Document:

Exhibit 10.7

 

 

December 15, 2014

 

Kenneth B. Newman, M.D., M.B.A

20 Sunderland Lane

Katonah, NY  10236

 

Re:                             Offer of Employment

 

Dear Dr. Newman:

 

On behalf of Verona Pharma, Inc. (the “Company”), I am pleased to offer you the position of Chief Medical Officer.  This offer letter agreement (the “Agreement”) sets forth the terms of employment the Company is offering you.  If you accept this offer, we anticipate that your first day of employment will be January 1, 2015.

 

1.             DUTIES.  As the Company’s Chief Medical Officer, you will be responsible for developing the Company’s global product portfolio strategy to bring products to market in compliance with global regulatory, legislative and medical/health requirements and perform the other duties associated with this position.  You will report to the Chief Executive Officer (the “CEO”) of Verona Pharma plc, the Company’s parent (“Parent”).  You will perform your services at your home office until the Company establishes an office in or around the New York metropolitan area.  In the event that the Company asks you to relocate, the Company will reimburse your relocation expenses on terms to be mutually agreed upon prior to the relocation.  You shall devote your full time and attention to the business affairs of the Company.

 

2.             BASE SALARY.  You will receive an annual base salary of $340,000 for all hours worked, less payroll deductions and withholdings, earned and payable in substantially equal installments in accordance with the Company’s payroll policy from time to time in effect.

 

3.             BONUS.  You will be eligible to participate in the Company’s annual bonus plan, with a target bonus of 40% of your base salary, subject to the terms of such plan and on such other terms and conditions as may be determined by the Company.  You must be employed on the date of payment of the bonus in order to be eligible for the bonus.

 

4.             STOCK OPTIONS.  Subject to the approval of the board of directors of Parent, you will be granted an option to subscribe for a total of 12,500,000 ordinary shares in the capital of Parent exercisable at the greater of 2.2 pence per ordinary share, or the market price of the Company’s shares traded on the AIM stock exchange at the date of grant (the “Stock Option”).

 

Verona Pharma, Inc.

Kaye Scholer LLP, 250 West 55th Street, New York, NY 10019-9710, USA
 E-mail: info@veronapharma.com § Website: www.veronapharma.com

 

 

The Stock Option will be granted pursuant to, and subject to, Parent’s equity incentive plan.  The definitive terms of the Stock Option will be governed by the equity incentive plan, which requires, as a condition of the grant, that you enter into a written option agreement, which will contain the definitive terms of the Stock Option.  The Stock Option shall cliff vest upon the earlier of (A) the third anniversary of the date of grant and (B) a change in control of Parent (as defined in the equity incentive plan or option agreement), in each case subject to your continued employment through such date or such change in control, as the case may be, provided however that if your employment under this Agreement is terminated by the Company without Cause (as defined in paragraph 7(a) below) within six months before the third anniversary of the date of grant, then the Stock Option shall vest in full upon the date of such termination subject to the release requirement set forth in paragraph 7(a) below.

 

5.             BENEFITS.    The Company does not currently sponsor any insurance or retirement plans.   If and when the Company’s establishes any such plans, you will be entitled to participate in the plans generally available from time to time to employees of the Company, subject to the terms of such plans.  Notwithstanding the foregoing, for so long as you are eligible for COBRA coverage from your previous employer or until the Company establishes a health insurance plan, whichever occurs first, the Company will reimburse you on a monthly basis for the premiums you pay for COBRA coverage, provided that you produce evidence of your payment of such premiums.  If the Company has not implemented a health insurance plan by the time that the COBRA coverage from your previous employer ends, the Company will reimburse you for the premiums you pay for private health insurance on similar terms to the COBRA coverage. In addition, the Company will procure short-term disability insurance for you in accordance with New York state law. Furthermore, until the Company establishes a long-term disability plan, the Company will reimburse you on a monthly basis for the premiums you pay for private long-term disability insurance, up to $800 per month, provided that you produce evidence of your payment of such premiums.  You will be entitled to five (5) weeks of paid time off per year, earned and accrued on a pro rata basis throughout the year, provided that you may not carry over more than five (5) weeks of accrued but unused time into a subsequent year and you will not be paid for any accrued but unused time upon termination of employment.

 

6.             EXPENSES.  You shall be entitled to reimbursement for all ordinary and reasonable out-of-pocket business expenses which are reasonably incurred by you in furtherance of the Company’s business and in accordance with the standard policies of the Company and Parent, provided that you produce to the Company such evidence of actual payment as the Company may require.

 

7.             SEVERANCE BENEFITS.

 

(a)           Termination By The Company Without Cause or Termination by the Employee for Good Reason.  If this Agreement is terminated by the Company without Cause (as defined below) or by the Employee for Good Reason (as defined below), and if you sign an agreement acceptable to the Company that (i) waives any rights you may otherwise have against the Company and Parent, (ii) releases the Company and Parent from any actions, suits, claims, proceedings and demands you may have relating to the period of your employment with the Company and/or the termination of your employment, and (iii) contains certain other obligations which will be set forth at the time of the termination, the Company shall provide

 

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you with the following severance benefits:  (1) continuation of your base salary less payroll deductions and withholding for a period of six (6) months; (2) continued payment, or reimbursement, as the case may be, of your COBRA premiums at the rate in effect upon termination for a period of six (6) months; (3) a pro-rated portion of the annual bonus you otherwise would have earned for the year in which termination occurs, if any, based upon actual performance for such year; and (4) if your termination date is within six months before the third anniversary of the date of grant of the Stock Option, the Stock Option shall vest in full as of the termination date.

 

(b)           Termination By The Company Without Cause Following Change in Control.  If this Agreement is terminated by the Company without Cause within twelve (12) months following a Change in Control, subject to the release requirement set forth in paragraph (a) above, the Company shall provide you with the following severance benefits in lieu of any benefits under paragraph (a) above:   (1) continuation of your base salary less payroll deductions and withholding for a period of nine (9) months; (2) continued payment, or reimbursement, as the case may be, of your COBRA premiums at the rate in effect upon termination for a period of nine (9); and (3) a pro-rated portion of the annual bonus you otherwise would have earned for the year in which termination occurs, if any, based upon actual performance for such year.

 

(c)           Termination By The Company With Cause, By Reason of Death or Disability or By Resignation.  If this Agreement is terminated by the Company at any time with Cause, by reason of your death or disability, or if you terminate your employment with the Company under this Agreement, you shall not be entitled to any severance pay, severance benefits, accelerated vesting or any compensation or benefits from the Company whatsoever.

 

(d)           Definitions:

 

A.            Cause.  “Cause” for purposes of this Agreement shall mean if you:  (1) shall have committed any felony or any other act involving fraud, theft, misappropriation, dishonesty, or embezzlement; (2) shall have committed intentional acts that materially impair the goodwill or business of the Company or Parent or cause material damage to Company’s or Parent’s property, goodwill, or business; (3) shall have refused to, or willfully failed to, perform your material duties hereunder; or (4) shall have violated any written policies or procedures of the Company or Parent.

 

B.            Change in Control.  For purposes of this Agreement, the term “Change of Control” means the consummation of any of the following transactions:

 

(1)           a shareholder, or a group of associated shareholders, becoming entitled to sufficient shares in Parent to give it or them the ability and that ability is successfully exercised, in a general meeting, to replace all or a majority of the board of directors of Parent;

 

(2)           in relation to a takeover bid in respect of shares in Parent, during the “Bid Period” as defined in the Companies Act 1985 provided that where a takeover bid is publicly announced prior to the service of a bidder’s statement on Parent in relation to that

 

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takeover bid, the Bid Period shall be deemed to have commenced at the time of that announcement; and

 

(3)           on an application under the Companies Act 1985 if a court orders a meeting to be held concerning a proposed compromise or arrangement for the purposes of or in connection with a scheme for the reconstruction of Parent or its amalgamation with any other company.

 

C.            Good Reason.  “Good Reason” for purposes of this Agreement shall mean if (i) the Company moves or relocates you and you are unable to achieve on reasonable terms approximately equivalent living circumstances to your situation in the New York metropolitan area, (ii) you are demoted or assigned duties of less seniority than your duties under this Agreement, or (iii) the Company decreases by 15% or more your base salary and target bonus under this Agreement.  In order for you to terminate your for “Good Reason” under this paragraph, immediately after becoming aware of the breach or other event giving rise to your right to terminate, you must have provided the Company with written notice of your right to terminate pursuant to this paragraph, the Company must have failed to cure the breach or other event so specified, if curable, within thirty days after receiving such notice.

 

(e)           Release Requirement and Timing of Severance Payments.  In order to receive the severance benefits under paragraph (a) or (b) above, as applicable, you must sign and tender the release as described above not later than sixty (60) days following your last day of employment, or such earlier date as required by the Company, and if you fail or refuse to do so, you shall forfeit the right to such termination compensation as would otherwise be due and payable.   If the severance payments are otherwise subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), they shall begin on the first pay period following the date that is sixty (60) days after your employment terminates and shall otherwise begin on the first pay period after the release becomes effective (with the initial salary continuation payment to include any unpaid salary continuation payments from the date your employment terminated), subject to your executing and tendering the release on the terms as set forth in the immediately preceding sentence.  The pro-rated bonus, if any, shall be paid when such bonus would have been paid absent the termination of your employment and in all cases in the calendar year following the fiscal year to which the bonus relates.

 

8.             COMPANY POLICIES AND CONFIDENTIALITY AGREEMENT.  As an employee of the Company, you will be expected to abide by all of the applicable policies and procedures of the Company and Parent.  As a condition of your employment, you agree to sign and to abide by the terms of a Protective Agreement with the Company, which is attached hereto as Exhibit A.

 

9.             NEW YORK WAGE THEFT PREVENTION ACT NOTICE.  Attached as Exhibit B a notice containing certain information regarding your pay as required by the New York Wage Theft Prevention Act.

 

10.          AT-WILL EMPLOYMENT.  As an employee of the Company, you may terminate your employment at any time and for any reason whatsoever simply by notifying the Company.  Similarly, the Company may terminate your employment at any time and for any reason whatsoever, with or without cause or advance notice.  Your at-will employment relationship with the Company cannot be changed except in writing signed by the CEO.

 

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11.          ENTIRE AGREEMENT.  This Agreement, including Exhibit A, constitutes the complete, final and exclusive embodiment of the entire agreement between you and the Company with respect to the terms and conditions of your employment specified herein.  If you enter into this Agreement, you are doing so voluntarily, and without reliance upon any promise, warranty or representation, written or oral, other than those expressly contained herein.  This Agreement supersedes any other such promises, warranties, representations or agreements.  This Agreement may not be amended or modified except by a written instrument signed by you and the CEO.

 

12.          GOVERNING LAW.  This Agreement will be governed by and construed in accordance with the laws of the State of New York.

 

13.          DISPUTE RESOLUTION.  To ensure the timely and economical resolution of disputes that arise in connection with your employment with the Company, you and the Company agree that any and all disputes, claims, or causes of action arising from or relating to the enforcement, breach, performance or interpretation of this Agreement, your employment, or the termination of your employment, shall be resolved to the fullest extent permitted by law by final, binding and confidential arbitration, by a single arbitrator, in New York, New York, conducted by Judicial Arbitration and Mediation Services, Inc. (“JAMS”) under the applicable JAMS employment rules.  By agreeing to this arbitration procedure, both you and the Company waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding.    Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof in the State of New York.  In reaching his or her decision, the arbitrator shall have no authority (a) to authorize or require the parties to engage in discovery (provided, however, that the arbitrator may schedule the time by which the parties must exchange copies of the exhibits that, and the names of the witnesses whom, the parties intend to present at the hearing) (b) to interpret or enforce the Protective Agreement (which shall not be covered by the dispute resolutions contained in this paragraph), (c) to change or modify any provision of this Agreement, (d) to base any part of his or her decision on the common law principle of constructive termination, or (e) to award punitive damages or any other damages not measured by the prevailing party’s actual damages and may not make any ruling, finding or award that does not conform to this Agreement.  Each party shall bear his, her or its own legal fees, costs and expenses of arbitration and one-half (1⁄2) of the costs of the arbitrator.

 

14.          SECTION 409A.  You and the Company intend that the payments and benefits provided for in this letter either be exempt from Section 409A of the Code, or be provided for in a manner that complies with Section 409A of the Code, and any ambiguity herein shall be interpreted so as to be consistent with the intent of this Section 14.  In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on you by Section 409A of the Code or damages for failing to comply with Section 409A of the Code.  Notwithstanding anything contained herein to the contrary, all payments and benefits under Section 7 above shall be paid or provided only at the time of a termination of your employment that constitutes a “separation from service” from the Company within the meaning of Section 409A of the Code and the regulations and guidance promulgated thereunder (determined after applying the presumptions set forth in Treas. Reg. Section 1.409A-1(h)(1)).  Further, if you are a “specified employee” as such term is defined under Section 409A of the

 

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Code and the regulations and guidance promulgated thereunder, any payments described in Section 7 above shall be delayed for a period of six (6) months following your separation of employment to the extent and up to an amount necessary to ensure such payments are not subject to the penalties and interest under Section 409A of the Code.   In addition, (i) in-kind benefits and reimbursements provided under this Agreement during any calendar year shall not affect in-kind benefits or reimbursements to be provided in any other calendar year, other than an arrangement providing for the reimbursement of medical expenses referred to in Section 105(b) of the Code, and are not subject to liquidation or exchange for another benefit and (ii) reimbursement requests must be timely submitted by you and, if timely submitted, reimbursement payments shall be promptly made to you following such submission, but in no event later than December 31st of the calendar year following the calendar year in which the expense was incurred.  In no event shall you be entitled to any reimbursement payments after December 31st of the calendar year following the calendar year in which the expense was incurred.  The reimbursement provisions in this Section 14 shall only apply to in-kind benefits and reimbursements that would result in taxable compensation income to you.

 

15.          AUTHORIZATION TO WORK AND BACKGROUND CHECK.  Your employment with the Company is contingent upon satisfactory results from any pre-employment background checks that we may deem necessary, including, but not limited to, a credit check, criminal background check, drug screening and confirmation of your legal authorization to work in the United States.  Our offer is also contingent upon you not being subject to any limitation, obligation or agreement, whether imposed by contract, statute or otherwise, that would preclude your employment by the Company or in any way restrict your ability to perform your duties as an employee.  If you have provided the Company with any false information with respect to your employment history, educational background or other credentials, the offer of employment contained herein shall be withdrawn or, if you have already been hired, your employment shall be immediately terminated.

 

If you choose to accept this Agreement under the terms described above, please sign below and return this letter to me no later than December 15, 2014.

 

We look forward to your favorable reply, and to a productive and enjoyable work relationship.

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
Verona   Pharma, Inc.
    
	
 
    	
 
    
	
 
    	
/s/   Jan-Anders Karlsson
    
	
 
    	
Name: 
    	
J-A Karlsson
    
	
 
    	
Its:
    	
CEO   15 Dec 2014
    

 

	
Accepted   and Agreed to by:
    	
 
    
	
 
    	
 
    
	
/s/   Kenneth B. Newman
    	
 
    
	
Employee   Name:
    	
Kenneth B. Newman, M.D., M.B.A
    	
 
    
	
Date:
    	
Dec. 15, 2014
    	
 
    

 

6

 

Exhibit A

 

Protective Agreement

 

(attached)

 

 

PROTECTIVE AGREEMENT

 

THIS PROTECTIVE AGREEMENT is made and entered into as of the 15th day of December, 2014, by and between Kenneth B. Newman, M.D., M.B.A. and Verona  Pharma, Inc. and each of its subsidiaries, parents, affiliates, successors or assigns (collectively, Verona Pharma, Inc. and each of its subsidiaries, parents, affiliates, successors and assigns shall be referred to herein as the “Company”).

 

1.             I acknowledge and agree that solely by virtue of my employment with the Company, I will acquire “Confidential Information,” as well as special knowledge of the Company’s relationships with its customers, prospective customers and suppliers, and that, but for my association with the Company, I will not have had access to the Confidential Information or knowledge of the relationships. As a condition precedent to the Company employing me, and as consideration for my employment, I represent and warrant as follows:

 

A.           I have voluntarily signed this Agreement after determining that the provisions contained in this Agreement are of a material benefit to me, and that the duties and obligations imposed on me are fair and reasonable and will not prevent me from earning a comparable livelihood following the termination of my employment with the Company.

 

B.           I have read and fully understand the terms of this Agreement and have considered its benefits and consequences. I also have informed the Company of, and provided the Company with copies of, any non-competition, confidentiality, work-for-hire or similar agreements to which I am subject or may be bound.

 

C.           I agree that, during the time of my employment with the Company and for a period of six months after the termination of my employment, whether voluntary or involuntary, I will not, directly or indirectly, except on behalf of the Company:

 

(1)      contact, solicit or accept if offered to me, or direct any person or entity to contact, solicit or accept if offered to it, any of the Company’s customers or prospective customers for the purpose of providing any products and/or services that are the same as or similar to the products and services provided by the Company to its customers during the term of my employment or for the purpose of otherwise interfering with the business relationships between the Company and its customers or prospective customers: or

 

(2)      solicit or accept if offered to me, with or without solicitation, on my own behalf or on behalf of any other person or entity, the services of any person who is a current employee or independent contractor of the Company (or was an employee or independent contractor of the Company during the year preceding such solicitation), nor solicit any of the Company’s current employees or independent contractors (or any individual who was an employee or independent contractor of the Company during the year preceding such solicitation) to terminate employment or an engagement with the Company, nor agree to hire any current employee or independent contractor (or any individual who was an employee or independent contractor of the Company during the year preceding such hire) of the

 

 

Company into employment or an engagement with me or any other person or entity; or

 

(3)                become associated with any business, whether as an investor (excluding investments representing less than one percent (1%) of the common stock of a public company), lender, owner, stockholder, member, manager, officer, director, employee, agent or in any other capacity, involved in the development and/or marketing of medicines to treat respiratory obstructive diseases or any other business that may be carried on by the Company from time to time.

 

D.              I acknowledge and agree that the scope described above is necessary and reasonable in order to protect the Company in the conduct of its business and that, if I become employed by another employer, I will be required to disclose the existence of this Paragraph 1 to such employer and I consent to and the Company is given permission to disclose the existence of this Paragraph 1 to such employer. I further acknowledge and agree that, if I breach any of the requirements of subparagraph C, the one (1) year restricted period set forth therein shall be tolled during the time of such breach.

 

E.              For purposes of this Paragraph 1: (i) “customer” is defined as any person or entity that purchased any type of product and/or service from the Company (including as a licensee) or is or was doing business with the Company or me within the twelve (12) month period immediately preceding the solicitation or other activity prohibited by subparagraph C; (ii) “prospective customer” is defined as any person or entity contacted or solicited by the Company or me (whether directly or indirectly) or who contacted the Company or me (whether directly or indirectly) within the twelve (12) month period immediately preceding the solicitation or other activity prohibited by subparagraph C for the purpose of having such persons or entities become a customer of the Company (including as a licensee); and (iii) “supplier” is defined as any person or entity who is or was supplying products or services to the Company (including as a licensor) within the twelve (12) month period immediately preceding the activity prohibited by subparagraph C.

 

F.              I agree that both during my employment and thereafter I will not use for myself or disclose to any person not employed by the Company any “Confidential Information” of the Company acquired by me during my relationship with the Company, except where such disclosure is consented to, or approved by, the Company. I agree that “Confidential Information” includes but is not limited to:

 

(1)           the Company’s corporate, business development and marketing strategy and plans;

 

(2)           budgets, management accounts, bank account details and other confidential financial data of the Company;

 

(3)           know-how and products being developed by the Company, including inventions and discoveries, biological and chemical fOormulations, research and development methods and processes, scientific techniques and formulas and results of experimentation and testing including, without limitation, clinical, biological, pharmaceutical, toxicological and pre-clinical and clinical test data;

 

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(4)           reports, confidential aspects of the Company’s computer technology and systems, confidential algorithms developed or used by the Company, confidential information relating to proprietary computer hardware or software (including updates) not generally known to the public;

 

(5)           confidential methods and processes, information relating to the running of the Company’s business which is not in the public domain, including details of salaries, bonuses, commissions and other employment terms applicable within the Company;

 

(6)           the names, addresses and contact details of any existing or prospective customers, suppliers or business partners of the Company and their requirements for any of the Company’s products or services. Without prejudice to the foregoing, this includes personal information provided to the Company by visitors to and users of any of its websites;

 

(7)           the terms on which the Company does business with any existing or prospective customers, suppliers or business partners of the Company and the terms of any partnership, joint venture or other form of commercial co-operation or agreement the Company enters into with any third party;

 

(8)           software and technical information necessary for the development, maintenance or operation of any of the Company’s websites and the source code of each website;

 

(9)           any other information which the Company is bound by an obligation of confidence owed to a third party, in particular the content of discussions or communications with any prospective customers, suppliers or business partners; and

 

(10)         any other information, written, oral or electronic, whether existing now or at some time in the future, which pertains to the Company’s affairs or interests or with whom the Company does business.

 

The Company acknowledges and agrees that Confidential Information does not include (a) information properly in the public domain, or (b) information in my possession prior to the date of my original employment with the Company, except to the extent that such information is or has become a trade secret of the Company or is or otherwise has become the property of the Company.

 

G.              I shall not, except in the proper performance of my duties, or with the Company’s permission, remove any property belonging or relating to the Company from the Company’s premises, or make any copies of documents or records relating to the Company’s affairs. Upon the Company’s request at any time, and in any event on the termination of my employment, I shall immediately deliver up to the Company or its authorized representative any plans, keys, mobile telephone, security passes, credit cards, equipment, documents, records, papers, computer disks, tapes or other computer hardware or software (together with all copies of the same), and all property of whatever nature in my possession or control which belongs to the Company or relates to its affairs. I shall, at the Company’s request, provide the Company with a written statement that I have complied with this obligation. If I have any information relating to the Company or work I have

 

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carried out for the Company which is stored on a computer or laptop computer, whether or not the computer is owned by the Company, the Company shall be entitled to download the information and/or supervise its deletion from the computer or laptop concerned.

 

H.            I recognize and agree that all ideas, know how, confidential information, inventions, discoveries, biological and chemical formulations, research and development methods and processes, scientific techniques and formulas and results of experimentation and testing including, without limitation, clinical, biological, pharmaceutical, toxicological and pre-clinical and clinical test data, products, patents, designs, trademarks, database right or copyright work or any right to prevent reproduction whether or not any of these is registered and including applications for any such right, matter or thing or registration thereof and all rights or forms of protection of a similar nature or having equivalent or similar effect to any of these which may subsist anywhere in the world, and all trade secrets, business applications, plans, writings and other developments or improvements and all other intellectual property and proprietary rights and any derivative works based thereon (the “Inventions”) made, conceived, or completed by me, alone or with others, during the time of my employment, whether or not during working hours, that are within the scope of the Company’s business operations, or that relate to any of the Company’s work or projects, are the sole and exclusive property of the Company. I further agree that (1) I will promptly disclose all Inventions to the Company and hereby assign to the Company all present and future rights I have or may have in those Inventions; and (2) all of the Inventions eligible under the copyright laws are “work made for hire.” At the request of and without charge to the Company, I will do all things deemed by the Company to be reasonably necessary to perfect title to the Inventions in the Company and to assist in obtaining for the Company such patents, copyrights or other protection as may be provided under law and desired by the Company, including but not limited to executing and signing any and all relevant applications, assignments, or other instruments. I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agents and attorneys-in-fact to act for and in my behalf and instead of me, to execute and file any documents and to do all other lawfully permitted acts to further the above purposes with the same legal force and effect as if executed by me, and I acknowledge that this designation and appointment constitutes an irrevocable power of attorney and is coupled with an interest. Notwithstanding the foregoing, I acknowledge that, the Company has informed me that the provisions of this Paragraph H will not apply to any Inventions for which no equipment, supplies, facility or trade secret information of the Company was used and which were developed entirely on my own time, unless (1) the Invention relates (i) to the business of the Company, or (ii) to actual or demonstrably anticipated research or development of the Company, or (2) the Invention results from any work performed by me for the Company.

 

I.             I acknowledge and agree that I have no expectation of privacy with respect to the Company’s telecommunications, networking or information processing systems (including, without limitation, stored computer files (whether on a Company computer or a home personal computer), email messages and voice messages) and that my activity and any files or messages on or using any of those systems may be monitored at any time without notice.

 

J.             It is agreed that any breach of any of the covenants contained in this Paragraph I will result in irreparable harm and continuing damages to the Company and its business and that the Company’s remedy at law for any such breach will be inadequate and,

 

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accordingly, in addition to any and all other remedies that may be available to the Company, any court of competent jurisdiction may issue a decree of specific performance or issue a temporary and permanent injunction, without the necessity of the Company posting bond or furnishing other security and without proving special damages or irreparable injury, enjoining and restricting the breach of any such covenant. I agree to pay all of the Company’s costs and expenses, including reasonable attorneys’ and accountants’ fees, incurred in enforcing such covenants.

 

2.         Nothing contained in this Agreement creates any right of employment or limits or restricts the Company’s or my right to terminate my employment at any time with or without cause.

 

3.         I hereby authorize the Company, at any time during my employment or following my termination, to withhold from any monies it otherwise owes me (including without limitation salary, bonus, commissions and expense reimbursements) any and all monies due from me to the Company (including without limitation cash and travel advances, overpayments made to me by the Company, and any debt I owe the Company for any reason, including without limitation misuse or misappropriation of Company assets). At the termination of my employment with the Company or at any other time upon reasonable notice, I agree to execute whatever documentation may be necessary to authorize the Company to make the withholdings described in this paragraph.

 

4.         It is our intention that all provisions of this Agreement be enforced to the fullest extent permitted by law. If any provision of this Agreement shall be found invalid or unenforceable for any reason, in whole or in part, then such provision shall be deemed modified, restricted, or reformulated 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, restricted, or reformulated or as if such provision had not been originally incorporated herein, as the case may be. The Company and I further agree to seek a lawful substitute for any provision found to be unlawful; provided, that, if we are unable to agree upon a lawful substitute, the Company and I desire and request that a court or other authority called upon to decide the enforceability of this Agreement modify those restrictions in this Agreement that, once modified, will result in an agreement that is enforceable to the maximum extent permitted by the law in existence at the time of the requested enforcement. This Agreement contains the entire understanding and agreement between us with respect to this subject matter, and supersedes all prior oral and written agreements, if any, between us with respect to that subject matter. I understand and acknowledge that the Company’s rights under this Agreement shall inure to the benefit of any of its successors and/or assigns, and I shall continue to be bound by the terms hereof with any of the Company’s successors and/or assigns.

 

5.         I understand that the Company does not wish to incorporate any unlicensed or unauthorized material into its products or services or those of its subsidiaries. Therefore, I agree that I will not knowingly disclose to the Company, use in the Company’s business, or cause the Company to use, any information or material which is confidential or proprietary to any third party including, but not limited to, any former employer, competitor or client, unless the Company has a right to receive and use such information. I will not incorporate into my work any material that is subject to the copyrights of any third party unless the Company has a written agreement with that third party or otherwise has the right to receive and use such information.

 

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6.         This Agreement will be governed and construed in accordance with the laws of the New York, including the internal conflicts of law. I agree and consent to submit to personal jurisdiction in the State of New York in any state or federal court of competent subject matter jurisdiction situated in New York, New York. I  further agree to waive any right I otherwise may have to a trial by jury in any action to enforce the terms of this Agreement.

 

We have executed this Agreement on the day and year first above written.

 

	
 
    	
Verona Pharma, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Kenneth B. Newman
    	
 
    	
By:
    	
/s/ J-A Karlsson
    
	
Kenneth B. Newman,   M.D., M.B.A.
    	
Name:
    	
J-A Karlsson
    
	
 
    	
Title:
    	
CEO
    
				

 

6

 

Exhibit B

 

New York Wage Theft Prevention Act Notice

 

(attached)

 

 

	

    	
Notice and Acknowledgement of Pay Rate and   Payday 
   Under Section 195.1 of the New York State Labor Law 
   Notice for Exempt Employees
    	
 
    

 

1. Employer Information 
  Name:

Verona Pharma, Inc.

 

Doing Business As (DBA) Name(s):

 

FEIN (optional):

 

Physical Address:

 

Mailing Address:

C1- Kaye Scholer, LLP
 250 West 55th street 
 New York, NY

 

Phone:

 

2. Notice given:

 

x At hiring

o Before a change in pay rate(s), allowances claimed, or payday

 

3.   Employee’s pay rate(s): State if pay is based on an hourly, salary, day rate, piece rate, or other basis.

 

$340,000

 

Employers may not pay a non-hourly rate to a non-exempt employee in the Hospitality Industry, except for commissioned salespeople.

 

4.   Allowances taken: 

x None

o Tips       per hour

o Meals     per meal

o Lodging

o Other

 

5. Regular payday: Last day of month in arrears

 

6.   Pay is:

 

o  Weekly

o Bi-weekly

x Other: Monthly

 

7.   Overtime Pay Rate:

 

Most workers in NYS must receive at least 11/2 times their regular rate of pay for all hours worked over 40 in a workweek, with few exceptions. A limited number of employees must only be paid overtime at 11/2 times the minimum wage rate, or not at all.

 

This employee is exempt from overtime under the following exemption (optional):

 

8. Employee Acknowledgement:

 

On this day, I received notice of my pay rate, overtime rate (if eligible), allowances, and designated payday. I told my employer what my primary language is.

 

Check one:

 

x I have been given this pay notice in English because it is my primary language.

 

o    My primary language is              . I  have been given this pay notice in English only, because the Department of Labor does not yet offer a pay notice form in my primary language.

 

	
Kenneth Newman
    	
 
    
	
Print Employee Name
    	
 
    
	
 
    	
 
    
	
Employee Signature
    	
 
    
	
 
    	
 
    
	
Date
    	
 
    
	
 
    	
 
    
	
Preparer Name and Title
    	
 
    

 

The employee must receive a signed copy of this form. The employer must keep the original for 6 years.

 

LS 59 (02/15)

 

 

FIRST AMENDMENT

TO

OFFER LETTER AGREEMENT

 

This First Amendment (the “First Amendment”) to that certain offer letter agreement (the “Offer Letter”), dated December 15, 2014, by and between Verona Pharma, Inc. (the “Company”) and Kenneth B. Newman (the “Executive” and, together with the Company, the “Parties”) is made as of March 28, 2017 by and between the Company and Executive.  Except as set forth in this First Amendment, capitalized terms used but not defined herein shall have the meanings ascribed to them in the Offer Letter.

 

WITNESSETH

 

WHEREAS, the Company and Executive desire to amend the terms of the Offer Letter as set forth herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Executive and the Company hereby agree to the following:

 

1.                                      Amendment to the Offer Letter.  The Offer Letter is hereby amended by adding Section 16, which shall read as follows:

 

16.                               EXCISE TAX.

 

(a) 280G Parachute Payments.  If any payment or benefit that you would receive following a Change of Control or otherwise (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of 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 such Payment shall be reduced to the Reduced Amount. The “Reduced Amount” shall be either (A) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax or (B) the largest portion, up to and including the total amount, of the Payment, whichever of the amounts determined under (A) and (B), 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 the your receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax.  If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following order: reduction of cash payments; cancellation of accelerated vesting of outstanding awards under Parent’s equity incentive plan; and reduction of employee benefits. In the event that acceleration of vesting of outstanding awards under Parent’s equity incentive plan is to be reduced, such acceleration of vesting shall be undertaken in the reverse order of the date of grant of your outstanding equity awards.

 

(b) Calculations. All calculations required to be performed under this Section 16 shall be made by a public accounting or employee benefits consulting firm with a national practice selected by the Company (the “Accounting Firm”).  The Accounting Firm shall provide detailed supporting calculations on the applicable matter to both to the Company and you.  All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon the Company and you.

 

2.                                      No Other Amendment.  Except as expressly set forth in this First Amendment, the Offer Letter shall remain unchanged and shall continue in full force and effect according to its terms.

 

 

3.                                      Acknowledgement.  Executive acknowledges and agrees that Executive has carefully read this First Amendment in its entirety, fully understands and agrees to its terms and provisions and intends and agrees that it be final and legally binding on Executive and the Company.

 

4.                                      Governing Law; Counterparts.  This First Amendment shall be construed in accordance with the laws of the State of New York, without regard to any conflicts of laws principles that would result in the application of other law, and may be executed in several counterparts, each of which shall be deemed an original and all of which together shall constitute one document.

 

[signature page follows]

 

 

IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.

 

	
 
    	
 
    	
EXECUTIVE
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Dated:
    	
30   MAR ; '20
    	
 
    	
/s/ Kenneth B. Newman
    
	
 
    	
 
    	
Kenneth B. Newman
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
VERONA PHARMA, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Dated:
    	
29 March 2017
    	
 
    	
By:
    	
/s/ Jan-Anders Karlsson   
    
	
 
    	
 
    	
Name:
    	
Jan-Anders   Karlsson 
    
	
 
    	
 
    	
Its:
    	
CEOExhibit 10.8

 

Dated 24 September 2016

 

VERONA PHARMA PLC

 

- and -

 

PIERS MORGAN

 

 

EMPLOYMENT AGREEMENT

 

 

 

INDEX

 

	
1
    	
DEFINITIONS
    	
3
    
	
2
    	
APPOINTMENT
    	
4
    
	
3
    	
PERIOD OF APPOINTMENT
    	
4
    
	
4
    	
DUTIES OF EXECUTIVE
    	
4
    
	
5
    	
COMPANY POLICIES
    	
5
    
	
6
    	
INTELLECTUAL PROPERTY
    	
5
    
	
7
    	
CONFIDENTIALITY
    	
6
    
	
8
    	
DELIVERY UP OF THE   COMPANY’S PROPERTY
    	
7
    
	
9
    	
REMUNERATION AND   DEDUCTIONS
    	
7
    
	
10
    	
EXPENSES
    	
8
    
	
11
    	
BENEFITS
    	
8
    
	
12
    	
BONUS
    	
8
    
	
13
    	
SHARE SCHEMES
    	
8
    
	
14
    	
CHANGE OF CONTROL
    	
9
    
	
15
    	
WORKING HOURS AND   HOLIDAYS
    	
9
    
	
16
    	
ILL-HEALTH OR INJURY
    	
10
    
	
17
    	
TERMINATION OF   EMPLOYMENT
    	
10
    
	
18
    	
PAYMENT IN LIEU AND   GARDEN LEAVE
    	
11
    
	
19
    	
POST-TERMINATION   RESTRICTIONS
    	
12
    
	
20
    	
DATA PROTECTION
    	
14
    
	
21
    	
STATEMENT OF TERMS OF   EMPLOYMENT
    	
14
    
	
22
    	
THIRD PARTIES
    	
14
    
	
23
    	
NOTICES
    	
14
    
	
24
    	
INTERPRETATION
    	
15
    
	
25
    	
GOVERNING LAW AND   JURISDICTION
    	
15
    

 

2

 

Employment Agreement

 

THIS AGREEMENT is made on 24 September 2016

 

BETWEEN:

 

(1)                                 VERONA PHARMA PLC, with its principal office at 3 More London Riverside, London SE1 2RE (the “Company”); and

 

(2)                                 PIERS MORGAN of Chilton Leys Farmhouse, Forest Road, Onehouse, Stowmarket, Suffolk IP14 3EN (the “Executive”).

 

IT IS AGREED as follows:

 

1                                         DEFINITIONS

 

1.1          In this Agreement, unless the context otherwise expressly requires, the following expressions shall have the following meanings:

 

“Agreement” means this Agreement;

 

“Articles of Association” means the Company’s articles of association, as amended from time to time;

 

“Board” means the board of directors of the Company or any duly authorised committee of the Board;

 

“Change of Control Event” means:

 

(a)                                 a shareholder, or a group of associated shareholders, becoming entitled to sufficient shares in the Company to give it or them the ability and that ability is successfully exercised, in a general meeting, to replace all or a majority of the Board;

 

(b)                                 in relation to a takeover bid in respect of shares in the Company, during the “Bid Period” as defined the Companies Act provided that where a takeover bid is publicly announced prior to the service of a bidder’s statement on the Company in relation to that takeover bid, the Bid Period shall be deemed to have commenced at the time of that announcement; and

 

(c)                                  on an application under the Companies Act if a court orders a meeting to be held concerning a proposed compromise or arrangement for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company.

 

“Commencement Date” means 26 September 2016;

 

“Companies Act” means the Companies Act 1985;

 

“Company” means Verona Pharma plc, a company incorporated under the laws of England and Wales with registered number 05375156;

 

“Employment” means the employment established by this Agreement;

 

“Executive” means Piers Morgan;

 

“Group” means the Group Companies collectively;

 

“Group Company” means the Company, and any company which is from time to time a subsidiary of the Company, the holding company of the Company or a subsidiary of such holding company;

 

“holding company” and “subsidiary” shall have the respective meanings ascribed to such expressions by section 736 of the Companies Act 1985;

 

“Holiday Year” means the period of twelve consecutive calendar months commencing on 1 January in each year; and

 

3

 

“Intellectual Property Rights” means rights in ideas, know how, confidential information, inventions, discoveries, biological and chemical formulations, research and development methods and processes, scientific techniques and formulas and results of experimentation and testing including, without limitation, clinical, biological, pharmaceutical, toxicological and pre-clinical and clinical test data, products, patents, designs, trademarks, database right or copyright work or any right to prevent reproduction whether or not any of these is registered and including applications for any such right, matter or thing or registration thereof and all rights or forms of protection of a similar nature or having equivalent or similar effect to any of these which may subsist anywhere in the world.

 

2                                         APPOINTMENT

 

2.1                                               The Company appoints the Executive and the Executive agrees to serve the Company as chief financial officer, or in such other capacity as the Board may reasonably require (such other appointment not to be of a lower status than the Executive’s appointment under this Agreement).

 

2.2                                               The Executive hereby warrants to the Company that he will not be in breach of any former terms of employment, whether express or implied, or of any other obligation, arrangement, order or contract binding on the Executive, by reason of his entering into this Agreement.

 

2.3                                               The Executive hereby warrants that he knows of no circumstances which may result in proceedings being brought against him by the Financial Services Authority, under the provisions of the Financial Services and Markets Act 2000 (“FSMA”) or any similar regulatory authority, whether in the UK or otherwise and that no such proceedings have been threatened or commenced against him.

 

3                                         PERIOD OF APPOINTMENT

 

3.1                                               The Employment shall begin on the Commencement Date and, subject to Clause 17, shall continue until it is terminated by either party giving to the other not less than six months’ written notice.

 

4                                         DUTIES OF EXECUTIVE

 

4.1                                               The Executive shall be chief financial officer of the Company and, subject always to the directions of the Company’s chief executive officer (“CEO”), shall carry out such duties in relation to the Company as the CEO may from time to time require.  The Executive shall, at the request of the CEO, and without additional remuneration, act as an officer or employee of any Group Company.

 

4.2                                               The Executive shall faithfully and diligently serve the Company as chief financial officer and shall act at all times in the best interests of the Company.  The Executive shall perform diligently such duties and exercise such powers consistent with his employment under this Agreement as may from time to time be assigned to or vested in him and, in his capacity as chief financial officer, shall obey the reasonable and lawful directions of the Board.

 

4.3                                               The Executive shall not, during the course of the Employment, whether alone or jointly with another and whether directly or indirectly, carry on, or be engaged or concerned in, or (except as the owner for investment of securities dealt in on a recognised stock exchange and not exceeding 3% in nominal value of the issued securities of any class or otherwise as approved in writing by the Company from time to time) be interested in, any other business which competes with the business of the Company or the Group.

 

4.4                                               The Executive shall at all times keep the CEO or any other persons as the CEO may nominate, promptly and fully informed (in writing if so requested) of his conduct of the business or affairs of the Company or the Group and provide such explanations as the CEO may require in connection therewith.

 

4

 

4.5                                               The Executive shall comply with (a) every rule of law; (b) every regulation of the London Stock Exchange or of the Alternative Investment Market or any other Recognised Investment Exchange as defined in the FSMA and including the NASDAQ Stock Market; (c) every rule or regulation of any competent regulatory authority; and (d) every regulation of the Company for the time being in force in relation to dealings in shares or other securities of the Company or any other member of the Group.

 

4.6                                               The Executive’s initial place of employment shall be the principal office of the Company stated in this Agreement. The Executive agrees that the Company may change the Executive’s place of work to anywhere in the United Kingdom, provided that, if this requires the Executive to relocate, reasonable relocation expenses are paid by the Company.  In addition, the Executive will be required to travel and work on the business of the Company both inside and outside the United Kingdom.

 

5                                         COMPANY POLICIES

 

5.1                                               The Executive must comply with all Company policies, rules, systems and procedures as shall be in force from time to time.

 

6                                         INTELLECTUAL PROPERTY

 

6.1                                               All Intellectual Property Rights devised, developed or created by the Executive during the period of his employment with the Company or any Group Company and relating to the business of the Company shall belong to, and be the absolute property of the Company or such Group Company as the Company may nominate. To the extent that such Intellectual Property Rights are not otherwise vested in the Company, the Executive hereby assigns the same to the Company, together with all related past and future rights to action.

 

6.2                                               It shall be part of the normal duties of the Executive to consider in what manner and by what new methods or devices, products, services, processes, equipment or systems of the Company and each Group Company might be improved, and promptly to give to the Board full details of any invention, discovery, formula, technique, design, improvement or other matter or work whatsoever in relation thereto which the Executive may from time to time make or discover during the course of the Employment, and to further the interests of the Company in relation to the same.

 

6.3                                               The Executive shall at the request and cost of the Company do all things necessary or desirable and execute all and any documents required to give the Company, or such other member of the Group as the Company may nominate, title to the Intellectual Property Rights vested or assigned under Clause 6.1.  The obligation contained in this Clause 6.3 shall continue to apply after the termination of the Executive’s employment with the Company without limit in point of time.

 

6.4                                               The Company may edit, copy, add to, take from, adapt, alter and translate the product of the Executive’s services in exercising the rights vested or assigned under Clause 6.1.

 

6.5                                               To the full extent permitted by law, the Executive irrevocably and unconditionally waives any moral rights the Executive may otherwise have under sections 77 to 85 inclusive of the Copyright Designs and Patents Act 1988 and any equivalent provisions of law anywhere in the world, in relation to the rights referred to in Clause 6.1.

 

6.6                                               The Executive must not knowingly do or omit to do anything which will or may have the result of preventing the Company from enjoying the full benefits of ownership of the Intellectual Property Rights vested or assigned under Clause 6.1.

 

6.7                                               The Executive must not at any time make use of the Company’s property or documents or materials in which the Company owns the Intellectual Property Rights for any purpose which has not been authorised by the Company.

 

5

 

6.8                                               Each of the provisions of this Clause 6 is distinct and severable from the others and if at any time one or more of such provisions is or becomes invalid, unlawful or unenforceable (whether wholly or to any extent), the validity, lawfulness and enforceability of the remaining provisions (or the same provision to any other extent) of this Clause 6 shall not in any way be affected or impaired.

 

7                                         CONFIDENTIALITY

 

7.1                                               During the course of the Employment, the Executive will have access to and become aware of information which is confidential to the Company.  Without prejudice to his common law duties, the Executive undertakes that he will not, save in the proper performance of his duties, make use of, or disclose to any person, (including for the avoidance of doubt any competitors of the Company), any of the trade secrets or other confidential information of or relating to the Company, or any user of the Company’s services or any company, organisation or business with which the Company is involved in any kind of business venture or partnership, or any other information concerning the business of the Company which he may have received or obtained in confidence while in the service of the Company. The Executive will use his best endeavours to prevent the unauthorised publication or disclosure of any such trade secrets or confidential information.

 

7.2                                               This restriction shall continue to apply after the termination of the Executive’s employment without limit in point of time but, both during the Executive’s employment and after its termination, shall cease to apply to information ordered to be disclosed by a Court or Tribunal of competent jurisdiction or otherwise required to be disclosed by law or to information which becomes available to the public generally (other than by reason of the Executive breaching this Clause 7). Nothing in this Clause 7 will prevent the Executive making a “protected disclosure” within the meaning of the Public Interest Disclosure Act 1998.

 

7.3                                               For the purposes of this Agreement confidential information shall include, but shall not be limited to:

 

(a)           the Company’s corporate, business development and marketing strategy and plans;

 

(b)           budgets, management accounts, bank account details and other confidential financial data of the Company;

 

(c)           know-how and products being developed by the Company, including inventions and discoveries, biological and chemical formulations, research and development methods and processes, scientific techniques and formulas and results of experimentation and testing including, without limitation, clinical, biological, pharmaceutical, toxicological and pre-clinical and clinical test data;

 

(d)           reports, confidential aspects of the Company’s computer technology and systems, confidential algorithms developed or used by the Company, confidential information relating to proprietary computer hardware or software (including updates) not generally known to the public;

 

(e)           confidential methods and processes, information relating to the running of the Company’s business which is not in the public domain, including details of salaries, bonuses, commissions and other employment terms applicable within the Company;

 

(f)            the names, addresses and contact details of any existing or prospective customers, suppliers or business partners of the Company and their requirements for any of the Company’s products or services.  Without prejudice to the foregoing, this includes personal information provided to the Company by visitors to and users of any of its websites;

 

(g)           the terms on which the Company does business with any existing or prospective customers, suppliers or business partners of the Company and the terms of any partnership, joint venture or other form of commercial co-operation or agreement the Company enters into with any third party;

 

(h)           software and technical information necessary for the development, maintenance or operation of any of the Company’s websites and the source code of each website; and

 

6

 

(i)            any other information which the Company is bound by an obligation of confidence owed to a third party, in particular the content of discussions or communications with any prospective customers, suppliers or business partners.

 

7.4                                               In this Clause 7, any reference to “Company” includes any “Group Company” as defined in Clause 1.1 and the Executive’s undertaking to the Company in Clause 7.1 is given to the Company for itself and as trustee for each Group Company.

 

7.5                                               The provisions of this Clause 7 shall be without prejudice to the Executive’s duties at common law.

 

8                                         DELIVERY UP OF THE COMPANY’S PROPERTY

 

8.1                                               The Executive shall not, except in the proper performance of his duties, or with the Company’s permission, remove any property belonging or relating to the Company or any Group Company from the Company’s or Group Company’s premises, or make any copies of documents or records relating to the Company’s or any Group Company’s affairs.

 

8.2                                               Upon the Company’s request at any time, and in any event on the termination of the Employment, the Executive shall immediately deliver up to the Company or its authorised representative, any plans, keys, mobile telephone, security passes, credit cards, equipment, documents, records, papers, computer disks, tapes or other computer hardware or software (together with all copies of the same), and all property of whatever nature in the Executive’s possession or control which belongs to the Company or any other Group Company or relates to its or their business affairs.  The Executive shall, at the Company’s request, provide the Company with a written statement that he has complied with this obligation.

 

8.3                                               If the Executive has any information relating to the Company or the Group or work he has carried out for the Company or any Group Company which is stored on a computer or laptop computer, whether or not the computer or laptop computer is owned by the Company or a Group Company, the Company shall be entitled to download the information and/or supervise its deletion from the computer or laptop concerned.

 

9                                         REMUNERATION AND DEDUCTIONS

 

9.1                                               The Executive shall receive during the Employment a salary at the rate of £200,000 per annum (or such higher rate as may be agreed in writing). The Company shall review the Executive’s salary within a reasonable time after, and with effect from, 1 January 2017 and thereafter annually with a change in any year effective from 1 January of that year. Such undertaking of a salary review does not confer a contractual right (whether express or implied) to any increase in salary, and an increase in salary one year will not guarantee an increase in salary in any subsequent year or years.

 

9.2                                               The Executive’s salary will accrue on a day-to-day basis payable by equal monthly payments in arrears no later than the last day of each month. Such salary shall include any sums receivable as director’s fees or other remunerations from any Group Company.

 

9.3                                               Payment of salary to the Executive may be made either by the Company or by another Group Company and, if by more than one company, in such proportion as the Board may from time to time decide.

 

9.4                                               At any time during the Employment, or, in any event, on the termination thereof howsoever arising, the Company shall be entitled to deduct from the Executive’s remuneration any monies due to the Company from the Executive, including, but not limited to, any outstanding loans, advances, the cost of repairing any damage or loss to the Company’s property caused by the negligence of the Executive (and of recovering the same), excess holiday pay and any other monies owed by the Executive to the Company.

 

7

 

10                                  EXPENSES

 

10.1                                        The Company shall refund the Executive all reasonable expenses wholly and exclusively incurred by him in the proper performance of the Company or the Group’s business provided that the Executive produces to the Company such evidence of actual payment as the Company reasonably requires.  Any credit card or similar facility supplied to the Executive by the Company shall be used solely for expenses incurred by him in the course of the Employment.

 

11                                  BENEFITS

 

11.1                                        The Company shall, if so requested by the Executive during the Employment, provide membership of a private medical insurance scheme for the Executive and his spouse. If the Executive is not accepted at standard rates of premium, the Executive shall be responsible for any excess premium.

 

11.2                                        The Company shall provide the Executive access to a workplace pension scheme and make contributions in accordance with the Company’s policy from time to time, which at the date of this agreement includes an undertaking by the Company to match the Executive’s pension contributions to such pension scheme during the Employment up to a maximum Company contribution rate of 6% of the Executive’s salary.

 

11.3                                        The Company shall maintain for the Executive Directors’ and Officers’ insurance in respect of those liabilities which he may incur as a director or officer of the Company or any other Group Company for which such insurance is normally available to the Company in respect of its directors and officers.

 

12                                  BONUS

 

12.1                                        The Executive shall be entitled to receive a discretionary bonus comprised of a target bonus of up to 35% of the Executive’s salary under Clause 9.1, extending to a maximum ‘stretch’ bonus of up to 50% of the Executive’s salary, dependent on performance objectives to be agreed by the Company and the Executive as target and stretch, accordingly. For the avoidance of doubt, for the period from the Commencement Date to 31 December 2016, such discretionary bonus entitement will be equal to one quarter of the full year entitement.

 

12.2                                        Subject to the rules of the Company’s Share Dealing Code in force from time to time, the Executive will be expected to invest at least 25% of his bonus (net of tax) by purchasing the publicly traded shares in the Company until the Executive has invested an amount equal to £200,000.

 

12.3                                        Any bonus scheme operated by the Company will not constitute a contractual term and bonus payments (if any) will be paid at the absolute discretion of the Company. The Executive shall not be eligible to be considered for a bonus if the Employment of the Executive is terminated under Clause 17.2(b). In addition, as the bonus is paid as an incentive to employees to remain in the employment of the Company, payment of any bonus is conditional on the Executive remaining in the employment of the Company and not having given notice to the Company to terminate his employment at the date that any bonus is payable.

 

13                                  SHARE SCHEMES

 

13.1                                        The Executive shall be entitled to participate in the Company’s share and share option schemes in place from time to time (the “Share Schemes”). With respect to any award made to the Executive under a Share Scheme:

 

(a)           the number and value, vesting schedule, circumstances of exercise and all other terms and conditions of any award will be as determined in the Company’s sole discretion and set out in a separate letter from the Company to the Executive;

 

8

 

(b)           the award will be subject to the Executive entering into a joint election approved by HM Revenue & Customs with respect to secondary national insurance liability;

 

(c)           the making of any award under a Share Scheme shall not entitle the Executive to any further award or right to participate in any other Share Scheme;

 

(d)           subject to Clause 13.1(e), the Executive’s rights under or in relation to this Agreement are separate from and shall not be affected by any participation in the Share Schemes, and his participation shall be subject to the Share Schemes’ rules from time to time;

 

(e)           subject to Clause 14, if the Employment is terminated for whatever reason and whether lawfully or unlawfully, the Executive agrees that he shall not be entitled by way of damages for breach of contract, dismissal or compensation for loss of office or otherwise to any sum, shares or other benefits to compensate him for the loss or diminution in value of any actual or prospective rights, benefits or expectations under or in relation to the Share Schemes.

 

13.2                                        As soon as reasonably practicable after the Commencement Date having regard to the Company’s Share Dealing Policy, the Company shall grant to the Executive an option to subscribe for a total of 15,000,000 ordinary shares in the capital of the Company exercisable at a price equal to 120% of the closing price of the Company’s shares traded on the AIM stock exchange on the last trading day immediately before the Commencement date. Such options will vest in equal proportions on the first, second and third anniversary of the Commencement Date. Subject to vesting, the options will be exerciseable at any time up to the tenth anniversary of the date of grant.

 

14                                  CHANGE OF CONTROL

 

Notwithstanding any other terms and conditions of this Agreement, if a Change of Control Event occurs:

 

(a)           any award made to the Executive under a Share Scheme referred to in Clause 13 will automatically vest and may be exercised prior to the award’s expiry date; and

 

(b)           the Executive will be entitled to receive his full bonus under Clause 12 without any obligation to purchase shares in the Company referred to in Clause 12.2.

 

15                                  WORKING HOURS AND HOLIDAYS

 

15.1                                        The Executive shall devote the whole of his time, attention and abilities to his duties hereunder during the Company’s usual business hours and such additional hours as may from time to time be reasonably necessary for the proper performance of his duties.  This may include working in the evenings outside normal office hours, at weekends or on public holidays.  The Executive shall not be entitled to receive any additional remuneration for work outside the Company’s usual business hours.

 

15.2                                        The Executive hereby agrees to disapply Regulation 4 of the Working Time Regulations 1998 to the effect that the 48 hour limit on average working time will not apply in respect of his employment by the Company, subject to his right to revoke this election by 13 weeks’ notice by the Executive to the Company.

 

15.3                                        The Executive shall (in addition to normal UK public holidays) be entitled to 25 working days’ holiday at full salary in each Holiday Year during the Employment to be taken at such reasonable time or times as the Board may approve.  Holiday may only be taken during the notice period if either the Company so requires or the Board has approved the holiday after notice has been served.

 

15.4                                        Holiday entitlement shall accrue pro rata during each Holiday Year.  Any entitlement to holiday remaining at the end of any Holiday Year may not be carried forward to the next succeeding Holiday Year, except that with the prior written permission of the CEO up to 5 

 

9

 

days holiday entitlement may be carried forward to the first quart of the following year; if such holiday entitlement is not used by 31 March of the following year it will be forfeited.  The notice requirements in relation to statutory annual leave, as provided by Regulation 15 of the Working Time Regulations 1998 shall not apply to this Agreement.

 

15.5                                        If the Executive has holiday entitlement accrued but not taken, the Company may, in its sole discretion, require him to take some or all of his holiday entitlement during his notice period or pay him a sum in lieu of accrued holiday on termination.  If, on the termination of the Employment, the Executive has exceeded his accrued holiday entitlement, this excess will be deducted from any sums due to the Executive from the Company.  A day’s holiday pay for these purposes shall be 1/260 of the Executive’s annual basic salary in accordance with Clause 9.1.

 

16                                  ILL-HEALTH OR INJURY

 

16.1                                        During any period of absence on medical grounds, the Executive shall be paid such statutory sick pay as he may be entitled to receive.

 

16.2                                        If the Executive is absent from work on medical grounds, he is required to notify the Company by telephone on the first morning of his absence or as soon as reasonably practicable thereafter.    If the Executive is absent from work for more than seven consecutive days, he must submit to the Company a medical certificate signed by a practising medical practitioner.  Thereafter, the Executive shall submit further medical certificates to cover the whole of his period of absence.

 

16.3                                        In the event that the Executive is incapacitated by reason of ill health or accident from performing his duties hereunder for a period or periods exceeding 130 working days in any 12 month period then:

 

(a)           the Company shall automatically become entitled to appoint a temporary successor to the Executive to perform all or any of the duties required to be performed by the Executive under the terms of this Agreement and the Executive’s duties shall be amended temporarily accordingly;

 

(b)           the Employment of the Executive may be subject to termination by the Company giving to the Executive not less than thirteen weeks’ notice in writing; and

 

(c)           nothing in this Clause 16.3 shall prejudice any rights that the Executive may have under the provisions of the Disability Discrimination Act 1995.

 

16.4                                        It is a condition of the Employment that the Executive consents to an examination by an independent doctor nominated by the Company should the Company so require.  The Executive hereby authorises the Company to have unconditional access to any report or reports (including copies of and documents referred to in such reports) prepared as a result of any such examination and authorises the doctor(s) to discuss the same with the Chairman of the Company.

 

16.5                                        The Company reserves the right to suspend the Executive on medical grounds, if, at any time, in the Company’s reasonable opinion, the Executive is incapable on grounds of ill-health of performing some or all of his duties under this Agreement.  During any period of suspension on medical grounds, the Executive will be subject to the same rights and duties as apply to employees on garden leave, as set out in Clause 18.2 of this Agreement.

 

17                                  TERMINATION OF EMPLOYMENT

 

17.1                                        The Employment may be terminated by either party by notice given in accordance with Clause 3.1.

 

17.2                                        The Employment of the Executive shall be subject to termination by the Company (but without prejudice to any of the Executive’s continuing obligations hereunder):

 

10

 

(a)           pursuant to the provisions of Clause 16.3 above;

 

(b)           immediately by notice in writing if the Executive shall:

 

(i)            have committed and repeated or continued (after warning) any material breach of his obligations hereunder; or

 

(ii)           have been guilty of conduct calculated or likely or tending to bring himself or any Group Company into disrepute or otherwise prejudicially to affect the interests of any Group Company; or

 

(iii)          have a bankruptcy order made against him or enter into a voluntary arrangement within the meaning of the Insolvency Act 1986 or enter into a Deed of Arrangement under the Deeds of Arrangement Act 1914 or make any composition with some or all of his creditors; or

 

(iv)          be convicted of any arrestable criminal offence, other than an offence under the Road Traffic legislation in respect of which a non-custodial sentence or penalty is imposed.

 

17.3                                        The Company may terminate the Employment if, in the opinion of the Board, the Executive’s performance of his duties is below the standard required of him.  Such termination will not usually occur without at least one prior written warning to the Executive of the possibility of such termination.

 

17.4                                        If the Company becomes entitled to terminate the Employment pursuant to Clause 17.2 above, it shall be entitled (but without prejudice to its rights subsequently to terminate the Employment on the same or any other ground) to suspend the Executive on full payment of salary for so long as it may think fit.

 

17.5                                        The Executive shall have no claim against the Company if this Agreement is terminated by reason of the liquidation of the Company for the purpose of reconstruction or amalgamation and the Executive is offered employment with any concern or undertaking resulting from such reconstruction or amalgamation in a similar position and on terms which are substantially the same as the terms of this Agreement.

 

17.6                                        On the termination of the Employment, howsoever arising, the Executive shall forthwith or at any time thereafter at the request of the Company, resign from any offices held by him in any Group Company together with any other offices or memberships held by him by virtue of the Employment.  Should the Executive fail to resign within seven days of being so requested, the Company is irrevocably authorised to appoint some person as his attorney to sign upon his behalf any document or do anything necessary or requisite to give effect thereto.

 

17.7                                        The Executive shall not at any time during or after the termination of the Employment make any untrue or misleading statement in relation to the Company or the Group nor, in particular, after the termination of the Employment represent himself as being employed by or connected with the Group.

 

17.8                                        Termination of the Employment within this Clause 17 shall be without prejudice to any rights which have accrued at the time of termination and to the provisions of Clauses 6, 7, 8 and 19 which shall remain in full force and effect.

 

18                                  PAYMENT IN LIEU AND GARDEN LEAVE

 

18.1                                        The Company reserves the right in its absolute discretion to terminate the Employment at any time with immediate effect by giving written notice to the Executive that the Company shall pay in lieu of notice. The payment shall be calculated at the rate of the Executive’s basic annual salary, pro-rated full bonus and contractual benefits prevailing at the

 

11

 

time when such notice is given.  The Company shall not, under any circumstances, be obliged to make a payment in lieu of notice.

 

18.2                                        If either party serves notice on the other to terminate the Employment, the Company may require the Executive to take “garden leave” for all or part of the remaining period of his employment.  If the Executive is asked to take garden leave he:

 

(a)           may not attend at his place of work or any other premises of the Company and/or any Group Company unless at the Company’s written request;

 

(b)           may not contact any customers, suppliers, partners or contacts of the Company without the Company’s prior written permission;

 

(c)           may be required not to carry out all or any of his normal day to day duties for the remaining period of the Employment or any part thereof;

 

(d)           may be assigned other duties or have powers vested in him withdrawn;

 

(e)           must return to the Company all equipment, including, but not limited to, laptop computers and fax machines, all documents, discs and other materials (including copies) belonging to the Company and/or any Group Company containing confidential information; and

 

(f)            must remain contactable by telephone on a daily basis during any period of absence from work under this Clause 18, and may not take holiday, save with the Company’s prior written consent, such consent not to be unreasonably withheld.

 

18.3                                        It is expressly agreed between the parties that, during any period of garden leave, the mutual duties of good faith and trust and confidence, and the Executive’s duty of fidelity to the Company, shall continue during any period that the Executive is not required to attend work, pursuant to this Clause 18.

 

19                                  POST-TERMINATION RESTRICTIONS

 

19.1        Within this Clause 19 the following words shall have the following meanings:

 

“Competitive Business” shall mean any business or activity in competition with that carried on by the Company or any Group Company at the Termination Date in which the Executive shall have been directly concerned at any time in the Contact Period;

 

“Contact Period” shall mean the 12 month period ending with the Termination Date;

 

“Customer Connection” shall mean any person, company or other organisation who:

 

(a)           was at any time in the Contact Period a customer (including as licensee) or supplier (including as licensor) of the Company; or

 

(b)           was at the Termination Date negotiating with the Company with a view to dealing with the Company as customer (including as licensee) or supplier (including as licensor);

 

provided that this will only include suppliers where alternative sources of supply on equivalent terms would not be generally available to the Company or where the interference with any such supplier may be anticipated to cause damage to the Company;

 

“Skilled Employee” shall mean any person who was:

 

(a)           employed by the Company; or

 

12

 

(b)           contracted to render services to the Company;

 

in technical or managerial work during the Contact Period and who was so engaged or contracted on the Termination Date;

 

“Supplier” shall mean any person, company or other organisation supplying (including under licence) goods or services to the Company or negotiating with the Company at the Termination Date with a view to supplying (including under licence) goods or services to the Company, where alternative sources of supply on equivalent terms would not be generally available to the Company or where the interference with any such supplier may be anticipated to cause damage to the Company;

 

“Termination Date” shall mean the date of termination of the Executive’s Employment under this Agreement; and

 

“Territory” shall mean any member country of the European Union.

 

19.2                                        The Executive shall not during the period of 6 months after the Termination Date, directly or indirectly, either on his own account or otherwise, canvass or solicit business in competition with the Company from any Customer Connection with whom the Executive shall have had material dealings in the Contact Period in the course of his Employment.

 

19.3                                        The Executive shall not during the period of 6 months after the Termination Date, either on his own account or otherwise, do business in competition with the Company with any Customer Connection with whom the Executive shall have had material dealings in the Contact Period in the course of his Employment.

 

19.4                                        The Executive will not during the period of 6 months after the Termination Date, in competition with the Company, either on his/her own account or otherwise, accept the supply of goods or directly or indirectly interfere with or seek to interfere with the continuance of the supply of goods to the Company from any Supplier with whom the Executive shall have had material dealings in the Contact Period in the course of his employment.

 

19.5                                        The Executive shall not, during the period of 6 months after the Termination Date, directly or indirectly, induce or seek to induce any Skilled Employee, with whom the Executive shall have had material dealings in the course of his duties hereunder in the Contact Period, to leave the Company’s employment, whether or not this would be a breach of contract on the part of such Skilled Employee or offer employment or an engagement to any such Skilled Employee.

 

19.6                                        The Executive shall not, during the period of 6 months after the Termination Date, carry on or be interested in Competitive Business in competition with the Company in the Territory whether as principal, agent, director, partner, proprietor, employee or otherwise.

 

19.7                                        The period of time of the restrictions under this Clause 19 shall be reduced by the length of any period of garden leave the Executive may be required to take pursuant to Clause 18.2 above.  In the event that the period of the restrictions is so reduced, the Contact Period shall mean the 12 month period ending with the date on which the Executive’s garden leave commences.

 

19.8                                        The Executive agrees that he will, at the request of the Company, enter into a direct agreement or undertaking with any Group Company whereby he will accept restrictions corresponding to the restrictions contained in this Clause 19 (or such of them as may be appropriate in the circumstances) in relation to such products and services and such areas and for such period as such Group Company may reasonably require for the protection of its legitimate interests.

 

19.9                                        Each of the restrictions contained in this Clause 19 are considered reasonable by the Company and the Executive as being no greater than is required for the protection of the goodwill of the business of the Company and the Group and are intended to be separate and

 

13

 

severable.  In the event that any of the said restrictions shall be held void, but would be valid if part of the wording thereof were deleted, such restriction shall apply with such deletion as may be necessary to make it valid and effective.

 

20                                  DATA PROTECTION

 

20.1                                        In order to keep and maintain records relating to the Employment it shall be necessary for the Company to record, keep and process personal data (including sensitive personal data) relating to the Executive.  This data may be recorded, kept and processed on computer and in hard copy form.  To the extent that it is reasonably necessary in connection with the Employment and the performance of the Company’s responsibilities as an employer, the Company may be required to disclose this data to others, including other employees of the Company, Group Companies, the Company’s professional advisers, the Her Majesty’s Revenue and Customs and other authorities.  The Executive consents to the recording, processing, use and disclosure by the Company of personal data relating to the Executive as set out above.  This does not affect the Executive’s rights as a data subject or the Company’s obligations and responsibilities under the Data Protection Act 1984 and/or the Data Protection Act 1998.  For the purposes of these Acts, the Company has nominated the Chairman as its representative.

 

21                                  STATEMENT OF TERMS OF EMPLOYMENT

 

21.1                                        The information in this Agreement constitutes a written statement of the terms of employment of the Executive in compliance with the provisions of the Employment Rights Act 1996.

 

22                                  THIRD PARTIES

 

22.1        This Agreement may be enforced by any Group Company subject to and in accordance with the terms of this Agreement.  Nothing in this Agreement confers on any other third party any benefits under the provision of the Contract (Rights of Third Parties) Act 1999.

 

23                                  NOTICES

 

23.1        Notices by either party must be in writing addressed:

 

(a)           to the Company at its registered office for the time being; and

 

(b)           to the Executive at his place of work or at the address set out in this Agreement or such other address as the Executive may from time to time have notified in writing to the Company for the purpose of this Clause.

 

23.2        Notices will be effectively served:

 

(a)           on the day of receipt, where any hand-delivered letter or (in the case of the Company) a facsimile transmission is received on a business day before or during normal working hours;

 

(b)           on the following business day, where any hand-delivered letter or (in the case of the Company) facsimile transmission is received either on a business day after normal working hours or on any other day;

 

(c)           on the second business day following the day of posting from within the United Kingdom of any letter sent by first class prepaid mail; or

 

(d)           on the fifth business day following the day of posting to an overseas address of any prepaid airmail letter.

 

14

 

24                                  INTERPRETATION

 

24.1                                        The headings in this Agreement are for convenience only and are not to be used as an aid to construction of this Agreement.

 

24.2                                        Reference to provisions of statutes, rules or regulations shall be deemed to include references to such provisions as amended, modified or re-enacted from time to time.

 

25                                  GOVERNING LAW AND JURISDICTION

 

25.1                                        This Agreement shall be governed by, and interpreted in accordance with, English law and the parties hereby submit to the exclusive jurisdiction of the courts and tribunals of England and Wales.

 

IN WITNESS WHEREOF this Deed has been executed by the duly authorised representatives of the Company and by the Executive the day and year first above written.

 

	
EXECUTED AND
    	
)
    	
 
    
	
DELIVERED AS A DEED
    	
)
    	
 
    
	
on the date hereof
    	
)
    	
 
    
	
by the Company
    	
)
    	
 
    
	
acting by:
    	
)
    	
/s/ Jan-Anders Karlsson
    
	
 
    	
 
    	
Director
    

 

 

	
In the presence   of :
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ Claire Poll
    	
 
    
	
 
    	
Claire Poll
    	
 
    
	
 
    	
Legal Counsel
    	
 
    
	
 
    	
Verona Pharma   PLC
    	
 
    

 

15

 

	
EXECUTED   AND
    	
)
    	
 
    	
 
    
	
DELIVERED   AS A DEED
    	
)
    	
 
    	
 
    
	
on the date   hereof
    	
)
    	
PJM
    	
/s/ PJ Morgan
    
	
by the Executive
    	
)
    	
PJM
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
In the presence   of:
    	
)
    	
 
    	
 
    

 

	
 
    	
/s/ Robert M. Jackson
    	
 
    
	
 
    	
 
    
	
 
    	
Robert Michael Jackson
    
	
 
    	
Gudgeons Prentice
    
	
 
    	
Solicitors
    
	
 
    	
Stowmarket
    
	
 
    	
Suffolk IP14 1ED
    
	
 
    	
Solicitor
    

 

16

 

FIRST AMENDMENT

TO

EMPLOYMENT AGREEMENT

 

This First Amendment (the “First Amendment”) to that certain employment agreement (as amended, the “Employment Agreement”), dated 24 September 2016, by and between Verona Pharma plc (the “Company”) and Piers Morgan (the “Executive” and, together with the Company, the “Parties”) is made as of 28 March 2017 by and between the Company and Executive.  Except as set forth in this First Amendment, capitalized terms used but not defined herein shall have the meanings ascribed to them in the Employment Agreement.

 

WITNESSETH

 

WHEREAS, the Company and Executive desire to amend the terms of the Employment Agreement as set forth herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Executive and the Company hereby agree to the following:

 

1.                                      Amendment to the Employment Agreement.  The Employment Agreement is hereby amended by replacing Clause 16.1 and adding Clauses 26 and 27, which shall read as follows:

 

“16.1                  During any period of absence on medical grounds, the Executive shall be paid such contractual and statutory sick pay as the Executive may be entitled to receive under the Company’s sick leave policy from time to time.

 

26                                  TAX EQUALISATION

 

26.1                        During the course of the Employment, the Executive will be liable for UK income tax and employee’s National Health Insurance contributions (“UK Tax”).  In addition, the Executive may be liable to pay US federal and state income taxes in respect of earnings from work carried out in the US.  The Company intends to minimize the effect of the different rate of US and UK tax rates and leave the Executive in a net after-tax position substantially equivalent to what the Executive would experience if Executive were subject only to UK Tax during this period.  The Company shall tax equalise the Executive so that the income and employment tax burden to the Executive on his remuneration and other amounts payable pursuant to this Agreement (including any remuneration with respect to the Share Schemes and including the tax equalisation payments made pursuant to this Clause 26), exclusive of any taxes under Section 409A, Section 457A or Section 4999 of the United States Internal Revenue Code of 1986, as amended (the “Code”) or any other provisions of the Code relating to excise taxes, penalties or interest, is neither substantially greater nor less than the UK Tax that the Executive would have paid had Executive performed all of Executive’s duties to the Company in the UK, subject to the terms of any tax equalisation policy adopted by the Company, as it may be amended by the Company from time to time in the Company’s sole discretion (“Tax Equalisation”).  Such payments, if any are payable pursuant to this Clause 26, shall be made within 60 days after the actual US tax amounts due are paid by the Executive for any applicable tax periods.  To the extent that payments pursuant to this Clause 26 exceed the amount that was required to achieve Tax Equalisation, the Executive will repay to the Company an amount equal to the overpayment on demand by the Company and agrees that the Company may deduct amounts equal to any

 

 

overpayment from the Executive’s salary or other payments due from the Company to the Executive.  The Executive shall cooperate with the Company in determining any Tax Equalisation and in seeking any tax refunds owed on taxes paid by the Company pursuant to this Clause 26 in accordance with applicable tax rules and regulations.  This Clause 26 shall continue to apply after the termination of the Executive’s employment with the Company without limit in point of time.

 

27                                  EXCISE TAX

 

27.1                        If any payment or benefit that Executive would receive following a Change of Control Event or otherwise (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of 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 such Payment shall be reduced to the Reduced Amount.  The “Reduced Amount” shall be either (A) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax or (B) the largest portion, up to and including the total amount, of the Payment, whichever of the amounts determined under (A) and (B), 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 the Executive’s receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax.  If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following order: reduction of cash payments; cancellation of accelerated vesting of outstanding awards under a Share Scheme; and reduction of employee benefits.  In the event that acceleration of vesting of outstanding awards under a Share Scheme is to be reduced, such acceleration of vesting shall be undertaken in the reverse order of the date of grant of the Executive’s outstanding equity awards.

 

27.2                        All calculations required to be performed under Clauses 26 and 27 shall be made by a public accounting or employee benefits consulting firm with a national practice selected by the Company (the “Accounting Firm”).  The Accounting Firm shall provide detailed supporting calculations on the applicable matter to both to the Company and the Executive.  All fees and expenses of the Accounting Firm shall be borne solely by the Company.  Any determination by the Accounting Firm shall be binding upon the Company and the Executive.”

 

2.                                      No Other Amendment.  Except as expressly set forth in this First Amendment, the Employment Agreement shall remain unchanged and shall continue in full force and effect according to its terms.

 

3.                                      Acknowledgement.  Executive acknowledges and agrees that Executive has carefully read this First Amendment in its entirety, fully understands and agrees to its terms and provisions and intends and agrees that it be final and legally binding on Executive and the Company.

 

4.                                      Governing Law; Counterparts.  This First Amendment shall be governed by, and interpreted in accordance with, English law and the Parties hereby submit to the exclusive jurisdiction of the courts and tribunals of England and Wales, and may be executed in several counterparts, each of which shall be deemed an original and all of which together shall constitute one document.

 

[signature page follows]

 

2

 

IN WITNESS WHEREOF this First Amendment has been executed by the duly authorised representatives of the Company and by Executive the day and year first above written.

 

	
EXECUTED AND
    	
)
    	
 
    
	
DELIVERED AS A DEED
    	
)
    	
 
    
	
on the date hereof
    	
)
    	
 
    
	
by the Company
    	
)
    	
 
    
	
acting by:
    	
)
    	
/s/ JA Karlsson
    
	
 
    	
 
    	
Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
In the presence of:
    	
)
    	
/s/ Robert Hendricks
    
	
 
    	
 
    	
Robert Hendricks
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
EXECUTED AND
    	
)
    	
 
    
	
DELIVERED AS A DEED
    	
)
    	
/s/ PJ Morgan
    
	
On the date hereof
    	
)
    	
PJ Morgan
    
	
by the Executive
    	
)
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
In the presence of:
    	
)
    	
/s/ Robert Hendricks
    
	
 
    	
 
    	
Robert Hendricks

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