narcotics, which misuse has had or is reasonably likely to have a material adverse effect on the business or financial affairs of the Company or the reputation of the Company; (ii) failure by the Employee to cooperate with the Company in any investigation or formal proceeding; (iii) the commission by the Employee of, or a plea by the Employee of guilty or nolo contendere with respect to, or conviction of the Employee for, a felony (or any lesser included offense or crime in exchange for withdrawal of a felony indictment or charged crime that might result in a penalty of incarceration), a crime involving moral turpitude, or any other offense that results in or could result in any prison sentence; (iv) adjudication as an incompetent; (v) a breach by the Employee of any material term of this Agreement, including the Employee’s failure to faithfully, diligently and adequately perform the Employee’s duties under this Agreement, that is not corrected within ten days after written notice from the Company, which notice shall set forth the nature of the breach; (vi) violation in any material respect of any of the Company’s rules, regulations or policies; (vii) gross insubordination by the Employee in the performance of the Employee’s duties under this Agreement; (viii) engaging in any conduct, action or behavior that, in the reasonable opinion of the Company, has had a material adverse effect on the reputation of the Company or the Employee; (ix) any continued or repeated absence from the Company, unless the absence is approved or excused by the CEO or the result of the Employee’s illness, disability or incapacity (in which event the provisions of Section 4(b) hereof shall control); or (x) misappropriation of any funds or property of the Company, theft, embezzlement or fraud.  In the event that the Company shall discharge the Employee pursuant to this Section 4(c), the Company shall not have any further obligation or liability under this Agreement, except that the Company shall pay to the Employee:  (i) any portion of the Employee’s Base Salary for the period up to the date of termination that has been earned but remains unpaid; and (ii) any benefits that have accrued to the Employee under the terms of the employee benefit plans of the Company, which benefits shall be paid in accordance with the terms of those plans.

 

(d)                                 Other Termination by the Company.  The Company may terminate the employment of the Employee for any reason other than one specified in Section 4(b) or 4(c) hereof immediately upon written notice to the Employee, in which event the Employee shall be entitled to receive:  (i) any portion of the Employee’s Base Salary for the period up to the date of termination that has been earned but remains unpaid; (ii) any benefits that have accrued to the Employee under the terms of any employee benefit plans of the Company, which benefits shall be paid in accordance with the terms of those plans; and (iii) subject to the satisfaction of the provisions of Section 4(g) and the compliance by the Employee with all terms and provisions of

 

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this Agreement that survive the termination of the Employee’s employment by the Company, (A) the Employee’s Base Salary for a period of nine months, less applicable taxes and withholdings, payable in accordance with the Company’s regular payroll practices, with an accelerated payment of any balance upon the occurrence of a Change in Control; provided, however, that if such termination of employment shall occur within three months before or within twelve months after the occurrence of a Change in Control (such period being referred to herein as the “Change of Control Period”), the severance payable to the Employee shall be increased to an amount equal to the Employee’s Base Salary for a period of eighteen months and be payable in a single lump sum payment, less applicable taxes and withholdings; (B) payment or reimbursement (upon presentation of proof of payment) of the Employee’s medical insurance premiums at the same level as was in effect on the termination date for a period of nine months, which period shall increase to eighteen months if such termination of employment shall occur within the Change in Control Period; and (C) if such termination shall occur within the Change in Control Period, an amount equal to the Employee’s Target Bonus for the year in which such employment termination shall occur prorated based on the relative number of days in such year during which the Employee was employed by the Company and/or its successor in the Change in Control, payable in a single lump sum payment, less applicable taxes and withholdings.  Any severance payments and lump sum payments due hereunder shall commence as soon as administratively feasible within 60 days after the date of the Employee’s termination of employment provided the Employee has timely executed and returned the Release referred to in Section 4(g) and, if a revocation period is applicable, the Employee has not revoked the Release; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, the severance payments shall begin to be paid in the second calendar year.  On the date that severance payments commence, the Company will pay the Employee in a single lump sum payment, less applicable taxes and withholding, the severance payments that the Employee would have received on or prior to such date but for the delay imposed by the immediately preceding sentence, with the balance of the severance payments to be paid as originally scheduled.

 

(e)                                  Termination by the Employee for Good Reason.  The Employee may terminate her employment by providing written notice to the Company of a breach constituting Good Reason.  “Good Reason” shall be deemed to exist with respect to any termination of employment by the Employee for any of the following reasons:  (i) a reassignment of the Employee to a location outside the Greater Philadelphia area; (ii) any material failure by the Company to comply with any material term of this Agreement; (iii) the demotion of the Employee to a lesser position than described in Section 1 hereof or a substantial diminution of the Employee’s authority, duties or responsibilities as in effect on the date of this Agreement or as hereafter increased; or (iv) a material diminution of the Executive’s Base Salary and benefits, in the aggregate, unless such reduction is part of a Company-wide reduction in compensation and/or benefits for all of its senior executives; provided, however, that Good Reason shall not include a termination of the Employee’s employment pursuant to Section 4(b) or 4(c) hereof or, following a Change in Control, a reduction in title, position, responsibilities or duties solely by virtue of the Company being acquired and made part of a larger entity or operated as a subsidiary.  If the Employee shall terminate the Employee’s employment hereunder for Good Reason, the Employee shall be entitled to receive the same payments and benefits on the same terms and conditions as would be applicable upon a termination of the Employee’s employment by the Company without Cause, as provided in Section 4(d) and subject to the satisfaction of the

 

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other provisions of this Section 4(e).  The Employee may not resign with Good Reason pursuant to this Section 4(e), and shall not be considered to have done so for any purpose of this Agreement, unless (A) the Employee, within 60 days after the initial existence of the act or failure to act by the Company that constitutes “Good Reason” within the meaning of this Agreement, provides the Company with written notice that describes, in particular detail, the act or failure to act that the Employee believes to constitute “Good Reason” and identifies the particular clause of this Section 4(e) that the Employee contends is applicable to such act or failure to act; (B) the Company, within 30 days after its receipt of such notice, fails or refuses to rescind such act or remedy such failure to act so as to eliminate “Good Reason” for the termination by the Employee of the Employee’s employment relationship with the Company, and (C) the Employee actually resigns from the employ of the Company on or before that date that is six calendar months after the initial existence of the act or failure to act by the Company that constitutes “Good Reason.”  If the requirements of the preceding sentence are not fully satisfied on a timely basis, then the resignation by the Employee from the Employee’s employment with the Company shall not be deemed to have been for “Good Reason,” the Employee shall not be entitled to any of the benefits to which the Employee would have been entitled if the Employee had resigned the Employee’s employment with the Company for “Good Reason,” and the Company shall not be required to pay any amount or provide any benefit that would otherwise have been due to the Employee under this Section 4(e) had the Employee resigned with “Good Reason.”

 

(f)                                   Other Termination by the Employee.  The Employee may terminate the Employee’s employment for any reason other than one specified in Section 4(e) upon at least 30 days’ prior written notice to the Company, which notice shall specify the effective date of the termination.  In the event the Employee shall terminate the Employee’s employment pursuant to this Section 4(f), the Company shall not have any further obligation or liability under this Agreement, except that the Company shall pay to the Employee:  (i) any portion of the Employee’s Base Salary for the period up to the date of termination that has been earned but remains unpaid; and (ii) any benefits that have accrued to the Employee under the terms of the employee benefit plans of the Company, which benefits shall be paid in accordance with the terms of those plans.

 

(g)                                 Execution of Release.  The Employee shall not be entitled to any payments or benefits under Sections 4(d) or 4(e) unless the Employee executes and does not revoke a Release and Agreement (the “Release”), as drafted at the time of the Employee’s termination of employment, including, but not limited to:

 

(i)                                     an unconditional release of all rights to any claims, charges, complaints, grievances, known or unknown to the Employee, against the Company, its affiliates or assigns, through the date of the Employee’s termination from employment other than post-termination payments and benefits pursuant to this Agreement;

 

(ii)                                  a representation and warranty that the Employee has not filed or assigned any claims, charges, complaints, or grievances against the Company, its affiliates, or assigns;

 

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(iii)                               an agreement not to use, disclose or make copies of any confidential information of the Company, as well as to return any such confidential information and property to the Company upon execution of the Release;

 

(iv)                              a mutual agreement to maintain the confidentiality of the Release or disclose the reasons for any termination of employment;

 

(v)                                 an agreement not to disparage the Company or its officers, directors, stockholders, products or business; and

 

(vi)                              an agreement to indemnify the Company, or its affiliates or assigns, in the event that the Employee breaches any portion of this Agreement or the Release.

 

Notwithstanding any provision of this Agreement to the contrary, in no event shall the timing of the Employee’s execution of the Release, directly or indirectly, result in the Employee designating the calendar year of payment, and if a payment that is subject to execution of the Release could be made in more than one taxable year, payment shall be made in the later taxable year.

 

(h)                                 Definition of Change in Control.  As used in this Agreement, the term “Change in Control” means:

 

(i)                                     any merger or consolidation in which voting securities of the Company possessing more than 50% of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from the person holding those securities immediately prior to such transaction and the composition of the Board following such transaction is such that the directors of the Company prior to the transaction constitute less than 50% of the Board membership following the transaction;

 

(ii)                                  any acquisition, directly or indirectly, by a person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership of voting securities of the Company possessing more than 50% of the total combined voting power of the Company’s outstanding securities; provided, however, that, no Change in Control shall be deemed to occur by reason of the acquisition of shares of the Company’s capital stock by an investor or group of investors in the Company in a capital-raising transaction; or

 

(iii)                               any sale, transfer, exclusive worldwide license or other disposition of all or substantially all of the assets of the Company; or

 

(iv)                              within any 24-month period beginning on or after the date hereof, the persons who were directors of the Company immediately before the beginning of such period (the “Incumbent Directors”) shall cease (for any reason other than death) to constitute at least a majority of the Board of Directors of the Company or the board of directors of any successor to the Company, provided that any director who was not a director as of the date hereof shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors either actually or by prior operation of this Section 4(h)(iv), unless such

 

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election, recommendation or approval was the result of an actual or threatened contested election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934 or any successor provision.

 

(i)                                    Base Salary Continuation.  The Base Salary continuation set forth in Sections 4(d) and (e) above shall be intended either (i) to satisfy the safe harbor set forth in the regulations issued under section 409A 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 Code section 409A (Treas. Regs. 1.409A-1(b)(4)).  To the extent 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 Code 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.  Solely for purposes of Code section 409A, each installment payment is considered a separate payment.  Notwithstanding any provision in this Agreement to the contrary, in the event that the Employee 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 the Employee’s termination of employment or before the date of the Employee’s death, if earlier.

 

(j)                                    Parachute Provisions.  Notwithstanding any provisions of this Agreement to the contrary:

 

(i)                                     If any of the payments or benefits received or to be received by the Employee in connection with the Employee’s termination of employment in respect of a Change in Control, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company (all such payments and benefits, being hereinafter referred to as the “Total Payments”), would be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the Code, the Employee shall receive the Total Payments and be responsible for the Excise Tax; provided, however that the Employee shall not receive the Total Payments and the Total Payments shall be reduced to the Safe Harbor Amount (defined below) if (A) the net amount of such Total Payments, as so reduced to the Safe Harbor Amount (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments) is greater than or equal to (B) the net amount of such Total Payment without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which the Employee would be subject in respect of such unreduced Total Payments).  The “Safe Harbor Amount” is the amount to which the Total Payments would hypothetically have to be reduced so that no portion of the Total Payments would be subject to the Excise Tax.

 

(ii)                                  For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (A) all of the Total Payments shall be treated as “parachute payments” (within the meaning of Section 280G(b)(2) of the Code) unless, in the opinion of tax counsel (“Tax Counsel”) selected by the accounting firm that was, immediately prior to the Change in Control, the Company’s independent auditor (the

 

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“Auditor”), such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of the Code, (B) all “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of the base amount (within the meaning of Section 280G(b)(3) of the Code) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (C) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.  If the Auditor is prohibited by applicable law or regulation from performing the duties assigned to it hereunder, then a different auditor, acceptable to both the Company and Employee, shall be selected.  The fees and expenses of Tax Counsel and the Auditor shall be paid by the Company.

 

(iii)                               In the event it is determined that the Safe Harbor Amount is payable to Employee, then the severance payments provided under this Agreement that are cash shall first be reduced on a pro rata basis, and the non-cash severance payments shall thereafter be reduced on a pro rata basis, to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax.

 

5.                                      Restrictive Covenant Agreement.  The Non-Disclosure, Invention Assignment, Non-Solicitation and Non-Compete Agreement executed by the Employee on December 29, 2014 (the “Restrictive Covenant Agreement”) shall remain in full force and effect in accordance with its terms and shall survive the termination of this Agreement in accordance with the terms of the Restrictive Covenant Agreement.

 

6.                                      Supersedes Other Agreements.  This Agreement supersedes and is in lieu of any and all other employment arrangements between the Employee and the Company, but shall not supersede the Restrictive Covenant Agreement or any existing confidentiality, nondisclosure, invention assignment or non-compete agreement between the Employee and the Company.

 

7.                                      Amendments.  Any amendment to this Agreement shall be made in writing and signed by the parties hereto.

 

8.                                      Enforceability.  If any provision of this Agreement shall be invalid or unenforceable, in whole or in part, then such provision shall be deemed to be modified or restricted to the extent and in the manner necessary to render the same valid and enforceable, or shall be deemed excised from this Agreement, as the case may require, and this Agreement shall be construed and enforced to the maximum extent permitted by law as if such provision had been originally incorporated herein as so modified or restricted or as if such provision had not been originally incorporated herein, as the case may be.

 

9.                                      Construction.  This Agreement shall be construed and interpreted in accordance with the internal laws of the Commonwealth of Pennsylvania.

 

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10.                               Assignment.

 

(a)                                 By the Company.  The rights and obligations of the Company under this Agreement shall inure to the benefit of, and shall be binding upon, the successors and assigns of the Company.  This Agreement may be assigned by the Company without the consent of the Employee.

 

(b)                                 By the Employee.  This Agreement and the obligations created hereunder may not be assigned by the Employee, but all rights of the Employee hereunder shall inure to the benefit of and be enforceable by the Employee’s heirs, devisees, legatees, executors, administrators and personal representatives.

 

11.                               Notices.  All notices required or permitted to be given hereunder shall be in writing and shall be deemed to have been given when mailed by certified mail, return receipt requested, or delivered by a national overnight delivery service addressed to the intended recipient as follows:

 

If to the Company:

 

Marinus Pharmaceuticals, Inc.
 3 Radnor Corporate Center
 100 Matsonford Road, Suite 304
 Radnor, PA  19087
 Attention:  Chairman of the Board

 

If to the Employee:

 

Albena Patroneva, M.D., MBA
 205 Church Street
 Wayne, PA  19087

 

Any party may from time to time change its address for the purpose of notices to that party by a similar notice specifying a new address, but no such change shall be deemed to have been given until it is actually received by the party sought to be charged with its contents.

 

12.                               Waivers.  No claim or right arising out of a breach or default under this Agreement shall be discharged in whole or in part by a waiver of that claim or right unless the waiver is supported by consideration and is in writing and executed by the aggrieved party hereto or such party’s duly authorized agent.  A waiver by any party hereto of a breach or default by the other party hereto of any provision of this Agreement shall not be deemed a waiver of future compliance therewith, and such provisions shall remain in full force and effect.

 

13.                               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 (together, “Section 409A”) issued pursuant to Section 409A so as not to subject the Employee to payment of interest or any additional tax under Code section 409A.  The parties

 

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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 the Employee 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 and be reasonably determined in good faith by the Company and the Employee.

 

14.                               Survival of Covenants.  Each provision of this Agreement that, by its terms, is intended to continue beyond the termination of the Employee’s employment shall continue in effect thereafter.

 

(Signature page follows.)

 

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IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date first above written.

 

	
 
    	
MARINUS   PHARMACEUTICALS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Christopher M. Cashman
    
	
 
    	
 
    	
Christopher   M. Cashman,
    
	
 
    	
 
    	
President   and CEO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   Albena Patroneva
    
	
 
    	
Albena   Patroneva
    

 

11Exhibit 10.16

 

INCENTIVE STOCK OPTION AGREEMENT

 

THIS AGREEMENT, effective as of                     , 201  , is made by and between Marinus Pharmaceuticals, Inc. (the “Company”), a Delaware corporation, and «Name» (the “Employee”), an employee of the Company.

 

Recitals:

 

WHEREAS, the Company has established the Marinus Pharmaceuticals, Inc. 2014 Equity Incentive Plan (the “Plan”), the terms of which are hereby incorporated by reference and made a part of this Agreement; and

 

WHEREAS, the Committee (as hereinafter defined) has determined that it would be in the best interest of the Company to grant an incentive stock option under the Plan, as provided for herein, to the Employee as an incentive for increased efforts during the Employee’s employment by the Company, subject to the execution and delivery by the Employee of this Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE 1
  DEFINITIONS

 

Whenever the following terms are used in this Agreement, they shall have the meanings specified below:

 

“Act” shall mean the Securities Act of 1933, as amended.

 

“Cause” shall have the meaning set forth in the Employment Agreement.

 

“Change of Control” shall have the meaning set forth in the Employment Agreement.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Committee” shall mean the Committee established in accordance with Section 1(a) of the Plan, if one has been appointed, or the Board of Directors of the Company if no such committee has been appointed.

 

“Common Stock” shall mean the Company’s Common Stock, $.001 par value.

 

“Employment Agreement” shall mean the Employment Agreement between the Company and the Employee as in effect at the relevant time.

 

“Good Reason” shall have the meaning set forth in the Employment Agreement.

 

“Option” shall mean the incentive stock option granted under this Agreement.

 

 

“Plan” shall have the meaning set forth in the first Recital paragraph above.

 

“Retirement” shall mean a termination of employment by reason of an Employee’s retirement at or after the Employee’s earliest permissible retirement date pursuant to and in accordance with a regular retirement plan or the personnel practices of the Company.

 

“Subsidiary” shall mean any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

“Termination of Employment” shall mean the time when the employee-employer relationship between the Employee and the Company or a Subsidiary is terminated for any reason, including, but not limited to, a termination by resignation, discharge, death or Retirement, but excluding any termination where there is a simultaneous reemployment by the Company or a Subsidiary.  The Committee, in its absolute discretion, shall determine the effect of all matters and questions relating to Termination of Employment, including, but not limited to, whether a Termination of Employment resulted from a discharge for Cause and whether a particular leave of absence constitutes a Termination of Employment; provided, however, that a leave of absence shall constitute a Termination of Employment if, and to the extent that, such leave of absence interrupts employment for purposes of Section 422(a)(2) of the Code and the then applicable Regulations and Revenue Rulings under Section 422(a)(2).

 

ARTICLE 2
 GRANT OF OPTION

 

Section 2.1 - Grant of Option

 

In consideration of the Employee’s employment by the Company and for other good and valuable consideration, on the date hereof the Company grants to the Employee the Option to purchase any part or all of a total of «Shares» shares of the Company’s Common Stock upon the terms and conditions set forth in this Agreement.  The Option shall be subject in all respects to the provisions of this Agreement and of the Plan.  The Option is intended to be an incentive stock option under Section 422 of the Code[; provided, however, that any portion of the Option that does not qualify for incentive stock option treatment shall be treated as a nonqualified stock option in accordance with Section 5(h) of the Plan.]

 

Section 2.2 - Purchase Price

 

The purchase price of the shares of Common Stock covered by the Option shall be US$[          ] per share without commission or other charge.

 

Section 2.3 - Adjustments in Option

 

The number of shares subject to issuance upon exercise of the Option and the purchase price thereof are subject to adjustment in accordance with Section 3(d) of the Plan.

 

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ARTICLE 3
 EXERCISABILITY OF OPTIONS

 

Section 3.1 - Commencement of Exercisability

 

(a)                                 Subject to the provisions of this Article 3, the Option shall vest and become exercisable as follows: (i) «First_Installment» shares shall vest and become exercisable on                     , 201   and (ii) the remaining «Balance» shares shall vest and become exercisable in 12 consecutive quarterly installments of «Installment_Shares» shares each on the          day of each                     ,                     ,                      and                     , beginning                     , 201   and continuing through                     , 201  ; provided that the Employee continues to be employed by the Company on the respective vesting date.

 

(b)                                 No portion of the Option that is not exercisable at the time of the Employee’s Termination of Employment shall thereafter become exercisable.

 

Section 3.2 - Duration of Exercisability

 

Upon vesting, the installments provided for in Section 3.1 shall be cumulative.  Each such installment that vests and becomes exercisable pursuant to Section 3.1 shall remain exercisable until it becomes unexercisable under Section 3.3.

 

Section 3.3 - Expiration of Option

 

The Option may not be exercised to any extent after the first to occur of the following events:

 

(a)                                 the expiration of ten years from the date the Option was granted;

 

(b)                                 the expiration of three months after the date of the Employee’s Termination of Employment unless such Termination of Employment results from the Employee’s (i) death, (ii) Retirement, (iii) disability (within the meaning of Section 22(e)(3) of the Code), or (iv) Cause;

 

(c)                                  the expiration of one year from the date of the Employee’s Termination of Employment by reason of the Employee’s death, Retirement or disability (within the meaning of Section 22(e)(3) of the Code), provided that in the event that the Option is exercised more than three months after termination of employment due to Retirement, the Option shall lose its status as an incentive stock option and shall be treated as a nonqualified stock option; or

 

(d)                                 the date of Employee’s Termination of Employment if the Termination of Employment is for Cause.

 

Section 3.4 - Acceleration of Exercisability

 

If a Change of Control shall occur prior to the termination of the Option pursuant to Section 3.3 and the Option is not then vested in full, and subject to the provisions of Section 3.3, from and after the occurrence of the Change of Control, the Option will continue to vest in accordance with Section 3.1 until the earlier to occur of (a) a Termination of Employment of the

 

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Employee without Cause by the Company or the acquiring or successor entity or (b) a Termination of Employment of the Employee upon a resignation for Good Reason in accordance with the terms of the Employment Agreement, at which earlier time the entire unvested portion of the Option shall vest in full and become immediately exercisable, provided that the Employee executes a release of claims in favor of the Company and/or the acquiring or successor entity and their respective affiliates, as the case may be, and satisfies the other relevant provisions of the Employment Agreement.

 

ARTICLE 4
 EXERCISE OF OPTION

 

Section 4.1 - Person Eligible to Exercise

 

During the lifetime of the Employee, only the Employee may exercise the Option or any portion thereof.  After the death of the Employee, any portion of the Option that is exercisable on the date of the Employee’s death may, prior to the time when the Option may no longer be exercised pursuant to the provisions of Section 3.3, be exercised by the Employee’s personal representative or by any person empowered to do so under the Employee’s will or under the then applicable laws of descent and distribution.

 

Section 4.2 - Partial Exercise

 

Any exercisable portion of the Option or the entire Option, if then wholly exercisable, may be exercised at any time prior to the time when the Option or portion thereof may no longer be exercised pursuant to the provisions of Article 3; provided, however, that each partial exercise shall be for whole shares only.

 

Section 4.3 - Manner of Exercise

 

The Option, or any exercisable portion thereof, may be exercised solely by delivery to the Secretary of the Company of all of the following prior to the time when the Option or such portion may no longer be exercised pursuant to the provisions of Article 3:

 

(a)                                 Notice in writing signed by the Employee or the other person then entitled to exercise the Option, stating that the Option or a portion thereof is thereby exercised, such notice complying with all applicable rules established by the Committee;

 

(b)                                 (i)                                     Full payment (in cash or by check) for the shares with respect to which the Option or portion is exercised; or

 

(ii)                                  If the Committee shall so permit, shares of the Company’s Common Stock owned by the Employee duly endorsed for transfer to the Company with a fair market value on the date of delivery equal to the aggregate purchase price of the shares with respect to which such Option or portion is exercised; or

 

(iii)                               If the Committee shall so permit, a combination of the consideration provided in the foregoing Sections 4.3(b)(i) and 4.3(b)(ii).

 

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(c)                                  A bona fide written representation and agreement in a form satisfactory to the Committee, signed by the Employee or other person then entitled to exercise such Option or portion, stating that the shares of Common Stock are being acquired for the Employee’s own account, for investment and without any present intention of distributing or reselling said shares or any of them except as may be permitted under the Act and then applicable rules and regulations thereunder, and that the Employee or other person then entitled to exercise the Option or portion will indemnify the Company against and hold it free and harmless from any loss, damage, expense or liability resulting to the Company if any sale or distribution of the shares by such person is contrary to the representation and agreement referred to above.  The Committee may, in its absolute discretion, take whatever additional actions it deems appropriate to ensure the observance and performance of such representation and agreement and to effect compliance with the Act and any other federal or state securities laws or regulations.  Without limiting the generality of the foregoing, the Committee may require an opinion of counsel acceptable to it to the effect that any subsequent transfer of the shares acquired upon the exercise of the Option does not violate the Act and may issue stop-transfer orders covering such shares.  Share certificates evidencing Common Stock issued upon the exercise of the Option shall bear an appropriate legend referring to the provisions of this Section 4.3(c) and the agreements herein and therein.  The written representation and agreement referred to in the first sentence of this Section 4.3(c) shall, however, not be required if the shares to be issued pursuant to such exercise have been registered under the Act and such registration is then effective in respect of such shares.

 

(d)                                 In the event the Option or portion shall be exercised pursuant to Section 4.1 by any person or persons other than the Director, appropriate proof of the right of such person or persons to exercise the Option.

 

Section 4.4 - Conditions to Issuance of Shares

 

The shares of Common Stock deliverable upon the exercise of the Option, or any portion thereof, may be either previously authorized but unissued shares or treasury shares.  Such shares shall be fully paid and nonassessable.  The Company shall not be required to issue any shares of Common Stock purchased upon the exercise of the Option or portion thereof prior to fulfillment of all of the following conditions:

 

(a)                                 The admission of such shares to listing on all stock exchanges on which such class of stock shall then be listed;

 

(b)                                 The completion of any registration or other qualification of such shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Committee shall, in its absolute discretion, deem necessary or advisable;

 

(c)                                  The obtaining of any approval or other clearance from any state or federal governmental agency which the Committee shall, in its absolute discretion, determine to be necessary or advisable; and

 

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(d)                                 The lapse of such reasonable period of time following the exercise of the Option as the Committee may from time to time establish for reasons of administrative convenience.

 

Section 4.5 - Rights as Stockholder

 

The holder of the Option shall not be, and shall not have any of the rights or privileges of, a stockholder of the Company in respect of any shares purchasable upon the exercise of any part of the Option unless and until such part of the Option is exercised in accordance with its terms.

 

ARTICLE 5
 MISCELLANEOUS

 

Section 5.1 - Options Not Transferable

 

Neither the Option nor any interest or right therein or part thereof shall be liable for the debts, contracts or engagements of the Employee or the Employee’s successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition shall be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided, however, that this Section 5.1 shall not prevent transfers by will or by the applicable laws of descent and distribution in accordance with the Plan.

 

Section 5.2 - Administration

 

The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules.  All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon the Employee, the Company and all other interested persons.  No member of the Committee shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or the Option.

 

Section 5.3 - Withholding

 

All amounts that, under federal, state or local law, are required to be withheld from the amount payable with respect to any Option shall be withheld by the Company.  Whenever the Company proposes or is required to issue or transfer shares of Common Stock, the Company shall have the right to require the recipient to remit to the Company an amount sufficient to satisfy any federal, state or local withholding tax requirements prior to the delivery of any certificate or certificates for such shares.

 

Section 5.4 - No Right of Continued Employment

 

Nothing contained in this Agreement or in the Plan shall confer upon the Employee any right to continue in the employ of the Company or any Subsidiary or shall interfere with or restrict in any way the rights of the Company and any Subsidiary, which are hereby expressly

 

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reserved, to discharge the Employee at any time for any reason whatsoever, with or without Cause.

 

Section 5.5 - Notices

 

Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its Secretary, and any notice to be given to the Employee shall be addressed to the Employee at the address given beneath the Employee’s signature hereto.  By a notice given pursuant to this Section 5.5, either party may hereafter designate a different address for notices to be given to such party.  Any notice that is required to be given to the Employee shall, if the Employee is then deceased, be given to the Employee’s personal representative if such representative has previously informed the Company of his or her status and address by written notice under this Section 5.5.  Any notice shall have been deemed duly given when addressed as aforesaid and deposited (with postage prepaid) in the United States mail or sent by overnight courier (with charges prepaid).

 

Section 5.6 - Entire Agreement

 

This Agreement and the Plan set forth the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings between the parties regarding the Option.

 

Section 5.7 - Successors and Assigns

 

This Agreement shall inure to the successors and assigns of the parties; provided, however, that neither this Agreement nor any rights hereunder may be assigned by the Employee.

 

Section 5.8 - Survival

 

Each provision of this Agreement that, by its terms, is intended to survive beyond the exercise of the Option shall continue in effect thereafter until such time as such term shall no longer apply.

 

Section 5.9 - Titles

 

Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

 

Section 5.10 - Counterparts; Electronic Transmission

 

This Agreement may be executed by the parties on separate counterparts, each of which shall be an original and both of which together shall constitute one and the same agreement.  A facsimile or electronic transmission of a scanned copy of a signed counterpart signature page hereto shall be deemed to be an originally executed copy for purposes of this Agreement.

 

(Signature page follows.)

 

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IN WITNESS WHEREOF, and intending to be legally bound hereby, this Agreement has been executed and delivered by the parties hereto.

 

	
 
    	
MARINUS   PHARMACEUTICALS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
«Name»
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Address   of Employee:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Employee’s   Taxpayer
    
	
 
    	
Identification   Number:
    
	
 
    	
 
    
	
 
    	
 
    

 

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